Proposed Kiwifruit Research, Promotion, and Consumer Information Order

SUMMARY: This proposed rule would establish an industry-funded

research, promotion, and consumer information program for fresh

kiwifruit. Under the proposed Kiwifruit Research, Promotion, and

Consumer Information Order (Order), producers and importers would pay

an assessment not to exceed 10 cents per 7-pound tray of kiwifruit to

the proposed National Kiwifruit Board (Board). Composed of producers

and importers or exporters, the Board would use the assessments

collected to conduct a generic program of research, promotion, and

consumer information to maintain, expand, and develop markets for

kiwifruit.

DATES: A referendum order establishing the voting period for the

referendum and the representative period for voter eligibility will be

published at a later date in the Federal Register.

FOR FURTHER INFORMATION CONTACT: Sonia N. Jimenez, Research and

Promotion Branch, Fruit and Vegetable Division, AMS, USDA, STOP Code

0244, 1400 Independence Ave, SW, Washington, DC 20250-0244, fax (202)

205-2800, telephone (202) 720-9916 or (1)(888) 720-9917.

SUPPLEMENTARY INFORMATION: This proposed Order is issued under the

National Kiwifruit Research, Promotion, and Consumer Information Act,

Subtitle V of the Federal Agricultural Improvement and Reform Act of

1996 [Pub. L. 104-127], enacted April 4, 1996, hereinafter referred to

as the Act.

Executive Order 12988

This rule has been reviewed under Executive Order 12988, Civil

Justice Reform. It is not intended to have retroactive effect. This

rule would 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 558 of the Act [7

U.S.C. 7467], after an Order is implemented, a person subject to the

Order may file a petition with the Secretary stating that the Order or

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 an exemption from the Order. The

petitioner is afforded the opportunity for a hearing on the petition.

After such hearing, the Secretary will make a ruling on the petition.

The Act provides that the district courts of the United States in any

district in which a person who is a petitioner resides or carries on

business are vested with jurisdiction to review the Secretary's ruling

on the petition, if a complaint for that purpose is filed within 20

days after the date of the entry of the ruling.

Executive Order 12866 and Regulatory Flexibility Act

This rule has been determined not significant for purposes of

Executive Order 12866 and, therefore, has not been reviewed by the

Office of Management and Budget.

In accordance with the Regulatory Flexibility Act [5 U.S.C. 601 et

seq.], the Agency has examined the impact of the proposed rule on small

entities.

The kiwifruit industry initiated this program by asking the U.S.

Congress (Congress) to pass legislation to create a generic program of

promotion and research for kiwifruit. Congress found that this program

is vital to the welfare of kiwifruit producers and other persons

concerned with producing, marketing, and processing kiwifruit.

This program is intended to: develop and finance an effective and

coordinated program of research, promotion, and consumer information

regarding kiwifruit; strengthen the position of the kiwifruit industry

in domestic and foreign markets and maintain, develop, and expand

markets for kiwifruit; and to treat domestically produced kiwifruit and

imported kiwifruit equitably.

The industry support for the program will be determined during the

referendum to be conducted by the Department. Dates for the referendum

will be announced by the Secretary no later than 60 days before the

referendum.

This program was initiated by industry, industry must approve the

program in a referendum in advance of its implementation, and industry

members would serve on the promotion board that would administer the

program under the Department's supervision. In addition, any person

subject to the program may file with the Secretary a petition stating

that the order or any provision is not in accordance with law and

requesting a modification of the order or an exemption from the order.

Administrative proceedings were discussed earlier in this proposed

rule.

In this program, handlers would be required to collect assessments

from producers, file reports, and submit assessments to the promotion

board. Importers would be required to remit to the promotion board

assessments not collected by the U.S. Customs Service (Customs) and to

file reports with the promotion board. In addition, exempt producers

and importers would be required to file an exemption application. While

the proposed Order would impose certain recordkeeping requirements on

handlers and importers, information required under the proposed Order

could be compiled from records currently maintained. The forms require

the minimum information necessary to effectively carry out the

requirements of the program, and their use is necessary to fulfill the

intent of the Act. The estimated cost in providing information to the

promotion board by the 760 respondents would be $7,842.50 or $10.32 per

respondent per year.

The Department would oversee program operations and, if the program

is implemented, every 6 years would conduct a referendum to determine

whether the kiwifruit industry supports continuation of the program.

There are approximately 650 producers, 45 importers, and 65

handlers of kiwifruit that would be covered by the program. Small

agricultural service firms, which would include the handlers and

importers who would be covered under the Order, have been defined by

the Small Business Administration (SBA) [13 CFR 121.601] as those whose

annual receipts are less than $5 million and small agricultural

producers, those who would be required to pay assessments, as those

having annual receipts of $500,000. Only one handler has been

identified to have $5 million or more in annual sales. In addition,

there are 10 producers at or over the $500,000 annual sales receipts

threshold. Accordingly, the majority of handlers and producers may be

classified as small entities. While the Department does not have

specific information regarding the size of importers, it may be

concluded that the majority of importers may be classified as small

entities.

The Department is aware of producers in California, Oregon,

Pennsylvania, and South Carolina, and importers that import kiwifruit

from Chile, New Zealand, and Italy. The Department believes that these

individuals would include a majority of the producers and

[[Page 54315]]

importers that would be covered under the program. The Department is

also aware that some individuals may be producers of ``hardy

kiwifruit,'' a different species of kiwifruit, known as Actinidia

arguta, which would not be covered under the proposed program. However,

the Department does not have specific information regarding how many

individuals produce only the ``hardy kiwi'' versus the ``fuzzy'' most

common kiwifruit species, known as Actinidia deliciosa. Therefore, the

total number of producers believed to be covered by the program is the

same as in the first proposed rule.

Other names for the species Actinidia arguta (hardy kiwifruit) are

baby kiwifruit, kiwifruit grape, and kiwiberry. There are no official

statistics on this commodity because it is such a small and new crop.

According to comments received, this species is grown in California,

Oregon, Pennsylvania, Washington, Virginia, and British Columbia. The

production in Virginia and Pennsylvania is not commercially marketed.

Oregon production on 5 acres was a total of 216,000 pounds over the

last 3 years. It takes 3 to 5 years to harvest the first crop. The

hardy kiwifruit is hand-harvested and packed in 6-ounce berry baskets

like raspberries. The harvesting, storage, handling, consumer

recognition, and marketing of this species is completely different from

the most common fuzzy kiwifruit or Actinidia deliciosa. All references

to ``kiwifruit'' in this document, therefore, mean the Actinidia

deliciosa species.

California is the source for practically all (99.7%) of the

kiwifruit produced in the United States. The California kiwifruit

industry consists of approximately 600 producers and 65 handlers.

Production rose by 75 percent between 1984 and 1996, increasing from 18

thousand tons to 31.5 thousand tons. In the period from 1984 through

1996, the value of production fell by 26 percent.

Most U.S. kiwifruit is utilized fresh. Fresh utilization increased

by 123 percent between 1984 and 1996, growing from 11.7 thousand tons

to 26.1 thousand tons. The season average price during 1984 through

1996 fell by 53 percent, declining from $1,070 per ton to $502 per ton.

Exports accounted for about 30 percent of U.S. fresh utilization during

that period.

Between 1992 and 1996, the average annual production per producer,

including kiwifruit for processing, was 99 tons or 28,286 7-pound trays

of kiwifruit. The average price was $406 per ton, giving an average

return of about $40,000 per producer per year. A typical tray price

during this period was $1.42 per tray, and the average amount shipped

per handler was about 148,276 trays, yielding an average annual revenue

per handler of $210,552. U.S. importers handled an average of 184,857

trays per year per importer. During this period, the average value of

total imports per year was $18.3 million (f.o.b. country of origin).

The majority of kiwifruit came from Chile, with the remaining coming

from New Zealand and Italy. In 1996, imports totaled 87.9 million

pounds, up 5 percent from 1995. The value of imports in 1996 was $26.5

million.

The proposed rule published in the Federal Register on October 2,

1996, provided statistics on production, value of production, fresh

utilization, average price, average return per producer, average annual

revenue per handler, and other related statistics that are different

from the statistics provided in this rule. These changes are due to the

fact that the October 2, 1996, rule relied on statistics from 1985

through 1995 because 1996 crop year statistics were not available. When

1996 statistics are added to the averages, the final averages change

because the domestic 1996 crop statistics are considerably lower in

terms of production, and fresh utilization. For example, production

from 1985 to 1995 increased an average of 119 percent. However, when

adding 1996 production, the average from 1985 to 1996 shows an average

increase of only 75 percent. Therefore, adding the 1996 statistics to

the averages provided in the October 2 proposed rule changes the

statistical averages, in some cases considerably, making the statistics

for production and fresh utilization lower than previously indicated.

The proposed kiwifruit Order would authorize assessment fees on

producers (to be collected by first handlers) and on importers

(collected by the U.S. Customs Service) of up to 10 cents per 7-pound

tray. The Board, which will be composed of kiwifruit producers,

importers, and, possibly, exporters, must recommend the assessment

rate, which is subject to oversight by the Secretary, as are the other

rules and regulations. At the maximum rate of assessment, the promotion

board would collect $2.1 million to administer the program. Assessments

on domestic production are expected to represent 45 percent of the

income under the program.

The effect of the assessments will depend on the actual rate

recommended by the Board. At the maximum rate, it is expected that the

effect on producers would be approximately 8 percent of their average

return. However, the Order would exempt producers of less than 500

pounds of kiwifruit a year, importers of less than 10,000 pounds a

year, and kiwifruit sold for processing and sold directly to consumers.

Furthermore, under the proposed program, the promotion board could

authorize different reporting schedules based on different marketing

practices. This could be of benefit specially to small businesses for

whom a less frequent reporting period would diminish the reporting

burden.

The Department would keep all of these individuals informed

throughout the program implementation and referendum process to ensure

that they are aware of and are able to participate in the

implementation process. In addition, trade associations and related

industry media would receive news releases and other information

regarding the implementation and referendum process. Furthermore, all

the information would be available through e-mail.

If the program is implemented, the promotion board would develop

guidelines for compliance with the program.

In addition, the kiwifruit industry would nominate individuals to

serve as members of the promotion board. These individuals would

recommend the assessment rate, programs and projects, a budget, and any

other rules and regulations that might be necessary for the

administration of the program. The Department would ensure that the

nominees represent the kiwifruit industry as specified in the Act.

There is a federal marketing order program for kiwifruit in

California which is administered by the Kiwifruit Administrative

Committee (KAC), under the Department's supervision. KAC is composed of

California producers. The marketing order regulations for grade, size,

maturity, and containers are designed to assure consumers of

consistently good quality California kiwifruit. The marketing order and

its regulations allow small farmers to compete effectively in an

increasingly competitive marketplace. Under the marketing order,

handlers are required to submit information pertaining to and pay

assessments on kiwifruit shipments. The assessment rate recommended by

the KAC is derived by dividing anticipated expenses by expected

shipments of kiwifruit. Because that rate is applied to actual

shipments, it must be established at a rate which will produce

sufficient income to pay the KAC's expected expenses. The 1996-97

assessment rate was set at 1.75 cents per tray or tray equivalent of

kiwifruit. The 1995-96 rate of assessment was 1.5 cent

[[Page 54316]]

per tray or tray equivalent of kiwifruit. Each handler pays an average

of $2,000 per year in assessments. The estimated reporting burden per

year on individual handlers is estimated at 4.2 hours or $42.00 per

handler under the marketing order.

The California Kiwifruit Commission (CKC) administers a California

state program for kiwifruit. The CKC is composed of kiwifruit

producers, packers, and handlers. In 1995-96 producers paid $1.4

million in assessments at a rate of 17 cents per tray or tray

equivalent. In 1996-97 it is estimated that producers would pay $1.15

million in assessments at a rate of 17 cents per tray or tray

equivalent. Handlers collect the assessments and remit them to the CKC.

The collection of information required under the proposed order for

the research and promotion program would be similar to the marketing

order program. However, the KAC and the promotion board would keep

their information separate to comply with confidentiality requirements

under the programs. Furthermore, using the same source of information

would reduce the burden on producers and handlers of all sizes.

In the past, the CKC participated in a voluntary promotional

program with Chilean kiwifruit growers to jointly advertise kiwifruit

in the United States. This program, however, does not provide enough

resources to be as effective as a national generic program could be. In

addition, other importing countries and private companies spend

considerable amounts of resources in kiwifruit advertising. The purpose

of this proposed program is not to restrict the individual promotions

but to add a generic promotion program for kiwifruit where industry

segments pull together resources for the benefit of the whole industry.

The absence of a generic program for kiwifruit may have a negative

impact on the industry because other commodity groups, specifically for

competing fruits, conduct promotion activities to maintain and expand

their markets. The kiwifruit industry would be at a disadvantage

because individual producers, handlers, and importers would not be able

to implement and finance such a program without cooperative action. In

addition, Agricultural Issues Forum, a group of 15 California commodity

organizations, conducted a study in mid-1995 and reported in early 1996

that consumers strongly support the concept of farmers working together

to promote their products, conduct product research, engage in consumer

education programs, and set quality standards and inspect products.

Consumers said that they benefitted from these activities and were more

inclined to buy those products. Eighty-one percent of the farmers

surveyed said that mandated programs were either very important or

important in promoting products. The survey was conducted among

farmers, public policy leaders, consumers, retailers, and allied

industries.

In order to conduct the Regulatory Flexibility Analysis regarding

the impact of this proposed Order on small entities, the proposed rule

that was published in the Federal Register on October 2, 1996 [61 FR

51378] invited comments concerning the potential effects of the

proposed Order. No comments were received concerning the impact of the

proposed order on small entities. However, as explained earlier in this

rule, ``hardy kiwifruit'' producers would not be covered under the

program because the species Actinidia arguta is considerably different

from the most common ``fuzzy kiwifruit'' species Actinidia deliciosa.

This would have a positive impact on small businesses since most of the

producers of ``hardy kiwifruit'' are considered small businesses.

In addition, it is expected that the proposed order would be very

beneficial to the kiwifruit industry, especially small businesses who

would not be able to afford a nationwide comprehensive program

individually.

It is estimated that there are approximately 700 kiwifruit

producers and importers that would be eligible to vote in the

referendum. It would take an average 15 minutes for each voter to read

the voting instructions and complete the referendum ballot. The total

burden on the total number of voters will be 29 hours.

Paperwork Reduction Act

In accordance with the Office of Management and Budget (OMB)

regulations [5 CFR Part 1320] which implement the Paperwork Reduction

Act of 1995 [44 U.S.C. Chapter 35], the information collection and

recordkeeping requirements that would be imposed by this proposed Order

were approved by OMB on December 16, 1996.

Title: National Research, Promotion, and Consumer Information

Programs.

OMB Number: 0581-0093, except for the Promotion Board nominee

background statement form which is assigned OMB number 0505-0001.

Expiration Date of Approval: October 31, 1997.

Type of Request: Revision of a currently approved information

collection for research and promotion programs.

Abstract: The information collection requirements in this request

are essential to carry out the intent of the Act.

While the proposed Order would impose certain recordkeeping

requirements on handlers and importers, information required under the

proposed Order could be compiled from records currently maintained. The

proposed Order's provisions have been carefully reviewed and every

effort has been made to minimize any unnecessary recordkeeping costs or

requirements, including efforts to utilize information already

maintained by handlers under the federal marketing order program in

California and the CKC. The information needed would be taken from

financial reports or sales receipts already maintained.

The forms require the minimum information necessary to effectively

carry out the requirements of the program, and their use is necessary

to fulfill the intent of the Act. Such information can be supplied

without data processing equipment or outside technical expertise. In

addition, there are no additional training requirements for individuals

filling out reports and remitting assessments to the promotion board.

The forms would be simple, easy to understand, and place as small a

burden as possible on the person required to file the information.

Collecting information monthly coincides with normal business

practices. Collecting information less frequently would hinder the

promotion board from effectively carrying out the provisions of its

program. Requiring reports less frequently than monthly would impose

additional recordkeeping requirements by requiring information from

several months to be consolidated prior to filling out the form rather

than just copying end-of-month figures already available onto the

forms. The timing and frequency of collecting information is intended

to meet the needs of the industry while minimizing the amount of work

necessary to fill out the required reports. In addition, the

information to be included on these forms is not available from other

sources because such information relates specifically to individual

producers, importers, and handlers who are subject to or exempted from

the provisions of the Act. Therefore, there is no practical method for

collecting the required information without the use of these forms.

The estimated cost in providing information to the promotion board

by the 760 respondents would be $7,842.50

[[Page 54317]]

or $10.32 per respondent. This total has been estimated by multiplying

784.25 (total burden hours requested) by $10.00 per hour, a sum deemed

to be reasonable should the respondents be compensated for their time.

Information collection requirements that are included in this

proposal include:

(1) A periodic report by each handler who handles kiwifruit.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .50 hours per each handler

reporting on kiwifruit handled.

Respondents: Handlers.

Estimated Number of Respondents: 65.

Estimated Number of Responses per Respondent: 12.

Estimated Total Annual Burden on Respondents: 390 hours.

(2) A periodic report by each importer who imports kiwifruit.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .25 hours per each importer

reporting on kiwifruit imported.

Respondents: Importers.

Estimated Number of Respondents: 45.

Estimated Number of Responses per Respondent: 12.

Estimated Total Annual Burden on Respondents: 135 hours.

(3) An exemption application for producers and importers of

kiwifruit producing less than 500 pounds and importing less than 10,000

pounds of kiwifruit a year respectively, persons which sell directly to

consumers or sell kiwifruit for processing who will be exempt from

assessments and reporting requirements.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .25 hours per response for each

exempt producer and importer.

Respondents: Exempt producers and importers

Estimated Number of Respondents: 50.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 12.5 hours.

(4) A referendum ballot to be used to determine whether producers

and importers covered by the Order favor implementation or continuance

of the Order.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .25 hours per response for each

producer and importer.

Respondents: Producers and importers.

Estimated Number of Respondents: 700.

Estimated Number of Responses per Respondent: 1 every 6 years

(.16).

Estimated Total Annual Burden on Respondents: 29 hours.

(5) Nominations.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .5 hours per response.

Respondents: Producers and importers.

Estimated number of Respondents: 700.

Estimated Number of Responses per Respondent: 1 every 3 years (.33)

Estimated Total Annual Burden on Respondents: 115.5 hours.

(6) A request for refund of assessments collected by Customs for

exempt importers.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .25 hours per response for each

exempt importer requesting a refund of assessments collected by

Customs.

Respondents: Exempt importers.

Estimated number of Respondents: 5

Estimated Number of Responses per Respondent: 1

Estimated Total Annual Burden on Respondents: 1.25 hours.

(7) A background questionnaire for nominees.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average .5 hours per response for each

producer, importer, and public member nominated to the Board.

Respondents: Producers, importers, and public member.

Estimated Number of Respondents: 22 for the initial nominations to

the Board and approximately 12 respondents annually thereafter.

Estimated Number of Responses per Respondent: 1.

Estimated Total Annual Burden on Respondents: 22 hours for the

initial nominations to the Board and 12 hours annually thereafter.

(8) A requirement to maintain records sufficient to verify reports

submitted under the Order.

Estimate of Burden: Public recordkeeping burden for keeping this

information is estimated to average .5 hours per recordkeeper

maintaining such records.

Recordkeepers: Handlers and importers.

Estimated number of Recordkeepers: 160.

Estimated Total Recordkeeping Hours: 80 hours.

No comments were received on the recordkeeping requirements.

Background

The Act authorizes the Secretary to establish a national kiwifruit

research, promotion, and consumer information program. The program

would be funded by an assessment levied on producers and importers not

to exceed 10 cents per 7-pound tray of kiwifruit. Kiwifruit sold

directly to a consumer by a producer for a purpose other than resale

and domestic and imported kiwifruit for processing would be exempt from

assessments.

Assessments would be used to pay for: Research, promotion, and

consumer information; administration, maintenance, and functioning of

the Board; and expenses incurred by the Secretary in implementing and

administering the Order, including referendum costs.

The first handler would be responsible for the collection of

assessments from the producer and payment to the promotion Board.

Handlers would be required to maintain records for each producer for

whom kiwifruit is handled, including kiwifruit produced by the handler.

In addition, handlers would be required to file reports regarding the

collection, payment, or remittance of the assessments. All information

obtained through handler reports would be kept confidential.

Customs would collect assessments on imported kiwifruit and would

remit those assessments to the promotion Board for a fee.

The Act requires the Department to conduct a referendum during the

60-day period preceding the proposed Order's effective date. Kiwifruit

producers of 500 pounds or more and importers of 10,000 pounds or more

annually would vote in the referendum to determine whether they favor

the Order's implementation. The proposed Order must be approved by a

majority of eligible producers and importers voting in the referendum,

and producers and importers favoring approval must produce and import

more than 50 percent of the total volume of kiwifruit produced and

imported by persons voting in the referendum. Subsequent referenda

would be conducted every 6 years after the program is in effect or when

requested by 30 percent of kiwifruit producers and importers covered by

the Order. The Secretary would give serious consideration to requests

for referendum when requested by a group representing a considerable

amount of the volume covered by the program.

[[Page 54318]]

Since the Department has incurred costs in connection with

implementing this national research, promotion, and consumer

information program for fresh kiwifruit, the Department is requesting

the proponents to post, prior to the referendum, a bond or other

collateral to cover the Department's costs prior, during, and after

referendum. The current estimate for implementation, including the

referendum, is $150,000. The Secretary will issue a referendum order,

which establishes the voting period, representative period, method of

voting, and designates the referendum agents, soon after the bond is

posted.

A final rule on the referendum procedures which will be used to

conduct the referendum will be published separately.

The Act provides for the submission of proposals for a kiwifruit

research, promotion, and consumer information Order by industry

organizations or any other interested person affected by the Act. The

Act requires that such a proposed Order provide for the establishment

of a promotion Board. The promotion Board would be composed of 11

voting members: 6 producers, 4 importers or exporters, and 1 public

member. Each member would have an alternate. Members would serve a

three-year term of office. No member may serve more than two

consecutive three-year terms.

The Act provides that any person subject to the Order may file with

the Secretary a petition stating that the Order or any of its

provisions is not in accordance with law and requesting a modification

of the Order or an exemption from the Order. The individual would be

given the opportunity to a hearing on the petition.

The Department issued a news release on May 6, 1996, requesting

proposals for an initial Order or portions of an initial Order by May

17, 1996. A second news release, extending the deadline for submission

of proposals to June 3, 1996, was issued on May 24, 1996.

An entire proposed Order was submitted by the CKC. The CKC is an

industry group created by the State of California to promote California

kiwifruit. In addition, a partial proposal was submitted by the New

Zealand Kiwifruit Marketing Board (NZKMB). The NZKMB represents all New

Zealand exporters of kiwifruit into the United States.

In addition to minor editorial changes, the Department modified the

CKC's proposed text by: adding the power and duty to investigate

violations of the Act and Order; deleting a definition for industry

information because it is not authorized under the Act; revising

definitions to make them in accordance with the Act; clarifying that

the collection of assessments from imports would be performed through

Customs; clarifying that the promotion board would have control over

voluntary contributions made to the promotion board; clarifying that

the assessment rate may only be changed prior to a fiscal year;

clarifying that the assessment rate may only be changed by regulation

rather than in the budget; and adding a provision regarding federal

debt collection procedures. The CKC also submitted referendum

procedures. The final rule on the referendum procedures will be

published separately.

A proposed rule seeking comments on a proposed kiwifruit research,

promotion, and consumer information order was published on October 2,

1996, in the Federal Register [61 FR 51378]. Comments were invited on

the CKC proposal for an entire Order (Proposal I), the NZKMB proposals

regarding board membership and limiting promotions to the U.S. market

(Proposal II), and the NZKMB alternate proposal regarding board

membership (Proposal III). The deadline for comments was December 2,

1996. Seventy-five comments were received. Comments were received from

eight Chilean kiwifruit growers or grower associations, 31 Chilean

kiwifruit exporters or exporter associations, one international

exporter association, 26 importers of Chilean kiwifruit, two U.S.

growers, the CKC (which represents California growers), four

universities, and the embassies of Australia and New Zealand.

The National Kiwifruit Growers Association from Chile submitted a

comment in opposition to the proposed order. The same comment was

submitted by Fedefruta, a trade association of Chilean fruit growers;

the Chilean Fresh Fruit Association (CFFA), a trade association

composed of Chilean fruit exporting companies; and the Chilean

Exporters Association (CEA), a trade association comprised of Chilean

fruit exporting companies. Twenty-nine comments were received from

exporters of kiwifruit from Chile that opposed the proposed order and

adopted the reasons explained in the comment submitted by the CFFA.

Twenty-six comments were received from importers of kiwifruit from

Chile that opposed the proposed order. These comments also adopted the

rationale in the comment submitted by the CFFA. In addition, six

comments were received from growers of kiwifruit from Chile that

opposed the proposed order. Three of these comments adopted the reasons

explained in the comment submitted by CFFA while the remaining three

comments adopted the comment submitted by Fedefruta. Accordingly, in

discussing these 59 comments in the preamble, for ease of reference we

will refer to them collectively as the Chilean commenters or comments.

The Chilean commenters provided six reasons for their opposition to

the proposed order. They were of the view that the proposed program:

(1) Was unnecessary to achieve legitimate marketing objectives; (2)

would be ineffective in achieving legitimate marketing objectives; (3)

was inherently biased against imported kiwifruit; (4) would violate the

First Amendment and the Foreign Commerce Clause of the U.S.

Constitution; (5) would contravene international principles of free

trade embodied in the General Agreement on Tariffs and Trade (GATT);

and (6) would violate provisions of the Chilean Constitution that

prohibit monopolistic practices.

With regard to the first reason presented, the Chilean commenters

argued that the proposed program was unnecessary because the CFFA had

been coordinating its promotional activities for kiwifruit in the U.S.

market with the CKC by participating in a voluntary funded program;

that there was no substantive difference in the objective of the

voluntary program and the proposed program; that a trade case brought

by the CKC against New Zealand kiwifruit [California Kiwifruit

Commission v. Moss, 53 Cal. Rptr. 2d 138 (Cal. App. 3d Dist. 1996]

demonstrated that a mandatory program such as the proposed program

could lead to significant abuses and the pursuit of non-marketing

objectives; and finally that AMS does not have sufficient data at hand

to warrant the imposition of a mandatory order. We disagree with the

commenters.

It is the Department's understanding that the voluntary program

funded by the CKC and the CFFA was not funded this past year. For a

program to be effective, it is necessary that promotional activities be

conducted on a regular basis and with no interruptions. Furthermore, it

is not the intention of the proposed research and promotion program to

obstruct the activities of other promotional activities for kiwifruit.

The promotional activities of the CFFA and the CKC could continue

independently of the proposed research and promotion program if the

parties so desire.

In addition, the proposed program is authorized under the Act and

is consistent with the intent and provisions of Act. The program as

proposed herein contains all of the necessary and appropriate

provisions under the Act needed to conduct a

[[Page 54319]]

national program. This program would be subject to similar oversight

and supervision as is currently provided for research and promotion

programs administered by the Department.

The activities of the proposed Board would be closely monitored by

the Department to assure that only authorized activities are funded by

the proposed Board. In addition, section 556(e) of the Act [7 U.S.C.

7465] and Sec. 1214.53 of the proposed Order prohibit the use of funds

for the purpose of influencing legislation or governmental policy or

action. Furthermore, under Title V, Subtitle A of the 1996 Farm Bill

(Commodity Promotion and Evaluation), research and promotion program

are required to evaluate the accomplishments of their programs. The

Department is working with current programs to develop guidelines for

the programs to meet the objectives of the required evaluations. If, as

a result of the evaluations, a program is determined to not have a

positive impact in the industry, those covered by the program would

have the necessary information to make a determination on whether to

continue the program. Furthermore, a referendum would be conducted to

determine the level of support for the program.

The Chilean commenters also argue that the Department should not

proceed with a referendum on the proposed order until a decision of the

Supreme Court in Daniel Glickman, Secretary of Agriculture v. Wileman

Brothers & Elliot, Inc. et al. (Wileman) [Supreme Court case 95-1184]

so that the Department has the benefit of that opinion and is able to

conform any proposed order to its requirements.

On June 25, 1997, the Supreme Court decided the case and upheld the

constitutionality of generic advertising funded by growers of

California nectarines and peaches. The case sought review of First

Amendment issues raised in generic advertising programs under Federal

marketing orders for California nectarines and peaches. The U.S. Court

of Appeals for the Ninth Circuit had previously found that mandatory

assessments implicated handlers' First Amendment right because they

were compelled to provide financial support for particular generic

commercial advertisements. The Supreme Court held that the requirement

that growers finance generic advertising does not violate the First

Amendment of the Constitution. Consequently, there is no reason to

delay the current rulemaking because this program as proposed is

consistent with applicable law.

In its second reason for opposing the proposed program, the Chilean

commenters argued that a mandatory promotional program could only be

successful if a general consensus exists in the affected industry and

was of the view that no such consensus exists; that the proposed Order

should be substantially altered to conform to GATT principles as are

more reflected in the Commodity Promotion, Research, and Information

Act of 1996 (generic statute) [7 U.S.C. 7411 et seq.]; that the

mandatory objectives and the market for domestic kiwifruit producers in

the United States were not necessarily the same as that for Chilean

kiwifruit; and that the proposed order does not have the necessary

safeguards to prevent potential misallocation or biased allocation of

funds. We disagree with the commenters' arguments and conclusions. The

Order as proposed herein is consistent with applicable law and will be

subject to a referendum vote of kiwifruit producers and importers who

will be subject to assessments under the Order to determine whether

such producers and importers approve and support the implementation of

the Order. In addition, the industry has the option of amending the

proposed program consistent with the Act in order to reflect the

industry's needs at anytime. Furthermore, this program, as are other

similar commodity research and promotion programs, will be subject to

Department oversight and supervision.

The third reason argued by the Chilean commenters was that the

proposed program is inherently biased and discriminates against

imported kiwifruit. The comment asserted that this bias is evident

throughout the regulation but is most obvious in proposed provisions

for adoption of the Order, composition of the board, voting procedure

for adopting of assessment and subsequent referenda. The comment went

on to conclude that the biases render the proposed Order invalid under

the Constitution. We disagree. The proposed program is consistent with

the enabling statute.

The commenters then discussed what they view as the most

objectionable provisions of the proposed Order that must be modified

before a referendum takes place.

The first proposed provision cited was Sec. 1214.30 Establishment,

adjustment, and membership. The comments asserted that the composition

of the Board does not bear any rational relationship to the interests

that are subject to assessments. However, the proposed provision is

consistent with the relevant statutory provisions that provide for a

diverse 11-member Board consisting of six producer members not exempt

from assessment; four importer members not exempt from assessment or

exporters; and one member appointed from the general public. The Act

also provides that, subject to the 11-member limit, the Secretary may

adjust membership on the Board to accommodate changes in production and

import levels of kiwifruit. However, the proposed order reflects

provisions in the Act requiring 51 percent or more of the members of

the promotion Board to be domestic producers.

Arguing that unfairness could result from a program controlled by a

domestic board representing a minority of the market, the Chilean

commenters asserted that in order to avoid a potential for abuse, the

provisions of the generic statute concerning geographic representation

and provisions concerning periodic reappointment should be invoked.

However, these statutory provisions in the generic statute are not part

of and do not apply to the kiwifruit statute, the authority for the

program proposed herein.

With regard to proposed Sec. 1214.36, Procedure, the commenters

noted that the voting procedures provide that all motions need only a

simple majority vote of a quorum to pass except for approval of an

assessment rate which requires a two-thirds vote of a quorum to pass.

The commenters pointed out that the Act in Sec. 556(a)(2) [7 U.S.C.

7465] requires a two-thirds vote of a quorum of the board for approval

of a budget. We agree, and Sec. 1214.36(b)(2) is revised to reflect the

need of a two-thirds vote of a quorum of the board for approval of a

budget. The commenters also expressed concern that the four importer

members would have a less effective role in setting an assessment rate

and budget based on the composition of the Board and the number of

votes needed to approve these items. The proposed four importer or

exporter members on the Board is consistent with the membership

provisions in the Act. A two-thirds vote of a quorum of the board

further assures agreement by all parties on budget and assessment rate

issues. In addition, the assessment rate would be recommended by the

promotion Board and Sec. 556 of the Act [7 U.S.C. 7465] specifies that

a budget and assessment rate must be approved by the Secretary before

becoming effective. Rulemaking and public comments would be sought by

the Department before a final decision is made on the assessment rate.

The Chileans also commented on proposed Secs. 1214.39 Duties,

1214.40 Programs, Plans, and Projects, and

[[Page 54320]]

1214.50 Budget and expenses. The Chilean commenters argued that, while

the specific controls established in these sections are needed to

prevent fraud, waste, or abuse in the promotional program, the

bureaucratic layer of supervision and expense of a mandatory

government-supervised program cause it to be necessarily less efficient

than a voluntary program. We disagree and believe that such safeguards

contribute to a sound and effective program for the industry. The

commenters also stated that the meaning of the term administrative

expenses in Sec. 1214.50(f) should be clearly specified. We disagree

and believe that the term does not need further clarification in the

proposed order. Further, USDA has developed guidelines to identify

administrative costs and ensure consistency between programs. These

guidelines are being used in other programs.

In commenting on Sec. 1214.51, the Chilean comments asserted that

the assessment provisions on imports could operate either as a

disguised tariff or as a trade barrier. The commenters argued that

domestic producers may default on the payment of assessments whereas

importers never will because Customs collects the assessments on

imports at the time of entry into the United States. The comments went

on to state that, if an initial assessment was set at 10 cents per

tray, it would diminish returns to growers in Chile under existing

market conditions by 30 percent. The commenters then concluded that a

program that uses up 30 percent of a foreign grower's return, without

demonstrated market share or price increases, is protectionist. We

again disagree with the comment. The statute itself provides for

collection of import assessments by Customs. This method of collection

is efficient and cost effective and has been used successfully in

similar research and promotion programs. We also note that the

assessment is imposed on each importer of kiwifruit and not upon the

foreign grower.

The comments also expressed concern regarding the board's authority

to enter into agreements authorizing state-mandated organizations to

collect assessments on its behalf. The comments raised concern about

abuse and self-dealing. Any such agreement would be subject to approval

of the Secretary and to supervision and oversight. In addition, the

proposed promotion Board may or may not decide to utilize a state

mandated organization to administer the proposed program. The final

issue raised by the comments regarding Sec. 1214.51 was concerning the

permitted level of administrative expenses which cannot exceed 30

percent of the budget except in the first year of operation. This

provision reflects Sec. 556(c)(3) of the Act [7 U.S.C. 7465] which

provides for just such a limitation in the case of assessments.

The CKC commented that the current organization takes great pride

in keeping administrative costs at a minimum and that combining the

operations of the CKC and the Board would result in substantial savings

for all segments of the industry. In addition, the CKC stated that

limiting administrative costs would ignore the reality of start-up

costs and would tie the hands of future Boards.

The CKC indicated in its comment that it would support a limitation

or cap on administrative expenses. The Act provides in Sec. 556(c)(3)

[7 U.S.C. 7465] that the level of administrative expenses cannot exceed

30 percent of the budget except in the first year of assessments. The

proposed Order reflects that provision of the Act, and, accordingly, no

change is made to the proposal as a result of this comment.

The last section discussed by the Chilean comments was Sec. 1214.71

Suspension or termination. The commenters were of the view that the

provision reflected a structural and discriminatory bias in the

regulation against imported kiwifruit. The comments suggested that to

correct this problem the votes should be weighted to reflect the number

of growers that each importer represents. We disagree. The voting

levels provided for in the proposed order concerning suspension or

termination reflect the provisions of Sec. 561 of the Act [7 U.S.C.

7470]. Not only does suspension or termination have to be favored by a

majority of the producers and importers voting in the referendum, but

those producers and importers must also produce or import more than 50

percent of the total volume of kiwifruit produced or imported by

persons voting in the referendum. Further, the Secretary is authorized

to suspend or terminate the operation of an order or provision if the

Secretary finds that it obstructs or does not tend to effectuate the

purposes of the Act.

In their fourth, fifth, and sixth reasons for opposing the proposed

order, the Chilean commenters argued that the proposed program would

violate several provisions of the United States Constitution,

provisions of GATT, and lastly principles embodied in the Constitution

and laws of Chile.

With regard to the U.S. Constitution, the comments identified not

only violations of the First Amendment and Foreign Commerce Clause but

also argued violations of the Import-Export Clause, the Interstate

Commerce Clause, the Equal Protection Clause, and the Separation of

Powers Principle. The comments argued that the proposed order violated

the national treatment provision of the GATT by treating imported

kiwifruit less favorably than domestic kiwifruit. We disagree and are

of the view that the proposed program is consistent with its

authorizing statutory provisions and the applicable law. Under the

proposed program, producers and importers of kiwifruit would pay an

equal assessment to support a generic program of research and promotion

for kiwifruit.

The commenters also argued that the proposed program is contrary to

free market principles embodied on the Constitution of Chile, noting

that mandatory assessments for generic promotion are not legal in

Chile. The commenters stated that without appropriate credit for

voluntary contributions, Chilean interests may be forced to mount legal

challenges. We do not believe that this rulemaking action raises any

pertinent legal issues with regard to the Constitution and laws of

Chile. Furthermore, the Act does not authorize credit for voluntary or

mandatory contributions to other programs.

In conclusion, the Chilean commenters state that the Department

should not submit the proposed Order to a referendum. However, if it is

submitted to referendum, the commenters stated that the proposed Order

should conform to GATT principles and the statutory limitations for

programs under the generic statute and should be modified to address

the concerns raised in the comment. The comment goes on to state that

the Department should refrain from further action on this rulemaking

until opinions are rendered in the Wileman and Moss cases.

In response to the Chilean commenters, for the reasons previously

discussed, the Department is continuing with this rulemaking but has

modified the proposed rule in Sec. 1214.36 (b)(1) and (b)(2), based on

the comments.

A comment was received from the New Zealand Embassy on behalf of

the New Zealand Government. That comment supported Proposal II and the

alternate Proposal III. Proposal II, in part, stated that two of the

four importer/exporter seats on the promotion Board should be filled

with New Zealand exporters since this country has been the major

exporting country into the U.S. for the past 10 years. Proposal III

stated that promotional expenditures of the exporting countries for the

last 10 years

[[Page 54321]]

should be considered when assigning seats on the promotion Board. In

addition, the comment expressed strong reservations concerning the

proposed Order, and other similar schemes, on the grounds that: (1) New

Zealand exporters and their import agents would have to contribute to

funding domestic promotions with their related administrative costs;

(2) funds collected from New Zealand exporters would be used to fund

U.S. exports of kiwifruit to third markets in direct competition with

New Zealand's interests; (3) the proliferation of checkoff schemes such

as the proposed order would encourage other countries to levy importers

in order to introduce similar schemes; and (4) there appears to be some

question about the World Trade Organization (WTO) consistency of the

checkoff schemes in general, particularly in relation to the

discrimination involved in using foreign contributions to fund the

marketing of domestic products.

We disagree with the commenter. All producers and importers under

the proposed Order would contribute to generic program of research,

promotion, and consumer information. Such a program is intended to

maintain, expand, and develop markets for kiwifruit. The proposed Order

does specifically provide that all promotions are to be generic in

nature without attribution to origin. Further, an amendment to the

proposed Order to address concerns raised by the Government of

Australia and the NZKMB would add a provision to the Order to limit

promotions to the U.S. domestic market. Accordingly, we believe that

the proposed Order would benefit both domestic and imported kiwifruit

alike, consistent with applicable law including the WTO. With regard to

the commenters concern regarding actions of other countries to levy

importers in order to introduce similar scheme, we believe that such a

view is speculative and as such we cannot offer an opinion of what a

particular country might do. Accordingly, we disagree with this part of

the comment.

The New Zealand Embassy also stated that representation of

importers on the Board should be based on promotion expenditures by the

exporting countries in the United States. In its comment concerning

this issue, the CKC stated that there is no reasonable way to verify

foreign countries' expenditures on advertising and marketing in the

U.S. Further, the CKC expressed its views opposing the NZKMB proposal

to provide in the Order that the Secretary ensure that at least two of

the four importers/exporters member seats be selected from nominees

nominated by importers and/or exporters of New Zealand kiwifruit. It

also expressed concern regarding any proposal to limit the importer

positions to import or export who have no domestic production

interests.

We agree that it would be very difficult to verify the promotional

expenditures of each country in the U.S. Further, this would not be a

reasonable measure to determine the number of importer members on the

Board. The Department believes that the Secretary should have the

latitude to appoint representatives to the Board in a manner that best

reflects the interests of the various importer and/or exporter

segments. Accordingly, this part of proposal II and all of proposal III

are denied.

A comment was received from the Embassy of Australia concerning the

proposed Order. The Australian Government indicated that it welcomed

certain elements of the proposed program. First, the commenter noted

that the proposed program would treat domestically produced and

imported kiwifruit equitably by using assessment collected to undertake

generic promotion for the whole industry. Second, there would be an

equitable spread of representation on the Board. Third, the comment

looked favorably on the exemption for importers of less than 10,000

pounds a year and kiwifruit sold for processing and the referendum to

be conducted before the program would be implemented.

The comment, however, did raise a concern if the generic promotion

activities discriminated against counter-seasonal produce and/or

importers. The commenter stated that it would be concerned if

assessments were used for the promotion of kiwifruit in competing

export markets. The comment concluded that assessments should be used

for the generic promotion of kiwifruit in the United States only.

Part of Proposal II recommended that all promotions be intended to

promote kiwifruit consumption in the U.S. domestic market and not U.S.-

produced kiwifruit in foreign markets.

We believe that these two concerns have merit. To avoid any

negative effects of seasonal promotion, proposed Sec. 1214.40,

Programs, plans, and projects, is revised to include a new paragraph

(e) to require that promotions be conducted all year round to promote

kiwifruit during all seasons which would result in kiwifruit from all

countries being promoted equitably. In addition, the Department is

adopting this part of Proposal II and a new paragraph (f) is added to

provide that all programs established by the Board with the approval of

the Secretary will be required to promote kiwifruit consumption on the

U.S. domestic market and that no program could promote exports of U.S.

produced kiwifruit in foreign markets. Section 557(e) of the Act [7

U.S.C. 7466] provides for the use of funds to be used for the

development and expansion of sales in foreign markets of kiwifruit

produced in the United States. However, this provision is permissive

and not required to be in an Order. Accordingly, we believe that the

most effective use of funds based upon the evidence in the rulemaking

would be to limit the use of assessments to domestic promotion only.

In its comment concerning the proposed order, the Southern

Hemisphere Association of Fresh Fruit Exporters opposed its

implementation because it is contrary to the free trade principles

embodied in the Uruguay Round of GATT. The commenter was of the view

that the Order would restrict free market access and would operate as a

non-tariff barrier to trade. The comment also stated that the

restrictive trade effects of the proposed Order were apparent from its

essential provision and noted that the proposed Order was drafted by

the CKC. The comment went on to state that: (1) The proposed Order was

anti-competitive in that it would divert funds from promotional

programs of individual companies or countries and would operate as an

anti-competitive non-tariff trade barrier; (2) the mandatory aspects of

the order conflict with the domestic trade laws of many countries; (3)

such mandatory programs are now subject to legal review in the Supreme

Court on constitutional grounds; and (4) the implementation of the

proposed Order would set a precedent for adoption of similar orders in

other countries.

We disagree with the commenter's views and conclusions. As

discussed previously in responding to similar comments received, we are

of the view that the proposed Order is consistent with applicable law

including the GATT. We again note the Supreme Court in Wileman held in

favor of the government with regard to the constitutional arguments. We

offer no view with regard to the domestic trade laws of the countries

as to whether other countries would adopt similar programs.

The CKC commented on the proposed Order and Proposals II and III.

The CKC comments regarding Proposals II and III were discussed

previously.

With regard to Sec. 1214.36(b)(2), the CKC stated that it would

support a

[[Page 54322]]

three-quarters of a quorum requirement for votes on budget and

assessment rate issues rather than the proposed two-thirds requirement.

Referencing the CEA comment about adopting the voting provision

contained in the generic statute, the commenter supported accommodating

the Chilean concern by changing the two-thirds requirement to three-

quarters and adopting by-laws to assure that there is near unanimous

agreement among all interests on assessment and budget issues. However,

the Act provides for the vote of two-thirds of a quorum of the Board

for both budget and assessment recommendations to the Secretary.

Accordingly, this proposed change is not adopted and the Order will

provide for the percentages that are required by the Act.

As to Sec. 1214.39(l), which specifies duties of the Board, the CKC

would support a provision on the Order to prohibit the Promotion Board

from making expenditures in any market other than the United States.

This concern has been previously addressed in response to a comment

received by the Australian Government and, as a result, Sec. 1214.40

would be revised to include a new paragraph (f) to limit promotions of

kiwifruit consumption to the U.S. domestic market.

The CKC raised concern about other commenters requesting that the

proposal include a provision concerning credits. While expressing a

lack of understanding of what purpose a generic credit would have, the

CKC indicated that it would oppose a brand credit. The Act does not

authorize credits for such expenditures.

Seven comments were received concerning the definition of kiwifruit

as proposed in Sec. 1214.8. Four of the comments were received from

university professors, Extension Service personnel at Clemson

University, Cornell University, Ohio State University, and Oregon State

University, and from two growers of kiwifruit. In addition, the CKC

commented on that section of the proposal.

Both the Act and the proposed Order define kiwifruit as all

varieties of fresh kiwifruit grown in or imported into the United

States. The university commenters requested that the definition of

kiwifruit be revised to include only the species Actinidia deliciosa.

They pointed out that this is the predominant species with one

commenter noting that this species controls over 95 percent of the

domestic market. There are other species of kiwifruit. These commenters

all expressed concerns regarding the species Actinidia arguta or hardy

kiwifruit. One comment noted that while the inside of the fruit was

similar to Actinidia deliciosa, this was really the only similarity.

Exterior appearance, harvesting, production areas (Oregon, Washington,

and Pennsylvania), production levels (an estimated 100,000 flats in the

next 5 years), and marketing are all different.

The university commenters were concerned about the impact of the

proposed Order on hardy kiwifruit producers. Two of the commenters

suggested that, if such kiwifruit is assessed, then a percentage of

funds should be earmarked for research and development of this new crop

of hardy kiwifruit. The two grower comments also raised concerns

regarding the definition of kiwifruit in the proposed Order. One grower

opposed the inclusion of hardy kiwifruit grown in the State of

Pennsylvania and stated that the Order should be limited to the State

of California. The second grower raised issues similar to the

university comments concerning hardy kiwifruit.

We agree that the species Actinidia arguta is a different species

from the most common known Actinidia deliciosa or fuzzy kiwifruit.

Therefore, the definition of kiwifruit was changed in the proposed

order to mean all varieties of the fresh kiwifruit classified under the

species Actinidia deliciosa or the genus Actinidia, whose fruit is a

large berry, oval in shape, with a brown skin covered in hairs, which

are grown in or imported into the United States. This definition would

exclude the species Actinidia arguta also known as ``hardy'' kiwifruit

from coverage under the program.

In its comment the CKC was in favor of the assessment being levied

on all varieties that are referred to as ``Kiwifruit or Kiwi'' but

stated that it would support a provision to allow the Board to exempt

certain varieties due to their limited volume, perhaps under 80,000

pounds of total domestic production, differences in appearance, or

other reasons.

Section 556(b)(5) of the Act [7 U.S.C. 7465] does provide for

exemptions from assessment for producers who produce less than 500

pounds of kiwifruit per year, importers who import less than 10,000

pounds of kiwifruit a year, sales of kiwifruit made directly from the

producer to a consumer for a purpose other than resale, and the

production or importation of kiwifruit for processing. No other

exemption is authorized in the Act. In addition, the proposed order

will cover all varieties of kiwifruit under the Actinidia deliciosa

species that meet the exemption levels.

In summary, Sec. 1214.8, Sec. 1214.36(b)(1) and (2), and

Sec. 1214.40 have been revised as a result of comments received.

Section 1214.8 was revised to define kiwifruit as all varieties of

fresh kiwifruit classified under the species Actinidia deliciosa.

Section 1214.36(b)(2) was revised to require a two-third vote of a

quorum for budget issues.

In Sec. 1214.40, a new paragraph (e) was added to specify that

promotions shall be conducted all year round. Also, a new paragraph (f)

was added to this section to prohibit the use of funds for promotional

activities in other countries.

There were no other changes to the proposed Order as a result of

the comments received on the text of the Order provisions as they were

proposed in the October 2, 1996, issue of the Federal Register.

For the Order to become effective, the Order must be approved by a

majority of kiwifruit producers and importers voting in a referendum,

with such majority producing or importing more than 50 percent of the

total volume of kiwifruit produced and imported by persons voting in

the referendum.

The proposed Order is summarized as follows:

Sections 1214.1 through 1214.19 of the proposed Order define

certain terms, such as kiwifruit, handler, producer, and importer,

which are used in the proposed Order.

Sections 1214.30 through 1214.39 include provisions relating to the

establishment, adjustment, and membership; nominations; appointment;

terms of office; vacancies; reimbursement; powers; and duties of the

Board.

The Board would be the body organized to administer the Order

through the implementation of programs, plans, projects, budgets, and

contracts to promote and disseminate information about kiwifruit, under

the supervision of the Secretary. Further, the Board would be

authorized to incur expenses necessary for the performance of its

duties and to set a reserve fund. Sections 1214.40 and 1214.50 provide

information on these activities.

Sections 1214.51 through 1214.53 would authorize the collection of

assessments, specify who pays them and how, and specifies persons who

would be exempt from paying the assessment. In addition, it would

prohibit use of funds to influence government policy or action.

The assessment rate may not exceed 10 cents per 7-pound tray of

kiwifruit. The actual rate would be recommended by the Board and

approved by the

[[Page 54323]]

Secretary through regulation. Direct sales to consumers by a producer

and kiwifruit for processing are exempt from assessments.

The assessment sections also outline the procedures to be followed

by handlers and importers for remitting assessments; establish a 1.5

percent per month interest charge for unpaid or late assessments; and

provide for refunds of assessments paid by importers who import less

than 10,000 pounds of kiwifruit a year.

Sections 1214.60 through 1214.62 concern reporting and

recordkeeping requirements for persons subject to the Order and protect

the confidentiality of information obtained from such books, records,

or reports.

Sections 1214.70 through 1214.73 describe the rights of the

Secretary, authorize the Secretary to suspend or terminate the Order

when deemed appropriate, and prescribe proceedings after suspension or

termination.

Sections 1214.74 through 1214.77 are miscellaneous provisions

including the provisions involving personal liability of Board members

and employees; handling of patents, copyrights, inventions, and others;

amendments to the Order; and separability of Order provisions.

List of Subjects in 7 CFR Part 1214

Administrative practice and procedure, Advertising, Consumer

information, Marketing agreements, Kiwifruit, Promotion, Reporting and

recordkeeping requirements.

For the reasons set forth in the preamble, it is proposed that

Title 7 of Chapter XI of the Code of Federal Regulations be amended as

follows:

1. Part 1214 is added to read as follows:

PART 1214--KIWIFRUIT RESEARCH, PROMOTION, AND CONSUMER INFORMATION

ORDER

Subpart A--Kiwifruit Research, Promotion, and Consumer Information

Order

Definitions

Sec.

1214.1 Act.

1214.2 Consumer information.

1214.3 Department.

1214.4 Exporter.

1214.5 Fiscal year.

1214.6 Handler.

1214.7 Importer.

1214.8 Kiwifruit.

1214.9 Marketing.

1214.10 Part and Subpart.

1214.11 Person.

1214.12 Processing.

1214.13 Producer.

1214.14 Programs, plans, and projects.

1214.15 Promotion.

1214.16 Promotion Board.

1214.17 Research.

1214.18 Secretary.

1214.19 United States.

National Kiwifruit Board

1214.30 Establishment, adjustment, and membership.

1214.31 Nominations.

1214.32 Acceptance.

1214.33 Appointment.

1214.34 Term of office.

1214.35 Vacancies.

1214.36 Procedure.

1214.37 Compensation and reimbursement.

1214.38 Powers.

1214.39 Duties.

Promotion, Research, and Consumer Information and Industry Information

1214.40 Programs, plans, and projects.

Expenses and Assessments

1214.50 Budget and expenses.

1214.51 Assessments.

1214.52 Exemption from assessment.

1214.53 Influencing governmental action.

Reports, Books, and Records

1214.60 Reports.

1214.61 Books and records.

1214.62 Confidential treatment.

Miscellaneous

1214.70 Right of the Secretary.

1214.71 Suspension or termination.

1214.72 Proceedings after termination.

1214.73 Effect of termination or amendment.

1214.74 Personal liability.

1214.75 Patents, copyrights, inventions, publications, and product

formulations.

1214.76 Amendments.

1214.77 Separability.

Subpart B--Rules and Regulations

Definitions

Sec.

1214.100 Terms defined.

Nomination Procedures

1214.110 Nominations.

1214.111 Mail balloting.

1214.112 Appointment.

General

1214.115 Financial statements.

Assessments

1214.120 Payment of assessments.

1214.121 Exemption procedures.

Reports

1214.125 Reports.

Miscellaneous

1214.130 OMB control numbers.

Authority: 7 U.S.C. 7461-7473.

Subpart A--Kiwifruit, Research, Promotion, and Consumer Information

Order

Definitions

Sec. 1214.1 Act.

Act means the National Kiwifruit Research, Promotion, and Consumer

Information Act, subtitle D of title V of the Federal Agricultural

Improvement and Reform Act of 1996, Public Law 104-127, 7 U.S.C. 7461-

7473, and any amendments thereto.

Sec. 1214.2 Consumer information.

Consumer information means any action taken to provide information

to, and broaden the understanding of, the general public regarding the

consumption, use, nutritional attributes, and care of kiwifruit.

Sec. 1214.3 Department.

Department means the United States Department of Agriculture.

Sec. 1214.4 Exporter.

The term exporter means any person outside the United States who

exports kiwifruit into the United States.

Sec. 1214.5 Fiscal year.

Fiscal year means the 12-month period from October 1 to September

30 each year, or such other period as recommended by the Promotion

Board and approved by the Secretary.

Sec. 1214.6 Handler.

Handler means any person, excluding a common carrier, engaged in

the business of buying and selling, packaging, marketing, or

distributing kiwifruit as specified in the Order.

Sec. 1214.7 Importer.

Importer means any person who imports kiwifruit into the United

States.

Sec. 1214.8 Kiwifruit.

Kiwifruit means all varieties of fresh kiwifruit classified under

the species Actinidia deliciosa or the genus Actinidia, whose fruit is

a large berry, oval in shape, with a brown skin covered in hairs, which

are grown in or imported into the United States.

Sec. 1214.9 Marketing.

Marketing means to sell or otherwise dispose of kiwifruit into

interstate, foreign, or intrastate commerce by buying, marketing,

distribution, or otherwise placing kiwifruit into commerce.

Sec. 1214.10 Part and subpart.

Part means this kiwifruit research, promotion, and consumer

information order and all rules and regulations and

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supplemental orders issued thereunder, and the term subpart means the

kiwifruit research, promotion, and consumer information order.

Sec. 1214.11 Person.

Person means any individual, group of individuals, partnership,

corporation, association, cooperative, or other legal entity.

Sec. 1214.12 Processing

Processing means kiwifruit that are commercially canned, fermented,

distilled, extracted, preserved, ground, crushed or processed in such

manner as the Promotion Board, with the approval of the Secretary, may

determine.

Sec. 1214.13 Producer.

Producer means any person who grows kiwifruit in the United States

for sale in commerce.

Sec. 1214.14 Programs, plans, and projects.

Programs, plans, and projects means promotion, research, and

consumer information plans, studies, projects, or programs conducted

pursuant to this part.

Sec. 1214.15 Promotion.

Promotion means any action taken under this Order including paid

advertising, to present a favorable image for kiwifruit to the general

public for the purpose of improving the competitive position of

kiwifruit and stimulating the sale of kiwifruit.

Sec. 1214.16 Promotion Board.

Promotion Board means the administrative body referred to as the

National Kiwifruit Board or otherwise named Kiwifruit Promotion Board

or Promotion Board established under Sec. 1214.30.

Sec. 1214.17 Research.

Research means any type of research relating to the use,

nutritional value, and marketing of kiwifruit conducted for the purpose

of advancing the image, desirability, marketability, or quality of

kiwifruit.

Sec. 1214.18 Secretary.

Secretary means the Secretary of Agriculture of the United States

or any other officer or employee of the Department to whom the

authority has heretofore been delegated, or to whom authority may

hereafter be delegated, to act in the Secretary's stead.

Sec. 1214.19 United States.

United States means the 50 states of the United States, the

District of Columbia, and the Commonwealth of Puerto Rico.

National Kiwifruit Board

Sec. 1214.30 Establishment, Adjustment, and membership.

(a) Establishment of National Kiwifruit Board. There is hereby

established a National Kiwifruit Board of 11 members appointed by the

Secretary as follows:

(1) Six members who are producers (or their representatives) and

who are not exempt from an assessment.

(2) Four members who are importers (or their representatives) and

who are not exempt from an assessment, or are exporters (or their

representatives).

(3) One member appointed from the general public.

(b) Adjustment of Membership.

(1) Subject to the 11 member limit, the Secretary may adjust

membership on the Promotion Board to accommodate changes in production

and import levels of kiwifruit, so long as producers comprise not less

than 51 percent of the membership of the Board.

(2) At least every five years, and not more than every three years,

the Promotion Board shall review changes in the volume of domestic and

imported kiwifruit. If the annual kiwifruit production and imports over

the preceding four years, indicate that such changes in production and

import levels have occurred warranting reapportionment, the Promotion

Board shall recommend reapportionment of Board membership subject to

the 51 percent requirement, for approval of the Secretary.

(3) In determining the volume of kiwifruit produced in the United

States or imported into the United States for purposes of this section,

the Promotion Board and the Secretary shall:

(i) Only consider kiwifruit produced or imported by producers and

importers, respectively, as those terms are defined in Sec. 1214.13 and

1214.7; and

(ii) Use the information received by the Promotion Board under

Sec. 1214.60, and data published by the California Kiwifruit

Commission, U.S. Department of Commerce import statistics and other

government kiwifruit production data.

(c) Appointment and nomination.

(1) Appointment. The Secretary shall appoint the members of the

Promotion Board from nominations submitted in accordance with this

section.

(i) Producers shall be appointed from individuals nominated by

producers.

(ii) Importers and exporters shall be appointed from individuals

nominated by importers and/or exporters.

(iii) The public representative shall be appointed from nominations

submitted by the Promotion Board.

(iv) If producers, importers, or exporters fail to nominate

individuals for appointment, the Secretary shall appoint members in the

manner specified in Sec. 1214.31. If the Promotion Board fails to

nominate a public representative, such member may be appointed by the

Secretary without a nomination.

(2) The Secretary shall appoint an alternate for each member of the

Promotion Board. Alternates shall:

(i) Be appointed in the same manner for whom such individual is an

alternate; and

(ii) Serve on the Promotion Board as a voting member if such member

is absent or disqualified.

(3) For purposes of the provisions of this section relating to the

appointment of producers and importers or exporters to serve on the

Promotion Board, the term producer, importer, or exporter refers to any

person who is a producer, importer, or exporter, respectively, or if

the producer, importer, or exporter is an entity other than an

individual, an individual who is an officer or employee of such

producer, importer, or exporter. Persons who qualify to serve as either

a producer member or an importer member must select the industry group

that they want to represent.

Sec. 1214.31 Nominations.

All nominations for appointments to the Promotion Board under

Sec. 1214.33 shall be made as follows:

(a) As soon as practicable after this subpart becomes effective,

nominations for appointment to the initial Promotion Board shall be

obtained from producers and importers or exporters by the Secretary. In

any subsequent year in which an appointment to the Promotion Board is

to be made, nominations for positions whose terms will expire at the

end of that year shall be obtained from producers, and as appropriate,

importers or exporters, and certified as eligible candidates by the

Promotion Board and submitted to the Secretary by May 1 of such year,

or such other date as approved by the Secretary.

(b) Nominations shall be made through mail ballot in accordance

with procedures prescribed in this section.

(c) Except for initial Promotion Board members, whose nomination

process will be initiated by the Secretary, the Promotion Board shall

issue a call for nominations by March 1 of each year in which

nominations for an appointment to the Promotion Board is to be made.

The call shall include, at a minimum, the following information:

(1) A list by importer/exporter and producer category of the

vacancies for which nominee may be submitted.

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(2) The date by which the names of nominees shall be submitted for

consideration to be in compliance with paragraph (a) of this section.

(3) Nominations for each position shall be made by mail. Nomination

forms shall be mailed to all known producers, importers in the United

States, and kiwifruit exporters and/or exporter organizations where

possible. The nomination form shall have attached to it the

requirements of the position, term, eligibility requirements, and the

Department's equal opportunity policy. Except with respect to

nominations for the initial appointments to the Promotion Board,

publicizing the nomination process and vacant positions shall be the

responsibility of the Promotion Board.

(4) All producers, importers within the United States, and

exporters may participate in the nomination process. However, if a

producer is engaged in the production of kiwifruit and is also an

importer, such person's participation shall be limited to one vote. The

following nomination process shall be followed:

(i) Nomination forms shall be sent to all known producers,

importers, or exporters. The Promotion Board shall determine the

eligibility and willingness to serve of all names of the individuals

listed on the nomination forms returned to the Promotion Board. The

names of the individuals who are eligible and willing to serve will be

listed on a selection ballot. The selection ballot will be sent to all

known producers and importers for final selection of the nominees to be

sent to the Secretary. Exporters will not be sent a selection ballot.

(ii) Each nominee shall meet the qualifications set forth in this

part.

(iii) If a producer nominee is engaged in the production of

kiwifruit and is also an importer, such individual shall participate

within the category that such individual so elects in writing to the

Promotion Board and such election shall remain controlling until

revoked in writing to the Promotion Board.

(d) When producers or importers are voting for nominees to the

Promotion Board the following provisions shall apply:

(1) Voting for any open position shall be on the basis of one vote

per eligible voter.

(2) Producers will vote for producer positions and importers will

vote for importer and exporter positions only.

(3) Whenever the producers or importers are choosing nominees for

one open position on the Promotion Board, the proposed nominee with the

highest and second highest number of votes cast shall be the nominees

submitted to the Secretary.

(4) Each open position will be a separate position. Alternate and

member selections will also be held as separate positions. A person

shall only be nominated for one open member or alternate position.

(5) Voters shall certify on their ballots as to their eligibility.

Such certification may be subject to verification.

(e) The Secretary may reject any nominee submitted. If there are

insufficient nominees from which to appoint members to the Promotion

Board as a result of the Secretary's rejecting such nominees,

additional nominees shall be submitted to the Secretary under the

procedures set out in this section.

(f) Whenever producers or importers fail to nominate individuals

for an open position on the Promotion Board under the preceding

provisions of this section the Secretary may appoint members in such

manner as the Secretary determines appropriate.

Sec. 1214.32 Acceptance.

Each individual nominated for membership on the Promotion Board

shall qualify by filing a written acceptance with the Secretary at the

time of nomination. Such acceptance shall represent the nominee's

willingness to serve if selected and to operate in accordance with the

provisions of this part.

Sec. 1214.33 Appointment.

From the nominations made pursuant to this subpart, the Secretary

shall appoint the members and alternates.

Sec. 1214.34 Term of office.

(a) The members and alternates of the Promotion Board shall serve

for terms of three years, except that five members and their alternates

appointed to the initial Promotion Board shall be appointed for a term

of two years and six members and their alternates shall be appointed

for a term of three years.

(b)(1) Except with respect to terms of office of the initial

Promotion Board, the term of office for each member and alternate of

the Promotion Board shall begin on July 1 or such other date that may

be approved by the Secretary.

(2) The term of office for the initial Promotion Board shall begin

immediately following appointment by the Secretary, except that time in

the interim period from appointment until the following July 1, or such

other date that is the generally applicable beginning date for terms

under paragraph (b)(1) of this section approved by the Secretary, shall

not count toward the tenure limitation of office.

(c) Promotion Board members shall serve during the term of office

for which they are appointed and have qualified, and until their

successors are appointed and have qualified.

(d)(1) No member shall serve more than two successive three-year

terms, except as provided in paragraph (d)(2) of this section and

Sec. 1214.35(b)(1). Members serving two consecutive three-year terms

are eligible to serve as alternates, and alternates serving two

consecutive three-year terms are eligible to serve two three-year terms

as members.

(2) Those members serving initial terms of two years may serve one

successive three-year term.

Sec. 1214.35 Vacancies.

(a) To fill any vacancy occasioned by the death, removal,

resignation, or disqualification of any member of the Promotion Board,

the alternate of that member shall automatically assume the position of

said member. If an alternate member position becomes vacant, the

Secretary shall appoint an alternate member in the manner specified in

Sec. 1214.31. Each successor appointment shall be for the remainder of

the term vacated. A vacancy will not be required to be filled if the

unexpired term is less than six months.

(b)(1) No successor appointed to a vacated term of office shall

serve more than two successive three-year terms on the Promotion Board,

except as provided in paragraph (b)(2)(ii) of this section.

(2)(i) Any successor serving longer than one year may serve one

successive three-year term.

(ii) Any successor serving one year or less may serve two

successive three-year terms.

(c) If a member of the Promotion Board consistently refuses to

perform the duties of a member of the Promotion Board, or if a member

of the Promotion Board is engaged in acts of dishonesty or willful

misconduct, the Promotion Board may recommend to the Secretary that the

member be removed from office. If the Secretary finds the

recommendation of the Promotion Board shows adequate cause, the

Secretary shall remove such member from office. Further, without

recommendation of the Promotion Board, a member may be removed by the

Secretary upon showing of adequate cause, including the failure by a

member to submit reports or remit assessments required under this part,

if the Secretary determines that such member's continued service would

be detrimental to the achievement of the purposes of the Act.

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Sec. 1214.36 Procedure.

(a) At a properly convened meeting of the Promotion Board, a

majority of the members shall constitute a quorum.

(b) Each member of the Promotion Board will be entitled to one vote

on any matter put to the Promotion Board. At assembled meetings of the

Promotion Board, all votes will be cast in person.

(1) A motion, except motions to set an assessment rate and motion

to approve a budget, will carry if supported by a simple majority of

those voting.

(2) Motions to establish an assessment rate and motions to approve

a budget shall require a two-thirds vote of a quorum of the Promotion

Board for passage.

(c) Meetings of the Promotion Board may be conducted by other means

of communications, provided that each member is given prior notice of

the meeting and has an opportunity to be present either physically or

by electronic connection.

(d) In lieu of voting at a properly convened meeting and, when in

the opinion of the chairperson of the Promotion Board such action is

considered necessary, the Promotion Board may take action upon the

concurring votes of a majority of its members by mail, telephone,

electronic mail, facsimile, or any other means of communication, and,

if appropriate, confirmed promptly in writing. In that event, all

members must be notified and provided the opportunity to vote. Any

action so taken shall have the same force and effect as though such

action had been taken at a properly convened meeting of the Promotion

Board. All votes shall be recorded in Promotion Board minutes.

(e) The organization of the Promotion Board and the procedures for

conducting meetings of the Promotion Board shall be in accordance with

its bylaws, which shall be established by the Promotion Board and

approved by the Secretary.

Sec. 1214.37 Compensation and reimbursement.

The members and alternate members of the Promotion Board shall

serve without compensation but shall be reimbursed for necessary and

reasonable expenses or a reasonable per diem allowance, as approved by

the Promotion Board and the Secretary, incurred by such members in the

performance of their responsibilities under this subpart.

Sec. 1214.38 Powers.

The Promotion Board shall have the following powers:

(a) To receive and evaluate or, on its own initiative, develop and

budget for proposed programs, plans, or projects to promote the use of

kiwifruit, as well as proposed programs, plans, or projects for

research and consumer information, and to make recommendations to the

Secretary regarding such proposals;

(b) To administer the provisions of this subpart in accordance with

its terms and provisions;

(c) To appoint or employ such individuals as it may deem necessary,

define the duties, and determine the compensation of such individuals.

The Board shall seek, to the extent possible, to employ or contract

with personnel who are already associated with state chartered

organizations involved in promoting kiwifruit;

(d) To make rules and regulations to effectuate the terms and

provisions of this subpart;

(e) To receive, investigate, and report to the Secretary for action

complaints of violations of the provisions of this subpart;

(f) To establish committees and subcommittees of Promotion Board

members, including an executive committee whose powers and membership

shall be determined by the Promotion Board, subject to the approval of

the Secretary, and to adopt such bylaws and other rules for the conduct

of its business as it may deem advisable;

(g) To establish committees which may include individuals other

than Promotion Board members, and pay the necessary and reasonable

expenses and fees for the members of such committees;

(h) To recommend to the Secretary amendments to this subpart;

(i) With the approval of the Secretary, to enter into contracts or

agreements for the development and conduct of programs, plans, or

projects authorized under Sec. 1214.40 and for other services necessary

for the implementation of this subpart, and for the payment of the cost

thereof with funds collected and received pursuant to this subpart. The

Promotion Board shall not contract with any person covered by the

program or serving on the promotion board for the purpose of kiwifruit

programs, plans, or projects. Any contract or agreement shall provide

that:

(1) The contractor or agreeing party shall develop and submit to

the Promotion Board a program, plan, or project together with a budget

or budgets that shall show the estimated cost to be incurred for such

program, plan, or project;

(2) Any such program, plan, or project shall become effective upon

approval of the Secretary;

(3) The contracting or agreeing party shall keep accurate records

of all of its transactions and make periodic reports to the Promotion

Board of activities conducted, submit accounting for funds received and

expended, and make such other reports as the Secretary or the Promotion

Board may require; and the Secretary may audit the records of the

contracting or agreeing party periodically; and

(4) Any subcontractor who enters into a contract with a Promotion

Board contractor and who receives or otherwise uses funds allocated by

the Promotion Board shall be subject to the same provisions as the

contractor;

(j) With the approval of the Secretary, to invest, pending

disbursement pursuant to a program, plan, or project, funds collected

through assessments provided for in Sec. 1214.51, and any other funds

received by the Promotion Board in, and only in, obligations of the

United States or any agency thereof, in any interest-bearing account or

certificate of deposit of a bank that is a member of the Federal

Reserve System, or in obligations fully guaranteed as to principal and

interest by the United States;

(k) To require its employees to receive, investigate, and report to

the Secretary complaints of violations of this part; and

(l) Such other powers as may be approved by the Secretary.

Sec. 1214.39 Duties.

The Promotion Board shall have the following duties:

(a) To meet not less than two times per year, and to organize and

select from among its members a chairperson and such other officers as

may be necessary;

(b) To evaluate or develop, and submit to the Secretary for

approval, promotion, research, and consumer information programs, plans

or projects;

(c) To prepare for each fiscal year, and submit to the Secretary

for approval at least 60 days prior to the beginning of each fiscal

year, a budget of its anticipated expenses and disbursements in the

administration of this subpart and a marketing plan with all the

programs, plans, and projects as provided in Secs. 1214.40 and 1214.50;

(d) To maintain such books and records, which shall be available to

the Secretary for inspection and audit, and to prepare and submit such

reports from time to time to the Secretary, as the Secretary may

prescribe, and to make appropriate accounting with respect to

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the receipt and disbursement of all funds entrusted to it;

(e) To prepare and make public, at least annually, a report of its

activities carried out, and an accounting for funds received and

expended;

(f) To cause its financial statements to be prepared in conformity

with generally accepted accounting principles and to be audited by an

independent certified public accountant in accordance with generally

accepted auditing standards at least once each fiscal year and at such

other times as the Secretary may request, and submit a copy of each

such audit to the Secretary;

(g) To give the Secretary the same notice of meetings of the

Promotion Board as is given to members in order that the Secretary, or

a representative of the Secretary, may attend such meetings;

(h) To submit to the Secretary such information as may be requested

pursuant to this subpart;

(i) To keep minutes, books, and records that clearly reflect all

the acts and transactions of the Promotion Board. Minutes of each Board

meeting shall be promptly reported to the Secretary;

(j) To act as intermediary between the Secretary and any industry

member;

(k) To follow the Department's equal opportunity/civil rights

policies;

(l) To work to achieve an effective, continuous, and coordinated

program of promotion, research, consumer information, evaluation and

industry information designed to strengthen the kiwifruit industry's

position in the marketplace, maintain and expand existing markets and

uses for kiwifruit, develop new markets and uses for kiwifruit, and to

carry out programs, plans, and projects designed to provide maximum

benefits to the kiwifruit industry;

(m) To conduct periodic review or evaluation of each program, plan,

or project to ensure that it contributes to an effective program of

research, promotion, and consumer information;

(n) Not less than every 5 years, authorize and fund, from funds

otherwise available to the Promotion Board, an independent evaluation

of the effectiveness of the programs conducted by the Promotion Board.

The Promotion Board shall submit to the Secretary, and make available

to the public, the results of each periodic independent evaluation

conducted under this section; and

(o) To investigate violations of the Order and report the results

of such investigations to the Secretary for appropriate action to

enforce the provisions of the Order.

Promotion, Research, and Consumer Information

Sec. 1214.40 Programs, plans, and projects.

(a) The Promotion Board shall receive and evaluate, or on its own

initiative develop, and submit to the Secretary for approval any

program, plan, or project authorized under this subpart. Such programs,

plans, or projects shall provide for:

(1) The establishment, issuance, effectuation, and administration

of appropriate programs for promotion, research, and consumer

information with respect to kiwifruit; and

(2) The establishment and conduct of research with respect to the

use, nutritional value, sale, distribution, and marketing, of kiwifruit

and kiwifruit products, and the creation of new products thereof, to

the end that marketing and use of kiwifruit may be encouraged,

expanded, improved, or made more acceptable and to advance the image,

desirability, or quality of kiwifruit.

(b) No program, plan, or project shall be implemented prior to its

approval by the Secretary. Once a program, plan, or project is so

approved, the Promotion Board shall take appropriate steps to implement

it.

(c) Each program, plan, or project implemented under this subpart

shall be reviewed or evaluated periodically by the Promotion Board to

ensure that it contributes to an effective program of promotion,

research, or consumer information. If it is found by the Promotion

Board that any such program, plan, or project does not contribute to an

effective program of promotion, research, or consumer information, then

the Promotion Board shall terminate such program, plan, or project.

(d) No program, plan, or project shall make any false claims on

behalf of kiwifruit or use unfair or deceptive acts or practices with

respect to the quality, value, or use of any competing product.

Kiwifruit of all origins shall be treated equally. All promotions shall

be generic in nature.

(e) Promotions shall be conducted to promote kiwifruit during all

seasons and from all countries.

(f) All programs developed and implemented by the Board shall

promote kiwifruit consumption in the U.S. domestic market. No program

shall be implemented by the Board to promote exports of U.S.-produced

kiwifruit in foreign markets.

Expenses and Assessments

Sec. 1214.50 Budget and Expenses

(a)(1) At least 60 days prior to the beginning of each fiscal year,

and as may be necessary thereafter, the Promotion Board shall prepare

and submit to the Secretary a budget for the fiscal year covering its

anticipated expenses and disbursements in administering this subpart.

Each such budget shall include:

(i) A statement of objectives and strategy for each program, plan,

or project;

(ii) A summary of anticipated revenue, with comparative data for at

least one preceding year;

(iii) A summary of proposed expenditures for each program, plan, or

project; and

(iv) Staff and administrative expense breakdowns, with comparative

data for at least one preceding year.

(2) Each budget shall provide adequate funds to defray its proposed

expenditures and to provide for a reserve as set forth in paragraph (f)

of this section.

(3)(i) Subject to paragraph (a)(3)(ii) of this section, any

amendment or addition to an approved budget must be approved by the

Secretary, including shifting of funds from one program, plan, or

project to another.

(ii) Shifts of funds which do not cause an increase in the

Promotion Board's approved budget and which are consistent with

governing bylaws need not have prior approval by the Secretary.

(b) The Promotion Board is authorized to incur such expenses,

including provision for a reasonable reserve, as the Secretary finds

are reasonable and likely to be incurred by the Promotion Board for its

maintenance and functioning, and to enable it to exercise its powers

and perform its duties in accordance with the provisions of this

subpart. Such expenses shall be paid from funds received by the

Promotion Board.

(c) The Promotion Board may accept voluntary contributions, but

these shall only be used to pay expenses incurred in the conduct of

programs, plans, and projects. Such contributions shall be free from

any encumbrance by the donor and the Promotion Board shall retain

complete control of their use.

(d) The Promotion Board shall reimburse the Secretary, from funds

received by the Promotion Board, for administrative costs incurred by

the Secretary in implementing and administering this subpart, including

the salaries of Department employees and costs incurred in conducting

referenda.

(e) The Promotion Board may establish an operating monetary reserve

and may carry over to subsequent fiscal periods excess funds in any

reserve so established. Such reserve funds may be

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used to defray any expenses authorized under this subpart.

(f) With the approval of the Secretary, the Promotion Board may

borrow money for the payment of administrative expenses, subject to the

same fiscal, budget, and audit controls as other funds of the Promotion

Board. This provision is limited to the first year of operation of the

Promotion Board.

Sec. 1214.51 Assessments.

(a) Any handler initially purchasing, or otherwise placing into

interstate, foreign, or intrastate commerce, kiwifruit produced in the

United States shall, in the manner as prescribed by the Promotion Board

and approved by the Secretary, collect an assessment based upon the

number of pounds of kiwifruit marketed in the United States for the

account of the producer, and remit the assessment to the Promotion

Board.

(b) The rate of assessment effective during any fiscal year shall

be the rate specified in the budget for such fiscal year approved by

the Secretary, except that:

(1) The rate of assessment shall not exceed $0.10 per seven pound

tray of kiwifruit or the equivalent thereof.

(2) The rate of assessment for a fiscal year may be changed at the

beginning of the fiscal year only and by regulation as necessary to

reflect changed circumstances, except that any such changed rate may

not exceed the level of assessment specified in paragraph (b)(1) of

this section.

(c) Any person marketing kiwifruit of that person's own production

into the channels of commerce in the United States, through retail or

wholesale outlets, shall be considered a handler and shall remit to the

Promotion Board an assessment on such kiwifruit at the rate then in

effect, at such time and in such form and manner prescribed by the

Promotion Board, with the approval of the Secretary.

(d)(1) Each importer of kiwifruit shall pay an assessment to the

Promotion Board on kiwifruit imported for marketing in the United

States, through the U.S. Customs Service. A person acting as a

principal or as an agent, broker, or consignee for any person who

produces kiwifruit outside the United States shall be considered an

importer.

(2) The assessment rate for imported kiwifruit shall be the same or

equivalent to the rate provided for kiwifruit produced in the United

States.

(3) The import assessment shall be uniformly applied to imported

kiwifruit that are identified by the number, 0709.51.0000, in the

Harmonized Tariff Schedule of the United States or any other number

used to identify fresh kiwifruit.

(4) The assessments due on imported kiwifruit shall be paid when

the kiwifruit are entered or withdrawn for consumption in the United

States.

(5) Only one assessment shall be paid on each unit of kiwifruit

imported.

(e)(1) Each person responsible for remitting assessments under

paragraphs (a), (c), or (f) of this section, and importers if the U.S.

Customs Service fails to collect the assessment, shall remit the

assessments due to the Promotion Board on a monthly basis no later than

the fifteenth day of the month following the month in which the

kiwifruit were marketed, in such manner as prescribed by the Promotion

Board.

(2)(i) The Promotion Board shall impose a late payment charge on

any person that fails to remit to the Promotion Board the total amount

for which the person is liable on or before the payment due date

established under this section. The amount of the late payment charge

shall be prescribed in rules and regulations as approved by the

Secretary.

(ii) The Promotion Board shall impose an additional charge on any

person subject to a late payment charge, in the form of interest on the

outstanding portion of any amount for which the person is liable. The

rate of interest shall be prescribed in rules and regulations as

approved by the Secretary.

(3) Any assessment that is determined to be owing at a date later

than the payment due established under this section, due to a person's

failure to submit a report to the Promotion Board by the payment due

date, shall be considered to have been payable on the payment due date.

Under such a situation, paragraphs (e)(2)(i) and (e)(2)(ii) of this

section shall be applicable.

(4) Persons failing to remit total assessments due in a timely

manner may also be subject to penalties and actions under federal debt

collection procedures as set forth in 7 CFR 3.1 through 3.36.

(f) The Promotion Board, with the approval of the Secretary, may

enter into agreements authorizing other state mandated organizations to

collect assessments in its behalf. Any such organization shall be

required to maintain the confidentiality of such information as is

required by the Promotion Board for collection purposes. Any

reimbursement by the Promotion Board for such services shall be based

on reasonable charges for services rendered.

(g) The Promotion Board is hereby authorized to accept advance

payment of assessments for the fiscal year by any person, that shall be

credited toward any amount for which such person may become liable. The

Promotion Board shall not be obligated to pay interest on any advance

payment.

(h) Except for the first year of operation of the promotion board,

expenses for the administration, maintenance, and functioning of the

board may not exceed 30 percent of the budget for a year.

Sec. 1214.52 Exemption from assessment.

(a) Producers who produce less than 500 pounds of kiwifruit

annually shall be exempted from assessment.

(b) Importers who import less than 10,000 pounds of kiwifruit per

year shall be exempted from assessment.

(c) Sales of kiwifruit made directly from the producer to a

consumer for a purpose other than resale are exempt from assessment.

(d) Domestic and imported kiwifruit used for processing are exempt

from assessment. The Promotion Board shall develop a list of approved

processors.

(e) To claim an exemption, a producer or importer shall submit an

application to the Promotion Board stating the basis on which the

person claims the exemption for such year.

(f) If, after a person claims an exemption from assessments for any

year under this section, and such person no longer meets the

requirements of this paragraph for an exemption, such person shall file

a report with the Board in the form and manner prescribed by the Board

and pay an assessment on all the kiwifruit produced or imported by such

person during the year for which the person claimed the exemption.

(g) Exempted individuals are subject to such safeguards as

prescribed in rules and regulations in this part to prevent improper

use of this exemption.

Sec. 1214.53 Influencing governmental action.

No funds received by the Promotion Board under this subpart shall

in any manner be used for the purpose of influencing legislation or

governmental policy or action, except to develop and recommend to the

Secretary amendments to this subpart.

Reports, Books, and Records

Sec. 1214.60 Reports.

(a) Each producer marketing kiwifruit of that person's own

production for resale, and each handler responsible for the collection

of assessments under Sec. 1214.51(a) shall be required to report

monthly to the Promotion Board, on a form provided by the Promotion

Board,

[[Page 54329]]

such information as may be required under this subpart or any rules and

regulations issued in this part. Such information shall include, but

not be limited to, the following:

(1) The handler's name, address, telephone number, and social

security number or Employer Identification Number;

(2) Date of report, which is also the date of payment to the

Promotion Board;

(3) Period covered by the report; and

(4) The number of kiwifruit containers, weight, size, and type

purchased, initially transferred or that in any other manner are

subject to the collection of assessments, and a copy of a certificate

of exemption, claiming exemption under Sec. 1214.52 from those who

claim such exemptions.

(b) If determined necessary by the Promotion Board and approved by

the Secretary, each importer shall file with the Promotion Board

periodic reports, on a form provided by the Promotion Board, containing

at least the following information:

(1) The importer's name, address, telephone number, and social

security number or Employer Identification Number;

(2) The quantity of kiwifruit entered or withdrawn for consumption

in the United States during the period covered by the report; and

(3) The amount of assessments paid to the U.S. Customs Service at

the time of such entry or withdrawal.

(c) For persons who have an exemption from assessments under

Sec. 1214.52, such information as deemed necessary by the Board, and

approved by the Secretary, concerning the exemption including

disposition of exempted kiwifruit.

Sec. 1214.61 Books and records.

Each person who is subject to this subpart shall maintain and make

available for inspection by the Promotion Board staff or the Secretary

such books and records as are deemed necessary by the Promotion Board,

with the approval of the Secretary, to carry out the provisions of this

subpart and any rules and regulations issued in this part, including

such books and records as are necessary to verify any reports required.

Such books and records shall be retained for at least two years beyond

the fiscal year of their applicability.

Sec. 1214.62 Confidential treatment.

All information obtained from books, records, or reports under the

Act, this subpart, and the rules and regulations issued in this part

shall be kept confidential by all persons, including all employees and

former employees of the Promotion Board, all officers and employees and

former officers and employees of contracting and subcontracting

agencies or agreeing parties having access to such information. Such

information shall not be available to Promotion Board members,

producers, importers, exporters, or handlers. Only those persons having

a specific need for such information to effectively administer the

provisions of this subpart shall have access to such information. Only

such information so obtained as the Secretary deems relevant shall be

disclosed by them, and then only by judicial order in a suit or

administrative hearing brought at the direction, or on the request, of

the Secretary, or to which the Secretary or any officer of the United

States is a party, and involving this subpart. Nothing in this section

shall be deemed to prohibit:

(a) The issuance of general statements based upon the reports of

the number of persons subject to this subpart or statistical data

collected therefrom, which statements do not identify the information

furnished by any person; and

(b) The publication, by direction of the Secretary, of the name of

any person who has been adjudged to have violated this subpart,

together with a statement of the particular provisions of this subpart

violated by such person.

Miscellaneous

Sec. 1214.70 Right of the Secretary.

All fiscal matters, programs, plans, or projects, rules or

regulations, reports, or other substantive actions proposed and

prepared by the Promotion Board shall be submitted to the Secretary for

approval.

Sec. 1214.71 Suspension or termination.

(a) Whenever the Secretary finds that this part obstructs or does

not tend to effectuate the declared purpose of the Act, the Secretary

shall terminate or suspend the operation of provisions of this part.

(b)(1) Six years after the date on which this subpart becomes

effective, and at the end of every six-year period thereafter; the

Secretary shall conduct a referendum among producers and importers to

determine whether they favor continuation, termination, or suspension

of this subpart.

(2) The Secretary shall also hold a referendum:

(i) At the request of the Promotion Board; or

(ii) If not less than 30 percent of the kiwifruit producers and

importers subject to assessments under the Order submit a petition

requesting a referendum be held.

(3) Whenever the Secretary determines that suspension or

termination of this subpart is favored by a majority of the kiwifruit

producers and importers voting in a referendum under paragraphs (b) (1)

or (2) of this section who, during a representative period determined

by the Secretary, have been engaged in producing and importing

kiwifruit and who, on average, annually produced and imported more than

50 percent of the volume of kiwifruit produced and imported by all

those producers and importers voting in the referendum, the Secretary

shall:

(i) Suspend or terminate, as appropriate, collection of assessments

within six months after making such determination; and

(ii) Suspend or terminate, as appropriate, all activities under

this subpart in an orderly manner as soon as practicable.

(4) Referenda conducted under this subpart shall be conducted in

such manner as the Secretary may prescribe.

Sec. 1214.72 Proceedings after termination.

(a) Upon the termination of this subpart, the Promotion Board shall

recommend not more than five of its members to the Secretary to serve

as trustees for the purpose of liquidating the affairs of the Promotion

Board. Such persons, upon designation by the Secretary, shall become

trustees for all the funds and property owned, in the possession of, or

under the control of the Promotion Board, including any claims unpaid

or property not delivered, or any other claim existing at the time of

such termination.

(b) The trustees shall:

(1) Continue in such capacity until discharged by the Secretary;

(2) Carry out the obligations of the Promotion Board under any

contract or agreement entered into by it under this subpart;

(3) From time to time account for all receipts and disbursements,

and deliver all property on hand, together with all books and records

of the Promotion Board and of the trustees, to such persons as the

Secretary may direct; and

(4) Upon the request of the Secretary, execute such assignments or

other instruments necessary or appropriate to vest in such persons full

title and right to all of the funds, property, and claims vested in the

Promotion Board or the trustees under this subpart.

(c) Any person to whom funds, property, or claims have been

transferred or delivered under this subpart shall be subject to the

same

[[Page 54330]]

obligations imposed upon the Promotion Board and upon the trustees.

(d) Any residual funds not required to defray the necessary

expenses of liquidation shall be turned over to the Secretary to be

used, to the extent practicable, in the interest of continuing one or

more of the promotion, research, consumer information, or industry

information programs, plans, or projects authorized under this subpart.

Sec. 1214.73 Effect of termination or amendment.

Unless otherwise expressly provided by the Secretary, the

termination of this subpart or of any rule and regulation issued in

this part, or the issuance of any amendment to such provisions, shall

not:

(a) Affect or waive any right, duty, obligation, or liability that

shall have arisen or may hereafter arise in connection with any

provision of this subpart or any such rules or regulations issued in

this part;

(b) Release or extinguish any violation of this subpart or any

rules or regulations issued in this part; or

(c) Affect or impair any rights or remedies of the United States,

the Secretary, or any person with respect to any such violation.

Sec. 1214.74 Personal liability.

No member or employee of the Promotion Board shall be held

personally responsible, either individually or jointly, in any way

whatsoever, to any person for errors in judgment, mistakes, or other

acts of either commission or omission of such member or employee under

this subpart, except for acts of dishonesty or willful misconduct.

Sec. 1214.75 Patents, copyrights, inventions, publications, and

product formulations.

Any patents, copyrights, inventions, publications, or product

formulations developed through the use of funds received by the

Promotion Board under this subpart shall be the property of the United

States Government as represented by the Promotion Board and shall,

along with any rents, royalties, residual payments, or other income

from the rental, sale, leasing, franchising, or other uses of such

patents, copyrights, inventions, publications, or product formulations

inure to the benefit of the Promotion Board. Upon termination of

certain provisions in this subpart, Sec. 1214.72 shall apply to

determine disposition of all such property.

Sec. 1214.76 Amendments.

Amendments to this subpart may be proposed, from time to time, by

the Promotion Board or by any interested person affected by the

provisions of the Act, including the Secretary.

Sec. 1214.77 Separability.

If any provision of this subpart is declared invalid, or the

applicability thereof to any person or circumstances is held invalid,

the validity of the remainder of this subpart or the applicability

thereof to other persons or circumstances shall not be affected

thereby.

Subpart B--Rules and Regulations

Definitions

Sec. 1214.100 Terms defined.

Unless otherwise defined in this subpart, the definitions of terms

used in this subpart shall have the same meaning as the definitions in

Subpart A--Kiwifruit Research, Promotion, and Consumer Information

Order of this part.

Nomination Procedures

Sec. 1214.110 Nominations.

Nominations shall be made by mail ballot in accordance with the

procedures prescribed in Sec. 1214.31. Each mail ballot shall be

scheduled so as to ensure that the nominations for each position that

will be open at the beginning of the following year are received by the

Secretary by May 1, or such other date approved by the Secretary.

Sec. 1214.111 Mail balloting.

(a) The Promotion Board shall conduct nominations of individuals as

candidates for appointment to the Promotion Board by mail nomination

form.

(b)(1) Notice of mail balloting to nominate candidates for a

position on the Promotion Board shall be publicized by the Promotion

Board to producers, importers, kiwifruit exporter organizations and to

the Secretary, by March 1 of each year.

(2) Nomination forms will be used to collect names of individuals

to be placed on a ballot to be sent to producers and importers to

select the individuals for the Secretary's appointment. Completed

nomination forms must be returned to the Promotion Board prior to March

30.

(c) Once proposed nominations have been submitted, the Promotion

Board shall cause each proposed nomination, if the individual

qualifies, to be placed on the producer or importer ballot. The

Promotion Board then shall mail a ballot to each known producer or

importer.

(d) Each producer or importer shall cast a ballot for each open

position on the Promotion Board assigned to the producers or importers/

exporters in accordance with the procedures prescribed in Sec. 1214.31.

The completed ballot must be returned to the Promotion Board or its

designee within 30 days after the ballot is issued.

(e) Within 45 days after a mail ballot is issued, the Promotion

Board shall validate the ballots cast, tabulate the votes, and provide

the Secretary with the results of the vote and the identification of

the top two vote getters for each open position on the Promotion Board.

(f) The Promotion Board shall provide nominees with qualification

statements and other specified information. Each nominee selected in

the mail ballot will be contacted by the Promotion Board and asked to

forward such completed documentation to the Promotion Board within 14

days of such notification.

Sec. 1214.112 Appointment.

If an employee, partner, officer, or shareholder of a producer,

importer or exporter is a current member of the Promotion Board, no

nominee who is also an employee, partner, officer, or shareholder of

such producer, importer, or exporter shall be appointed to the

Promotion Board. A Promotion Board member shall be disqualified from

serving on the Promotion Board if such individual ceases to be

affiliated with a producer, importer, or exporter the Promotion Board

member represents.

General

Sec. 1214.115 Financial statements.

(a) As requested by the Secretary, the Promotion Board shall

prepare and submit financial statements to the Secretary on a periodic

basis. Each such financial statement shall include, but not be limited

to, a balance sheet, income statement, and expense budget. The expense

budget shall show expenditures during the time period covered by the

report, year-to-date expenditures, and the unexpended budget.

(b) Each financial statement shall be submitted to the Secretary

within 30 days after the end of the time period to which it applies.

(c) The Promotion Board shall submit annually to the Secretary an

annual financial statement within 90 days after the end of the fiscal

year to which it applies.

Assessments

Sec. 1214.120 Payment of assessments.

(a) Each handler responsible for collecting assessments on domestic

kiwifruit shall collect the amounts

[[Page 54331]]

assessed and remit such amounts to the Promotion Board on a monthly

basis not later than the fifteenth day of the month following the month

in which the kiwifruit were marketed to or through the handler,

whatever comes first.

(b) A state mandated organization may collect producer assessments

from handlers then remit the funds to the Promotion Board on a monthly

basis. The state mandated program collecting the assessments must

provide access to records for the purpose of periodic audit.

(c) Each producer who is also a handler responsible for paying any

assessment amount on the producer's own kiwifruit shall complete a

shipment data form to the Promotion Board not later than the fifteenth

day of the month following the month in which the kiwifruit were

marketed by the producer. An invoice will be sent to the producer for

the amount owed.

(d) Each importer shall be responsible for remittance to the

Promotion Board of any assessment amount not collected by the U.S.

Customs Service at the time of entry or withdrawal for consumption into

the United States. Any such assessment amount shall be remitted to the

Promotion Board on a monthly basis not later than the fifteenth day of

the month following the month of entry or withdrawal for consumption

into the United States. Any person who imports kiwifruit, as principal

or as an agent, broker, or consignee for any person who produces

kiwifruit outside the United States shall be considered an importer.

(e) Remittance shall be by check, draft, or money order payable to

the National Kiwifruit Board or Kiwifruit Promotion Board, and shall be

accompanied by a report, on a form provided by the Promotion Board.

(f) The Promotion Board shall impose a late payment charge on any

handler or importer who fails to make timely remittance to the

Promotion Board of the total assessment amount for which the person is

liable. Such late payment charge shall be imposed on any assessments

not received by the last day of the month following the month in which

the kiwifruit involved were marketed or, in the case of imports, not

collected by the U.S. Customs Service at the time of entry or

withdrawal for consumption into the United States. This one-time late

payment charge shall be 10 percent of the assessments due before

interest charges have accrued. The late payment charge will not be

applied to any late payments postmarked within 15 days after the end of

the month such assessments are due.

(g) In addition to the late payment charge, the Promotion Board

shall charge interest at a rate of 1.5 percent per month on the

outstanding balance, including the late payment charge and any accrued

interest, of any account that remains delinquent beyond the last day of

the second month following the month the Kiwifruit involved were

marketed. However, handlers paying their assessments, in accordance

with paragraph (i) of this section, will not be subject to the 1.5

percent per month interest under this paragraph until the last day of

the second month after such assessments were due under paragraph (i) of

this section. In the case of imports, such a rate of interest will be

charged to any account that remains delinquent on any assessments not

collected by the U.S. Customs Service at the time of entry or

withdrawal for consumption into the United States. Such a rate of

interest will continue to be charged monthly until the outstanding

balance is paid to the Promotion Board.

(h) Any assessment determined by the Promotion Board at a date

later than prescribed by this section, because of a person's failure to

submit a report to the Promotion Board when due, shall be considered to

have been payable by the date it would have been due if the report had

been filed on time. A late payment charge and monthly interest charges

on the outstanding balance shall be applicable to such unpaid

assessment in accordance with paragraphs (f) and (g) of this section.

(i) In lieu of the monthly assessment payment and reporting

requirements of Secs. 1214.125 and 1214.60, the Promotion Board may

permit a handler to make advance payment of the total estimated

assessment amount due to the Promotion Board for the ensuing fiscal

year, or portion thereof, prior to the actual determination of

assessable kiwifruit.

(j) Any person whose prepayment exceeds the amount paid shall be

reimbursed for the amount of overpayment. The Promotion Board shall

not, in any case, be obligated to pay interest on any advance payment.

Sec. 1214.121 Exemption procedures.

(a) Any producer who produces less than 500 pounds of kiwifruit

annually or who produces kiwifruit for processing and who desires to

claim an exemption from assessments during a fiscal year as provided in

Sec. 1214.52 shall apply to the Promotion Board, on a form provided by

the Promotion Board, for a certificate of exemption. Such producer

shall certify that their production of kiwifruit shall be less than 500

pounds, for the fiscal year for which the exemption is claimed. Any

importer who imports less than 10,000 pounds of kiwifruit annually or

who imports kiwifruit for processing and who desires to claim an

exemption from assessments during a fiscal year as provided in

Sec. 1214.52 shall apply to the Promotion Board, on a form provided by

the Promotion Board, for a certificate of exemption. Such importer

shall certify that their importation of kiwifruit shall not exceed

10,000 pounds, for the fiscal year for which the exemption is claimed.

(b) On receipt of an application, the Promotion Board shall

determine whether an exemption may be granted. The Promotion Board then

will issue, if deemed appropriate, a certificate of exemption to each

person that is eligible to receive one. Each person who is exempt from

assessment must provide an exemption number to the first handler in

order not to be subject to collection of an assessment on kiwifruit.

Handlers and importers, except as otherwise authorized by the Promotion

Board, shall maintain records showing the exemptee's name and address

along with the exemption number assigned by the Promotion Board.

(c) Importers who are exempt from assessment shall be eligible for

reimbursement of assessments collected by the U.S. Customs Service and

shall apply to the Promotion Board for reimbursement of such

assessments paid. No interest will be paid on assessments collected by

the U.S. Customs Service and determined to be exempt at a later time.

Requests for reimbursement shall be submitted to the Board within 90

days of the last day of the year the kiwifruit were actually imported.

(d) Any person who desires to renew the exemption from assessments

for a subsequent fiscal year shall reapply to the Promotion Board, on a

form provided by the Promotion Board, for a certificate of exemption.

(e) The Promotion Board may require persons receiving an exemption

from assessments to provide to the Promotion Board reports on the

disposition of exempt kiwifruit and, in the case of importers, proof of

payment of assessments.

Reports

Sec. 1214.125 Reports.

Each handler or producer that is also a handler shall be required

to report monthly to the Promotion Board such information as may be

required under Sec. 1214.60. In addition, each handler may be required

to provide the farm identification number or social security number of

each producer the handler

[[Page 54332]]

has dealt with during the time period covered by the report.

Miscellaneous

Sec. 1214.130 OMB control numbers.

The control number assigned to the information collection

requirements by the Office of Management and Budget pursuant to the

Paperwork Reduction Act of 1995, 44 U.S.C. Chapter 35, is OMB control

number 0581-0093, except for the Promotion Board nominee background

statement form which is assigned OMB control number 0505-0001.

Dated: October 8, 1997.

Lon Hatamiya,

Administrator, Agricultural Marketing Service.

[FR Doc. 97-27322 Filed 10-16-97; 8:45 am]

BILLING CODE 3410-02-U