New Legislation Aims to Limit Use of ‘California’ on Olive Oil Labels

New leg­is­la­tion has been intro­duced to the California State Assembly that would tighten the restric­tions on using the word ​“California” on olive oil labels, in mar­ket­ing cam­paigns and by brands.

Existing laws in the state, which is respon­si­ble for vir­tu­ally all of the olive oil pro­duc­tion in the United States, already pro­hibit using the term ​“California olive oil” on labels in which the con­tents were not pro­duced from 100-per­cent California-grown olives.

However, the new leg­is­la­tion goes one step fur­ther. It pro­hibits the use of ​“California olive oil,” ​“California olives” or other sim­i­lar terms in brand names, prod­uct labels, pack­ag­ing mate­r­ial, com­pany let­ter­head, invoices, busi­ness cards, signs and other oral, writ­ten or printed mate­r­ial asso­ci­ated with prod­ucts that are not pro­duced from 100-per­cent California-grown olives.

The bill would also apply sim­i­lar restric­tions for olive oils pro­duced in cer­tain regions of the state unless 85 per­cent of the olive oil (by weight) had been pro­duced in the named region.

“This is in response to the grow­ing deval­u­a­tion of California extra vir­gin olive oil by California Olive Ranch​’s prod­ucts that cyn­i­cally and with false rep­re­sen­ta­tions carry the name California mar­queed across their label to give con­sumers the impres­sion the olive oil is from California, dri­ving them to buy some­thing that is not, but rather from for­eign coun­tries,” Alan Hilburg, the founder of the California Coalition for Truth in Olive Oil Labeling (CCTOOL), told Olive Oil Times.

“AB-535 is sim­ply designed to end mis­lead­ing prac­tices and level the play­ing field by hold­ing those whose actions demean and devalue the California brand account­able,” he added. ​“The pas­sage of this bill will go a long way to pro­tect­ing the integrity of the California brand and start­ing a new era of trust [in California olive oil].”

Assembly Bill 535 was first intro­duced at the begin­ning of 2020 by Assemblywoman Cecilia Aguiar-Curry, but was tabled after the onset of the COVID-19 pan­demic and rein­tro­duced last month.

“This bill will ensure that con­sumers know exactly what they are buy­ing, and it will help to sup­port our local farm­ers who are pro­duc­ing world-class oils from olives grown here in our state,” Aguiar-Curry said in a press release. ​“It’s time we stop peo­ple from prof­it­ing off our name by giv­ing the impres­sion con­sumers are get­ting some­thing they’re not.”

Aguiar-Curry rep­re­sents California’s fourth state assem­bly dis­trict, which includes sev­eral promi­nent olive-grow­ing regions. Hilburg esti­mates that between 150 and 200 olive grow­ers are located in her dis­trict.

The bill is cur­rently await­ing a vote in the agri­cul­ture and health com­mit­tee before return­ing to the assem­bly floor for a full vote. Hilburg, who has been fol­low­ing the process closely, said that the bill is likely to pass with bipar­ti­san sup­port and Governor Gavin Newsom could sign it before the end of the year.

However, the process is far from over. Michael Fox, the CEO of California Olive Ranch (COR), told Olive Oil Times that he and other pro­duc­ers who the leg­is­la­tion will neg­a­tively impact intend to fight it.

“This is a direct attack on California Olive Ranch,” Fox said. ​“Fundamentally, we believe AB-535 as cur­rently drafted vio­lates exist­ing fed­eral First Amendment rights around com­mer­cial speech, and we are con­fi­dent there are sev­eral very strong legal argu­ments chal­leng­ing its con­sti­tu­tion­al­ity.”

The for­mer PepsiCo and Safeway exec­u­tive added that he believes the bill pun­ishes large pro­duc­ers and could ​“neg­a­tively impact hun­dreds of jobs across the state.”

Milad Emam, an attor­ney at the Institute for Justice, a non-profit lib­er­tar­ian pub­lic inter­est law firm, agrees that AB-535 is uncon­sti­tu­tional.

“If California enacts AB-535, the bill’s olive oil label­ing require­ments would be uncon­sti­tu­tional,” he said. ​“The olive-oil labels that AB-535 reg­u­lates are not mis­lead­ing when they con­spic­u­ously iden­tify their product’s region of ori­gin.”

At the crux of the issue are prod­ucts such as COR’s Global Blend brand (for­mally known as the Destination Series), which is made from olives farmed in Argentina, California, Chile and Portugal.

Hilburg con­tends this brand does not ​“con­spic­u­ously iden­tify” the ori­gin of their prod­ucts. He argued that reg­u­lar con­sumers can­not eas­ily read the smaller print on the labels that iden­ti­fies the ori­gins of the bot­tle, but can eas­ily see the larger ​“California” printed at the top of the label.

According to Emam, there are sev­eral prece­dents set by pre­vi­ous cases that pro­tect brand names and com­pany trade­marks from being restricted by leg­is­la­tion. He added that pass­ing AB-535 would set a dan­ger­ous prece­dent.

“Besides being uncon­sti­tu­tional, the speech restric­tions in AB-535 would set a dan­ger­ous exam­ple,” Emam said. ​“Just as rea­son­able con­sumers know that Kentucky Fried Chicken has prod­ucts fried out­side Kentucky, they know that olive oil with ​‘California’ in a trade­mark some­times con­sists of out-of-state olives.”

However, mem­bers of CCTOOL say that sell­ing imported olive oils in a bot­tle labeled con­spic­u­ously with ​“California” under­cuts their prod­ucts. They argue that these blended olive oils are pro­duced at lower prices than 100-per­cent California olive oil while heav­ily imply­ing that it is a California prod­uct.

“It’s trad­ing on our region and name with a prod­uct that is not even close to a major­ity from our region and under­mines all of us that are try­ing to do busi­ness and pro­mote our prod­uct as a California extra vir­gin olive oil,” Greg Traynor, co-owner of 43 Ranch, told Olive Oil Times.

He added that, anec­do­tally, many con­sumers with whom he speaks dur­ing mill tours and olive oil tast­ings at 43 Ranch assume that the Destination Series was made with California-grown olives. For Traynor, this mis­con­cep­tion exem­pli­fies the need for AB-535.

Fox dis­agrees with CCTOOL and Traynor on these points and empha­sized that COR’s Global Blend brand – which make up roughly 70 per­cent of the company’s olive oil sales – is accu­rately labeled and com­plies with all exist­ing leg­is­la­tion in place to pre­vent false adver­tis­ing.

“We’re not giv­ing con­sumers enough credit,” he said. ​“We’ve tested this with con­sumers and done con­sumer research that shows 90 per­cent of con­sumers can under­stand the dif­fer­ence between our 100-per­cent California bot­tle and our Global Blend bot­tle. Consumers get it.”

Citing mar­ket research from IRI/SPINS, Fox said in the two years that COR’s Global Blend has been on the mar­ket, items labeled as 100-per­cent California extra vir­gin olive oil had grown in vol­ume by 315 per­cent and are 116 per­cent more expen­sive than the extra vir­gin olive oils of major importers, up from 96 per­cent in January 2019.

“There is no data that illus­trates that accu­rately labeled prod­ucts like our Global Blend have had any neg­a­tive impact on the broader California extra vir­gin olive oil pro­duc­ers and their grow­ers,” Fox said.

Olive Oil Times could not inde­pen­dently cor­rob­o­rate this data and IRI/SPINS did not respond to ques­tions about the report.

Fox added that large-scale pro­duc­ers, such as COR, rely on blend­ing imported olive oils with California olive oils to meet the demand for the prod­uct. He said that COR is sold in 29,000 stores across the U.S. and relies on imported olive oils to main­tain its expen­sive shelf space, espe­cially after poor local har­vests, such as the pre­vi­ous one.

“We have to have the abil­ity to com­pete and this allows us the flex­i­bil­ity to man­age high-yield years and bad years,” Fox said. ​“This line was born out of a crop dis­as­ter and last year we had an off-year that was worse than we like and cli­mate change has an impact too.”

“We have to be able – after spend­ing mil­lions of dol­lars to secure space on super­mar­ket shelves – pro­tect that invest­ment and con­tinue to deliver olive oil to con­sumers,” he added. ​“We should be allowed to com­pete like this.”

However, CCTOOL mem­bers and sup­port­ers argue that hav­ing the word ​“California” embla­zoned on a bot­tle of mostly-imported olive oil is not allow­ing them to com­pete on a level play­ing field.

“In California, we’re sub­ject to much stricter reg­u­la­tions, much stricter over­sight when it comes to how we treat our work­ers and how we use water and pes­ti­cides,” Samantha Dorsey, pres­i­dent of McEvoy Ranch and a mem­ber of CCTOOL, told Olive Oil Times. ​“All of that costs money and that’s true for every crop in California.”

“Every one of us who grows crops in California, we’re proud of the crop that we grow and proud that it’s a high-qual­ity prod­uct,” she added. ​“Imported prod­ucts are not sub­ject to the same reg­u­la­tory over­sight and they just com­pletely dimin­ish the work that we do here.”

• Washington Legal Foundation