Proposed Kiwifruit Research, Promotion, and Consumer Information Order

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1214

[FV-96-705-APR]

Proposed Kiwifruit Research, Promotion, and Consumer Information

Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Supplementary Notice of Proposed Rulemaking.

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SUMMARY: This proposed rule would amend an October 17, 1997, proposed

rule which described the proposed Kiwifruit Research, Promotion, and

Consumer Information Order (Order). Under the proposed 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). The Board would conduct a generic program of research,

promotion, and consumer information to maintain, expand, and develop

markets for kiwifruit under the supervision of the Department of

Agriculture (USDA). The amended proposed rule would revise the Order by

eliminating the requirement that 51 percent of the members of the Board

be domestic kiwifruit producers to reflect the June 23, 1998,

amendments to the National Kiwifruit Research, Promotion, and Consumer

Information Act.

DATES: Comments must be received by January 11, 1999. 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.

ADDRESSES: Interested persons are invited to submit written comments

concerning this proposed rule to the Docket Clerk, Research and

Promotion Branch, Fruit and Vegetable Programs, Agricultural Marketing

Service (AMS), USDA, Stop 0244, Room 2535-S, 1400 Independence Avenue,

S.W., Washington, D.C. 20250-0244. Comments should be submitted in

triplicate and will be made available for public inspection at the

above address during regular business hours. Comments may also be

submitted electronically to: [email protected]. All comments

should reference the docket number and the date and page number of this

issue of the Federal Register. A copy of this rule may be found at:

www.ams.usda.gov/fv/rpdocketlist.htm. Pursuant to the Paperwork

Reduction Act of 1995 (PRA), send comments regarding the merits of the

burden estimate, ways to minimize the burden, including the use of

automated collection techniques or other forms of information

technology, or any other aspect of this collection of information to

the above. Comments concerning the information collection associated

with this action should also be sent to the Desk Officer for

Agriculture, Office of Information and Regulatory Affairs, Office of

Management and Budget, Washington, D.C. 20503.

FOR FURTHER INFORMATION CONTACT: Stacey L. Bryson, Research and

[[Page 62965]]

Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244,

1400 Independence Avenue, S.W., Washington, D.C. 20250-0244, fax (202)

205-2800, telephone (888) 720-9917, or e-mail at

[email protected].

SUPPLEMENTARY INFORMATION: This proposed rule 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. The Act was amended on June 23, 1998 [Pub. L. 105-185].

Previous documents in connection with this proceeding: a proposed rule

with a request for comments dated September 23, 1996 [61 FR 51378,

October 2, 1996] (first proposed rule) and a proposed rule dated

October 8, 1997 [62 FR 54314, October 17, 1997] (second proposed rule).

In addition, a proposed rule was issued on September 23, 1996 [61 FR

51391, October 2, 1996], to establish procedures for conducting

referenda on the proposed Order. The referendum procedures were made

final on November 17, 1997 [61 FR 54310, October 17, 1997].

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 Sec. 558 of the Act as

amended [7 U.S.C. 7467], after an Order is implemented, a person

subject to the Order may file a petition with the Secretary of

Agriculture (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 as amended 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

This rule has been determined to be ``not significant'' for

purposes of Executive Order 12866 and, therefore, has not been reviewed

by the Office of Management and Budget (OMB).

Regulatory Flexibility Act

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

seq.], the Agency has examined the impact of the previously published

proposed rules on small entities.

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

Congress (Congress) to pass legislation to provide authority for 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.

Industry support for the program will be determined during the

referendum to be conducted by USDA. 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 Board that would administer the program

under USDA'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 Board.

Importers would be required to remit to the Board assessments not

collected by the U.S. Customs Service (Customs) and to file reports

with the Board. Exempt producers and importers would be required to

file an exemption application. Producers, importers, and exporters

(persons outside of the United Sates who export kiwifruit into the

United States) would participate in the nomination process and be

eligible to serve as members on the Board. 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 as amended. The estimated cost in providing information to the

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

respondent per year.

USDA 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 600 producers, 45 importers, and 65

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

addition, exporters would be eligible to serve on the Board.

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 [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 USDA 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.

Exporters were not included in the initial Regulatory Flexibility

Analysis regarding the impact of previously published proposed rule. In

order to have all the data necessary for a more comprehensive analysis

of the effects of the proposed Order, we are inviting comments

concerning the potential effects on exporters. In particular, we are

interested in determining the number and size of exporters that may

incur benefits or costs from implementation of this proposed rule and

information on the expected benefits or costs.

USDA is aware of producers in California, Oregon, Pennsylvania, and

South Carolina, and importers that

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import kiwifruit from Chile, New Zealand, and Italy. USDA believes that

these individuals would include a majority of the producers and

importers that would be covered under the program. USDA 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, USDA 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.

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 first proposed rule, this species

is grown in California, Oregon, Pennsylvania, Washington, and Virginia.

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 are 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 of practically all of the kiwifruit

produced in the United States. The California kiwifruit industry

consists of approximately 600 producers and 65 handlers. Production

rose by 94 percent between 1984 and 1997, increasing from 36 million

pounds to 70 million pounds annually. In contrast, from 1984 through

1997, the value of production fell 7 percent.

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

tripled between 1984 and 1997, growing from 24 million pounds to 62.6

million pounds. The season average price from 1984 through 1997 fell 52

percent, declining from $0.54 per pound to $0.26 per pound. Exports

accounted for about 19 percent of U.S. fresh utilization during that

period.

In 1997, California production was 70.0 million pounds. The value

of the 1997 crop was $16.5 million of which $16.2 million represented

fresh utilization. In 1996, production was 63.0 million pounds with a

crop value of $13.2 million. In 1997, 98 percent of production was

utilized in fresh outlets.

U.S. exports of fresh kiwifruit totaled 13.1 million pounds in

1997. The value was $7.1 million. The major destinations included

Canada (66 percent of the U.S. poundage exported), Republic of Korea

(18 percent), and Mexico (7 percent).

In 1997, kiwifruit imports totaled 75.9 million pounds, with a

value of $20.7 million. About 80 percent of imports came from Chile, 14

percent from Italy, and 4 percent from New Zealand. Fresh kiwifruit per

capita consumption in 1996 was 0.55 pounds, down slightly from 0.56

pounds per capita during the 1995 season.

The proposed kiwifruit Order would authorize assessments on

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

(collected by Customs) of up to 10 cents per 7-pound tray. The Board,

which would be composed of kiwifruit producers, importers, and

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 Board would collect $1.97 million

to administer the program. Assessments on domestic fresh-market

production (62.6 million pounds) 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 5 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 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.

USDA will 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 will receive

news releases and other information regarding the implementation and

referendum process. Furthermore, all the information will be available

electronically.

If the program is implemented, the Board would develop guidelines

for compliance with the program.

In addition, the kiwifruit industry would nominate individuals to

serve as members of the 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. USDA would ensure that the nominees represent the kiwifruit

industry as specified in the Act as amended.

There is a federal marketing order program for kiwifruit in

California which is administered by the Kiwifruit Administrative

Committee (KAC), also under USDA 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. On August 21,

1998, the assessment rate and assessable unit were decreased from

$0.0225 per tray or tray equivalent to $0.05 per 22-pound volume fill

container or equivalent. The assessment rate of $0.0225 per tray or

tray equivalent approximates $0.0675 per 22-pound volume fill

container. Each handler pays an average of $2,000 per year in

assessments. Under the marketing order, the estimated reporting burden

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

per handler.

The California Kiwifruit Commission (CKC) administers a California

state program for kiwifruit. The CKC is composed of kiwifruit

producers, packers, and handlers. In 1996-97 producers paid $1.4

million in assessments at a rate of $0.17 per tray or tray equivalent.

The CKC has set an assessment rate of $0.17 per 22-pound volume fill

container for the 1998-99 season.

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

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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 the program is not to restrict 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 the proposed Order on small entities, the first proposed

rule 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 and

in the second proposed 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 previously published 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 645 kiwifruit

producers and importers who 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 OMB regulations [5 CFR Part 1320] which

implement the PRA [44 U.S.C. Chapter 35], and as stated in the previous

proposed rules, the information collection and recordkeeping

requirements that would be imposed by the 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 background questionnaire (no.

2 below) which is assigned OMB number 0505-0001.

Expiration Date of Approval: November 30, 2000, for 0581-0093 and

November 30, 1998, for 0505-0001.

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 as amended.

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

provisions of the proposed Order 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 as amended. 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

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.

The most recent information indicates that there would be 647

respondents affected by the nomination of Board members provisions of

the proposed Order, which is related to this amended proposed rule: 600

producers, 45 importers or exporters, and 2 public member nominees. The

estimated cost in providing information related to the nomination of

Board members by the 647 respondents would be $1,200 or $1.86 per

respondent. This total has been estimated by multiplying 120 (total

burden hours requested) by $10.00 per hour, a sum deemed to be

reasonable should the respondents be compensated for their time.

The information collection requirements that are related to the

nomination sections of the proposed Order which are affected by this

amended proposed rule are:

(1) Nominations.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average 0.5 hour per response.

Respondents: Producers, importers, and exporters.

Estimated Number of Respondents: 647.

Estimated Number of Responses per Respondent: 1 every 3 years

(0.33).

Estimated Total Annual Burden on Respondents: 108 hours.

(2) A background questionnaire for nominees.

Estimate of Burden: Public reporting burden for this collection of

information is estimated to average 0.5 hours per response for each

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

Respondents: Producers, importers or exporters, 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.

Comments are invited on: (a) Whether the proposed collection of

information

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is necessary for the proper performance of functions of the Order and

the Department's oversight of the program, including whether the

information will have practical utility; (b) the accuracy of USDA's

estimate of the burden of the proposed collection of information,

including the validity of the methodology and assumption used; (c) ways

to enhance the quality, utility, and clarity of the information to be

collected; and (d) ways to minimize the burden of the collection of

information on those who are to respond, including the use of

appropriate automated, electronic, mechanical, or other technological

collection techniques or other forms of information technology.

OMB is required to make a decision concerning the collection of

information contained in this rule between 30 and 60 days after

publication. Therefore, a comment to OMB is best assured of having its

full effect if OMB receives it within 30 days of publication.

Comments concerning the burden for the nomination process should

reference OMB No. 0581-0093. Comments addressing the nomination

background information form should reference OMB No. 0505-0001. In

addition, the docket number, date, and page number of this issue of the

Federal Register also should be referenced. Comments should be sent to

the USDA Docket Clerk and the OMB Desk Officer for Agriculture at the

addresses and by the deadline listed above.

Background

The Act became effective on April 4, 1996. It authorizes the

Secretary to implement a promotion program for kiwifruit, which would

be administered by an 11-member industry board appointed by the

Secretary.

Under the program, producers of 500 or more pounds of kiwifruit per

year and importers of 10,000 pounds or more of kiwifruit per year would

be assessed at a rate not to exceed 10 cents per 7-pound tray of

kiwifruit. There are approximately 600 producers, 45 importers, and 65

handlers of kiwifruit that would be covered by the program. In addition

to the de minimis exemptions for producers and importers, U.S.

kiwifruit for processing would be exempt from assessment. The maximum

assessment rate would generate about $2 million annually. 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 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 Board for a fee.

The Act requires the Secretary 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.

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, who would be producers, importers or exporters, and a

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 Secretary 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. 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, USDA modified the CKC's

proposed text to conform with provisions of the Act and to clarify

certain other provisions of the proposed order. USDA published the

CKC's and the NSKMB's proposals for public comment in the Federal

Register on October 2, 1996 [61 FR 51378]. 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, four universities, and the

embassies of Australia and New Zealand. Seventy-three of the comments

opposed implementation of the Order as proposed on October 2, 1996.

USDA analyzed the comments and made several changes to the proposed

Order to address commenters' concerns. One of the commenters' issues,

however, was not addressed because the provisions at issue were

consistent with the then relevant provisions of the Act. This issue

related to the composition of the initial Board and the requirement

that 51 percent of the members of the Board be domestic producers,

regardless of the percentage of assessments paid by importers. These

provisions are contained in Sec. 1214.30 of the proposed Order.

A revised proposed Order was published in the Federal Register on

October 17, 1997 [62 FR 54314]. At the same time, USDA announced that a

referendum on the proposed Order, as revised by that proposed rule,

would be conducted.

After the publication of that proposed rule, the CKC requested the

Secretary to delay the referendum until the Act could be amended to

remove the requirement that 51 percent of the Board members be domestic

producers. Subsequently, on June 23, 1998, the Act was amended [Pub. L.

105-185] to remove the 51 percent requirement as well as to provide

that future

[[Page 62969]]

amendments of the Order could become effective without an industry

referendum. The first amendment requires changes in Sec. 1214.30 of the

proposed Order. In addition, a conforming change is needed in

Sec. 1214.76 to indicate that the Act has been amended.

Therefore, this action would revise Secs. 1214.30 and 1214.76 to

reflect the amendments to the Act.

In the earlier proposed rules, Sec. 1214.30(a) provided that the

initial Board would be composed of six producers, four importers and/or

exporters, and one public member. This section would be revised by this

proposed rule to state that, for the initial Board, the number of

producer and importers or exporters on the Board would be apportioned,

by the Secretary, on the basis of the average annual kiwifruit

production and imports over the preceding four years.

To determine the four-year average, we have calculated domestic

production and imports for the last four seasons (1994-95 through 1997-

98) as shown in the accompanying chart.

U.S. Production and Imports of Kiwifruit

----------------------------------------------------------------------------------------------------------------

Domestic

production Imports Total Percent Percent

Year \1\ \2\ (million (million (million domestic imports

pounds) pounds) pounds)

----------------------------------------------------------------------------------------------------------------

1997-98...................................... 62.6 \3\ 79.3 \3\ 141.9 \3\ 44.1 \3\ 55.9

1996-97...................................... 52.2 83.2 135.4 38.6 61.4

1995-96...................................... 65.0 81.1 146.1 44.5 55.5

1994-95...................................... 75.0 79.4 154.4 48.6 51.4

4-year average............................... ............. ........... ........... 43.9 56.1

----------------------------------------------------------------------------------------------------------------

\1\ September 1 through August 31.

\2\ Fresh utilization because the proposed program would not cover kiwifruit for processing.

\3\ Projected; includes imports through July 1998.

Based on this analysis, the four-year average for domestic

production in the U.S. fresh market is 43.9 percent, and the four-year

average of imports in the U.S. fresh market is 56.1. Therefore, if the

initial Board seats were allocated as of the date of this rule, the

Secretary would appoint four producers, six importers or exporters, and

one public member to the Board. However, if the proposed promotion

program is implemented, the Secretary will use the most current

information available at the time of implementation in determining the

allocation of seats on the initial Board.

Section 1214.30(a) (1) and (2) stated that the Kiwifruit Board

would be composed of six producers and four importers. This section has

been revised to state that the Kiwifruit Board would be composed of ten

producers and importers or exporters (or their representatives) based

on the proportional representation of the level of domestic production

and imports of kiwifruit, as determined by the Secretary.

Sections 1214.30(b) (1) and (2) stated that membership of the Board

could be adjusted to accommodate changes in production and import

levels of kiwifruit as long as producers comprise not less than 51

percent of the membership of the Board. These sections are revised to

remove the 51 percent requirement.

In addition, this rule would revise Sec. 1214.76 to add ``as

amended,'' after the word ``Act''.

This action makes no other changes to the text of the Order

provisions as they appeared in the October 1997 proposed rule.

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 previously published 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 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

[[Page 62970]]

the Order; and separability of Order provisions.

USDA will analyze all comments received in response to this

proposed rule and make any necessary changes to the proposed Order.

Then, as appropriate, the Secretary will issue a referendum order,

which will establish the voting period, representative period, and

method of voting and designate the referendum agents.

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 the

proposed rule establishing Title 7 of Chapter XI of the Code of Federal

Regulations and published at 62 FR 54314 on October 17, 1997, be

further amended as follows:

1. In Sec. 1214.30, paragraphs (a), (b) (1) and (2) are revised to

read as follows:

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

ORDER

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

Order

* * * * *

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. Ten members shall

be producers (or their representatives) who are not exempt from

assessment, exporters (or their representatives), or importers (or

their representatives) who are not exempt from assessment. One member

shall be appointed from the general public. The number of members

allocated to domestic producers, exporters, and importers shall be

based on a proportional representation of the level of domestic

production and imports of kiwifruit, as determined by the Secretary.

The Secretary shall consider average annual domestic production and

imports during the four years which immediately precede the effective

date of the Order.

(b) Adjustment of Membership. (1) Subject to the 11-member limit,

the Secretary may adjust membership on the Promotion Board to

accommodate changes in domestic production and import levels of

kiwifruit.

(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 covered by this part. If 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, for approval of the Secretary.

* * * * *

Sec. 1214.76 [Amended]

2. Section 1214.76 is amended by adding the phrase ``as amended,''

after the word ``Act''.

Dated: November 4, 1998.

Enrique E. Figueroa,

Administrator, Agricultural Marketing Service.

[FR Doc. 98-30119 Filed 11-9-98; 8:45 am]

BILLING CODE 3410-02-P