Almonds Grown in California; Revision to Requirements Regarding Credit for Promotion and Advertising, 60405-60407 [05-20859]

Agencies

• Agricultural Marketing Service
• DEPARTMENT OF AGRICULTURE

[Federal Register Volume 70, Number 200 (Tuesday, October 18, 2005)]
[Rules and Regulations]
[Pages 60405-60407]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-20859]



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Federal Register / Vol. 70, No. 200 / Tuesday, October 18, 2005 / 
Rules and Regulations

[[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