Olives Grown in California; Decreased Assessment Rate, 21441-21443 [2024-06482]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 89, Number 61 (Thursday, March 28, 2024)]
[Proposed Rules]
[Pages 21441-21443]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06482]


========================================================================
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.

========================================================================


Federal Register / Vol. 89, No. 61 / Thursday, March 28, 2024 / 
Proposed Rules

[[Page 21441]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 932

[Doc. No. AMS-SC-23-0087]


Olives Grown in California; Decreased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule would implement a recommendation from the 
California Olive Committee (Committee) to decrease the assessment rate 
established for the 2024 fiscal year and subsequent fiscal years. The 
proposed assessment rate would remain in effect indefinitely unless 
modified, suspended, or terminated.

DATES: Comments must be received by April 29, 2024.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk electronically by Email: [email protected] or 
internet: https://www.regulations.gov. Comments should reference the 
document number and the date and page number of this issue of the 
Federal Register and can be viewed at: https://www.regulations.gov. All 
comments submitted in response to this proposed 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: Jeremy Sasselli, Marketing Specialist, 
or Barry Broadbent, Acting Chief, West Region Branch, Market 
Development Division, Specialty Crops Program, AMS, USDA; Telephone: 
(559) 487-5901, 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) 720-8085, or Email: 
[email protected].

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 Marketing 
Agreement No. 148 and Order No. 932, both 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 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 proposed 
rule in conformance with Executive Orders 12866, 13563, and 14094. 
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. Executive 
Order 14094 directs agencies to conduct proactive outreach to engage 
interested and affected parties through a variety of means, such as 
through field offices, and alternative platforms and media. This action 
falls within a category of regulatory actions that the Office of 
Management and Budget (OMB) exempted from Executive Order 12866 review.
    This proposed rule has been reviewed under Executive Order 13175, 
Consultation and Coordination with Indian Tribal Governments, which 
requires agencies to consider whether their rulemaking actions would 
have tribal implications. AMS has determined that 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 
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 proposed 
assessment rate would be applicable to all assessable olives beginning 
on January 1, 2024, 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 U.S. 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 requesting 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.
    Section 932.38 of 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 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 proposed rule would decrease the assessment rate from $35 per 
ton of assessed olives, the rate that was

[[Page 21442]]

established for the 2023 fiscal year and subsequent fiscal years, to 
$28 per ton of assessed olives for the 2024 fiscal year and subsequent 
fiscal years. The proposed lower rate is the result of the 
significantly higher crop size in 2023 (fruit that is marketed over the 
course of the 2024 fiscal year), and the need to maintain the 
Committee's financial reserve at a responsible level.
    The Committee met on December 12, 2023, and unanimously recommended 
2024 expenditures of $1,100,151 and an assessment rate of $28 per ton 
of assessed olives. In comparison, last year's budgeted expenditures 
were $1,154,412. The proposed assessment rate of $28 is $7 lower than 
the rate currently in effect. Producer receipts show total production 
of approximately 34,000 tons of olives from the 2023 crop year that 
will be assessable during the 2024 fiscal year. This amount is 
substantially higher than the quantity of olives that was harvested in 
2022.
    Olives harvested in 2023 will be marketed over the course of the 
2024 fiscal year, which begins on January 1, 2024, as the harvested 
olives are stored in brining tanks and processed over the subsequent 
year. The 34,000 tons of assessable olives from the 2023 crop would 
generate $952,000 in assessment revenue over the 2024 fiscal year at 
the proposed assessment rate. The balance of funds needed to cover 
budgeted expenditures would come from interest income and the 
Committee's financial reserve. The 2024 fiscal year assessment rate 
decrease is appropriate to ensure the Committee has sufficient revenue 
to fund the recommended 2024 fiscal year budgeted expenditures while 
also ensuring that funds in the reserve do not exceed approximately one 
fiscal year's expenses, the maximum reserve amount 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 
(2022) followed by a large crop (2023). For this assessment rate 
proposed rule, the Committee utilized the estimated 2023 crop year 
receipts to determine the recommended assessment rate for the 2024 
fiscal year.
    The major expenditures recommended by the Committee for the 2024 
fiscal year include $350,250 for program administration, $164,650 for 
export programs, $197,500 for marketing activities, $302,751 for 
research, and $85,000 for inspection. Budgeted expenses for these items 
during the 2023 fiscal year were $399,700, $148,000, $193,000, 
$325,712, and $88,000, respectively.
    The assessment rate recommended by the Committee resulted from 
consideration of anticipated fiscal year expenses, estimated olive 
tonnage received by handlers during the 2023 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 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 this assessment rate would be in effect for an indefinite 
period, the Committee would 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 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 budget for subsequent 
fiscal 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), 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 800 producers of olives in the production 
area and 2 handlers subject to regulation under the Order. Small 
agricultural producers are defined by the Small Business Administration 
(SBA) as those having annual receipts equal to or less than $3.5 
million (NAICS code 111339, Other Noncitrus Fruit Farming) and small 
agricultural service firms are defined as those whose annual receipts 
are equal to or less than $34.0 million (NAICS code 115114, Postharvest 
Crop Activities) (13 CFR 121.201).
    Because of the large year-to-year variation in California olive 
production, it is helpful to use a two-year average of the seasonal 
average producer price when undertaking calculations relating to 
average producer revenue. The National Agricultural Statistics Service 
(NASS) reported season average producer prices of olives utilized for 
canning for 2021 and 2022 of $851 and $913 per ton, respectively, with 
a two-year average price of $882. NASS had not reported the 2023 season 
average producer price at the time this proposed rule was published.
    The appropriate quantities to consider are the annual assessable 
olive quantities, which were 43,336 tons in 2021 and 19,912 tons in 
2022, with the two-year average production being 31,624 tons. 
Multiplying 31,624 tons by the two-year average producer price of $882 
yields a two-year average crop value of $27,892,368. Dividing the crop 
value by the number of olive producers (800) yields calculated annual 
average producer revenue of $34,865, much less than SBA's size standard 
of $3.5 million. Thus, the majority of olive producers may be 
classified as small entities.
    Dividing the $27,892,368 average crop value by 2 (the number of 
handlers) equals $13,946,184, which is the annual average producer crop 
value processed by each of the 2 handlers over the two-year period. 
Dividing the $34.0 million annual sales SBA size threshold for a large 
handler by the $13,946,184 crop value per handler yields an estimate of 
a 125 percent manufacturing margin for the 2 handlers, on average, to 
be considered large handlers. A key question is whether 125 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 were in the 
range of 76 to 85 percent. Although the studies are not recent, canning 
technology has not changed significantly since that time period. 
Therefore, with the 125 percent margin estimate for the 2 olive 
handlers, the data indicates that they could be on the threshold of 
being large handlers

[[Page 21443]]

($34.0 million in annual sales), using two-year average data, and 
assuming that the 2 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 proposal would decrease the assessment rate collected from 
handlers for the 2024 fiscal year and subsequent fiscal years from $35 
to $28 per ton of assessable olives. The Committee unanimously 
recommended 2024 expenditures of $1,100,151 and an assessment rate of 
$28 per ton. The recommended assessment rate of $28 is $7 lower than 
the 2023 assessment rate. The quantity of assessable olives harvested 
in the 2023 crop year is estimated to be 34,000 tons, compared to 
19,912 tons in 2022. Olives are an alternate-bearing crop, with a small 
crop (2022) followed by a large crop (2023). Income derived from the 
$28 per ton assessment rate, along with interest income and funds from 
the authorized reserve, would be adequate to meet this fiscal year's 
budgeted expenditures.
    The major expenditures recommended by the Committee for the 2024 
fiscal year include $350,250 for program administration, $164,650 for 
export programs, $197,500 for marketing activities, $302,751 for 
research, and $85,000 for inspection. Budgeted expenses for these items 
during the 2023 fiscal year were $399,700, $148,000, $193,000, 
$325,712, and $88,000, respectively.
    The Committee deliberated on many of the expenses, weighed the 
relative value of various programs or projects, and decreased their 
expenses for inspection and research activities while increasing 
marketing activities. Overall, the 2024 budget of $1,100,151 is $54,261 
less than the $1,154,412 budgeted for the 2023 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 $28 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 information from NASS indicates that the average 
producer price for the 2022 crop year (the most recent year for which 
information is available) was $913 per ton. Therefore, utilizing the 
recommended assessment rate of $28 per ton, assessment revenue for the 
2024 fiscal year as a percentage of total producer revenue would be 
approximately 3.1 percent ($28 divided by $913 times 100).
    This proposed action would decrease the assessment obligation 
imposed on handlers. Assessments are applied uniformly on all handlers. 
Some of the assessment costs to handlers may be passed on to producers. 
Decreasing the assessment rate would reduce the burden on handlers and 
may also, therefore, 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 December 
12, 2023, meeting was a public meeting and all entities, both large and 
small, were able to express views on this issue. In addition, 
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 as a result of this 
action are necessary. 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 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 action.
    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, USDA 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 rule.

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 proposes to amend 7 CFR part 932 as follows:

PART 932--OLIVES GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR 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, 2024, an assessment rate of $28 per ton is 
established for California olives.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2024-06482 Filed 3-27-24; 8:45 am]
BILLING CODE P