54314 Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules

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.

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
Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules 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 handharvested 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
54316 Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules

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
Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules 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.
54318 Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules

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

§ 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 § 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 § 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 § 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 § 1214.36(b)(2) is

revised to reflect the need of a twothirds 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 § 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 §§ 1214.39 Duties, 1214.40

Programs, Plans, and Projects, and
54320 Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules

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 § 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 § 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 statemandated 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 § 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

§ 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 § 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 § 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

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

§ 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 anticompetitive 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 § 1214.36(b)(2), the

CKC stated that it would support a
54322 Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules

three-quarters of a quorum requirement

for votes on budget and assessment rate

issues rather than the proposed twothirds 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 twothirds 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 § 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, § 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 § 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, § 1214.8, § 1214.36(b)(1)

and (2), and § 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 § 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
Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules 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

§ 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.

§ 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.

§ 1214.3 Department.

Department means the United States

Department of Agriculture.

§ 1214.4 Exporter.

The term exporter means any person

outside the United States who exports

kiwifruit into the United States.

§ 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.

§ 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.

§ 1214.7 Importer.

Importer means any person who

imports kiwifruit into the United States.

§ 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.

§ 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.

§ 1214.10 Part and subpart.

Part means this kiwifruit research,

promotion, and consumer information

order and all rules and regulations and
54324 Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules

supplemental orders issued thereunder,

and the term subpart means the

kiwifruit research, promotion, and

consumer information order.

§ 1214.11 Person.

Person means any individual, group

of individuals, partnership, corporation,

association, cooperative, or other legal

entity.

§ 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.

§ 1214.13 Producer.

Producer means any person who

grows kiwifruit in the United States for

sale in commerce.

§ 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.

§ 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.

§ 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

§ 1214.30.

§ 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.

§ 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.

§ 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

§ 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 § 1214.13 and 1214.7; and

(ii) Use the information received by

the Promotion Board under § 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 § 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.

§ 1214.31 Nominations.

All nominations for appointments to

the Promotion Board under § 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.
Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules 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.

§ 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.

§ 1214.33 Appointment.

From the nominations made pursuant

to this subpart, the Secretary shall

appoint the members and alternates.

§ 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 § 1214.35(b)(1).

Members serving two consecutive threeyear 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.

§ 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

§ 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.
54326 Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules

§ 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.

§ 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.

§ 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 § 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 § 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.

§ 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

§§ 1214.40 and 1214.50;

(d) To maintain such books and

records, which shall be available to the

Secretary for inspection and audit, and

to prepare and submit such reports from

time to time to the Secretary, as the

Secretary may prescribe, and to make

appropriate accounting with respect to
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the receipt and disbursement of all

funds entrusted to it;

(e) To prepare and make public, at

least annually, a report of its activities

carried out, and an accounting for funds

received and expended;

(f) To cause its financial statements to

be prepared in conformity with

generally accepted accounting

principles and to be audited by an

independent certified public accountant

in accordance with generally accepted

auditing standards at least once each

fiscal year and at such other times as the

Secretary may request, and submit a

copy of each such audit to the Secretary;

(g) To give the Secretary the same

notice of meetings of the Promotion

Board as is given to members in order

that the Secretary, or a representative of

the Secretary, may attend such

meetings;

(h) To submit to the Secretary such

information as may be requested

pursuant to this subpart;

(i) To keep minutes, books, and

records that clearly reflect all the acts

and transactions of the Promotion

Board. Minutes of each Board meeting

shall be promptly reported to the

Secretary;

(j) To act as intermediary between the

Secretary and any industry member;

(k) To follow the Department’s equal

opportunity/civil rights policies;

(l) To work to achieve an effective,

continuous, and coordinated program of

promotion, research, consumer

information, evaluation and industry

information designed to strengthen the

kiwifruit industry’s position in the

marketplace, maintain and expand

existing markets and uses for kiwifruit,

develop new markets and uses for

kiwifruit, and to carry out programs,

plans, and projects designed to provide

maximum benefits to the kiwifruit

industry;

(m) To conduct periodic review or

evaluation of each program, plan, or

project to ensure that it contributes to an

effective program of research,

promotion, and consumer information;

(n) Not less than every 5 years,

authorize and fund, from funds

otherwise available to the Promotion

Board, an independent evaluation of the

effectiveness of the programs conducted

by the Promotion Board. The Promotion

Board shall submit to the Secretary, and

make available to the public, the results

of each periodic independent evaluation

conducted under this section; and

(o) To investigate violations of the

Order and report the results of such

investigations to the Secretary for

appropriate action to enforce the

provisions of the Order.

Promotion, Research, and Consumer

Information

§ 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

§ 1214.50 Budget and Expenses

(a)(1) At least 60 days prior to the

beginning of each fiscal year, and as

may be necessary thereafter, the

Promotion Board shall prepare and

submit to the Secretary a budget for the

fiscal year covering its anticipated

expenses and disbursements in

administering this subpart. Each such

budget shall include:

(i) A statement of objectives and

strategy for each program, plan, or

project;

(ii) A summary of anticipated

revenue, with comparative data for at

least one preceding year;

(iii) A summary of proposed

expenditures for each program, plan, or

project; and

(iv) Staff and administrative expense

breakdowns, with comparative data for

at least one preceding year.

(2) Each budget shall provide

adequate funds to defray its proposed

expenditures and to provide for a

reserve as set forth in paragraph (f) of

this section.

(3)(i) Subject to paragraph (a)(3)(ii) of

this section, any amendment or addition

to an approved budget must be

approved by the Secretary, including

shifting of funds from one program,

plan, or project to another.

(ii) Shifts of funds which do not cause

an increase in the Promotion Board’s

approved budget and which are

consistent with governing bylaws need

not have prior approval by the

Secretary.

(b) The Promotion Board is authorized

to incur such expenses, including

provision for a reasonable reserve, as the

Secretary finds are reasonable and likely

to be incurred by the Promotion Board

for its maintenance and functioning,

and to enable it to exercise its powers

and perform its duties in accordance

with the provisions of this subpart.

Such expenses shall be paid from funds

received by the Promotion Board.

(c) The Promotion Board may accept

voluntary contributions, but these shall

only be used to pay expenses incurred

in the conduct of programs, plans, and

projects. Such contributions shall be

free from any encumbrance by the donor

and the Promotion Board shall retain

complete control of their use.

(d) The Promotion Board shall

reimburse the Secretary, from funds

received by the Promotion Board, for

administrative costs incurred by the

Secretary in implementing and

administering this subpart, including

the salaries of Department employees

and costs incurred in conducting

referenda.

(e) The Promotion Board may

establish an operating monetary reserve

and may carry over to subsequent fiscal

periods excess funds in any reserve so

established. Such reserve funds may be
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used to defray any expenses authorized

under this subpart.

(f) With the approval of the Secretary,

the Promotion Board may borrow

money for the payment of

administrative expenses, subject to the

same fiscal, budget, and audit controls

as other funds of the Promotion Board.

This provision is limited to the first year

of operation of the Promotion Board.

§ 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.

§ 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.

§ 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

§ 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

§ 1214.51(a) shall be required to report

monthly to the Promotion Board, on a

form provided by the Promotion Board,
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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 § 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

§ 1214.52, such information as deemed

necessary by the Board, and approved

by the Secretary, concerning the

exemption including disposition of

exempted kiwifruit.

§ 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.

§ 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

§ 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.

§ 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.

§ 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
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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.

§ 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.

§ 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.

§ 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, § 1214.72

shall apply to determine disposition of

all such property.

§ 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.

§ 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

§ 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

§ 1214.110 Nominations.

Nominations shall be made by mail

ballot in accordance with the

procedures prescribed in § 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.

§ 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 § 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.

§ 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

§ 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

§ 1214.120 Payment of assessments.

(a) Each handler responsible for

collecting assessments on domestic

kiwifruit shall collect the amounts
Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules 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

§§ 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.

§ 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 § 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

§ 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

§ 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

§ 1214.60. In addition, each handler

may be required to provide the farm

identification number or social security

number of each producer the handler
54332 Federal Register / Vol. 62, No. 201 / Friday, October 17, 1997 / Proposed Rules

has dealt with during the time period

covered by the report.

Miscellaneous

§ 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