Olives Grown in California; Modification to Handler Membership on the California Olive Committee

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 932

[Docket No. FV99-932-2 IFR]

Olives Grown in California; Modification to Handler Membership on

the California Olive Committee

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule invites comments on modifications to the handler

membership on the California Olive Committee (Committee). The Committee

locally administers the California olive marketing order (order) which

regulates the handling of olives grown in California. The Committee is

composed of 16 industry members of which 8 are producers and 8 are

handlers. Current handler membership is allocated between cooperative

marketing organizations and independent handlers (handlers not

affiliated with cooperatives), and the number of handler members that

may be affiliated with any one handler is limited to two. This rule

removes the distinction between cooperative and independent handlers,

removes the limitation on handler affiliation, and reallocates handler

membership on the basis of the total quantity of olives handled. These

modifications will allow two vacant handler member positions on the

Committee to be filled. This rule was unanimously recommended by the

Committee.

DATES: Effective January 29, 1999; comments received by March 29, 1999

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, 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]. 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: Mary Kate Nelson, Marketing

Specialist, California Marketing Field Office, Marketing Order

Administration Branch, F&V, AMS, USDA, 2202 Monterey Street, suite

102B, Fresno, California 93721; telephone: (559) 487-5901, Fax: (559)

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

Administration Branch, F&V, AMS, USDA, room 2525-S, P.O. Box 96456,

Washington, DC 20090-6456; telephone: (202) 720-9921; Fax: (202) 720-

5698. Small businesses may request information on complying with this

regulation, or obtain a guide on complying with fruit, vegetable, and

specialty crop marketing agreements and orders by contacting Jay

Guerber, Marketing Order Administration Branch, Fruit and Vegetable

Programs, AMS, USDA, P.O. Box 96456, room 2525-S, 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. 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 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. A handler is afforded the opportunity for

[[Page 4287]]

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.

Section 932.25 of the order provides for the establishment of the

Committee to locally administer the terms and provisions of the order.

The Committee is composed of 16 industry members, each with an

alternate. Of the 16 industry members, 8 are producers and 8 are

handlers. This section also specifies how the handler membership on the

Committee is allocated. Authority is provided for the Committee, with

the approval of the Secretary, to change the allocation of both

producer and handler members as may be necessary to assure equitable

representation.

Section 932.159 of the administrative rules and regulations

provides that two members shall represent cooperative marketing

organizations and six members shall represent handlers who are not

cooperative marketing organizations. In addition, Sec. 932.160 limits

to two the number of handler members that may be affiliated with the

same handler.

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

modifying the rules and regulations to remove the distinction between

cooperative and independent handlers, and the limitation on the number

of handler members that may be affiliated with the same handler. It

also unanimously recommended that the two handlers who handled the

largest and second largest total volume of olives during the crop year

in which nominations are made and the preceding crop year be

represented by three members each, and that the third largest handler

be represented by two members. This rule is intended to modify the

Committee's handler membership to reflect structural changes within the

handler segment of the industry, and to enable the Committee to operate

at full strength; i.e., with all eight handler and producer positions

filled.

The structure of the olive industry has changed over the years and

the number of handlers, both cooperative and independent, has

decreased. At one time, there were a number of cooperative marketing

organizations and independent handlers and the Committee's structure

was designed so that four of the eight handler seats were held by

cooperatives and four were held by independents. This representation

was also weighted by the volume of olives handled so that if one group,

either cooperatives or independents, handled 65 percent or more of the

total industry's volume handled during the nominating crop year and the

preceding crop year, that group would have five seats on the Committee

and the other group would have three seats.

In 1993, handler membership on the Committee was reallocated to

reflect changes within the industry. The number of industry handlers

declined to only five handlers--one cooperative and four independents.

At that time, Sec. 932.159 of the order's rules and regulations was

modified to reapportion handler membership to provide cooperative

handlers with two seats on the Committee and independent handlers with

six seats.

Since 1993, the number of handlers in the olive industry has

continued to decline. Today there are three handlers remaining--one

cooperative and two independents. Because there is only one existing

cooperative, the Committee believes that the distinction regarding

cooperative and independent handlers on the Committee is no longer

appropriate or necessary.

Additionally, Sec. 932.160 specifies that no more than two nominees

for member and alternate member positions may be affiliated with the

same handler. Because there are only three handlers remaining in the

industry, this restriction has resulted in two vacant handler positions

on the Committee that cannot be filled.

To allow these positions to be filled and enable the Committee to

operate at full strength, the Committee recommended that Sec. 932.159

be revised to eliminate the distinction between cooperative marketing

organizations and independent handlers (or handlers not affiliated with

a cooperative marketing organization). It also recommended that the

eight handler seats on the Committee be reallocated based on the total

volume of olives handled during the crop year in which nominations are

made and the preceding crop year, with the handlers handling the first

and second largest volume being represented with three members each,

and the remaining handler being represented with two members.

The reallocation of handler membership in Sec. 932.159 makes the

two nominee limitation on affiliation with the same handler specified

in Sec. 932.160 unnecessary, and that section is removed.

These changes are designed to modify the Committee's handler

membership to reflect structural changes within the handler segment of

the industry, and to remove the current barriers to filling the two

vacant handler positions on the Committee.

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

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.

There are 3 handlers of California olives who are subject to

regulation under the marketing order and approximately 1,200 olive

producers in the regulated area. Small agricultural service firms 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 having annual receipts of

less than $500,000. None of the olive handlers may be classified as

small entities.

Based on a review of historical and preliminary price and marketing

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

through July 31) is estimated to be approximately $39,500,000, and the

average grower revenue will be approximately $33,000. Thus, it can be

concluded that the majority of producers of California olives may be

classified as small entities.

This rule modifies the order's administrative rules and regulations

regarding the structure of handler membership on the Committee. The

Committee locally administers the order and is composed of 16 industry

members. Eight of the 16 industry members are producers and 8 are

handlers. Current handler membership provisions distinguish between

cooperative marketing organizations and independent handlers specifying

that two members shall represent cooperative marketing organizations

and six members shall represent handlers who are not cooperative

marketing organizations. The handler nominee provisions also specify

that no more than two nominees for handler member

[[Page 4288]]

and alternate member positions may be affiliated with the same handler.

This rule modifies the order's rules and regulations to remove the

distinction between cooperative and independent handlers, and to

specify that the number of members representing each of the three

currently existing industry handlers shall be based on the total volume

of olives handled during the nominating crop year and the preceding

crop year, with the two handlers handling the largest and second

largest volume of olives represented by three members and alternates

each, and the remaining handler represented by two members and

alternates. This rule also removes provisions limiting the number of

members to which each handler is entitled because the limitation is no

longer necessary. The changes were unanimously recommended by the

Committee and are intended to modify the Committee's handler membership

to reflect structural changes within the handler segment of the

industry, and to remove current barriers to filling two vacant handler

positions on the Committee. Authority for this rule is provided in

Sec. 932.25 which allows the Committee, with the approval of the

Secretary, to reallocate the Committee's producer or handler membership

as necessary to assure equitable representation.

Removal of the distinction between cooperative and independent

handlers will not have any impact on handlers or producers in the

California olive industry.

One alternative to this rule discussed at the meeting was to leave

the language in Sec. 932.159 unchanged; however, the Committee believes

that the distinction between cooperative and independent is no longer

appropriate, because there is only one existing cooperative in the

industry and two independent handlers. Another alternative discussed at

the meeting was to leave Sec. 932.160 of the order's rules and

regulations unchanged so that only two members may be affiliated with

the same handler, but with only three handlers currently in the

industry that would result in uneven representation between growers

with eight members and handlers with six members, and would fail to

assure equitable representation on the Committee as is required

pursuant to Sec. 932.25.

This rule will not impose any additional reporting or recordkeeping

requirements on any of the three 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. In addition, the Department has not identified

any relevant Federal rules that duplicate, overlap, or conflict with

this proposed rule.

Further, the Committee's meeting was widely publicized throughout

the 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 their views on this issue. All three industry handlers are

currently represented on the Committee and participated in the

deliberations. Finally, interested persons are invited to submit

information on the regulatory and informational impacts of this action

on small businesses.

After consideration of all relevant material presented, including

the Committee's recommendation, and other information, it is found that

this interim final rule, as hereinafter set forth, will tend to

effectuate the declared policy of the Act.

This rule invites comments on modifications to the handler

membership on the Committee. Any comments received will be considered

prior to finalization of this rule.

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) There are currently two vacant handler member seats on the

Committee that cannot be filled until these modifications to the

administrative rules and regulations are implemented, and it is

important that the Committee operate at full strength; (2) timely

implementation of this action will allow the vacancies to be filled;

(3) the Committee unanimously recommended these changes at a public

meeting and interested parties had an opportunity to provide input; (4)

all three handlers are represented on the Committee and participated in

deliberations; and (5) this rule provides a 60-day comment period and

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

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

follows:

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

2. Section 932.159 is revised to read as follows:

Sec. 932.159 Reallocation of handler membership.

Pursuant to Sec. 932.25, handler representation on the committee is

reallocated to provide that the two handlers who handled the largest

and second largest total volume of olives during the crop year in which

nominations are made and in the preceding crop year shall be

represented by three members and alternate members each, and the

remaining handler shall be represented by two members and alternate

members.

Sec. 932.160 [Removed]

3. Section 932.160 is removed.

Dated: January 22, 1999.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 99-1970 Filed 1-27-99; 8:45 am]

BILLING CODE 3410-02-P