[Federal Register Volume 68, Number 231 (Tuesday, December 2, 2003)]
[Proposed Rules]
[Pages 67381-67385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29958]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
 ========================================================================
 

  Federal Register / Vol. 68, No. 231 / Tuesday, December 2, 2003 / 
Proposed Rules  

[[Page 67381]]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 900

[Docket Number FV03-900-1 PR]


Proposed Rule To Exempt Organic Producers and Marketers From 
Assessments for Market Promotion Activities Under Marketing Order 
Programs

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This proposed rule would exempt any person producing and 
marketing solely 100 percent organic products from paying assessments 
for market promotion, including paid advertising, activities to 
marketing order programs administered by the Agricultural Marketing 
Service (AMS). AMS has identified 28 marketing order programs for which 
assessment exemptions may be established. The authority for this 
proposal is section 10607 of the Farm Security and Rural Investment Act 
(2002 Farm Bill). The 2002 Farm Bill also covers 16 national research 
and promotion programs. The research and promotion programs will be 
addressed separately at a later date.

DATES: Comments must be received by January 2, 2004. Pursuant to the 
Paperwork Reduction Act, comments on the information collection burden 
that would result from this proposal must be received by February 2, 
2004.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this proposed rule. Comments must be sent to the Docket 
Clerk, Marketing Order Administration Branch, Fruit and Vegetable 
Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237, 
Washington, DC 20250-0237; Fax: (202) 720-8938; or E-mail: 
[email protected]. All comments should reference the docket 
number and the date and page number of this issue of the Federal 
Register. All comments received will be made available for public 
inspection in the Office of the Docket Clerk at the Marketing Order 
Administration Branch, AMS, USDA, Room 2525-South; 1400 Independence 
Avenue, SW., Washington, DC 20250-0237 during regular business hours. A 
copy of this proposed rule may be found at http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: George Kelhart or Jay Guerber, 
Marketing Order Administration Branch, Fruit and Vegetable Programs, 
Agricultural Marketing Service, U.S. Department of Agriculture, 1400 
Independence Avenue, SW., STOP 0237, Room 2525-South; Washington, DC 
20250-0237; Telephone: (202) 720-2491; Fax: (202) 720-8938; or E-mail: 
[email protected].
    Small businesses may request information on complying with this 
regulation by contacting Jay Guerber, Marketing Order Administration 
Branch, Fruit and Vegetable Programs, AMS, USDA, 1400 Independence 
Avenue, SW., Stop 0237, Washington, DC 20250-0237; telephone: (202) 
720-2491; Fax: (202) 720-8938; or E-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule is being issued by the Department of Agriculture 
(USDA) in conformance with Executive Order 12866.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. It is not intended to have retroactive effect. 
This proposed rule would not preempt any state or local laws, 
regulations, or policies, unless they present an irreconcilable 
conflict with this rule.
    The Agricultural Marketing Agreement Act of 1937 (7 U.S.C. 601-
674)(Act), under which the 28 marketing order programs are established, 
provides that administrative proceedings must be exhausted before 
parties may file suit in court. Under the Act, any person subject to an 
order may file a petition with the Secretary of Agriculture 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. The petitioner 
is afforded the opportunity for a hearing on the petition. After the 
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 the person is an inhabitant, or has his principal place of 
business, has jurisdiction to review the Secretary's ruling, provided a 
complaint is filed within 20 days from the date of the entry of the 
ruling.
    The authority for this proposed rule is specified in section 10607 
of the Farm Security and Rural Investment Act (Pub. L. 107-171; 2002 
Farm Bill). The 2002 Farm Bill was enacted May 13, 2002. Section 501 of 
the Federal Agriculture Improvement and Reform Act of 1996 (FAIR Act; 7 
U.S.C. 7401) was amended by the 2002 Farm Bill. This amendment exempts 
any person that produces and markets solely 100 percent organic 
products, and that does not produce any conventional or non-organic 
products, from paying assessments under a commodity promotion law with 
respect to any agricultural commodity that is produced on a certified 
organic farm as defined in section 2103 of the Organic Foods Production 
Act of 1990 (7 U.S.C. 6502). The amendment further requires the 
Secretary of Agriculture to amend any market research and promotion 
regulations to reflect this exemption.
    USDA is proposing amendments to general regulations affecting 28 
marketing order programs established under the Act for which it has 
oversight. These amendments would establish provisions for organic 
producers and marketers meeting the specified criteria to be exempt 
from paying assessments for market promotion, including paid 
advertising, activities.
    The FAIR Act amendment covers 28 marketing order programs 
established under the Act (Texas citrus--7 CFR part 906; Florida 
avocados--7 CFR part 915; California nectarines--7 CFR part 916; 
California peaches and pears--7 CFR part 917; Washington apricots--7 
CFR part 922; Washington sweet cherries--7 CFR part 923; Washington/
Oregon fresh prunes--7 CFR part 924; Southeastern California grapes--7 
CFR part 925; Oregon/Washington winter pears--7 CFR part 927; 
cranberries grown in States of Massachusetts, et al.--7 CFR part 929; 
tart cherries grown in States of Michigan, et al.--7 CFR part 930; 
Oregon/Washington Bartlett pears--7

[[Page 67382]]

CFR part 931; California olives--7 CFR part 932; Oregon/California 
potatoes--7 CFR part 947; Colorado potatoes--7 CFR part 948; Georgia 
Vidalia onions--7 CFR part 955; Washington/Oregon Walla Walla onions--7 
CFR part 956; Idaho-Eastern Oregon onions--7 CFR part 958; Texas 
onions--7 CFR part 959; Florida tomatoes--7 CFR part 966; Texas 
melons--7 CFR part 979; California almonds--7 CFR part 981; Oregon-
Washington hazelnuts--7 CFR part 982; California walnuts--7 CFR part 
984; Far West spearmint oil--7 CFR part 985; California dates--7 CFR 
part 987; California raisins--7 CFR part 989; and California dried 
prunes--7 CFR part 993).
    These marketing order programs allow for promotion activities 
designed to assist, improve, or promote the marketing, distribution, or 
consumption of the commodity covered under the marketing order program. 
Some of these programs also authorize market promotion in the form of 
paid advertising. Promotion, including paid advertising, activities are 
paid for by assessments levied on handlers regulated under the various 
marketing orders.
    Under this proposal, a new subpart would be added in 7 CFR part 900 
General Regulations to specify the criteria for identifying persons 
eligible to obtain an assessment exemption for market promotion, 
including paid advertising; procedures for persons to apply for an 
exemption; procedures for calculating the assessment exemption; and 
other procedural details for the applicable marketing orders.
    Prior to or during the assessment period, the person would submit 
an application for exemption to the applicable committee or board. The 
application would be reviewed by the committee or board to determine 
whether the applicant is eligible for an assessment exemption. If the 
application is disapproved, the marketing order committee or board will 
notify the handler of the reason(s) for disapproval. The Secretary may 
review any decisions made by the committees or boards at his/her 
discretion.
    The marketing order's committee or board would compute the 
assessment rate for any person approved for an organic exemption. The 
exempt rate would be computed by dividing the committee's or board's 
estimated non-marketing promotion expenditures by the committee's or 
board's estimated total expenditures for the same assessment period, as 
approved by the Secretary, and applying that percentage to the 
assessment rate applicable to all persons for the assessment period. 
Within 30 days following the applicable assessment period, the 
committee or board would re-compute the assessment rate for persons 
exempt under the section, based on the actual expenditures incurred 
during the assessment period. The exempt person would pay an additional 
assessment or be reimbursed or credited by the committee or board for 
the amount overpaid.

Who Is Eligible for Exemption?

    To be eligible for an exemption, the person must be subject to an 
assessment under a designated marketing order program. All of the 
marketing order programs assess handlers; i.e., persons that handle the 
regulated commodity.
    The FAIR Act amendment specifies that to be exempt from a commodity 
promotion assessment, a person--meaning an individual, group of 
individuals, corporation, association, cooperative, or other business 
entity--must produce and market solely 100 percent organic products and 
must not produce any non-organic or conventional products. For purposes 
of this proposed rule, ``produce'' means to grow or produce food, feed, 
livestock, or fiber or to receive food, feed, livestock, or fiber, and 
alter that product by means of feeding, slaughtering, or processing. 
Under this proposed rule, handlers, and processors and producers acting 
as handlers may be eligible for exemption if they meet the definition 
of ``produce'' as outlined in this proposed rule. This proposed rule 
provides for assessment exemptions for those regulated under marketing 
orders for domestic commodities. Thus, importers subject only to 
section 8e import regulations would not pay marketing order assessments 
and would not be eligible for an assessment exemption. Additionally, to 
be exempt, such persons must possess certification from a USDA-
accredited certifying agent that the farm or handling operation meets 
the requirements of 100 percent organic as defined in section 2103 of 
the Organic Foods Production Act of 1990 (7 U.S.C. 6502).

Examples

    [sbull] A grower who produces and markets (handles) 100 percent 
certified organic, is certified as an organic handling operation, and 
pays the marketing order assessments, is eligible for an exemption for 
the portion of the assessments used for marketing promotion.
    [sbull] A handler receives 100 percent of the commodity as 
certified organic and is certified as an organic handling operation. 
The handler alters (e.g., shells, slices, processes, or in some other 
way alters) the commodity and pays marketing order assessments. The 
handler is eligible for an exemption for the portion of the assessments 
used for marketing promotion.
    [sbull] A grower who produces and markets (handles) both certified 
organic and conventional commodities is not eligible for the exemption 
because that person is not producing and marketing solely 100 percent 
certified organic commodities.
    [sbull] A handler receives 100 percent of a commodity that is 
organic, and the handler is certified as an organic handling operation. 
The handler sorts, packages, markets, and pays assessments on the 
commodity. The handler is not eligible for the exemption because the 
handler did not alter (e.g., shell, slice, process, or in some other 
way alter) the commodity.
    The FAIR Act amendment also covers 16 national research and 
promotion programs. The research and promotion programs will be 
addressed separately at a later date. The 16 programs cover 
blueberries, beef, cotton, dairy, eggs, fluid milk, Hass avocados, 
honey, lamb, mushrooms, peanuts, popcorn, pork, potatoes, soybeans, and 
watermelons.

Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.) (RFA), the Agricultural Marketing Service 
(AMS) has considered the economic impact of this rule on small 
entities. Accordingly, AMS has prepared this initial 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 the 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.
    As previously mentioned, assessments under the 28 marketing order 
programs are paid by handlers regulated under the various marketing 
orders. There are approximately 850 handlers regulated under the 28 
marketing orders. USDA does not have precise numbers, but believes 
there may be approximately 84 persons who produce and market solely 100 
percent organic products that might be exempt from paying assessments 
for market promotion, including paid advertising, under the 28 
marketing order programs administered by AMS. Thus, the

[[Page 67383]]

estimated number of prospective applicants eligible for the assessment 
exemption may only represent approximately 9.9 percent of the total 
handler population.
    Small agricultural service firms are defined by the Small Business 
Administration (13 CFR 121.201) as those whose annual receipts are less 
than $5,000,000. Although the exact size of the potential applicants is 
not known, USDA believes that the majority of persons who might qualify 
for an exemption may be classified as small entities.
    Section 501 of the Federal Agriculture Improvement and Reform Act 
of 1996 (FAIR Act) was amended on May 13, 2002 (7 U.S.C 7401). The 
amendment provides that notwithstanding any provision of a commodity 
promotion law, a person that produces and markets solely 100 percent 
organic products, and that does not produce any conventional or non-
organic products, shall be exempt from paying assessments under a 
commodity promotion law with respect to any agricultural commodity that 
is produced on a certified organic farm as defined in section 2103 of 
the Organic Foods Production Act of 1990 (7 U.S.C. 6502). The amendment 
further requires the Secretary of Agriculture to amend any research and 
promotion regulations to reflect this exemption.
    USDA is proposing amendments to the general regulations affecting 
28 marketing order programs established under the Act for which it has 
oversight. These amendments would establish provisions for organic 
producers and marketers meeting the specified criteria to be exempt 
from paying assessments for market promotion, including paid 
advertising.
    The 28 marketing order programs allow for promotion activities 
designed to assist, improve, promote, the marketing, distribution, or 
consumption of the commodity covered under the marketing order. Some of 
the orders also include authority for paid advertising activities. 
Market promotion, including paid advertising, activities are paid for 
by assessments levied on handlers regulated under the various marketing 
orders.
    Under this proposal, a new subpart would be added in 7 CFR Part 900 
General Regulations to specify criteria for identifying persons 
eligible to obtain an assessment exemption for marketing promotion, 
including paid advertising; procedures for applying for an exemption; 
procedures for calculating the assessment exemption; and other 
procedural details for the applicable marketing orders.
    Regarding the impact of this proposed rule on affected entities, 
this rule would impose minimal additional costs incurred in filing the 
exemption application and in maintaining records needed to verify the 
applicant's exemption status during applicable assessment period. Such 
applicants will be required to submit an application and receive 
approval from the applicable committee or board to obtain the 
assessment exemption. USDA estimates that each applicant will submit 
one application annually. The annual burden for all of the marketing 
order industries is estimated to total about 42 hours.
    The cost burden associated with the information collection would be 
$420 for all applicants, or $5.00 per applicant. The total cost has 
been estimated by multiplying the burden hours associated with the 
exemption application by $10.00 per hour, a sum deemed reasonable 
should the applicants be compensated for their time.
    Since this action potentially exempts from assessments agricultural 
producers and marketers, AMS believes that this rule would have a 
beneficial economic effect on exempted entities by reducing their 
assessment payments. During the 2001-2002 marketing season, assessments 
for the 28 marketing orders totaled $44,400,000. Of that amount, about 
$29,900,000 (or 65 percent) was made available for marketing promotion, 
including paid advertising, activities. USDA does not have precise 
information, but believes that about 1 percent on average of the total 
assessments are for certified organic commodities. Thus, assessments on 
organic commodities could total about $440,000. Of that amount, about 
$299,000 for marketing promotion, including paid advertising, might be 
exempt under this proposed rule if all of the approximate 84 handlers 
of the regulated commodities were eligible for the assessment exemption 
as specified in the proposed rule.
    Based on our estimate that there might be a total of 84 handlers 
exempt from assessments for marketing promotion activities conducted 
under the various marketing orders, the assessments for eligible 
persons would be reduced by an average of almost $3,600 ($299,000 
divided by 84) on an annual basis.
    There is some variation among the 28 marketing orders on the 
percent of assessments used for marketing promotion, including paid 
advertising. Thus, the actual reduction in assessments would vary among 
the various orders. In fact, the amounts allocated for marketing 
promotion as a percentage of the total marketing order budgets range 
from less than 5 percent to almost 60 percent.
    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), the reporting and recordkeeping provisions that would be 
generated by this proposed rule will be submitted to the Office of 
Management and Budget (OMB) under OMB No. 0581-NEW. As explained later, 
USDA plans to request emergency approval.
    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. In addition, USDA 
has not identified any relevant Federal rules that duplicate, overlap, 
or conflict with this rule.
    There are no viable alternatives to proposing these organic 
assessment exemption procedures. The FAIR Act requires USDA to take 
this action to lessen the assessment costs for persons who produce and 
market solely 100 percent organic products. In drafting the exemption 
procedures, every effort has been made to minimize the burden on the 
persons impacted, and to simplify the process. The anticipated 
assessment reductions for eligible persons are expected to greatly 
outweigh the additional costs related to the reporting required.
    A small business guide on complying with fruit, vegetable, and 
specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/fv/moab.html. Any questions about the compliance 
guide should be sent to Jay Guerber at the previously mentioned address 
in the FOR OTHER INFORMATION CONTACT section.
    A 30-day comment period is provided for interested persons to 
submit written comments on the criteria for identifying persons 
eligible to obtain an assessment exemption, and the procedural details 
for obtaining an assessment exemption under the various marketing 
orders. Thirty days is deemed appropriate because this action was 
mandated by Congress under the 2002 Farm Bill and is intended to 
provide relief to producers and marketers of solely 100 percent organic 
products. Pursuant to the Paperwork Reduction Act, comments on the 
information collection burden must be received within 60 days after the 
date of publication of this proposal in the Federal Register.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
chapter 35), this notice also announces

[[Page 67384]]

that AMS is seeking emergency approval for a new information collection 
request enabling organic producers and marketers to apply for 
exemptions from paying market promotion assessments under the following 
28 Federal marketing orders: 7 CFR parts 906, 915, 916, 917, 922, 923, 
924, 925, 927, 929, 930, 931, 932, 947, 948, 955, 956, 958, 959, 966, 
979, 981, 982, 984, 985, 987, 989, and 993. The emergency request is 
necessary because insufficient time is available to follow normal 
clearance procedures.
    Title: Organic Producer and Marketer Market Promotion Assessment 
Exemption under 28 Federal Marketing Orders.
    OMB Number: 0581-NEW.
    Type of Request: New collection.
    Abstract: Marketing order programs provide an opportunity for 
producers of fresh fruits, vegetables and specialty crops to solve 
marketing problems that cannot be solved individually. Order 
regulations help ensure adequate supplies of high quality products for 
consumers and adequate returns to producers. Under the Act, orders may 
authorize production and marketing research, including paid 
advertising, as mentioned earlier. Production and marketing research 
and development, including paid advertising, activities to promote the 
various commodities are paid for with assessments levied on handlers 
regulated under the 28 Federal marketing orders.
    On May 13, 2002, section 501 of the FAIR Act was amended (7 U.S.C. 
7401) to exempt any person that produces and markets solely 100 percent 
organic products, and that does not produce any conventional or non-
organic products, from paying assessments under a commodity promotion 
law with respect to any agricultural commodity that is produced on a 
certified organic farm as defined in Section 2103 of the Organic Foods 
Production Act of 1990 (7 U.S.C. 6502).
    To be exempt from paying assessments for marketing promotion, 
including paid advertising expenses, under the specified marketing 
orders, the certified organic producer and marketer would submit an 
application, ``Certified Organic Producer and Marketer Application for 
Exemption from Market Promotion Assessments Paid Under Federal 
Marketing Orders'' to the marketing order committee or board. The 
application would need to be submitted to the committee or board prior 
to or during the applicable assessment period, and annually thereafter, 
as long as the applicant continues to be eligible for the exemption. 
This application would include the applicant's name, name and address 
of the company, telephone and fax numbers, a copy of the applicant's 
organic farm or organic handling operation certificate provided by a 
USDA-accredited certifying agent under the Organic Foods Production Act 
of 1990 (7 U.S.C. 6502), and a signed certification that the applicant 
meets all of the requirements specified for an assessment exemption. 
The burdens associated with obtaining the certifications under the 
Organic Foods Production Act of 1990 have already been approved by OMB 
under OMB Control No. 0581-0181.
    If the applicant complies with these requirements and is eligible 
for a market promotion assessment exemption, the committee or board 
would approve the exemption and notify the applicant within 30 days of 
receiving the applicant's application. The Secretary may review any 
decisions made by the committees or boards at his/her discretion.
    The respective marketing orders (e.g., 7 CFR 932.61 and 7 CFR 
981.70) also provide that handlers maintain, and make available, all 
records necessary to demonstrate compliance with order requirements for 
two years. The burdens on handlers for such recordkeeping requirements 
are included in the information collection requests previously approved 
by OMB for the respective marketing orders under the following OMB 
Control Numbers: OMB No. 0581-0178 for marketing order Nos. 947, 948, 
955, 956, 958, 959, 966, 979, 982, 984, 987, 989, and 993; OMB No. 
0581-0189 for marketing order Nos. 906, 915, 916, 917, 922, 923, 924, 
925, 927, 929, 930, and 931; OMB No. 0581-0142 for marketing order No. 
932; OMB No. 0581-0071 for marketing order No. 981; and OMB No. 0581-
0065 for marketing order No. 985.
    The information collection would be used only by authorized 
representatives of USDA, including AMS, Fruit and Vegetable Programs' 
regional and headquarters staff, and authorized Committee and Board 
employees. Authorized Committee and Board employees will be the primary 
users of the information, and AMS will be the secondary user.
    The request for approval of the new information collection under 
the 28 Federal marketing orders is as follows:

Form FV-649, Certified Organic Producer and Marketer Application for 
Exemption From Marketing Promotion Assessments Paid Under Federal 
Marketing Orders

    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 30 minutes per response.
    Respondents: Eligible Certified Organic Producers and Marketers.
    Estimated Number of Respondents: 84.
    Estimated Number of Responses per Respondent: 1
    Estimated Total Annual Burden on Respondents: 42 hours.
    Comments: Comments are invited on: (1) Whether the collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information will have practical 
utility; (2) the accuracy of the agency's estimate of the burden of the 
collection of information, including the validity of the methodology 
and assumptions used; (3) ways to enhance the quality, utility, and 
clarity of the information to be collected; and (4) ways to minimize 
the burden of the collection of information on those who are to 
respond, including the use of appropriate automated, electronic, 
mechanical, or other technological collection techniques of other forms 
of information technology.
    A sixty-day period is provided to comment on the information 
collection burden. Comments should reference OMB No. 0581-NEW and be 
sent to [email protected]. All comments received will be 
available for public inspection during regular business hours at the 
same address.
    All responses to this rule will be summarized and included in the 
request for OMB approval. All comments will become a matter of public 
record. 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.

List of Subjects in 7 CFR Part 900

    Administrative practices and procedures, Freedom of information, 
Marketing agreements, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 900 is 
proposed to be amended to read as follows:

PART 900--GENERAL REGULATIONS

    1. The authority citation for part 900 is revised to read as 
follows:

    Authority: 7 U.S.C. 610 and 7 U.S.C. 7401.

    2. Add a new subpart heading ``Assessment Exemptions'' after Sec.  
900.601, and add a new Sec.  900.700 to read as follows:

[[Page 67385]]

Sec.  900.700  Exemption from assessments.

    (a) This section specifies criteria for identifying persons 
eligible to obtain an assessment exemption for marketing promotion, 
including paid advertising, and procedures for applying for an 
exemption for 7 CFR parts 906, 915, 916, 917, 922, 923, 924, 925, 927, 
929, 930, 931, 932, 947, 948, 955, 956, 958, 959, 966, 979, 981, 982, 
984, 985, 987, 989, and 993. For the purposes of this section, the term 
``assessment period'' means fiscal period, fiscal year, crop year, or 
marketing year as defined under these parts; the term ``marketing 
promotion expenditures'' mean expenses incurred under the various 
marketing order for marketing research and development projects, and 
marketing promotion, including paid advertising, designed to assist, 
improve, or promote the marketing, distribution, and consumption of the 
applicable commodity.
    (b) Any handler that produces and markets solely 100 percent 
organic products produced on a certified organic farm as defined in 
section 2103 of the Organic Foods Production Act of 1990 (7 U.S.C. 
6502) and the regulations issued under that Act, is subject to 
assessments under a part or parts specified in paragraph (a) of this 
section, and does not produce or market any conventional or non-organic 
products shall be exempt from the portion of the assessment applicable 
to marketing promotion, including paid advertising. For purposes of 
this section, produce means to grow or produce food, feed, livestock, 
or fiber or to receive food, feed, livestock, or fiber and alter that 
product by means of feeding, slaughtering, or processing. Any handler 
so exempted shall be obligated to pay the portion of the assessment for 
other authorized activities under such part or parts.
    (c) To be exempt from paying assessments for these purposes under a 
part or parts, the handler shall submit an application to the committee 
or board established under the applicable part or parts prior to or 
during the assessment period. This application shall include the 
handler's name and address, the name and address of the company, 
telephone and fax numbers, a copy of the organic farm or organic 
handling operation certificate(s) provided by a USDA-accredited 
certifying agent under the Organic Foods Production Act of 1990 (7 
U.S.C. 6502) for the purposes specified in paragraph (b) of this 
section, and the handler's certification that the handler meets all of 
the applicable requirements for an assessment exemption as provided in 
this section. The handler shall file the application with the committee 
or board, prior to or during the applicable assessment period, and 
annually thereafter as long as the handler continues to be eligible for 
the exemption. If the handler complies with these requirements and is 
eligible for an assessment exemption, the committee or board will 
approve the exemption and notify the handler within 30 days of 
receiving the handler's application. If the application is disapproved, 
the committee or board will notify the handler of the reason(s) for 
disapproval. The Secretary may review any decisions made by the 
committees or boards at his/her discretion.
    (d) The applicable assessment rate for any handler approved for an 
exemption shall be computed by dividing the committee's or board's 
estimated non-marketing promotion expenditures by the committee's or 
board's estimated total expenditures approved by the Secretary and 
applying that percentage to the assessment rate applicable to all 
persons for the assessment period. The Secretary shall review the 
assessment rate for eligible persons and, if appropriate, approve the 
assessment rate.
    (e) Within 30 days following the applicable assessment period, the 
committee or board shall re-compute the applicable assessment rate for 
handlers exempt under this section based on the actual expenditures 
incurred during the applicable assessment period. The Secretary shall 
review, and if appropriate, approve any change in the rate applicable 
to exempt handlers.
    (f) When the requirements of this section for exemption no longer 
apply to a handler, the handler shall inform the committee or board 
immediately and pay the full assessment on all remaining assessable 
product for all committee or board assessments from the date the 
handler no longer is eligible to the end of the assessment period.

    Dated: November 25, 2003.
A.J. Yates,
Administrator,
Agricultural Marketing Service.
[FR Doc. 03-29958 Filed 12-1-03; 8:45 am]
BILLING CODE 3410-02-P