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Questions and Answers:

Proposed Rule – Retail Pet Sales

What is APHIS proposing?

APHIS is proposing to revise its definition of “retail pet store” to close a loophole
that has in some cases threatened the health of pets sold sight unseen over the
Internet and via phone- and mail based businesses. Under the current definition of
“retail pet store,” which was developed over 40 years ago and predates the
Internet, some breeders selling pets are taking advantage of a loophole that
improperly exempts them from meeting the basic requirements of the Animal
Welfare Act. The proposed rule will close this loophole, ensuring that animals sold
over the Internet and via phone- and mail-based businesses are better monitored
for their overall health and humane treatment.

The proposal will restore the definition to its original intent so that it limits the
retail pet store exemption to only business and residences:

• where buyers physically enter to observe the animals available for sale prior to
purchasing them, 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,
chinchilla, domestic ferrets, domestic farm animals, birds, and coldblooded species.

APHIS is also proposing to increase the number of breeding females from three to
four that small hobby breeders can own and still be exempt from licensing
requirements. To meet the exemption requirements, these breeders can only sell
the offspring of the breeding females that were born and raised on their premises,
and sold for only pets or exhibition.

Why does APHIS want to change this rule?

This proposed rule is intended to help ensure that consumers will be purchasing
healthy animals for pets.

The current definition of “retail pet store” was written in the 1970s to exempt from
federal regulation traditional pet stores and other facilities whose animals are
subject to a certain degree of oversight from customers who enter their shop.

Today, the Internet allows retailers to sell animals directly to the public sight-
unseen. Because the current definition is broadly defined, those retailers continue
to qualify for exemption, even though they don’t meet the intent of the definition.
As a result, some buyers have received animals with a contagious disease, general
illness, genetic deformities or other medical and social issues. Some of these
buyers also received animals that were too young to be weaned.

APHIS wants to restore the original intent of the Animal Welfare Act and modernize
its regulations to reflect today’s business practices.

The change to the small hobby breeder licensing exemption will increase the
number of breeding females from three to four. This will allow us to focus more on
the facilities that present the greatest risk of noncompliance with the regulations.

How will this affect retail pet stores?

This proposed rule would not affect traditional retail pet stores, breeders, and other
dealers whose buyers physically enter the premises. They will continue
to be exempt from licensing and inspection under the Animal Welfare Act. However,
they will still be subject to any applicable individual state and county regulations.

How will this affect Internet, phone and mail order retailers?

The proposal will affect these retailers if they currently sell their pet animals to
buyers sight-unseen.

Pet animal retailers will have a choice. They can either sell their animals to buyers
who physically enter their store to visibly observe the animals available for
sale, or they can obtain a license under the Animal Welfare Act and allow APHIS
inspectors to inspect their facility.

What will this mean for consumers?

The changes will help protect consumers. Under the proposed rule, no dog or other
pet animal will be sold at retail without either public or APHIS oversight.

What is the Animal Welfare Act?

The Animal Welfare Act sets standards for humane care and treatment that must
be provided for certain animals that are bred for commercial sale; exhibited to
the public; used in biomedical research; or transported commercially. The act does
not apply to cold-blooded animals or agricultural animals used for food or fiber.
Individuals and entities licensed under the Animal Welfare Act must provide their
animals with adequate housing, sanitation, nutrition, water and veterinary care.
They must also protect the animals from extreme weather and temperatures.

What does a proposed rule mean?

APHIS has issued this proposed rule as part of its rule making process. It is just a
proposal, issued for public review and comment. It has no immediate effect
on potentially regulated facilities.

What is the next step in the rule making process?

The proposed rule is available for public review and comment for the next 60 days.
Once the comment period closes, APHIS will consider all comments received.

How can I comment on this proposal?

To comment on this proposal, you can submit your comments one of two ways:

• Visit the Federal eRulemaking Portal at http://www.regulations.gov/#!documentDe ... -2011-0003

• Mail your comments to: Docket No. APHIS-2011-0003, Regulatory Analysis and
Development PPD APHIS, Station 3A-03.8, 4700 River Road Unit 118,
Riverdale, MD, 20737-1238.


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http://www.aphis.usda.gov/newsroom/2012/05/pdf/docket_APHIS_2011_0003.pdf

BILLING CODE: 3410-34-P
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: Proposed rule.

SUMMARY: We are proposing to revise the definition of retail pet
store and related regulations to bring more pet animals sold at retail under the
protection of the Animal Welfare Act (AWA). Specifically, we would narrow the
definition of retail pet store so that it means 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 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. We are also proposing to increase 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 would
apply regardless of whether those animals are sold at retail or wholesale. This
proposed rule is necessary to ensure that animals sold at retail are monitored for
their health and humane treatment and to concentrate our regulatory efforts on
those facilities that present the greatest risk of noncompliance with the regulations.

DATES: We will consider all comments that we receive on or before [Insert
date 60 days after date of publication in the Federal Register].

ADDRESSES: You may submit comments by either of the following methods:

• Federal eRulemaking Portal: Go to
http://www.regulations.gov/#!documentDe ... -0003-0001.

• Postal Mail/Commercial Delivery: Send your comment to Docket No. APHIS-2011-
0003, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700
River Road Unit 118, Riverdale, MD 20737-1238.

Supporting documents and any comments we receive on this docket may be
viewed at http://www.regulations.gov/#!docketDeta ... -2011-0003 or in
our reading room, which is located in room 1141 of the USDA South Building, 14th
Street and Independence Avenue SW., Washington, DC. Normal reading room
hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be
sure someone is there to help you, please call (202) 799-7039 before coming.

FOR FURTHER INFORMATION CONTACT: Dr. Gerald Rushin, Veterinary
Medical Officer, Animal Care, APHIS, 4700 River Road Unit 84, Riverdale, MD
20737-1231; (301) 851-3740.

SUPPLEMENTARY INFORMATION:
EXECUTIVE SUMMARY

I. Purpose of Regulatory Action

The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection
Service (APHIS) is taking this action pursuant to its authority under the Animal
Welfare Act (AWA or the Act, 7 U.S.C. 2131 et seq.). 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. The Secretary has delegated responsibility for
administering the AWA to the Administrator of APHIS. Regulations and standards
established under the AWA are contained in the Code of Federal Regulations (CFR)
in 9 CFR parts 1, 2, and 3. APHIS is undertaking this action to ensure that animals
sold at retail are monitored for their health and humane treatment.

II. Summary of Major Provisions

“Retail pet stores” are not required to obtain a license under the AWA or comply
with the AWA regulations and standards. Currently, anyone selling, at retail, the
following animals for use as pets are considered retail pet stores: Dogs, cats,
rabbits, guinea pigs, hamsters, gerbils, rats, mice, gophers, chinchilla, domestic
ferrets, domestic farm animals, birds, and cold-blooded species.

This proposed rule would rescind the “retail pet store” status of anyone selling, at
retail for use as pets, the animals listed above to buyers who do not physically
enter his or her place of business or residence in order to personally observe the
animals available for sale prior to purchase and/or to take custody of the animals
after purchase. Unless otherwise exempt under the regulations, these entities
would be required to obtain a license from APHIS and would become subject to the
requirements of the AWA, which include identification of animals and
record keeping requirements, as well as the following standards: Facilities and
operations (including space, structure and construction, waste disposal, heating,
ventilation, lighting, and interior surface requirements for indoor and outdoor
primary enclosures and housing facilities); animal health and husbandry (including
requirements for veterinary care, sanitation and feeding, watering, and separation
of animals); and transportation (including specifications for primary enclosures,
primary conveyances, terminal facilities, and feeding, watering, care, and handling
of animals in transit).

In addition to retail pet stores, the proposed rule would exempt from regulation
anyone who sells or negotiates the sale 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 such animals. In addition, the proposed rule would increase 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
licensing and inspection if he or she sells only the offspring of those animals born
and raised on his or her premises for use as pets or exhibition, regardless of
whether those animals are sold at retail or wholesale.

III. Costs and Benefits

The benefits of the rule, primarily expected improvements in animal welfare, are
expected to justify the costs. These benefits are not quantified. As detailed in the
RIA, total costs are expected to total from $2.2 million to $5.5 million, while total
cost savings could range from about $45,000 to about $150,000 per year. An
estimate of the primary costs that may be incurred by entities in connection with
this proposed rule is provided below:





Background

Under the Animal Welfare Act (AWA or the Act, 7 U.S.C. 2131 et seq.), 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. The Secretary has delegated
responsibility for administering the AWA to the Administrator of U.S. Department
of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS).
Within APHIS, the responsibility for administering the AWA has been delegated to
the Deputy Administrator for Animal Care. Regulations and standards established
under the AWA are contained in the Code of Federal Regulations (CFR) in 9 CFR
parts 1, 2, and 3 (referred to below as the regulations). 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.

The AWA 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. Dealers of animals
must obtain licenses, they must comply with the AWA regulations and standards,
and their facilities may be inspected for compliance. The Act defines the term
dealer to exclude “a retail pet store except such store which sells any animals to a
research facility, an exhibitor, or a dealer.” However, the Act does not define the
term “retail pet store.”

Pursuant to its rule making authority, the USDA amended the AWA regulations in
1971 by adding a definition of retail pet store. A retail pet store is defined in § 1.1
of the regulations to mean “any outlet 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, chinchilla, domestic ferrets, domestic farm
animals, birds, and cold-blooded species.” The definition of retail pet store goes on
to describe certain establishments that do not qualify as retail pet stores, even if
they sell animals at retail. Those establishments that do not qualify as retail pet
stores are:

• Establishments or persons who deal in dogs used for hunting, security, or
breeding purposes;

• Establishments or persons exhibiting, selling, or offering to exhibit or sell any wild
or exotic or other non-pet species of warmblooded animals (except birds), such as
skunks, raccoons, nonhuman primates, squirrels, ocelots, foxes, coyotes, etc.;

• Establishments or persons selling warmblooded animals (except birds, and
laboratory rats and mice) for research or exhibition purposes;

• Establishments wholesaling any animals (except birds, rats, and mice); and

• Establishments 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.

In accordance with the AWA, retail pet stores are exempt from the licensing
requirements in § 2.1(a)(3) of the regulations. Other retail and wholesale dealers
must be licensed, unless otherwise exempt under the regulations. The exemptions
most relevant to this proposed rule are discussed in greater detail later in this
document.

The current definition of the term retail pet store was established over 40
years ago to ensure that the appropriate retail facilities were exempt from the
licensing requirements. At that time, such outlets were primarily hobby breeders,
whose small facilities usually pose less risk to the welfare of animals than do large
facilities, and traditional “brick and mortar” stores that were subject to a degree of
oversight by persons who physically entered their place of business to personally
observe the animals offered for sale prior to purchase and/or to take custody of
the animals after purchase. In this way, animals sold by such traditional retail pet
stores can be monitored by the public for their health and humane treatment.
However, with the increased use of the Internet in the 1990s, many retailers
began to offer their animals for sale remotely over the Internet and to sell and
transport their animals nationwide. As a result, today’s customers are
often unable to enter the retailer’s place of business to observe the animals before
taking them home. Because the current definition of retail pet store includes all
retail outlets, with the limited exceptions discussed above, retailers selling animals
by any means, including remote sales conducted over the Internet or by mail,
telephone, or any other means where the customers do not physically enter a
physical premises, qualify as retail pet stores and are exempt from the licensing
requirements, even if they lack the public oversight provided by customers
entering their place of business.

Without that public oversight or licensing and inspections by APHIS, there is no
assurance that animals sold at retail for use as pets are monitored for their health
and humane treatment nationwide. In fact, in recent years, APHIS has noted a
number of reports and complaints concerning the welfare of such animals. During
a program audit that was completed in 2010, the USDA's Office of Inspector
General found that some consumers who purchased dogs over the Internet had
encountered health problems with their dogs. The report did not discuss whether
animals purchased over the Internet suffer from health problems at a greater rate
than those sold in traditional, brick-and-mortar retail pet stores. In addition, APHIS
has received complaints directly from members of the public concerning the
welfare of dogs and other pet animals sold at retail. Members of Congress have
also introduced legislation intended to address the issue of dogs raised by
high-volume breeders that sell directly to the public, including sales over the
Internet.

To address these issues and ensure that animals sold at retail for use as pets are
monitored for their health and humane treatment, we are proposing to revise the
definition of retail pet store in order to bring more pet animal retailers under the
AWA licensing requirements. Specifically, we are proposing to amend the
definition of retail pet store to limit the applicability of the term to only those
places of business or residences 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. Because animals sold by such stores can be
monitored by the buyers for their health and humane treatment, we have
determined that the risk to the welfare of animals posed by these stores does not
warrant our inspection or require the issuance of a license.

We are also proposing that the revised definition of retail pet store include any
person who meets the criteria in § 2.1(a)(3)(iii) of the regulations. That paragraph
currently provides an exemption from licensing requirements for persons who
maintain a total of three or fewer breeding female dogs, cats, and/or small exotic
or wild mammals and who sell 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. This licensing exemption does not include: (1) Any person
residing in a household that collectively maintains a total of more than three
breeding female dogs, cats, and/or small exotic or wild mammals, regardless of
ownership, (2) 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, or (3) 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.

In addition to adding persons meeting the criteria in § 2.1(a)(3)(iii) to the
definition of retail pet store, we are also proposing to increase the number of
breeding females found in that exemption from three to four. That proposed
change is discussed in the next section.

Licensing Exemptions

The current licensing exemption for retail pet stores is found in two paragraphs in
§ 2.1 of the regulations:

•Paragraph (a)(3)(i) exempts from licensing “retail pet stores which sell
non-dangerous, pet-type animals, such as dogs, cats, birds, rabbits, hamsters,
guinea pigs, gophers, domestic ferrets, chinchilla, rats, and mice, for pets, at
retail only: Provided, That, Anyone wholesaling any animals, selling any animals
for research or exhibition, or selling any wild, exotic, or non-pet animals retail,
must have a license;” and

• Paragraph (a)(3)(vii) exempts 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., a purebred dog or cat fancier)
and is not otherwise required to obtain a license.”

We are proposing to simplify the exemption presented in paragraph (a)(3)(i) so
that it states simply that “retail pet stores as defined in part 1 of this subchapter”
are exempt from the licensing requirements. The definition of retail pet store
already lists the types of animals sold at such stores and excludes persons who
sell animals at wholesale, who sell warmblooded animals for research or
exhibition, and who sell wild, exotic, or non-pet animals from the scope of the
definition, so the exemption and exclusions detailed in that paragraph are
unnecessary. This change would also ensure that the licensing exemption for retail
pet stores is consistent with our proposed definition. Similarly, we are proposing
to remove paragraph (a)(3)(vii) in its entirety. Retaining the exemption for the
entities addressed under that paragraph – essentially all retail breeders – would
be inconsistent with our proposed definition of retail pet store.

In addition to these proposed changes to the licensing exemptions for retail pet
stores, we would also revise the licensing exemption in § 2.1(a)(3)(ii) of the
regulations. Paragraph (a)(3)(ii) exempts from licensing “any person who sells or
negotiates the sale 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 such
animals 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.” While this
exemption is based on a similar provision found in the definition of dealer in the
AWA and § 1.1 of the regulations, it differs from that provision by limiting the
source of gross income to sales to research facilities, exhibitors, dealers, and pet
stores only. We believe that this exemption should apply to all animals. Therefore,
we are proposing to remove the limitation concerning the source of gross income in
§ 2.1(a)(3)(ii) of the regulations.

Finally, as noted previously, we are proposing to amend § 2.1(a)(3)(iii) to increase
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 licensing and inspection requirements. In proposing to increase this
number, we are taking into account the fact that some dealers who currently
qualify as retail pet stores would no longer be exempt from licensing and
inspection requirements as a result of our proposed change to the definition of
retail pet store. By increasing the number of breeding females, some dealers with
small facilities who would not otherwise qualify as retail pet stores under the
revised definition of that term would continue to be exempt from licensing and
inspection requirements and some pet wholesalers with small facilities who are
currently required to be licensed would no longer have to be licensed. Based
on a recent review of compliance among currently regulated facilities, we believe
that a facility that maintains four breeding females, one more than the current
limit of three, can be considered a low-risk facility, so this proposed change would
allow us to continue to concentrate our regulatory resources on those facilities
that present the greatest risk of noncompliance and thereby ensure the welfare of
animals.

Other Changes

Currently, the definition of dealer in § 1.1 of the regulations states that this term
does not include “retail pet stores as defined in this section, unless such store sells
any animal to a research facility, an exhibitor, or a dealer (wholesale)”. The
phrase “unless such store sells any animal to a research facility, an exhibitor, or a
dealer (wholesale)” is redundant given the exclusions contained in the definition of
retail pet store. We are proposing to revise the definition of dealer by removing
this phrase in order to eliminate this redundancy.

Alternatives Considered

APHIS believes that compliance with the requirements of the AWA is important for
these potentially affected entities for the reasons discussed above, but should not
be regarded as unreasonably onerous. Entities subject to the AWA must purchase
a license, which ranges in cost from $40 - $760, depending on the size of the
establishment. Further, breeders who sell animals over the Internet will be subject
to the other provisions of the AWA, including identification of animals,
recordkeeping, facility maintenance, periodic vet care, shelter construction
standards, and sanitation requirements. APHIS believes that these requirements
are not excessively burdensome, but we also recognize that many of the regulated
entities are likely to be small businesses.

Consistent with Executive Orders 12866 and 13563, which emphasize determining
the least costly regulatory option, and with the President’s January 12, 2011,
Memorandum on Small Businesses and Job Creation, APHIS has considered
several alternatives to this proposed action. For the reasons discussed below, we
believe the changes proposed in this document represented the best alternative
option that would satisfactorily accomplish the stated objectives and
minimize impacts on small entities. However, we welcome comments from the
public on these and other alternative options.

As written, some dealers would no longer qualify as retail pet stores under our
proposed definition if they sold covered animals at retail to a buyer who did not
physically enter the seller's place of business or residence, unless the dealer is
otherwise exempted under the regulations. This would mean that if a person sold
some pets to walk-in customers from a physical storefront and some pets via
remote sales, including over the Internet or by mail, telephone, or other non-face-
to-face means, then that person would be considered a dealer under the AWA and
subject to regulation under the Act unless otherwise exempted under the
regulations.

We recognize that retailers who sell some animals to walk-in customers and some
animals remotely may be subject to a certain degree of oversight by the
customers who enter their place of business or residence. As a result, we
considered establishing a regulatory threshold based on the percentage of such a
retailer’s remote sales. However, we did not include this alternative in our
proposed changes for two reasons. First, we do not have the authority to require
that retail pet stores make and retain sales records under the AWA, which are
necessary to verify the retailer is operating within the established threshold,
whatever that percentage might be. Second, it would also be difficult to confirm
that all the animals that the entity sells at retail were available to be observed by
its walk-in customers. If the animals sold to walk-ins were kept in one location or
part of a location where they could be seen by the public and the animals sold
remotely were kept at another location, then those latter animals would not
receive the public oversight that forms the basis for the retail pet store exemption.
For these reasons, we do not believe that it is possible to craft a threshold based
on a percentage of a retailer’s remote sales that, if met, would enable a hybrid
operation such as we have described to continue to be considered a retail pet
store and thus remain exempt from the licensing and requirements under the Act.
We are, however, interested in receiving comments from the public on this
alternative. Are there currently retailers who sell some animals from a storefront
and some animals remotely and, if so, are there specific ways that they do
business that provide assurance that all the covered animals they sell at retail are
subject to public oversight? Are there alternatives to verifying compliance that we
may not have considered? We welcome comments from the public on these
questions.

A second alternative we considered in preparing this proposed rule was to add an
exception from licensing for retailers that are subject to oversight by State or local
agencies or by breed and registry organizations that enforce standards of welfare
comparable to those standards established under the AWA. 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. While
the State laws concerning the welfare of animals in retail pet stores vary by State,
few States actually address all categories of welfare required under the AWA,
including veterinary care, food and water, proper sanitation, and housing.
Similarly, few breed and registry organizations have welfare standards that they
require their members to meet that are comparable to those required under the
AWA, and few of those organizations conduct regular, unannounced inspections or
have an adequately sized inspectorate to evaluate compliance with such welfare
standards. However, APHIS is continuing to look for ways to better collaborate
with its State counterparts and other organizations. For example, APHIS works
with State or local authorities in jurisdictions that have laws regarding animal
cruelty. We are also working in collaboration with State regulatory groups to
develop better educational tools and requirements for licensure under the AWA.
With these considerations in mind, APHIS concluded that it would be premature to
consider establishing an exemption from the licensing requirements for retailers
that are subject to oversight by State or local agencies or breed and registry
organizations. We certainly wish to avoid imposing duplicative regulatory
requirements on establishments where the welfare of the animals is being assured
through alternative means, so we welcome information or comments from the
public regarding the idea of an exemption based on oversight from other agencies
or organizations. We request comment on whether any State or local laws
establish standards that would assure the humane handling, care, treatment, and
transportation of animals sold remotely, such as over the Internet. We also
request comment on whether any private organizations have certification
programs that verify compliance with animal welfare standards comparable to
those promulgated under the AWA. Finally, we request comment on the
appropriateness of APHIS providing an exemption for entities that are so
regulated at the State or local level, or who are otherwise certified.

A third alternative we considered during the development of this proposed rule was
to amend the definition of retail pet store so that only high-volume breeders
would be subject to the AWA regulations and standards. While an objective
standard for what constitutes a high-volume breeder has not been established, we
note that the PUPS Act legislation referenced in footnote 2 would amend the AWA
to define a “high volume retail breeder” as a person who, in commerce, for
compensation or profit: (1) Has an ownership interest in or custody of one or
more breeding female dogs; and (2) sells or offers for sale, via any means of
conveyance (including the Internet, telephone, or newspaper), more than 50 of
the offspring of such dogs for use as pets in any 1-year period.

To compare our proposed exemption for persons who maintain four or fewer
breeding females to the standard of 50 dogs sold that is provided in the PUPS Act,
we note that the number of puppies that could be produced by 3 breeding female
dogs is going to vary according to the breed of the dog. For example, as noted in
the Fall 2009 edition of the AKC Breeder, Labrador retrievers had a typical range
of 5 to 10 puppies per litter, with an average of 7.6, while Yorkshire terriers
showed a range of 2 to 5 pups, with an average of 3.3. The number of litters per
year varies as well, but we are aware of estimates of an average of 1.5 litters per
dog per year. With that, 3 Yorkshire terriers could produce as many as 22 puppies
in a year, while 3 Labrador retrievers might produce as many as 45 puppies over
the same period. Adding a fourth breeding female as proposed above would bring
that average to 30 to 60 puppies in a year, which is a figure that brings our
exemption into closer alignment with the standard of 50 dogs sold per year
provided in the PUPS Act. We welcome comments regarding the variability of litter
size by breed and the impact that variability may have on the setting of size
thresholds for the types of entities discussed in this proposed rule.

We have elected in this proposed rule to retain an exemption based on the number
of breeding females, and not to propose a different exemption based on the
number of animals sold in a given period, largely because of enforceability
concerns. When an inspector visits a facility under the current regulations, he or
she can quickly ascertain, through direct observation and discussion with the
operator of that facility, if the number of breeding female animals that are present
falls within the exemption. In contrast, if there were an exemption based on the
number of animals sold in a given period, it would be necessary for the inspector
to review sales records and/or other documentation, which could create
compliance burdens, especially for smaller facilities. Moreover, though, as noted
above, we do not have the authority to require retail pet stores to make or retain
the records that would be necessary to verify the number of animals sold. We
encourage the submission of comments on this topic, however, and will consider
all suggestions regarding exemptions based on number of breeding females,
number of animals sold, or alternative numerical or other thresholds that we may
not have considered.

Finally, we note that the exemption in § 2.1(a)(3)(iii) applies to persons who
maintain breeding female dogs, cats, and/or small exotic or wild mammals and
who sell 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. Given
that our proposed change in the number of breeding females was motivated by
primarily dog-specific considerations, we contemplated a fourth alternative, which
was to propose to increase the number of breeding females for dogs only and to
leave the threshold for cats and small exotic or wild mammals at three breeding
females. We ultimately decided that as a matter of fairness and consistency, the
increase in the number of breeding females should be applied to all three
categories of animals covered by the exemption.

We welcome comment on this alternative.

Executive Orders 12866 and 13563 and Regulatory Flexibility Act

This proposed 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, and an initial regulatory flexibility analysis that examines the potential
economic effects of this proposed rule on small entities, as required by the
Regulatory Flexibility Act. The economic analysis is summarized below. Copies of
the full analysis are available by contacting the person listed under FOR FURTHER
INFORMATION CONTACT or on the Regulations.gov Web site (see ADDRESSES
above for instructions for accessing Regulations.gov).

Should this proposed rule be adopted, persons who sell covered animals to any
buyer who does not enter their facility to observe the animals prior to purchase
and/or to take custody of the animals after purchase, such as remote sales
conducted over the Internet where the customer does not enter a storefront at
any point in time, would need to obtain a license in accordance with AWA
regulations. APHIS expects that this rule would primarily affect dog breeders that
maintain more than four breeding females at their facilities. While the scope of
this rule applies to certain other animals, as a practical matter, most of retailers of
animals other than dogs would meet the proposed definition of retail pet store and
continue to be exempt from regulation. APHIS estimates that there may be
around 1,500 dog breeders who are not currently subject to the AWA regulations
but would be required to be licensed as a result of this proposed rule. We base
this estimate on the ratio of the number of wholesale breeders regulated by USDA
in Iowa, Kansas, and Missouri to the number of retail breeders currently regulated
by these three States and that are likely to have more than four breeding females.
Assuming this ratio between the numbers of wholesale and retail breeders in the
three States is similar to that for the United States as a whole, we extrapolate
that there are about 1,500 U.S. retail breeders who would be newly subject to
regulation. This figure is likely overly inclusive, as it assumes that all retail
breeders, except for traditional retail pet stores and hobby breeders, would be
regulated. However, those retailers for which each buyer visits their place of
business prior to purchase or taking custody would continue to be exempt from
regulation.

In addition to obtaining a license, regulated entities must comply with animal
identification and record keeping requirements. Licensed entities are also subject
to standards that address the following: Facilities and operations (including space,
structure and construction, waste disposal, heating, ventilation, lighting, and
interior surface requirements for indoor and outdoor primary enclosures and
housing facilities); animal health and husbandry (including requirements for
veterinary care, sanitation and feeding, watering, and separation of animals); and
transportation (including specifications for primary enclosures, primary
conveyances, terminal facilities, and feeding, watering, care, and handling of
animals in transit).

Some affected entities may need to make infrastructural and/or operational
changes in order to comply with the standards. Based on our experience with
regulating wholesale breeders, the most common areas of regulatory
noncompliance at prelicensing inspections are veterinary care, facility
maintenance and construction, shelter construction, primary enclosure minimum
space requirements, and cleaning and sanitation. Assuming patterns of
noncompliance by retail breeders newly regulated as a result of the proposed
changes would be similar to those observed in prelicensing inspection of wholesale
breeders, we estimate that the total cost attributable to the proposed rule may
range from $2.2 million to $5.5 million. The majority of businesses that would be
affected are likely to be small entities.

Expanding the licensing exemption from three or fewer breeding females to four or
fewer breeding females could substantially reduce the number of Class A licensees
(breeders). APHIS inspection data suggest that the number of current Class A
licensees, 2,064, could be reduced by about 638 facilities (31 percent) due to this
increase in the exemption threshold. Licensing fees range from $40 to $760
annually, depending on a facility’s yearly income from the sale of regulated
animals. In 2010, more than 85 percent of Class A licensees had gross income
associated with license fees of between $70 and $235. Assuming that the entities
no longer required to be licensed fall in this range, total cost savings by these
entities could range from about $45,000 to about $150,000 per year.

We believe that the benefits of this rule, primarily enhanced animal welfare, would
justify the costs. The rule would help ensure that animals sold at retail, but lacking
public oversight receive humane handling, care and treatment in keeping with the
requirements of the AWA. It would also address the competitive disadvantage of
retail breeders who adhere to the AWA regulations, when compared to those
retailers who do not operate their facilities according to AWA standards and may
therefore bear lower costs. These benefits are not quantified.

Executive Order 12372

This program/activity is listed in the Catalog of Federal Domestic Assistance unde
r 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 proposed 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.

Executive Order 13175

This proposed rule has been reviewed in accordance with the requirements of
Executive Order 13175, Consultation and Coordination with Indian Tribal
governments. The review reveals that this regulation will not have substantial and
direct effects on Tribal governments and will not have significant Tribal
implications.

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 proposed rule have been submitted for approval to the Office of
Management and Budget (OMB). Please send written comments to the Office of
Information and Regulatory Affairs, OMB, Attention: Desk Officer for APHIS,
Washington, DC 20503. Please state that your comments refer to Docket No.
APHIS-2011-0003. Please send a copy of your comments to: (1) APHIS, using one
of the methods described under ADDRESSES at the beginning of this document,
and (2) Clearance Officer, OCIO, USDA, room 404-W, 14th Street and
Independence Avenue SW., Washington, DC 20250. A comment to OMB is best
assured of having its full effect if OMB receives it within 30 days of publication of
this proposed rule.

This proposed rule would revise the definition of retail pet store and related
regulations to bring more pet animals sold at retail under the protection of the
AWA. Specifically, we would narrow the definition of retail pet store so that it
means 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 certain animals are
sold or offered for sale, at retail, for use as pets. We are also proposing to increase
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 licensing and inspection requirements, regardless if those animals
are sold at retail or wholesale. This proposed rule is necessary to ensure that
animals sold at retail are monitored for their health and humane treatment and to
concentrate our regulatory efforts on those facilities that present the greatest risk
of noncompliance with the regulations.

We are soliciting comments from the public (as well as affected agencies)
concerning our proposed information collection and record keeping requirements.
These comments will help us:

(1) Evaluate whether the proposed information collection is necessary for the
proper performance of our agency’s functions, including whether the information
will have practical utility;

(2) Evaluate the accuracy of our estimate of the burden of the proposed
information collection, including the validity of the methodology and assumptions
used;

(3) Enhance the quality, utility, and clarity of the information to be collected; and

(4) Minimize the burden of the information collection on those who are to respond
(such as through the use of appropriate automated, electronic, mechanical, or
other technological collection techniques or other forms of information technology;
e.g., permitting electronic submission of responses).

Estimate of burden: Public reporting burden for this collection of information is
estimated to average 0.355921499 hours per response.

Respondents: Retailers and wholesalers of pet animals.
Estimated annual number of respondents: 1,500.
Estimated annual number of responses per respondent: 28.50066667.
Estimated annual number of responses: 42,751.
Estimated total annual burden on respondents: 15,216 hours. (Due to
averaging, the total annual burden hours may not equal the product of the
annual number of responses multiplied by the reporting burden per response.)

Copies of this information collection can be obtained from 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 propose to amend 9 CFR parts 1 and 2 as follows:

PART 1—DEFINITION OF TERMS

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.

2. In §1.1, the definition of dealer and the introductory text of the definition of
retail pet store are revised to read as follows:

§ 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 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, chinchilla,
domestic ferrets, domestic farm animals, birds, and coldblooded species. A
retail pet store also includes any person who meets the criteria in § 2.1(a)(3)(iii) of
this subchapter. Such definition excludes—

* * * * *

PART 2—REGULATIONS

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.

4. Section 2.1 is amended as follows:

a. By revising paragraph (a)(3)(i) to read as set forth below.

b. In paragraph (a)(3)(ii), by removing the words “to a research facility, an
exhibitor, a dealer, or a pet store”.

c. In paragraph (a)(3)(iii), in the first sentence, by removing the words “three (3)”
and adding the word “four” in their place, and in the second sentence, by
removing the word “three” each of the three times it appears and adding the word
“four” in its place.

d. By removing paragraph (a)(3)(vii) and redesignating paragraph (a)(3)(viii) as

paragraph (a)(3)(vii).

§ 2.1 Requirements and application.

* * * * *

(a) * * *

(3) * * *

(i) Retail pet stores as defined in part 1 of this subchapter;

* * * * *

Done in Washington, DC, this day of .
______________________________________
Under Secretary for Marketing and Regulatory Programs.