Olives Grown in California; Increased Assessment Rate

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 932

[Docket No. FV99-932-1 PR]

Olives Grown in California; Increased Assessment Rate

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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SUMMARY: This rule would increase the assessment rate from $17.10 to

$26.18 per ton of olives established for the California Olive Committee

(Committee) under Marketing Order No. 932 for the 1999 and subsequent

fiscal years. The Committee is responsible for local administration of

the marketing order which regulates the handling of olives grown in

California. Authorization to assess olive handlers enables the

Committee to incur expenses that are reasonable and necessary to

administer the program. The fiscal year began January 1 and ends

December 31. The assessment rate would remain in effect indefinitely

unless modified, suspended, or terminated.

DATES: Comments must be received by March 1, 1999.

ADDRESSES: Interested persons are invited to submit written comments

concerning this rule. Comments must be sent to the Docket Clerk, Fruit

and Vegetable Programs, AMS, USDA, room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; Fax: (202) 720-5698; or E-mail:

[email protected]. Comments should reference the docket number

and the date and page number of this issue of the Federal Register and

will be available for public inspection in the Office of the Docket

Clerk during regular business hours.

FOR FURTHER INFORMATION CONTACT: Diane Purvis, Marketing Assistant, and

Mary Kate Nelson, Marketing Specialist, California Marketing Field

Office, Fruit and Vegetable Programs, AMS, USDA, 2202 Monterey Street,

Suite 102B, Fresno, California 93721; telephone: (209) 487-5901; Fax:

(209) 487-5906; or George Kelhart, Technical Advisor, Marketing Order

Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room

2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202)

720-2491, Fax: (202) 720-5698. Small businesses may request information

on compliance with this regulation, or obtain a guide on complying with

fruit, vegetable, and specialty crop marketing agreements and orders by

contacting Jay Guerber,

[[Page 4351]]

Marketing Order Administration Branch, Fruit and Vegetable Programs,

AMS, USDA, room 2525-S, P.O. Box 96456, Washington, DC 20090-6456;

telephone: (202) 720-2491, Fax: (202) 720-5698, or E-mail:

Jay__N__G[email protected]. You may view the marketing agreement and

order small business compliance guide at the following web site: http:/

/www.ams.usda.gov/fv/moab.html.

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 marketing agreement and order are

effective under the Agricultural Marketing Agreement Act of 1937, as

amended (7 U.S.C. 601-674), hereinafter referred to as the ``Act.''

The Department of Agriculture (Department) 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 applicable to all assessable

olives beginning on January 1, 1999, and 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 the Secretary 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 the Secretary 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 the

Secretary'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 would increase the assessment rate established for the

Committee for the 1999 and subsequent fiscal years from $17.10 per ton

to $26.18 per ton of olives.

The California olive marketing order provides authority for the

Committee, with the approval of the Department, to formulate an annual

budget of expenses and collect assessments from handlers to administer

the program. The members of the Committee are producers and handlers of

California olives. They are familiar with the Committee's needs and

with the 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 formulated and discussed in a public meeting.

Thus, all directly affected persons have an opportunity to participate

and provide input.

For the 1998 and subsequent fiscal years, the Committee

recommended, and the Department approved, an assessment rate that would

continue in effect from fiscal year to fiscal year unless modified,

suspended, or terminated by the Secretary upon recommendation and

information submitted by the Committee or other information available

to the Secretary.

The Committee met on December 10, 1998, and unanimously recommended

1999 expenditures of $1,845,185 and an assessment rate of $26.18 per

ton of olives. In comparison, last year's budgeted expenditures were

$1,750,000. The assessment rate of $26.18 is $9.08 higher than the rate

currently in effect. A higher assessment rate is needed because:

(1) Assessable tonnage is down for the second year in a row due in

large part this crop year to adverse conditions created by the weather

phenomenon El Nino. Assessable tonnage in 1996 totaled 144,075 tons, in

1997 it totaled 85,585 tons, and in 1998 the assessable tonnage totaled

67,990 tons; and

(2) Rather than reduce 1999 expenditures, the Committee determined

that more funds are needed to continue the development of an improved

mechanical olive harvester that can efficiently harvest most orchard

configurations. The California olive industry recognized that it needs

to make cutting harvesting costs a top priority if it is to remain

competitive with imports. Consequently, after considerable discussion,

the Committee recommended increasing the $52,000 1999 Research Fund

initially suggested by Committee members by an additional $250,000. The

additional $250,000 is to be used specifically for the purpose of

further development of a mechanical harvester that can be more

effectively utilized by growers throughout the California olive

industry while at the same time reducing harvesting costs.

The following table compares major budget expenditure

recommendations for the 1999 fiscal year with those from last year:

------------------------------------------------------------------------

Budget expenditure 1998 1999

------------------------------------------------------------------------

Administration................................ $357,900 $346,485

Research...................................... 50,000 302,000

Market Development............................ 1,308,500 1,190,500

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The assessment rate recommended by the Committee was derived by

considering anticipated expenses, actual receipts of olives, and

additional pertinent factors. The quantity of assessable olives for the

1999 fiscal year is 67,990 tons which should provide $1,779,978 in

assessment income. Income derived from handler assessments, interest,

and carryover of reserve funds would be adequate to cover budgeted

expenses. Funds in the reserve (currently $316,409) would be kept

within the maximum permitted by the order (approximately one fiscal

year's expenses, Sec. 932.40).

The proposed assessment rate would continue in effect indefinitely

unless modified, suspended, or terminated by the Secretary 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 the

Department. Committee meetings are open to the public and interested

persons may express their views at these meetings. The Department 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

1999 budget and those for subsequent fiscal years would be reviewed

and, as appropriate, approved by the Department.

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 initial 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.

[[Page 4352]]

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 1,200 producers of olives in the production

area and 3 handlers subject to regulation under the marketing order.

Small agricultural producers have been defined by the Small Business

Administration (13 CFR 121.601) as those having annual receipts less

than $500,000, and small agricultural service firms are defined as

those whose annual receipts are less than $5,000,000. None of the olive

handlers may be classified as small entities, while the majority of

olive producers may be classified as small entities.

This rule would increase the assessment rate established for the

Committee and collected from handlers for the 1999 and subsequent

fiscal years from $17.10 per ton to $26.18 per ton of olives. The

Committee recommended 1999 expenditures of $1,845,185 and an assessment

rate of $26.18 per ton. The proposed assessment rate of $26.18 is $9.08

higher than the 1998 rate. The quantity of assessable olives for the

1999 fiscal year is 67,990 tons. Thus, the $26.18 rate should provide

$1,779,978 in assessment income and be adequate to meet this year's

budgeted expenses, when combined with funds from the authorized reserve

and interest income.

The following table compares major budget expenditure

recommendations for the 1999 fiscal year with those from last year:

------------------------------------------------------------------------

Budget expenditure 1998 1999

------------------------------------------------------------------------

Administration................................ $357,900 $346,485

Research...................................... 50,000 302,000

Market Development............................ 1,308,500 1,190,500

------------------------------------------------------------------------

A higher assessment rate is needed for 1999 because:

(1) Assessable tonnage is down for the second year in a row due in

large part this crop year to adverse conditions created by the weather

phenomenon El Nino. Assessable tonnage in 1996 totaled 144,075 tons, in

1997 it totaled 85,585 tons, and in 1998 the assessable tonnage totaled

67,990 tons; and

(2) Rather than reduce 1999 expenditures, the Committee determined

that more funds are needed to continue the development of an improved

mechanical olive harvester that can efficiently harvest most orchard

configurations. The California olive industry recognized that it needs

to make cutting harvesting costs a top priority if it is to remain

competitive with imports. Consequently, after considerable discussion,

the Committee recommended increasing the $52,000 1999 Research Fund

initially suggested by Committee members by an additional $250,000. The

additional $250,000 is to be used specifically for the purpose of

further development of a mechanical harvester that can be more

effectively utilized by growers throughout the California olive

industry while at the same time reducing harvesting costs.

The Committee reviewed and unanimously recommended 1999

expenditures of $1,845,185 which included the $250,000 increase in

Research for further development of an improved mechanical olive

harvester. To finance this additional research allotment, the Committee

considered reducing the Market Development budget item by amounts

ranging from $100,000 to $309,530. The prevailing opinion was that the

money allocated for 1999 Market Development recommended by the

Marketing Subcommittee remain the same ($1,190,500) as initially

suggested, which is $118,000 less than budgeted for 1998. The Committee

members believed that the Administrative Budget had already been

reduced as low as possible ($11,415 less than for 1998). The only other

alternative was to increase the assessment rate. The assessment rate of

$26.18 per ton of assessable olives was then derived by considering

anticipated expenses, actual receipts of olives, and additional

pertinent factors.

Based on a review of historical and preliminary marketing and price

information, grower revenue for the 1998-99 crop year (August 1 through

July 31) is estimated to be approximately $39,500,000. Therefore, the

estimated assessment revenue of $1,779,978 for the 1999 fiscal year

will be approximately 4.5 percent of grower revenue.

This action would increase the assessment obligation imposed on

handlers. While assessments impose some additional costs on handlers,

the costs are minimal and uniform on all handlers. Some of the

additional costs may be passed on to producers. However, these costs

would be offset by the benefits derived by the operation of the

marketing order. 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

10, 1998, meeting was a public meeting and all entities, both large and

small, were able to express views on this issue. Finally, interested

persons are invited to submit information on the regulatory and

informational impacts of this action on small businesses.

This proposed rule would impose no additional reporting or

recordkeeping requirements on 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.

The Department has not identified any relevant Federal rules that

duplicate, overlap, or conflict with this rule.

A 30-day comment period is provided to allow interested persons to

respond to this proposed rule. Thirty days is deemed appropriate

because: (1) The Committee needs to have sufficient funds to pay its

expenses which are incurred on a continuous basis; (2) the 1999 fiscal

year began on January 1, 1999, and the order requires that the rate of

assessment for each fiscal year apply to all assessable olives handled

during such fiscal year; (3) all three handlers are represented on the

Committee and participated in deliberations, (4) and all handlers are

aware of this action which was unanimously recommended by the Committee

at a public meeting and is similar to other assessment rate actions

issued in past years.

List of Subjects in 7 CFR Part 932

Marketing agreements, Olives, Reporting and recordkeeping

requirements.

For the reasons set forth in the preamble, 7 CFR part 932 is

proposed to be amended as follows:

PART 932--OLIVES GROWN IN CALIFORNIA

1. The authority citation for 7 CFR part 932 continues to read as

follows:

Authority: 7 U.S.C. 601-674.

2. Section 932.230 is proposed to be revised to read as follows:

Sec. 932.230 Assessment rate.

On and after January 1, 1999, an assessment rate of $26.18 per ton

is established for California olives.

Dated: January 22, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-1969 Filed 1-27-99; 8:45 am]

BILLING CODE 3410-02-P