[Federal Register: June 27, 2005 (Volume 70, Number 122)]
[Rules and Regulations]
[Page 36816-36819]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27jn05-5]
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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: moab.docketclerk@usda.gov, 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: Jay.Guerber@usda.gov.
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