[Federal Register Volume 61, Number 151 (Monday, August 5, 1996)]
[Rules and Regulations]
[Pages 40507-40510]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-19855]


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DEPARTMENT OF AGRICULTURE
7 CFR Parts 932 and 944

[Docket No. FV96-932-3IFR]


Olives Grown in California and Imported Olives; Establishment of 
Limited-Use Style Olive Grade and Size Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This interim final rule authorizes the use of smaller olives 
in the production of limited-use styles for California olives. This 
rule is intended to help the California olive industry meet the 
increasing market needs for limited-use style olives by allowing more 
olives into market channels. It is expected that such increased use of 
olives will increase returns to growers.

[[Page 40508]]

As required under section 8e of the Agricultural Marketing Agreement 
Act of 1937, this rule also changes the import regulation so that it 
conforms with the requirements established under the California olive 
marketing order.

DATES: Effective August 8, 1996; comments received by September 4, 1996 
will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this rule. Comments must be sent in triplicate to the Docket 
Clerk, Fruit and Vegetable Division, AMS, USDA, Room 2525-S, P.O. Box 
96456, Washington, DC 20090-6456, or by facsimile at 202-720-5698. All 
comments should reference the docket number and the date and page 
number of this issue of the Federal Register and will be made available 
for public inspection in the Office of the Docket Clerk during regular 
business hours.

FOR FURTHER INFORMATION CONTACT: Terry Vawter, California Marketing 
Field Office, Fruit and Vegetable Division, AMS, USDA, 2202 Monterey 
Street, Suite 102-B, Fresno, CA 93721, telephone (209) 487-5901; or 
Caroline C. Thorpe, Marketing Order Administration Branch, Fruit and 
Vegetable Division, AMS, USDA, P.O. Box 96456, Room 2523-S, Washington, 
D.C. 20090-6456; telephone (202) 720-5127. Small businesses may request 
information on compliance with this regulation by contacting: Jay 
Guerber, Marketing Order Administration Branch, Fruit and Vegetable 
Division, AMS, USDA, P.O. Box 96456, Room 2523-S, Washington, D.C. 
20090-6456; telephone: (202) 720-2491, Fax: (202) 720-5698.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement No. 148 and Order No. 932 (7 CFR Part 932), as amended, 
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.
    This rule is also issued under section 8e of the Act, which 
requires the Secretary of Agriculture to issue grade, size, quality, or 
maturity requirements for certain listed commodities, including olives, 
imported into the United States that are the same as, or comparable to, 
those imposed upon the domestic commodities regulated under the Federal 
marketing orders.
    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. This rule is not intended to have retroactive effect. 
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 608(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 requesting a modification of the order or to be exempted 
therefrom. A 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 date of the entry of the ruling.
    There are no administrative procedures which must be exhausted 
prior to any judicial challenge to the provisions of import regulations 
issued under section 8e of the Act.
    Pursuant to the requirements set forth in the Regulatory 
Flexibility Act (RFA), the AMS has considered the economic impact of 
this action on small entities. 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 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. Import 
regulations issued under the Act are based on those established under 
Federal marketing orders.
    There are 5 handlers of California olives who are subject to 
regulation under the order during the current season, and there are 
about 1,200 olive producers in California. There are approximately 25 
importers of olives subject to the olive import regulation. Small 
agricultural producers have been defined by the Small Business 
Administration (913 CFR Sec. 121.601) as those whose annual receipts 
are less than $500,000; and small agricultural service firms, which 
includes handlers and importers, have been defined by the Small 
Business Administration as those having annual receipts of less than 
$5,000,000. None of the domestic olive handlers may be classified as 
small entities. The majority of olive producers and importers may be 
classified as small entities.
    This rule provides that smaller olives may be used in the 
production of limited-use styles (sliced, wedged, halved, or chopped) 
and will assist the California olive industry as well as importers meet 
increasing market needs for such olives. Annual domestic shipment data 
for olives indicates that for the last 5 seasons (1991 to 1995), 
limited use style shipments ranged from 35 percent to 41 percent of 
total annual domestic shipments. Absent this rule, many smaller 
California olives would have to be disposed of in less profitable, non-
canning uses, and the smaller olives from other countries could not be 
imported into the United States. Both the California olive industry and 
olive importers should, thus, benefit from the issuance of this rule.
    Based on these considerations, the AMS has determined that this 
action will not have a significant economic impact on a substantial 
number of small entities. Interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    Nearly all of the olives grown in the United States are produced in 
California. California olives are used for canned black ripe whole and 
whole pitted olives which are eaten out of hand as hors d'oeuvres or 
sliced, wedged, halved, or chopped styles used as an ingredient in 
cooking and in salads. The canned ripe olive market is essentially a 
domestic market. A few shipments of California olives are exported.
    Olive production has fluctuated from a low of 24,200 tons during 
the 1972-73 crop year to a high of 163,023 tons during the 1992-93 crop 
year. The California Olive Committee (committee), responsible for local 
administration of the order, indicated that total production for the 
1995-96 crop year was 73,648 tons. While there is no estimate yet 
available for the 1996-97 crop, it is expected to be larger than the 
1995-96 crop. Olive trees are subject to alternate bearing 
characteristics. This may result in high production one year and low 
the next, which can cause the total crop to vary greatly from year to 
year.
    Paragraph (a)(3) of Sec. 932.52 of the order provides that 
processed olives smaller than the sizes prescribed for whole and whole 
pitted styles may be used for limited-use styles, if

[[Page 40509]]

recommended by the committee and approved by the Secretary. The minimum 
sizes which can be authorized for limited uses were established in a 
1971 amendment to the marketing order. The use of smaller olives for 
limited-use styles has been authorized in all but two crop years since 
the order was amended in 1971.
    Under the marketing order, olives smaller than the prescribed 
minimum sizes which are authorized for limited uses must be disposed of 
in less-profitable, non-canning uses such as in frozen or acidified 
forms, or crushed for oil. Returns to producers are lower on fruit used 
for such purposes.
    On June 13, 1996, the committee recommended, by a unanimous vote, 
establishment of quality and size regulations for limited-use size 
olives on a continuing basis pursuant to paragraph (a)(3) of 
Sec. 932.52 of the order. This rule authorizes the use of additional 
olives for limited-use styles by relaxing the minimum sizes and making 
more olives available to handlers for limited-use styles.
    The minimum sizes authorized for limited-use styles by this rule 
are smaller than those in effect last year, but are the same as those 
in effect for the 1991-92, 1992-93, and 1993-94 crop years.
    The minimum sizes were reduced for the 1991-92 season after handler 
tests during the 1990-91 crop year confirmed the feasibility of using 
such fruit in limited-use styles. However, the minimum sizes for 
limited-use styles were increased slightly for the 1994-95 season to 
their previous levels. At that time, the handlers reported that the use 
of certain smaller olives in limited-use styles resulted in greater 
percentages of broken slices, wedges, and halves. The inconsistencies 
of the product, especially sliced olives, were not favored by the 
handlers' customers, and the committee recommended that use of these 
smaller olives for limited-use styles be discontinued. At its recent 
meeting, the committee recommended that limited-use sizes include the 
sizes authorized prior to the 1994-95 season.
    There have been substantial changes to olive pitting and slicing 
equipment since the 1993-94 season. New machinery yields a greater 
percentage of unbroken slices, wedges, and halves by making such 
slices, wedges, and halves thicker and less likely to break. The new 
equipment also eliminates the problem of double-feeding, in which the 
pitter's feed wheel sends not one, but two, olives into the same 
pitting chamber, leaving one of the two olives unpitted. Because of 
these advances in the pitting and slicing equipment, the committee 
believes that undersized olives may again be utilized in limited-use 
styles effectively and to the satisfaction of the handlers' customers.
    This rule will help growers and handlers meet the increasing market 
demand for limited-use style olives based upon current conditions. This 
demand can be illustrated in the increasing shipments of sliced olives 
in the previous three years. Shipments of sliced olives increased by 
17.11 percent from the 1991-92 season to the 1992-93 season and by an 
additional 14.5 percent from the 1992-93 season to the 1993-94 season. 
According to handlers, such shipments continue to increase. The 
limited-use size requirements allow the use of sizes which would 
otherwise have to be disposed of for less-profitable, non-canning uses. 
Permitting the use of such smaller olives for limited-use styles would, 
therefore, improve grower returns and help handlers meet the increasing 
demand for limited-use style olives.
    The authority for limited-use size olives has been subject to an 
annual reconsideration by the committee since first authorized in 1971. 
The committee now believes that making the authority for limited-use 
sizes continuous rather than annual will provide handlers an 
opportunity to plan for and develop new markets, thereby increasing the 
market share of domestically-produced olives. Such increased production 
of limited-use styles is expected to increase returns to growers.
    Based on past production and marketing experience, the committee 
believes that handlers will need smaller olives to meet market demand 
for limited-use styles of canned olives. The committee also believes 
that handlers will need the smaller olives on a continuing basis to 
meet market demand for limited-use styles of canned olives.
    To effectuate this change, Sec. 932.153 of the order's rules and 
regulations is being revised. The committee recommended that these new 
minimum sizes become effective August 1, 1996, the beginning of the new 
crop year.
    Limited-use size olives are too small to meet the minimum size 
requirements established for whole and whole pitted canned ripe olives. 
However, they are large enough to be suitable for processing into 
limited-use styles. Absent this action, olives which are smaller than 
those authorized for whole and whole pitted canning uses would have to 
be disposed of by handlers into non-canning uses such as in frozen or 
acidified forms, and crushed for oil.
    The specified sizes for the different olive variety groups are the 
minimum sizes which are deemed desirable for use in the production of 
limited-use styles at this time. As in past years, permitting the use 
of smaller olives in the production of limited-use styles will allow 
handlers to take advantage of the strong market for sliced, wedged, 
halved, and chopped olives. By permitting the use of such olives, 
handlers will be able to market more olives than would be permitted in 
the absence of this relaxation in size requirements, thus increasing 
returns to growers.
    Although these limited-use sizes are effective for an indefinite 
period, the committee will continue to meet prior to or during each 
crop year to consider recommendations for modification of these 
limited-use sizes. 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 will evaluate the Committee's 
recommendations and other available information to determine whether 
modification of the limited-use sizes is needed. Further rulemaking 
will be undertaken as necessary.
    Section 8(e) of the Act requires that whenever grade, size, 
quality, or maturity requirements are in effect for olives under a 
domestic marketing order, imported olives must meet the same or 
comparable requirements. This rule allows smaller olives to be used in 
the production of limited-use styles under the marketing order. 
Therefore, a corresponding change is needed in the olive import 
regulation.
    Canned ripe olives, and bulk olives for processing into canned ripe 
olives, imported into the United States must meet certain minimum 
quality and size requirements specified in Olive Regulation 1 (7 CFR 
Sec. 944.401). All canned ripe olives are required to be inspected and 
certified prior to importation (release from custody of the United 
States Customs Service), and all bulk olives for processing into canned 
ripe olives must be inspected and certified prior to canning. ``Canned 
ripe olives'' means olives in hermetically sealed containers and heat 
sterilized under pressure, of two distinct types, ``ripe'' and ``green-
ripe'', as defined in the U.S. Standards for Grades of Canned Ripe 
Olives. The term does not include Spanish-style green olives.
    Any lot of olives failing to meet the import requirements may be 
exported, disposed of, or shipped for exempt uses. Exportation or 
disposal of such olives would be accomplished under the supervision of 
the Processed Products Branch of the Fruit and Vegetable Division, with 
the costs of certifying the

[[Page 40510]]

disposal of the olives borne by the importer. Exempt olives are those 
imported for processing into oil or donation to charity. Any person may 
also import up to 100 pounds (drained weight) of canned ripe olives or 
bulk olives exempt from these quality and size requirements.
    This interim final rule modifies paragraph (b)(12) of the olive 
import regulation to authorize the importation of bulk olives which do 
not meet the minimum size requirements established for olives for whole 
and whole pitted uses to be used in the production of limited-use 
styles. Such authority would be on a continuing basis, rather than on 
an annual basis, as has been done in previous years.
    This interim final rule also modifies paragraphs (b)(12)(i) through 
(b)(12)(v) by relaxing the minimum sizes of olive permitted to be 
imported for limited use.
    Permitting the use of smaller olives in the production of limited-
use styles will allow importers to better take advantage of the strong 
market for sliced, wedged, halved, and chopped style olives. Importers 
will be able to import and market more olives than would be permitted 
in the absence of this relaxation in size requirements.
    The two largest exporters of ripe and bulk olives to the United 
States are Spain and Mexico, respectively. Imports comprise 
approximately 50 percent of total annual U.S. consumption.
    In accordance with section 8e of the Act, the U.S. Trade 
Representative has concurred with the issuance of this interim final 
rule.
    After consideration of all relevant material presented, including 
the committee's recommendation, and other available information, it is 
found that this interim final rule, as hereinafter set forth, will tend 
to effectuate the declared policy of the Act.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect and that good cause exists for not postponing the effective date 
of this rule until 30 days after publication in the Federal Register 
because: (1) The 1996-97 crop year begins on August 1, 1996, and this 
rule needs to become effective as soon as possible to cover as much of 
the crop as possible; (2) this rule relaxes minimum size requirements; 
(3) California olive handlers are aware of this rule as it was 
discussed and recommended at a public meeting; and (4) this rule 
provides a 30-day comment period and any comments received will be 
considered prior to finalization of this rule.

List of Subjects

7 CFR Part 932

    Marketing agreements, Olives, Reporting and recordkeeping 
requirements.

7 CFR Part 944

    Avocados, Food grades and standards, Grapefruit, Grapes, Imports, 
Kiwifruit, Limes, Olives, Oranges.

    For the reasons set forth in the preamble 7 CFR parts 932 and 944 
are amended as follows:
    1. The authority citation for 7 CFR parts 932 and 944 continues to 
read as follows:

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

PART 932--OLIVES GROWN IN CALIFORNIA

    2. Section 932.153 is revised to read as follows:


Sec. 932.153  Establishment of grade and size requirements for 
processed olives for limited uses.

    (a) Grade. On and after August 1, 1996, any handler may use 
processed olives of the respective variety group in the production of 
limited-use styles of canned ripe olives if such olives were processed 
after July 31, 1996, and meet the grade requirements specified in 
paragraph (a)(1) of Sec. 932.52 as modified by Sec. 932.149.
    (b) Sizes. On and after August 1, 1996, any handler may use 
processed olives in the production of limited-use styles of canned ripe 
olives if such olives were harvested after August 1, 1996, and meet the 
following requirements:
    (1) The processed olives shall be identified and kept separate and 
apart from any olives harvested before August 1, 1996.
    (2) Variety Group 1 olives, except the Ascolano, Barouni, or St. 
Agostino varieties, shall be of a size which individually weigh at 
least \1/105\ pound: Provided, That no more than 35 percent of the 
olives in any lot or sublot may be smaller than \1/105\ pound.
    (3) Variety Group 1 olives of the Ascolano, Barouni, or St. 
Agostino varieties shall be of a size which individually weigh at least 
\1/180\ pound: Provided, That no more than 35 percent of the olives in 
any lot or sublot may be smaller than \1/180\ pound.
    (4) Variety Group 2 olives, except the Obliza variety, shall be of 
a size which individually weigh at least \1/205\ pound: Provided, That 
not to exceed 35 percent of the olives in any lot or sublot may be 
smaller than \1/205\ pound.
    (5) Variety Group 2 olives of the Obliza variety shall be of a size 
which individually weigh at least \1/180\ pound: Provided, That not to 
exceed 35 percent of the olives in any lot or sublot may be smaller 
than \1/180\ pound.

PART 944--FRUITS; IMPORT REGULATIONS

    3. Section 944.401 is amended by revising paragraph (b)(12) to read 
as follows:


Sec. 944.401  Olive Regulation 1.

* * * * *
    (b) * * *
    (12) Imported bulk olives when used in the production of canned 
ripe olives must be inspected and certified as prescribed in this 
section. Imported bulk olives which do not meet the applicable minimum 
size requirements specified in paragraphs (b)(2) through (b)(11) of 
this section may be imported after August 1, 1996, for limited-use, but 
any such olives so used shall not be smaller than the following 
applicable minimum size:
    (i) Whole ripe olives of Variety Group 1, except Ascolano, Barouni, 
or St. Agostino varieties, of a size that not more than 35 percent of 
the olives, by count, may be smaller than \1/105\ pound (4.3 grams) 
each.
    (ii) Whole ripe olives of Variety Group 1 of the Ascolano, Barouni, 
or St. Agostino varieties, of a size that not more than 35 percent of 
the olives, by count, may be smaller than \1/180\ pound (2.5 grams) 
each.
    (iii) Whole ripe olives of Variety Group 2, except the Obliza 
variety, of a size that not more than 35 percent of the olives, by 
count, may be smaller than \1/205\ pound (2.2 grams) each.
    (iv) Whole ripe olives of Variety Group 2 of the Obliza variety of 
a size that not more than 35 percent of the olives, by count, may be 
smaller than \1/180\ pound (2.5 grams) each.
    (v) Whole ripe olives not identifiable as to variety or variety 
group of a size that not more than 35 percent of olives, by count, may 
be smaller than \1/205\ pound (2.2 grams) each.
* * * * *
    Dated: July 31, 1996.
Robert C. Keeney,
Director, Fruit and Vegetable Division.
[FR Doc. 96-19855 Filed 8-2-96; 8:45 am]
BILLING CODE 3410-02-P