Olives Grown in California; Decreased Assessment Rate, 57061-57064 [2024-15247]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 89, Number 134 (Friday, July 12, 2024)]
[Rules and Regulations]
[Pages 57061-57064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15247]


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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: Final rule.

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SUMMARY: This action decreases the assessment rate established for the 
2024 fiscal year and subsequent fiscal years for California olives as 
recommended by the California Olive Committee. The assessment rate will 
remain in effect indefinitely unless modified, suspended, or 
terminated.

DATES: Effective August 12, 2024.

FOR FURTHER INFORMATION CONTACT: Jeremy Sasselli, Marketing Specialist, 
or Barry Broadbent, 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, 
amends regulations issued to carry out a marketing order as defined in 
7 CFR 900.2(j). This 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.

[[Page 57062]]

    The Agricultural Marketing Service (AMS) is issuing this 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 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 this rule 
establishes will 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 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 able 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 $35 per ton of 
assessed olives, the rate that was 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 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 assessment rate of $28 set for the remainder of 
the 2024 fiscal year and subsequent fiscal years is $7 lower than the 
rate established for the 2023 fiscal year. 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. At the $28 per ton assessment rate, the estimated 34,000 tons of 
assessable olives from the 2023 crop are expected to generate $952,000 
in assessment revenue over the 2024 fiscal year. The balance of funds 
needed to cover budgeted expenditures will 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 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 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

[[Page 57063]]

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 
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 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. 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 
($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 action decreases 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, should be adequate to meet the 2024 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 
assessment rate established herein 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 action decreases 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 is expected to reduce the burden on 
handlers and may also, therefore, reduce the burden on producers.
    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 will 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

[[Page 57064]]

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 action.
    A proposed rulemaking concerning this action was published in the 
Federal Register on March 28, 2024 (89 FR 21441). Copies of the 
proposed rulemaking were provided to all olive handlers. In addition, 
the proposal was made available through the internet by AMS and the 
Office of the Federal Register. A 30-day comment period ending April 
29, 2024, was provided for interested persons to respond to the 
proposal. There were no comments received during the comment period. 
Accordingly, no changes will be made to the rulemaking 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 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 amends 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, 2024, an assessment rate of $28 per ton is 
established for California olives.

Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2024-15247 Filed 7-11-24; 8:45 am]
BILLING CODE 3410-02-P