Federal Register, Volume 78 Issue 181 (Wednesday, September 18, 2013)

[Federal Register Volume 78, Number 181 (Wednesday, September 18, 2013)]
[Rules and Regulations]
[Pages 57227-57250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-22616]

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Rules and Regulations
Federal Register
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Federal Register / Vol. 78, No. 181 / Wednesday, September 18, 2013 /
Rules and Regulations

[[Page 57227]]

DEPARTMENT OF AGRICULTURE

Animal and Plant Health Inspection Service

9 CFR Parts 1 and 2

[Docket No. APHIS-2011-0003]
RIN 0579-AD57

Animal Welfare; Retail Pet Stores and Licensing Exemptions

AGENCY: Animal and Plant Health Inspection Service, USDA.

ACTION: Final rule.

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SUMMARY: We are revising the definition of retail pet store and related
regulations in order to ensure that the definition of retail pet store
in the regulations is consistent with the Animal Welfare Act (AWA),
thereby bringing more pet animals sold at retail under the protection
of the AWA. Specifically, we are narrowing the definition of retail pet
store to mean a place of business or residence at which the seller,
buyer, and the animal available for sale are physically present so that
every buyer may personally observe the animal prior to purchasing and/
or taking custody of that animal after purchase, and where only certain
animals are sold or offered for sale, at retail, for use as pets.
Retail pet stores are not required to be licensed and inspected under
the AWA. In addition, we are removing the limitation on the source of
gross income from the licensing exemption in the regulations for any
person who does not sell or negotiate the sale of any wild or exotic
animal, dog, or cat and who derives no more than $500 gross income from
the sale of the animals other than wild or exotic animals, dogs, or
cats during any calendar year. We are also increasing from three to
four the number of breeding female dogs, cats, and/or small exotic or
wild mammals that a person may maintain on his or her premises and be
exempt from the licensing and inspection requirements if he or she
sells only the offspring of those animals born and raised on his or her
premises, for pets or exhibition. This exemption applies regardless of
whether those animals are sold at retail or wholesale. These actions
are necessary so that all animals sold at retail for use as pets are
monitored for their health and humane treatment.

DATES: Effective Date: November 18, 2013.

FOR FURTHER INFORMATION CONTACT: Dr. Gerald Rushin, Veterinary Medical
Officer, Animal Care, APHIS, 4700 River Road Unit 84, Riverdale, MD
20737-1236; (301) 851-3751.

SUPPLEMENTARY INFORMATION:

I. Purpose of the Regulatory Action

Need for the Regulatory Action

The Animal Welfare Act (AWA or the Act, 7 U.S.C. 2131 et seq.),
seeks to ensure the humane handling, care, treatment, and
transportation of certain animals that are sold at wholesale and retail
for use in research facilities, for exhibition purposes, or for use as
pets by means of Federal licensing and inspection. When Congress passed
the AWA in 1966, it specifically exempted retail pet stores from such
licensing and inspection. At that time, retailers of pets covered under
the exemption consisted mostly of traditional ``brick-and-mortar'' pet
stores, as well as small-scale breeders whose place of business was
typically their residence. Both types of retail outlets were exempted
by the AWA as ``retail pet stores'' because, despite the many
dissimilarities in how pet shops and small-scale residential breeders
conduct business, they share in common a business model in which buyers
visit their places of business and personally observe the animals
available for sale prior to purchasing and/or taking custody of them.
Enforcement of the Act has been delegated by the Secretary of
Agriculture to the Animal and Plant Health Inspection Service (APHIS)
of the United States Department of Agriculture (USDA). APHIS has issued
regulations pursuant to the Act; these regulations, which we refer to
below as the AWA regulations, are found in 9 CFR parts 1, 2, and 3.
Part 1 contains definitions for terms used in parts 2 and 3; part 2
provides administrative requirements and sets forth institutional
responsibilities for regulated parties; and part 3 contains
specifications for the humane handling, care, treatment, and
transportation of animals covered by the AWA.
Part 2 requires most dealers to be licensed by APHIS; classes of
individuals who are exempt from such licensing are listed in paragraph
(a)(3) of Sec. 2.1.
Since the AWA regulations were issued, most retailers of pet
animals have been exempt from licensing by virtue of our considering
them to be ``retail pet stores'' as defined in Sec. 1.1 of the AWA
regulations.
Because the previous definition of retail pet store in the AWA
regulations covered nearly all retail outlets, retailers selling
animals by any means, including sight unseen sales conducted over the
Internet or by mail, telephone, or any other method where customers do
not personally observe the animals available for sale prior to
purchasing and/or taking custody of them, were considered to be retail
pet stores and as such had been exempt from licensing and inspection
under Sec. 2.1(a)(3)(i) and Sec. 2.1(a)(3)(vii).\1\
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\1\ Both the retail pet store exemption in Sec. 2.1(a)(3)(i)
and the direct retail sales exemption in Sec. 2.1(a)(3)(vii) derive
their authority from the AWA exemption for retail pet stores. We
discuss this at greater length later in this document.
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With the growth of the Internet in the 1990s, technology brought
with it new and unforeseen opportunities to buy and sell pets. More
retailers began offering pets for sale sight unseen and to sell and
ship them nationwide. While pet animals were sometimes sold sight
unseen via telephone and mail order decades before passage of the AWA,
the Internet has made it possible for many more persons throughout the
United States to buy pets online from retailers without ever having to
be physically present at the seller's place of business or residence
and personally observe the animals offered for sale as the AWA
intended. With the dramatic rise in sight unseen sales have come
increasing complaints from the public about the lack of monitoring and
oversight of the health and humane treatment of those animals.
In order to ensure that the definition of retail pet store in the
AWA regulations is consistent with the AWA and that all animals sold at
retail for use

[[Page 57228]]

as pets are monitored for their health and humane treatment, we
published in the Federal Register (77 FR 28799-28805, Docket No. APHIS-
2011-0003), on May 16, 2012, a proposal \2\ to revise the definition of
retail pet store and related regulations to bring more pet animals sold
at retail under the protection of the AWA. This rule finalizes that
proposed rule while also making changes to its provisions based on the
comments we received (see the section below titled ``Summary of the
Major Provisions of the Regulatory Action'').
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\2\ To view the proposed rule, its supporting documents, and the
comments we received, go to http://www.regulations.gov/#!docketDetail;D=APHIS-2011-0003.
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Legal Authority for the Regulatory Action

Under the AWA, the Secretary of Agriculture is authorized to
promulgate standards and other requirements governing the humane
handling, care, treatment, and transportation of certain animals by
dealers, research facilities, exhibitors, operators of auction sales,
and carriers and intermediate handlers. As we mentioned previously in
this document, the Secretary has delegated responsibility for
administering the AWA to the Administrator of APHIS. Within APHIS, the
responsibility for administering the AWA has been delegated to the
Deputy Administrator for Animal Care.

II. Summary of the Major Provisions of the Regulatory Action

Key Changes to the Proposed Rule

Based on the comments we received and our own reevaluation of the
proposed rule, we are finalizing the proposed rule with the following
key changes to its provisions:
Revising our proposed definition of retail pet store so
that it means a place of business or residence (not necessarily that of
the seller's) at which the seller, buyer, and the animal available for
sale are physically present so that every buyer may personally observe
the animal available for sale prior to purchasing and/or taking custody
of that animal after purchase and where only certain animals are sold
or offered for sale, at retail, for use as pets.
Amending the exemption from licensing for persons
maintaining four or fewer breeding females in Sec. 2.1(a)(3)(iii) to
apply only to wholesalers (for whom the exemption was originally
intended).
Restoring and amending the exemption in Sec.
2.1(a)(3)(vii) so that any person including, but not limited to,
purebred dog or cat fanciers, who maintains a total of four or fewer
breeding female dogs, cats, and/or small exotic or wild mammals, and
who sells, at retail, only the offspring of these dogs, cats, and/or
small exotic or wild mammals, which were born and raised on his or her
premises, for pets or exhibition, and is not otherwise required to
obtain a license, is also considered a retail pet store for regulatory
purposes.
Explaining in detail the effects of the proposed
provisions on cat and rabbit breeders.

III. Costs and Benefits

The benefits of this rule justify its costs. More pet animals sold
at retail will be brought under the protection of the AWA and monitored
for their health and humane treatment. Improved animal welfare will
benefit buyers of pets and the general public in various ways.
Monitoring the health and humane treatment of pet animals should reduce
the number of pets receiving inadequate care and reduces the
possibility of sick or injured pet animals being purchased sight
unseen. When a buyer receives a sick or abused pet animal, sight
unseen, the responsibility for correcting inadequate care has been
effectively transferred from the seller to the buyer without the
buyer's knowledge or consent. If that buyer is unable or unwilling to
provide the pet animal with needed care, a shelter may become the
default caregiver for that animal. A reduction in the number of sick or
abused pet animals received by buyers may reduce the number of such
animals sent to shelters. Public shelters provide for the care of these
unwanted pet animals, usually at local taxpayer expense. Also, as noted
by several commenters, neglected or abused pet animals confiscated from
substandard breeding operations are often sent to shelters to provide
for their care. Newly regulated commercial breeders working to comply
with AWA regulations will increase the health and well-being of the pet
animals under their care.
In addition, when breeding operations for which regulatory
oversight is insufficient fail to adequately provide veterinary care
for their animals, the buyer may subsequently incur greater costs
associated with providing that care because needed care has been
delayed. The rule will benefit buyers of animals by providing
regulatory oversight to ensure that breeders provide necessary
veterinary care.
Animals can carry zoonotic diseases (diseases that can be
transmitted between, or are shared by animals and humans). The
possibility of an animal carrying a zoonotic disease is reduced with
adequate veterinary care, including vaccinations. To the extent that
improved oversight reduces the likelihood of pet-to-human transmission
of zoonotic diseases such as rabies, the public as a whole will benefit
from the rule. The rule will also address the competitive disadvantage
of retail breeders who incur certain costs by adhering to AWA standards
while retail breeders who do not operate their facilities according to
AWA standards may bear lower costs.
There is a great deal of uncertainty surrounding the number of
facilities that will be affected by this rule, as we acknowledged in
the proposed rule, and as evidenced in the public comments. There are
hundreds of distinct dog breeds, and correspondingly large numbers of
dog breeders in the United States. Breeders with an online presence are
those most likely to be selling the offspring sight unseen and thus are
more likely to be affected by this rule. We estimate that there could
be between 8,400 and 15,000 such breeders in the United States. This
estimate is based on the assumption that for every five breeders
identified by APHIS in online breeder registries there is one other
breeder that has not been identified who also uses remote marketing
methods.
However, this rule will only affect those dog breeders who sell
dogs as pets, not for hunting, security, breeding, or other purposes;
who maintain more than four breeding females on their property; and
whose buyers are not all physically present to observe the animals
prior to purchase and/or to take custody of that animal after purchase.
When these conditions are taken into account, we estimate that there
are between 2,600 and 4,640 dog breeders that may be affected by this
rule.
The rule will also affect cat breeders who maintain more than four
breeding females at their facilities and sell the offspring as pets,
sight unseen. Fewer than 2 percent of cats in the United States are
purebred and raised by breeders. We estimate that about 325 cat
breeders may be affected by this rule.
The rule will also affect rabbit breeders who sell the offspring as
pets, sight unseen, which is not a common practice because rabbits are
usually sold face-to-face at auctions, exhibits, and fairs where buyers
are physically present. We estimate that no more than 75 rabbitries may
be affected by this rule.
Newly regulated breeders will be subject to licensing, animal
identification and recordkeeping requirements. In addition, affected
entities will be subject to standards for

[[Page 57229]]

facilities and operations, animal health and husbandry, and
transportation. One set of costs attributable to the rule will be
incurred annually by all newly regulated entities, such as licensing
fees. Other costs will depend on the manner and extent to which
entities are not complying with the basic standards of the AWA. Some of
these costs will be one-time costs in the first year, such as providing
adequate shelter; others will recur yearly, such as providing adequate
veterinary care.
The cost of a license for breeders is based on 50 percent of gross
sales during the preceding business year. As an example, if 50 percent
of gross sales are more than $500 but not more than $2,000, the annual
cost of a license is $70. Identification tags for dogs and cats cost
from $1.12 to $2.50 each. Other animals such as rabbits can be
identified by a label attached to the primary enclosure containing a
description of the animals in the enclosure. We estimate that the
average licensed breeder requires about 10 hours annually to comply
with the licensing paperwork and recordkeeping requirements. All newly
licensed breeders will incur these costs. We estimate these costs would
be between about $284 and $550 for a typical dog breeder. Costs at the
3,000 to 5,000 newly licensed dog, cat, and rabbit breeders for animal
licensing, animal identification and recordkeeping could range between
$853,000 and $2.8 million annually.
The newly regulated breeders will also need to meet regulatory
standards concerning facilities and operations, animal health and
husbandry, and transportation. However, as acknowledged by a wide
spectrum of commenters on the proposed rule, most breeders maintain
their facilities well above the minimum standards of the AWA.
Therefore, the vast majority of newly regulated breeders will only need
to incur licensing, animal identification, and recordkeeping costs and
not need to make structural and/or operational changes in order to
comply with the standards. Neither the number of entities that will
need to make changes nor the extent of those changes is known.
Therefore, the overall cost of structural and operational changes that
will be incurred due to this rule is also unknown. However, we can
estimate the general magnitude of these costs by assuming the newly
regulated entities exhibit patterns of noncompliance similar to those
of currently regulated wholesale breeders. We agree with many comments
we received that most breeders that may be affected by this rule are
already substantially in compliance.
Based on our experience regulating wholesale breeders, the most
common areas of regulatory noncompliance at prelicensing and compliance
inspections are veterinary care, facility maintenance and construction,
shelter construction, primary enclosure minimum space requirements, and
cleaning and sanitation. We apply percentages of noncompliance for
these areas, multiplied by likely unit costs or cost ranges, to the
estimated number of affected breeders described above to arrive at a
total cost range for the rule. We estimate that costs for coming into
compliance for currently noncompliant breeders could range from $2.9
million to $12.1 million in the first year, when both one-time
structural changes will occur and annual operational changes will
start.
The rule will also affect some currently licensed wholesale
breeders. Expanding the licensing exemption from three or fewer
breeding females to four or fewer breeding females could reduce the
number of these licensees. We expect that the number of current
licensees that will fall below the exemption threshold following the
implementation of this rule will be very small.
The majority of businesses affected are likely to be small
entities. As explained, this wide range in total cost is mainly derived
from the uncertainty surrounding the total number of breeders that will
need to become licensed as a result of this rule and the number that
will then need to make structural or operational changes. It derives to
a lesser degree from the ranges in costs that are assumed will be
incurred by the newly licensed facilities to remedy instances of
noncompliance.

IV. Discussion of Comments

We solicited comments on the proposed rule for 60 days ending July
16, 2012. On July 16, 2012, we published in the Federal Register (77 FR
41716, Docket No. APHIS-2011-0003) a document \3\ announcing a 30-day
extension of the comment period to give the public more time to submit
comments. We also announced in that document the availability of a
factsheet \4\ regarding the provisions of the proposed rule.
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\3\ To view this document, go to http://www.regulations.gov/#!documentDetail;D=APHIS-2011-0003-8841.
\4\ To view the factsheet, go to http://www.aphis.usda.gov/publications/animal_welfare/2012/retail_pets_faq.pdf.
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We received 75,584 individual comments, 134,420 signed form
letters, and 213,000 signatures on petitions submitted by organizations
supporting or opposing the proposed rule. The comments were from animal
welfare organizations, kennel clubs, breed registries, organizations
representing owners and trainers of working dogs, not-for-profit animal
rescue and sheltering organizations, animal transporters, purebred dog
and cat fanciers, residential breeders of dogs, cats, rabbits, rats,
and other animals, USDA-licensed breeders, pet and pet supply stores,
pet owners, farmers, veterinarians and veterinary organizations, horse
and livestock owners and producers, raptor propagators, State
governments, elected officials, including U.S. Senators and
Representatives, and members of the public. The issues raised by the
commenters are discussed below by topic. We address the issues in the
order that they pertain to the regulatory text of the proposed rule,
then address comments pertaining to oversight and enforcement,
constitutionality and legality, and other topics.

Dealer Definition

We proposed to amend the definition of dealer in Sec. 1.1 of the
AWA regulations to mean: ``Any person who, in commerce, for
compensation or profit, delivers for transportation, or transports,
except as a carrier, buys, sells, or negotiates the purchase or sale
of: Any dog or other animal whether alive or dead (including unborn
animals, organs, limbs, blood, serum, or other parts) for research,
teaching, testing, experimentation, exhibition, or for use as a pet, or
any dog at the wholesale level for hunting, security, or breeding
purposes. This term does not include: A retail pet store, as defined in
this section; any retail outlet where dogs are sold for hunting,
breeding, or security purposes; or any person who does not sell or
negotiate the purchase or sale of any wild or exotic animal, dog, or
cat and who derives no more than $500 gross income from the sale of the
animals other than wild or exotic animals, dogs, or cats during any
calendar year.'' This proposed amendment to the definition of dealer
was necessary in order to eliminate inconsistencies between that
definition and our proposed definition of retail pet store.
In the paragraphs that follow, we use discrete portions of the
proposed definition as section headings to organize our discussion of
the comments we received on various aspects of the proposed definition.
Later in this document we take the same approach in our discussion of
the

[[Page 57230]]

comments received on the proposed definition of retail pet store and
the proposed revisions to the exemptions from licensing contained in
the AWA regulations.
Dealer: ``Any person who, in commerce, for compensation or profit .
. .''
A number of commenters stated that APHIS had failed to define the
terms ``commerce'' and ``compensation'' as the terms are used in the
definition of dealer. Specifically, they noted that private animal
rescues and shelters that suggest a self-determined donation are not
operating in commerce or attempting to obtain compensation or profit
and thus do not fall under the definition of dealer (see also the
section below titled ``Requests for Additional Exemptions''). Likewise,
many commenters stated that the business model of rescue and shelter
organizations is clearly different from that of dealers in that it
involves neither compensation nor profit, and for that reason all
rescues and shelters should be exempt from licensing. Several
commenters stated that it is illegal for 501(c)(3)s to require
compensation or to attempt to profit from any services that they
provide; one of these commenters expressed concern that, if requests
for donations by private animal rescues or shelters are considered to
be commerce or compensation, those organizations would be forced to pay
Federal, State, and/or local taxes on every sale of a rescued or
abandoned animal.
On the other hand, some commenters noted that animal shelter and
rescue organizations that transport and offer for adoption rescued dogs
and cats employ a business model that does not significantly differ
from those of many dealers. The commenters also noted that rescues
often request substantial adoption fees for their services and that
those fees constitute compensation. Many of these commenters concluded
that such organizations should therefore be regulated as dealers.
We consider private rescues and shelters that perform any of the
activities listed in the definition of dealer, including transporting
or offering animals for compensation, to be dealers. We consider acts
of compensation to include any remuneration for the animal, regardless
of whether it is for profit or not for profit. Remuneration thus
includes, but is not limited to, sales, adoption fees, and donations.
We note, however, that dealers are only required to be licensed if
they do not meet any of the exemptions in the regulations. Many private
rescues and shelters operate under a business model in which
representatives for the rescue or shelter and the animals available for
sale or adoption are physically present at a location where the public
is encouraged to personally observe the animals; this business model is
consistent with our definition of retail pet store. As a result,
private rescues and shelters with this business model have historically
been exempted under the retail pet store exemption in Sec.
2.1(a)(3)(i) and will continue to be exempted.
Finally, we consider such rescues and shelters to be retail pet
stores only for the purposes of our regulations. Whether any other
Agency or jurisdiction defines such an organization as a retail pet
store for taxation or any other purpose is beyond our purview.
One commenter asked whether the proposed rule establishes a new
class of licensee to be categorized in the same manner as existing
dealers, and if so, it is unclear how APHIS could treat the new dealers
differently from those existing licensees.
We are not establishing a new class of licensee. All newly licensed
dealers would be subject to the same requirements as dealers who are
currently licensed.
Dealer: ``Including unborn animals, organs, limbs, blood, serum, or
other parts. . . .''
One commenter stated that she frequently purchases semen in order
to impregnate female dogs that cannot travel to stud because of
distance or risk to health. The commenter added that she does not sell
the female dogs or their offspring and for that reason should not be
considered a dealer.
Unless an individual buys or sells, at retail, or transports semen
or unborn animals for one of the six purposes listed in the definition
of dealer (research, teaching, testing, experimentation, exhibition, or
use as a pet), the individual is not a dealer. The activities described
by the commenter do not fall under any of the listed purposes.
The same commenter asked whether individuals involved in
transporting a female dog back from a stud after breeding would be
considered dealers, since the female dog is presumed to be carrying an
unborn animal within it at that time.
We consider persons transporting pregnant female dogs in retail
commerce for breeding purposes to be exempted from licensing, as this
purpose is not one of the six purposes listed in the definition of
dealer.
Dealer: ``For research, teaching, testing, experimentation,
exhibition, or for use as a pet[hellip]''
Several commenters stated that they sold animals at retail for
purposes other than the six specified in the definition of dealer.
These commenters stated that they believed themselves to be outside of
the scope of dealers and thus not subject to licensing but asked for
clarification. Some of these commenters, including dog, cat, and rabbit
dealers, stated that they sold or transported animals only in order to
preserve bloodlines. The commenters who mentioned rabbits also stated
that most rabbit breeders sell rabbits for one of three purposes: Food,
fur, or preservation of bloodlines.
One commenter stated that, if APHIS were to indicate that all
individuals who buy, sell, or transport animals for the preservation of
bloodlines (i.e., breeding purposes) are not within the scope of
dealer, it could provide a loophole for dealers to evade regulatory
oversight. That being said, the commenter suggested that individuals
who buy, sell, or transport a dog for which there are fewer than 100
registered litters in the United States should be allowed to state that
they are acting solely to preserve rare bloodlines.
If an individual is selling animals at retail for breeding
purposes, that individual is not a dealer. We do, however, share the
commenter's concern that claiming breeding purposes as the purpose for
an animal's retail sale could be subject to abuse. Therefore, if we
were to receive word that individuals making such claims are, in fact,
marketing their animals as pets, we would consider this to be grounds
for initiating an investigation to resolve the matter.
Another commenter stated that he bred and sold dogs for
participation in agility competitions and asked if he would be
considered a dealer.
We are making no changes in response to this comment. It has been
our experience that dogs that participate in agility competitions are
primarily marketed as personal or family pets. An individual selling
dogs at retail for use as pets would be considered a dealer.
Dealer: ``Any retail outlet where dogs are sold for hunting,
security, or breeding purposes . . .''
Many commenters stated that if the purpose of this clause is to
exempt sellers and buyers of working dogs from being dealers, its
description is too limited in scope. The commenters cited a number of
different uses for a dog--a companion animal for individuals with
disabilities, a guide dog, a herd or livestock dog, a sled dog, or a
rescue

[[Page 57231]]

dog--that do not fall within the scope of these uses but that require a
dog to be trained to perform a specific function. The commenters urged
us to expand the exemption to cover additional uses or to amend it to
specify that it covers dogs sold at retail for work purposes.
Individuals who sell or buy dogs at retail for any purpose other
than the six listed in the definition of dealer are not dealers. The
examples cited in the exemption (hunting, security, or breeding
purposes) are only intended to illustrate other purposes for buying or
selling a dog at retail. As commenters pointed out, those examples are
not exhaustive, and there are many other purposes that a dog can be
used or trained for that are not included under the definition of
dealer.
Finally, we note that persons selling dogs at the wholesale level
for hunting, security, or breeding purposes are considered to be
dealers.
Several commenters stated that they sold dogs at retail only for
hunting, security, or breeding purposes but that sometimes birth
defects, genetic anomalies, poor temperament, or other flaws preclude
them from selling some of the offspring for those purposes. Other
commenters stated that they imported and maintained dogs for use in
working dog programs, but occasionally if a dog did not work out as a
working animal, it would be sold at retail as a pet. The commenters
asked whether they were covered by the exemption.
Individuals who intend to breed and sell dogs at retail as working
dogs may occasionally raise a dog that lacks the characteristics that
would enable it to be sold or used for its intended working purpose. As
long as the individual originally intended to raise and sell the dog at
retail for that purpose and the individual continues to market his or
her dogs for that purpose, the individual could sell that dog at retail
and remain exempt.
Another commenter asked whether a person operating a multi-use
retail facility, in which some dogs were sold at retail for hunting or
security and others were sold for other purposes, would be considered a
dealer.
Any person selling dogs at retail for one of the six purposes
stated in the definition of dealer, including as pets, would be
considered a dealer. If the dogs intended to be sold as pets at a
multi-use retail facility are commingled with dogs intended to be sold
for purposes other than one of the six in the definition of dealer, all
parts of the multi-use facility would be subject to regulation.
One commenter stated that he sold dogs at retail for hunting, but
did so from his home rather than from an outlet. The commenter asked
whether he was still exempt from being considered a dealer.
An individual selling dogs at retail solely for hunting purposes is
not a dealer.
One commenter asked how APHIS determines from a seller that a dog
sold for hunting, herding, or other work will not also be used as a
pet.
In making such a determination, we consider the manner in which the
seller markets his or her animals and gather feedback from buyers and
State, county, and local authorities.
Dealer: ``Who does not sell or negotiate the sale of any wild or
exotic animal, dog, or cat and who derives no more than $500 gross
income from the sale of [such animals] during any calendar year.''
Excluded under the definition of dealer is any person who does not
sell or negotiate the purchase or sale of any wild or exotic animal,
dog, or cat and who derives no more than $500 gross income from the
sale of animals other than wild or exotic animals, dogs, or cats during
any calendar year. A number of sellers stated that the costs of animal
breeding have risen significantly in recent years and a $500 limit for
this exemption is too low. They asked that it be adjusted upwards to
compensate for inflation. On the other hand, several commenters stated
that the $500 de minimis exemption is too high.
The gross income limit is set by the AWA. However, it is important
to note that, under the proposed rule, there are a number of other ways
that persons who sell animals covered by this exemption (including
rabbits, guinea pigs (cavies), and rats) can be exempted from
licensing, either by not meeting the definition of dealer in Sec. 1.1
or through one or more of the licensing exemptions in Sec. 2.1 (see
the section below titled ``Retail Pet Store: ``. . . rabbits, guinea
pigs . . .'').
Several commenters asked why sales of dogs or cats are not covered
by this exemption, and suggested it be amended to exempt individuals
who derive no more than $500 gross income from the sale of any animals
listed in the definition of dealer.
The AWA does not include dogs and cats under this particular
exemption.
Dealer: Discrepancy with the definition of ``pet animal''
One commenter noted a discrepancy between the list of animals
covered under the definition of pet animal and animals listed in the
definition of dealer in Sec. 1.1. The commenter stated that this
discrepancy was likely to result in a degree of confusion among
breeders regarding whether they fell under the regulations as a dealer.
In order to clarify the definition of pet animal, the commenter
suggested amending the definition to read as follows: ``Pet animal''
means any animal that has commonly been kept as a pet in family
households in the United States, such as dogs, cats, guinea pigs,
rabbits, and hamsters. This term excludes: (1) Any wild or exotic or
other non-pet species of warm-blooded animals (except birds), such as
skunks, raccoons, nonhuman primates, ocelots, foxes, coyotes, etc.; and
(2) animals sold at retail in commerce for any of the following
purposes: hunting, security, breeding, food, or fiber (including
fur).''
We are making no change in response to this comment. Animals listed
under the definition of dealer are there for the purpose of indicating
which persons are subject to regulation and focus on the type of animal
and how it is bought, sold, or transported in commerce. Animals listed
under the definition of pet animal provide examples of ``pets'' as that
term is used in the definition of dealer.

Retail Pet Store Definition

We proposed to revise the definition of retail pet store so that it
would mean ``a place of business or residence that each buyer
physically enters in order to personally observe the animals available
for sale prior to purchase and/or to take custody of the animals after
purchase, and where only the following animals are sold or offered for
sale, at retail, for use as pets: Dogs, cats, rabbits, guinea pigs,
hamsters, gerbils, rats, mice, gophers, chinchillas, domestic ferrets,
domestic farm animals, birds, and coldblooded species.'' We also
proposed to specify that persons who meet the criteria for an exemption
from licensing in Sec. 2.1(a)(3)(iii) of the AWA regulations are
retail pet stores.
Retail Pet Store: ``A place of business or residence . . .''
Several commenters wanted to know why, in revising the definition
of retail pet store, we had removed the word ``outlet'' and added the
words ``place of business or residence.''
``Outlet'' as used in the definition has always referred simply to
the activity of retailing animals, not necessarily within the confines
of a ``brick-and-mortar'' pet store or even a physical location.
Accordingly, ``outlet'' in this context can include the sale of animals
sight unseen, which is the retail activity that we proposed to
regulate. For this reason, we proposed removing the word

[[Page 57232]]

``outlet'' and replacing it with ``place of business or residence.''
A commenter stated that, by removing the word ``outlet'' and thus
removing sight unseen sales from the scope of the retail pet store
definition, we had fundamentally reinterpreted the implicit meaning of
``retail'' within the AWA. The commenter stated that ``retail'' has
always been understood to mean sale directly to the consumer and added
that the method of delivery does not change the underlying structure of
the retail transaction. Similarly, several commenters pointed out that
sight unseen sales were fairly common during the time period when
Congress passed the AWA, but are not mentioned within the Act as an
activity that contributes to animal neglect or abuse; these commenters
concluded that the AWA must therefore consider retail sales of pets to
include sight unseen sales.
We disagree with the commenters that we reinterpreted the meaning
of ``retail'' in relation to the AWA, or that the AWA includes sight
unseen sales within the scope of retail sales. It is our contention
that the AWA envisioned a retail pet store as a business in which the
seller, buyer, and animal are physically present so that every buyer
can personally observe the animal for sale prior to purchasing and/or
taking custody of that animal, thus ensuring that the animals were
monitored for humane care and treatment.
In the factsheet,\5\ we clarified our proposed change to the retail
pet store definition by noting that pet animal retailers who sell their
animals to customers in face-to-face transactions at a location other
than their premises are also subject to some degree of public
oversight, and therefore we would not regulate them for that activity.
---------------------------------------------------------------------------

\5\ See footnote 4.
---------------------------------------------------------------------------

Several commenters stated that the factsheet is inconsistent with
the proposed rule because a face-to-face transaction at any location
other than a fixed residence or place of business is substantively
different from going to that residence or place of business to observe
animals offered for sale.
Although the AWA does not define ``retail pet store,'' the Act
exempted retail sellers of pets from licensing pursuant to the Act. As
we mentioned above, it is our contention that it did so because
sellers, buyers, and animals are physically present at retail pet
stores so that buyers can personally observe the animals before taking
custody of those animals, thus ensuring that the animals are monitored
for humane care and treatment. Personal observation of an animal
offered for sale can and does take place at locations other than a
``brick-and-mortar'' pet store, so restricting the definition of retail
pet store to ``brick-and-mortar'' stores is unnecessary and not in
keeping with the intent of the AWA.
A few commenters asked for a definition of a ``face-to-face''
transaction.
We consider a face-to-face transaction as one in which the seller,
buyer, and the animal available for sale are physically present so that
every buyer may personally observe the animal prior to purchasing and/
or taking custody of that animal. While the seller's presence at this
transaction was implicit in our proposed definition of retail pet
store, we are amending the definition to actually include the word
``seller'' in order to underscore his or her presence.
Several commenters stated that, while the intent of our proposed
changes was likely to exempt small-scale residential breeders from
licensing, labeling such breeders as a retail pet store has unintended
adverse effects. Many commenters pointed out that local zoning codes
often prohibit retail stores in areas designated for residential use,
while others stated that State and local tax codes often require retail
stores to file differently from ``hobby businesses'' and asked whether
APHIS had considered these implications. One breeder asked whether,
pursuant to Internal Revenue Service Code Section 183, being considered
a retail pet store by APHIS would allow him to claim ``for profit''
status and increase the number of itemized deductions he could claim on
his tax form.
We used the term retail pet store only for the specific purpose of
defining certain persons who sell pets at retail as retail pet stores,
thus exempting them from licensing pursuant to the AWA.
One commenter suggested that we should remove the words ``or
residence'' and the reference to Sec. 2.1(a)(3)(iii) from the retail
pet store definition and instead specify that hobby breeders fall under
the definition of retail pet store. The commenter stated that we could
define the term ``hobby breeder'' in the manner specified in current
USDA Animal Care guidance for dealers, transporters, and researchers:
``Small-scale breeders with gross sales under $500 per year, provided
that such sales do not include wild or exotic animals, dogs, or cats;
and/or small-scale breeders with four or fewer breeding cats and dogs
who sell the offspring.''
The definition of ``hobby breeder'' provided by the commenter is
our longstanding understanding of that term. However, we are retaining
the word ``residence'' in the definition of retail pet store because we
established in Doris Day Animal League (DDAL) v. Veneman \6\ that we
consider residential breeders selling pets at retail to be included
under the exemption of ``retail pet stores'' in the AWA.
---------------------------------------------------------------------------

\6\ Doris Day Animal League v. Veneman, 01-5351: published 1/23/
2003. Doris Day Animal League filed a rulemaking petition with the
Agriculture Department, urging a change in the regulatory definition
of ``retail pet store'' so that residential operations would not be
exempted. On March 25, 1997, the Secretary published the petition in
the Federal Register (62 FR 14044) and received more than 36,000
comments. On July 19, 1999, when the Secretary announced in the
Federal Register that he would retain the definition, and stated the
reasons why (64 FR 38546), Doris Day Animal League and other
organizations and individuals concerned about the mistreatment of
dogs brought this action for judicial review.
---------------------------------------------------------------------------

Retail Pet Store: ``That each buyer physically enters. . . .''
Many commenters objected to the provision that each buyer be
required to enter the premises where animals are offered for sale. Some
of them presented a number of different scenarios in which, they
stated, it would be impracticable to have each buyer personally observe
the animal prior to purchasing and/or taking custody of it after
purchase. Suggested scenarios included sales to foreign customers;
sales to disabled or elderly customers for whom travel to the buyer is
a health risk; and sales of a rare breed, with a handful of
geographically dispersed owners, for preservation of bloodlines. Many
of these commenters added that personally delivering animals to buyers
would also be impractical and costly.
We proposed this provision because it is our contention that the
AWA considers a retail pet store to be one in which the buyer, seller,
and animal are physically present so that every buyer can personally
observe the animal available for sale prior to purchasing and/or taking
custody of that animal. Animals that are sold at retail sight unseen
are not personally observed by buyers prior to purchase. However, it is
important to note that we consider the buyer of a pet animal sold at
retail to be the person who takes custody of the animal after purchase,
even if this person is not the ultimate owner of the animal. Bearing
this in mind, we consider many of the scenarios presented by commenters
to pertain to issues that would preclude the ultimate owner of the
animal, not the buyer, from being physically present to observe the
animals. However, a carrier or intermediate handler cannot be
designated as the buyer.
Retailers who, for whatever reason, do not consider it possible for
each buyer to personally observe their animals prior to purchasing them
and/or taking

[[Page 57233]]

custody of them may still be exempt from licensing if they do not sell
the animals at retail for one of the six purposes covered under the
definition of dealer. If they sell the animals at retail for one of
those six purposes, but maintain four or fewer breeding females and
sell only the offspring born and raised on their premises, they are
also exempt from licensing.
Those who own more than four breeding females and wish to continue
selling the offspring as pets, sight unseen, can do so by obtaining a
license and allowing APHIS inspectors to inspect their facility. As
explained in the economic analysis prepared for this final rule, the
costs associated with being licensed will be relatively low for all but
that small percentage of newly licensed breeders who are not currently
compliant with the AWA standards.
Commenters who cited the need to engage in sight unseen sales to
preserve a bloodline often cited animal health risks associated with
not doing so. An organization representing a rare dog breed, for
example, stated that sight-unseen sales of its breed for breeding
purposes are necessary in order to keep the breed from becoming
extinct. The commenter stated that when the breed is deprived of a wide
genetic pool, fatal heritable conditions can begin to appear within the
breed. Several other breeders of rare dogs, cats, and rabbits made
similar claims. Several small-scale residential breeders stated that
their practice of occasionally shipping animals to each other for stud
services will no longer be possible and result in less genetic
diversity for their breed.
We do not expect licensing of some breeders to result in the
extinction of rare breeds, an increase in health issues, or a decrease
in genetic diversity. A person who sells and ships animals at retail
for breeding purposes is not considered a dealer and thus not subject
to licensing. Such persons could continue selling at retail and
shipping animals sight unseen as long as the animal is used for
breeding purposes and not for any of the six purposes listed under the
definition of dealer in Sec. 1.1.
One commenter asked how recently buyers must have visited a
facility before a seller can sell them a pup remotely. As an example,
the commenter wanted to know whether, if buyers visited her facility 2
years earlier to buy a pup, she could remain exempt if she shipped them
a second pup without them visiting her a second time.
As indicated in our revised definition of retail pet store, each
purchase of a pet animal requires that the seller, buyer, and the
animal available for sale are physically present so that every buyer
may personally observe the animal prior to purchasing and/or taking
custody of that animal after purchase. Accordingly, if the buyers
observed this second pup during their visit, this condition is
fulfilled. If they did not (e.g., if the pup was not yet born when the
prior transaction took place), this condition is not fulfilled.
Several commenters opposed to the rule questioned APHIS' basis in
assuming that sight unseen sales of pet animals necessarily constitute
a potential risk to animal welfare. To support their point, many of
these commenters stated that they regularly buy healthy animals sight
unseen or sell healthy animals sight unseen to satisfied customers. The
commenters pointed out that in the proposed rule, APHIS had failed to
quantify the number of complaints that had arisen regarding sight
unseen sales of animals, the percentage of complaints that came from
unique customers, and the relative severity of the complaints. The
commenters also noted that APHIS did not conduct a survey of all
individuals who buy animals sight unseen to see what percentage of them
were satisfied with the welfare of the animals they purchased.
On the other hand, several commenters supporting the rule provided
accounts of sick and injured pet animals that they had bought sight
unseen or had been bought by others known to them. Several
veterinarians commented that pet animals bought sight unseen by their
owners were often brought to their clinics with a wide range of health
problems.
The primary purpose of the proposed rule was to revise the
definition of retail pet store so that it is consistent with the AWA.
It is our contention that the AWA exempted pet retailers from licensing
because the seller, buyer, and animal are physically present in the
same place so that the buyer can personally observe the animal
available for sale prior to purchasing and/or taking custody of that
animal, thus monitoring them for humane care and treatment. This
physical presence and personal observation does not occur when
retailers sell and ship pets sight unseen.
A few commenters stated that they had sold animals sight unseen in
the past but no longer did so, and asked that, if the proposed rule is
finalized, whether the scope of this definition should not be
retroactively applied to them.
The effect of this rulemaking and its enforcement would not be
retroactive to any prior actions.
A number of commenters expressed concern that using the Internet or
news media to generate customers would result in a loss of the
exemption from licensing. Many commenters also expressed uncertainty
whether any remote sales completed over the Internet will automatically
subject them to licensing requirements, even if the buyer picks up the
animal in person after buying it online. One commenter expressed
concern that she would be considered an Internet seller because she has
posted sales ads online in the past.
We are not regulating the use of the Internet (or any other method
of sale). Sellers are free to use the Internet to advertise or sell pet
animals, provide information to buyers, and conduct other related
activities. Indeed, a seller who sells over the Internet could still be
considered a retail pet store provided that, before the buyer takes
custody of the animals purchased, the seller, buyer, and animals have
been physically present in one location so that the buyer may
personally observe the animals.
A number of commenters stated that they preferred the alternative
set forth in the proposed rule that considered a regulatory threshold
based on percentage of sight unseen sales. The commenters challenged
APHIS' assertion that it has no authority under the AWA to require
retail pet stores to make and retain sales records, and asked, if this
is the case, how APHIS currently determines that a person meets the
exemption from licensing in Sec. 2.1(a)(3)(iv) of the regulations.
Persons who are exempt from licensing under the AWA cannot be
required under the AWA regulations to keep records. The commenter's
question about Sec. 2.1(a)(3)(iv) addresses how we determine a
person's eligibility for an exemption without requiring them to keep
records. This exemption applies to persons selling fewer than 25 dogs
and/or cats each year for research, teaching, or testing purposes. We
determine a person's exemption eligibility by inspecting records kept
by the research, teaching, and testing facilities that buy these
animals. These facilities are required under the AWA to document when
and from whom the animals are purchased.
The same commenters pointed out that APHIS' stated second reason
for not establishing a threshold, that animals sold sight unseen could
be kept under conditions different from those sold to walk-ins, is not
resolved by eliminating sight unseen sales from the exemption. The
commenters pointed out that a large-scale breeder could appear to be in
compliance with the regulations by

[[Page 57234]]

establishing a ``brick-and-mortar'' facility for walk-ins while
engaging surreptitiously in sight unseen sales of animals bred at
another location. The commenters stated that an exemption based on
percentage of retail sales would be likely to dissuade such abuses.
Another commenter noted that, for many small-scale residential dog
breeders, sight unseen sales constitute 20 percent of annual sales. The
commenter stated that APHIS should therefore adopt an ``80/20''
threshold of face-to-face to sight unseen sales.
We have no evidence to indicate that allowing retail pet stores to
conduct a percentage of their sales sight unseen would discourage
large-scale breeders from engaging in fraudulent practices, nor do we
have information to indicate why an 80/20 ratio of face-to-face to
sight unseen sales would be appropriate.
A few commenters asked that the final rule ``grandfather in''
existing relationships with remote customers, and specify that after
the effective date of the rule each new buyer would have to physically
enter a place of business or residence.
We are making no changes in response to the comments. As noted
above, persons who are exempt from licensing under the AWA cannot be
required under the AWA regulations to maintain the records necessary to
monitor and enforce such an approach.
Retail Pet Store: ``That each buyer physically enters. . . .''
A few commenters asked whether a buyer could use an agent to serve
in his or her place.
As we mentioned above, for purposes of our definition of retail pet
store, we consider the buyer to be the person who takes custody of the
animal after purchase. This person may differ from the ultimate owner
of the animal but cannot be acting as a carrier or intermediate
handler.
Retail Pet Store: ``That each buyer physically enters. . . . ''
A number of commenters asked why a buyer's physical presence at a
place of business or residence was necessary to protect animal welfare.
The commenters pointed out that Web-based technologies allow buyers to
``virtually'' observe animals that are for sale. On the other hand,
several commenters pointed out that virtual technologies can be
manipulated to provide an inaccurate depiction of animal care at a
seller's premises.
While many breeders use Web-based technologies to provide buyers
with visual and other information about the animals they sell, we agree
with the commenters' point that such technologies can be used to
inaccurately depict the health and condition of the animal for sale.
Several commenters suggested amending the definition to allow
buyers the option to waive the requirement to physically enter the
seller's place of business or residence to observe the animals offered
for sale. The commenters stated that this would prevent buyers who have
an existing relationship with a seller from having to travel long
distances to view animals when they felt confident about the care
standards provided by the seller. A few commenters stated that this
waiver should be in writing as documentary proof.
One commenter suggested that the regulations should require that
the seller have a return policy and that language requiring physical
entry of the business or place of residence be removed from the
definition of retail pet store. The commenter suggested that we define
return policy as ``a written policy provided to a purchaser in a sales
contract that contains provisions for returning the animal, reimbursing
the purchaser, and adjudicating disputes.'' The commenter stated that
return policies ultimately foster animal welfare, since sellers that
provide poor care for their animals are subject to frequent returns and
less able to turn a profit.
We are making no change in response to these comments. Waivers and
return policies used in place of requiring buyers to observe the
animals face-to-face would be appropriate for a rule focused on
consumer protection, not animal welfare, and could result in instances
in which retail pet stores sold animals to buyers without the buyers
being physically present to personally observe the animals prior to
purchasing and/or taking custody of them. This would be inconsistent
with the AWA.
Some commenters noted that the proposed rule provides no evidence
that purchasing or shipping animals sight unseen jeopardizes animal
welfare and treatment. Several of these commenters pointed to various
scenarios as examples in which such sales could be conducted sight
unseen and without significant risk, such as when the buyer is a repeat
customer with whom the seller has previously done business, when the
buyer and seller are relatives or close friends for whom a preexisting
relationship exists, or when the breed is so rare that each breeder is
personally known within the community of potential buyers. One
commenter, a State association of dog owners, cited the results of an
informal survey showing that most of its members buying dogs sight
unseen over the Internet saw few or no health problems in the dogs they
purchased. Conversely, a veterinary medical association cited a study
concluding that breeders who advertise on large-scale puppy sales Web
sites and sell to customers sight unseen are less knowledgeable about
breed-specific health issues compared to national parent club breeders,
and that such breeders are often less likely to perform screening tests
on their breeding dogs to detect undesirable heritable health risks.
We are making no changes in response to these comments. Retail
sales that are entirely sight unseen do not require the buyer to be
physically present in order to personally observe the animal available
for sale prior to purchasing and/or taking custody of that animal. It
is our contention that this concept of physical presence for the
purposes of personal observation is consistent with the AWA's use of
the term retail pet store.
Retail Pet Store: ``That each buyer physically enters. . . . ''
A significant number of residential breeders objected to this
provision. Many of the commenters cited human health and safety
concerns and others cited animal health risks associated with opening
their residence to buyers. They pointed out that many diseases of dogs,
in particular, are zoonotic, and that buyers who are ill may transmit
diseases to animals at their residences. Several of these commenters
also stated that they had no way of knowing the disease status of any
animals with which a buyer has recently come in contact, and expressed
concern that clothing could serve as fomites (inanimate objects or
substances capable of transmitting infectious organisms from one
individual to another) for diseases of dogs. A few commenters stated
that their animals become agitated when strangers enter their premises
and stated that requiring buyers or inspectors to enter could therefore
adversely impact animal welfare.
A place of business can be any location in which the seller, the
buyer, and the animal are physically present so that every buyer can
personally observe the animal offered for sale prior to purchasing and/
or taking custody of that animal(s) after purchase.
On the other hand, several commenters stated that, for the sake of
animal welfare, buyers need to personally observe the breeding and
living conditions of animals available for sale prior to purchasing
and/or taking custody of those animals. The commenters suggested that
we amend

[[Page 57235]]

the definition of retail pet store to specify that buyers must be able
to see these conditions.
Such an amendment would make the definition of retail pet store in
our regulations significantly more restrictive than its meaning in the
AWA. The AWA neither authorizes nor requires public oversight of
breeding stock or the premises on which animals for sale at retail are
maintained.
Several commenters stated, both before and after issuance of the
APHIS factsheet, that face-to-face sales at a mutually agreed-upon
location should suffice in lieu of physically entering a fixed place of
business or residence. Animal rescue organizations, in particular,
supported this point by noting that buyers seldom visit their primary
location, but that they always have face-to-face interaction with
buyers at adoption events or when delivering the animal to the buyer.
Such a face-to-face interaction is consistent with the AWA.
One commenter suggested that we require a seller to have face-to-
face interaction with the buyer at some point prior to purchase and/or
taking custody of an animal, but suggested that we decouple this from
personal observation of the animal. The commenter stated that this
would allow breeders who had developed long-standing relationships with
existing buyers to ship dogs sight unseen while meeting the intent of
the rule as they understood it. Another commenter agreed and pointed
out a number of scenarios in which the breeder would be known to the
buyer, but may not visually inspect the animals before purchase (buying
from a blood relative or close friend, buying from a breeder with whom
one has previously done business, and buying under time constraints
that do not allow for visual inspection of the animal).
We are making no changes in response to these comments. The
definition of retail pet store is consistent with the AWA in that it
requires that the seller, buyer, and the animal available for sale be
physically present so that every buyer can personally observe the
animal prior to purchasing and/or taking custody of that animal.
A few commenters stated that, instead of requiring the buyer to
enter the premises to observe the animal before purchase and/or taking
custody, we should require all animals sold at a place of business or
residence to be accompanied by a certificate of veterinary inspection
attesting to their health and freedom from genetic disorders in order
for that place of business or residence to meet the definition of
retail pet store. Other commenters similarly noted that the required
health certificate currently issued by a veterinarian for animals being
shipped should be sufficient proof that the animal is in good health
and that therefore entering the premises to observe the animal before
purchase is unnecessary. Similarly, another commenter asked that if a
dog is shipped internationally whether the requirements for shipping
the dog (airline health certificate, USDA endorsed certificate, shot
records) could be used in lieu of a face-to-face transaction.
On the other hand, several commenters questioned the efficacy of
veterinary certificates generally, stating that they had bought a pet
that was accompanied by a veterinary certificate only to later discover
the animal had a genetic condition or longstanding malady. For this
reason, the commenters stated APHIS should review its policing of
health certificates issued for dogs in transit to ensure that
certificates are valid.
We are making no changes in response to these comments. Persons
exempted from licensing under the AWA, such as retail pet stores, are
not required to obtain a veterinary health certificate when shipping an
animal via commercial transport. For those licensees required to obtain
such a certificate from a licensed veterinarian, the certificate only
affirms that transport of the animal is not likely to pose a health
risk to that animal or to other animals in transit. No relationship
exists between issuance of a health certificate for an animal and the
standard of care provided by the seller receiving the certificate.
Finally, regardless of a certificate, any retail transaction that does
not include the element of public oversight is inconsistent with the
AWA.
Several commenters stated that persons operating foster homes for
abused or rescued animals should be exempted from having buyers/
adopters physically enter their premises. They stated that requiring
such entrance would likely dissuade both foster persons and potential
adopters from accepting dogs and cats and would ultimately adversely
impact animal welfare.
Persons who engage solely in face-to-face retail transactions are
retail pet stores, regardless of whether these transactions occur at a
residence or at some other location; as we noted above, most animal
rescues engage solely in such types of retail transactions. Persons who
foster pet animals in their homes on behalf of these rescues may
conduct these face-to-face transactions at an alternative location and
therefore would not be required to allow adopters to enter their
premises.
Several commenters stated that many of the reasons that render it
difficult for a buyer to physically enter a seller's place of business
or residence also apply to completing face-to-face transactions (e.g.,
age, health, or physical capacities of the buyer, distance between the
seller and buyer, geographical isolation of seller).
The commenters assumed that the buyer of an animal sold at retail
is the ultimate owner of the animal. However, as noted above, we
consider the buyer of an animal sold at retail to be the person who
takes custody of that animal after purchase; this might not be the
ultimate owner. For purposes of the definition of retail pet store, it
is this person, not necessarily the ultimate owner, who must be
physically present to observe animals available for sale. However, a
carrier or intermediate handler cannot be designated as the buyer.
One commenter objected to face-to-face transactions off-site on the
grounds that they would put animal rescues and shelters at a
competitive advantage over commercial retailers, since the former would
be able to conduct face-to-face transactions of animals through
networks of transport volunteers rather than by any employee of the
rescue group or shelter actually meeting the buyer, while commercial
retailers would be restricted to having only their employees conduct
the sale.
As is the case with commercial pet retailers, representatives of
rescue groups also must be physically present at a place of business so
that potential buyers/adoptees can personally observe their animals
before purchasing and/or taking custody of them.
A commenter noted that substandard Internet sellers could shift
their model of business to selling animals face-to-face at a location
off their premises to avoid licensing, as the proposed rule will not
impact such activities.
We carefully considered this comment when we decided to allow the
seller, buyer, and animal available for sale be physically present at
the same place, but not necessarily the seller's premises. This does
not create an incentive for and a means of avoiding licensing for the
types of dealers the AWA encompasses.
Internet sellers who shift their model of business in such a manner
would have to provide buyers with the opportunity to personally observe
animals for sale prior to purchasing and/or taking custody of them, and
thus will engage in a retail model that is consistent with the AWA. Our
analysis

[[Page 57236]]

of the industry is that dealers who currently use an Internet sales
business model would not find it economically viable to shift their
business model in such a manner and would instead opt for licensing and
inspection by USDA. As noted in our economic analysis, we believe that
between 2,600 and 4,640 dog breeders who currently claim retail pet
store status will no longer be able to do so under this rule. However,
USDA will monitor the rule's implementation and consider proposing new
rules should we determine that the AWA's intent is not being served.
Another commenter suggested that, if sellers who have face-to-face
transactions at shows, flea markets, and auctions are exempt from
licensing, then the shows, flea markets, and auctions themselves should
have to be licensed. (The commenter stated that events that solely
serve non-profits should not have to be licensed.)
If a seller is selling regulated animals to buyers at a show or
event solely in retail, face-to-face transactions, that seller meets
the definition of a retail pet store and is exempt from licensing
regardless of the physical venue in which the animals are offered for
sale. Auctions and other events in which regulated animals are sold at
wholesale must be licensed.
One commenter stated that both APHIS and other commenters may have
understated the difficulty of meeting in public to purchase dogs or
cats face-to-face. The commenter pointed to several State and local
regulations that forbid or restrict sales or commercial transactions in
public areas. The commenter concluded that, because of these
difficulties, APHIS should revise the definition of retail pet store to
allow some sight unseen sales to take place.
We are making no changes in response to this comment. If local or
State ordinances prohibit the sale of dogs or other pet animals in
public areas, roadsides, or other locations, retailers of pet animals
residing in the States or locales affected would retain the option of
conducting business in any other location that is not prohibited by
law.
One commenter asked what sort of documentation APHIS would ask from
sellers that a face-to-face transaction had occurred between them and
the buyer of a pet. The commenter stated that this would almost
certainly require recordkeeping if the buyer and seller offer differing
accounts of the transaction.
In instances where there is some question about the method of sale,
APHIS will conduct an investigation and determine whether a sight
unseen sale has occurred.
Retail Pet Store: ``In order to personally observe the animals . .
.''
Several commenters stated that APHIS provided no evidence that
having individuals personally observe pet animals prior to purchase
will result in more humane treatment and healthier pets. A number of
commenters stated that, while personally observing an animal prior to
purchase and/or taking custody will allow a buyer to visually inspect
the animal for signs of neglect or symptoms of certain diseases, a
simple visual inspection will not reveal to the buyer whether the
animal has genetic conditions or other maladies; several commenters
pointed out that a number of genetic conditions of dogs and cats have a
significant latency period. Another commenter pointed out that personal
testimonials from animal welfare organizations received during the
comment period have provided evidence that animals sold at retail often
have genetic conditions that can only result from inbreeding or
overbreeding.
Our focus in this rule is to ensure that our definition of retail
pet store is consistent with the AWA. It is our contention that the AWA
exempted retail pet stores from Federal licensing and inspection
requirements because, at such establishments, buyers are physically
present in order to personally observe the animal available for sale
prior to purchasing and/or taking custody of that animal, thus
monitoring them for humane care and treatment.
As an alternative to requiring buyers to personally observe the
animals for sale, face-to-face, several commenters stated that all
retail breeders should have to be licensed pursuant to the AWA
regulations. On the other hand, a number of commenters pointed out that
licensing of all such breeders would expand the scope of regulated
entities far beyond APHIS' capacity to enforce the AWA regulations.
We are making no change in response to these comments. The AWA
exempts certain breeders from licensing.
One commenter asserted that the blind are incapable of personal
observation of animals.
As long as the buyer is physically present with the animals prior
to purchasing them and/or taking custody of them after purchase, it is
considered an acceptable transaction for the purposes of maintaining
the status of a retail pet store.
Retail Pet Store: ``Where only the following animals are sold or
offered for sale . . .''
One commenter stated that this phrase is ambiguous because there is
no distinguishing factor defining the difference between which animals
are sold and which are offered for sale.
Animals offered for sale are the property of the seller, while
animals that are sold are the property of the buyer.
Retail Pet Store: ``cats . . .''
Several commenters noted that most pet cats come from sources other
than small-scale cat breeders and that regulating such breeders is not
necessary. A cat club representative cited a 2010 survey by the
American Pet Products Association revealing that fewer than 1 percent
of cats are obtained through Internet/online contact and only 2 percent
of owned cats are obtained from breeders of pedigreed cats. The
commenter stated that there is no need for Federal regulation of small
or moderate scale home-based breeders of cats who have more than four
breeding females, regardless of whether or not pet buyers come to their
places of business.
Given the presence of commercial cat breeders selling and shipping
cats sight unseen, we consider some degree of Federal regulation to be
necessary to ensure adequate oversight.
Retail Pet Store: ``. . . rabbits, guinea pigs . . .''
Several commenters asked APHIS to clarify for those who own rabbits
and guinea pigs (cavies) the conditions under which they are required
to obtain a USDA license.
Only a very small number of persons selling rabbits and guinea pigs
will be affected by this rule. Such persons may be required to obtain a
license if the following applies to their situation: (1) They sell
animals sight unseen; (2) They sell the animals as pets and not for
purposes of food or fiber (including fur) or agricultural purposes; and
(3) They do not qualify for the $500 gross income limit from licensing.
Several commenters noted that the regulations were vague on when
rabbits are to be considered livestock or pets for regulatory purposes.
If a person sells rabbits only for the purposes of food or fiber
(including fur), those animals are considered to be farm animals and
the person is exempt from licensing.
Some commenters were concerned that the rule would require
licensing of National and State Future Farmers of America (FFA)
organizations and 4-H participants who sell their rabbits and limit the
ability of youth to breed and show rabbits at county fairs and other
exhibitions.
FFA and 4-H participants who sell their rabbits for the purposes of
food or fiber (including fur) or in face-to-face

[[Page 57237]]

transactions at county fairs, rabbit shows, and other agricultural
exhibitions are exempt from licensing regardless of the number sold.
One commenter concerned about the sale of rabbits asked whether
this proposal has any provisions that would stop some rabbit rescue
organizations from buying rabbits from commercial sources and reselling
them as ``rescues'' for a substantial profit.
APHIS investigates all credible reports we receive of unlicensed
activities involving sales of covered pets.
A few commenters stated that we should entirely exempt guinea pig
(cavy) breeders from licensing.
Guinea pigs (cavies) are under the authority of the AWA, and APHIS
is tasked with ensuring that all guinea pigs sold as pets are monitored
for their humane care and treatment.
Retail Pet Store: ``. . . rats . . .''
Some commenters asked APHIS to clarify for those who own rats the
conditions under which they would have to obtain a USDA license.
Under the regulations, we currently cover rats other than those of
the genus Rattus bred for use in research. Therefore, persons retailing
covered rats would need to obtain a license if they are not otherwise
exempt.
Retail Pet Store: ``. . . gophers . . .''
One commenter stated that gophers should be removed from the list
of pets that can be sold without licensing in the definition of retail
pet store. The commenter noted that while the other animals listed in
that definition have historically been sold as pets, gophers have not
and should more accurately be classified as ``wild animals.''
We are making no changes in response to this comment. Our research
shows that gophers have been bought and sold as pets in the United
States for at least a decade.
Retail Pet Store: ``. . . domestic farm animals . . .''
Some commenters were uncertain about how the proposed rule would
affect the ownership, breeding, and sale of farm animals.
One commenter stated that the regulations are unclear with respect
to livestock which may either be reared for utility purposes or kept as
pets. The commenter noted that transfer of ownership of equids, bovids,
caprids, lagomorphs, and domestic fowl is regularly conducted sight
unseen both for utility purposes and as pets, and that sellers are
sometimes not aware of the buyer's intended use of the animals. The
commenter asked that APHIS add clarifying language to the regulations
that allows the free exchange of domestic livestock and clarifies that
livestock are, in most instances, not pets.
Farm animals intended for use as food, fiber, or other purposes
specified under the definition of farm animal in Sec. 1.1 are exempt
from regulation. Farm animals intended to be used as pets, for
biomedical research, or other nonagricultural research are regulated
under the AWA. Persons exhibiting farm animals at agricultural shows,
fairs, and exhibits are exempt from licensing. However, persons
exhibiting farm animals for nonagricultural purposes (such as petting
zoos) are required to be licensed.
A national livestock organization asked that we include language
allowing face-to-face transactions of farm animals.
As noted above, farm animals intended for use as food, fiber, or
other purposes specified under the definition of farm animal in Sec.
1.1 are exempt from regulation, regardless of whether those animals are
sold face-to-face or sight unseen. Farm animals sold specifically as
pets in face-to-face transactions are also exempt from licensing. On
the other hand, farm animals used for biomedical or other
nonagricultural research, or for nonagricultural exhibition, are
regulated under the AWA and require licensing.
One commenter suggested that we specifically exempt horses not used
for research purposes from the retail pet store definition.
In Sec. 1.1, the term animal excludes horses not used for research
purposes, which specifically exempts them from regulation.
One commenter expressed concern that if a breeder maintains both
farm animals and regulated animals on his residence, and the farm
animals are deemed responsible for the breeder failing to meet the
regulatory standards for the regulated animals, the breeder could be
penalized and APHIS could remove the farm animals from the premises.
Farm animals intended for use as food, fiber, or other purposes
specified under the definition of farm animal in Sec. 1.1 are exempt
from regulation, and therefore cannot be removed from a premises due to
failure to meet the AWA regulations.
Another commenter asked if any livestock sold to a buyer who does
not have a ``farm plan'' on file with USDA would be considered as pets.
The commenter is referring to a type of business plan required for
certain Farm Service Agency loans. As noted above, animals sold and
intended for use as food, fiber, or other purposes under the definition
of farm animal in Sec. 1.1 are exempt from regulation regardless of
whether the buyer has such a plan on file.
Retail Pet Store: ``. . . birds . . .''
A few commenters requested that APHIS create an exemption in the
regulations for raptors. One commenter requested that we include
specific exemptions from licensing and all other regulations
promulgated under the AWA for falconers, raptor propagators, those that
conduct education of the public regarding raptors, and raptor
permittees. The commenter stated that these persons are already subject
to other stringent Federal regulations designed to ensure the welfare
of these raptors, including licensing, facility inspections, reporting
requirements, and permit fees. Another commenter asserted that raptors
are not pets, and thus do not fall under the scope of the AWA; hence
their owners do not need to be licensed.
Another commenter stated that we should exempt parrot breeders from
licensing on the grounds that subjecting them to licensing will promote
smuggling of parrots from other countries. Similarly, a commenter
expressed concern that waterfowl could be affected by the proposed rule
and requested that we include in our regulations an exemption for birds
already regulated under the Migratory Bird Treaty Act of 1918.
Finally, one commenter noted that there is no clear definition of
``bird(s)'' in part 1. Because of this, the commenter wondered about
the extent to which the regulations in parts 2 and 3 pertain to birds.
On June 4, 2004, we published a final rule in the Federal Register
(69 FR 31513-31514, Docket No. 98-106-3) that amended the definition of
animal in the AWA regulations to include birds, other than those bred
for use in research. However, APHIS has not established standards
specific to birds.
Retail Pet Store: ``. . . coldblooded species''
A number of reptile breeders stated that the industry is highly
self-regulated, and that sight unseen sales of reptiles tend to be of
high-end, extremely valuable animals where animal welfare is paramount
for the sake of the sale. The commenter suggested that sellers of cold-
blooded animals should be exempt from licensing, whether their sales
are face-to-face or sight unseen. Another commenter asked how APHIS
could require licensing of individuals who sell reptiles sight unseen,
when the reptiles do not fall under the definition of animal.

[[Page 57238]]

As the commenter noted, cold-blooded species do not fall under the
definition of animal in Sec. 1.1 and are therefore not regulated.
Retail Pet Store: ``A retail pet store also includes any person who
meets the criteria in Sec. 2.1(a)(3)(iii) of this subchapter.''
A number of commenters raised questions regarding the reference to
Sec. 2.1(a)(3)(iii) that we proposed adding to the definition of
retail pet store. Many of these commenters were unsure why persons
meeting these criteria were considered retail pet stores. A few of
these commenters asked whether being considered a retail pet store
because of these criteria allows a person to claim the exemption in
Sec. 2.1(a)(3)(i). One commenter, who met the criteria in Sec.
2.1(a)(3)(iii), asked why he would need two separate exemptions from
licensing.
Several commenters surmised that we included this criterion within
the scope of the proposed definition of retail pet store because we
proposed to remove the exemption in Sec. 2.1(a)(3)(vii); many of these
commenters referred to Sec. 2.1(a)(3)(vii) as the ``hobby breeder''
exemption, and suggested that our intent was to provide some hobby
breeders an exemption from licensing.
However, many of these commenters pointed out that the criteria in
Sec. 2.1(a)(3)(iii) are significantly more restrictive than those in
Sec. 2.1(a)(3)(vii). Although a number of these commenters agreed with
APHIS that retaining the exemption unchanged in Sec. 2.1(a)(3)(vii)
would continue to allow commercial Internet retailers of dogs and cats
to remain exempt from licensing, the commenters stated that we had
failed to provide a rationale for removing the exemption from licensing
in Sec. 2.1(a)(3)(vii) for certain dog and cat fanciers.
A number of self-described dog and cat fanciers stated that they
did not meet any of the criteria in our proposed definition of retail
pet store, but offered various reasons why they should be exempt from
licensing. These reasons included: Because their animals are maintained
in private residences; because dog and cat fanciers provide adequate
care and treatment for their animals; and because dog and cat fanciers
are ``known commodities'' among their clientele and that failing to
provide adequate care for animals they offer for sale would ruin their
reputations. Several of these commenters suggested that, in the final
rule, we should specify that all dog and cat fanciers, rather than all
individuals who meet the criteria in Sec. 2.1(a)(3)(iii), are exempt
from licensing; a number of these commenters suggested that we keep the
exemption in Sec. 2.1(a)(3)(vii) in the regulations, but specify that
it pertains solely to dog and cat fanciers.
The commenters who surmised that we proposed to include persons
meeting the criteria of Sec. 2.1(a)(3)(iii) in the definition of
retail pet store because we proposed to remove Sec. 2.1(a)(3)(vii)
from the regulations are correct. The AWA exempts retail pet stores
from licensing pursuant to the Act; this is the only exemption from
licensing that is specified for retailers within the AWA. The
exemptions from licensing that had existed in Sec. 2.1(a)(3)(i) and
Sec. 2.1(a)(3)(vii) were in the AWA regulations because we had
considered individuals who met the criteria in those paragraphs to be
retail pet stores.
In the proposed rule, we proposed to revise the definition of
retail pet store to make it more restrictive than it had previously
been; this is because, as we noted above, the existing definition had
begun to be interpreted in a manner that was inconsistent with the AWA.
Our proposed revisions to the definition of retail pet store
conflicted with the criteria in Sec. 2.1(a)(3)(vii). However, as we
mentioned above, that paragraph of the AWA regulations only could exist
if we consider all persons who meet the criteria in the paragraph to be
retail pet stores. Thus, we proposed to remove Sec. 2.1(a)(3)(vii)
from the regulations, since it would have otherwise provided an
exemption from licensing for people who did not meet our proposed
revision to the definition of retail pet store.
However, we recognized that if we were to remove Sec.
2.1(a)(3)(vii) from the regulations, we would expose to licensing a
subcategory of individuals, those with four or fewer breeding female
dogs, cats, and/or small exotic or wild mammals who sell at least some
of the offspring of these animals sight unseen, that we consider to
present a low risk of noncompliance with the AWA. It has been our
experience that such individuals maintain few enough breeding females
on their premises to offer adequate care and treatment to each animal.
To continue to exempt these individuals from licensing, we included the
``breeding females'' exemption in Sec. 2.1(a)(3)(iii) within the scope
of the definition of retail pet store.
During preparation of this final rule, we then realized that Sec.
2.1(a)(3)(iii), as written, applied both to retailers and to
wholesalers with regard to breeding females. If we were to finalize the
proposed definition of retail pet store to include persons who meet the
criteria in Sec. 2.1(a)(3)(iii), this could mistakenly allow
wholesalers to consider themselves to be retail pet stores, although
they do not engage in retail sales. For these reasons, we are not
removing Sec. 2.1(a)(3)(vii) from the regulations in this final rule.
Instead, we are revising that exemption so that it duplicates the
criteria contained in Sec. 2.1(a)(3)(iii) but specifies that those
criteria moved into Sec. 2.1(a)(3)(vii) pertain only to retailers.
Conversely, we are amending the exemption in Sec. 2.1(a)(3)(iii) to
specify that it pertains only to wholesalers. Because of these
amendments, we are in turn amending our proposed definition of retail
pet store so that it includes individuals who meet the criteria in
Sec. 2.1(a)(3)(vii) under the definition of retail pet store. We are
also making a nonsubstantive change to the definition of retail pet
store based on our inclusion under that definition of persons who meet
the criteria in Sec. 2.1(a)(3)(vii). (These revisions are set forth in
the regulatory text at the end of this rule.)
Finally, it is not possible under the AWA to exempt a purebred dog
or cat fancier from licensing solely because he or she is a purebred
dog or cat fancier. However, dog and cat fanciers who meet the criteria
in Sec. 2.1(a)(3)(vii) will be exempt from licensing because we
consider them to be retail pet stores for the purposes of the AWA
regulations.

$500 Gross Income Limit

We also proposed to remove the limitation concerning the source of
gross income in Sec. 2.1(a)(3)(ii) of the regulations, which exempts
from licensing ``any person who sells or negotiates the sale of or
purchase of any animal except wild or exotic animals, dogs, or cats,
and who derives no more than $500 gross income from the sale of any
animal except wild or exotic animals, dogs, or cats to a research
facility, an exhibitor, a dealer, or a pet store during any calendar
year and is not otherwise required to obtain a license.'' We proposed
removing the limitation on the source of sales so that such persons
could also sell their animals at retail if they wish and remain exempt
under the $500 limit.
Several commenters stated that the $500 gross income limit should
be much higher because of inflation and the rising costs of animal
breeding. Conversely, some commenters stated that the $500 limit for
the exemption is too high because no animal breeder selling his or her
animals should be exempt from licensing.
We are making no changes in response to these comments. The $500
gross income limit was mandated by Congress within the AWA. However, it
is important to note that under the

[[Page 57239]]

proposed rule, there are a number of ways that persons who sell animals
covered by this exemption (including rabbits, guinea pigs (cavies), and
rats) can be exempted from licensing, either by not meeting the
definition of dealer in Sec. 1.1 or through one or more of the
licensing exemptions in Sec. 2.1 (see the section below titled
``Retail Pet Store: ``. . . rabbits, guinea pigs . . .'').
A number of dog and cat breeders stated that the $500 gross income
limit was too low for such animals.
The $500 gross income limit exemption does not apply to dogs or
cats.

Breeding Females and Offspring

Section 2.1(a)(3) of the AWA regulations exempts certain persons
from licensing requirements. Prior to this final rule, paragraph
(a)(3)(iii) had exempted ``any person who maintains a total of three
(3) or fewer breeding female dogs, cats, and/or small exotic or wild
mammals, such as hedgehogs, degus, spiny mice, prairie dogs, flying
squirrels, and jerboas, and who sells only the offspring of these dogs,
cats, or small exotic or wild mammals, which were born and raised on
his or her premises, for pets or exhibition, and is not otherwise
required to obtain a license.'' The paragraph further provided that the
exemption did not extend to anyone in a household who collectively
maintains a total of more than three breeding female dogs, cats, and/or
small exotic or wild mammals, regardless of ownership, nor to any
person maintaining breeding female dogs, cats, and/or small exotic or
wild mammals, on premises on which more than three breeding female
dogs, cats, and/or small exotic or wild mammals are maintained, nor to
any person acting in concert with others where they collectively
maintain a total of more than three breeding females, cats, and/or
small exotic or wild mammals, regardless of ownership. In the proposed
rule, we increased the number of breeding females that may be
maintained to four.
(As noted earlier, we have revised our proposed definition of
retail pet store so that it no longer includes individuals who meet the
criteria in Sec. 2.1(a)(3)(iii). However, we are revising and
retaining the direct retail exemption in Sec. 2.1(a)(3)(vii), linking
it to the retail pet store definition, and adding to the direct retail
exemption the criteria in Sec. 2.1(a)(3)(iii). In other words, the
requirement regarding the number of breeding females remains part of
the retail pet store definition.)
In the proposed rule, we solicited comments on our proposed change
to the exemption limit. We also invited comments regarding the
variability of litter size by breed and the impact that variability may
have on the setting of size thresholds, as well as comments on whether
to regulate breeders by number of offspring sold or by number of
breeding females.
A few commenters stated that we should substantially revise the
exemption. One commenter stated that the exemption should cover only
those breeders who breed their animals no more than once annually;
other commenters suggested breeding intervals of 12, 18, and 24 months.
Another commenter stated that the exemption should specify the
conditions under which breeding females must be raised on their
premises in order to qualify for an exemption from licensing, rather
than set a limit on the number of breeding females on the premises.
As we discuss at greater length below, this exemption is based upon
our determination that individuals who maintain four or fewer breeding
females on their premises and sell only the offspring of these females
are likely to provide adequate care for these animals. Breeding Females
and Offspring: ``Any person who maintains a total of four or fewer
breeding female dogs, cats, and/or small exotic or wild mammals. . .
.''
A number of commenters asked what constitutes maintaining a
breeding female on a premises. Several commenters asked if breeding
females that stay temporarily at a residence are considered to be
maintained at the residence. A few of the commenters stated that
breeders should only be considered to maintain a breeding female at
their residence when the breeding female's stay at the residence does
not have a fixed end date. All of these commenters asked APHIS to
define or otherwise explain ``maintain'' in the final rule.
A breeding female is considered to be maintained at their premises
if it resides at that premises, even if temporarily. That being said,
as we discuss below, the threshold in this exemption applies only to
dogs, cats, and/or small exotic or wild mammals that an APHIS inspector
has determined to be breeding females, and only applies to such females
if their offspring are sold as pets.
Breeding Females and Offspring: ``Any person who maintains a total
of four or fewer breeding female dogs, cats, and/or small exotic or
wild mammals. . . .''
A number of commenters asked whether, by ``total,'' we meant four
or fewer breeding female dogs, in total, four or fewer breeding female
cats, in total, and four or fewer breeding female small exotic or wild
mammals, in total, or the total number of breeding female dogs, cats,
and small exotic or wild mammals on the premises that is four or fewer.
In the latter case, the commenters stated that this exemption was too
stringent for many 4-H, FFA, and rural families, particularly given our
decision to remove Sec. 2.1(a)(3)(vii), which exempted any person who
breeds and raises domestic pet animals for direct retail sales to
another person for the buyer's own use and who buys no animals for
resale. The commenters stated that APHIS should engage in dialog with
FFA and 4-H families and set a more reasonable number based on that
dialog.
Another commenter asked whether we meant four breeding female dogs
of each breed on the premises, or four breeding female dogs, total,
regardless of breed.
A number of commenters suggested that, if the term ``total'' is
meant in a partitive sense (i.e., four or fewer breeding female dogs,
four or fewer breeding female cats, four or fewer breeding female small
exotic or wild mammals), the sentence should be amended to make this
clear.
The exemption refers to the aggregate number of female dogs, cats,
and/or small exotic or wild mammals on the premises who are bred and
whose offspring are sold as pets. As we stated in the proposed rule, we
consider someone who maintains four or fewer such females to be a low-
risk facility. What we meant by this was that, based on our experience,
an individual who maintains four or fewer such females on his or her
premises has demonstrated that they are capable of providing adequate
care and treatment for the animals on their premises, so we do not
consider Federal oversight to be necessary.
Furthermore, interpreting the exemption in such a manner is not
likely to adversely impact rural families or anyone participating in
FFA or 4-H activities. Most FFA and 4-H exhibitors sell their animals
for agricultural purposes and/or in face-to-face transactions and thus
are not dealers. They therefore do not need to claim an exemption from
licensing.
A number of commenters stated that litter sizes for hobby breeds
and small breeds are considerably smaller than those for larger breeds,
that four breeding females are therefore too few to maintain a viable
breeding program, and that setting the exemption at four would
accordingly encourage overbreeding of the animals. They also stated
that a lack

[[Page 57240]]

of genetic diversity from having four or fewer breeding females would
result in offspring that would be less desirable to buyers seeking
strong breed characteristics. Others noted that small-scale breeders
typically do not breed their dogs every estrus cycle. As a female will
produce offspring with the same strengths and weaknesses each time,
such breeders will often wait until her female pups mature and then
breed the best of them in order to further improve the breed line. For
these reasons, several breeders stated that 6 breeding females is the
minimum necessary to have a viable breeding program for their breed;
other breeders stated that it should be 10, 12, or 20 for their breed.
One commenter stated that USDA has historically acknowledged a
``tipping point'' at 60 breeding females after which animal welfare
violations become disproportionately common. The commenter asked why 60
had not been selected as the cut-off.
On the other hand, a few commenters opposed our proposal to
increase the maximum number of breeding females allowed under the
licensing exemptions in Sec. 2.1(a)(3)(iii) from three to four. Most
of those commenters stated that this change would allow breeders to
produce greater numbers of pets that could potentially be abandoned or
sent to shelters and euthanized. One commenter opposed the changes
because the current number was put in place years ago for a reason, and
that reason, the commenter stated, has not changed.
Rather than simply raising the number of breeding females allowed
under the exemption to one of the numbers suggested by commenters, a
number of commenters suggested alternate amendments that, they stated,
would better serve the needs of the regulated community. One commenter
supporting this approach stated that raising the number from three to
four or fewer breeding females for pet fanciers is irrelevant, because
numbers change within fancier practices in ways that are different from
a wholesale operation. Similarly, a commenter stated that one set of
regulations for all breeds of cats fails to consider the differences in
growth rates and breeding ages among breeds. These commenters stated
that we should establish breed-specific thresholds, or, at least, breed
categories with various thresholds (e.g., ``Breeders of a Category A
dog may have no more than four breeding females; Category B, six
breeding females,'' and so on).
Another commenter stated that we should set the exemption from
licensing at 4, but should create subclasses of licensees, set at
thresholds based on the total number of breeding females, and should
specify the standards in part 3 that apply to each class, e.g., ``A
class A-1 breeder has between 5 and 10 breeding females, and must meet
the requirements of Sec. Sec. 3.7-11.''
We are making no changes based on these comments. The number of
offspring that breeding females are likely to produce annually did not
factor into our determination to propose raising the threshold in the
exemption to four breeding females. Rather, this decision was based on
our experience that an individual with four or fewer breeding females
can generally be considered a low-risk facility with regard to animal
welfare, so we do not consider Federal oversight to be necessary.
In addition, we recognize that depending on the species and the
breeds within the species, animals can mature at different rates. In
determining the number of eligible breeding females maintained by a
breeder, an APHIS inspector would consider each animal's age, health,
and fitness for breeding. We consider it impractical and unnecessary to
establish specific growth rate and breeding age standards for every
breed and every species of pet animal.
Breeding Females and Offspring: ``Any person who maintains a total
of four or fewer breeding female dogs, cats, and/or small exotic or
wild mammals. . . .''
A considerable number of commenters expressed uncertainty about
what APHIS considers to be a breeding female and asked us to define the
term in the final rule. Many of these commenters stated that
``breeding'' should not be considered equivalent to ``sexually mature
and sexually intact.'' Several commenters cited health concerns with
having their dogs breed. One of the commenters pointed out that her
female dogs become sexually mature at 6 months of age, but that
breeding them at that age would pose a serious health risk to the
female dog and had little possibility of resulting in a live litter.
Other commenters raised a similar point regarding older female dogs. A
number of these commenters stated that ``retired'' female dogs should
not count towards the total; many of these commenters cited peer-
reviewed articles \7\ stating that keeping a retired female sexually
intact is conducive to animal health and welfare. A number of
commenters stated that a female dog should be considered a breeding
female only when it is an age at which it is generally agreed her breed
is capable of producing a live litter.
---------------------------------------------------------------------------

\7\ The documents cited were: (1) Parvene Farhoody and M.
Christine Zink. Behavioral and Physical Effects of Spaying and
Neutering Domestic Dogs (Canis familiaris). (2) Laura J. Sanborn,
M.S. Health Risks and Benefits Associated with Spay/Neuter in Dogs.
---------------------------------------------------------------------------

A few commenters stated that most breeders do not breed their
female dogs until they are old enough to have a viable litter and have
passed all relevant health inspections, and stated that a female should
not be considered a breeding female until both of these conditions have
been fulfilled.
Other commenters agreed that a female dog that is sexually mature
and intact should not necessarily be considered a breeding female, but
did so for different reasons. Breeders of female show dogs stated that
many competitions require the animals to be sexually intact in order to
be shown, but that few show breeders breed their animals during the
time period that they are exhibiting them. Other commenters pointed out
that a female dog may be retired for any number of reasons (age, number
of litters produced to date, producing offspring with undesirable
characteristics), but still reside on a residence. These commenters
stated that a female dog should be considered a breeding female only
when it is actually being bred.
However, a number of commenters pointed out the limitations of such
an interpretation of ``breeding female'': Just because a breeding
female is not currently being bred does not mean that she will never be
bred. The commenters also noted that this interpretation could result
in enforceability issues for APHIS: A breeder could qualify for an
exemption one year, need to be licensed the next, and again qualify for
an exemption the third. Another commenter pointed out that breeders do
have ``accident'' litters from time to time, so a breeder's intent to
not breed a female in a certain year may not actually mean that the
female dog is not bred.
While we recognize that breeders have several reasons for not
breeding an intact female, for the purposes of enforcement, APHIS has
to assume that a female that is capable of breeding may be bred.
However, in determining whether an animal is capable of breeding, an
APHIS inspector will take into consideration a variety of factors,
including the animal's age, health, and fitness for breeding.
A few commenters pointed out that any definition of ``breeding
female'' would likely exclude animals that should fall within its scope
and include animals that should not. They stated that the determination
that an animal is a breeding female should ultimately be at an
inspector's discretion. Other

[[Page 57241]]

commenters agreed that the determination must be the inspector's, but
stated that APHIS should provide certain considerations that factor
into this determination, at the risk of otherwise appearing arbitrary
and capricious. One commenter stated that these considerations should
include frequency of estrous cycles and the age at which the female
could bear a litter. Two other commenters stated that tests, such as
the OFA, Penn Hip, thyroid, and recognized breed-related tests, should
factor into our determination regarding whether an animal has the
capacity to breed.
It is ultimately an APHIS inspector's responsibility to decide
whether an animal is a breeding female, and this decision must rely on
a variety of factors. Inspectors currently rely on factors such as the
animal's age, health, and fitness for breeding in deciding whether an
animal is a breeding female. Moreover, in determining the animal's
health status, inspectors may have recourse to recognized breed-related
tests.
However, inspectors do not rely on the frequency of estrous cycles,
which are variable and influenced by many factors.
One commenter stated that, since the decision that an animal is a
breeding female is ultimately an inspector's, this exemption
presupposes that all breeding females will be inspected by APHIS, which
the commenter stated cannot be done.
APHIS does not intend to conduct inspections of all potentially
regulated entities and their breeding females all at once. We discuss
this matter in greater detail below.
Another commenter asked how APHIS is able to determine that a
female dog has been spayed based on visual inspection.
APHIS inspectors rely on a variety of means to determine whether a
female has been spayed. One means is visual inspection. Other options
include reviewing veterinary records or other documentary evidence,
such as sales receipts.
Some commenters stated that certain types of animals should not be
considered breeding females for purposes of determining the total
number of breeding females on their premises. One commenter stated that
purebred dogs and show dogs should not count towards the total number,
since the medical care and husbandry provided to such animals exceed
the standards set forth in the regulations. Similarly, other commenters
stated that, if the breeder belongs to a registry or breeding
organization for a particular breed, breeding females of that breed
that reside on his or her premises should not be considered breeding
females for purposes of this exemption, since the codes of ethics and
guidance for those registries and organizations already provide
adequate assurances of animal welfare.
We are making no changes in response to these comments. Sexually
mature and intact show dogs can always be used as breeding females at
some point after they are no longer shown. Additionally, breed
registries vary widely in how they oversee and inspect breeders within
their organizations.
Several commenters suggested that sexually intact working dogs
should not count towards the total number of breeding females.
If sellers of such dogs also sell dogs at retail for pets, any
female dogs bred to produce puppies for sale would be counted as
breeding females.
A cat breeder stated that, because only 2 percent of owned cats are
obtained from pedigree breeders, breeding female cats should not count
towards the number of total breeding females on the premises for
purposes of the regulations.
As we mentioned above, this exemption is intended for certain
breeders who maintain few enough breeding females on their premises
that we consider them capable of providing adequate care and oversight
for all animals on their premises. We have determined that this
threshold is four breeding female dogs, cats, and/or small exotic or
wild mammals. We have no evidence suggesting that cats should not
factor into the threshold, nor do we consider the percentage of cats
obtained from pedigree breeders to be relevant to determining the
threshold.
One commenter stated that she intended to have several of her dogs
spayed in order to qualify for the exemption, but would need some time
in order to accomplish this. She asked how much time APHIS would afford
breeders to spay their dogs following publication of a final rule
before we began enforcing the ``four breeding female'' limit.
The revisions to the exemption will be effective when this final
rule becomes effective.
A number of commenters stated that all breeders with sexually
intact females on their premises should have to be licensed, and the
exemption should therefore be removed from the regulations.
We conclude from our experience with currently regulated entities
that breeders who maintain four or fewer breeding females can generally
be considered low-risk facilities with regard to animal welfare.
Several commenters stated that purebred breeders and breeders of
``custom'' mixed breeds (e.g., cockapoos) should be required to be
licensed, regardless of the number of breeding females on their
premises, stating that these breeders were most likely to overbreed
their animals.
Our data suggests that it is the total number of breeding female
dogs maintained on the premises, rather than the breed of dogs
maintained, that is the primary determinant in whether the premises is
a low-risk facility.
Several commenters suggested that we consider the number of puppies
sold per year instead of counting the breeding females at a premises.
Most of the commenters suggested that this number should be 50 puppies
produced per year; a few commenters suggested adjusting this number up
or down, depending on the breed. Two commenters suggested that the
exemption be based on number of litters and puppies sold; one of the
commenters suggested setting the exemption at 10 litters and 50
puppies, the other at 15 and 50. One commenter suggested, instead of
the proposed amendments to exemptions in Sec. 2.1(a)(3)(iii) in the
proposed rule, that we amend (a)(3)(iv) to read as follows: ``Any
person who sells fewer than 50 dogs and/or cats per year, which were
born and raised on the premises of a co-owner of the breeding female or
at a facility owned by a licensed veterinarian in the jurisdiction
either as pets or for research, teaching or testing purposes and is not
otherwise required to obtain a license. This exemption does not extend
to any person residing in a household that collectively sells 50 or
more dogs and/or cats, regardless of ownership, nor to any person
acting in concert with others, where they collectively sell 50 or more
dogs and/or cats from a single property. The sale of any dog or cat not
born and raised on the premises for research purposes requires a
license.'' The commenter stated that this would effectively return the
number of regulated entities to that of the time period before the
Internet.
As we explained in the proposed rule, we have enforceability
concerns regarding an exemption based on number of puppies sold: We
cannot require individuals who are exempt from licensing to keep
records regarding animal sales, but would need such recordkeeping in
order to enforce the exemption. No commenters suggested that such
recordkeeping was unnecessary for enforcement purposes, nor did
commenters suggest alternate

[[Page 57242]]

means of obtaining the necessary information.
Breeding Females and Offspring: ``And who sells only the offspring
of these dogs, cats, or small exotic or wild mammals, which were born
and raised on his or her premises. . . .''
Several commenters stated that it is common for a breeder to
receive a puppy as compensation for lending an animal out for stud
services and then sell that puppy at a later date. The commenters
pointed out that, in order to qualify for the exemption in Sec.
2.1(a)(3)(iii), these breeders could not resell such puppies, and
suggested that, if breeders stopped engaging in this practice in order
to qualify for the exemption, this would ultimately impact genetic
diversity in several breeds.
While such individuals cannot qualify for the exemption in Sec.
2.1(a)(3)(iii), this does not necessarily mean that they need to stop
engaging in this practice in order to be exempt from licensing. The
stud services may constitute brokering or breeding purposes and we
would need more information to determine the purpose for licensing
purposes. They may be exempt from licensing under another exemption in
the AWA regulations.
Several commenters stated that breeders often sell a breeding
female to individuals who are aspiring breeders or who wish to add new
bloodlines to their breeding program; one commenter stated that the
occasional addition of such bloodlines is necessary in order to
preserve genetic diversity in his breed. Other commenters stated that
they occasionally sold ``retired'' breeding females to friends or
acquaintances as pets. A number of commenters suggested that we amend
the paragraph so that both the breeding females and their offspring may
be sold.
We are not amending the paragraph in the manner suggested by the
commenter. The paragraph pertains to a distinct category of breeders
that APHIS has evaluated and determined to be low risk for
noncompliance with the AWA. The amendments requested by the commenters
would expand the paragraph's scope to include breeders that APHIS has
not evaluated.
We note, however, that the commenters who stated that they sold
breeding females as pets did not specify where the breeding females
were born and raised. The exemption allowance on the number of breeding
females only applies when dogs are sold that are born and raised on the
seller's premises. If the breeding females were not born and raised on
the premises, the seller does not qualify for this exemption regardless
of the number of breeding females they maintain, but may still be
exempt from licensing as a retail pet store depending on the manner in
which they sell the animals (i.e., face-to-face). Breeders who sell
breeding females for purposes other than the six uses listed in the
definition of dealer may also be exempt under this rule.
Several commenters stated that the requirement that breeders can
only sell the offspring of dogs, cats, and other small mammals born and
raised on their premises for pets or exhibition is vague or unclear.
One commenter, a dog breeding club, asked APHIS to provide a clear
statement of the meaning of ``born and raised on his or her premises.''
Several commenters were uncertain how to apply the requirement for
puppies or other animals that were born at a veterinarian's office, off
premises, and then returned with their mother to the premises.
``Born and raised on his or her premises'' means that a breeding
female gives birth on the premises and that the offspring are raised on
that premises. When enforcing this requirement, we consider the
ownership of the animal and the ability to maintain control over the
animal. This would include medical contingencies that may require a
female animal to deliver its offspring at a veterinarian's office. In
such cases, APHIS may request additional information to determine where
the animals are born and raised.
Breeding Females and Offspring: ``This exemption does not apply . .
. to any person acting in concert with others where they collectively
maintain a total of more than three breeding female dogs, cats, and/or
small exotic or wild mammals regardless of ownership. . . .''
Several commenters stated that co-ownership is common in the hobby
and show dog breeding community. Many small-scale residential breeders
co-own animals with people who live in other locations. One commenter,
a dog breeding club, asked APHIS to explain the meaning of ``acting in
concert with'' and whether the term applies to co-ownership of breeding
females. One commenter noted that when puppies are raised for show or
breeding, the breeder will sometimes co-own a puppy with its new owner
and mentor the owner on how to breed or show the dog. Another commenter
noted that when a show dog is sold, breeding rights for the dog are
often part of the sale, so that an animal that is owned by the buyer
remains on the breeder's property until it produces a litter.
One commenter noted that to deprive retail breeders of a feasible
exemption for co-ownership would not only significantly affect for-
profit breeding operations, but would disrupt and change longstanding,
useful practices among pet fanciers that actually ensure welfare
through educating newcomers and sharing expertise in the long-term
interest of better breeding. The commenter added that the proposed rule
would leave fanciers and all retail-sale breeders the options of
selling only to on-premises buyers or limiting themselves to four
breeding females.
One commenter asked whether, if a breeder has multiple premises but
has no more than four breeding females at any one location, he or she
would be required to be licensed. Another commenter pointed out that,
if this exemption applies to each premises rather than to each breeder,
regardless of the number of premises on which the breeding females are
maintained, this could create a significant loophole that would allow
puppy mills and other mass-producers to retain an exemption from
licensing by distributing their breeding females among multiple
premises. Several of these commenters asked us to specify in the final
rule that co-ownership does not constitute acting in concert with
another person to maintain a breeding female.
We acknowledge that co-ownership of breeding females is a standard
practice among small-scale residential breeders. Provided that no more
than four breeding females are maintained on his or her premises, these
individuals would qualify for the exemption in Sec. 2.1(a)(3)(iii).

Comments on Removing Sec. 2.1(a)(3)(vii)

As noted above, we proposed to remove Sec. 2.1(a)(3)(vii), which
exempted from licensing any person who breeds and raises domestic pet
animals for direct retail sales to another person for the buyer's own
use and who buys no animals for resale and who sells no animals to a
research facility, an exhibitor, a dealer, or a pet store (e.g., ``dog
and cat fanciers''), on the grounds that it was inconsistent with our
proposed revision to the definition of retail pet store.
One commenter stated that we should state in the final rule that
removing the exemption in Sec. 2.1(a)(3)(vii) will subject dog and cat
fanciers to licensing and the possibility of inspections, but will not
force them to comply with the standards in 9 CFR part 3. Several
commenters suggested that we require dog and cat fanciers to follow the
standards in part 3 that pertain to grouping, exercise, feeding,
watering, and cleaning, but that we exempt them from the facility
standards of that part, which are

[[Page 57243]]

impracticable for breeders who raise animals in their homes.
Specifically, a number of commenters cited the standards in Sec. 3.2
regarding impervious materials and Sec. 3.6 regarding whelping areas
as being cost-prohibitive for most residential breeders. Several of
these commenters suggested that we amend part 3 in the final rule to
establish alternate, performance-based standards for dog and cat
fanciers and other small-scale residential breeders.
We are making no changes in response to these comments. The
comments were predicated on an assumption that it will be cost-
prohibitive for most residential breeders who are regulated as a result
of this rule to meet the standards in part 3; we do not consider that
to be the case. We discuss this at greater length in the economic
analysis that accompanies this final rule.
One commenter suggested that we should delay the effective date for
removing the exemption until we consult with residential breeders and
explain what structural modifications they will need to make to their
residences so that they comply with the regulations in part 3.
We are not delaying the effective date. As we note in the economic
analysis, many residential breeders will continue to be exempt from the
regulations, and as noted by several commenters, many who are not
exempt are already operating in a manner that is consistent with the
AWA. Accordingly, they will likely need to make only minor structural
changes to their facilities to be in compliance with AWA standards.
One commenter suggested that we ``grandfather in'' all existing
residential breeders as retail pet stores, and require licensing only
for new residential breeders.
We are making no change in response to this comment. The
commenter's suggestion would privilege existing breeders over new
breeders.
A number of commenters stated that, if APHIS needed to require them
to be regulated and licensed in order to ensure animal welfare, APHIS
should take measures to ensure that the impact of such licensing has as
minimal an effect on such breeders as possible. One commenter suggested
that we limit the licensing fee for purebred dog and cat fanciers and
other small-scale breeders to $10 yearly.
We expect that many small-scale breeders will remain exempt from
licensing and will therefore not need to pay a licensing fee. However,
we note in the economic analysis prepared for this rule that the costs
of licensing are likely to be lower than most breeders figure them to
be.
Finally, a commenter stated that the rollout of the final rule
should be accompanied by a supporting document or educational campaign
for small-scale residential dog and cat breeders in best practices for
breeding and care. The commenter said that many breeders will want to
comply with the regulations, but, because of unfamiliarity with the
AWA, will need instruction.
APHIS already provides such education as part of its prelicensing
process and existing stakeholder outreach.

Requests for Additional Exemptions

A few commenters stated that we needed to add additional exemptions
to paragraph (a)(3) of Sec. 2.1.
Many commenters stated that we should amend the regulations to
specify that animal rescue groups should be exempt from licensing
because such groups have business models that are vastly different from
those of retail dealers. They pointed out that the goal of such groups
is to preserve animal welfare rather than to breed animals for profit.
A few commenters stated that we should make a distinction between non-
profit and for-profit rescue groups, and exempt the former from
licensing.
On the other hand, several commenters stated that rescue groups
should not be exempt from licensing solely because of their mission.
Some of these commenters pointed out that both profit and non-profit
rescue groups often request substantial adoption fees to recoup the
costs of maintaining the group. Several other commenters acknowledged
the good intentions of rescue groups, but stated that many groups
overreach and end up overcrowded with rescued animals. The commenters
also pointed out that many rescues rely on volunteers to provide care
for the animals and that reliance on volunteer efforts could result in
gaps or significant disparities in the care provided.
Some commenters suggested alternatives. One commenter suggested
that we require rescue groups to be licensed, but that we waive
licensing fees for such groups. Another commenter suggested exempting
them from the facility standards of part 3. A third commenter suggested
that we amend the regulations so that all ``Class A'' breeders have to
enter into a trust fund agreement with APHIS at licensing and renewal,
with the money in the agreement dedicated to licensing for non-profit
rescue groups and other non-profits. Another commenter suggested that
we define non-profit organization in the final rule, include rescue
groups within the definition, and exempt all non-profit organizations
from licensing.
As we noted earlier, private rescues and shelters tend to operate
under a business model in which animals available for sale or adoption
are physically present at a predetermined location where the public is
encouraged to meet and inspect the animals; this business model is
consistent with what we consider a retail pet store to be, and fits
within the scope of our definition of a retail pet store. As a result,
most private rescues and shelters have historically been exempted under
the retail pet store exemption and will continue to be exempted as long
as they meet the amended definition of retail pet store.
However, private rescues or shelters that are operating in a manner
that requires them to be licensed as dealers must be treated in a
manner that is consistent with our regulation of all other licensed
dealers. This includes paying licensing fees and adhering to the
standards in part 3 of the AWA regulations.

Oversight and Enforcement

A number of commenters believed that we had greatly underestimated
the number of newly regulated entities in our initial regulatory impact
assessment and questioned whether we had sufficient personnel to
enforce the provisions of the proposed rule. A number of commenters
stated that, before conducting all the inspections necessary to enforce
the proposed rule, APHIS would have to hire additional inspectors. One
commenter stated that our ability to enforce the proposed rule is
hampered by our restrictive definition of inspector in Sec. 1.1, and
that we should expand the definition to include State employees and
third parties authorized by APHIS. Other commenters noted that APHIS
had provided no indication of how it will fund expenditures for
additional personnel.
On the other hand, a commenter supporting the proposed rule
commented that APHIS is capable of handling the enforcement
responsibility of the proposed rule without hiring large numbers of
additional personnel. The commenter acknowledged that the number of
additional facilities that would be subject to licensing under this
rule would be difficult to determine. They noted, however, that even if
the new regulation doubled the number of operations subject to USDA
regulation, the inspection burden would merely return to approximately
the level that was handled by USDA in 2008.

[[Page 57244]]

APHIS' plan is to incorporate newly affected entities into our
existing regulatory structure using a phased implementation for
conducting initial prelicensing inspections and compliance inspections.
Factors we would consider when determining when and how frequently such
inspections would take place include, but are not limited to: (1)
Whether an entity has applied for a USDA license; (2) whether an entity
is already subject to some degree of State, county, or local oversight,
and the nature of that oversight; and (3) whether an entity is the
subject of a legitimate complaint and the nature or severity of that
complaint. We will conduct periodic compliance inspections based on a
risk-based inspection system that calculates the level of risk of
noncompliance.
Because of this phased implementation, we do not consider it
necessary to amend the definition of inspector to allow APHIS to use
non-APHIS employees to serve as inspectors.
A number of commenters asked how we would identify newly regulated
entities. One commenter suggested that we conduct spot checks of
advertised breeders to confirm that they are either licensed or qualify
for an exemption. Several commenters suggested that we develop a dealer
registry and require all sellers or breeders to submit contact
information, along with the appropriate licensing fee or a written
statement explaining why they were exempt from licensing. However, a
commenter warned that adding newly regulated entities to our database
will take a sizable investment of Animal Care workforce hours and asked
if APHIS considered the costs of doing so.
We will identify newly regulated entities using our current
methods, which include reviewing marketing or promotional material in
the public domain, self-identification, and complaints. Implementation
of this rule will take into consideration the workforce hours that it
will take to add newly regulated entities to our database.
A commenter requested that we investigate unlicensed ``puppy
brokers'' who transport and sell puppies for commercial breeders who
raise puppies in rural, remote areas. The commenter stated that such
brokers are transporting puppies to more populated areas so that they
can be sold out of private homes, for which the residents receive a
percentage of the profit.
APHIS investigates all credible reports we receive of unlicensed
activities involving sales of covered pets.
One commenter suggested that APHIS require breeders to maintain a
record of whenever they move interstate and to allow spot audits of
those records to determine which breeders to inspect. Another commenter
stated that breeders should have to report any land or storage spaces
they maintain and go through a background check and provide references
in order to maintain a license.
APHIS does not require exempted breeders to report such information
cited by the commenters. However, we are authorized to inspect the
records of licensed entities.
Several commenters supporting the rule asked why pet stores are not
subject to licensing and inspection under the regulations. Some of
those commenters expressed concern about inhumane conditions in pet
stores and recommended that they be subject to monitoring and
inspection. Some commenters stated that pet stores should be prohibited
from selling puppies and adult dogs, and to lesser extent cats, as a
means to reduce the demand for animals from commercial breeders.
Under the AWA, retail pet stores are exempt from regulation.
Another commenter stated that all locations in which pet animals
are sold should be required to have a licensee on-site at all times,
and that this licensee should have all veterinary records of the
animals on the premises available for review at all times; the records
maintained by this licensee would facilitate traceback in the event of
possible animal welfare abuses.
Under the AWA, APHIS already requires licensed breeders to maintain
such records, but we only require that a licensee be available to
present records during business hours. Breeders exempted from licensing
have no such recordkeeping requirements.
One commenter suggested that APHIS pilot a voluntary inspection
program for newly regulated dealers, in which dealers would agree to be
inspected in exchange for assurances from APHIS that violations
discovered during this inspection would not result in fines or
penalties. Other dealers would be inspected based on complaints of
abuse, and would not be exempt from penalties.
We have no plans to institute a voluntary inspection program. APHIS
will provide information upon request to persons to help them assess
whether they need to apply for licensing and to offer guidance on
complying with AWA regulations.
A number of commenters suggested that the need for inspections
would be greatly reduced if APHIS increased penalties for dealers who
violate existing AWA regulations. One commenter pointed out that the
2010 USDA OIG audit \8\ (referred to below as the OIG audit) referenced
in the proposed rule found that few, if any, first-time violators of
the AWA were subject to an enforcement action, even for those found to
be in direct violation of the Act. The commenter suggested that
penalizing all first-time offenders would decrease recidivism, would
further animal welfare within the United States, and could obviate the
need for the proposed rule.
---------------------------------------------------------------------------

\8\ To view this audit, go to http://www.usda.gov/oig/webdocs/33002-4-SF.pdf. The major objectives of the OIG audit were to
examine Animal Care's enforcement process against dealers that
violated the AWA and to review the impact of recent changes that
APHIS made to the penalty assessment process.
---------------------------------------------------------------------------

We continue to review and improve the manner in which we assess
penalties, consistent with our response to the OIG audit. However, we
continue to maintain that this rulemaking is necessary in order to
ensure that our definition of retail pet store is consistent with the
AWA.
We invited comments on an alternative regulatory scheme presented
in the proposed rule that would minimize APHIS oversight of entities
already subject to State, local, or industry oversight. A number of
commenters, including several State agricultural officials, noted that
many States already require licensing of commercial dog and cat
breeders. The commenters stated that Federal oversight of breeders
would likely be duplicative, contradictory, and confusing. Several
commenters stated that APHIS should withdraw the rule in favor of
establishing a cooperative Federal-State program that relies primarily
on State officials to provide oversight of dealers and breeders, with
APHIS providing guidance and coordination at the Federal level.
However, a number of commenters disagreed, noting that State
regulations are in many cases insufficient to provide for the welfare
of animals sold as pets. Many of these commenters pointed out that
withdrawing the proposed rule and deferring to States would simply
maintain the status quo, and that the OIG audit clearly indicates that
the status quo does not adequately provide for animal welfare. For this
reason, a number of the commenters stated that State animal welfare
officials should not be used as inspectors for purposes of enforcing
APHIS regulations.
A few breeders stated that, while they were not regulated
stringently at the State level, they were subject to very stringent
city or local regulations, and

[[Page 57245]]

that these regulations obviated the need for further Federal
regulation. The breeders suggested a locality-by-locality review of
existing regulations prior to issuance of a Federal rule, and also
encouraged us to claim selective preemption.
As we noted in the proposed rule, to our knowledge 27 States and
the District of Columbia have enacted laws that establish some form of
humane welfare standards for animals kept at pet stores and sold at
retail. We have provided many of these States with guidance on
developing and enforcing their animal welfare regulations. But while
these States and several municipalities have such laws, none actually
address all categories of welfare required under the AWA, including
veterinary care, food and water, proper sanitation, and housing. As a
consequence, Federal oversight is necessary to ensure that AWA
regulations are consistently applied across all States.
We should add, however, that if a State has issued and is enforcing
several of its regulations under a category of welfare required under
the AWA, we can adjust our own inspection frequency and procedures in
that category in ways that will reduce the burden of duplicative
regulations on breeders in that State.
In the proposed rule, we also invited comments from the public
regarding the idea of an exemption based on oversight from private
organizations. Many commenters stated that industry-run programs
provide adequate oversight of certain breeders and dealers, and that
licensing and oversight by APHIS is therefore unnecessary for these
entities. One commenter, a national dog breeder and fancier
organization, noted that they maintain a purebred dog registry, that
members of that registry are subject to routine inspections, and that
ongoing enrollment in the registry requires continued adherence to a
comprehensive care and conditions policy. Several commenters noted that
they belonged to the registry or a similar breed-specific registry, and
that inclusion on the registries is in fact dependent on agreeing to
regular inspections, recordkeeping requirements, and other welfare
safeguards.
However, a number of commenters disagreed, stating that private
organizations are not always capable of adequate oversight of breeders.
One commenter conducted a study on oversight by pet registry
organizations and concluded that self-regulation attempts have been
largely ineffective. They also noted that registry organizations only
monitor breeders of purebred dogs, while mixed-breed and ``designer''
dogs such as yorkie-poos, puggles, and labradoodles, which are among
the most popular varieties sold online, appear to have no self-policing
registries.
We are making no changes in response to the comments. While some
breed registries and other organizations maintain programs for
oversight of breeders, few, if any, have requirements that address all
categories of animal welfare required under the AWA. Furthermore, as
the one commenter noted, many mixed-breed dog breeders appear to have
no self-policing registries.
Other commenters pointed out that a number of States have puppy
``lemon laws'' that protect consumers from the financial losses
incurred when buying a sick dog, and stated that these consumer
protection laws have the effect of securing animal welfare through
market forces. Similarly, a few other commenters pointed out that,
while not all States have puppy ``lemon laws,'' all States have laws
that protect consumers from fraud and deceptive marketing practices,
and that these laws could be enforced at the State level in a manner
that results in State inspections of dealers and breeders and imposes
civil and criminal penalties for those dealers and breeders who do not
provide adequate care for their animals. Several of these commenters
suggested that APHIS conduct a State-by-State review of animal welfare
and consumer protection laws prior to issuing a final rule, and should
claim preemption of State laws only for those States that have less
stringent standards than those that dealers would have to adhere to
under the provisions of the proposed rule. On the other hand, a few
commenters stated that consumer protection laws do not provide
assurances that animals are bred and raised humanely, but solely
provide remedies for consumers when they purchase animals that turn out
to be unhealthy or are otherwise not what they were portrayed to be.
We are making no changes in response to the comments. ``Lemon
laws'' protect the economic interests of the buyer and do not meet the
goals of the AWA.
Finally, one commenter suggested that APHIS petition Congress to
amend the AWA so that private entities could bring suit against
breeders, brokers, and handlers for AWA violations. The commenter
stated that any damages awarded in a lawsuit could far exceed the
penalties under the AWA, and would serve as a strong incentive to
follow the regulations. However, a few commenters disagreed, pointing
out that APHIS has limited ability to petition Congress to enact
legislation.
APHIS does not consider it necessary to amend the AWA in order to
meet the request of the commenter.

Constitutionality and Legal Authority

Several commenters expressed concerns about the constitutionality
of the proposed rule. One commenter stated that Congress is not
permitted to delegate authority to Agencies to issue rules with the
force of law, and that the rule therefore violates Section 1 of the
Constitution.
Congress is permitted to delegate authority to Agencies to issue
rules.
Another commenter stated that, because APHIS has no evidence that
all individuals engaged in Internet or sight unseen sales are guilty of
violations of the AWA, subjecting those who are not guilty to licensing
amounts to a tax. The commenter pointed out that, as an Agency of the
Executive Branch, APHIS has no authority under the Constitution to
impose or collect taxes.
The AWA specifically authorizes the assessment of licensing fees,
which do not constitute a tax.
A number of commenters stated that any change to the definition of
retail pet store that subjects their homes to possible unannounced
government inspections for AWA compliance violates their Fourth
Amendment rights against unlawful search and seizure.
Section 2146 of the AWA explicitly authorizes inspections of
licensees to determine compliance with the AWA. However, such
inspections are limited to only those areas that impact the well-being
of the animals, such as areas where food and medicine for the animals
are stored.
One commenter stated that most animals sold as pets are born and
moved within State boundaries. The commenter suggested that, since
interstate commerce does not occur in those instances, attending to the
welfare of those animals is outside of Federal jurisdiction under the
Tenth Amendment and solely a State prerogative.
In issuing the AWA, Congress found that such intrastate commerce
often substantially affects interstate commerce.
One commenter stated that the AWA does not address privately owned
property, nor does it provide that a retail business must permit
customers to personally visit the seller's property to be considered a
retail pet store. The commenter also stated that there is no assumption
in the AWA that animal welfare entails customers visiting a

[[Page 57246]]

seller's property and monitoring the property for compliance with the
AWA.
The AWA does not require retail pet sellers to allow customers to
enter their property. A seller exempted as a retail pet store can
indicate a place of business separate from his or her premises at which
to sell pet animals at retail.
One commenter stated that the rule essentially restricts the
ability to advertise the availability of animals for sale by rendering
it difficult to use the Internet to engage in such sales, and that
APHIS had failed to provide a compelling reason for such restrictions.
The commenter stated that using the Internet to sell the animal
constitutes commercial speech and concluded that the rule violated the
First Amendment right to free speech.
The rule does not restrict the use of the Internet as a marketing
or communications tool. Rather, it revises the definition of retail pet
store to ensure that it stays consistent with the AWA.
A few commenters noted that that the 2010 OIG audit mentioned in
the proposed rule focused on large-scale, AWA-licensed problematic
dealers and not on small-scale breeders, and that APHIS inappropriately
extrapolated from the report that breeders of all sizes should be under
Federal oversight for the purpose of animal welfare. One commenter
noted that the USDA OIG's finding regarding remote, Internet sales
(Finding 5) was that ``some large breeders circumvented [the] AWA by
selling animals over the Internet,'' and stated that the OIG audit had
broadly referred to these large-scale breeders as ``Internet breeders''
later in the report for the sake of brevity. The commenter stated that,
in the proposed rule, APHIS had construed the term ``Internet breeder''
in an unqualified sense that is at odds with the meaning of the term in
the OIG audit.
In the proposed rule, we used the term ``Internet breeders'' only
for the purpose of passing along factual information regarding the OIG
audit's findings and were not attempting to assign a specialized
meaning to the term.
The same commenter stated that the OIG audit had heavily redacted
statements made by former Secretary of Agriculture Ann Veneman in DDAL
v. Veneman in order to suggest that Internet sellers need to be
licensed. The commenter provided Secretary Veneman's full transcript,
which stated that oversight is necessary but is already being exercised
by breed and registry organizations. The commenter concluded that APHIS
had either taken these statements in the report out of context or
relied on statements that were taken out of context in order to justify
the proposed rule, and that this was tantamount to legal dishonesty.
APHIS drafted the proposed rule because the term retail pet store
was being understood and applied in a manner that was inconsistent with
the AWA, in order to ensure that the definition of retail pet store in
our regulations was consistent with the AWA.
A commenter noted that the proposed rule makes references and
comparisons to the Puppy Uniform Protection and Safety (PUPS) Act. The
commenter stated that APHIS had assumed that the bill represents the
will of Congress, and pointed out that the bill has not been signed
into law and should not be considered to have the force of law for the
sake of issuing regulations.
The proposed rule made no statements suggesting the PUPS Act had
the force of law.
Two commenters stated that APHIS had failed to comply with the
National Environmental Policy Act (NEPA) in issuing the proposed rule.
The first commenter stated that we had failed to examine the aggregate
effects on the environment that may occur if many breeders throughout
the United States have to significantly alter their residences in order
to meet AWA standards. In a similar manner, the other commenter stated
that we had failed to consider the environmental impacts on local
communities that may occur because of the proposed rule.
We followed NEPA and determined the proposed rule was categorically
exempt from preparation of NEPA documentation because it outlined
routine measures. The commenters who stated that the rule would have
such environmental effects believed that most residential breeders
would have to make significant structural changes to their homes in
order to comply with 9 CFR part 3; for reasons specified above and in
the economic analysis that accompanies this rule, we do not consider
that to be the case.
Similarly, a few commenters stated that APHIS failed to fulfill a
statutory duty to ensure full compliance with the Small Business Act,
including a determination of impact under zoning laws presented by
federalizing a hobby and converting small-scale breeders to home-based
businesses, and submitting certification to the Small Business
Administration (SBA) with a detailed statement on the impact of the
proposed rule on the affected ``Small Businesses.''
APHIS submitted the proposed rule and its accompanying regulatory
impact analysis, which included an initial regulatory flexibility
analysis produced in accordance with the Regulatory Flexibility Act, to
SBA prior to the publication of the proposed rule.
A number of commenters stated that the factsheet \9\ contained
several responses that contradicted the provisions of the proposed
rule. Many of these commenters stated that the average person would not
interpret the ``physical entry'' provision of the definition of retail
pet store to allow face to face off-site transactions to occur. One of
these commenters also asserted that the factsheet appears to grant a
blanket exemption from licensing to all rescue groups, and that this
exemption was neither explicit nor inferred within the proposed rule.
---------------------------------------------------------------------------

\9\ See footnote 4.
---------------------------------------------------------------------------

In a similar manner, a number of commenters stated that the
factsheet interprets the facility construction standards of 9 CFR part
3 in a performance-based manner that the regulations themselves, which
are highly prescriptive, do not support. Several commenters concluded
that the factsheet materially contradicts both existing regulations and
the provisions of the proposed rule. The commenters added that APHIS
had made no attempt, in issuing the factsheet, to specify that it is a
``pararegulatory'' document which, by definition, cannot have the force
of law. The commenters further stated that the factsheet provides
evidence that APHIS' interpretation of the proposed rule will be
arbitrary and capricious. For these reasons, the commenters stated that
the proposed rule cannot be finalized and must be withdrawn.
The factsheet was simply intended to provide additional explanation
about the provisions of the proposed rule for the public. It did not
contradict the provisions of the proposed rule.
Several commenters cited DDAL v. Veneman as supporting an exemption
from licensing for all small-scale residential breeders. The commenters
asserted that APHIS had stated in DDAL v. Veneman that hobby breeders
do not need to be licensed.
As we state elsewhere in this document, we do not consider the term
``hobby breeder'' to be equivalent to a small-scale residential
breeder, nor was it used in such a manner in DDAL v. Veneman.
One commenter stated that Congress has amended the AWA several
times since its promulgation, but never sought to define ``retail pet
store'' or otherwise restrict certain entities from considering
themselves to be retail pet stores.

[[Page 57247]]

It is our contention that our proposed definition of the term
retail pet store is consistent with the AWA.
One commenter stated that the rule had not been issued in
accordance with Executive Order 13563. The commenter stated that APHIS
failed to provide the scientific and technical basis for the rule and
allow for a critique and evaluation of these bases. The commenter
stated that it would be reasonable for someone to infer that the
proposed rule was based on anecdotal evidence. The commenter also
stated that this failure to provide the technical and scientific basis
for the rule, and to apparently rely on anecdotal evidence, was in
violation of Section (2)(b) of the Executive Order.
Executive Order 13563 only requires regulatory Agencies such as
APHIS to state the scientific and technical basis for a rule if that
basis exists. The proposed rule was based on our determination that
certain parties were construing the definition of retail pet store in
the AWA regulations in a manner inconsistent with the AWA.
The commenter further stated that, by failing to engage in dialog
with those who would be potentially regulated by the rule, we failed to
meet the objectives of Section (2)(c) of the Executive Order, which
suggests that, where feasible and appropriate, Agencies should seek the
views of entities likely to be affected. The commenter stated that he
was not aware that we had engaged in any meaningful dialog with
potentially regulated entities prior to issuance of the rule, and
certainly not in a manner proportionate to the scope of the rule.
APHIS engaged the potentially regulated industries at length before
issuing the proposed rule. Our outreach activities included personal
communications by telephone and in person.

Other Comments

We received many comments on subjects that are outside the scope of
this rulemaking. Several of the comments also requested changes that
are also outside the scope of the AWA, among them a ban on the sale of
pets, mandatory spaying or neutering and microchipping of all pets sold
at retail, regulation of the Internet as a marketing tool for pets,
licensing of individuals who buy animals as pets and imposing minimum
requirements on those individuals, and titling for animals used in
agility competitions.
Therefore, for the reasons given in the proposed rule and in this
document, we are adopting the proposed rule as a final rule, with the
changes discussed in this document.

Executive Orders 12866 and 13563 and Regulatory Flexibility Act

This final rule has been determined to be significant for the
purposes of Executive Order 12866 and, therefore, has been reviewed by
the Office of Management and Budget.
We have prepared an economic analysis for this rule. The economic
analysis provides a cost-benefit analysis, as required by Executive
Orders 12866 and 13563, which direct agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, and equity). Executive Order 13563 emphasizes the importance
of quantifying both costs and benefits, of reducing costs, of
harmonizing rules, and of promoting flexibility. Executive Order 13563
also emphasizes the need for retrospective analysis of rulemaking.
Accordingly, USDA will carefully monitor the implementation of this
rule and will propose any changes that may be necessary to both protect
the welfare of covered animals and to minimize undue burdens on the
public. The economic analysis also examines the potential economic
effects of this rule on small entities, as required by the Regulatory
Flexibility Act. The economic analysis is summarized below. Copies of
the full analysis are available on the Regulations.gov Web site (see
footnote 2 in this document for a link to Regulations.gov) or by
contacting the person listed under FOR FURTHER INFORMATION CONTACT.
This rule will primarily affect dog breeders who maintain more than
four breeding females at their facilities, sell the offspring as pets,
and whose buyers are not all physically present to observe the animals
prior to purchase and/or to take custody of those animals after
purchase. The rule may also affect some cat and rabbit breeders. While
the scope of this rule applies to certain other animals, based on our
experience, most retailers of animals other than dogs will meet the
amended definition of retail pet store and continue to be exempt from
regulation.
The benefits of this rule justify its costs. More pet animals sold
at retail will be brought under the protection of the AWA and monitored
for their health and humane treatment. Improved animal welfare will
benefit buyers of pets and the general public in various ways.
Monitoring the health and humane treatment of pet animals should reduce
the number of pets receiving inadequate care and reduces the
possibility of sick or injured pet animals being purchased sight
unseen. When a buyer receives a sick or abused pet animal, sight
unseen, the responsibility for correcting inadequate care has been
effectively transferred from the seller to the buyer without the
buyer's knowledge or consent. If that buyer is unable or unwilling to
provide the pet animal with needed care, a shelter may become the
default caregiver for that animal. A reduction in the number of sick or
abused pet animals received by buyers may reduce the number of such
animals sent to shelters. Public shelters provide for the care of these
unwanted pet animals, usually at local taxpayer expense. Also, as noted
by several commenters, neglected or abused pet animals confiscated from
substandard breeding operations are often sent to shelters to provide
for their care. Newly regulated commercial breeders working to comply
with AWA regulations will increase the health and well-being of the pet
animals under their care.
In addition, when breeding operations for which regulatory
oversight is insufficient fail to adequately provide veterinary care
for their animals, the buyer may subsequently incur greater costs
associated with providing that care because needed care has been
delayed. The rule will benefit buyers of animals by providing
regulatory oversight to ensure that breeders provide necessary
veterinary care.
Animals can carry zoonotic diseases (diseases that can be
transmitted between, or are shared by animals and humans). The
possibility of an animal carrying a zoonotic disease is reduced with
adequate veterinary care, including vaccinations. To the extent that
improved oversight reduces the likelihood of pet-to-human transmission
of zoonotic diseases such as rabies, the public as a whole will benefit
from the rule. The rule will also address the competitive disadvantage
of retail breeders who incur certain costs by adhering to the AWA
standards regulations while retail breeders who do not operate their
facilities according to AWA standards may bear lower costs.
There is a great deal of uncertainty surrounding the number of
facilities that will be affected by this rule, as we acknowledged in
the proposed rule, and as evidenced in the public comments. There are
hundreds of distinct dog breeds, and correspondingly large numbers of
dog breeders in the United States. Breeders with an online presence are
those most likely to be selling the offspring sight unseen and thus are
more likely to be affected by this rule. We estimate that there could
be between 8,400 and 15,000 such dog breeders in

[[Page 57248]]

the United States. This estimate is based on the assumption that for
every five breeders identified by APHIS in online breeder registries
there is one other breeder that has not been identified who also uses
remote marketing methods.
However, this rule will only affect those dog breeders who sell
dogs as pets, not for hunting, security, breeding, or other purposes;
who maintain more than four breeding females on their property; and
whose buyers are not all physically present to observe the animals
prior to purchase and/or to take custody of the animals after purchase.
When these conditions are taken into account, we estimate that there
are between 2,600 and 4,640 dog breeders that may be affected by this
rule. The following table highlights the criteria used for identifying
dog breeders potentially affected by this rule and the process used to
calculate the number of such breeders:

Potentially Affected Dog Breeder Calculations--A Breeder Must Meet All Criteria Before Licensing Is Required
----------------------------------------------------------------------------------------------------------------
Criteria for
Row Category inclusion \2\ Calculation Range
----------------------------------------------------------------------------------------------------------------
(a).......... Number of Listed All listed......... .......................... 7,000 to 12,500.
Breeders \1\.
(b).......... Inclusion of For every five (a) * 1.2................. 8,400 to 15,000.
breeders not listed. breeders listed,
we assume one more
not listed who
also has a remote
marketing presence.
(c).......... Breeder sells pets.. 75% of breeders (b) * 0.75................ 6,300 to 11,250.
sell dogs as pets,
i.e., not for
hunting, security,
breeding, etc.
(d).......... AND Breeder has more 55% of breeders (c) * 0.55................ 3,465 to 6,188.
than 4 breeding have more than 4
females. breeding females.
(e).......... AND Buyer purchases 75% of breeders (d) * 0.75................ 2,599 to 4,641.
dog sight unseen. sell one or more
dogs without the
purchaser
physically
observing the dog
before purchase
and/or taking
custody.
----------------------------------------------------------------------------------------------------------------
\1\ Two multi-breed breeder listings: www.puppysites.com and www.dogbreederregistry.com, and individual breed
breeder listings for 160 individual breeds.
\2\ Expert judgment based on online breeder registries, public comments, and APHIS' knowledge of industry
practices.

The rule will also affect cat breeders who maintain more than four
breeding females at their facilities and sell the offspring as pets,
sight unseen. Fewer than 2 percent of cats in the United States are
purebred and raised by breeders. We estimate that about 325 cat
breeders may be affected by this rule.
The rule will also affect rabbit breeders who sell the offspring as
pets, sight unseen, which is not common. Rabbits are usually sold at
auctions, exhibits, and fairs where the buyers are physically present.
We estimate that no more than 75 rabbitries may be affected by this
rule.
Newly regulated breeders will be subject to licensing, animal
identification, and recordkeeping requirements. In addition, affected
entities will be subject to standards for facilities and operations,
animal health and husbandry, and transportation. One set of costs
attributable to the rule will be incurred annually by all newly
regulated entities, such as licensing fees. Other costs will depend on
the manner and extent to which entities are not complying with the
basic standards of the AWA. Some of these costs will be one-time costs
in the first year, such as providing adequate shelter; others will
recur yearly, such as providing adequate veterinary care.
The cost of a license for breeders is based on 50 percent of gross
sales during the preceding business year. As an example, if 50 percent
of gross sales are more than $500 but not more than $2,000, the annual
cost of a license is $70. Identification tags for dogs and cats cost
from $1.12 to $2.50 each. Other animals such as rabbits can be
identified by a label attached to the primary enclosure containing a
description of the animals in the enclosure. We estimate that the
average licensed breeder requires about 10 hours annually to comply
with the licensing paperwork and recordkeeping requirements. All newly
licensed breeders will incur these costs. We estimate these costs would
be between about $284 and $550 for a typical dog breeder. Costs at the
3,000 to 5,000 newly licensed dog, cat, and rabbit breeders for animal
licensing, animal identification and recordkeeping could range between
$853,000 and $2.8 million annually.
The newly regulated breeders will also need to meet regulatory
standards concerning facilities and operations, animal health and
husbandry, and transportation. However, as acknowledged by a wide
spectrum of commenters on the proposed rule, most breeders maintain
their facilities well above the minimum standards of the AWA.
Therefore, the vast majority of newly regulated breeders will only need
to incur licensing, animal identification, and recordkeeping costs and
not need to make structural and/or operational changes in order to
comply with the standards. Neither the number of entities that will
need to make changes nor the extent of those changes is known.
Therefore, the overall cost of structural and operational changes that
will be incurred due to this rule is also unknown. However, we can
estimate the general magnitude of these costs by assuming the newly
regulated entities exhibit patterns of noncompliance similar to those
of currently regulated wholesale breeders. We agree with many comments
we received that most breeders that may be affected by this rule are
already substantially in compliance.
Based on our experience regulating wholesale breeders, the most
common areas of regulatory noncompliance at prelicensing and compliance
inspections are veterinary care, facility maintenance and construction,
shelter construction, primary enclosure minimum space requirements, and
cleaning and sanitation. We apply percentages of noncompliance for
these areas, multiplied by likely unit costs or cost ranges, to the
estimated number of affected breeders described above to arrive at a
total cost range for the rule. We estimate that costs for coming into
compliance for currently noncompliant breeders could range from $2.9
million to $12.1 million in the first year, when both one-time
structural changes will occur and annual operational changes will
start.
The rule will also affect some currently licensed wholesale
breeders. Expanding the licensing exemption from three or fewer
breeding females to four or fewer breeding females could reduce the
number of these licensees. We expect that the number of current
licensees that will fall below the

[[Page 57249]]

exemption threshold following the implementation of this rule will be
very small.
The majority of businesses affected are likely to be small
entities. As explained, this wide range in total cost is mainly derived
from the uncertainty surrounding the total number of breeders that will
need to become licensed as a result of this rule and the number that
will then need to make structural or operational changes. It derives to
a lesser degree from the ranges in costs that are assumed will be
incurred by the newly licensed facilities to remedy instances of
noncompliance.

Executive Order 12372

This program/activity is listed in the Catalog of Federal Domestic
Assistance under No. 10.025 and is subject to Executive Order 12372,
which requires intergovernmental consultation with State and local
officials. (See 7 CFR part 3015, subpart V.)

Executive Order 12988

This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. It is not intended to have retroactive effect.
The Act does not provide administrative procedures which must be
exhausted prior to a judicial challenge to the provisions of this rule.

Paperwork Reduction Act

In accordance with section 3507(d) of the Paperwork Reduction Act
of 1995 (44 U.S.C. 3501 et seq.), the information collection or
recordkeeping requirements included in this final rule, which were
filed under 0579-0392, have been submitted for approval to the Office
of Management and Budget (OMB). When OMB notifies us of its decision,
if approval is denied, we will publish a document in the Federal
Register providing notice of what action we plan to take.

E-Government Act Compliance

The Animal and Plant Health Inspection Service is committed to
compliance with the E-Government Act to promote the use of the Internet
and other information technologies, to provide increased opportunities
for citizen access to Government information and services, and for
other purposes. For information pertinent to E-Government Act
compliance related to this rule, please contact Mrs. Celeste Sickles,
APHIS' Information Collection Coordinator, at (301) 851-2908.

List of Subjects in 9 CFR Parts 1 and 2

Animal welfare, Pets, Reporting and recordkeeping requirements,
Research.

Accordingly, we are amending 9 CFR parts 1 and 2 as follows:

PART 1--DEFINITION OF TERMS

0
1. The authority citation for part 1 continues to read as follows:

Authority: 7 U.S.C. 2131-2159; 7 CFR 2.22, 2.80, and 371.7.

0
2. In Sec. 1.1, the definitions of dealer and retail pet store are
revised to read as follows:

Sec. 1.1 Definitions.

* * * * *
Dealer means any person who, in commerce, for compensation or
profit, delivers for transportation, or transports, except as a
carrier, buys, or sells, or negotiates the purchase or sale of: Any dog
or other animal whether alive or dead (including unborn animals,
organs, limbs, blood, serum, or other parts) for research, teaching,
testing, experimentation, exhibition, or for use as a pet; or any dog
at the wholesale level for hunting, security, or breeding purposes.
This term does not include: A retail pet store, as defined in this
section; any retail outlet where dogs are sold for hunting, breeding,
or security purposes; or any person who does not sell or negotiate the
purchase or sale of any wild or exotic animal, dog, or cat and who
derives no more than $500 gross income from the sale of animals other
than wild or exotic animals, dogs, or cats during any calendar year.
* * * * *
Retail pet store means a place of business or residence at which
the seller, buyer, and the animal available for sale are physically
present so that every buyer may personally observe the animal prior to
purchasing and/or taking custody of that animal after purchase, and
where only the following animals are sold or offered for sale, at
retail, for use as pets: Dogs, cats, rabbits, guinea pigs, hamsters,
gerbils, rats, mice, gophers, chinchillas, domestic ferrets, domestic
farm animals, birds, and coldblooded species. In addition to persons
that meet these criteria, retail pet store also includes any person who
meets the criteria in Sec. 2.1(a)(3)(vii) of this subchapter. Such
definition excludes--
(1) Establishments or persons who deal in dogs used for hunting,
security, or breeding purposes;
(2) Establishments or persons, except those that meet the criteria
in Sec. 2.1(a)(3)(vii), exhibiting, selling, or offering to exhibit or
sell any wild or exotic or other nonpet species of warmblooded animals
(except birds), such as skunks, raccoons, nonhuman primates, squirrels,
ocelots, foxes, coyotes, etc.;
(3) Any establishment or person selling warmblooded animals (except
birds, and laboratory rats and mice) for research or exhibition
purposes;
(4) Any establishment wholesaling any animals (except birds, rats,
and mice); and
(5) Any establishment exhibiting pet animals in a room that is
separate from or adjacent to the retail pet store, or in an outside
area, or anywhere off the retail pet store premises.
* * * * *

PART 2--REGULATIONS

0
3. The authority citation for part 2 continues to read as follows:

Authority: 7 U.S.C. 2131-2159; 7 CFR 2.22, 2.80, and 371.7.

0
4. Section 2.1 is amended as follows:
0
a. By revising paragraph (a)(3)(i);
0
b. In paragraph (a)(3)(ii), by removing the words ``to a research
facility, an exhibitor, a dealer, or a pet store'';
0
c. By revising paragraphs (a)(3)(iii) and (a)(3)(vii); and
0
d. In the OMB citation at the end of the section, by removing the words
``number 0579-0254'' and adding the words ``numbers 0579-0254 and 0579-
0392'' in their place.
The revisions read as follows:

Sec. 2.1 Requirements and application.

(a) * * *
(3) * * *
(i) Retail pet stores as defined in part 1 of this subchapter;
* * * * *
(iii) Any person who maintains a total of four or fewer breeding
female dogs, cats, and/or small exotic or wild mammals, such as
hedgehogs, degus, spiny mice, prairie dogs, flying squirrels, and
jerboas, and who sells, at wholesale, only the offspring of these dogs,
cats, and/or small exotic or wild mammals, which were born and raised
on his or her premises, for pets or exhibition, and is not otherwise
required to obtain a license. This exemption does not extend to any
person residing in a household that collectively maintains a total of
more than four breeding female dogs, cats, and/or small exotic or wild
mammals, regardless of ownership, nor to any person maintaining
breeding female dogs, cats, and/or small exotic or wild mammals on
premises on which more than four breeding female dogs, cats, and/or
small exotic or wild mammals are maintained, nor to any person acting
in concert with others where they collectively maintain a total of more

[[Page 57250]]

than four breeding female dogs, cats, and/or small exotic or wild
mammals regardless of ownership;
* * * * *
(vii) Any person including, but not limited to, purebred dog or cat
fanciers, who maintains a total of four or fewer breeding female dogs,
cats, and/or small exotic or wild mammals, such as hedgehogs, degus,
spiny mice, prairie dogs, flying squirrels, and jerboas, and who sells,
at retail, only the offspring of these dogs, cats, and/or small exotic
or wild mammals, which were born and raised on his or her premises, for
pets or exhibition, and is not otherwise required to obtain a license.
This exemption does not extend to any person residing in a household
that collectively maintains a total of more than four breeding female
dogs, cats, and/or small exotic or wild mammals, regardless of
ownership, nor to any person maintaining breeding female dogs, cats,
and/or small exotic or wild mammals on premises on which more than four
breeding female dogs, cats, and/or small exotic or wild mammals are
maintained, nor to any person acting in concert with others where they
collectively maintain a total of more than four breeding female dogs,
cats, and/or small exotic or wild mammals regardless of ownership.
* * * * *

Done in Washington, DC, this 11th day of September 2013.
Edward Avalos,
Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 2013-22616 Filed 9-17-13; 8:45 am]
BILLING CODE 3410-34-P