Olives Grown in California and Imported Olives; Establishment of Limited Use Olive Grade and Size Requirements During the 1995-96 Crop Year

DEPARTMENT OF AGRICULTURE

7 CFR Parts 932 and 944

[Docket No. FV95-932-1IFR]

Olives Grown in California and Imported Olives; Establishment of

Limited Use Olive Grade and Size Requirements During the 1995-96 Crop

Year

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 sized

olives in the production of limited use styles for California olives

during the 1995-96 crop year. This rule is intended to allow more

olives into fresh 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 rule also changes the import

regulation so that it conforms with the requirements established under

the California olive marketing order.

DATES: Effective August 21, 1995; comments received by September 18,

1995 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,

DC 20090-6456; telephone (202) 720-5127.

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 12778, 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 in equity to review the

Secretary's ruling on the petition, provided a bill in equity is filed

not later than 20 days after date of the entry of the ruling.

There are no administrative procedures which must be exhausted

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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 Administrator of 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 issued under

the Act are based on those established under Federal marketing orders.

There are 5 handlers of California olives who will be 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 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.

Nearly all of the olives grown in the United States are produced in

California. California olives are primarily used for canned black ripe

whole and whole pitted olives which are eaten out of hand as hors

d'oeuvres or 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) indicated that 1994-95

production totalled about 80,925 tons. Total production for the 1995-96

crop year is estimated to be 75,500 tons. This is the first time that

there have been two consecutive years of declining production. The

unprecedented and unusual rains, poor pollination, and cool weather

during the Spring of this year have resulted in a lower than normal

fruit crop set on the trees.

Olive trees generally need to restore their nutrients from one

season to the next, resulting in various varieties of olives produced

in California having 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 uses were established in a 1971 amendment to 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 crushing for oil. Returns to

producers are lower on fruit used for such purposes. The use of smaller

sized olives for limited use styles has been authorized in all but two

crop years since the order was promulgated in 1965.

This rule will help growers and handlers meet the growing market

demand for limited use style olives based upon current conditions. This

demand can be illustrated in the record of shipments of sliced olives

in the previous three years. Shipments of one type of limited use style

fruit (sliced) totalled over 29,000 tons in the 1992-93 season, 34,000

tons in the 1993-94 season, and an estimated 30,000 tons in the 1994-95

season. 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.

On July 12, 1995, the committee recommended, by a unanimous vote,

establishment of grade and size regulations for limited use size olives

during the 1995-96 crop year pursuant to paragraph (a)(3) of

Sec. 932.52 of the order.

Based on past production and marketing experience, the committee

believes that handlers will need smaller sized olives during the 1995-

96 crop year to meet market demand for limited use styles of canned

olives. 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 wedges, halves, slices, or segments. 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 crushing into 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 the smaller olives in the production of limited use styles allows

handlers to take advantage of the strong market for halved, segmented,

sliced, and chopped canned ripe olives. Handlers will be able to market

more olives than would be permitted in the absence of this relaxation

in size requirements.

Also, the committee estimates that production for this crop year is

expected to be at 75,500 tons, which is smaller than the previous two

seasons. The 1993-94 and 1994-95 crop years produced larger crops of

120,049 tons, and 80,925 tons, respectively.

During years with large olive crops, the ratio of limited use size

olives to other sizes tends to be higher; there may be more limited use

size olives in proportion to the other sizes. During years with small

olive crops, the ratio of smaller olives to other sizes tends to be

smaller; there may be fewer limited use size olives in proportion to

the other sizes. The increased availability of limited use size fruit

can be reflected in handler processing for the last three seasons. For

example, during the 1992-93 crop year, 19 percent of the olives (31,175

tons) received by handlers were classified as limited use sizes as

compared with 16 percent of the olives (19,465 tons) in 1993-94, and an

estimated 9 percent of the olives (7,047 tons) in 1994-95. Thus, due to

the poor pollination and sporadic fruit set of the 1995-96 crop, fewer

limited use size olives are expected to be available for harvest. The

percentage of limited use size olives available to handlers is,

therefore, expected to be smaller.

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 for 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 grade

and size

[[Page 42774]]

requirements specified in Olive Regulation 1 (7 CFR 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

grade 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 during the 1995-96 crop year.

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 halved, segmented, sliced, and chopped canned ripe olives.

Importers will be able to import and market more olives than would be

permitted in the absence of this relaxation in size requirements. This

additional opportunity is provided to maximize the use of the available

olive supply and facilitate market expansion. In the absence of this

rule, the smaller fruit could not be imported for limited uses, and

would have to be disposed of through less profitable, non-canning uses

under the supervision of the inspection service, exported, or utilized

in exempt outlets.

Based on these considerations, the Administrator of the AMS has

determined that this action will not have a significant economic impact

on a substantial number of small entities.

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 1995-96 crop year began August 1, 1995, and this rule

needs to become effective as soon as possible to cover as much as 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 unanimously recommended by the committee 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. In Sec. 932.153, the section heading and paragraphs (a), (b)

introductory text, and (b)(1) are revised to read as follows:

Sec. 932.153 Establishment of grade and size requirements for

processed 1995-96 crop year olives for limited uses.

(a) Grade. On and after August 1, 1995, 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, 1995, and meet the grade requirements specified in

Sec. 932.52(a)(1) as modified by Sec. 932.149.

(b) Sizes. On and after August 1, 1995, any handler may use

processed olives in the production of limited use styles of canned ripe

olives if such olives were harvested during the period August 1, 1995,

through July 31, 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, 1995, or after July

31, 1996.

* * * * *

PART 944--FRUITS; IMPORT REGULATIONS

3. In Sec. 944.401, paragraph (b)(12) introductory text is revised

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 during the period August 1, 1995, through

July 31, 1996, for limited use, but any such olives so used shall not

be smaller than the following applicable minimum size:

* * * * *

Dated: August 11, 1995.

Terry C. Long,

Acting Deputy Director, Fruit and Vegetable Division.

[FR Doc. 95-20355 Filed 8-16-95; 8:45 am]

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