[Federal Register Volume 62, Number 201 (Friday, October 17, 1997)]
[Proposed Rules]
[Pages 54314-54332]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-27322]



  Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / 
Proposed Rules  

[[Page 54314]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1214

[FV-96-705-PR2]


Proposed Kiwifruit Research, Promotion, and Consumer Information 
Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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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

[[Page 54324]]

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.

[[Page 54325]]

    (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.

[[Page 54326]]

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

[[Page 54327]]

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

[[Page 54328]]

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