Kiwifruit Research, Promotion, and Consumer Information Order; Referendum Procedures

SUMMARY: This rule provides procedures which the Department of

Agriculture (Department) will use in conducting the referendum to

determine whether the issuance of the proposed Kiwifruit Research,

Promotion, and Consumer Information Order (Order) is approved by a

majority of the producers and importers voting in the referendum and

that the producers and importers favoring approval produce and import

50 percent of the total volume of kiwifruit produced and imported by

persons voting in the referendum.

EFFECTIVE DATE: This rule is effective November 17, 1997.

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

Promotion Branch, Fruit and Vegetable Division, AMS, USDA, P.O. Box

96456, Room 2535-S, Washington, DC 20090-6456, telephone (202) 720-9916

or (888) 720-9917.

SUPPLEMENTARY INFORMATION: This rule is issued under the Kiwifruit

Research, Promotion, and Consumer Information Act [7 U.S.C. 7461-

7473], hereinafter referred to as the Act.

This rule provides the procedures under which the referendum will

be conducted.

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 will not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

rule.

The Act provides that administrative proceedings must be exhausted

before parties may file suit in court. Under section 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 this rule on small

entities. Accordingly, we have performed this Final Regulatory

Flexibility Analysis.

Legislation to create a generic program of promotion and research

for kiwifruit became effective on April 4, 1996.

Section 561 of the Act [7 U.S.C. 7470] provides that the Secretary

of Agriculture (Secretary) shall conduct a referendum during the 60-day

period immediately preceding the proposed effective date of an Order to

determine whether the issuance of an Order is favored by a majority of

the producers and importers voting in the referendum. Paragraph (a)(2)

of Section 561 of the Act [7 U.S.C. 7470] requires that the Order be

approved by a majority of producers and importers voting in the

referendum and that the producers and importers favoring approval

produce and import 50 percent or more of the volume of kiwifruit

produced and imported by persons voting in the referendum.

There are approximately 650 producers, 45 importers, and 65

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

agricultural service firms, which will 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. The Department does not have specific information regarding

the size of importers. However, it could be concluded that the majority

of kiwifruit producers and importers may be classified as small

entities.

The Department is aware of kiwifruit producers in California,

Oregon, Pennsylvania, 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

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 kiwifruit'' 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 proposed rule on this action.

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 on the Order published on October 2,

1996, in the Federal Register, 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. Accordingly, we

changed the definition of kiwifruit in the proposed order to mean all

varieties of fresh kiwifruit classified under the species Actinidia

deliciosa or the genus Actinidia. That definition of kiwifruit is added

in this rule as well. All references to ``kiwifruit'' in this document,

therefore, mean the Actinidia deliciosa species.

California is the source for practically all (99.7 percent) 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

[[Page 54311]]

18 thousand tons to 31.5 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.

This rule provides the procedures under which kiwifruit producers

and importers may vote on whether they want the kiwifruit research and

promotion program to be implemented. Kiwifruit producers of 500 pounds

or more and importers of 10,000 pounds or more annually can vote in the

referendum. There are approximately 700 eligible voters.

The Department will keep all these individuals informed throughout

the program implementation and referendum process to ensure that they

are aware of and are able to participate in the program implementation

process. In addition, trade associations and related industry media

will receive news releases and other information regarding the

implementation and referendum process.

There is a federal marketing order program and a California state

program for kiwifruit. 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. The California Kiwifruit

Commission (CKC) administers the California state program for

kiwifruit. The CKC is composed of kiwifruit producers, packers, and

handlers.

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

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

equivalent. Handlers collect the assessments and remit the money to the

CKC.

Voting in the referendum is optional. However, if producers and

importers choose to vote, the burden of voting will be offset by the

benefits of having the opportunity to vote on whether they want the

program or not.

The Department considered requiring eligible voters to vote in

person at various Department offices across the country. However,

conducting the referendum from one central location by mail ballot is

more cost effective for this program. Also, the Department will provide

easy access to information for potential voters through a toll free

telephone line.

Paperwork Reduction Act

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

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

Act of 1995 [44 U.S.C. Chapter 35], the referendum ballot has been

approved by the Office of Management and Budget (OMB) and has been

assigned OMB number 0581-0093.

Title: National Research, Promotion, and Consumer Information

Programs.

OMB Number: 0581-0093.

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.

The burden associated with the ballot is as follows:

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.

No comments were received concerning the collection of information,

the accuracy of the estimated burden, or ways to enhance or minimize

the collection of information.

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. Producers who produce

less than 500 pounds annually, importers who import less than 10,000

pounds annually, and kiwifruit sold directly to a consumer by a

producer for a purpose other than resale and domestic and imported

kiwifruit for processing are 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.

Section 561 of the Act [7 CFR part 7470] requires that a referendum

be conducted among eligible producers and importers of kiwifruit to

determine whether they favor implementation of the Order. The Order

shall become effective if it is approved by a majority of producers and

importers voting in the referendum and the producers and importers

favoring approval produce and import more than 50 percent of the total

volume of kiwifruit produced and imported by persons voting in the

referendum.

[[Page 54312]]

A proposed rule containing the proposed Order was published in the

October 2, 1996, issue of the Federal Register [61 FR 51378]. A

proposal containing that proposed order that will be subject to

referendum is being published separately in this issue of the Federal

Register.

This final rule provides the procedures under which kiwifruit

producers and importers may vote on whether they want the kiwifruit

research and promotion program to be implemented. Kiwifruit producers

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

can vote in the referendum. There are approximately 700 eligible

voters.

This final rule will add a new subpart which establishes procedures

to be used in the referendum. This subpart covers definitions, voting,

instructions, use of subagents, ballots, the referendum report, and

confidentiality of information.

A proposed rule with a request for comments on the referendum

procedures was published in the October 2, 1996, issue of the Federal

Register [61 FR 51391]. No comments were received on the proposal.

However, comments were received on the proposed Order regarding the

definition of kiwifruit. The commenters expressed that some individuals

may be producers of ``hardy kiwifruit,'' a different species of

kiwifruit, known as Actinidia arguta. Other names for this species

(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 on the proposed

Order 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. Accordingly, we changed the

definition of kiwifruit in the proposed order to mean all varieties of

fresh kiwifruit classified under the species Actinidia deliciosa or the

genus Actinidia. That definition of kiwifruit is added in this rule as

well. All references to ``kiwifruit'' in this document, therefore, mean

the Actinidia deliciosa species.

Accordingly, no changes to the text of the regulation as proposed

are made in this final rule, except for the addition of the definition

of kiwifruit that appears in the proposed order. After consideration of

all relevant material presented, it is found that this final rule

effectuates the declared policy of the Act.

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, Title 7, chapter XI of

the Code of Federal Regulations is amended as follows:

1. Part 1214 is added to read as follows:

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

ORDER

Subpart A--Reserved

Subpart B--Reserved

Subpart C--Procedure for the Conduct of Referenda in Connection With

the Kiwifruit Research, Promotion, and Consumer Information Order

Sec.

1214.200 General.

1214.201 Definitions.

1214.202 Voting.

1214.203 Instructions.

1214.204 Subagents.

1214.205 Ballots.

1214.206 Referendum report.

1214.207 Confidential information.

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

Subpart C--Procedure for the Conduct of Referenda in Connection

With the Kiwifruit Research, Promotion, and Consumer Information

Order

Sec. 1214.200 General.

A referendum to determine whether eligible producers and importers

favor the issuance of a proposed Kiwifruit Research, Promotion, and

Consumer Information Order shall be conducted in accordance with this

subpart.

Sec. 1214.201 Definitions.

Unless otherwise defined in this section, the definition of terms

used in this subpart shall have the same meaning as the definitions in

the Order.

(a) Administrator means the Administrator of the Agricultural

Marketing Service, with power to redelegate, or any officer or employee

of the Department to whom authority has been delegated or may hereafter

be delegated to act in the Administrator's stead.

(b) Order means the Kiwifruit Research, Promotion, and Consumer

Information Order.

(c) Referendum agent or agent means the individual or individuals

designated by the Secretary to conduct the referendum.

(d) Representative period means the period designated by the

Secretary.

(e) Person means any individual, group of individuals, partnership,

corporation, association, cooperative, or any other legal entity. For

the purpose of this definition, the term ``partnership'' includes, but

is not limited to:

(1) A husband and wife who has title to, or leasehold interest in,

kiwifruit production facilities and equipment as tenants in common,

joint tenants, tenants by the entirety, or, under community property

laws, as community property, and

(2) So-called ``joint ventures,'' wherein one or more parties to

the agreement, informal or otherwise, contributed capital and others

contributed labor, management, equipment, or other services, or any

variation of such contributions by two or more parties so that it

results in the production or importation of kiwifruit and the authority

to transfer title to the kiwifruit so produced or imported.

(f) Eligible producer means any person or entity defined as a

producer who produced 500 pounds or more of kiwifruit during the

representative period and who:

(1) Owns or shares in the ownership of kiwifruit production

facilities and equipment resulting in the ownership of the kiwifruit

produced;

(2) Rents kiwifruit production facilities and equipment resulting

in the ownership of all or a portion of the kiwifruit produced;

(3) Owns kiwifruit production facilities and equipment but does not

manage them and, as compensation, obtains the ownership of a portion of

the kiwifruit produced; or

(4) Is a party in a landlord-tenant relationship or a divided

ownership arrangement involving totally independent entities

cooperating only to produce kiwifruit who share the risk of loss and

receive a share of the kiwifruit produced. No other acquisition of

legal title to kiwifruit shall be deemed to result in persons becoming

eligible producers.

(g) Eligible importer means any person or entity defined as an

importer who imported 10,000 pounds or more during the representative

period. Importation occurs when commodities originating outside the

United States are entered or withdrawn from the U.S. Customs

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Service for consumption in the United States. Included are persons who

hold title to foreign-produced kiwifruit immediately upon release by

the U.S. Customs Service, as well as any persons who act on behalf of

others, as agents or broker, to secure the release of kiwifruit from

the U.S. Customs Service when such kiwifruit are entered or withdrawn

for consumption in the United States.

(h) 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. 1214.202 Voting.

(a) Each person who is an eligible producer or importer, as defined

in this subpart, at the time of the referendum and during the

representative period, shall be entitled to cast only one ballot in the

referendum. However, each producer in a landlord-tenant relationship or

a divided ownership arrangement involving totally independent entities

cooperating only to produce kiwifruit, in which more than one of the

parties is a producer, shall be entitled to cast one ballot in the

referendum covering only such producer's share of the ownership.

(b) Proxy voting is not authorized, but an officer or employee of

an eligible corporate producer or importer, or an administrator,

executor, or trustee of an eligible producing or importing entity may

cast a ballot on behalf of such producer or importer entity. Any

individual so voting in a referendum shall certify that such individual

is an officer or employee of the eligible producer or importer, or an

administrator, executor, or trustee of an eligible producing or

importing entity, and that such individual has the authority to take

such action. Upon request of the referendum agent, the individual shall

submit adequate evidence of such authority.

(c) All ballots are to be cast by mail.

Sec. 1214.203 Instructions.

The referendum agent shall conduct the referendum, in the manner

provided in this subpart, under the supervision of the Administrator.

The Administrator may prescribe additional instructions, not

inconsistent with the provisions of this section, to govern the

procedure to be followed by the referendum agent. Such agent shall:

(a) Determine the time of commencement and termination of the

period during which ballots may be cast.

(b) Provide ballots and related material to be used in the

referendum. Ballot material shall provide for recording essential

information including that needed for ascertaining:

(1) Whether the person voting, or on whose behalf the vote is cast,

is an eligible voter;

(2) The total volume of kiwifruit produced by the voting producer

during the representative period; and

(3) The total volume of kiwifruit imported by the voting importer

during the representative period.

(c) Give reasonable advance public notice of the referendum:

(1) By utilizing available media or public information sources,

without incurring advertising expense, to publicize the dates, places,

method of voting, eligibility requirements, and other pertinent

information. Such sources of publicity may include, but are not limited

to, print and radio; and

(2) By such other means as the agent may deem advisable.

(d) Mail to eligible producers and importers, whose names and

addresses are known to the referendum agent, the instructions on

voting, a ballot, and a summary of the terms and conditions of the

proposed Order. No person who claims to be eligible to vote shall be

refused a ballot.

(e) At the end of the voting period, collect, open, number, and

review the ballots and tabulate the results in presence of an agent of

the Office of Inspector General.

(f) Prepare a report on the referendum.

(g) Announce the results to the public.

Sec. 1214.204 Subagents.

The referendum agent may appoint any individual or individuals

deemed necessary or desirable to assist the agent in performing such

agent's functions in this subpart. Each individual so appointed may be

authorized by the agent to perform any or all of the functions which,

in the absence of such appointment, shall be performed by the agent.

Sec. 1214.205 Ballots.

The referendum agent and subagents shall accept all ballots cast;

but, should they, or any of them, deem that a ballot should be

challenged for any reason, the agent or subagent shall endorse above

their signature, on the ballot, a statement to the effect that such

ballot was challenged, by whom challenged, the reasons therefore, the

results of any investigations made with respect thereto, and the

disposition thereof. Ballots invalid under this subpart shall not be

counted.

Sec. 1214.206 Referendum report.

Except as otherwise directed, the referendum agent shall prepare

and submit to the Administrator a report on results of the referendum,

the manner in which it was conducted, the extent and kind of public

notice given, and other information pertinent to analysis of the

referendum and its results.

Sec. 1214.207 Confidential information.

The ballots and other information or reports that reveal, or tend

to reveal, the vote of any person covered under the Act and the voting

list shall be held confidential and shall not be disclosed.

Dated: October 8, 1997.

Robert C. Keeney,

Deputy Administrator, Fruit and Vegetable Programs.

[FR Doc. 97-27323 Filed 10-16-97; 8:45 am]

BILLING CODE 3410-02-U