E6-9724. Olives Grown in California; Decreased Assessment Rate

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

The Department of Agriculture (USDA) is adopting, as a final rule, without change, an interim final rule that decreased the assessment rate established for the California Olive Committee (committee) for the 2006 and subsequent fiscal years from $15.68 to $11.03 per assessable ton of olives handled. The committee locally administers the marketing order that regulates the handling of olives grown in California. Assessments upon olive handlers are used by the committee to fund reasonable and necessary expenses of the program. The fiscal year began January 1 and ends December 31. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.

DATES:

Effective Date: July 21, 2006.

FOR FURTHER INFORMATION CONTACT:

Laurel May, Marketing Specialist, or Kurt Kimmel, Regional Manager, California Marketing Field Office, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street, Suite 102B, Fresno, CA 93721; Telephone: [phone], Fax: [phone].

Small businesses may request information on complying with this regulation by contacting Jay Guerber, Marketing Order Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; Telephone: [phone], Fax: [phone], or E-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

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, hereinafter referred to as the “order.” 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.”

USDA is issuing this rule in conformance with Executive Order 12866.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the marketing 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 as issued herein will be effective beginning on January 1, 2006, apply to all assessable olives from the current crop year, and will continue until amended, suspended, or terminated. This rule will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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.

This rule continues in effect the action that decreased the assessment rate established for the committee for the 2005 and subsequent fiscal years from $15.68 to $11.03 per ton of assessable olives from the applicable crop years.

The California olive marketing 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 fiscal year, which is the 12-month period between January 1 and December 31, begins after the corresponding crop year, which is the 12-month period beginning August 1 and ending July 31 of the subsequent year. Fiscal year budget and assessment recommendations are made after the corresponding crop year olive tonnage is reported. The members of the committee are producers and handlers of California olives. They are familiar with the committee's needs and with costs for 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 discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

For the 2005 and subsequent fiscal years, the committee recommended, and USDA approved, an assessment rate that would continue in effect from fiscal year to fiscal year unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the committee or other information available to USDA.

The committee met on December 13, 2005, and made recommendations regarding their fiscal year 2006 expenditures and assessment rate. Subsequently, the committee revised its budget recommendation because it anticipated higher administrative expenses than it had originally estimated. In a mail vote completed on January 27, 2006, the committee unanimously recommended 2006 fiscal year expenditures of $1,301,121 and an assessment rate of $11.03 per ton of assessable olives. In comparison, the budgeted expenditures for fiscal year 2005 were $1,217,014. The assessment rate of $11.03 is $4.65 lower than the rate previously in effect.

The major expenditures recommended by the committee for the 2006 fiscal year include $800,700 for marketing activities, $290,421 for administration, and $210,000 for research. Budgeted expenditures for these items in 2005 were $680,000, $337,014, and $200,000, respectively.

The assessment rate recommended by the committee was derived by considering anticipated fiscal year expenses, actual olive tonnage received by handlers during the 2005-06 crop year, and additional pertinent factors. The California Agricultural Statistics Service (CASS) reported assessable olive receipts for the 2005-06 crop year at 114,761 tons, compared to 85,862 tons for the 2004-05 crop year. The increased production of assessable olives for the 2005-06 crop year is due in part to the alternate-bearing nature of olives, with heavy production in one year followed by light production the next. Although the committee's budgeted expenses for fiscal year 2006 are higher than those for 2005, the increased production would yield increased total assessment funds, even at the lower rate, covering the increased expenditures. Additionally, actual administrative expenditures in 2005 were less than the amount budgeted, enabling the committee to carry excess funds into the 2006 fiscal year and offset the assessments needed to cover budgeted expenses.

Income derived from handler assessments, along with interest income and funds from the committee's authorized reserve, will be adequate to cover budgeted expenses. Funds in the reserve will be kept within the maximum permitted by the order of approximately one fiscal year's expenses (7 CFR 932.40).

The assessable tonnage for the 2006 fiscal year is expected to be slightly less than the 2005-06 crop receipts of 114,761 tons reported by CASS because some olives may be diverted by handlers to uses that are exempt from marketing order requirements.

The assessment rate will 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 is effective 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 USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The committee's 2006 budget and those for subsequent fiscal years will be reviewed and, as appropriate, approved by USDA.

Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA), the Agricultural Marketing Service (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 business 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. Thus, both statutes have small entity orientation and compatibility.

There are approximately 850 producers of olives in the production area. Small agricultural producers are defined by the Small Business Administration (13 CFR 121.201) as those having annual receipts less than $750,000. Based upon information from the committee, the majority of olive producers may be classified as small entities.

There are two handlers subject to regulation under the marketing order. At the time the interim final rule was published, the definition of small agricultural service firms included those whose annual receipts were less than $6,000,000, and both handlers were classified as large entities. Subsequently, the definition of small agricultural service firms was changed to include those whose annual receipts are less than $6,500,000. Based upon information from the committee, both handlers may be classified as large entities.

This rule continues in effect the action that decreased the assessment rate established for the committee and collected from handlers for the 2006 and subsequent fiscal years from $15.68 to $11.03 per ton of assessable olives. The committee unanimously recommended 2006 expenditures of $1,301,121 and an assessment rate of $11.03 per ton. The assessment rate is $4.65 lower than the rate previously in effect.

The quantity of assessable olive receipts for the 2005-06 crop year was reported by CASS to be 114,761 tons, but the actual assessable tonnage for the 2006 fiscal year is expected to be slightly lower. This is because some of the receipts are expected to be diverted by handlers to exempt outlets on which assessments are not paid.

The $11.03 per ton assessment rate should be adequate to meet this year's expenses when combined with funds from the authorized reserve and interest income. Funds in the reserve will be kept within the maximum permitted by the order of about one fiscal year's expenses (7 CFR 932.40).

Expenditures recommended by the committee for the 2006 fiscal year include $800,700 for marketing development, $290,421 for administration, and $210,000 for research. Budgeted expenses for these items in 2005 were $680,000, $337,014, and $200,000, respectively.

Assessable olive receipts for the 2005-06 crop year were 114,761 tons, compared to 85,862 tons for the 2004-05 crop year. The increased production of assessable olives will yield increased assessment funds, even at the lower rate. These funds, along with unused assessments from the 2005 fiscal year that have been carried into 2006, and interest income, are adequate to cover the increased expenditures.

The committee reviewed and unanimously recommended 2006 expenditures of $1,301,121. This reflects increases in the committee's research and market development budgets and a decrease in the administrative budget compared to the previous year's budget. The committee recommended a larger research budget intended to further the study of olive fly management and development of a mechanical olive harvesting method. The 2006 marketing program recommendation includes participation in media activities in conjunction with the release of a new diet plan book; translation of some of the committee's education and nutrition materials into Spanish; and continuation of several outreach activities including cookbook contributions, Web site development, and educational programs for school children. Recommended decreases in the administrative budget are due mainly to personnel changes in the committee's staff.

Prior to arriving at this budget, the committee considered information from various sources, such as the committee's Executive, Market Development, and Research Subcommittees. Alternate spending levels were discussed by these groups, based upon the relative value of various research and marketing projects to the olive industry and the anticipated olive production. The assessment rate of $11.03 per ton of assessable olives was derived by considering anticipated expenses, the volume of assessable olives, and additional pertinent factors.

A review of historical and preliminary information pertaining to the upcoming fiscal year indicates that the grower price for the 2005-06 crop year is estimated to be approximately $714 per ton for canning fruit and $314 per ton for limited-use sizes, leaving the balance as unusable cull fruit. Approximately 76 percent of a ton of olives are canning fruit sizes and 17 percent are limited use sizes, leaving the balance as unusable cull fruit. Total grower revenue on 114,761 tons would then be $73,485,966, given the percentage of canning and limited-use sizes and current grower prices for those sizes. Therefore, with an assessment rate decreased from $15.68 to $11.03, the estimated assessment revenue is expected to be approximately 1.72 percent of grower revenue.

This action continues in effect the action that decreased 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 reduces the burden on handlers, and may reduce the burden on producers. In addition, the committee's meeting was widely publicized throughout the California olive industry and all interested persons were invited to attend the meeting and participate in committee deliberations on all issues. Like all committee meetings, the December 13, 2005, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

This action imposes no 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 compliance with the Government Paperwork Elimination Act (GPEA), which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this rule.

An interim final rule concerning this action was published in the Federal Register on March 13, 2006 (71 FR 12614). Copies of the rule were faxed to both olive handlers. Finally, the interim rule was made available through the Internet by USDA and the Office of the Federal Register. A 60-day comment period was provided for interested persons to respond to the interim final rule. The comment period ended on May 12, 2006, and no comments were received.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/​fv/​moab/​html. Any questions about the compliance guide should be sent to Jay Guerber at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

After consideration of all relevant material presented, including the information and recommendation submitted by the committee and other available information, it is herby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 932

• Marketing agreements
• Olives
• Reporting and recordkeeping requirements

PART 932—OLIVES GROWN IN CALIFORNIA

Accordingly, the interim final rule amending 7 CFR part 932 that was published at 71 FR 12614 on March 13, 2006, is adopted as a final rule without change.

Dated: June 15, 2006.

Lloyd C. Day,

Administrator, Agricultural Marketing Service.