[Federal Register Volume 63, Number 217 (Tuesday, November 10, 1998)]
[Proposed Rules]
[Pages 62964-62970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-30119]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 1214

[FV-96-705-APR]


Proposed Kiwifruit Research, Promotion, and Consumer Information 
Order

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Supplementary Notice of Proposed Rulemaking.

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SUMMARY: This proposed rule would amend an October 17, 1997, proposed 
rule which described the proposed Kiwifruit Research, Promotion, and 
Consumer Information Order (Order). Under the proposed Order, producers 
and importers would pay an assessment not to exceed 10 cents per 7-
pound tray of kiwifruit to the proposed National Kiwifruit Board 
(Board). The Board would conduct a generic program of research, 
promotion, and consumer information to maintain, expand, and develop 
markets for kiwifruit under the supervision of the Department of 
Agriculture (USDA). The amended proposed rule would revise the Order by 
eliminating the requirement that 51 percent of the members of the Board 
be domestic kiwifruit producers to reflect the June 23, 1998, 
amendments to the National Kiwifruit Research, Promotion, and Consumer 
Information Act.

DATES: Comments must be received by January 11, 1999. A referendum 
order establishing the voting period for the referendum and the 
representative period for voter eligibility will be published at a 
later date in the Federal Register.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule to the Docket Clerk, Research and 
Promotion Branch, Fruit and Vegetable Programs, Agricultural Marketing 
Service (AMS), USDA, Stop 0244, Room 2535-S, 1400 Independence Avenue, 
S.W., Washington, D.C. 20250-0244. Comments should be submitted in 
triplicate and will be made available for public inspection at the 
above address during regular business hours. Comments may also be 
submitted electronically to: [email protected]. All comments 
should reference the docket number and the date and page number of this 
issue of the Federal Register. A copy of this rule may be found at: 
www.ams.usda.gov/fv/rpdocketlist.htm. Pursuant to the Paperwork 
Reduction Act of 1995 (PRA), send comments regarding the merits of the 
burden estimate, ways to minimize the burden, including the use of 
automated collection techniques or other forms of information 
technology, or any other aspect of this collection of information to 
the above. Comments concerning the information collection associated 
with this action should also be sent to the Desk Officer for 
Agriculture, Office of Information and Regulatory Affairs, Office of 
Management and Budget, Washington, D.C. 20503.

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

[[Page 62965]]

Promotion Branch, Fruit and Vegetable Programs, AMS, USDA, Stop 0244, 
1400 Independence Avenue, S.W., Washington, D.C. 20250-0244, fax (202) 
205-2800, telephone (888) 720-9917, or e-mail at 
[email protected].

SUPPLEMENTARY INFORMATION: This proposed rule is issued under the 
National Kiwifruit Research, Promotion, and Consumer Information Act, 
Subtitle V of the Federal Agricultural Improvement and Reform Act of 
1996 [Pub. L. 104-127], enacted April 4, 1996, hereinafter referred to 
as the Act. The Act was amended on June 23, 1998 [Pub. L. 105-185]. 
Previous documents in connection with this proceeding: a proposed rule 
with a request for comments dated September 23, 1996 [61 FR 51378, 
October 2, 1996] (first proposed rule) and a proposed rule dated 
October 8, 1997 [62 FR 54314, October 17, 1997] (second proposed rule). 
In addition, a proposed rule was issued on September 23, 1996 [61 FR 
51391, October 2, 1996], to establish procedures for conducting 
referenda on the proposed Order. The referendum procedures were made 
final on November 17, 1997 [61 FR 54310, October 17, 1997].

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. It is not intended to have retroactive effect. This 
rule would not preempt any State or local laws, regulations, or 
policies, unless they present an irreconcilable conflict with this 
rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under Sec. 558 of the Act as 
amended [7 U.S.C. 7467], after an Order is implemented, a person 
subject to the Order may file a petition with the Secretary of 
Agriculture (Secretary) stating that the Order or any provision of the 
Order, or any obligation imposed in connection with the Order, is not 
in accordance with law and requesting a modification of the Order or an 
exemption from the Order. The petitioner is afforded the opportunity 
for a hearing on the petition. After such hearing, the Secretary will 
make a ruling on the petition. The Act as amended provides that the 
district courts of the United States in any district in which a person 
who is a petitioner resides or carries on business are vested with 
jurisdiction to review the Secretary's ruling on the petition, if a 
complaint for that purpose is filed within 20 days after the date of 
the entry of the ruling.

Executive Order 12866

    This rule has been determined to be ``not significant'' for 
purposes of Executive Order 12866 and, therefore, has not been reviewed 
by the Office of Management and Budget (OMB).

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act [5 U.S.C. 601 et 
seq.], the Agency has examined the impact of the previously published 
proposed rules on small entities.
    The kiwifruit industry initiated this program by asking the U.S. 
Congress (Congress) to pass legislation to provide authority for a 
generic program of promotion and research for kiwifruit. Congress found 
that this program is vital to the welfare of kiwifruit producers and 
other persons concerned with producing, marketing, and processing 
kiwifruit.
    This program is intended to: develop and finance an effective and 
coordinated program of research, promotion, and consumer information 
regarding kiwifruit; strengthen the position of the kiwifruit industry 
in domestic and foreign markets and maintain, develop, and expand 
markets for kiwifruit; and to treat domestically produced kiwifruit and 
imported kiwifruit equitably.
    Industry support for the program will be determined during the 
referendum to be conducted by USDA. Dates for the referendum will be 
announced by the Secretary no later than 60 days before the referendum.
    This program was initiated by industry, industry must approve the 
program in a referendum in advance of its implementation, and industry 
members would serve on the Board that would administer the program 
under USDA's supervision. In addition, any person subject to the 
program may file with the Secretary a petition stating that the Order 
or any provision is not in accordance with law and requesting a 
modification of the Order or an exemption from the Order. 
Administrative proceedings were discussed earlier in this proposed 
rule.
    In this program, handlers would be required to collect assessments 
from producers, file reports, and submit assessments to the Board. 
Importers would be required to remit to the Board assessments not 
collected by the U.S. Customs Service (Customs) and to file reports 
with the Board. Exempt producers and importers would be required to 
file an exemption application. Producers, importers, and exporters 
(persons outside of the United Sates who export kiwifruit into the 
United States) would participate in the nomination process and be 
eligible to serve as members on the Board. While the proposed Order 
would impose certain recordkeeping requirements on handlers and 
importers, information required under the proposed Order could be 
compiled from records currently maintained. The forms require the 
minimum information necessary to effectively carry out the requirements 
of the program, and their use is necessary to fulfill the intent of the 
Act as amended. The estimated cost in providing information to the 
Board by the 760 respondents would be $7,842.50 or $10.32 per 
respondent per year.
    USDA would oversee program operations and, if the program is 
implemented, every 6 years would conduct a referendum to determine 
whether the kiwifruit industry supports continuation of the program.
    There are approximately 600 producers, 45 importers, and 65 
handlers of kiwifruit that would be covered by the program. In 
addition, exporters would be eligible to serve on the Board.
    Small agricultural service firms, which would include the handlers 
and importers who would be covered under the Order, have been defined 
by the Small Business Administration [13 CFR 121.601] as those whose 
annual receipts are less than $5 million and small agricultural 
producers, those who would be required to pay assessments, as those 
having annual receipts of $500,000. Only one handler has been 
identified to have $5 million or more in annual sales. In addition, 
there are 10 producers at or over the $500,000 annual sales receipts 
threshold. Accordingly, the majority of handlers and producers may be 
classified as small entities. While USDA does not have specific 
information regarding the size of importers, it may be concluded that 
the majority of importers may be classified as small entities.
    Exporters were not included in the initial Regulatory Flexibility 
Analysis regarding the impact of previously published proposed rule. In 
order to have all the data necessary for a more comprehensive analysis 
of the effects of the proposed Order, we are inviting comments 
concerning the potential effects on exporters. In particular, we are 
interested in determining the number and size of exporters that may 
incur benefits or costs from implementation of this proposed rule and 
information on the expected benefits or costs.
    USDA is aware of producers in California, Oregon, Pennsylvania, and 
South Carolina, and importers that

[[Page 62966]]

import kiwifruit from Chile, New Zealand, and Italy. USDA believes that 
these individuals would include a majority of the producers and 
importers that would be covered under the program. USDA is also aware 
that some individuals may be producers of ``hardy kiwifruit,'' a 
different species of kiwifruit, known as Actinidia arguta, which would 
not be covered under the proposed program. However, USDA does not have 
specific information regarding how many individuals produce only the 
``hardy kiwi'' versus the ``fuzzy'' most common kiwifruit species, 
known as Actinidia deliciosa.
    Other names for the species Actinidia arguta (hardy kiwifruit) are 
baby kiwifruit, kiwifruit grape, and kiwiberry. There are no official 
statistics on this commodity because it is such a small and new crop. 
According to comments received on the first proposed rule, this species 
is grown in California, Oregon, Pennsylvania, Washington, and Virginia. 
The production in Virginia and Pennsylvania is not commercially 
marketed. Oregon production on 5 acres was a total of 216,000 pounds 
over the last 3 years. It takes 3 to 5 years to harvest the first crop. 
The hardy kiwifruit is hand-harvested and packed in 6-ounce berry 
baskets like raspberries. The harvesting, storage, handling, consumer 
recognition, and marketing of this species are completely different 
from the most common fuzzy kiwifruit or Actinidia deliciosa. All 
references to ``kiwifruit'' in this document, therefore, mean the 
Actinidia deliciosa species.
    California is the source of practically all of the kiwifruit 
produced in the United States. The California kiwifruit industry 
consists of approximately 600 producers and 65 handlers. Production 
rose by 94 percent between 1984 and 1997, increasing from 36 million 
pounds to 70 million pounds annually. In contrast, from 1984 through 
1997, the value of production fell 7 percent.
    Most U.S. kiwifruit is utilized fresh. Fresh utilization almost 
tripled between 1984 and 1997, growing from 24 million pounds to 62.6 
million pounds. The season average price from 1984 through 1997 fell 52 
percent, declining from $0.54 per pound to $0.26 per pound. Exports 
accounted for about 19 percent of U.S. fresh utilization during that 
period.
    In 1997, California production was 70.0 million pounds. The value 
of the 1997 crop was $16.5 million of which $16.2 million represented 
fresh utilization. In 1996, production was 63.0 million pounds with a 
crop value of $13.2 million. In 1997, 98 percent of production was 
utilized in fresh outlets.
    U.S. exports of fresh kiwifruit totaled 13.1 million pounds in 
1997. The value was $7.1 million. The major destinations included 
Canada (66 percent of the U.S. poundage exported), Republic of Korea 
(18 percent), and Mexico (7 percent).
    In 1997, kiwifruit imports totaled 75.9 million pounds, with a 
value of $20.7 million. About 80 percent of imports came from Chile, 14 
percent from Italy, and 4 percent from New Zealand. Fresh kiwifruit per 
capita consumption in 1996 was 0.55 pounds, down slightly from 0.56 
pounds per capita during the 1995 season.
    The proposed kiwifruit Order would authorize assessments on 
producers (to be collected by first handlers) and on importers 
(collected by Customs) of up to 10 cents per 7-pound tray. The Board, 
which would be composed of kiwifruit producers, importers, and 
exporters, must recommend the assessment rate, which is subject to 
oversight by the Secretary, as are the other rules and regulations. At 
the maximum rate of assessment, the Board would collect $1.97 million 
to administer the program. Assessments on domestic fresh-market 
production (62.6 million pounds) are expected to represent 45 percent 
of the income under the program.
    The effect of the assessments will depend on the actual rate 
recommended by the Board. At the maximum rate, it is expected that the 
effect on producers would be approximately 5 percent of their average 
return. However, the Order would exempt producers of less than 500 
pounds of kiwifruit a year, importers of less than 10,000 pounds a 
year, and kiwifruit sold for processing and sold directly to consumers. 
Furthermore, under the proposed program, the Board could authorize 
different reporting schedules based on different marketing practices. 
This could be of benefit specially to small businesses for whom a less 
frequent reporting period would diminish the reporting burden.
    USDA will keep all of these individuals informed throughout the 
program implementation and referendum process to ensure that they are 
aware of and are able to participate in the implementation process. In 
addition, trade associations and related industry media will receive 
news releases and other information regarding the implementation and 
referendum process. Furthermore, all the information will be available 
electronically.
    If the program is implemented, the Board would develop guidelines 
for compliance with the program.
    In addition, the kiwifruit industry would nominate individuals to 
serve as members of the Board. These individuals would recommend the 
assessment rate, programs and projects, a budget, and any other rules 
and regulations that might be necessary for the administration of the 
program. USDA would ensure that the nominees represent the kiwifruit 
industry as specified in the Act as amended.
    There is a federal marketing order program for kiwifruit in 
California which is administered by the Kiwifruit Administrative 
Committee (KAC), also under USDA supervision. KAC is composed of 
California producers. The marketing order regulations for grade, size, 
maturity, and containers are designed to assure consumers of 
consistently good quality California kiwifruit. The marketing order and 
its regulations allow small farmers to compete effectively in an 
increasingly competitive marketplace. Under the marketing order, 
handlers are required to submit information pertaining to and pay 
assessments on kiwifruit shipments. The assessment rate recommended by 
the KAC is derived by dividing anticipated expenses by expected 
shipments of kiwifruit. Because that rate is applied to actual 
shipments, it must be established at a rate which will produce 
sufficient income to pay the KAC's expected expenses. On August 21, 
1998, the assessment rate and assessable unit were decreased from 
$0.0225 per tray or tray equivalent to $0.05 per 22-pound volume fill 
container or equivalent. The assessment rate of $0.0225 per tray or 
tray equivalent approximates $0.0675 per 22-pound volume fill 
container. Each handler pays an average of $2,000 per year in 
assessments. Under the marketing order, the estimated reporting burden 
per year for individual handlers is estimated at 4.2 hours or $42.00 
per handler.
    The California Kiwifruit Commission (CKC) administers a California 
state program for kiwifruit. The CKC is composed of kiwifruit 
producers, packers, and handlers. In 1996-97 producers paid $1.4 
million in assessments at a rate of $0.17 per tray or tray equivalent. 
The CKC has set an assessment rate of $0.17 per 22-pound volume fill 
container for the 1998-99 season.
    The collection of information required under the proposed order for 
the research and promotion program would be similar to the marketing 
order program. However, the KAC and the

[[Page 62967]]

Board would keep their information separate to comply with 
confidentiality requirements under the programs. Furthermore, using the 
same source of information would reduce the burden on producers and 
handlers of all sizes.
    In the past, the CKC participated in a voluntary promotional 
program with Chilean kiwifruit growers to jointly advertise kiwifruit 
in the United States. This program, however, does not provide enough 
resources to be as effective as a national generic program could be. In 
addition, other importing countries and private companies spend 
considerable amounts of resources in kiwifruit advertising. The purpose 
of the program is not to restrict individual promotions but to add a 
generic promotion program for kiwifruit where industry segments pull 
together resources for the benefit of the whole industry.
    The absence of a generic program for kiwifruit may have a negative 
impact on the industry because other commodity groups, specifically for 
competing fruits, conduct promotion activities to maintain and expand 
their markets. The kiwifruit industry would be at a disadvantage 
because individual producers, handlers, and importers would not be able 
to implement and finance such a program without cooperative action. In 
addition, Agricultural Issues Forum, a group of 15 California commodity 
organizations, conducted a study in mid-1995 and reported in early 1996 
that consumers strongly support the concept of farmers working together 
to promote their products, conduct product research, engage in consumer 
education programs, and set quality standards and inspect products. 
Consumers said that they benefitted from these activities and were more 
inclined to buy those products. Eighty-one percent of the farmers 
surveyed said that mandated programs were either very important or 
important in promoting products. The survey was conducted among 
farmers, public policy leaders, consumers, retailers, and allied 
industries.
    In order to conduct the Regulatory Flexibility Analysis regarding 
the impact of the proposed Order on small entities, the first proposed 
rule invited comments concerning the potential effects of the proposed 
Order. No comments were received concerning the impact of the proposed 
Order on small entities. However, as explained earlier in this rule and 
in the second proposed rule, ``hardy kiwifruit'' producers would not be 
covered under the program because the species Actinidia arguta is 
considerably different from the most common ``fuzzy kiwifruit'' species 
Actinidia deliciosa. This would have a positive impact on small 
businesses since most of the producers of ``hardy kiwifruit'' are 
considered small businesses.
    In addition, it is expected that the previously published proposed 
Order would be very beneficial to the kiwifruit industry, especially 
small businesses who would not be able to afford a nationwide 
comprehensive program individually.
    It is estimated that there are approximately 645 kiwifruit 
producers and importers who would be eligible to vote in the 
referendum. It would take an average 15 minutes for each voter to read 
the voting instructions and complete the referendum ballot. The total 
burden on the total number of voters will be 29 hours.

Paperwork Reduction Act

    In accordance with OMB regulations [5 CFR Part 1320] which 
implement the PRA [44 U.S.C. Chapter 35], and as stated in the previous 
proposed rules, the information collection and recordkeeping 
requirements that would be imposed by the proposed Order were approved 
by OMB on December 16, 1996.
    Title: National Research, Promotion, and Consumer Information 
Programs.
    OMB Number: 0581-0093, except for the background questionnaire (no. 
2 below) which is assigned OMB number 0505-0001.
    Expiration Date of Approval: November 30, 2000, for 0581-0093 and 
November 30, 1998, for 0505-0001.
    Type of Request: Revision of a currently approved information 
collection for research and promotion programs.
    Abstract: The information collection requirements in this request 
are essential to carry out the intent of the Act as amended.
    While the proposed Order would impose certain recordkeeping 
requirements on handlers and importers, information required under the 
proposed Order could be compiled from records currently maintained. The 
provisions of the proposed Order have been carefully reviewed and every 
effort has been made to minimize any unnecessary recordkeeping costs or 
requirements, including efforts to utilize information already 
maintained by handlers under the federal marketing order program in 
California and the CKC. The information needed would be taken from 
financial reports or sales receipts already maintained.
    The forms require the minimum information necessary to effectively 
carry out the requirements of the program, and their use is necessary 
to fulfill the intent of the Act as amended. Such information can be 
supplied without data processing equipment or outside technical 
expertise. In addition, there are no additional training requirements 
for individuals filling out reports and remitting assessments to the 
Board. The forms would be simple, easy to understand, and place as 
small a burden as possible on the person required to file the 
information.
    The most recent information indicates that there would be 647 
respondents affected by the nomination of Board members provisions of 
the proposed Order, which is related to this amended proposed rule: 600 
producers, 45 importers or exporters, and 2 public member nominees. The 
estimated cost in providing information related to the nomination of 
Board members by the 647 respondents would be $1,200 or $1.86 per 
respondent. This total has been estimated by multiplying 120 (total 
burden hours requested) by $10.00 per hour, a sum deemed to be 
reasonable should the respondents be compensated for their time.
    The information collection requirements that are related to the 
nomination sections of the proposed Order which are affected by this 
amended proposed rule are:
    (1) Nominations.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hour per response.
    Respondents: Producers, importers, and exporters.
    Estimated Number of Respondents: 647.
    Estimated Number of Responses per Respondent: 1 every 3 years 
(0.33).
    Estimated Total Annual Burden on Respondents: 108 hours.
    (2) A background questionnaire for nominees.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 0.5 hours per response for each 
producer, importer, exporter, and public member nominated to the Board.
    Respondents: Producers, importers or exporters, and public member
    Estimated Number of Respondents: 22 for the initial nominations to 
the Board and approximately 12 respondents annually thereafter.
    Estimated Number of Responses per Respondent: 1.
    Estimated Total Annual Burden on Respondents: 22 hours for the 
initial nominations to the Board and 12 hours annually thereafter.
    Comments are invited on: (a) Whether the proposed collection of 
information

[[Page 62968]]

is necessary for the proper performance of functions of the Order and 
the Department's oversight of the program, including whether the 
information will have practical utility; (b) the accuracy of USDA's 
estimate of the burden of the proposed collection of information, 
including the validity of the methodology and assumption used; (c) ways 
to enhance the quality, utility, and clarity of the information to be 
collected; and (d) ways to minimize the burden of the collection of 
information on those who are to respond, including the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology.
    OMB is required to make a decision concerning the collection of 
information contained in this rule between 30 and 60 days after 
publication. Therefore, a comment to OMB is best assured of having its 
full effect if OMB receives it within 30 days of publication.
    Comments concerning the burden for the nomination process should 
reference OMB No. 0581-0093. Comments addressing the nomination 
background information form should reference OMB No. 0505-0001. In 
addition, the docket number, date, and page number of this issue of the 
Federal Register also should be referenced. Comments should be sent to 
the USDA Docket Clerk and the OMB Desk Officer for Agriculture at the 
addresses and by the deadline listed above.

Background

    The Act became effective on April 4, 1996. It authorizes the 
Secretary to implement a promotion program for kiwifruit, which would 
be administered by an 11-member industry board appointed by the 
Secretary.
    Under the program, producers of 500 or more pounds of kiwifruit per 
year and importers of 10,000 pounds or more of kiwifruit per year would 
be assessed at a rate not to exceed 10 cents per 7-pound tray of 
kiwifruit. There are approximately 600 producers, 45 importers, and 65 
handlers of kiwifruit that would be covered by the program. In addition 
to the de minimis exemptions for producers and importers, U.S. 
kiwifruit for processing would be exempt from assessment. The maximum 
assessment rate would generate about $2 million annually. Assessments 
would be used to pay for: research, promotion, and consumer 
information; administration, maintenance, and functioning of the Board; 
and expenses incurred by the Secretary in implementing and 
administering the Order, including referendum costs.
    The first handler would be responsible for the collection of 
assessments from the producer and payment to the Board. Handlers would 
be required to maintain records for each producer for whom kiwifruit is 
handled, including kiwifruit produced by the handler. In addition, 
handlers would be required to file reports regarding the collection, 
payment, or remittance of the assessments. All information obtained 
through handler reports would be kept confidential.
    Customs would collect assessments on imported kiwifruit and would 
remit those assessments to the Board for a fee.
    The Act requires the Secretary to conduct a referendum during the 
60-day period preceding the proposed Order's effective date. Kiwifruit 
producers of 500 pounds or more and importers of 10,000 pounds or more 
annually would vote in the referendum to determine whether they favor 
the Order's implementation. The proposed Order must be approved by a 
majority of eligible producers and importers voting in the referendum, 
and producers and importers favoring approval must produce and import 
more than 50 percent of the total volume of kiwifruit produced and 
imported by persons voting in the referendum. Subsequent referenda 
would be conducted every 6 years after the program is in effect or when 
requested by 30 percent of kiwifruit producers and importers covered by 
the Order. The Secretary would give serious consideration to requests 
for referendum when requested by a group representing a considerable 
amount of the volume covered by the program.
    The Act provides for the submission of proposals for a kiwifruit 
research, promotion, and consumer information Order by industry 
organizations or any other interested person affected by the Act. The 
Act requires that such a proposed Order provide for the establishment 
of a promotion Board. The promotion Board would be composed of 11 
voting members, who would be producers, importers or exporters, and a 
public member. Each member would have an alternate. Members would serve 
a three-year term of office. No member may serve more than two 
consecutive three-year terms.
    The Act provides that any person subject to the Order may file with 
the Secretary a petition stating that the Order or any of its 
provisions is not in accordance with law and requesting a modification 
of the Order or an exemption from the Order. The individual would be 
given the opportunity to a hearing on the petition.
    The Secretary issued a news release on May 6, 1996, requesting 
proposals for an initial Order or portions of an initial Order by May 
17, 1996. A second news release, extending the deadline for submission 
of proposals to June 3, 1996, was issued on May 24, 1996.
    An entire proposed Order was submitted by the CKC. In addition, a 
partial proposal was submitted by the New Zealand Kiwifruit Marketing 
Board (NZKMB). The NZKMB represents all New Zealand exporters of 
kiwifruit into the United States.
    In addition to minor editorial changes, USDA modified the CKC's 
proposed text to conform with provisions of the Act and to clarify 
certain other provisions of the proposed order. USDA published the 
CKC's and the NSKMB's proposals for public comment in the Federal 
Register on October 2, 1996 [61 FR 51378]. The deadline for comments 
was December 2, 1996. Seventy-five comments were received. Comments 
were received from eight Chilean kiwifruit growers or grower 
associations, 31 Chilean kiwifruit exporters or exporter associations, 
one international exporter association, 26 importers of Chilean 
kiwifruit, two U.S. growers, the CKC, four universities, and the 
embassies of Australia and New Zealand. Seventy-three of the comments 
opposed implementation of the Order as proposed on October 2, 1996.
    USDA analyzed the comments and made several changes to the proposed 
Order to address commenters' concerns. One of the commenters' issues, 
however, was not addressed because the provisions at issue were 
consistent with the then relevant provisions of the Act. This issue 
related to the composition of the initial Board and the requirement 
that 51 percent of the members of the Board be domestic producers, 
regardless of the percentage of assessments paid by importers. These 
provisions are contained in Sec. 1214.30 of the proposed Order.
    A revised proposed Order was published in the Federal Register on 
October 17, 1997 [62 FR 54314]. At the same time, USDA announced that a 
referendum on the proposed Order, as revised by that proposed rule, 
would be conducted.
    After the publication of that proposed rule, the CKC requested the 
Secretary to delay the referendum until the Act could be amended to 
remove the requirement that 51 percent of the Board members be domestic 
producers. Subsequently, on June 23, 1998, the Act was amended [Pub. L. 
105-185] to remove the 51 percent requirement as well as to provide 
that future

[[Page 62969]]

amendments of the Order could become effective without an industry 
referendum. The first amendment requires changes in Sec. 1214.30 of the 
proposed Order. In addition, a conforming change is needed in 
Sec. 1214.76 to indicate that the Act has been amended.
    Therefore, this action would revise Secs. 1214.30 and 1214.76 to 
reflect the amendments to the Act.
    In the earlier proposed rules, Sec. 1214.30(a) provided that the 
initial Board would be composed of six producers, four importers and/or 
exporters, and one public member. This section would be revised by this 
proposed rule to state that, for the initial Board, the number of 
producer and importers or exporters on the Board would be apportioned, 
by the Secretary, on the basis of the average annual kiwifruit 
production and imports over the preceding four years.
    To determine the four-year average, we have calculated domestic 
production and imports for the last four seasons (1994-95 through 1997-
98) as shown in the accompanying chart.

                                    U.S. Production and Imports of Kiwifruit
----------------------------------------------------------------------------------------------------------------
                                                  Domestic
                                                 production     Imports       Total       Percent      Percent
                   Year \1\                     \2\ (million    (million     (million     domestic     imports
                                                  pounds)       pounds)      pounds)
----------------------------------------------------------------------------------------------------------------
1997-98......................................          62.6      \3\ 79.3    \3\ 141.9     \3\ 44.1     \3\ 55.9
1996-97......................................          52.2          83.2        135.4         38.6         61.4
1995-96......................................          65.0          81.1        146.1         44.5         55.5
1994-95......................................          75.0          79.4        154.4         48.6         51.4
4-year average...............................  .............  ...........  ...........         43.9        56.1
----------------------------------------------------------------------------------------------------------------
\1\ September 1 through August 31.
\2\ Fresh utilization because the proposed program would not cover kiwifruit for processing.
\3\ Projected; includes imports through July 1998.

    Based on this analysis, the four-year average for domestic 
production in the U.S. fresh market is 43.9 percent, and the four-year 
average of imports in the U.S. fresh market is 56.1. Therefore, if the 
initial Board seats were allocated as of the date of this rule, the 
Secretary would appoint four producers, six importers or exporters, and 
one public member to the Board. However, if the proposed promotion 
program is implemented, the Secretary will use the most current 
information available at the time of implementation in determining the 
allocation of seats on the initial Board.
    Section 1214.30(a) (1) and (2) stated that the Kiwifruit Board 
would be composed of six producers and four importers. This section has 
been revised to state that the Kiwifruit Board would be composed of ten 
producers and importers or exporters (or their representatives) based 
on the proportional representation of the level of domestic production 
and imports of kiwifruit, as determined by the Secretary.
    Sections 1214.30(b) (1) and (2) stated that membership of the Board 
could be adjusted to accommodate changes in production and import 
levels of kiwifruit as long as producers comprise not less than 51 
percent of the membership of the Board. These sections are revised to 
remove the 51 percent requirement.
    In addition, this rule would revise Sec. 1214.76 to add ``as 
amended,'' after the word ``Act''.
    This action makes no other changes to the text of the Order 
provisions as they appeared in the October 1997 proposed rule.
    For the Order to become effective, the Order must be approved by a 
majority of kiwifruit producers and importers voting in a referendum, 
with such majority producing or importing more than 50 percent of the 
total volume of kiwifruit produced and imported by persons voting in 
the referendum.
    The previously published proposed Order is summarized as follows:
    Sections 1214.1 through 1214.19 of the proposed Order define 
certain terms, such as kiwifruit, handler, producer, and importer, 
which are used in the proposed Order.
    Sections 1214.30 through 1214.39 include provisions relating to the 
establishment, adjustment, and membership; nominations; appointment; 
terms of office; vacancies; reimbursement; powers; and duties of the 
Board.
    The Board would be the body organized to administer the Order 
through the implementation of programs, plans, projects, budgets, and 
contracts to promote and disseminate information about kiwifruit, under 
the supervision of the Secretary. Further, the Board would be 
authorized to incur expenses necessary for the performance of its 
duties and to set a reserve fund. Sections 1214.40 and 1214.50 provide 
information on these activities.
    Sections 1214.51 through 1214.53 would authorize the collection of 
assessments, specify who pays them and how, and specifies persons who 
would be exempt from paying the assessment. In addition, it would 
prohibit use of funds to influence government policy or action.
    The assessment rate may not exceed 10 cents per 7-pound tray of 
kiwifruit. The actual rate would be recommended by the Board and 
approved by the Secretary through regulation. Direct sales to consumers 
by a producer and kiwifruit for processing are exempt from assessments.
    The assessment sections also outline the procedures to be followed 
by handlers and importers for remitting assessments; establish a 1.5 
percent per month interest charge for unpaid or late assessments; and 
provide for refunds of assessments paid by importers who import less 
than 10,000 pounds of kiwifruit a year.
    Sections 1214.60 through 1214.62 concern reporting and 
recordkeeping requirements for persons subject to the Order and protect 
the confidentiality of information obtained from such books, records, 
or reports.
    Sections 1214.70 through 1214.73 describe the rights of the 
Secretary, authorize the Secretary to suspend or terminate the Order 
when deemed appropriate, and prescribe proceedings after suspension or 
termination.
    Sections 1214.74 through 1214.77 are miscellaneous provisions 
including the provisions involving personal liability of Board members 
and employees; handling of patents, copyrights, inventions, and others; 
amendments to

[[Page 62970]]

the Order; and separability of Order provisions.
    USDA will analyze all comments received in response to this 
proposed rule and make any necessary changes to the proposed Order. 
Then, as appropriate, the Secretary will issue a referendum order, 
which will establish the voting period, representative period, and 
method of voting and designate the referendum agents.

List of Subjects in 7 CFR Part 1214

    Administrative practice and procedure, Advertising, Consumer 
information, Marketing agreements, Kiwifruit, Promotion, Reporting and 
recordkeeping requirements.

    For the reasons set forth in the preamble, it is proposed that the 
proposed rule establishing Title 7 of Chapter XI of the Code of Federal 
Regulations and published at 62 FR 54314 on October 17, 1997, be 
further amended as follows:
    1. In Sec. 1214.30, paragraphs (a), (b) (1) and (2) are revised to 
read as follows:

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

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

* * * * *

National Kiwifruit Board


Sec. 1214.30  Establishment, adjustment, and membership.

    (a) Establishment of National Kiwifruit Board. There is hereby 
established a National Kiwifruit Board of 11 members. Ten members shall 
be producers (or their representatives) who are not exempt from 
assessment, exporters (or their representatives), or importers (or 
their representatives) who are not exempt from assessment. One member 
shall be appointed from the general public. The number of members 
allocated to domestic producers, exporters, and importers shall be 
based on a proportional representation of the level of domestic 
production and imports of kiwifruit, as determined by the Secretary. 
The Secretary shall consider average annual domestic production and 
imports during the four years which immediately precede the effective 
date of the Order.
    (b) Adjustment of Membership. (1) Subject to the 11-member limit, 
the Secretary may adjust membership on the Promotion Board to 
accommodate changes in domestic production and import levels of 
kiwifruit.
    (2) At least every five years, and not more than every three years, 
the Promotion Board shall review changes in the volume of domestic and 
imported kiwifruit covered by this part. If annual kiwifruit production 
and imports over the preceding four years indicate that such changes in 
production and import levels have occurred warranting reapportionment, 
the Promotion Board shall recommend reapportionment of Board 
membership, for approval of the Secretary.
* * * * *


Sec. 1214.76  [Amended]

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

    Dated: November 4, 1998.
Enrique E. Figueroa,
Administrator, Agricultural Marketing Service.
[FR Doc. 98-30119 Filed 11-9-98; 8:45 am]
BILLING CODE 3410-02-P