Proposed Rule2022-07992
Olives Grown in California; Decreased Assessment Rate
Primary source
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Published
April 14, 2022
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
This proposed rule would implement a recommendation from the California Olive Committee (Committee) to decrease the assessment rate established for the 2022 fiscal year and subsequent fiscal years. The proposed assessment rate would remain in effect indefinitely unless modified, suspended, or terminated.
Full Text
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<title>Federal Register, Volume 87 Issue 72 (Thursday, April 14, 2022)</title>
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[Federal Register Volume 87, Number 72 (Thursday, April 14, 2022)]
[Proposed Rules]
[Pages 22142-22144]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-07992]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 72 / Thursday, April 14, 2022 /
Proposed Rules
[[Page 22142]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 932
[Doc. No. AMS-SC-21-0099; SC22-932-1 PR]
Olives Grown in California; Decreased Assessment Rate
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement a recommendation from the
California Olive Committee (Committee) to decrease the assessment rate
established for the 2022 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 June 13, 2022.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rule. Comments must be sent to the Docket
Clerk electronically by Email: <a href="/cdn-cgi/l/email-protection#3875594a535d4c51565f774a5c5d4a7b5755555d564c784d4b5c59165f574e"><span class="__cf_email__" data-cfemail="fab79b88919f8e93949db5889e9f88b99597979f948eba8f899e9bd49d958c">[email protected]</span></a> or via
the internet at: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. All comments should
reference the document number and the date and page number of this
issue of the Federal Register. All comments submitted in response to
this proposed rule will be included in the record and will be made
available to the public and can be viewed at: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. 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: Kathie Notoro, Marketing Specialist,
or Gary Olson, Regional Director, West Region Marketing Field Office,
Market Development Division, Specialty Crops Program, AMS, USDA;
Telephone: (559) 538-1672, or Email: <a href="/cdn-cgi/l/email-protection#1a517b6e72737f3454756e7568755a6f697e7b347d756c"><span class="__cf_email__" data-cfemail="b2f9d3c6dadbd79cfcddc6ddc0ddf2c7c1d6d39cd5ddc4">[email protected]</span></a> or
<a href="/cdn-cgi/l/email-protection#f1b6908388b5dfbe9d829e9fb184829590df969e87"><span class="__cf_email__" data-cfemail="f0b7918289b4debf9c839f9eb085839491de979f86">[email protected]</span></a>.
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:
<a href="/cdn-cgi/l/email-protection#99cbf0faf1f8ebfdb7d5f6eefcebd9eceafdf8b7fef6ef"><span class="__cf_email__" data-cfemail="5f0d363c373e2d3b711330283a2d1f2a2c3b3e71383029">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: This proposed 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 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 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 Department of Agriculture (USDA) is issuing this proposed 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 proposed 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. Agricultural Marketing Service (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 assessment rate
would 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 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 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 $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 proposed lower rate is the
result of the
[[Page 22143]]
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 proposed assessment rate of $16.00 is $14.00 lower than
the rate currently 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, 2022. The 43,336 tons of
assessable olives from the 2021 crop would generate $693,376 in
assessment revenue at the proposed assessment rate. The balance of
funds needed to cover budgeted expenditures would come from interest
income, Federal grants, and the Committee's financial reserve. The 2022
fiscal year assessment rate decrease would be 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 would 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 proposed 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 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 less than $1,000,000, and 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
season 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 standard of
$1,000,000. 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 USDA, 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 would 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 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
[[Page 22144]]
assessment rate of $16.00 per ton. The recommended assessment rate of
$16.00 is $14.00 lower than the 2021 rate. The quantity of assessable
olives harvested in the 2021 crop year is 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 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 would be approximately 1.5 percent ($16.00 multiplied
by 43,336 tons divided by $45,936,160 multiplied by 100).
This proposed action would 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 would reduce 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 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 proposed rule.
A small business guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders may be viewed at:
<a href="https://www.ams.usda.gov/rules-regulations/moa/small-businesses">https://www.ams.usda.gov/rules-regulations/moa/small-businesses</a>. 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 will effectuate the purposes of the Act.
A 60-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
proposed 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, 2022, an assessment rate of $16.00 per ton
is established for California olives.
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2022-07992 Filed 4-13-22; 8:45 am]
BILLING CODE 3410-02-P
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