Proposed Rule2023-12769
Olives Grown in California; Increased Assessment Rate
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
June 16, 2023
Issuing agencies
Agriculture DepartmentAgricultural Marketing Service
Abstract
This proposed rule would implement a recommendation from the California Olive Committee to increase the assessment rate established for the 2023 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 88 Issue 116 (Friday, June 16, 2023)</title>
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[Federal Register Volume 88, Number 116 (Friday, June 16, 2023)]
[Proposed Rules]
[Pages 39374-39377]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-12769]
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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. 88 , No. 116 / Friday, June 16, 2023 /
Proposed Rules
[[Page 39374]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 932
[Doc. No. AMS-SC-22-0094]
Olives Grown in California; Increased Assessment Rate
AGENCY: Agricultural Marketing Service, Department of Agriculture
(USDA).
ACTION: Proposed rule.
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SUMMARY: This proposed rule would implement a recommendation from the
California Olive Committee to increase the assessment rate established
for the 2023 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 July 17, 2023.
ADDRESSES: Interested persons are invited to submit written comments
concerning this proposed rule. Comments may be sent to the Docket
Clerk, Market Development Division, Specialty Crops Program, AMS, USDA,
1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237.
Comments may be sent to the Docket Clerk electronically by Email:
<a href="/cdn-cgi/l/email-protection#d895b9aab3bdacb1b6bf97aabcbdaa9bb7b5b5bdb6ac98adabbcb9f6bfb7ae"><span class="__cf_email__" data-cfemail="155874677e70617c7b725a67717067567a7878707b6155606671743b727a63">[email protected]</span></a> or internet: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Comments should reference the document number and
the date and page number of this issue of the Federal Register and can
be viewed at: <a href="https://www.regulations.gov">https://www.regulations.gov</a>. 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 Gary Olson, Chief, Western Region Branch, Market Development
Division, Specialty Crops Program, AMS, USDA; Telephone: (559) 487-5901
or Email: <a href="/cdn-cgi/l/email-protection#f1bb9483949c88dfa2908282949d9d98b184829590df969e87"><span class="__cf_email__" data-cfemail="c58fa0b7a0a8bceb96a4b6b6a0a9a9ac85b0b6a1a4eba2aab3">[email protected]</span></a> or <a href="/cdn-cgi/l/email-protection#ebac8a9992afc5a487988485ab9e988f8ac58c849d"><span class="__cf_email__" data-cfemail="b4f3d5c6cdf09afbd8c7dbdaf4c1c7d0d59ad3dbc2">[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) 720-8085, or Email:
<a href="/cdn-cgi/l/email-protection#8bd9e2e8e3eaf9efa5c7e4fceef9cbfef8efeaa5ece4fd"><span class="__cf_email__" data-cfemail="55073c363d3427317b193a22302715202631347b323a23">[email protected]</span></a>.
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
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 may have one public member.
The Agricultural Marketing Service (AMS) 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 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. 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, 2023, 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 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 can formulate an appropriate budget
and assessment rate. The assessment rate is formulated and discussed in
a public meeting and all directly affected persons have an opportunity
to participate and provide input.
This proposed rule would increase the assessment rate from $16 per
ton of assessed olives, the rate that was established for the 2022 and
subsequent fiscal years, to $35 per ton of assessed olives for the 2023
and subsequent fiscal years. The proposed higher rate is the
[[Page 39375]]
result of the significantly lower crop size in 2022 (fruit that is
marketed over the course of the 2023 fiscal year) and the need to
maintain the Committee's financial reserve.
The Committee met on December 13, 2022, and unanimously recommended
2023 fiscal year expenditures of $1,154,412 and an assessment rate of
$35 per ton of assessed olives. In comparison, last year's budgeted
expenditures were $1,245,085. The proposed assessment rate of $35 is
$19 higher than the rate currently in effect. Producer receipts show a
yield of 19,912 tons of assessable olives from the 2022 crop year,
which is substantially less than the quantity of olives harvested in
the 2021 crop year, in which 46,359 tons of assessable olives were
produced.
Olives harvested in 2022 will be marketed over the course of the
2023 fiscal year, which begins on January 1, 2023. The 19,912 tons of
assessable olives from the 2022 crop would generate $696,920 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 2023
fiscal year assessment rate increase would be appropriate to ensure the
Committee has sufficient revenue to fund the recommended 2023 fiscal
year budgeted expenditures. Funds in the reserve are expected to remain
within the Order's requirement of no more than approximately one fiscal
year's budgeted expenses.
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 large crop
(2021) followed by a small crop (2022). For this assessment rate
proposed rule, the actual 2022 crop year receipts are used to determine
the assessment rate for the 2023 fiscal year.
The major expenditures recommended by the Committee for the 2023
fiscal year include $547,700 for program administration, $193,000 for
marketing activities, $325,712 for research, and $88,000 for
inspection. Budgeted expenses for these items during the 2022 fiscal
year were $538,700, $284,000, $379,485, and $42,900, respectively.
The assessment rate recommended by the Committee resulted from
consideration of anticipated fiscal year expenses, actual olive tonnage
received by handlers during the 2022 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 rulemaking would
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 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 AMS.
Committee meetings are open to the public and interested persons may
express their views at these meetings. AMS 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 AMS.
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 of olives are defined by the Small Business
Administration (SBA) as those having annual olive receipts of 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 less than $34 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 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 2020
and 2021 of $1,060 and $1,110 per ton, respectively, with a two-year
average price of $1,085.
The appropriate quantities to consider are the annual assessable
olive quantities, which were 19,912 tons in 2022 and 43,336 tons in
2021, with two-year average production of 31,624 tons. Multiplying
31,624 tons by the two-year average grower price of $1,085 yields a
two-year average crop value of $34.312 million. Dividing the crop value
by the number of olive producers (800) yields calculated annual average
revenue per producer of $42,890, 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 $34.312 million average crop value by 2 (the number of
handlers) equals $17.156 million, which is the annual average olive
crop value processed by each of the 2 handlers over the two-year
period. Subtracting $17.156 million average crop value from the large
handler size threshold of $34 million yields a difference of $16.844
million. Dividing the $16.844 million difference by $17.156 average
crop value processed by each of the handlers yields an average
manufacturing margin of 98 percent to be considered large handlers. A
key question is whether 98 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. These margins are somewhat below the
computed margin estimate of 98 percent to reach the $34 million SBA
threshold to be a large, canned olive handler. Although the studies are
not recent, key observations are that canning technology has not
changed significantly in that time period, but canning costs may have
risen somewhat. Therefore, the conclusion to be drawn from these
computations is that the two handlers are slightly below the large
handler threshold of $34 million in annual canned olive sales, using
two-year average data, and assuming that the 2 handlers are about the
same size.
[[Page 39376]]
In a large crop year, one or both handlers could be considered
large handlers, depending on the proportion of the olive crop that each
of the handlers processed. For example, the 2021 quantity of assessable
olives was 43,336 tons, and half of that quantity was 21,668 tons.
Multiplying that tonnage by the average grower price of $1,085 per ton
yields a crop value per handler estimate of $23.51 million. To reach
the $34 million size threshold would mean canning costs of at least
$10.49 million, which would be a manufacturing margin of 45 percent
($10.49/$23.51)--well below the range of canning margins shown above.
The contrasting examples presented here show that in terms of
canned olive sales, the processors can be viewed as either being above
or below the SBA large handler size threshold, depending on the
assumptions used in alternative calculations.
This proposal would increase the assessment rate collected from
handlers for the 2023 and subsequent fiscal years from $16 to $35 per
ton of assessable olives. The Committee unanimously recommended 2023
expenditures of $1,154,412 and an assessment rate of $35 per ton. The
recommended assessment rate of $35 is $19 higher than the 2022 rate.
The quantity of assessable olives harvested in the 2022 crop year was
19,912 tons, as compared to 46,359 tons in 2021. Olives are an
alternate-bearing crop, with a large crop (2021) followed by a small
crop (2022). Income derived from the $35 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 sufficient to
partially fund 2023 fiscal year budgeted expenditures and remain within
the requirements of Sec. 932.40(a)(2) of the Order. The major
expenditures recommended by the Committee for the 2023 fiscal year
include $547,700 for program administration, $193,000 for marketing
activities, $325,712 for research, and $88,000 for inspection. Budgeted
expenses for these items during the 2022 fiscal year were $538,700,
$284,000, $379,485, and $42,900 respectively. The Committee deliberated
on many of the expenses, weighed the relative value of various programs
or projects, and decreased the budgeted expenses for research and
marketing activities, while increasing the budget for administration
and inspection program costs. Overall, the 2023 fiscal year budget of
$1,154,412 is $90,673 less than the $1,245,085 budgeted for the 2022
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
decreased olive production. The assessment rate of $35 per ton of
assessable olives was derived by considering anticipated expenses, the
relatively low 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 2021 crop year, the most recent crop year surveyed by
NASS, was $851 per ton. The quantity of assessable olives harvested
during the 2022 crop year was 19,912 tons, which makes estimated total
producer revenue $16,945,112 ($851 multiplied by 19,912 tons).
Therefore, utilizing the assessment rate of $35 per ton, the assessment
revenue for the 2023 fiscal year as a percentage of estimated total
producer revenue is expected to be approximately 4.1 percent ($35
multiplied by 19,912 tons divided by $16,945,112 multiplied by 100).
This proposed action would increase 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, these
costs would be offset by the benefits derived by the operation of the
Order.
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
13, 2022, 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.
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 will effectuate the purposes of the Act.
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.
AMS 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:
<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. 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 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:
[[Page 39377]]
Sec. 932.230 Assessment rate.
On and after January 1, 2023, an assessment rate of $35 per ton is
established for California olives.
Erin Morris,
Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2023-12769 Filed 6-15-23; 8:45 am]
BILLING CODE P
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