Federal Register / Vol. 70, No. 10 / Friday, January 14, 2005 / Rules and Regulations 2763

organic under the NOP; and who 

operates under an approved NOP 

system plan and is not a split operation. 

(b) To apply for an exemption under 

this section, the person shall submit the 

request to the Board—on a form 

provided by the Board—at any time 

initially and annually thereafter on or 

before January 1 as long as the person 

continues to be eligible for the 

exemption. 

(c) The request shall include the 

following: the person’s name and 

address, a copy of the organic farm or 

organic handling operation certificate 

provided by a USDA-accredited 

certifying agent as defined in section 

2103 of the Organic Foods Production 

Act of 1990 (7 U.S.C. 6502), a signed 

certification that the applicant meets all 

of the requirements specified for an 

assessment exemption, and such other 

information as may be required by the 

Board and with the approval of the 

Secretary. 

(d) If the person complies with the 

requirements of this section, the Board 

will grant the exemption and issue a 

Certificate of Exemption to the 

producer. For exemption requests 

received on or before August 15, 2005, 

the Board will have 60 days to approve 

the exemption request; after August 15, 

2005, the Board will have 30 days to 

approve the exemption request. If the 

application is disapproved, the Board 

will notify the applicant of the reason(s) 

for disapproval within the same 

timeframe. 

(e) An exempt producer shall provide 

a copy of the Certificate of Exemption to 

each person to whom the producer sells 

ovine animals or lamb and lamb 

products. The Certificate of Exemption 

must accompany the ovine animals 

through the production chain to the 

person responsible for remitting the 

assessment to the Board. 

(f) The person shall maintain records 

showing the exempt producer’s name 

and address and the exemption number 

assigned by the Board. 

(g) The exemption will apply at the 

first reporting period following the 

issuance of the exemption. 

(h) Agricultural commodities 

produced and marketed under an 

organic system plan, as described in 7 

CFR 205.201, but not sold, labeled, or 

represented as organic, shall not 

disqualify a producer, seed stock 

producer, or feeder from exemption 

under this section, except that persons 

producing or feeding both organic and 

non-organic agricultural commodities as 

a result of split operations shall not 

qualify for exemption. Reasons for 

conventional sales include lack of 

demand for organic products, isolated 

use of antibiotics for humane purposes, 

chemical or pesticide use as the result 

of State or emergency spray programs, 

and crops from a buffer area as 

described in 7 CFR part 205, provided 

all other criteria are met.

Dated: January 5, 2005. 

Kenneth C. Clayton, 

Associate Administrator, Agricultural 

Marketing Service.

[FR Doc. 05–573 Filed 1–13–05; 8:45 am] 

BILLING CODE 3410–02–P

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service 

7 CFR Part 900 

[Docket No. FV03–900–1 FR] 

Exemption of Organic Handlers From 

Assessments for Market Promotion 

Activities Under Marketing Order 

Programs

AGENCY: Agricultural Marketing Service, 

USDA.

ACTION: Final rule.

SUMMARY: This rule implements the 

provisions of section 10607 of the 2002 

Farm Bill and exempts handlers subject 

to marketing order requirements from 

paying assessments for market 

promotion activities, including paid 

advertising, to marketing order 

committees and boards. To obtain an 

exemption, the handler must operate 

under an approved organic process 

system plan authorized by the National 

Organic Program (NOP), and handle or 

market only products that are eligible 

for a 100 percent organic product label 

under the NOP. The Agricultural 

Marketing Service (AMS), that oversees 

and works with the committees and 

boards in administering the programs, 

has identified 28 marketing order 

programs for which assessment 

exemptions may be established. A 

separate final rule to exempt any person 

producing and marketing solely 100 

percent organic products from paying 

assessments to any national research 

and promotion program administered by 

AMS also is being published in today’s 

Federal Register.

DATES: Effective February 14, 2005.

FOR FURTHER INFORMATION CONTACT:

George Kelhart or Jay Guerber, 

Marketing Order Administration 

Branch, Fruit and Vegetable Programs, 

Agricultural Marketing Service, U.S. 

Department of Agriculture, 1400 

Independence Avenue SW., STOP 0237, 

Room 2525–South, Washington, DC 

20250–0237; Telephone: (202) 720–

2491; Fax: (202) 720–8938; or E-mail: 

George.Kelhart@usda.gov.

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: Prior 

documents in this proceeding: 

Proposed rule; Published in the 

Federal Register December 2, 2003 (68 

FR 67381). 

Proposed rule; Extension of comment 

period; Published in the Federal 

Register December 30, 2003 (68 FR 

75148). 

Executive Order 12866 

This final rule is being issued by the 

Department of Agriculture (USDA) in 

conformance with Executive Order 

12866. 

Executive Order 12988 

This final rule has been reviewed 

under Executive Order 12988, Civil 

Justice Reform. It is not intended to 

have retroactive effect. This final rule 

would not preempt any State or local 

laws, regulations, or policies, unless 

they present an irreconcilable conflict 

with this rule. 

The Agricultural Marketing 

Agreement Act of 1937 (7 U.S.C. 601–

674)(Act or AMAA), under which the 28 

marketing order programs are 

established, provides that 

administrative proceedings must be 

exhausted before parties may file suit in 

court. Under the Act, any person subject 

to an order may file a petition with 

USDA 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. The petitioner is 

afforded the opportunity for a hearing 

on the petition. After the hearing, USDA 

would make a ruling on the petition. 

The Act provides that the district court 

of the United States in any district in 

which the person is an inhabitant, or 

has his or her principal place of 

business, has jurisdiction to review 

USDA’s ruling, provided a complaint is 

filed within 20 days from the date of the 

entry of the ruling. 

Background 

Section 10607 of the Farm Security 

and Rural Investment Act (Pub. L. 107–

171; 2002 Farm Bill) was enacted May 

13, 2002. Section 501 of the Federal 

2764 Federal Register / Vol. 70, No. 10 / Friday, January 14, 2005 / Rules and Regulations 

Agriculture Improvement and Reform 

Act of 1996 (7 U.S.C. 7401; FAIR Act) 

was amended by the 2002 Farm Bill. 

This amendment exempts any person 

that produces and markets solely 100 

percent organic products, and that does 

not produce any conventional or nonorganic products, from paying 

assessments under a commodity 

promotion law with respect to any 

agricultural commodity that is produced 

on a certified organic farm as defined in 

section 2103 of the Organic Foods 

Production Act of 1990 (7 U.S.C. 6502; 

OFPA). USDA has implemented 

National Organic Program (NOP) 

requirements at 7 CFR part 205 to carry 

out the provisions of the OFPA.

USDA is amending the general 

regulations (7 CFR part 900) with 

respect to 28 marketing order programs 

established under the Act for which it 

has oversight. These amendments 

establish provisions for handlers who 

handle or market solely 100 percent 

organic products to be exempt from 

paying assessments for market 

promotion activities, including paid 

advertising. 

Currently, the FAIR Act amendment 

covers 28 marketing order programs 

established under the Act: Texas 

citrus—7 CFR part 906; Florida 

avocados—7 CFR part 915; California 

nectarines—7 CFR part 916; California 

peaches and pears—7 CFR part 917; 

Washington apricots— 7 CFR part 922; 

Washington sweet cherries—7 CFR part 

923; Washington/Oregon fresh prunes—

7 CFR part 924; Southeastern California 

grapes—7 CFR part 925; Oregon/

Washington winter pears—7 CFR part 

927; Cranberries grown in States of 

Massachusetts, et al.—7 CFR part 929; 

Tart cherries grown in States of 

Michigan, et al.—7 CFR part 930; 

Oregon/Washington Bartlett pears—7 

CFR part 931; California olives—7 CFR 

part 932; Oregon/California potatoes—7 

CFR part 947; Colorado potatoes—7 CFR 

part 948; Georgia Vidalia onions—7 CFR 

part 955; Washington/Oregon Walla 

Walla onions—7 CFR part 956; IdahoEastern Oregon onions—7 CFR part 958; 

Texas onions—7 CFR part 959; Florida 

tomatoes—7 CFR part 966; Texas 

melons—7 CFR part 979; California 

almonds—7 CFR part 981; OregonWashington hazelnuts—7 CFR part 982; 

California walnuts—7 CFR part 984; Far 

West spearmint oil—7 CFR part 985; 

California dates—7 CFR part 987; 

California raisins—7 CFR part 989; and 

California dried prunes—7 CFR part 

993. In addition, § 900.700(a) provides 

that the assessment exemption also shall 

apply to any additional marketing 

orders for fruits, vegetables, or specialty 

crops that may be established or 

amended to include market promotion. 

These marketing order programs 

allow for promotion programs designed 

to assist, improve, or promote the 

marketing, distribution, or consumption 

of the commodity covered under the 

marketing order program. Some of these 

programs also authorize market 

promotion in the form of paid 

advertising. Promotion activities, 

including paid advertising, are paid for 

by assessments levied on handlers 

regulated under the various marketing 

orders. 

Notice of this action was published in 

the Federal Register on December 2, 

2003 (68 FR 67381). The period for 

written comments initially ended on 

January 2, 2004. However, at the request 

of the Organic Trade Association, the 

comment period was extended until 

February 2, 2004 (68 FR 75148; 

December 30, 2003). 

During the comment period, 147 

comments were received from a member 

of Congress, producers of organic 

commodities, marketers of organic 

commodities, organic producer and 

trade organizations, the management of 

the tart cherry and almond marketing 

order boards, cooperative marketing 

organizations, and interested 

consumers. About 85 of the commenters 

used a form letter that discussed 

eligibility and administrative issues. 

Another 80 comments were received 

after the comment period, but they did 

not introduce any new issues. AMS has 

considered each comment timely 

submitted, and they are discussed 

below. 

Summary of Changes From the 

Proposed Rule 

This final rule clarifies that, for the 

purpose of obtaining an assessment 

exemption for market promotion 

activities, a handler (i.e., assessment 

payer) must operate under a NOPapproved organic process system plan. 

Further, that handler may handle or 

market only commodities eligible for a 

100 percent organic label under the 

NOP (7 CFR part 205.300–205.311). This 

applies to all commodities handled or 

marketed by the handler, not only those 

covered by the marketing order 

programs. Such handlers are considered 

to be the persons that handle or market 

solely 100 percent organic commodities 

for the purposes of the 2002 Farm Bill. 

The application form has been changed 

to reflect this as appropriate. 

The final rule also clarifies that a 

handler who handles or markets 

products produced on buffer zones or 

chemically-treated products from 

certified NOP producers is not eligible 

for an assessment exemption. Moreover, 

a handler, who is a split operation 

handling both organic and 

conventionally-produced product, is not 

eligible for an assessment exemption. 

Further, if an NOP handler is also a 

certified NOP producer, that handler 

would not be eligible for exemption 

unless the non-organic production from 

his or her production operation is 

handled by another handler. 

The final rule provides that the 

exemption will apply at the beginning 

of the next assessable period following 

notification to the applicant of approval 

of the assessment exemption, in writing, 

by the committee or board. The final 

rule requires marketing order 

committees and boards to grant or deny 

exemption requests within 30 days. 

However, for the first 6 months 

following the final rule’s effective date, 

committees and boards will have 60 

days to grant or deny exemption 

requests. After 6 months, the deadline 

will revert to 30 days. 

The final rule also provides that 

persons denied the exemption will be 

notified in writing. The procedures for 

handlers to follow in the event they are 

denied exemption status and desire 

further review are explained in this final 

rule. 

Summary of Comments Received

The comments largely fall into two 

broad categories. One category 

addresses issues of assessment 

exemption eligibility. The other 

category addresses administrative and 

procedural issues. 

Issues of Eligibility 

Numerous commenters, including 

those that submitted the form letter, 

stated that the proposed rule changed 

the eligibility requirements fixed by 

Congress. They assert that the eligibility 

criteria for an organic exemption were 

established by Congress in the 

exemption statute and are easily 

implemented using the definitions (e.g., 

producer, handler, 100 percent organic, 

etc.) of the FAIR Act and the OFPA. 

The assessment exemption statute 

amends section 501 of the FAIR Act to 

provide that persons that produce and 

market solely 100 percent organic 

products shall be exempt from the 

payment of assessments under a 

commodity promotion law with respect 

to any agricultural commodity that is 

produced on a certified organic farm (as 

defined in section 2103 of the OFPA). 

This exemption from assessments 

applies to a number of programs, 

including marketing orders that include 

marketing promotion provisions under 

section 8c(6)(I) of the AMAA. Marketing 

Federal Register / Vol. 70, No. 10 / Friday, January 14, 2005 / Rules and Regulations 2765

orders established under the AMAA 

regulate the handling of the commodity, 

not the production; handlers, not 

producers, pay assessments under 

marketing order programs. Thus, 

relevant definitions established under 

the AMAA for the marketing order 

programs should apply and not those 

specified under other statutes. 

Other commenters, including those 

that submitted the form letter, stated 

that the term ‘‘100 percent organic’’

should refer to 100 percent of a specific 

commodity, not all commodities. This 

would mean that a person that handles 

or markets an organic commodity 

regulated under a marketing order 

would be eligible for an exemption even 

if that person handled other 

commodities that are not organic. Other 

commenters stated that the term ‘‘100 

percent organic’’ means nothing more 

than produced on a certified organic 

farm, and certified organic farms 

include split operations (i.e., those that 

produce and market both organic and 

conventionally-grown commodities). 

Other commenters stated that rendering 

a certified organic grower who produces 

any non-organic commodity ineligible 

for exemption would conflict with the 

OFPA and Congressional intent. 

USDA considered these comments. 

Such an interpretation, however, would 

make the additional statutory 

qualifications of ‘‘solely’’ and ‘‘does not 

produce any conventional or nonorganic products’’ meaningless. The 

statutory language of the 2002 Farm Bill 

provides that to be exempt, a person 

must produce and market solely 100 

percent organic products, and not 

produce any conventional or nonorganic products. Therefore, the 

interpretation urged by the commenters 

is not consistent with the statute. 

Furthermore, to eliminate uncertainty 

in interpreting exemption eligibility for 

programs authorized under the AMAA, 

the reference to a ‘‘person that produces 

and markets solely 100 percent organic 

commodities’’ in the 2002 Farm Bill is 

the person that handles or markets (i.e., 

the person that pays assessments) on the 

commodities under the marketing order. 

Therefore, for a handler to qualify for an 

exemption, that handler must handle or 

market only 100 percent organic 

products under an approved NOP 

handler organic process system plan 

and all of the products handled or 

marketed by the handler must be 

eligible for a 100 percent organic label 

under the NOP. 

Handlers handling non-organic 

products are not eligible for an 

exemption. For example, NOP 

recognizes split farm operations and 

certain NOP permitted practices in 

which an organic grower produces 

conventionally-grown product, but 

maintains his or her organic grower 

status. Under the NOP, an organic 

grower may be required to sell a 

commodity conventionally due to 

Federal or State emergency chemical 

spray programs to eliminate pests or 

diseases. Similarly, the NOP requires an 

organic operation to maintain a buffer 

area between the organic crop and the 

conventional growing areas, and any 

commodity grown in that buffer area 

may not be sold as organic. Even if the 

handler is an organic producer who 

produces a conventional product 

consistent with NOP practices (i.e., 

product from a buffer zone), that 

handler would only be eligible for an 

exemption if the conventionallyproduced commodity produced by that 

handler was handled or marketed by 

another handler. 

As defined in the proposed rule, 

‘‘produce means to grow or produce 

food, feed, livestock, or fiber or to 

receive food, feed, livestock or fiber and 

alter that product by means of feeding, 

slaughtering, or processing.’’

Commenters, including those who 

submitted the form letter, noted that 

there is nothing in the 2002 Farm Bill 

to require that handlers perform more 

than their normal activities for the 

exemption to apply. They assert that the 

exemptions should apply whether or 

not the handler alters the commodity. 

To address the concerns of the 

commenters and because the AMAA 

only authorizes regulation of handlers 

(the entities required to pay 

assessments), the exemption eligibility 

has been modified by removing the 

requirements for alteration or other 

forms of processing so all handlers are 

treated similarly. 

In response to the form letter 

comment, this final rule clarifies that, as 

long as the handler meets the 

requirements in § 900.700(b), it is not 

necessary that the handler label all 

products as organic. In other words, if 

the products were produced organically, 

the fact that they were marketed as 

conventional products would not 

nullify a handler’s exemption from 

assessment status. Under the NOP, 

product produced under an approved 

system of organic management does not 

lose its status as the product of a 

certified organic farm when transacted 

in the conventional marketplace. Thus, 

persons who market organic products in 

conventional markets will not lose their 

exempt status. 

As revised, § 900.700(b) provides that 

a handler who operates under an NOPapproved organic process system plan; 

handles or markets under an applicable 

marketing order or outside the 

marketing order solely 100 percent 

organic products produced on a 

certified organic farm as defined in 

§ 2103 of the Organic Foods Production 

Act of 1990 (7 U.S.C. 6502) and NOP 

regulations; is not a split operation; and 

is subject to assessments, shall be 

exempt from the portion of the 

assessments applicable to marketing 

promotion.

Examples Illustrating the Application of 

Handling and Marketing Solely 100 

Percent Organic Products 

• A handler who handles or markets 

solely 100 percent organic products 

under an NOP-approved organic process 

system plan, and pays marketing order 

assessments to the board or committee, 

is eligible for an exemption for the 

portion of the assessments used for 

marketing promotion on all products 

handled or marketed under the 

applicable marketing order. 

• A handler receives products from a 

certified grower who grows 20 acres 

organically and 20 acres of another 

product conventionally. If the handler 

handles or markets any of the 

conventionally-produced products, the 

handler is not eligible for an exemption. 

Conversely, if the handler receives and 

markets only 100 percent organic 

products, the handler is eligible for an 

exemption even if the producers who 

grew the product also produced 

conventional product. 

• If a handler produces products 

organically and conventionally, the 

conventionally-grown products must be 

handled or marketed by another handler 

to be eligible for an exemption from the 

portion of the assessments used for 

marketing promotion. 

Administrative and Procedural Issues 

The proposed rule limited the 

exemption to that portion of the 

assessment funds allocated for 

marketing promotion, including paid 

advertising. Some commenters, 

including those who submitted the form 

letter, said that all eligible persons 

should be exempt from all of the 

marketing order assessments collected, 

not just those assessments used for 

market promotion activities. The 

commenters asserted that the intent of 

Congress was to bar all assessments that 

might be imposed under generic 

commodity promotion laws on 

commodities originating from certified 

organic farms, not only those earmarked 

for marketing promotion, including paid 

advertising. 

The assessment exemption only 

applies to assessments that are spent for 

market research, market development, 

2766 Federal Register / Vol. 70, No. 10 / Friday, January 14, 2005 / Rules and Regulations 

market promotion, or paid advertising. 

Section 501 of the FAIR Act covers all 

promotion programs and all marketing 

orders with market research and 

promotion activities, including industry 

information and consumer information 

activities funded by assessments on 

handlers. Limiting the exemption to 

such activities is consistent with section 

501 of FAIR Act and the marketing 

orders with market research and 

promotion activities. 

Several commenters requested that 

USDA list examples of eligible activities 

in the final rule to help the committees 

and boards administer the organic 

assessment exemption program. Others 

requested that exempt activities be 

broadened to include all of the activities 

authorized in section 8c(6)(I) of the 

AMAA. If this were done, the activities 

would also include production research. 

Production research encompasses a 

whole array of activities including, but 

not limited to, research on growing 

techniques, disease control, the 

development of new varieties, and 

similar activities relating to the efficient 

production of the commodity. 

Production research activities are not 

within the scope of the 2002 Farm Bill, 

because they do not directly promote 

the marketing of the commodity. 

To provide guidance to those 

commenters who requested examples of 

eligible market promotion activities, 

market promotion includes a full range 

of activities designed to assist, improve, 

or promote the marketing, distribution, 

and consumption of the applicable 

commodity. Research related to the 

traditional market research activities 

(e.g., surveys of consumer and 

institutional users, product 

development, and taste studies) would 

be covered. Assessments used for the 

promotion of the nutritional and health 

benefits of the particular commodity, 

recipe development, informational 

packets, and other types of publicity 

also would be eligible for exemption. 

Market development projects would 

cover the full range of promotional 

activities generally included in that 

category, which include—but are not 

limited to—participation in trade 

shows, the development and use of 

internet websites to inform the trade 

and the public of the uses (e.g., recipes) 

and/or nutritional value of the regulated 

commodity, point of purchase materials, 

publication of promotional materials, 

the development and dissemination of 

materials to the media promoting the 

commodity’s uses and benefits, and 

paid advertising when authorized under 

a marketing order. 

Another commenter objected to the 

exemption, mentioning that promotion 

activities implemented under their 

program promote their commodity and 

do not distinguish between organic and 

non-organic. As a consequence, organic 

producers and handlers would benefit 

from the industry’s investment in 

market research and trade promotion, 

without contributing to the cost. The 

enabling legislation requires the organic 

assessment exemption to be 

implemented.

Administrative Costs Involving Market 

Promotion 

Commenters said that the final rule 

should clarify what portion of 

administrative costs on exempted 

activities should be eligible for 

exemption, because there are 

administrative costs associated with 

market promotion activities. Section 

900.700(d) has been clarified to provide 

that the exempted costs include the 

portion of committee/board 

administrative costs incurred in 

implementing market promotion 

activities. For example, such 

administrative costs could include 

prorated amounts for salaries, rents, 

supplies, and other overhead costs 

associated with the market promotion 

activities, as recommended by the 

committees or boards, and approved by 

USDA. 

The proposed rule specified a 

calculation of the exemption rate based 

on the portion of funds allocated for 

market promotion activities. Some 

commenters said that the proposed 

method of calculation of the rate of 

assessment for exempt handlers, and its 

implementation, are too complicated 

and burdensome and should be 

simplified. 

USDA continues to conclude that the 

method of calculation specified in the 

proposed rule is necessary to administer 

the assessment exemption under the 

applicable marketing orders and should 

not be changed. Moreover, the 

assessment formula establishes a 

uniform method of calculation for all of 

the committees and boards and should 

not be overly complicated or 

burdensome. 

One commenter said that USDA 

should allow committees/boards to 

certify annually to AMS if they are not 

planning to conduct any market 

promotion activities. This process 

would eliminate the need for 

administering the exemption authority 

for the particular marketing order for a 

given assessment period. Based on this 

comment, USDA has modified 

§ 900.700(d) to provide that if a 

committee or board does not plan to 

conduct any market promotion activities 

during an assessment period, the 

committee or board may submit a 

certification to that effect to AMS. In 

such a situation, the committee or board 

would assess all handlers, regardless of 

their organic status, the full assessment 

rate applicable to the assessment period. 

A commenter suggested that the 

assessment exemption calculations be 

based on the previous year’s promotion 

related expenses so that a producer is 

not required to pay for such activities. 

All marketing orders require 

assessments to be computed at the 

beginning of the assessment period, but 

the assessments may be modified as 

necessary during the applicable 

assessment period. Assessments are 

paid by handlers. 

Commenters, including those that 

submitted the form letter, stated that 

USDA seems to be implying that 100 

percent organic producers are not 

exempt from promotion expenses until 

they are ‘‘approved.’’ They contend that 

approval processes beyond those of the 

OFPA and the NOP are not necessary. 

Under marketing orders, handlers pay 

assessments, and committees and 

boards administer the assessment 

provisions with USDA oversight. It is 

the responsibility of the committees and 

boards to assure that all persons who 

handle or market the regulated 

commodities pay assessments to cover 

program expenses. Therefore, 

committees and boards must approve 

any exemptions for the payment of 

assessments under the marketing order 

programs, and approval procedures 

must be implemented. In turn, persons 

meeting the exemption criteria will be 

granted assessment exemptions. 

According to the commenters, the 

application process duplicates the 

paperwork certified organic producers 

and handlers submit to their accredited 

certification agency to demonstrate that 

certified organic products maintain their 

organic integrity. They contend that it 

would be simpler to have the handler 

operating under the NOP require 

documentation of organic certification 

from the producer and verify that the 

commodity was organic. They further 

contend that the standard audit 

processes for the payment of 

assessments could be applied to 

determine that the handler properly 

assessed or exempted producers. 

The certificate from a USDAaccredited certifying agent under the 

OFPA and the NOP indicates whether a 

farm or operation is certified for organic 

production. However, the application 

submitted by handlers requests 

additional information necessary for 

committees or boards to determine 

whether a handler qualifies for an 

exemption. The information requested 

Federal Register / Vol. 70, No. 10 / Friday, January 14, 2005 / Rules and Regulations 2767

is discussed in the Paperwork 

Reduction Act section of this final rule. 

This information is necessary to 

provide information to committees or 

boards to determine an applicant’s 

eligibility and to verify compliance. 

Inclusion of this information on the 

form will assist the applicants in 

making their certifications and the 

committees or boards in properly 

administering the assessment exemption 

under the various marketing order 

programs. 

The role of the committees and boards 

has been clarified in this rule to specify 

that they will approve the applications 

of persons who meet the specified 

criteria. With USDA oversight, 

committees and boards will administer 

the exemption as they do all other 

aspects of their programs. Information 

confirming that an applicant is 100 

percent organic for all commodities will 

be provided to the committees and 

boards by applicants and will be 

verified through routine compliance 

efforts. As discussed previously, to be 

‘‘100 percent organic’’, a handler must 

operate under an NOP-approved organic 

process system plan and handle or 

market only products that can be 

labeled as 100 percent organic under the 

NOP. 

Commenters said that an appeals 

process should be fully described in the 

final rule to help the committees or 

boards and applicants better operate 

under the exemption program. 

A few marketing orders specify 

provisions allowing handlers to appeal 

committee or board decisions before 

seeking review by USDA, but such 

provisions are not necessary for 

interested persons to appeal any 

committee or board decision. Safeguards 

and avenues for appeal exist and 

operate without specified orderprovided appeal processes. Handlers 

may request committees or boards to 

review the decisions with which the 

handlers question. Further, if the 

handlers still are not satisfied, they may 

ask USDA to conduct a final review of 

the matter. Accordingly, no change to 

the regulatory text is necessary. 

Also, in the proposed rule, provisions 

were included in § 900.700(c) specifying 

that USDA may review any decisions 

made by the committees or boards at its 

discretion. Because USDA routinely 

oversees committee or board actions 

under these programs, these provisions 

are not necessary in the regulatory text 

and have been removed.

A commenter requested that a 

producer who does not agree that the 

assessment rate is fair, based on the 

calculation of promotion expenses, be 

accorded the right of due process, to be 

exercised through appeal to the National 

Appeals Division (NAD). The NAD is 

responsible for all administrative 

appeals arising from program activities 

of USDA’s Farm Service Agency, Risk 

Management Agency, Natural Resources 

Conservation Service, Rural BusinessCooperative Development Service, Rural 

Housing Service, and the Rural Utilities 

Service. However, the NAD has no 

jurisdiction over the programs of AMS, 

including the administration of the 

assessment exemption process. 

Another commenter said the proposal 

implements an exemption from 

assessment and must not require a 

producer payment followed by a refund. 

Further, the commenter stated that if the 

operator provides an affidavit from a 

USDA-accredited certifying agent that 

shows the operation has been 100 

percent organic during the course of the 

assessment period, the committee or 

board must not assess the producer. The 

commenter also stated that if a producer 

provides an affidavit demonstrating that 

the commodity has been 100 percent 

organically-produced during the 

assessment period, for which the 

producer has already paid in full, not 

having an affidavit at the time of 

payment, the committee or board must 

grant a refund of any promotion 

assessment money paid by the operator 

during the assessment period. Producers 

are not assessed under the 28 specified 

marketing orders. Handlers of the 

commodities are assessed. The 

committees and boards have procedures 

in place to make pro rata adjustments in 

assessment overpayments when 

necessary consistent with marketing 

order procedures. 

One commenter stated that the words 

‘‘application’’ and ‘‘certification’’ used 

in the proposed rule should be changed 

to ‘‘affidavit’’ to avoid confusion with 

the term ‘‘certification’’ as used in the 

NOP. USDA believes that the language 

in § 900.700(c) is clear in the context 

used and that no change is needed. In 

fact, it is customary under marketing 

order programs for handlers to certify 

that the information they provide to the 

committees and boards is factually 

correct. 

A few commenters also contended 

that the proposed rule unnecessarily 

requires an exempt person to reapply to 

the committee or board each assessment 

period. All marketing order programs 

operate on an annual assessment period 

basis and annual applications are 

necessary for the committees and boards 

to maintain compliance and to ensure 

that the exemption program is 

implemented equitably among the 

eligible persons. 

A commenter contends that it is up to 

USDA not to assess 100 percent organic 

producers; if USDA questions 

someone’s status, it is up to USDA to 

prove otherwise. Committee and Board 

application and review systems are 

intended to assure that assessment 

exemptions are properly applied. 

Moreover, under the various marketing 

order programs, the payment of 

assessments is one of a number of 

requirements applied to handlers, not to 

producers, and a detailed application 

process is necessary to oversee handler 

compliance with these requirements. 

Section 900.700(f) of the proposed 

rule requires a handler to immediately 

notify the committee or board when the 

handler is no longer eligible for an 

exemption. A commenter recommended 

that the word ‘‘immediately’’ be 

changed to ‘‘within 30 days’’ to lessen 

the burden on industry participants. 

This change has been made and 

paragraph (f) has been redesignated as 

paragraph (e). 

A commenter requested USDA to 

clarify that the organic assessment 

exemption did not apply to State 

marketing orders. The exemption only 

applies to the 28 specified Federal 

marketing orders under the AMAA. The 

exemption does not apply to 

assessments under any State marketing 

order or similar program. 

The same commenter requested 

USDA to specify, in the Small Business 

Guide for Complying with Marketing 

Agreements and Orders for Fruits, 

Vegetables, and Specialty Crops, the 

activities to which the exemption 

applies and does not apply. We have 

provided previously in this document 

examples of such activities and will do 

so in the Small Business Guide. 

Some commenters said that the 

effective date and initial coverage (e.g., 

which assessment period) for the 

exemption should be clarified, because 

an initial exemption period was not 

specified in the proposed rule. Under 

the proposal, a person can apply for an 

exemption at any time initially and 

must reapply every year after that on a 

specific date. 

There is a wide variation among 

programs in the collection of 

assessments. For example, in some 

programs, assessments are collected 

every month. In others, assessments are 

collected at the end of the assessable 

period; i.e., fiscal period, marketing 

year, crop year, etc. Accordingly, to treat 

the various marketing order programs 

uniformly, the exemption should be 

made effective at the beginning of the 

next assessable period for each 

marketing order program following the 

effective date of this final rule. This 

2768 Federal Register / Vol. 70, No. 10 / Friday, January 14, 2005 / Rules and Regulations 

means that organic assessment 

exemptions for some applicants will 

become effective sooner for some 

marketing orders than others, depending 

on the beginning of the respective 

assessable periods.

In the proposed rule, the term 

‘‘marketing promotion expenditures’’

was defined in § 900.700(a). This term is 

not needed because it is not used in 

§ 900.700. The term ‘‘marketing 

promotion’’ is used and is defined to 

mean marketing research and 

development projects, and marketing 

promotion, including paid advertising, 

designed to assist, improve, or promote 

the marketing, distribution, and 

consumption of the applicable 

commodity. 

Final Regulatory Flexibility Analysis 

Pursuant to requirements set forth in 

the Regulatory Flexibility Act (5 U.S.C. 

601 et seq.) (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. 

As previously mentioned, 

assessments under the 28 marketing 

order programs are paid by handlers 

regulated under the various marketing 

orders. There are approximately 850 

handlers regulated under the 28 

marketing orders. USDA does not have 

precise numbers, but believes there may 

be approximately 84 persons who 

handle or market solely 100 percent 

organic products that might be exempt 

from paying assessments for market 

promotion, including paid advertising, 

under the 28 marketing order programs 

administered by AMS. Thus, the 

estimated number of prospective 

applicants eligible for the assessment 

exemption may represent approximately 

10 percent of the total handler 

population. 

Small agricultural service firms are 

defined by the Small Business 

Administration (13 CFR 121.201) as 

those whose annual receipts are less 

than $5,000,000. Although the exact size 

of the potential applicants is not known, 

USDA believes that the majority of 

persons who might qualify for an 

exemption may be classified as small 

entities. 

Section 501 of the Federal Agriculture 

Improvement and Reform Act of 1996 

(FAIR Act) was amended on May 13, 

2002 (7 U.S.C 7401). The amendment 

provides that, notwithstanding any 

provision of a commodity promotion 

law, a person that produces and markets 

solely 100 percent organic products, and 

that does not produce any conventional 

or non-organic products, shall be 

exempt from paying assessments under 

a commodity promotion law with 

respect to any agricultural commodity 

that is produced on a certified organic 

farm, as defined in section 2103 of the 

Organic Foods Production Act of 1990 

(7 U.S.C. 6502). The amendment further 

requires USDA to amend any research 

and promotion regulations to reflect this 

exemption. 

USDA is issuing amendments to the 

general regulations (7 CFR part 900) 

affecting 28 of the 34 active marketing 

order programs established under the 

Act for which it has oversight. As 

defined in this final rule, these 

amendments will establish provisions to 

exempt any person subject to marketing 

order requirements who handles and 

markets solely 100 percent organic 

products from paying assessments for 

market promotion activities, including 

paid advertising.

The 28 marketing order programs 

allow for promotion activities that are 

designed to assist, improve, or promote 

the marketing, distribution, or 

consumption of the commodity covered 

under the marketing order. Some of the 

marketing orders also include authority 

for paid advertising activities. Market 

promotion, including paid advertising, 

activities are paid for by assessments 

levied on handlers regulated under the 

various marketing orders. 

Under this rule, a new subpart is 

added in 7 CFR part 900 General 

Regulations to identify persons eligible 

to obtain an assessment exemption for 

marketing promotion, including paid 

advertising; procedures for applying for 

an exemption; procedures for 

calculating the assessment exemption; 

and other procedural details for the 

applicable marketing orders. The rule 

imposes certain reporting and 

recordkeeping requirements on persons 

that handle or market solely 100 percent 

organic products. This form requires the 

minimum information necessary to 

effectively administer the exemption 

from assessment provisions and for 

compliance purposes. 

Regarding the impact of this final rule 

on affected entities, this rule imposes 

minimal additional costs incurred in 

filing the exemption application and in 

maintaining records for two years 

needed to verify the applicant’s 

exemption status during the applicable 

assessment period. Such applicants will 

be required to submit an application 

and receive approval from the 

applicable committee or board to obtain 

the assessment exemption. USDA 

estimates that each applicant will 

submit one application annually. The 

annual burden for all of the marketing 

order industries is estimated to total 

about 42 hours. 

The cost burden associated with the 

information collection is $420 for all 

applicants, or $5.00 per applicant. The 

total cost has been estimated by 

multiplying the burden hours associated 

with the exemption application by 

$10.00 per hour, a sum deemed 

reasonable should the applicants be 

compensated for their time. 

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. In addition, USDA has 

not identified any relevant Federal rules 

that duplicate, overlap, or conflict with 

this rule. 

Since this action potentially exempts 

from assessments handlers who handle 

or market solely 100 percent organic 

products, AMS believes that this rule 

will have a beneficial economic effect 

on exempted entities by reducing their 

assessment payments. During the 2001–

2002 marketing season, assessments for 

the 28 marketing orders totaled 

$44,400,000. Of that amount, about 

$29,900,000 (or 67 percent) was made 

available for marketing promotion, 

including paid advertising, activities. 

USDA does not have precise 

information, but believes that about 1 

percent on average of the total 

assessments are for certified organic 

commodities. Thus, assessments on 

organic commodities could total about 

$444,000, and about $300,000 for 

marketing promotion, including paid 

advertising, might be exempt under this 

final rule if all of the approximately 84 

handlers of the regulated commodities 

were eligible for the assessment 

exemption. 

Based on our estimate that there 

might be a total of 84 handlers exempt 

from assessments for marketing 

promotion activities conducted under 

the various marketing orders, the 

assessments for each eligible person 

could be reduced by an average of 

almost $3,600 ($300,000 divided by 84) 

on an annual basis. 

There is some variation among the 28 

marketing orders on the percentage of 

assessments used for marketing 

Federal Register / Vol. 70, No. 10 / Friday, January 14, 2005 / Rules and Regulations 2769

promotion, including paid advertising, 

as well as the number of handlers 

handling or marketing solely 100 

percent organic commodities. Thus, the 

actual reduction in assessments will 

vary among the various orders. In fact, 

the amounts allocated for marketing 

promotion, as a percentage of the total 

marketing order budgets, range from less 

than 5 percent to over 75 percent. 

With regard to alternatives, the FAIR 

Act requires USDA to take this action, 

which will lessen the assessment costs 

for persons who handle and market 

solely 100 percent organic products. In 

drafting the exemption procedures, 

every effort has been made to minimize 

the burden on the persons impacted, 

and to simplify the process. The 

anticipated assessment reductions for 

eligible persons are expected to greatly 

outweigh the additional costs related to 

the reporting required. 

Paperwork Reduction Act 

In accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35), the reporting and 

recordkeeping provisions generated by 

this rule have been approved by the 

Office of Management and Budget 

(OMB) as a reinstatement, with change, 

of previously-approved OMB No. 0581–

0216, which has expired. This action is 

intended to provide relief to handlers of 

solely 100 percent organic products. 

This action will enable handlers that 

operate under an NOP-approved organic 

process system plan, and handle or 

market only organic product that can be 

labeled ‘‘100 percent organic’’ to apply 

for exemptions from paying market 

promotion assessments under the 

following 28 Federal marketing orders: 

7 CFR parts 906, 915, 916, 917, 922, 923, 

924, 925, 927, 929, 930, 931, 932, 947, 

948, 955, 956, 958, 959, 966, 979, 981, 

982, 984, 985, 987, 989, and 993, and 

such other marketing orders for fruits, 

vegetables, and specialty crops as may 

be established or amended to include 

market promotion. 

Title: Organic Handler Market 

Promotion Assessment Exemption 

under 28 Federal Marketing Orders 

OMB Number: 0581–0216. 

Type of Request: Approval of 

reinstatement, with change, of a 

previously-approved collection for 

which approval has expired. 

Abstract: Marketing order programs 

provide an opportunity for producers of 

fresh fruits, vegetables and specialty 

crops to solve marketing problems that 

cannot be solved individually. 

Marketing order regulations help ensure 

adequate supplies of high quality 

products for consumers and adequate 

returns to producers. Under the Act, 

orders may authorize marketing 

research and development, including 

paid advertising, activities. Such 

activities to promote the various 

commodities are paid for with 

assessments levied on handlers 

regulated under the 28 Federal 

marketing orders.

On May 13, 2002, section 501 of the 

FAIR Act was amended (7 U.S.C. 7401) 

to exempt any person that handles or 

markets solely 100 percent organic 

products, and that does not produce any 

conventional or non-organic products, 

from paying assessments under a 

commodity promotion law, with respect 

to any agricultural commodity that is 

produced on a certified organic farm as 

defined in section 2103 of the Organic 

Foods Production Act of 1990 (7 U.S.C. 

6502). 

To be exempt from paying 

assessments for marketing promotion, 

including paid advertising expenses, 

under the specified marketing orders, 

the handler who operates under an 

NOP-approved organic process system 

plan should submit an application, FV–

649, ‘‘Certified Organic Handler 

Application for Exemption from Market 

Promotion Assessments Paid under 

Federal Marketing Orders’’ to the 

applicable marketing order committee 

or board. The application needs to be 

submitted to the committee or board 

prior to or during the applicable 

assessment period, and annually 

thereafter, as long as the applicant 

continues to be eligible for the 

exemption. 

This application has been changed 

slightly from the previously approved 

form to reflect differences in the 

provisions between the proposed and 

final rules. The information requested 

includes (changes from the proposed 

application are noted): Introductory text 

explaining who may request an organic 

assessment exemption, the purpose of 

the form, and where the application 

should be submitted has been added; 

the applicable Marketing Committee/

Board and Federal marketing order 

number has been added; the date; 

handler’s name (applicant); telephone 

and fax numbers, an optional e-mail 

address has been added; name and 

address of the company; certification 

that the applicant operates under an 

approved organic process system plan 

authorized by the National Organic 

Program (NOP) and handles or markets 

products that are eligible to be labeled 

as 100 percent organic, that the 

applicant is not a split operation as 

defined by the Organic Foods 

Production Act of 1990 (OFPA) and the 

NOP, and that the applicant is subject 

to assessments under the Federal 

marketing order program for which this 

exemption is requested. 

A table has been added for the 

applicant to list all commodities 

handled or marketed and to indicate 

whether each commodity handled or 

marketed is eligible to be labeled as 100 

percent organic. As revised, the 

application requires the applicant to list 

the number of producers for whom the 

applicant handles or markets products. 

The applicant also is required to attach 

a copy of their organic handling 

operation certificate provided by a 

USDA-accredited certifying agent under 

the OFPA and the NOP, and a copy of 

the applicant’s NOP producer 

certificate, if applicable. An NOP 

certificate for each producer for whom 

the applicant handles or markets also 

must be attached. 

The form continues to include 

language for the applicant to certify that 

their firm meets the requirements and is 

eligible for an organic assessment 

exemption under the applicable Federal 

marketing order. Language has been 

added cautioning applicants that any 

false statement or misrepresentation 

may result in a fine of not more than 

$10,000, or imprisonment for not more 

than five years, or both (18 U.S.C. 1001). 

Lastly, the form continues to include a 

section for the committee or board to fill 

out, indicating whether the application 

has been approved or disapproved. If 

disapproved, the reason(s) for denial 

must be listed. 

When the requirements for exemption 

no longer apply to a handler, the 

handler shall inform the committee or 

board within 30 days and pay the full 

assessment on all remaining assessable 

product for all committee or board 

assessments from the date the handler 

no longer is eligible to the end of the 

assessment period. The notification by 

the handler can be made in any manner 

the handler desires (telephone, fax, email, etc.). 

This information is necessary to help 

the committees or boards to determine 

an applicant’s eligibility and to verify 

compliance. Inclusion of this 

information on the form will assist the 

applicants in making their certifications 

and the committees or boards in 

properly administering the assessment 

exemption. The burdens associated with 

obtaining the certifications under the 

Organic Foods Production Act of 1990 

have already been approved by OMB 

under OMB Control No. 0581–0191. 

In the proposed rule, AMS estimated 

that this application would take 30 

minutes to complete. With the 

application modifications, the estimated 

average per response time will remain at 

2770 Federal Register / Vol. 70, No. 10 / Friday, January 14, 2005 / Rules and Regulations 

30 minutes, resulting in no change to 

the total burden hours. 

If the applicant complies with these 

requirements and is eligible for a market 

promotion assessment exemption, the 

committee or board will approve the 

exemption and notify the applicant, in 

writing, within 30 days of receiving the 

applicant’s application, by filling out 

the bottom portion of the application. If 

the application is disapproved, the 

committee or board will notify the 

applicant, in writing, of the denial and 

the reason(s) for denial. 

The respective marketing orders (e.g., 

7 CFR 932.61 and 7 CFR 981.70) also 

provide that handlers maintain, and 

make available, all records necessary to 

demonstrate compliance with order 

requirements for two years. The burdens 

on handlers for such recordkeeping 

requirements are included in the 

information collection requests 

previously-approved by OMB for the 

respective marketing orders under the 

following OMB Control Numbers: OMB 

No. 0581–0178 for Marketing Order Nos. 

947, 948, 955, 956, 958, 959, 966, 979, 

981, 982, 984, 987, 989, and 993; OMB 

No. 0581–0189 for Marketing Order Nos. 

906, 915, 916, 917, 922, 923, 924, 925, 

927, 929, 930, and 931; OMB No. 0581–

0142 for Marketing Order No. 932; and 

OMB No. 0581–0065 for Marketing 

Order No. 985. 

The information collection will be 

used only by authorized representatives 

of USDA, including AMS, Fruit and 

Vegetable Programs’ regional and 

headquarters staff, and authorized 

Committee and Board employees. 

Authorized Committee and Board 

employees will be the primary users of 

the information, and AMS will be the 

secondary user.

The request for OMB approval of the 

reinstatement, with change, of OMB No. 

0581–0216 under the 28 Federal 

marketing orders is as follows: 

Form FV–649, Certified Organic Handler 

Application for Exemption From 

Marketing Promotion Assessments Paid 

Under Federal Marketing Orders 

Estimate of Burden: Public reporting 

burden for this collection of information 

is estimated to average 30 minutes per 

response. 

Respondents: Eligible Certified 

Organic Handlers. 

Estimated Number of Respondents:

84. 

Estimated Number of Responses per 

Respondent: 1 

Estimated Total Annual Burden on 

Respondents: 42 hours. 

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. As previously discussed, 

AMS intends to revise the guide to list 

examples of the activities to which the 

exemption applies and does not apply. 

Any questions about the compliance 

guide should be sent to Jay Guerber at 

the previously mentioned address in the 

FOR OTHER INFORMATION CONTACT

section. 

After consideration of all relevant 

material presented, including the 

information submitted by the 

commenters and other information, it is 

hereby found that this rule, as 

hereinafter set forth, tends to effectuate 

declared policy of the AMAA and 2002 

Farm Bill.

List of Subjects in 7 CFR Part 900 

Administrative practices and 

procedures, Freedom of information, 

Marketing agreements, Reporting and 

recordkeeping requirements.

■ For the reasons set forth in the 

preamble, 7 CFR part 900 is amended to 

read as follows:

PART 900—GENERAL REGULATIONS

■ 1. The authority citation for part 900 is 

revised to read as follows:

Authority: 7 U.S.C. 601–674 and 7 U.S.C. 

7401.

■ 2. In part 900, a new subpart heading 

‘‘Assessment Exemptions’’ is added after 

§ 900.601, and a new § 900.700 is added 

to read as follows:

Subpart—Assessment of Exemptions

§ 900.700 Exemption from assessments. 

(a) This section specifies criteria for 

identifying persons eligible to obtain an 

assessment exemption for marketing 

promotion, and procedures for applying 

for an exemption under 7 CFR parts 906, 

915, 916, 917, 922, 923, 924, 925, 927, 

929, 930, 931, 932, 947, 948, 955, 956, 

958, 959, 966, 979, 981, 982, 984, 985, 

987, 989, 993, and such other parts 

(included in 7 CFR parts 905 through 

998) covering marketing orders for 

fruits, vegetables, and specialty crops as 

may be established or amended to 

include market promotion. For the 

purposes of this section, the term 

‘‘assessment period’’ means fiscal 

period, fiscal year, crop year, or 

marketing year as defined under these 

parts; the term ‘‘marketing promotion’’

means marketing research and 

development projects, and marketing 

promotion, including paid advertising, 

designed to assist, improve, or promote 

the marketing, distribution, and 

consumption of the applicable 

commodity. 

(b) Any handler who operates under 

an approved National Organic Program 

(7 CFR part 205)(NOP) process system 

plan, only handles or markets organic 

products that are eligible to be labeled 

100 percent organic under the NOP, and 

are produced on a certified organic farm 

as defined in § 2103 of the Organic 

Foods Production Act of 1990 (7 U.S.C. 

6502) and the NOP regulations issued 

under that Act, is not a split operation, 

and is subject to assessments under a 

part or parts specified in paragraph (a) 

of this section, shall be exempt from the 

portion of the assessment applicable to 

marketing promotion, including paid 

advertising. Any handler so exempted 

shall be obligated to pay the portion of 

the assessment for other authorized 

activities under such part or parts.

(c) To be exempt from paying 

assessments for these purposes under a 

part or parts, the handler shall submit 

an application to the committee or 

board established under the applicable 

part or parts prior to or during the 

assessment period. This application, 

FV–649, ‘‘Certified Organic Handler 

Application for Exemption from Market 

Promotion Assessments Paid Under 

Federal Marketing Orders,’’ shall 

include: The applicable committee or 

board and Federal marketing order 

number; the date; handler’s name; 

company name and address; telephone 

and fax numbers; an optional e-mail 

address; certification that the applicant 

is not a split operation, as defined by 

the Organic Foods Production Act of 

1990 (OFPA) (7 U.S.C. 6502) and the 

NOP; certification that the applicant 

only handles and markets organic 

products eligible to be labeled 100 

percent organic under the NOP, and that 

the applicant is subject to assessments 

under the Federal marketing order 

program for which the exemption is 

requested. The applicant shall list all 

commodities handled or marketed. The 

applicant shall list the number of 

producers for whom they handle or 

market. The applicant shall attach a 

copy of their organic handler operation 

certificate and all applicable producer 

certificates provided by a USDAaccredited certifying agent under the 

OFPA and the NOP. The applicant shall 

certify that the handler meets all of the 

applicable requirements for an 

assessment exemption as provided in 

this section. The handler shall file the 

application with the committee or 

board, prior to or during the applicable 

assessment period, and annually 

thereafter, as long as the handler 

continues to be eligible for the 

exemption. If the person complies with 

the requirements of this section and is 

Federal Register / Vol. 70, No. 10 / Friday, January 14, 2005 / Rules and Regulations 2771

eligible for an assessment exemption, 

the committee or board will approve the 

exemption and notify the applicant, in 

writing, within the applicable timeframe 

as follows: For exemption requests 

received on or before August 15, 2005, 

the committee or board will have 60 

days to approve the exemption request; 

after August 15, 2005, the committee or 

board will have 30 days to approve the 

exemption request. If the application is 

disapproved, the committee or board 

will notify the applicant, in writing, of 

the reason(s) for disapproval within the 

same timeframes. 

(d) The applicable assessment rate for 

any handler approved for an exemption 

shall be computed by dividing the 

committee’s or board’s estimated nonmarketing promotion expenditures by 

the committee’s or board’s estimated 

total expenditures approved by the 

Secretary and applying that percentage 

to the assessment rate applicable to all 

persons for the assessment period. The 

committee’s or board’s estimated nonmarketing promotion expenditures shall 

exclude the direct costs of marketing 

promotion and the portion of 

committee’s or board’s administrative 

and overhead costs (e.g., salaries, 

supplies, printing, equipment, rent, 

contractual expenses, and other 

applicable costs) to support and 

administer the marketing promotion 

activities. If a committee or board does 

not plan to conduct any market 

promotion activities in a fiscal year, the 

committee or board may submit a 

certification to that effect to the 

Secretary, and as long as no assessments 

for such fiscal year are used for 

marketing promotion projects, or the 

administration of projects funded by a 

previous fiscal period’s assessments, the 

committee or board may assess all 

handlers, regardless of their organic 

status, the full assessment rate 

applicable to the assessment period. For 

each assessment period, the Secretary 

shall review the portion of the 

assessment rate applicable to marketing 

promotion for persons eligible for an 

exemption and, if appropriate, approve 

the assessment rate. 

(e) When the requirements of this 

section for exemption no longer apply to 

a handler, the handler shall inform the 

committee or board within 30 days and 

pay the full assessment on all remaining 

assessable product for all committee or 

board assessments from the date the 

handler no longer is eligible to the end 

of the assessment period. 

(f) Within 30 days following the 

applicable assessment period, the 

committee or board shall re-compute the 

applicable assessment rate for handlers 

exempt under this section based on the 

actual expenditures incurred during the 

applicable assessment period. The 

Secretary shall review, and if 

appropriate, approve any change in the 

portion of the assessment rate for market 

promotion applicable to exempt 

handlers, and authorize adjustments for 

any overpayments. 

(g) The exemption will apply at the 

beginning of the next assessable period 

following notification of approval of the 

assessment exemption, in writing, by 

the committee or board.

Dated: January 5, 2005. 

Kenneth C. Clayton, 

Associate Administrator, Agricultural 

Marketing Service.

[FR Doc. 05–572 Filed 1–13–05; 8:45 am] 

BILLING CODE 3410–02–P