[Federal Register Volume 61, Number 208 (Friday, October 25, 1996)]
[Rules and Regulations]
[Pages 55202-55205]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27456]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 932 and 944

[Docket No. FV96-932-3FIR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: The Department of Agriculture (Department) is adopting as a 
final rule, without change, the provisions of an interim final rule 
authorizing the use of smaller-sized olives in the production of 
limited-use styles for olives grown in California. This final rule 
allows more olives into market channels and is consistent with current 
market demand for olives. As required under section 8e of the 
Agricultural Marketing Agreement Act of 1937, this final rule also 
changes the olive import regulation so that it conforms with the 
requirements established under the California olive marketing order.

EFFECTIVE DATE: November 25, 1996.


[[Page 55203]]


FOR FURTHER INFORMATION CONTACT: Terry Vawter, California Marketing 
Field Office, Fruit and Vegetable Division, AMS, USDA, 2202 Monterey 
Street, Suite 102B, Fresno, California, telephone (209) 487-5901; or 
Caroline C. Thorpe, Marketing Specialist, Marketing Order 
Administration Branch, F&V, AMS, USDA, room 2522-S, P.O. Box 96456, 
Washington, DC 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, DC 20090-6456; telephone (202) 720-2491; Fax # (202) 720-
5698.

SUPPLEMENTARY INFORMATION: This final 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 final 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 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 8c(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. 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 requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (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 under the Act 
are based on those established under Federal marketing orders.
    There are 4 handlers of California olives who are subject to 
regulation under the marketing order and approximately 1,200 olive 
producers in California. There are also approximately 25 importers of 
olives subject to the olive import regulation. Small agricultural 
service firms, which includes handlers and importers, have been defined 
by the Small Business Administration (13 CFR 121.601) as those having 
annual receipts of less than $5,000,000, and small agricultural 
producers are defined as those whose annual receipts are less than 
$500,000. None of the domestic olive handlers may be classified as 
small entities. The majority of 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 
the increasing market demand for such olives. Annual domestic shipment 
data for olives indicate that for the last 5 seasons (1991 to 1995), 
limited-use style shipments ranged from 35 percent to 41 percent of the 
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.
    Therefore, the AMS has determined that this action will not have a 
significant economic impact on a substantial number of small entities.
    An interim final rule was issued on July 31, 1996, and published in 
the Federal Register (61 FR 40507, August 5, 1996), with an effective 
date of August 8, 1996. That rule amended Sec. 932.153 of the rules and 
regulations in effect under the order, and Sec. 944.401 of the import 
regulations. That rule authorized the use of smaller-sized limited-use 
olives under the order and for importation into the United States. That 
rule provided a 30-day comment period which ended September 4, 1996. No 
comments were received.
    Nearly all of the olives grown in the United States are produced in 
California. California olives are used for canned black ripe whole, 
whole pitted, and sliced olives which are eaten out of hand as hors 
d'oeuvres, or used as an ingredient in cooking, in salads, or on 
pizzas. 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) indicated that the 
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 recommended by the 
committee and approved by the Secretary. The minimum sizes which can be 
authorized for limited use 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 
through 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.

[[Page 55204]]

    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 use of such fruit for 
limited-use styles was not recommended by the committee for the 1994-95 
season. 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 certain 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 
should, therefore, improve grower returns and help handlers meet the 
increasing need 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 sizes 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 the handlers will need undersized olives on a continuing basis to 
meet the market demand for limited-use styles of canned olives.
    To effectuate this change, Section 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 such as sliced, wedged, halved and chopped 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 frozen or acidified forms, or 
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 allows 
handlers to take advantage of the strong market for sliced, wedged, 
halved, and chopped style 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 Custom 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 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 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

[[Page 55205]]

whole and whole pitted uses to be used in the production of limited-use 
styles. Such authority will be on a continuing basis, rather than on an 
annual basis, as has been done in previous years.
    This 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 styles.
    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 final rule.
    After consideration of all relevant material presented, the 
information and recommendations submitted by the committee, and other 
information, it is found that finalizing the interim final rule, 
without change, as published in the Federal Register (61 FR 40507, 
August 5, 1996) will tend to effectuate the declared policy of the Act.

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:

PART 932--OLIVES GROWN IN CALIFORNIA

    Accordingly, the interim final rule amending 7 CFR part 932 which 
was published at 61 FR 40507 on August 5, 1996, is adopted as a final 
rule without change.

PART 944--FRUITS; IMPORT REGULATIONS

    Accordingly, the interim final rule amending 7 CFR part 944, which 
was published at 61 FR 40507 on August 5, 1996, is adopted as a final 
rule without change.

    Dated: October 18, 1996.
Eric M. Forman,
Acting Director, Fruit and Vegetable Division.
[FR Doc. 96-27456 Filed 10-24-96; 8:45 am]
BILLING CODE 3410-02-P