[Federal Register Volume 64, Number 145 (Thursday, July 29, 1999)]
[Rules and Regulations]
[Pages 41023-41029]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-19091]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 981
[Docket No. FV99-981-2 FR]
Almonds Grown in California; Revisions to Requirements Regarding
Credit for Promotion and Advertising Activities
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule revises the requirements regarding credit for
promotion and advertising activities prescribed 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
[[Page 41024]]
California (Board). The order is funded through the collection of
assessments from almond handlers. Under the terms of the order's
regulations, 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 make the promotion program more effective and efficient,
clarify the regulations, and improve program administration.
EFFECTIVE DATE: This final rule becomes effective August 1, 1999.
FOR FURTHER INFORMATION CONTACT: Martin Engeler, Assistant Regional
Manager, California Marketing Field Office, Marketing Order
Administration Branch, F&V, AMS, USDA, 2202 Monterey Street, 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, room
2525-S, P.O. Box 96456, Washington, DC 20090-6456; telephone: (202)
720-2491, Fax: (202) 720-5698. Small businesses may request information
on complying with this regulation, or obtain a guide on complying with
fruit, vegetable, and specialty crop marketing agreements and orders by
contacting Jay Guerber, Marketing Order Administration Branch, Fruit
and Vegetable Programs, AMS, USDA, P.O. Box 96456, room 2525-S,
Washington, DC 20090-6456; telephone (202) 720-2491, Fax: (202) 720-
5698, or E-mail: Jay.Guerber@usda.gov. You may view the marketing
agreement and order small business compliance guide at the following
web site: http://www.ams.usda.gov/fv/moab.html.
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 marketing 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 (Department) is issuing this rule in
conformance with Executive Order 12866.
This final 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 the Secretary 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. A handler is afforded the opportunity for a hearing on the
petition. After the hearing the Secretary 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 the Secretary'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 final rule revises the requirements regarding credit for
promotion and advertising activities prescribed under the
administrative rules and regulations of the order. The order is funded
through the collection of assessments from almond handlers. Under the
terms of the order's regulations, 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. It provides for more effective promotion programs and
improved clarity to the regulations, resulting in improved program
administration and more efficient and effective use of industry
promotion funds. This rule was unanimously recommended by the Board at
meetings on December 2, 1998, and March 5, 1999.
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 989.41(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. These changes apply only to promotional activities
conducted during the 1999-2000 and future crop years.
Revising Time Frames for Submitting Documentation
Section 981.441(a) provides that, 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. Currently, 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 at least 2 weeks prior to assessment billings. This 2-week period
is also currently specified in Sec. 981.441(b) and 981.441(e)(6)(ii).
Assessments are typically billed in four installments for a crop year
near the end of the following months--November, January, April, and
August.
Based on past experience with the program, the majority of handlers
file claims for credit for their promotional activities during the
later months of a crop year. The vast majority of claims are thus
received at the Board's office near the third and fourth filing
deadlines. Because of this, the Board's staff has found that it needs
more time to review and process handler documentation for promotional
claims submitted during this time to grant credit against handlers'
assessment obligations at the time assessment notices are issued. Thus,
the Board recommended that, in order for handlers to receive credit for
their promotional activities on their third and fourth assessment
billings (April and August), the documentation for such activities must
be submitted to the Board 3 weeks, rather than 2 weeks, prior to those
billings. However, this requirement should not apply to documentation
submitted prior to the fourth assessment billing for activities
conducted during the 1998-99 crop year. Handlers conducted activities
and operated under program parameters in place throughout the 1998-99
crop year. They should be allowed to continue to follow those
parameters for activities conducted during the 1998-99 crop year. Thus,
the two week timeframe should apply to submission of documentation
prior to the fourth assessment billing of the 1998-99 crop year.
Appropriate changes are made to paragraphs (a), (b), and (e)(6)(ii) of
Sec. 981.441.
Section 981.441(e)(6)(iv) currently provides that final claims for
credit-back advertising be submitted to the Board within 105 days after
the close of the crop year, in situations when handlers
[[Page 41025]]
have filed a statement of credit-back commitments outstanding as of the
close of the crop year. The Board recommended changing this 105-day
time frame for several reasons. First, the deadline can cause confusion
among handlers because it overlaps with the time frame for filing the
first claims of the new crop year. In addition, the overlap creates
program administration problems for Board staff with regard to
reviewing claims and applying credit for two separate years during the
same time period. Finally, the current deadline causes a delay in
completion of the Board's year-end accounting practices and annual
financial audit. Thus, the Board recommended that this deadline be
reduced from 105 to 76 days after the close of the end of the crop
year. This will eliminate confusion and program administration problems
associated with the overlap period for filing claims, and allow the
Board's end-of-year financial audit to be completed by December or
earlier of the following crop year, as opposed to January or later.
However, for reasons discussed in the preceding paragraph, the deadline
should remain at 105 days for activities conducted during the 1998-99
crop year. Section 981.441(e)(6)(iv) is modified accordingly.
When handlers have not filed a statement of credit-back commitments
outstanding at the close of a crop year, the deadline for filing final
promotional claims with the Board is 2 weeks prior to the final
assessment notice (mid-August). However, this deadline date is not
clearly specified in the current regulations and has caused some
confusion in the past. Therefore, the Board recommended establishing
August 15 as the deadline for filing final claims in this situation.
This will provide more clarity and reduce confusion regarding the
deadline for filing final claims. Section 981.441(e)(6)(iv) is modified
accordingly.
Redefining Growing Region
Section 981.441(e)(3) currently does not generally allow handlers
to receive credit against their assessment obligation for outdoor
advertising or sponsorships that are conducted in the major growing
regions of California. The major growing regions currently listed in
the regulation are the following 11 almond-growing counties: Butte,
Colusa, Fresno, Glenn, Kern, Madera, Merced, Sacramento, San Joaquin,
Stanislaus, and Tulare counties. The rationale for this exclusion is
that historically, much of the outdoor advertising and sponsorship
activities in the major growing areas have been to encourage growers to
do business with specific handlers rather than encouraging consumption
of almonds. This is contrary to the intent of this program, which is to
promote the sale, consumption, or use of almonds.
The Board recommended removing this list of counties from the
regulations and adding substitute language. Production and new acreage
planted in the almond industry have increased significantly in recent
years, and production areas have been shifting within the State. The
current regulations do not take this into account, and the
aforementioned list of counties no longer accurately reflects the major
growing areas.
The Board believes a more effective approach will be to revise the
regulations to specify that no credit be given for outdoor advertising
activities conducted in any California county with more than 1,000
bearing acres of almonds. This approach will adequately define the
major growing regions, and accommodate production shifts in the future.
This, in effect, removes Sacramento County as a major growing area and
thus allows outdoor advertising in that county. Sacramento County
contains a major metropolitan area, which lends itself to the use of
outdoor advertising, and is a minor almond growing area, with only 110
acres compared to an industry total of over 400,000 acres. The other 10
counties listed above continue to be regions ineligible for this type
of credit. Other counties with significant almond acreage such as
Kings, San Luis Obispo, Solano, Sutter, Tehama, Yolo, and Yuba are
classified as major almond growing areas, and outdoor advertising in
those counties, thus, will be considered ineligible for credit-back.
The Board further believes that modifying the regulations in this
manner will better reflect the original intent of the regulation, and
allow more flexibility for shifts in production within the growing
area. Section 981.441(e)(3) is modified accordingly. The Board also
recommended that sponsorship be completely eliminated as a credit-back
activity; this recommendation is discussed below.
Revisions to List of Credit-Back Activities
Section 981.441(e)(4)(ii) lists 13 other market promotion
activities for which credit may be granted. These activities currently
include marketing research (except pre-testing and test-marketing of
paid advertising); trade and consumer product publicity; printing costs
for promotional material; direct mail printing and distribution; retail
in-store demonstrations; point-of-sale materials (not including
packaging); sales and marketing presentation kits; trade fairs and
exhibits; trade seminars; 50/50 advertising with retailers; couponing
(printing, distribution, and handling costs only); purchase of Board-
produced promotional materials; and sponsorships.
The Board recommended revising the requirements regarding trade and
consumer product publicity. Trade and consumer product publicity
includes disseminating information through various communications media
to attract public attention. Handlers often hire an outside agency to
conduct such activities. Usually, such an agency charges a fee for its
work. In the past, this agency fee has been included as part of the
credit-back activity, as agency fees for paid advertising are. However,
in the case of trade and consumer product publicity, the Board has
encountered difficulties in associating agency fees to particular
credit-back activities, and determining whether this fee is
appropriate, because there is no standard fee or guidelines for such
fees. For paid advertising, this does not pose a problem because there
is a standard agency fee that can easily be associated directly to a
particular activity. Thus, the Board recommended that agency fees for
publicity no longer be included as a credit-back activity. All of the
other allowable activities associated with publicity (such as
materials) which can be directly tied to a specific publicity campaign
will still be eligible for credit.
The Board also recommended that trade seminars be removed from this
list of credit-back activities. Trade seminars include special events
designed to educate the trade about the almond industry and its
products. Although Board records indicate there has been no use of this
area as a credit-back activity by handlers, the Board believes that
there is a high possibility of misuse in this area. Trade seminars are
not well defined and standardized activities; thus, lavish
entertainment or elaborate sales meetings are characterized as trade
seminars. Trade shows will remain as a credit-back activity, however.
These events are widely used and the activities are well-defined and
standardized, such as setting up booths to exhibit merchandise to
customers. Thus, the Board recommended that trade seminars be removed
from the list of credit-back activities.
The Board also recommended that handlers' purchases of Board-
produced promotional materials be removed from the list of credit-back
activities. Board funds are used to develop various
[[Page 41026]]
promotional materials that are made available to handlers. In the past,
handlers purchased such materials from the Board and received promotion
credit. However, the Board has recently developed an allocation system
whereby handlers may receive a certain percentage of promotional
material produced by the Board free of charge. Each handler's
allocation for a crop year is based on the percentage of almonds
handled during the prior year. Handlers may purchase additional
material at cost. This new system, not covered by the credit-back
regulations, allows Board staff to plan more effectively and to
purchase materials more cost effectively, while maintaining a
promotional tool for handlers. Since this new system was developed, the
Board determined that continuing to allow credit for purchase of Board-
produced promotional material results in overlap of two similar
programs. Therefore, the Board recommended that purchase of such
material be removed from the list of credit-back activities.
In addition, the Board recommended that sponsorship be removed from
the list of credit-back activities. Sponsorship includes the financial
support of an event or person carried out by another group or person.
Sponsorship can be targeted towards consumers, the trade, or may be
undertaken for general goodwill. A review of sponsorship claims
submitted in the past indicates several claims appear to fall into the
category of general goodwill rather than to promote the sale and
consumption of almonds as the primary purpose. Further, Board staff has
had difficulty in determining a reasonable rate for crediting some of
the activities due to a lack of an industry standard. Finally, Board
staff has found that many of the most effective activities typically
claimed as sponsorship can be applicable under other credit-back areas
in the regulations. Thus, the Board recommended that sponsorship be
removed from the list of credit-back activities.
The Board also recommended that a new credit-back activity be added
to the regulations concerning use of the Internet. Several handlers
have or are developing web-sites to promote their almonds. This is a
rapidly developing communication medium becoming widely recognized as a
valuable promotional tool. Thus, the Board believes handlers should be
allowed credit for development and use of the Internet for promotional
purposes. Because of the vast array of uses of the Internet, however,
the Board believes guidelines should be implemented regarding crediting
handlers' expenditures in this area. Thus, the Board recommended that
handlers be allowed up to $5,000 credit against their assessment
obligation for the development and use of a web-site on the Internet
for advertising and public relations purposes. No credit is given for
costs regarding E-commerce (which is equivalent to opening a store),
Extranet (private web sites within the Internet), or portions of a web-
site that target the farming or grower trade. The Board believes these
types of activities lend themselves to potential abuses and do not
necessarily advance the intent of the program, which is to promote the
sale, use, and consumption of almonds.
Appropriate changes have been made to the list of credit-back
activities specified in Sec. 981.441(e)(4)(ii) to incorporate all of
these changes.
Recommendation Regarding Credit-Back for Almond Products
Section 981.441(a) specifies that handlers may be granted credit
against their assessment obligation for an amount not to exceed 66\2/3\
percent of a handler's proven expenditures for qualified activities.
Section 981.441(e)(iv) provides that when products containing almonds
are promoted, the amount allowed for credit-back shall reflect that
portion of the product weight represented by almonds, or the handler's
actual payment, whichever is less. For example, if a handler paid
$1,000 in advertising costs to promote a product which contained 60
percent almonds by weight, such handler is able to file a claim for
credit against his or her assessment obligation of 60 percent of
$1,000, or $600. The amount of credit is 66\2/3\ percent of $600, or
$400. If the product contained 70 percent almonds by weight, the
handler is eligible to receive a credit against his or her assessment
of 66\2/3\ percent of the 70 percent, or $467.
The Board recommended adding an exception to this portion of the
regulations. Specifically, handlers who own almond-containing
``unique'' or ``non-traditional'' products would be allowed to request
that the Board grant them a one-year exemption from this ``percentage
rule.'' Thus, in the above example, a handler could request from the
Board an exemption and receive credit for 66\2/3\ percent of his or her
advertising costs for the product, or $667, regardless of the weight of
the almonds in the product. The Board believes that this special
exception would provide handlers incentive to produce and advertise
unique almond products, resulting in increased almond sales for the
industry. Board members would be responsible for reviewing such
requests from handlers and determining whether an exception would be
granted on a case-by-case basis.
The Department has concerns with this recommendation. Although
there was support for this concept at the industry meetings which led
to the recommendations, those participating in the meetings were not
able to develop criteria to define a ``unique'' or ``non-traditional''
product. Thus, there are no specific parameters for Board staff to
review claims against. Because of this, the recommendation calls for
the Board itself, rather than staff, to determine what products would
qualify (Board staff currently reviews all promotion claims). It is
unclear how the Board would make such determinations. The lack of
criteria could potentially lead to subjective decision-making and Board
members reviewing claims could create potential conflicts of interest.
The purpose of these regulations is to provide a clear set of
guidelines that can be applied uniformly by Board staff to avoid these
situations. While the Department supports the concept of providing
incentive for new product development, it is not proceeding with this
recommendation at this time because of the aforementioned concerns.
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 action 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 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 105 handlers of California almonds who are
subject to regulation under the order and approximately 6,000 almond
producers in the regulated area. Small agricultural service firms have
been defined by the Small Business Administration (13 CFR 121.601) as
those having annual receipts of less than $5,000,000, and small
agricultural producers are defined as those having annual receipts of
less than $500,000.
Based on the most current data available, about 54 percent of the
handlers ship under $5,000,000 worth
[[Page 41027]]
of almonds and 46 percent ship over $5,000,000 worth on an annual
basis. In addition, based on acreage, production, and grower prices
reported by the National Agricultural Statistics Service, and the total
number of almond growers, the average annual grower revenue is
approximately $195,000. In view of the foregoing, it can be concluded
that the majority of handlers and producers of California almonds may
be classified as small entities.
This final rule revises Sec. 981.441 of the order's administrative
rules and regulations regarding credit-back promotion and advertising.
Under the terms of the regulations, handlers may receive credit towards
their assessment obligation for certain of their direct expenditures
for marketing promotion activities, including paid advertising. This
rule makes several revisions to the requirements regarding the
activities for which handlers may receive such credit. These revisions
include: Revising the time frames and clarifying deadlines for when
handlers must submit documentation to the Board on activities
conducted; redefining the growing region eligible for credit for
certain types of outdoor advertising; revising the list of creditable
activities by eliminating credit for fees charged by advertising and
public relations agencies for publicity, trade seminars, purchase of
Board-produced promotional material, and sponsorships; and adding use
of the Internet as a promotional tool as a new, credit-back activity.
Regarding the impact of this rule on affected entities, the changes
specified herein are designed to provide for a more effective and
efficient use of the industry's advertising and promotion funds, and to
improve program administration. Requiring handlers to submit
documentation to the Board 3 weeks, as opposed to 2 weeks, prior to the
Board's April and August assessment billings changes the timing, but
not the frequency, of the filings submitted by handlers. This change is
not expected to increase the reporting burden on handlers, but rather
provide the Board's staff sufficient time to review the material and
credit handlers' accounts in a more timely manner. Clarifying the
deadline for filing claims at the end of a crop year will eliminate
confusion among handlers and allow the Board to complete its year-end
accounting practices more timely. Redefining the growing region
eligible for credit for outdoor advertising to include only counties
with less than 1,000 bearing acres of almonds will help ensure that
credit only be given for outdoor advertising that encourages consumers
to buy almonds (as opposed to such advertising done in larger bearing
counties directing growers to specific handlers). This change also adds
flexibility to the regulations to accommodate production shifts in the
future. Adding the Internet as a credit-back activity will allow
handlers to take advantage of a new communication medium and provide
them with a new promotional opportunity that can be used to offset a
portion of their assessment obligation. Removing certain activities
available for credit-back is not expected to negatively impact
handlers, as numerous promotional activities remain for them to offset
a portion of their assessment obligation. The activities removed have
received little use in the past, and in some cases lend themselves to
potential abuses that result in ineffective use of promotional funds.
The changes are expected to be equally beneficial to all handlers who
conduct their own promotional activities and to the industry as a
whole.
Several alternatives to the changes were considered. The first
alternative in all cases was to leave the regulations as they currently
exist. However, this does not address the changes in the industry,
technology, or promotional practices. Nor does it address the
administrative inefficiencies and the potential program abuses that
have been identified. Alternatives to the recommendations concerning
removing certain activities from the list of credit-back activities
included leaving the activities in the regulations, with further
definition and clarification added. However, it was determined that
this would lead to increased regulations and guidelines, with no
assurance of solving the problems. In addition, most of the activities
being removed have been used very infrequently by handlers. The removal
of credit for purchase of Board-produced promotional materials was
replaced by an alternative system whereby handlers are provided a free
allocation of such materials, with the option of purchasing additional
materials at cost.
Regarding the changing of dates for submitting documents to the
Board, different dates were considered. However, it was determined that
the dates ultimately recommended allow the minimum amount of time
necessary for Board staff to review documents, apply credit to
handlers' assessment accounts, and to complete year-end accounting
practices in a timely manner. Alternatives to changing the growing
region definition included using a different acreage number as a
threshold to defining a producing county. However, the industry agreed
for purposes of the credit-back program, 1,000 acres was appropriate.
Another alternative considered was to remove the restriction of outdoor
advertising in almond growing counties, but that does not address the
problem of handlers advertising to growers.
It was determined that the changes herein are the best way to
address the situation at this time. These regulations were designed to
reflect the industry's practices, and these revisions are intended to
respond to an evolving marketplace and changing promotional practices.
Changes have been and will continue to be recommended based on industry
and program experiences.
This rule imposes no additional reporting or recordkeeping
requirements on either small or large 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
(OMB) and have been assigned OMB No. 0581-0071. 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, the Department has not identified any
relevant Federal rules that duplicate, overlap or conflict with this
rule.
Additionally, the Board's meetings were widely publicized
throughout the almond industry and all interested persons were invited
to attend the meetings and participate in Board deliberations. Like all
Board meetings, the December 2, 1998, and March 5, 1999, meetings were
public meetings and all entities, both large and small, were able to
express their views on this issue. The Board itself is composed of 10
members, of which 5 are producers and 5 are handlers.
Also, the Board has a number of appointed committees to review
certain issues and make recommendations to the Board. The Board formed
a task force in July 1998 to review its credit-back advertising
program. The task force met periodically during the following months to
review the program and consider appropriate changes. The task force
presented its recommendations to the Board's Public Relations and
Advertising Committee on November 13, 1998, and that committee
presented its recommendations to the Board on December 2, 1998. The
March 5, 1999, meeting was held to finalize the Board's
recommendations. All of these meetings were open to the public, and
both large
[[Page 41028]]
and small entities were able to participate and express their views.
A proposed rule concerning this action was published in the Federal
Register on June 10, 1999 (64 FR 31153). Copies of the rule were mailed
to all Board members and almond handlers. The proposal was also made
available through the Internet by the Office of the Federal Register. A
30-day comment period was provided for interested persons to respond to
the proposal. The comment period ended July 12, 1999. No comments were
received.
The Department made some changes to the amendatory language as
stated in the proposed rule for clarity and conformity between
provisions. These changes include a change pertaining to the
development and use of web-sites on the Internet for advertising and
public relations purposes. The words ``for such activities'' were added
to the proviso in paragraph (e)(4)(ii)(K) of Sec. 981.441 to clarify
that handlers may be allowed up to $5,000 credit against their
assessment obligation for activities concerning web-sites and the
Internet. Another change conforms language in paragraph (b) of
Sec. 981.441 to be consistent with the change requiring handlers to
submit documentation to the Board three weeks prior to the third and
fourth assessment billings in order to offset a portion of the
assessment obligation. Language was added to paragraphs (a),
(e)(6)(ii), and (e)(6)(iv) to clarify that the changes do not apply to
promotional activities conducted prior to the 1999-2000 crop year.
After consideration of all relevant matter 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.
It is further found that good cause exists for not postponing the
effective date of this rule until 30 days after publication in the
Federal Register (5 U.S.C. 553) because: (1) This rule should be in
effect by August 1, the beginning of the 1999-2000 crop year; (2) these
changes were unanimously recommended by the Board and interested
persons had an opportunity to provide input; (3) handlers are aware of
these changes which were recommended at public meetings; and (4) a 30-
day comment period was provided for in the proposed rule.
List of Subjects in 7 CFR Part 981
Almonds, Marketing agreements, Nuts, Reporting and recordkeeping
requirements.
For the reasons set forth in the preamble, 7 CFR part 981 is
amended as follows:
PART 981--ALMONDS GROWN IN CALIFORNIA
1. The authority citation for 7 CFR part 981 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
2. Section 981.441 is amended by revising the second sentence in
paragraph (a), paragraphs (b), (e)(3), (e)(4)(ii), the first sentence
in paragraph (e)(6)(ii), and paragraph (e)(6)(iv) 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: Provided, That promotional
activities conducted during the 1998-99 crop year must be conducted and
documented at least 2 weeks prior to the Board's fourth assessment
billing in order to receive credit in the form of a payment from the
Board, or as an offset to that portion of the assessment. * * *
(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: Provided, That promotional activities conducted
during the 1998-99 crop year must be conducted and documented at least
2 weeks prior to the Board's fourth assessment billing in order to
receive credit. If the handler(s) conduct activities and submit
documentation according to applicable provisions in this section, their
advertising assessment obligation will be reduced according to the
amount of proven activities approved by the Board.
* * * * *
(e) * * *
(3) No Credit-Back will be given for advertising placed in
publications that target the farming or grower trade. No Credit-Back
shall be given for any outdoor advertising in California almond growing
counties with more than 1,000 bearing acres: Provided, That outdoor
advertising in these counties which specifically directs consumers to a
handler-operated outlet offering direct purchase of almonds will be
eligible for Credit-Back.
(4) * * *
(ii) Other market promotion activities. Credit-Back shall be
granted for market promotion other than paid advertising, for the
following activities:
(A) Marketing research (except pre-testing and test-marketing of
paid advertising);
(B) Trade and consumer product publicity: Provided, That no Credit-
Back shall be given for related fees charged by an advertising or
public relations agency;
(C) Printing costs for promotional material;
(D) Direct mail printing and distribution;
(E) Retail in-store demonstrations;
(F) Point-of-sale materials (not including packaging);
(G) Sales and marketing presentation kits;
(H) Trade fairs and exhibits;
(I) 50/50 advertising with retailers;
(J) Couponing (printing, distribution, and handling costs only);
and
(K) Development and use of web-site on the Internet for advertising
and public relations purposes: Provided, That Credit-Back shall be
limited to $5,000 per year for such activities, and no credit shall be
given for costs for E-commerce (mail ordering through the Internet),
Extranet (restricted web sites within the Internet), or portions of a
web-site that target the farming or grower trade.
* * * * *
(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: Provided further, That promotional activities conducted during
the 1998-99 crop year must be conducted and documented at least 2 weeks
prior to the mailing of the Board's fourth assessment notice in order
to receive credit. * * *
(iii) * * *
(iv) A statement of the Credit-Back commitments outstanding as of
the close of a crop year must be submitted in full to the Board within
15 days after the close of that crop year. Final claims
[[Page 41029]]
pertaining to such commitments outstanding must be submitted within 76
days after the close of that crop year: Provided, That for activities
conducted during the 1998-99 crop year, final claims pertaining to such
commitments outstanding must be submitted within 105 days after the
close of the crop year. All other final claims for which no statement
of Credit-Back commitments outstanding has been filed must be submitted
by August 15 of that calendar year.
* * * * *
Dated: July 22, 1999.
Robert C. Keeney,
Deputy Administrator, Fruit and Vegetable Programs.
[FR Doc. 99-19091 Filed 7-28-99; 8:45 am]
BILLING CODE 3410-02-U
