[Federal Register Volume 77, Number 95 (Wednesday, May 16, 2012)]
[Proposed Rules]
[Pages 28799-28805]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-11839]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 77, No. 95 / Wednesday, May 16, 2012 / 
Proposed Rules

[[Page 28799]]



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 July 
16, 2012.

ADDRESSES: You may submit comments by either of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov/#!documentDetail;D=APHIS-2011-0003-0001.
     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/#!x0docketDetail;D=APHIS-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 
recordkeeping 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.

[[Page 28800]]

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:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
Area of possible                            Unit cost \1\....................    Number of    Total cost range
non-compliance                                                                    affected        ($1,000)
                                                                                facilities
                                                                                       \2\
----------------------------------------------------------------------------------------------------------------
Licensing fees............................  $10 application fee; $30-$750            1,500       $105       $353
                                             licensing fee (assume $70 to
                                             $235) \3\.
Identification............................  $1.12-$2.50 for collars & tags           1,500        413        923
                                             (246 dogs per facility need
                                             identification) \4\.
Recordkeeping.............................  10 hrs annually * $13.07/hour            1,500        196        196
                                             (BLS 43-9061).
Facility Maintenance......................  8-10 hrs (preliminary) *; $9.38/           248         19         23
                                             hr (BLS 39-2021).
                                            $50 to $100 (materials)..........  ...........         12         25
                                            2-8 hrs per week (ongoing) *;      ...........        242        968
                                             $9.38/hr (BLS 39-2021).
Veterinary care...........................  $50 to $150 (site visit).........          237         12         36
                                            $75 to $300 (1 to 3 veterinary     ...........         18        213
                                             care issues).
                                            $16 to $35 for puppy vaccinations  ...........        531      1,161
Shelter Construction......................  $80-$120 for a commercial igloo             65          5        156
                                             style dog house (1 to 20 new
                                             shelters).
Primary Enclosures........................  $220-$260 for a commercial 3' x             21          5        164
                                             6' kennel (1 to 30 new
                                             enclosures).
Daily Sanitation & Cleaning per Year......  1-2 hrs daily * $9.38/hr (BLS 39-          194        664      1,328
                                             2021).
                                                                              ----------------------------------
    Total.................................  .................................  ...........      2,222      5,545
----------------------------------------------------------------------------------------------------------------
\1\ These costs may be overestimated. In general, they do not account for volume discounts, do-it-yourself labor
  or construction out of inexpensive materials that may be more likely in some cases.
\2\ We estimate that there may be about 1,500 dog breeders that could be affected by this rule. The number of
  facilities for each area of possible non-compliance is based on 1,500 multiplied by the percentage of
  wholesale breeders found to be non-compliant for that category in pre-licensing inspections in 2010.
\3\ In 2010, more than 85 percent of Class A licensees had gross income associated with license fees of between
  $70 and $235. Therefore, we assume that newly regulated entities would fall in this range.
\4\ In 2010, there were an average of 106 adults and 93 puppies at licensed wholesale breeders at one time. We
  assume, based on litter sizes, frequency of litters, and puppy sales, that there would be about 1.5 times this
  number of puppies at the average facility over the course of a year.

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 rulemaking authority, the USDA amended the AWA 
regulations in 1971 by adding a definition of retail pet store. A 
retail pet store is defined in Sec.  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 nonpet 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 Sec.  2.1(a)(3) of the regulations. Other 
retail and wholesale dealers must be licensed, unless

[[Page 28801]]

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.\1\ 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.\2\
---------------------------------------------------------------------------

    \1\ USDA, Office of Inspector General, ``Animal and Plant Health 
Inspection Service, Animal Care Program, Inspections of Problematic 
Dealers'' (Report No: 33002-4-SF, Issued May 2010), p. 37.
    \2\ See, for example, H.R. 835/S. 707, the Puppy Uniform 
Protection and Safety (PUPS) Act, http://thomas.loc.gov/cgi-bin/bdquery/z?d112:h.r.835.
---------------------------------------------------------------------------

    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 Sec.  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 Sec.  
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 Sec.  2.1 of the regulations:
     Paragraph (a)(3)(i) exempts from licensing ``retail pet 
stores which sell nondangerous, 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 nonpet 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 nonpet 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 
Sec.  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

[[Page 28802]]

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 Sec.  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 Sec.  2.1(a)(3)(ii) of the regulations.
    Finally, as noted previously, we are proposing to amend Sec.  
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 Sec.  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

[[Page 28803]]

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,\3\ 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.
---------------------------------------------------------------------------

    \3\ http://www.akc.org/enewsletter/akc_breeder/2009/fall/handbook.cfm.
---------------------------------------------------------------------------

    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 Sec.  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

[[Page 28804]]

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 recordkeeping 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 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 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 
recordkeeping 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

[[Page 28805]]

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 Sec.  1.1, the definition of dealer and the introductory text 
of the definition of 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 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 Sec.  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).


Sec.  2.1  Requirements and application.

* * * * *
    (a) * * *
    (3) * * *
    (i) Retail pet stores as defined in part 1 of this subchapter;
* * * * *

    Done in Washington, DC, this 10th day of May 2012.
Edward Avalos,
Under Secretary for Marketing and Regulatory Programs.
[FR Doc. 2012-11839 Filed 5-15-12; 8:45 am]
BILLING CODE 3410-34-P