[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Rules and Regulations]
[Pages 41023-41029]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19091]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV99-981-2 FR]


Almonds Grown in California; Revisions to Requirements Regarding 
Credit for Promotion and Advertising Activities

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule revises the requirements regarding credit for 
promotion and advertising activities prescribed under the 
administrative rules and regulations of the California almond marketing 
order (order). The order regulates the handling of almonds grown in 
California and is administered locally by the Almond Board of

[[Page 41024]]

California (Board). The order is funded through the collection of 
assessments from almond handlers. Under the terms of the order's 
regulations, handlers may receive credit towards their assessment 
obligation for certain expenditures for marketing promotion activities, 
including paid advertising. This rule revises the requirements 
regarding the activities for which handlers may receive such credit. 
The changes make the promotion program more effective and efficient, 
clarify the regulations, and improve program administration.

EFFECTIVE DATE: This final rule becomes effective August 1, 1999.

FOR FURTHER INFORMATION CONTACT: Martin Engeler, Assistant Regional 
Manager, California Marketing Field Office, Marketing Order 
Administration Branch, F&V, AMS, USDA, 2202 Monterey Street, suite 
102B, Fresno, California 93721; telephone: (559) 487-5901, Fax: (559) 
487-5906; or George Kelhart, Technical Advisor, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, room 
2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202) 
720-2491, Fax: (202) 720-5698. Small businesses may request information 
on complying with this regulation, or obtain a guide on complying with 
fruit, vegetable, and specialty crop marketing agreements and orders by 
contacting Jay Guerber, Marketing Order Administration Branch, Fruit 
and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2525-S, 
Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 720-
5698, or E-mail: Jay.G[email protected]. You may view the marketing 
agreement and order small business compliance guide at the following 
web site: http://www.ams.usda.gov/fv/moab.html.

SUPPLEMENTARY INFORMATION: This rule is issued under Marketing Order 
No. 981, as amended (7 CFR part 981), regulating the handling of 
almonds grown in California, hereinafter referred to as the ``order.'' 
The marketing order is effective under the Agricultural Marketing 
Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter 
referred to as the ``Act.''
    The Department of Agriculture (Department) is issuing this rule in 
conformance with Executive Order 12866.
    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is not intended to have retroactive 
effect. This rule will not preempt any State or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Act provides that administrative proceedings must be exhausted 
before parties may file suit in court. Under section 608c(15)(A) of the 
Act, any handler subject to an order may file with the Secretary a 
petition stating that the order, any provision of the order, or any 
obligation imposed in connection with the order is not in accordance 
with law and request a modification of the order or to be exempted 
therefrom. A handler is afforded the opportunity for a hearing on the 
petition. After the hearing the Secretary would rule on the petition. 
The Act provides that the district court of the United States in any 
district in which the handler is an inhabitant, or has his or her 
principal place of business, has jurisdiction to review the Secretary's 
ruling on the petition, provided an action is filed not later than 20 
days after the date of the entry of the ruling.
    This final rule revises the requirements regarding credit for 
promotion and advertising activities prescribed under the 
administrative rules and regulations of the order. The order is funded 
through the collection of assessments from almond handlers. Under the 
terms of the order's regulations, handlers may receive credit towards 
their assessment obligation for certain expenditures for marketing 
promotion activities, including paid advertising. This rule revises the 
requirements regarding the activities for which handlers may receive 
such credit. It provides for more effective promotion programs and 
improved clarity to the regulations, resulting in improved program 
administration and more efficient and effective use of industry 
promotion funds. This rule was unanimously recommended by the Board at 
meetings on December 2, 1998, and March 5, 1999.
    The order provides authority for the Board to incur expenses for 
administering the order and to collect assessments from handlers to 
cover these expenses. Section 981.41(a) provides authority for the 
Board to conduct marketing promotion projects, including projects 
involving paid advertising. Section 989.41(c) allows the Board to 
credit a handler's assessment obligation with all or a portion of his 
or her direct expenditures for marketing promotion, including paid 
advertising, that promotes the sale of almonds, almond products, or 
their uses. Section 981.41(e) allows the Board to prescribe rules and 
regulations regarding such credit for market promotion, including paid 
advertising activities. Those regulations are prescribed in 
Sec. 981.441. The Board recommended the following changes to those 
regulations. These changes apply only to promotional activities 
conducted during the 1999-2000 and future crop years.

Revising Time Frames for Submitting Documentation

    Section 981.441(a) provides that, in order for handlers to receive 
credit against their assessment obligation for their own promotional 
expenditures, the Board must determine that such expenditures meet 
applicable requirements. Currently, credit may be granted in the form 
of a payment from the Board, or as an offset to the Board's assessment 
if activities are conducted and documented to the satisfaction of the 
Board at least 2 weeks prior to assessment billings. This 2-week period 
is also currently specified in Sec. 981.441(b) and 981.441(e)(6)(ii). 
Assessments are typically billed in four installments for a crop year 
near the end of the following months--November, January, April, and 
August.
    Based on past experience with the program, the majority of handlers 
file claims for credit for their promotional activities during the 
later months of a crop year. The vast majority of claims are thus 
received at the Board's office near the third and fourth filing 
deadlines. Because of this, the Board's staff has found that it needs 
more time to review and process handler documentation for promotional 
claims submitted during this time to grant credit against handlers' 
assessment obligations at the time assessment notices are issued. Thus, 
the Board recommended that, in order for handlers to receive credit for 
their promotional activities on their third and fourth assessment 
billings (April and August), the documentation for such activities must 
be submitted to the Board 3 weeks, rather than 2 weeks, prior to those 
billings. However, this requirement should not apply to documentation 
submitted prior to the fourth assessment billing for activities 
conducted during the 1998-99 crop year. Handlers conducted activities 
and operated under program parameters in place throughout the 1998-99 
crop year. They should be allowed to continue to follow those 
parameters for activities conducted during the 1998-99 crop year. Thus, 
the two week timeframe should apply to submission of documentation 
prior to the fourth assessment billing of the 1998-99 crop year. 
Appropriate changes are made to paragraphs (a), (b), and (e)(6)(ii) of 
Sec. 981.441.
    Section 981.441(e)(6)(iv) currently provides that final claims for 
credit-back advertising be submitted to the Board within 105 days after 
the close of the crop year, in situations when handlers

[[Page 41025]]

have filed a statement of credit-back commitments outstanding as of the 
close of the crop year. The Board recommended changing this 105-day 
time frame for several reasons. First, the deadline can cause confusion 
among handlers because it overlaps with the time frame for filing the 
first claims of the new crop year. In addition, the overlap creates 
program administration problems for Board staff with regard to 
reviewing claims and applying credit for two separate years during the 
same time period. Finally, the current deadline causes a delay in 
completion of the Board's year-end accounting practices and annual 
financial audit. Thus, the Board recommended that this deadline be 
reduced from 105 to 76 days after the close of the end of the crop 
year. This will eliminate confusion and program administration problems 
associated with the overlap period for filing claims, and allow the 
Board's end-of-year financial audit to be completed by December or 
earlier of the following crop year, as opposed to January or later. 
However, for reasons discussed in the preceding paragraph, the deadline 
should remain at 105 days for activities conducted during the 1998-99 
crop year. Section 981.441(e)(6)(iv) is modified accordingly.
    When handlers have not filed a statement of credit-back commitments 
outstanding at the close of a crop year, the deadline for filing final 
promotional claims with the Board is 2 weeks prior to the final 
assessment notice (mid-August). However, this deadline date is not 
clearly specified in the current regulations and has caused some 
confusion in the past. Therefore, the Board recommended establishing 
August 15 as the deadline for filing final claims in this situation. 
This will provide more clarity and reduce confusion regarding the 
deadline for filing final claims. Section 981.441(e)(6)(iv) is modified 
accordingly.

Redefining Growing Region

    Section 981.441(e)(3) currently does not generally allow handlers 
to receive credit against their assessment obligation for outdoor 
advertising or sponsorships that are conducted in the major growing 
regions of California. The major growing regions currently listed in 
the regulation are the following 11 almond-growing counties: Butte, 
Colusa, Fresno, Glenn, Kern, Madera, Merced, Sacramento, San Joaquin, 
Stanislaus, and Tulare counties. The rationale for this exclusion is 
that historically, much of the outdoor advertising and sponsorship 
activities in the major growing areas have been to encourage growers to 
do business with specific handlers rather than encouraging consumption 
of almonds. This is contrary to the intent of this program, which is to 
promote the sale, consumption, or use of almonds.
    The Board recommended removing this list of counties from the 
regulations and adding substitute language. Production and new acreage 
planted in the almond industry have increased significantly in recent 
years, and production areas have been shifting within the State. The 
current regulations do not take this into account, and the 
aforementioned list of counties no longer accurately reflects the major 
growing areas.
    The Board believes a more effective approach will be to revise the 
regulations to specify that no credit be given for outdoor advertising 
activities conducted in any California county with more than 1,000 
bearing acres of almonds. This approach will adequately define the 
major growing regions, and accommodate production shifts in the future. 
This, in effect, removes Sacramento County as a major growing area and 
thus allows outdoor advertising in that county. Sacramento County 
contains a major metropolitan area, which lends itself to the use of 
outdoor advertising, and is a minor almond growing area, with only 110 
acres compared to an industry total of over 400,000 acres. The other 10 
counties listed above continue to be regions ineligible for this type 
of credit. Other counties with significant almond acreage such as 
Kings, San Luis Obispo, Solano, Sutter, Tehama, Yolo, and Yuba are 
classified as major almond growing areas, and outdoor advertising in 
those counties, thus, will be considered ineligible for credit-back.
    The Board further believes that modifying the regulations in this 
manner will better reflect the original intent of the regulation, and 
allow more flexibility for shifts in production within the growing 
area. Section 981.441(e)(3) is modified accordingly. The Board also 
recommended that sponsorship be completely eliminated as a credit-back 
activity; this recommendation is discussed below.

Revisions to List of Credit-Back Activities

    Section 981.441(e)(4)(ii) lists 13 other market promotion 
activities for which credit may be granted. These activities currently 
include marketing research (except pre-testing and test-marketing of 
paid advertising); trade and consumer product publicity; printing costs 
for promotional material; direct mail printing and distribution; retail 
in-store demonstrations; point-of-sale materials (not including 
packaging); sales and marketing presentation kits; trade fairs and 
exhibits; trade seminars; 50/50 advertising with retailers; couponing 
(printing, distribution, and handling costs only); purchase of Board-
produced promotional materials; and sponsorships.
    The Board recommended revising the requirements regarding trade and 
consumer product publicity. Trade and consumer product publicity 
includes disseminating information through various communications media 
to attract public attention. Handlers often hire an outside agency to 
conduct such activities. Usually, such an agency charges a fee for its 
work. In the past, this agency fee has been included as part of the 
credit-back activity, as agency fees for paid advertising are. However, 
in the case of trade and consumer product publicity, the Board has 
encountered difficulties in associating agency fees to particular 
credit-back activities, and determining whether this fee is 
appropriate, because there is no standard fee or guidelines for such 
fees. For paid advertising, this does not pose a problem because there 
is a standard agency fee that can easily be associated directly to a 
particular activity. Thus, the Board recommended that agency fees for 
publicity no longer be included as a credit-back activity. All of the 
other allowable activities associated with publicity (such as 
materials) which can be directly tied to a specific publicity campaign 
will still be eligible for credit.
    The Board also recommended that trade seminars be removed from this 
list of credit-back activities. Trade seminars include special events 
designed to educate the trade about the almond industry and its 
products. Although Board records indicate there has been no use of this 
area as a credit-back activity by handlers, the Board believes that 
there is a high possibility of misuse in this area. Trade seminars are 
not well defined and standardized activities; thus, lavish 
entertainment or elaborate sales meetings are characterized as trade 
seminars. Trade shows will remain as a credit-back activity, however. 
These events are widely used and the activities are well-defined and 
standardized, such as setting up booths to exhibit merchandise to 
customers. Thus, the Board recommended that trade seminars be removed 
from the list of credit-back activities.
    The Board also recommended that handlers' purchases of Board-
produced promotional materials be removed from the list of credit-back 
activities. Board funds are used to develop various

[[Page 41026]]

promotional materials that are made available to handlers. In the past, 
handlers purchased such materials from the Board and received promotion 
credit. However, the Board has recently developed an allocation system 
whereby handlers may receive a certain percentage of promotional 
material produced by the Board free of charge. Each handler's 
allocation for a crop year is based on the percentage of almonds 
handled during the prior year. Handlers may purchase additional 
material at cost. This new system, not covered by the credit-back 
regulations, allows Board staff to plan more effectively and to 
purchase materials more cost effectively, while maintaining a 
promotional tool for handlers. Since this new system was developed, the 
Board determined that continuing to allow credit for purchase of Board-
produced promotional material results in overlap of two similar 
programs. Therefore, the Board recommended that purchase of such 
material be removed from the list of credit-back activities.
    In addition, the Board recommended that sponsorship be removed from 
the list of credit-back activities. Sponsorship includes the financial 
support of an event or person carried out by another group or person. 
Sponsorship can be targeted towards consumers, the trade, or may be 
undertaken for general goodwill. A review of sponsorship claims 
submitted in the past indicates several claims appear to fall into the 
category of general goodwill rather than to promote the sale and 
consumption of almonds as the primary purpose. Further, Board staff has 
had difficulty in determining a reasonable rate for crediting some of 
the activities due to a lack of an industry standard. Finally, Board 
staff has found that many of the most effective activities typically 
claimed as sponsorship can be applicable under other credit-back areas 
in the regulations. Thus, the Board recommended that sponsorship be 
removed from the list of credit-back activities.
    The Board also recommended that a new credit-back activity be added 
to the regulations concerning use of the Internet. Several handlers 
have or are developing web-sites to promote their almonds. This is a 
rapidly developing communication medium becoming widely recognized as a 
valuable promotional tool. Thus, the Board believes handlers should be 
allowed credit for development and use of the Internet for promotional 
purposes. Because of the vast array of uses of the Internet, however, 
the Board believes guidelines should be implemented regarding crediting 
handlers' expenditures in this area. Thus, the Board recommended that 
handlers be allowed up to $5,000 credit against their assessment 
obligation for the development and use of a web-site on the Internet 
for advertising and public relations purposes. No credit is given for 
costs regarding E-commerce (which is equivalent to opening a store), 
Extranet (private web sites within the Internet), or portions of a web-
site that target the farming or grower trade. The Board believes these 
types of activities lend themselves to potential abuses and do not 
necessarily advance the intent of the program, which is to promote the 
sale, use, and consumption of almonds.
    Appropriate changes have been made to the list of credit-back 
activities specified in Sec. 981.441(e)(4)(ii) to incorporate all of 
these changes.

Recommendation Regarding Credit-Back for Almond Products

    Section 981.441(a) specifies that handlers may be granted credit 
against their assessment obligation for an amount not to exceed 66\2/3\ 
percent of a handler's proven expenditures for qualified activities. 
Section 981.441(e)(iv) provides that when products containing almonds 
are promoted, the amount allowed for credit-back shall reflect that 
portion of the product weight represented by almonds, or the handler's 
actual payment, whichever is less. For example, if a handler paid 
$1,000 in advertising costs to promote a product which contained 60 
percent almonds by weight, such handler is able to file a claim for 
credit against his or her assessment obligation of 60 percent of 
$1,000, or $600. The amount of credit is 66\2/3\ percent of $600, or 
$400. If the product contained 70 percent almonds by weight, the 
handler is eligible to receive a credit against his or her assessment 
of 66\2/3\ percent of the 70 percent, or $467.
    The Board recommended adding an exception to this portion of the 
regulations. Specifically, handlers who own almond-containing 
``unique'' or ``non-traditional'' products would be allowed to request 
that the Board grant them a one-year exemption from this ``percentage 
rule.'' Thus, in the above example, a handler could request from the 
Board an exemption and receive credit for 66\2/3\ percent of his or her 
advertising costs for the product, or $667, regardless of the weight of 
the almonds in the product. The Board believes that this special 
exception would provide handlers incentive to produce and advertise 
unique almond products, resulting in increased almond sales for the 
industry. Board members would be responsible for reviewing such 
requests from handlers and determining whether an exception would be 
granted on a case-by-case basis.
    The Department has concerns with this recommendation. Although 
there was support for this concept at the industry meetings which led 
to the recommendations, those participating in the meetings were not 
able to develop criteria to define a ``unique'' or ``non-traditional'' 
product. Thus, there are no specific parameters for Board staff to 
review claims against. Because of this, the recommendation calls for 
the Board itself, rather than staff, to determine what products would 
qualify (Board staff currently reviews all promotion claims). It is 
unclear how the Board would make such determinations. The lack of 
criteria could potentially lead to subjective decision-making and Board 
members reviewing claims could create potential conflicts of interest. 
The purpose of these regulations is to provide a clear set of 
guidelines that can be applied uniformly by Board staff to avoid these 
situations. While the Department supports the concept of providing 
incentive for new product development, it is not proceeding with this 
recommendation at this time because of the aforementioned concerns.

Final Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (RFA), the Agricultural Marketing Service (AMS) has considered the 
economic impact of this action on small entities. Accordingly, AMS has 
prepared this final regulatory flexibility analysis.
    The purpose of the RFA is to fit regulatory actions to the scale of 
business subject to such actions in order that small businesses will 
not be unduly or disproportionately burdened. Marketing orders issued 
pursuant to the Act, and rules issued thereunder, are unique in that 
they are brought about through group action of essentially small 
entities acting on their own behalf. Thus, both statutes have small 
entity orientation and compatibility.
    There are approximately 105 handlers of California almonds who are 
subject to regulation under the order and approximately 6,000 almond 
producers in the regulated area. Small agricultural service firms have 
been defined by the Small Business Administration (13 CFR 121.601) as 
those having annual receipts of less than $5,000,000, and small 
agricultural producers are defined as those having annual receipts of 
less than $500,000.
    Based on the most current data available, about 54 percent of the 
handlers ship under $5,000,000 worth

[[Page 41027]]

of almonds and 46 percent ship over $5,000,000 worth on an annual 
basis. In addition, based on acreage, production, and grower prices 
reported by the National Agricultural Statistics Service, and the total 
number of almond growers, the average annual grower revenue is 
approximately $195,000. In view of the foregoing, it can be concluded 
that the majority of handlers and producers of California almonds may 
be classified as small entities.
    This final rule revises Sec. 981.441 of the order's administrative 
rules and regulations regarding credit-back promotion and advertising. 
Under the terms of the regulations, handlers may receive credit towards 
their assessment obligation for certain of their direct expenditures 
for marketing promotion activities, including paid advertising. This 
rule makes several revisions to the requirements regarding the 
activities for which handlers may receive such credit. These revisions 
include: Revising the time frames and clarifying deadlines for when 
handlers must submit documentation to the Board on activities 
conducted; redefining the growing region eligible for credit for 
certain types of outdoor advertising; revising the list of creditable 
activities by eliminating credit for fees charged by advertising and 
public relations agencies for publicity, trade seminars, purchase of 
Board-produced promotional material, and sponsorships; and adding use 
of the Internet as a promotional tool as a new, credit-back activity.
    Regarding the impact of this rule on affected entities, the changes 
specified herein are designed to provide for a more effective and 
efficient use of the industry's advertising and promotion funds, and to 
improve program administration. Requiring handlers to submit 
documentation to the Board 3 weeks, as opposed to 2 weeks, prior to the 
Board's April and August assessment billings changes the timing, but 
not the frequency, of the filings submitted by handlers. This change is 
not expected to increase the reporting burden on handlers, but rather 
provide the Board's staff sufficient time to review the material and 
credit handlers' accounts in a more timely manner. Clarifying the 
deadline for filing claims at the end of a crop year will eliminate 
confusion among handlers and allow the Board to complete its year-end 
accounting practices more timely. Redefining the growing region 
eligible for credit for outdoor advertising to include only counties 
with less than 1,000 bearing acres of almonds will help ensure that 
credit only be given for outdoor advertising that encourages consumers 
to buy almonds (as opposed to such advertising done in larger bearing 
counties directing growers to specific handlers). This change also adds 
flexibility to the regulations to accommodate production shifts in the 
future. Adding the Internet as a credit-back activity will allow 
handlers to take advantage of a new communication medium and provide 
them with a new promotional opportunity that can be used to offset a 
portion of their assessment obligation. Removing certain activities 
available for credit-back is not expected to negatively impact 
handlers, as numerous promotional activities remain for them to offset 
a portion of their assessment obligation. The activities removed have 
received little use in the past, and in some cases lend themselves to 
potential abuses that result in ineffective use of promotional funds. 
The changes are expected to be equally beneficial to all handlers who 
conduct their own promotional activities and to the industry as a 
whole.
    Several alternatives to the changes were considered. The first 
alternative in all cases was to leave the regulations as they currently 
exist. However, this does not address the changes in the industry, 
technology, or promotional practices. Nor does it address the 
administrative inefficiencies and the potential program abuses that 
have been identified. Alternatives to the recommendations concerning 
removing certain activities from the list of credit-back activities 
included leaving the activities in the regulations, with further 
definition and clarification added. However, it was determined that 
this would lead to increased regulations and guidelines, with no 
assurance of solving the problems. In addition, most of the activities 
being removed have been used very infrequently by handlers. The removal 
of credit for purchase of Board-produced promotional materials was 
replaced by an alternative system whereby handlers are provided a free 
allocation of such materials, with the option of purchasing additional 
materials at cost.
    Regarding the changing of dates for submitting documents to the 
Board, different dates were considered. However, it was determined that 
the dates ultimately recommended allow the minimum amount of time 
necessary for Board staff to review documents, apply credit to 
handlers' assessment accounts, and to complete year-end accounting 
practices in a timely manner. Alternatives to changing the growing 
region definition included using a different acreage number as a 
threshold to defining a producing county. However, the industry agreed 
for purposes of the credit-back program, 1,000 acres was appropriate. 
Another alternative considered was to remove the restriction of outdoor 
advertising in almond growing counties, but that does not address the 
problem of handlers advertising to growers.
    It was determined that the changes herein are the best way to 
address the situation at this time. These regulations were designed to 
reflect the industry's practices, and these revisions are intended to 
respond to an evolving marketplace and changing promotional practices. 
Changes have been and will continue to be recommended based on industry 
and program experiences.
    This rule imposes no additional reporting or recordkeeping 
requirements on either small or large almond handlers. In accordance 
with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the 
information collection requirements that are contained in this rule 
have been previously approved by the Office of Management and Budget 
(OMB) and have been assigned OMB No. 0581-0071. As with all Federal 
marketing order programs, reports and forms are periodically reviewed 
to reduce information requirements and duplication by industry and 
public sector agencies. Finally, the Department has not identified any 
relevant Federal rules that duplicate, overlap or conflict with this 
rule.
    Additionally, the Board's meetings were widely publicized 
throughout the almond industry and all interested persons were invited 
to attend the meetings and participate in Board deliberations. Like all 
Board meetings, the December 2, 1998, and March 5, 1999, meetings were 
public meetings and all entities, both large and small, were able to 
express their views on this issue. The Board itself is composed of 10 
members, of which 5 are producers and 5 are handlers.
    Also, the Board has a number of appointed committees to review 
certain issues and make recommendations to the Board. The Board formed 
a task force in July 1998 to review its credit-back advertising 
program. The task force met periodically during the following months to 
review the program and consider appropriate changes. The task force 
presented its recommendations to the Board's Public Relations and 
Advertising Committee on November 13, 1998, and that committee 
presented its recommendations to the Board on December 2, 1998. The 
March 5, 1999, meeting was held to finalize the Board's 
recommendations. All of these meetings were open to the public, and 
both large

[[Page 41028]]

and small entities were able to participate and express their views.
    A proposed rule concerning this action was published in the Federal 
Register on June 10, 1999 (64 FR 31153). Copies of the rule were mailed 
to all Board members and almond handlers. The proposal was also made 
available through the Internet by the Office of the Federal Register. A 
30-day comment period was provided for interested persons to respond to 
the proposal. The comment period ended July 12, 1999. No comments were 
received.
    The Department made some changes to the amendatory language as 
stated in the proposed rule for clarity and conformity between 
provisions. These changes include a change pertaining to the 
development and use of web-sites on the Internet for advertising and 
public relations purposes. The words ``for such activities'' were added 
to the proviso in paragraph (e)(4)(ii)(K) of Sec. 981.441 to clarify 
that handlers may be allowed up to $5,000 credit against their 
assessment obligation for activities concerning web-sites and the 
Internet. Another change conforms language in paragraph (b) of 
Sec. 981.441 to be consistent with the change requiring handlers to 
submit documentation to the Board three weeks prior to the third and 
fourth assessment billings in order to offset a portion of the 
assessment obligation. Language was added to paragraphs (a), 
(e)(6)(ii), and (e)(6)(iv) to clarify that the changes do not apply to 
promotional activities conducted prior to the 1999-2000 crop year.
    After consideration of all relevant matter presented, including the 
information and recommendation submitted by the Board and other 
available information, it is hereby found that this rule, as 
hereinafter set forth, will tend to effectuate the declared policy of 
the Act.
    It is further found that good cause exists for not postponing the 
effective date of this rule until 30 days after publication in the 
Federal Register (5 U.S.C. 553) because: (1) This rule should be in 
effect by August 1, the beginning of the 1999-2000 crop year; (2) these 
changes were unanimously recommended by the Board and interested 
persons had an opportunity to provide input; (3) handlers are aware of 
these changes which were recommended at public meetings; and (4) a 30-
day comment period was provided for in the proposed rule.

List of Subjects in 7 CFR Part 981

    Almonds, Marketing agreements, Nuts, Reporting and recordkeeping 
requirements.

    For the reasons set forth in the preamble, 7 CFR part 981 is 
amended as follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

    1. The authority citation for 7 CFR part 981 continues to read as 
follows:

    Authority: 7 U.S.C. 601-674.

    2. Section 981.441 is amended by revising the second sentence in 
paragraph (a), paragraphs (b), (e)(3), (e)(4)(ii), the first sentence 
in paragraph (e)(6)(ii), and paragraph (e)(6)(iv) to read as follows:


Sec. 981.441  Credit for market promotion activities, including paid 
advertising.

    (a) * * * Credit will be granted either in the form of a payment 
from the Board, or as an offset to that portion of the assessment if 
activities are conducted and documented to the satisfaction of the 
Board at least 2 weeks prior to the Board's first and second assessment 
billings, and at least 3 weeks prior to the Board's third and fourth 
assessment billings in a crop year: Provided, That promotional 
activities conducted during the 1998-99 crop year must be conducted and 
documented at least 2 weeks prior to the Board's fourth assessment 
billing in order to receive credit in the form of a payment from the 
Board, or as an offset to that portion of the assessment. * * *
    (b) The portion of the handler assessment for which credit may be 
received under this section will be billed, and is due and payable, at 
the same time as the portion of the handler assessment used for the 
Board's administrative expenses, unless the handler(s) conduct and 
document activities at least 2 weeks prior to the first and second 
assessment billings and 3 weeks prior to the third and fourth 
assessment billings: Provided, That promotional activities conducted 
during the 1998-99 crop year must be conducted and documented at least 
2 weeks prior to the Board's fourth assessment billing in order to 
receive credit. If the handler(s) conduct activities and submit 
documentation according to applicable provisions in this section, their 
advertising assessment obligation will be reduced according to the 
amount of proven activities approved by the Board.
* * * * *
    (e) * * *
    (3) No Credit-Back will be given for advertising placed in 
publications that target the farming or grower trade. No Credit-Back 
shall be given for any outdoor advertising in California almond growing 
counties with more than 1,000 bearing acres: Provided, That outdoor 
advertising in these counties which specifically directs consumers to a 
handler-operated outlet offering direct purchase of almonds will be 
eligible for Credit-Back.
    (4) * * *
    (ii) Other market promotion activities. Credit-Back shall be 
granted for market promotion other than paid advertising, for the 
following activities:
    (A) Marketing research (except pre-testing and test-marketing of 
paid advertising);
    (B) Trade and consumer product publicity: Provided, That no Credit-
Back shall be given for related fees charged by an advertising or 
public relations agency;
    (C) Printing costs for promotional material;
    (D) Direct mail printing and distribution;
    (E) Retail in-store demonstrations;
    (F) Point-of-sale materials (not including packaging);
    (G) Sales and marketing presentation kits;
    (H) Trade fairs and exhibits;
    (I) 50/50 advertising with retailers;
    (J) Couponing (printing, distribution, and handling costs only); 
and
    (K) Development and use of web-site on the Internet for advertising 
and public relations purposes: Provided, That Credit-Back shall be 
limited to $5,000 per year for such activities, and no credit shall be 
given for costs for E-commerce (mail ordering through the Internet), 
Extranet (restricted web sites within the Internet), or portions of a 
web-site that target the farming or grower trade.
* * * * *
    (6) * * *
    (ii) Handlers may receive credit against their assessment 
obligation up to the advertising amount of the assessment installment 
due: Provided, That handlers submit the required documentation for a 
qualified activity at least 2 weeks prior to the mailing of the Board's 
first and second assessment notices, and at least 3 weeks prior to the 
mailing of the Board's third and fourth assessment notices in a crop 
year: Provided further, That promotional activities conducted during 
the 1998-99 crop year must be conducted and documented at least 2 weeks 
prior to the mailing of the Board's fourth assessment notice in order 
to receive credit. * * *
    (iii) * * *
    (iv) A statement of the Credit-Back commitments outstanding as of 
the close of a crop year must be submitted in full to the Board within 
15 days after the close of that crop year. Final claims

[[Page 41029]]

pertaining to such commitments outstanding must be submitted within 76 
days after the close of that crop year: Provided, That for activities 
conducted during the 1998-99 crop year, final claims pertaining to such 
commitments outstanding must be submitted within 105 days after the 
close of the crop year. All other final claims for which no statement 
of Credit-Back commitments outstanding has been filed must be submitted 
by August 15 of that calendar year.
* * * * *

    Dated: July 22, 1999.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-19091 Filed 7-28-99; 8:45 am]
BILLING CODE 3410-02-U