[Federal Register: October 18, 2005 (Volume 70, Number 200)]
[Rules and Regulations]
[Page 60405-60407]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18oc05-1]
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Rules and Regulations
Federal Register
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[[Page 60405]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 981
[Docket No. FV05-981-1 FIR]
Almonds Grown in California; Revision to Requirements Regarding
Credit for Promotion and Advertising
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: The Department of Agriculture (USDA) is adopting, as a final
rule, without change, an interim final rule revising 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
continues in effect the action that revised the requirements regarding
the activities for which handlers may receive such credit. The changes
expand the credit allowed for certain promotional activities, and help
to clarify and simplify the regulations.
DATES: Effective Date: November 17, 2005.
FOR FURTHER INFORMATION CONTACT: Maureen T. Pello, Senior Marketing
Specialist, California Marketing Field Office, Marketing Order
Administration Branch, Fruit and Vegetable Programs, AMS, USDA;
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.''
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 an 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 continues in effect the action that revised 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 continues to revise the
requirements regarding the activities for which handlers may receive
such credit. The changes expand the credit allowed for certain
promotional activities, and help to clarify and simplify the
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. Prior to implementation of the interim final rule, allowable
credit was limited to $5,000 per year, and no credit was 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
[[Page 60406]]
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 expands the allowable
credit and activities concerning Web sites and thus provides handlers
more flexibility. Section 981.441(e)(4)(ii)(K) continues to be 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) 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 helps to facilitate program administration. Section
981.441(e)(6)(iv) continues to be revised accordingly.
Removal of Obsolete Language
Prior to implementation of the interim final rule Sec. 981.441
contained language throughout the section that referred to the 1998-99
crop year only. The Board recommended removing this language to help
clarify and simplify the regulation. Section 981.441 continues to be
revised accordingly.
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 rule 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 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.
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 2003-04 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 continues in effect the action that revised 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 continues to increase
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. This final rule continues to remove 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 provides
additional opportunities for handlers. The changes to specify that
handlers must submit final claims with all required elements help to
facilitate program administration. Finally, removing obsolete language
clarifies and simplifies 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, 2005, were all
public meetings and all entities, both large and small, were able to
express views on this issue. Finally, interested persons were invited
to submit information on the regulatory and informational impacts of
this action on small businesses.
[[Page 60407]]
An interim final rule concerning this action was published in the
Federal Register on June 27, 2005. Copies of the rule were mailed or
sent via facsimile by the Board's staff to all Board members,
alternates and almond handlers. In addition, the rule was made
available through the Internet by the Office of the Federal Register
and USDA. That rule provided a 30-day comment period which ended on
August 26, 2005. No comments were received.
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.
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 finalizing the interim
rule, without change as published in the Federal Register (70 FR 36816
on June 27, 2005) will tend to effectuate the declared policy of the
Act.
List of Subjects in 7 CFR Part 981
Almonds, Marketing agreements, Nuts, Reporting and recordkeeping
requirements.
PART 981--ALMONDS GROWN IN CALIFORNIA
Accordingly, the interim final rule amending 7 CFR part 981 which
was published at 70 FR 36816 on June 27, 2005, is adopted as a final
rule without change.
Dated: October 13, 2005.
Lloyd C. Day,
Administrator, Agricultural Marketing Service.
[FR Doc. 05-20859 Filed 10-17-05; 8:45 am]
BILLING CODE 3410-02-P