[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 [www.gpo.gov]
[FR Doc No: 2022-07992]


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 Proposed Rules
                                                 Federal Register
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 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: [email protected] or via 
the internet at: https://www.regulations.gov. 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: https://www.regulations.gov. 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: [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 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: 
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 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