[Federal Register Volume 70, Number 122 (Monday, June 27, 2005)]
[Rules and Regulations]
[Pages 36816-36819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-12623]


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DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Part 981

[Docket No. FV05-981-1 IFR]


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

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Interim final rule with request for comments.

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SUMMARY: This rule revises the requirements regarding credit for 
promotion and advertising activities 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 California (Board). The 
order is funded through the collection of assessments from almond 
handlers. Under the order, 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 will expand the credit allowed for certain 
promotional activities, and help to clarify and simplify the current 
regulations.

DATES: Effective August 1, 2005; comments received by August 26, 2005 
will be considered prior to issuance of a final rule.

ADDRESSES: Interested persons are invited to submit written comments 
concerning this 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, E-mail: [email protected], or 
Internet: http://www.regulations.gov. All comments should reference the 
docket number and the date and page number of this issue of the Federal 
Register and will be available for public inspection in the Office of 
the Docket Clerk during regular business hours, or can be viewed at: 
http://www.ams.usda.gov/fv/moab.html.

FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Senior Marketing 
Specialist, California Marketing Field Office, Marketing Order 
Administration Branch, Fruit and Vegetable Programs, AMS, USDA, 2202 
Monterey Street,

[[Page 36817]]

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, 1400 
Independence Avenue, SW., STOP 0237, Washington, DC 20250-0237; 
Telephone: (202) 720-2491, Fax: (202) 720-8938.
    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: 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 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 (USDA) is issuing this rule in 
conformance with Executive Order 12866.
    This 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 USDA 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. Such 
handler is afforded the opportunity for a hearing on the petition. 
After the hearing USDA 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 USDA'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 rule revises the requirements regarding credit for promotion 
and advertising activities prescribed under the administrative rules 
and regulations of the order. Under the order, 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 will expand the credit allowed for 
certain promotional activities, and help to clarify and simplify the 
current regulations. This action was unanimously recommended by the 
Board at a meeting on May 12, 2005.
    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 981.41(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.

Increasing Credit for Internet Promotion Activities

    Section 981.441(e)(4)(ii)(K) allows handlers to receive credit 
against their assessment obligation for the development and use of Web 
site activities on the Internet for advertising and public relations 
purposes. The allowable credit is currently limited to $5,000 per year, 
and no credit is given for costs regarding E-commerce (which is 
equivalent to opening a store).
    The Board recommended increasing the credit allowed for Internet 
promotional activities from $5,000 to $20,000 per year, adding credit 
for E-commerce (except for administration costs), and clarifying that 
no credit would be given to Intranet (inter-office communication 
network). The Board determined that administration costs associated 
with E-commerce such as online payments and processing fees do not 
directly promote almonds and should thus be excluded from reimbursement 
under the program. This action would expand the allowable credit and 
activities concerning Web sites and thus provide handlers more 
flexibility. Section 981.441(e)(4)(ii)(K) is revised accordingly.

Clarification Regarding Final Reimbursement Claims

    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. Handlers 
must submit claims with appropriate documentation to the Board. 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 within certain time frames throughout the 
crop year.
    Section 981.441(e)(6)(iv) currently requires handlers to submit a 
statement of all outstanding credit-back commitments in full to the 
Board as of the close of the crop year (July 31) within 15 days after 
the crop year ends (August 15). Additionally, handlers must submit 
final claims pertaining to such outstanding commitments to the Board 
within 76 days after the crop year ends (October 15).
    The Board recommended adding language to this section to clarify 
that final claims must be submitted ``with all required elements,'' 
which includes invoices, proof of payment, and similar documentation. 
This will allow Board staff to process the final claims for a crop year 
and complete the necessary accounting functions to close the books for 
that crop year in a timely manner. Other comparable deadlines 
throughout the credit-back regulations contain this language. This 
addition will help to facilitate program administration. Section 
981.441(e)(6)(iv) is revised accordingly.

Removal of Obsolete Language

    Section 981.441 contains language throughout the section that 
refers to the 1998-99 crop year only. The Board recommended removing 
this language to help clarify and simplify the regulation. Section 
981.441 is revised accordingly.

Initial 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 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

[[Page 36818]]

through group action of essentially small entities acting on their own 
behalf. Thus, both statutes have small entity orientation and 
compatibility.
    There are approximately 6,000 producers of almonds in the 
production area and approximately 115 handlers subject to regulation 
under the marketing order. Small agricultural producers are defined by 
the Small Business Administration (13 CFR 121.201) as those having 
annual receipts of less than $750,000, and small agricultural service 
firms are defined as those whose annual receipts are less than 
$6,000,000.
    Data for the most recently completed crop year indicate that about 
48 percent of the handlers shipped over $6,000,000 worth of almonds and 
about 52 percent of the handlers shipped under $6,000,000 worth of 
almonds. In addition, based on production and grower price data 
reported by the California Agricultural Statistics Service (CASS), and 
the total number of almond growers, the average annual grower revenue 
is estimated to be approximately $261,248. Based on the foregoing, the 
majority of handlers and producers of almonds may be classified as 
small entities.
    This rule revises the Sec.  981.441 of the order's administrative 
rules and regulations regarding credit-back promotion and advertising. 
Under the order, handlers may receive credit towards their assessment 
expenditures for marketing promotion activities, including paid 
advertising. This rule increases the credit allowed for Internet 
promotion activities from $5,000 to $20,000 per year, adds credit for 
E-commerce (excluding administration), and clarifies that final 
reimbursement claims submitted to the Board by handlers for a crop year 
must include all applicable documentation. Additionally, this rule 
removes obsolete language from the regulations that was applicable to 
the 1998-99 crop year.
    Regarding the impact of this rule on affected entities, it is 
estimated that, for the 2003-04 crop year, about 18 percent of the 
industry's handlers participated in the credit-back program 
administered under the order. Increasing the credit allowed for 
Internet promotion activities and adding credit for E-commerce will 
provide additional opportunities for handlers. The changes to specify 
that handlers must submit final claims with all required elements will 
help to facilitate program administration. Finally, removing obsolete 
language will clarify and simplify the regulations.
    Regarding alternatives, the Board formed a task force that met on 
January 26, March 1, and April 1, 2005, to review the credit-back 
regulations. The task force considered several changes to the 
regulations, including whether handlers should receive credit for 
travel to trade shows, sponsorships, and sweepstakes. The task force 
also reviewed a handbook that Board staff developed to facilitate 
administration of the credit-back regulations. The task force's 
recommendations were reviewed by the Board's Public Relations and 
Advertising Committee on May 11, 2005, and by the full Board on May 12, 
2005. Ultimately, the Board decided that the changes discussed herein 
are warranted at this time.
    This action imposes no additional reporting or recordkeeping 
requirements on either small or large California 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 and assigned OMB No. 0581-0178. 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, USDA has not identified any relevant Federal rules 
that duplicate, overlap, or conflict with this rule.
    Additionally, the meetings were widely publicized throughout the 
California almond industry and all interested persons were invited to 
attend the meetings and participate in deliberations on all issues. 
Like all task force, committee and Board meetings, those meetings held 
on January 26, March 1, April 1, May 11, and May 12 were all public 
meetings and all entities, both large and small, were able to express 
views on this issue. Finally, interested persons are invited to submit 
information on the regulatory and informational impacts of this action 
on small businesses.
    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 further information contact section.
    This rule invites comments on changes to the credit-back 
regulations under the California almond marketing order. Any comments 
received will be considered prior to finalization of this rule.
    After consideration of all relevant material 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.
    Pursuant to 5 U.S.C. 553, it is also found and determined upon good 
cause that it is impracticable, unnecessary, and contrary to the public 
interest to give preliminary notice prior to putting this rule into 
effect, and that good cause exists for not postponing the effective 
date of this rule until 30 days after publication in the Federal 
Register because: (1) This action needs to be in effect by August 1, 
2005, the start of the 2005-06 crop year; (2) handlers are aware of 
this action which was unanimously recommended by the Board at a public 
meeting; (3) this action expands the opportunities for handlers to 
receive credit towards their assessment obligation for certain 
promotional expenditures which they conduct; and (4) this interim final 
rule provides a 60-day comment period, and all comments timely received 
will be considered prior to finalization of this rule.

List of Subjects in 7 CFR Part 981

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

0
For the reasons set forth in the preamble, 7 CFR part 981 is amended as 
follows:

PART 981--ALMONDS GROWN IN CALIFORNIA

0
1. The authority citation for 7 CFR part 981 continues to read as 
follows:

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

0
2. Section 981.441 is amended by:
0
A. Revising the second sentence in paragraph (a);
0
B. Revising the first sentence in paragraph (b);
0
C. Revising paragraph (e)(4)(ii)(K);
0
D. Revising the first sentence in paragraph (e)(6)(ii);
0
E. Revising the second sentence in paragraph (e)(6)(iv); and
0
F. Removing paragraph (e)(4)(v) 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. * * *

[[Page 36819]]

    (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. * * *
* * * * *
    (e) * * *
    (4) * * *
    (ii) * * *
    (K) Development and use of web-site on the Internet for advertising 
and public relations purposes, including E-commerce (mail ordering 
through the Internet): Provided, That Credit-Back shall be limited to 
$20,000 per year for such activities, and no credit shall be given for 
costs for E-commerce administration, Extranet (restricted Web sites 
within the Internet), Intranet (inter-office communication network), or 
portions of a web-site that target the farming or grower trade.
    (iii) * * *
    (iv) * * *
    (5) * * *
    (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. * * *
    (iii) * * *
    (iv) * * * Final claims pertaining to such commitments outstanding 
must be submitted with all required elements within 76 days after the 
close of that crop year. * * *
* * * * *

    Dated: June 20, 2005.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 05-12623 Filed 6-24-05; 8:45 am]
BILLING CODE 3410-02-P