[Federal Register Volume 81, Number 137 (Monday, July 18, 2016)]
[Rules and Regulations]
[Pages 46567-46570]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-16704]



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  Federal Register / Vol. 81, No. 137 / Monday, July 18, 2016 / Rules 
and Regulations  

[[Page 46567]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 932

[Docket No. AMS-SC-16-0031; SC16-932-1 IR]


Olives Grown in California; Suspension and Revision of Incoming 
Size-Grade Requirements

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim rule with request for comments.

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SUMMARY: This rule implements a recommendation from the California 
Olive Committee (Committee) to suspend the incoming size-grade 
authority under the California olive marketing order (order), which 
regulates the handling of olives in California. The rule also makes 
conforming changes to the corresponding size-grade requirements in the 
order's rules and regulations to adapt them to the suspension. The 
Committee locally administers the order and is comprised of California 
olive producers and handlers operating within the production area. The 
suspension and revisions are intended to allow the Committee time to 
develop new incoming size-grade authority that will reflect currently-
available technology and meet the industry's future needs.

DATES: Effective July 19, 2016; comments received by September 16, 2016 
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 to the Docket Clerk, 
Marketing Order and Agreement Division, Specialty Crops Program, AMS, 
USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-
0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. All 
comments should reference the document 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, or can be viewed at: http://www.regulations.gov. All 
comments submitted in response to this rule will be included in the 
record and will be made available to the public. 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: Peter Sommers, Marketing Specialist, 
or Jeffrey Smutny, Regional Director, California Marketing Field 
Office, Marketing Order and Agreement Division, Specialty Crops 
Program, AMS, USDA; Telephone: (559) 487-5901, Fax: (559) 487-5906; or 
Email: [email protected] or [email protected].
    Small businesses may request information on complying with this 
regulation by contacting Antoinette Carter, Marketing Order and 
Agreement Division, Specialty Crops Program, AMS, USDA, 1400 
Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: 
[email protected].

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing 
Agreement 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 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 (USDA) is issuing this interim rule 
in conformance with Executive Orders 12866, 13563, and 13175.
    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is not intended to have retroactive effect.
    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. A 
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 suspends the incoming size-grade authority of the 
marketing order and revises the corresponding size-grade requirements 
in the order's rules and regulations. The current authority establishes 
a range of size designations and average count ranges per pound into 
which the varieties of olives must fall in order to be size-certified 
by the Federal or Federal-State Inspection Service. The incoming size-
grade regulations do not reflect the size-grading capabilities of newer 
technology available to California olive handlers. Currently, the order 
mandates that sizing of olives be based on count ranges and average 
counts per pound, while the new technology sizes olives using their 
associated mass and volume. Thus, the current size-grade requirements 
and the sizing capabilities of the new technology are incompatible. 
This recommendation was passed unanimously by the Committee at a 
meeting on February 17, 2016.
    The incoming regulations include a requirement for olives to be 
weighed upon receipt. This regulation is not being suspended, since 
handlers need to weigh the bins of incoming olives so that each 
producer has a record of their total deliveries to handlers. Thus, this 
relaxation will require continued weighing of olives but will suspend 
the requirement that olives be size-graded upon receipt.
    By relaxing the sizing requirement, handlers will be able to 
voluntarily size olives to make accurate payments to their producers on 
their total deliveries, ensure that the olives they place into their 
storage tanks are uniform in size for efficient processing, and utilize 
any olive size for limited-use styles.
    Even though there will be no incoming size requirements, handlers 
will continue to be bound by mandatory inspection and certification of 
outgoing

[[Page 46568]]

size requirements listed in the U.S. Standards for Grade of Canned Ripe 
Olives (7 CFR part 52). Outgoing inspection, based on weight and count, 
will continue to be used to verify compliance with the U.S. Standards 
of the previously sorted olives.
    Limited-use styles include olives that are no longer in whole form 
and are sliced, segmented (wedged), chopped, halved, and broken pitted 
styles. When incoming regulation is in effect, the Committee has 
authority to identify size-grade categories of olives that are eligible 
to be used in limited-use styles. With the suspension of the incoming 
size-grade requirement, handlers will be able to use any size olive for 
limited-use styles. Therefore, the suspension of incoming size-grade 
regulation relaxes the requirements for limited-use.
    This suspension is necessary in order to provide the industry, and 
their USDA partners, the opportunity to work on new size-grading 
requirements that will address and work in tandem with new sizing 
technology.
    This rule suspends language in Sec.  932.51 related to size-grade 
requirements. In addition, this rule revises language in Sec.  932.151, 
where ``weight'' is used to replace ``size-grading,'' and removes 
certain references to the ``inspection service'' or replaces the term 
with ``Committee.'' With this change, while incoming regulation is 
suspended, the Committee will receive information directly from 
handlers on incoming olive receipts from growers, rather than through 
the Inspection Service.
    Section 932.51 of the order specifies that incoming olives be 
weighed and size-graded under the supervision of the Federal or 
Federal-State Inspection Service. The size designations set forth are 
those found in the U.S. Standards for Grade of Canned Ripe Olives (7 
CFR part 52) and include additional size designations specified in 
Sec.  932.51.
    Section 932.51 also establishes authority for handlers to use 
limited-use olives. As previously stated, once the suspension is in 
effect, handlers will be able to use any olives in the production of 
limited-use styles.
    As noted above, weight certification will still be required under 
Sec.  932.51 for all olives received by handlers, so that producers 
will be able to confirm their total deliveries to handlers.
    Section 932.151 of the order's rules and regulations specifies the 
requirements for incoming olives, which are--weighing, size-grading, 
and certifying of canning olives and non-canning olives (culls).
    The olive industry has been involved in a technological shift since 
2012. In addition to electronic reporting technology, which eliminates 
burdensome paper reports, the industry has begun moving toward more 
cost-effective and accurate sizing technology. New technology sorts 
olives by measuring the volume and mass of each olive directly, rather 
than by count per pound and approximate count per pound. As technology 
changes and improves, better methods of classifying olives by size need 
to be in place. With the technology now available, handlers report a 
30-percent reduction in labor costs. Those reduced costs contribute to 
making California olive handlers more competitive with other olive-
processing countries.
    Since new technology represents a significant departure from 
existing size-grading techniques, the Committee believes, with industry 
support, that the correct course of action is to suspend the incoming 
size-grade requirements. This will give the industry, working with 
their USDA partners, the time to develop size-grade requirements that 
reflect changes in technology.
    This suspension requires a modification of two Committee forms, 
Weight and Grade Report (COC-3c) and the Report of Limited and 
Undersize and Cull Olives Inspection and Disposition (COC-5). Both are 
approved for use under OMB No. 0581-0178, Generic Vegetables and 
Specialty Crops, and used by the Federal or Federal-State Inspection 
Service to certify sizes of incoming olives and limited-use style 
sizes. In addition, the COC-3c is specified as being an inspection 
certificate. Since this rule suspends the incoming size-grading 
requirements, there is no need for the inspection service to certify 
sizes of olives or issue an inspection certificate.
    Following the publication of this rule, the COC-3c will be used by 
handlers to report to the Committee the incoming weights and volume 
size distribution of the sample. The COC-5 will be used by handlers to 
certify limited, undersize, and cull olive disposition.

Initial 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 action 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 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 two handlers subject to regulation under the marketing 
order and approximately 1,000 olive producers in the production area. 
Small agricultural service firms are defined by the Small Business 
Administration (SBA) as those having annual receipts of less than 
$7,500,000, and small agricultural producers are defined as those 
having annual receipts of less than $750,000 (13 CFR 121.201).
    Based upon information from the Committee and the National 
Agricultural Statistics Service (NASS), the average producer price for 
the 2013-14 crop year (the last year information was available) was 
$1,150 per ton of canning-size olives and $385 per ton for limited-use 
size olives. The total assessable volume was 85,668 tons. Canning sizes 
represented 88 percent of the assessable olive volume, while limited-
use sizes represented 12 percent of the assessable olive volume.
    Based on production, producer prices, and the total number of 
California olive producers, the average annual producer revenue is less 
than $750,000. Thus, the majority of olive producers may be classified 
as small entities. Both of the handlers may be classified as large 
entities.
    This relaxation is expected to positively impact both handlers and 
producers. Handlers will be able to use new technology as it becomes 
available to voluntarily size-grade incoming fruit more accurately, 
helping them be more competitive. Producers will benefit from more-
accurate sizing, potentially resulting in higher handler payments to 
producers. This relaxation will also provide the industry with the 
opportunity to develop new mandatory sizing requirements conducive to 
alternative sizing capabilities.
    The Committee's Incoming Inspection Workgroup initially discussed 
this recommendation and its alternatives on January 25, 2016, as did 
the Inspection Subcommittee prior to the Committee meeting on February 
17, 2016. The Committee also considered alternatives to this action, 
but concluded that the correct course of action would be to recommend 
suspension. For all the reasons cited herein, the alternative to 
continue mandatory size-grading was not considered viable, would not 
give handlers the flexibility they need, and was rejected.
    This rule suspends the size-grade requirements of the incoming 
regulations in Sec.  932.51, beginning with the 2016-2017 crop year. It 
also revises

[[Page 46569]]

the rules and regulations in Sec.  932.151 allowing for the continued 
certification of olives by weight and replaces references to the 
inspection service with the Committee. In addition, minor modifications 
are being made to the COC 3 and COC 5 forms.
    The suspension and revisions are intended to allow the Committee 
time to develop new requirements that address advancing technology and 
equipment; help reduce handling costs, keeping the California industry 
competitive with other olive-processing countries; and increase handler 
efficiency.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the order's information collection requirements are 
approved by the Office of Management and Budget (OMB) under OMB No. 
0581-0178 (Generic Vegetables and Specialty Crops). Minor changes to 
those requirements are necessary as a result of this action.
    AMS has submitted a request to the Office of Management and Budget 
(OMB) to make minor changes to forms COC-3c and COC-5. The four changes 
to form COC-3c include removing the block entitled ``Cert No.''; 
deleting the words ``inspection certificate'' from the block entitled 
``California Olive Committee''; deleting the statement ``This lot was 
weighed, sampled, and size graded under the direct supervision of the 
Federal-State Inspection Program'' and deleting the signature and date 
lines associated with that statement; and lastly, removing the words 
``OFFICIAL INSPECTION CERTIFICATE'' and adding the words ``Handler Use 
Only''.
    The changes to form COC-5 include changing the words ``(5) REQUEST 
FOR INSPECTION'' to ``(5) DISPOSITION'' and removing the words ``(7) 
INSPECTION CERTIFICATION: The olives inspected conform to the 
information listed above'' and deleting the space for the inspector's 
signature and the date. Additionally, changes to the form's 
instructions include removing the words ``to be inspected'' from the 
GENERAL instruction, and deleting the instruction for ITEM (7).
    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.
    In addition, USDA has not identified any relevant Federal rules 
that duplicate, overlap or conflict with this rule. Furthermore, the 
Committee's meeting was widely publicized throughout the California 
olive industry, and all interested persons were invited to attend the 
meeting and encouraged to participate in Committee deliberations. Like 
all Committee and subcommittee meetings, the January 25, 2016, and 
February 17, 2016, meetings were public meetings, and all entities, 
both large and small, were able to express their views on this issue.
    Also, the Committee has a number of appointed subcommittees that 
review specific issues and make recommendations to the Committee. The 
Committee's Inspection Subcommittee met on February 17, 2016, prior to 
the full Committee meeting on that same day, and discussed this issue 
in detail. That meeting was the result of a special working group 
meeting on January 25, 2016. The working group was tasked with 
reviewing the inspection protocol and related issues, and reporting 
their findings and recommendations to the Inspection Subcommittee. All 
three meetings were public meetings, and both large and small entities 
were encouraged to participate and express their views. Finally, 
interested persons are invited to submit comments on this interim rule, 
including the regulatory and informational impacts of this action on 
small businesses.
    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/rules-regulations/moa/small-businesses. Any questions 
about the compliance guide should be sent to Antoinette Carter at the 
previously mentioned address in the FOR FURTHER INFORMATION CONTACT 
section.
    This rule invites comments on the suspension and revision of 
incoming size-grade requirements under the California olive marketing 
order. Any comments received will be considered prior to the 
finalization of this rule.
    After consideration of all relevant material presented, including 
the Committee's recommendation, and other information, it is found that 
this interim 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 60 days after publication in the Federal Register 
because: the Committee unanimously recommended these changes at a 
public meeting; this is a relaxation of the marketing order 
requirements; and this rule provides a 30-day comment period. Any 
comments received will be considered prior to finalization of this 
rule.

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 
amended 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.


Sec.  932.51  [Amended]

0
2. In Sec.  932.51, suspend indefinitely paragraphs (a)(1)(ii) through 
(a)(5).

0
3. Amend Sec.  932.151 by revising paragraphs (a), (b), (c), (d), 
(e)(1), (2), and (4), and (f)(1) to read as follows:


Sec.  932.151  Incoming regulations.

    (a) Inspection stations. Natural condition olives shall be weighed 
only at inspection stations which shall be a plant of a handler or 
other place having facilities for weighing such olives: Provided, That 
such location and facilities are satisfactory to the committee: 
Provided further, That upon prior application to, and approval by, the 
committee, a handler may receive olives at an inspection station other 
than the one where the lot was weighed.
    (b) Lot identification. (1) Immediately upon receipt of each lot of 
natural condition olives, the handler shall complete Form COC 3A or 3C, 
weight and grade report or such other lot identification form as may be 
approved by the committee, which shall contain at least the following:
    (i) Lot number;
    (ii) Date;
    (iii) Variety; and
    (iv) Number and type containers.
    (2) The handler shall maintain identity of such lot of olives with 
its corresponding lot weight and grade report.
    (c) Weighing. Each lot of natural condition olives shall be 
separately weighed to determine the net weight of olives.
    (d) Handler incoming responsibility--(1) General. The handler is 
responsible for the proper performance of all actions connected with 
the identification of lots of olives, the weighing of boxes or bins, 
the taking of samples, and the furnishing of necessary personnel for 
the carrying out of such actions.
    (2) Certification. (i) For each lot of olives that are weighed, the 
handler

[[Page 46570]]

shall complete Form COC-3A or 3C, weight and grade report, which shall 
contain at least the following:
    (A) Name of handler;
    (B) Name of producer;
    (C) County of production;
    (D) Applicable lot number;
    (E) Weight certificate number;
    (F) Net weight;
    (G) Number and type of containers;
    (H) Date received;
    (I) Time received; and
    (J) Weight of sample.
    (ii) The completed Form COC-3A or 3C shall be furnished to the 
committee, which shall certify thereon that the lot was weighed as 
required by Sec.  932.51 if in accordance with the facts.
    (e) Disposition of noncanning olives--(1)(i) Notification and 
inspection of noncanning olives. Prior to disposition of noncanning 
olives the handler shall complete Form COC-5, report of limited and 
undersize and cull olives inspection and disposition, which shall 
contain the following:
    (A) Type and number of containers;
    (B) Type of olives (undersize or culls);
    (C) Net weight;
    (D) Variety;
    (E) Outlet (green olives, olive oil, etc.); and
    (F) Consignee.
    (ii) Before disposition of such olives, the completed Form COC-5 
shall be furnished to the committee.
    (2) Control and surveillance. Noncanning olives that have been 
reported on Form COC-5 shall, unless such olives are disposed of 
immediately after receipt, be identified by fixing to each bin or 
pallet of boxes a COC control card which may be obtained from the 
committee. Such olives shall be kept separate and apart from other 
olives in the handler's possession and shall be disposed of only in the 
outlet shown on Form COC-5.
* * * * *
    (4) Olives not subject to incoming regulation requirements. Except 
as otherwise prescribed in Sec.  932.51(b), any lot of olives to be 
used solely in the production of green olives or canned ripe olives of 
the ``tree ripened'' type shall not be subject to incoming regulation: 
Provided, That the applicable requirements of Sec.  932.51(b) are met 
and the handler notifies the committee, in writing, that such lot is to 
be so used. Notice may be given by writing on the weight certificate 
``Lot to be used solely for use in the production of green olives or 
tree ripened olives'' and a copy of such weight certificate given to 
the committee.
    (f) Partially exempted lots. (1) Pursuant to Sec.  932.55, any 
handler may process any lot of natural condition olives for use in the 
production of packaged olives which has not first been weighed as an 
individual lot as required by Sec.  932.51(a)(1)(i) but was combined 
with any other lot or lots of natural condition olives, only if:
    (i) All the olives in the combined lot are delivered to the handler 
in the same day;
    (ii) The total net weight of the olives delivered to the handler by 
any person in such day does not exceed 500 pounds;
    (iii) Each such person had authorized combination of his lot with 
other lots; and
    (iv) The combined lot of the natural condition olives is weighed as 
required by Sec.  932.51(a)(1)(i) prior to processing the olives.
* * * * *

    Dated: July 11, 2016.
Elanor Starmer,
Administrator, Agricultural Marketing Service.
[FR Doc. 2016-16704 Filed 7-15-16; 8:45 am]
 BILLING CODE 3410-02-P