Olives Grown in California; Decreased Assessment Rate, 50763-50765 [2022-17759]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 87, Number 159 (Thursday, August 18, 2022)]
[Rules and Regulations]
[Pages 50763-50765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17759]



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Rules and Regulations
                                                Federal Register
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Federal Register / Vol. 87, No. 159 / Thursday, August 18, 2022 / 
Rules and Regulations

[[Page 50763]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 932

[Doc. No. AMS-SC-21-0099; SC22-932-1 FR]


Olives Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule implements a recommendation from the 
California Olive Committee to decrease the assessment rate established 
for the 2022 fiscal year and subsequent fiscal years. The assessment 
rate will remain in effect indefinitely unless modified, suspended, or 
terminated.

DATES: Effective September 19, 2022.

FOR FURTHER INFORMATION CONTACT: Kathie Notoro, Marketing Specialist, 
or Gary Olson, Regional Director, West Region Branch, Market 
Development Division, Specialty Crops Program, AMS, USDA; Telephone: 
(559) 538-1672, or Email: [email protected] or 
[email protected].
    Small businesses may request information on complying with this 
regulation by contacting Richard Lower, Market Development Division, 
Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 
0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This action, pursuant to 5 U.S.C. 553, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This rule is issued under Marketing Agreement and Order 
No. 932, as amended (7 CFR part 932), regulating the handling of olives 
grown in California. Part 932 (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 
California Olive Committee (Committee) locally administers the Order 
and is comprised of producers and handlers of olives operating within 
the area of production, and one public member.
    The Agricultural Marketing Service (AMS) is issuing this rule in 
conformance with Executive Orders 12866 and 13563. Executive Orders 
12866 and 13563 direct agencies to assess all costs and benefits of 
available regulatory alternatives and, if regulation is necessary, to 
select regulatory approaches that maximize net benefits (including 
potential economic, environmental, public health and safety effects, 
distributive impacts and equity). Executive Order 13563 emphasizes the 
importance of quantifying both costs and benefits, reducing costs, 
harmonizing rules, and promoting flexibility. This action falls within 
a category of regulatory actions that the Office of Management and 
Budget (OMB) exempted from Executive Order 12866 review.
    This rule has been reviewed under Executive Order 13175--
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions will 
have tribal implications. AMS has determined that this 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 rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect. 
Under the Order now in effect, California olive handlers are subject to 
assessments. Funds to administer the Order are derived from such 
assessments. It is intended that the assessment rate be applicable to 
all assessable olives beginning on January 1, 2022, 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 the United States 
Department of Agriculture (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 not later than 20 days after the date of the entry of 
the ruling.
    The Order provides authority for the Committee, with the approval 
of AMS, 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 thus in a position to formulate an 
appropriate budget and assessment rate. The assessment rate is 
formulated and discussed in a public meeting. Thus, all directly 
affected persons have an opportunity to participate and provide input.
    This rule decreases the assessment rate from $30.00 per ton of 
assessed olives, the rate that was established for the 2021 and 
subsequent fiscal years, to $16.00 per ton of assessed olives for the 
2022 and subsequent fiscal years. The lower rate is the result of the 
significantly higher crop size in 2021 (fruit that is marketed over the 
course of the 2022 fiscal year) and the need to reduce the Committee's 
financial reserve.
    The Committee met on November 10, 2021, and unanimously recommended 
2022 expenditures of $1,245,085 and an assessment rate of $16.00 per 
ton of assessed olives to fund necessary administrative expenses and to 
maintain a financial reserve within the limits prescribed under the 
Order. In comparison, last year's budgeted expenditures were 
$1,151,831. The assessment rate of $16.00 is $14.00 lower than the rate 
previously in effect. Producer receipts show a yield of 43,336 tons of 
assessable olives from the 2021 crop year, which is more than double 
the quantity of olives harvested in 2020.
    Olives harvested in 2021 will be marketed over the course of the 
2022 fiscal year, which begins on January 1,

[[Page 50764]]

2022. The 43,336 tons of assessable olives from the 2021 crop should 
generate $693,376 in assessment revenue at the newly established 
assessment rate. The balance of funds needed to cover budgeted 
expenditures will come from interest income, Federal grants, and the 
Committee's financial reserve. The 2022 fiscal year assessment rate 
decrease is appropriate to ensure the Committee has sufficient revenue 
to fund the recommended 2022 fiscal year budgeted expenditures while 
ensuring the funds in the financial reserve will be kept within the 
maximum permitted by Sec.  932.40.
    The Order has a fiscal year and a crop year that are independent of 
each other. The crop year is a 12-month period that begins on August 1 
of each year and ends on July 31 of the following year. The fiscal year 
is the 12-month period that begins on January 1 and ends on December 31 
of each year. Olives are an alternate-bearing crop, with a small crop 
followed by a large crop. The Committee used the actual 2021 crop year 
receipts, in part, to determine the recommended assessment rate for the 
2022 fiscal year.
    The major expenditures recommended by the Committee for the 2022 
fiscal year includes $538,700 for program administration, $284,000 for 
marketing activities, $379,485 for research, and $42,900 for 
inspection. Budgeted expenses for these items during the 2021 fiscal 
year were $531,300, $238,000, $334,532, and $48,000, respectively.
    The Committee derived the recommended assessment rate by 
considering anticipated fiscal year expenses, actual olive tonnage 
received by handlers during the 2021 crop year, and the amount in the 
Committee's financial reserve. Income derived from handler assessments 
and other revenue sources is expected to be adequate to cover budgeted 
expenses. The assessment rate established in this rule will continue in 
effect indefinitely unless modified, suspended, or terminated by AMS 
upon recommendation and information submitted by the Committee or other 
available information.
    Although this assessment rate will be in effect for an indefinite 
period, the Committee will continue to meet prior to or during each 
fiscal 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 AMS. 
Committee meetings are open to the public and interested persons may 
express their views at these meetings. AMS will 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 budget for subsequent 
fiscal years will be reviewed and, as appropriate, approved by AMS.

Final 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 rule 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 
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 800 producers of olives in the production 
area and 2 handlers subject to regulation under the Order. Small olive 
producers are defined by the Small Business Administration (SBA) as 
those having annual receipts less than $3,000,000(NAICS code 111339, 
Other Noncitrus Fruit Farming). The SBA threshold for producers changed 
after the publication of the proposed rule. Thus, AMS changed the 
producer threshold to reflect the new SBA threshold in this final rule. 
The change did not impact the number of producers considered to be 
small. Small agricultural service firms are defined as those whose 
annual receipts are less than $30,000,000 (13 CFR 121.201).
    Because of the large year-to-year variation in California olive 
production, it is helpful to use two-year averages of seasonal average 
grower price when undertaking calculations relating to average grower 
revenue. The National Agricultural Statistics Service (NASS) reported 
seasonal average grower prices of olives utilized for canning for 2019 
and 2020 of $1,040 and $1,060 per ton, respectively. The two-year 
average price is $1,050.
    The appropriate quantities to consider are the annual assessable 
olive quantities, which were 20,020 tons in 2020 and 43,336 tons in 
2021. The two-year average quantity was 31,678 tons. Multiplying 31,678 
tons by the two-year average grower price of $1,050 yields a two-year 
average crop value of $33.262 million. Dividing the crop value by the 
number of olive producers (800) yields calculated annual average 
producer revenue of $41,577, much less than SBA's size threshold of 
$3,000,000. Thus, the majority of olive producers may be classified as 
small entities.
    Dividing the $33.262 million crop value by two equals $16.631 
million, which is the annual average producer crop value processed by 
each of the two handlers over the two-year period. Dividing the $30 
million annual sales SBA size threshold for a large handler by the 
$16.631 crop value per handler yields an estimate of an 80 percent 
manufacturing margin for the two canners, on average, to be considered 
large handlers. A key question is whether 80 percent is a reasonable 
estimate of a manufacturing margin for the olive canning process.
    A review of economic literature on canned food manufacturing 
margins found no recent published estimates. A series of Economic 
Research Service reports on cost components of farm to retail price 
spreads, published in the late 1970s and early 1980s, found that 
margins above crop value for a canned vegetable product was in the 
range of 76 to 85 percent. Although the studies are not recent, a key 
observation is that canning technology has not changed significantly in 
that time period. Therefore, with the 80 percent margin estimate for 
the two olive handlers, the data indicates that they are right on the 
threshold of being large handlers ($30 million in annual sales), using 
two-year average data, and assuming that the two handlers are about the 
same size. In a large crop year, one or both handlers could be 
considered large handlers, depending on the proportion of the crop that 
each of the handlers processed.
    This rule decreases the assessment rate collected from handlers for 
the 2022 and subsequent fiscal years from $30.00 to $16.00 per ton of 
assessable olives. The Committee unanimously recommended 2022 
expenditures of $1,245,085 and an assessment rate of $16.00 per ton. 
The new assessment rate of $16.00 is $14.00 lower than the 2021 rate. 
The quantity of assessable olives harvested in the 2021 crop year was 
43,336 tons as compared to 20,020 tons in 2020. Olives are an 
alternate-bearing crop, with a small crop followed by a large crop. 
Income derived from the $16.00 per ton assessment rate, along with 
interest income, Federal grants, and funds from the authorized reserve, 
should be adequate to meet this fiscal year's budgeted expenditures.
    The Committee's financial reserve is projected to be $1,990,000. 
The major expenditures recommended by the Committee for the 2022 fiscal 
year include $538,700 for program

[[Page 50765]]

administration, $284,000 for marketing activities, $379,485 for 
research, and $42,900 for inspection. Budgeted expenses for these items 
during the 2021 fiscal year were $531,300, $238,000, $334,531, and 
$48,000, respectively. The Committee deliberated on many of the 
expenses, weighed the relative value of various programs or projects, 
and decreased their expenses for marketing and research activities 
while increasing program administration. Overall, the 2022 budget of 
$1,245,085 is $93,254 more than the $1,151,831 budgeted for the 2021 
fiscal year.
    Prior to arriving at this budget and assessment rate, the Committee 
considered information from various sources including the Committee's 
Executive, Marketing, Inspection, and Research Subcommittees. Alternate 
expenditure levels were discussed by these groups, based upon the 
relative value of various projects to the olive industry and the 
increased olive production. The assessment rate of $16.00 per ton of 
assessable olives was derived by considering anticipated expenses, the 
high volume of assessable olives, the current balance in the monetary 
reserve, and additional pertinent factors.
    A review of NASS information indicates that the average producer 
price for the 2020 crop year was $1,060 per ton and the quantity of 
assessable olives harvested in the 2021 crop year is 43,336 tons, which 
makes total producer revenue $45,936,160 ($1,060 multiplied by 43,336 
tons). Therefore, utilizing the assessment rate of $16.00 per ton, the 
assessment revenue for the 2022 fiscal year as a percentage of total 
producer revenue is expected to be approximately 1.5 percent ($16.00 
multiplied by 43,336 tons divided by $45,936,160 multiplied by 100).
    This action will decrease 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, decreasing the 
assessment rate reduces the burden on handlers and may also reduce the 
burden on producers.
    The Committee's meetings are widely publicized throughout the 
production area. The olive industry and all interested persons are 
invited to attend the meetings and participate in Committee 
deliberations on all issues. Like all Committee meetings, the November 
10, 2021, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. In addition, 
interested persons were invited to submit comments on this 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 as a result of this 
action are necessary. Should any changes become necessary, they would 
be submitted to OMB for approval.
    This rule does not impose any additional reporting or recordkeeping 
requirements on either small or large California olive 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 final rule.
    A proposed rule concerning this action was published in the Federal 
Register on April 14, 2022 (87 FR 22142). Copies of the proposed rule 
were also mailed or sent via email to all olive handlers. A copy of the 
proposed rule was made available through the internet by AMS and 
https://www.regulations.gov. A 60-day comment period ending June 13, 
2022, was provided for interested persons to respond to the proposal. 
No comments were received. Accordingly, no changes have been made to 
the rule as proposed.
    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.
    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 final rule is 
consistent with and will effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 932

    Marketing agreements, Olives, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, the Agricultural 
Marketing Service is amending 7 CFR part 932 as follows:

PART 932--OLIVES GROWN IN CALIFORNIA

0
1. The authority citation for part 932 continues to read as follows:

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

0
2. Section 932.230 is revised to read as follows:


Sec.  932.230  Assessment rate.

    On and after January 1, 2022, an assessment rate of $16.00 per ton 
is established for California olives.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2022-17759 Filed 8-17-22; 8:45 am]
BILLING CODE P