United States 

Department of 

Agriculture

Animal and 

Plant Health 

Inspection 

Service

February 2012

Analysis in Support of Certification that the 

Rule will not have a Significant Economic 

Impact on a Substantial Number of Small 

Entities

Final Rule

2011-0030

RIN 0579-AD43

Require Horse Industry Organizations to 

Enforce Minimum Penalties for Violations

Policy & Program Development

Policy Analysis & Development
i

Summary

The Horse Protection Act (HPA) is a Federal law that prohibits horses subjected to a 

practice called soring (intentional injuring of a horse’s limbs to produce a high-stepping gait) 

from participating in shows, sales, exhibitions, or auctions. Walking horses are prized for this

distinctive high-stepping gait. Horse Industry Organizations (HIOs), groups formally engaged in 

the promotion of shows and similar activities, are responsible for licensing Designated Qualified 

Persons (DQPs), who are authorized to enforce the prohibition on participation of horses 

subjected to soring. Participants found to be in violation of the Horse Protection Act are 

assessed penalties by the DQPs, as set by the HIOs.

Efforts to eliminate soring have been hindered by the non-uniform assessment of 

penalties for Horse Protection Act violations. The rule will provide USDA with clear authority

to require a uniform minimum penalty protocol. Also, the rule will give USDA the authority to 

decertify HIOs that refuse to implement the minimum penalty protocol.

Since the HIOs already administer a penalty protocol for violations of the Horse 

Protection Act, the proposed rule is not expected to impose additional costs upon HIOs or show 

participants (other than those individuals who incur penalties for violating the HPA). 

The uniform penalty protocol may benefit the walking horse industry by:

 Helping to ensure more humane treatment of the horses;

 Reducing uncertainty about penalties for infractions of the Horse Protection Act;

 Enhancing the reputation and integrity of the walking horse industry;

 Providing for more fair competition at shows, which may positively impact

attendance and regional economies; and 

 Improving the value of the walking horse breeds.

The Small Business Administration’s small-entity standard for business associations that 

promote horses through the showing, exhibiting, sale, auction, registry, or any activity which 
ii

contributes to the advancement of the horse is not more than $7 million in annual receipts (North 

American Industry Classification System (NAICS) 813910). The SBA small-entity standard for

entities involved in Horses and Other Equine Production is $750,000 or less in annual receipts

(NAICS 112920), while the small-entity standard is $7 million or less in annual receipts for 

businesses classified within Support Activities for Animal Production (NAICS 115210). 

Businesses in these industries that may be affected by this rule are likely to be small. The 

Administrator of the Animal and Plant Health Inspection Service has determined that this action 

will not have a significant economic impact on a substantial number of small entities.
iii

Table of Contents

Summary............................................................................................................................. i

Introduction......................................................................................................................... 1

Potentially Affected Industries ........................................................................................... 2

The U.S. Horse Industry ................................................................................................. 2

Show and Competition Horse Industry........................................................................... 4

The Walking Horse Industry........................................................................................... 5

Potential Impact on Small Entities...................................................................................... 6
1

Introduction

This analysis provides the basis, as required by the Regulatory Flexibility Act, for 

certification by the APHIS Administrator that the rule will not have a significant economic 

impact on a substantial number of small entities. The Horse Protection Act (HPA) is a Federal 

law that prohibits horses subjected to a practice called soring (intentionally injuring a horse’s 

limbs to produce a high-stepping gait) from participating in shows, sales, exhibitions, or 

auctions. Horse Industry Organizations (HIOs), that is, groups formally engaged in the 

promotion of shows and similar activities, are responsible for licensing Designated Qualified 

Persons (DQPs), who are authorized to enforce the prohibition on participation of horses 

subjected to soring. Currently, participants found to be in violation of the Horse Protection Act 

are assessed penalties by the DQPs, as set by the HIOs.

There are 12 Horse Industry Organizations (HIOs) certified by the USDA and APHIS. 

HIOs are organizations with formal structures engaged in the promotion of walking horses 

through the showing, exhibiting, sale, auction, registry, or any activity which contributes to the 

advancement of the horse breed. HIOs are primarily non-profit organizations or associations and 

the size of their memberships and the scope of their programs and shows vary.

In September 2010, USDA’s Office of Inspector General (OIG) released an audit report 

that found APHIS’ program for inspecting horses for soring was not adequate to ensure that 

these animals were not being abused.1 Due to this inadequate inspection system, the report 

stated, the Act was not being sufficiently enforced, and the practice of abusing show horses 

 

1 Office of the Inspector General. Animal and Plant Health Inspection Service Administration of the Horse 

Protection Program and the Slaughter Horse Transport Program. Office of Inspector General, USDA, Washington, 

D.C., Audit Report 33601-2-KC, September 2010.
2

continues. One of the recommendations in the audit report was that APHIS develop and 

implement protocols to more consistently negotiate penalties with individuals who are found to 

be in violation of the Act.

This rule, in response to the OIG recommendation, will clearly establish USDA’s

authority to require DQPs to assess and enforce minimum penalties for violations of the Horse 

Protection Act. HIOs could still impose penalties that are more severe than those in the penalty

protocol. In addition, the rule will give USDA the authority to decertify HIOs that refuse to 

implement the minimum penalty protocol. Requiring HIOs to implement a minimum penalty

protocol will strengthen the enforcement of the Act and the regulations by ensuring that 

minimum penalties are assessed and enforced consistently by all HIOs that are certified by the 

Department. 

Following, we present background information on the U.S. horse industry, generally, and 

in increasing detail on the show and competition horse industry and the walking horse industry. 

We then address expected effects of the proposed rule for small entities.

Potentially Affected Industries 

The U.S. Horse Industry

There are approximately 9.2 million horses in the United States, of which about 4 

million are located on farms and ranches, according to surveys conducted by Deloitte 

Consulting LLP in 2005 for the American Horse Council, and the National Agricultural 

Statistics Service, respectively.

2

 There are horses in every State, with 45 States each having at 

 

2 Deloitte Consulting, LLP. National Economic Impact of the U.S. Horse Industry. American Horse Council 

Foundation, 1616 H Street NW, Washington, D.C., 2005. http://www.horsecouncil.org/nationaleconomics.php

USDA-NASS, Census of Agriculture, 2007. Washington, D.C.: National Agricultural Statistics Service.

http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_2_US_State_Level/st99_2_015_
3

least 20,000 horses. About 2 million Americans own horses and another 2.6 million are 

involved in the horse industry as service providers, employees, and volunteers. One out of 

every 63 Americans is involved with horses and the horse industry. 

The American Horse Council survey and a 2010 study by the University of Kentucky for 

the American Horse Publication found that while about 42 percent of the respondents indicated 

that their association with the horse industry was through recreational and leisure riding, almost 

one-third of the respondents were involved in show and competitive riding.3 The studies found 

that approximately 46 percent of horse owners had incomes between $25,000 and $75,000. 

Although the majority of horses (57 percent) are concentrated in communities with less than 

20,000 people, 26 percent of horses were located in areas with populations over 50,000. 

Seventy-two percent of the horse owners are between the ages of 35 and 64, with 56 percent over 

45 years of age. The U.S. horse industry supports a wide variety of equine-related activities in 

all regions of the country, including racing, showing, competition, sport, breeding, recreation and 

work (table 1).

Table 1 – Number and Percentage of Horses in the United States, by Activity, 

2005

Activity Number Percent

Racing 844,531 9

Showing 2,718,954 30

Recreation 3,906,923 42

Other 1,752,439 19

Total 9,222,847 100

Source: American Horse Council Foundation, 2005.

Note: “Other” activities include farm and ranch work, rodeo, carriage horses, polo, police 

work, informal competitions, etc.

 

015.pdf

3 C. Jill Stowe. 2009-2010 AHP Equine Industry Survey American Horse Publication, Department of Agricultural 

Economics, University of Kentucky, 2010. http://www.americanhorsepubs.org/resources/AHP-Equine-SurveyFinal.pdf
4

The horse industry combines the primarily rural activities of breeding, training, 

maintaining and riding horses with the more urban activities of operating racetracks, off-track 

betting parlors, horse shows and public sales. Direct and indirect economic effects of horserelated activities derive from the purchase of goods and services from a variety of businesses 

and individuals. 

According the Deloitte Consulting LLP study, the horse industry contributes about $39

billion directly to the gross domestic product (GDP) and another $63 billion indirectly (table 2).

In addition, it was estimated that the horse industry generated around 460,000 direct full-time 

equivalent (FTE) jobs and another 700,000 indirect FTE jobs. Independent studies by

universities in the major horse industry States show similar results concerning the industry’s

contribution to States’ economies and employment. 

Table 2 – Horse Industry’s Direct and Total Contributions to Gross Domestic 

Product, by Activity, 2005

Activity Direct Total

--- Billion Dollars ---

Racing 10.6 26.1

Showing 10.8 28.7

Recreation 11.8 32.9

Other 5.5 14.6

Total 38.7 102.3

Source: American Horse Council Foundation, 2005.

Note: “Other” activities include farm and ranch work, rodeo, carriage horses, polo, police 

work, informal competitions, etc.

Show and Competition Horse Industry

The show and competition horse industry comprises about 30 percent of the U.S. horse 

industry, providing economic benefits to the local communities that host the shows. A recent 

study by the University of Kentucky found that over 81 percent of the responding shows 
5

involved more than 50 competitors, and almost half involved more than 100 competitors.

4

Respondents competed on average five times in 2009, although respondents in Arkansas, 

Louisiana, Oklahoma, and Texas competed more frequently, on average. Income and age were 

positively correlated to the number of times the respondents competed each year.

The University of Kentucky study found that all shows charge entry fees, which consist 

of gate fees, per class or horse fees, or a combination. Most shows distribute some sort of prize 

money from sponsors, entry fees, or some other source. The shows spend money for 

announcers, show managers, staff, farriers, emergency personnel (medical and fire), security, and 

musicians. Also, shows often purchase or rent services from local vendors such as for food, 

advertising, hotel services, and show equipment.

The Walking Horse Industry

The walking horse industry represents a relatively small niche within the show and 

competition horse industry. Although the Tennessee walking horse is probably the best known, 

there are other walking horse breeds as well. All walking horse breeds are known for their 

unique smooth gaits, but Tennessee walking horses also are prized for their distinctive highstepping gait, known as the “big lick.” The exaggerated gait can be achieved with proper 

training and considerable time and effort, but some horse exhibitors, owners, and trainers attempt 

to shorten the training time by using soring. “Soring” is the practice of intentionally injuring a

horse’s front legs to cause pain so intense that the horse instantly jerks its legs up to relieve the 

pain when the horse’s hooves come into contact with the ground, thereby producing the “big 

lick.” Similar results also are achieved by using certain types of mechanical devices. Since an 

 

4 C. Jill Stowe and Kenny Burdine. Understanding the Impact of Horse Shows and Competitions in Kentucky. 

Department of Agricultural Economics, University of Kentucky, Lexington, Kentucky, Extension No. 2009-29. 

September 2009. http://www.ca.uky.edu/cmspubsclass/files/cjstowe/Horse%20Shows%20AEC%202009-29.pdf
6

exaggerated "big lick" gait is highly rewarded by the judges at walking horse show events, there 

is an incentive to use soring to gain a competitive advantage.

Of the 210,000 show and competition horses in Tennessee estimated by the Tennessee 

Agricultural Statistics Service in 2004, 62,000 or about 30 percent were Tennessee walking 

horses and the primary use for the breed was for pleasure/sport (40 percent), followed by

competition (25 percent), breeding (24 percent), and other (11 percent).

5

 Thus, even in a State 

that is known for its walking horses, only about 15,000 to 17,000 horses compete in shows. 

Although it is difficult to determine the number of Walking Horse competitors in the 

United States or enterprises that support them, horse shows provide an economic benefit for the 

communities where these events are held. The shows are often used to raise money for local 

charities. The Tennessee Walking Horse National Celebration is a premier event, where some 20 

World Champions are named and more than $650,000 in prizes are awarded.6 The event has a 

large economic impact on the entire middle Tennessee region. Winning the Celebration 

enhances the value of the horse and the reputations of the trainers and owners. In 1996, there 

were more than 2,170 entries at the Tennessee Walking Horse National Celebration from 

throughout the United States and an attendance of more than 150,000. In 2010, there were 3,216 

entries with nearly 500,000 in attendance at the Celebration.

Potential Impact on Small Entities

The Small Business Administration’s (SBA) small-entity standard for business 

associations that promote horses through the showing, exhibiting, sale, auction, registry, or any

 

5

 Debra Kenerson and Joel Moore. A Tennessee Tradition, Equine 2004, Tennessee Agricultural Statistics Service,

Nashville, Tennessee, p. 13, 2004. 

http://www.nass.usda.gov/Statistics_by_State/Tennessee/Special_Surveys/2004equine.pdf

6 Bob Womack. Walking Horse National Celebration. The Tennessee Encyclopedia of History and Culture, Version 

2. The Tennessee Historical Society, Nashville, Tennessee Middle Tennessee State University February 28, 2011. 

http://tennesseeencyclopedia.net/entry.php?rec=1455
7

activity which contributes to the advancement of the horse is not more than $7 million in annual 

receipts (North American Industry Classification System (NAICS) code 813910). The SBA 

small-entity standard for entities involved in Horses and Other Equine Production is $750,000 or 

less in annual receipts (NAICS 112920), while the small-entity standard is $7 million or less in 

annual receipts for businesses classified within Support Activities for Animal Production

(NAICS 115210).

7

 According to the 2007 Census of Agriculture, the average market value of 

livestock sales by farms classified within Horse and Other Equine Production was about 

$12,300.8 Also according to the Agricultural Census, 93 percent of farms with horse inventories 

had sales of less than $250,000 and of these, 65 percent of the farms had sales less than $10,000, 

well below the SBA threshold for small entities.9 We do not have an estimate of the average 

income for enterprises classified within the industry, Support Activities for Animal Production. 

For those industries for which we have information, clearly the majority of entities that may be 

affected by the rule are small. 

Riding stables and other equestrian recreational facilities are not included as horse farms;

the Census of Agriculture defines a horse farm as an operation that sells at least $1,000 of 

agricultural products in a year and generates 50 percent or more of its sales from horses. While 

most of the horses in the United States are privately owned and not located on farms and ranches, 

all horses that compete are subject to the Horse Protection Act.

 

7 Table of Size Standards based on NAICS 2002 [Horses and Other Equine Production: NAICS code 112920] and 

[Support Activities for Animal Production: NAICS Code 115210] Washington, D.C.: U.S. Small Business 

Administration, effective October 1, 2007.

8

2007 Census of Agriculture, Table 46: Special Characteristics of Farms by North American Industry Classification 

System: 2007, 

http://www.agcensus.usda.gov/Publications/2007/Full_Report/Volume_1,_Chapter_1_US/st99_1_046_046.pdf

9USDA-NASS, 2007 Census of Agriculture: Small Farms. Washington, D.C.: National Agricultural Statistics 

Service. http://www.agcensus.usda.gov/Publications/2007/Online_Highlights/Fact_Sheets/small_farm.pdf
8

Numerous comments were received on the proposed rule regarding potential economic 

impacts of the regulation. A principal concern was that the regulation would destroy the walking 

horse industry (i) by creating an environment that diminishes the appeal and status of this 

industry and reduces the value of walking horses, and (ii) by imposing additional costs or 

burdensome requirements that will severely limit or restrict shows, exhibits, sales and auctions. 

We believe these expectations are without basis in theory or fact. It is unrealistic that 

enforcement of a minimum penalty protocol for violations of the HPA would have an impact so 

great that the walking horse industry would end. Participation by some entities may decline in 

the short run, given sentiments expressed by certain commenters, but we expect the industry to 

grow over time, based on past trends. We expect that many owners and trainers will continue 

their memberships and want to compete in an industry that is perceived to be fairer for 

competitors. The shows and associated charitable organizations will benefit as well.

Records show that there are owners who continue to engage trainers that violate the HPA

and continue to participate in events. Several commenters argued that since owners incur 

substantial costs in order for their horses to compete, they will not retain trainers whose practices 

could result in their horses being repeatedly disallowed from competing. The rule is intended to 

deter the soring of horses, and is expected to require changes in horse training practices by those 

individuals who rely on soring techniques. 

Prizes and awards are not very large for individual walking horse events, unless it is a 

premier event such as the Tennessee Walking Horse National Celebration. Based on information 

from the HIOs, cash prizes for walking horse shows typically range from $25 to $500. Ribbons, 

trophies, or saddles and tack sometimes are awarded. According to a Kentucky study of horse 

shows and competitions, between 2005 and 2008, the average prize money distributed per show 
9

was $10,399 and the median amount was $3,987, excluding the value of ribbons, trophies, 

buckles, or saddles that are often given as prizes.10 It is apparent that in most instances potential 

monetary gain is not a major motivation for event participants. 

Although people who do not violate the HPA will be unaffected by the minimum penalty

protocol, many commenters expressed concern that requiring HIOs to assess and enforce 

minimum penalties will encourage owners and trainers to show their horses at events that are not 

affiliated with a HIO. While the exact number of these unaffiliated shows is not known, many

commenters believed an increase in the number of unaffiliated shows because of this rule will 

detract from HIO events and reduce participation in the HIO events. 

This assumption is unfounded. Managers of unaffiliated shows, like managers of 

affiliated shows, assume liability under the Act for any sore horses that are shown, exhibited, 

sold, or auctioned. Owners and trainers risk penalties if they show a sore horse at the 

unaffiliated shows. This is no advantage or disadvantage to owners’ participation in unaffiliated 

shows; unaffiliated show prizes are much the same as those awarded at affiliated shows. 

Classical economists believed that people pursue their own interests and, in doing so, 

some individuals choose to violate the law. Their decision to violate the law is guided by their 

perception of the gains they hope to obtain compared to their potential loss if they are caught and 

punished for the violation.11,12 In the late 1960’s, Gary Becker stated that the decision to violate 

the law was influenced by the same factors that motivate all other behavior. That is, people 

 

10 C. Jill Stowe and Kenny Burdine. Understanding the Impact of Horse Shows and Competitions in Kentucky. 

Department of Agricultural Economics, University of Kentucky, Lexington, Kentucky, Extension No. 2009-29. 

September 2009. http://www.ca.uky.edu/cmspubsclass/files/cjstowe/Horse%20Shows%20AEC%202009-29.pdf

11 Beccaria, Cesare. Dei delitti e delle pene (Of Crimes and Punishment), originally published 1764. Reprint 

Philadelphia (No. 175, Chesnut St.): Published by Philip H. Nicklin: A. Walker, printer, 24, Arch St., 1819. 

http://www.constitution.org/cb/crim_pun.txt

12

 Bentham, Jeremy, An Introduction to the Principles of Morals and Legislation. (Originally published 1789) 

1907. Library of Economics and Liberty. 6 October 2011. http://www.econlib.org/library/Bentham/bnthPML.html 
10

chose criminal over noncriminal alternatives in the same way that they chose strategies as 

consumers in the marketplace.13 Economic theory assumes that individuals are rational 

(although not necessarily logical) players who, if not motivated by profit, are motivated to

maximize the expected net benefits (gains over losses) of their actions. 

For owners of walking horses who knowingly violate the HPA, these benefits may not be 

monetary, but may be intangible benefits such as the pride and satisfaction of their horse winning 

or placing in a competition. Potential losses also may not be monetary and could include loss of 

reputation or emotional and psychological distress. On the other hand, trainers probably are 

more motivated by profits and want to ensure their continued income by establishing and 

maintaining a reputation for producing horses that are competitive. 

Owners who condone soring may be less risk-averse than other owners or even riskseeking. The decision to violate the law is influenced by a person's tolerance or enjoyment of 

taking risks. Owners and trainers who enter a sore horse in a show believe the risks are worth 

the potential benefits (winning or placing). 

Among comments received from horse owners in favor of the rule, it was observed that 

uniform enforcement of the HPA will attract people who are interested in training and showing 

sound horses and competing on a level playing field. These commenters recognize that 

enforcement of minimum penalties for soring will help create a fairer environment for all 

participants.

A uniform penalty protocol will benefit the walking horse industry by helping to ensure

more humane treatment of the horses. Soring intentionally injures the horses to produce the “big 

 

13

 Becker, Gary S. Crime and Punishment: An Economic Approach .The Journal of Political Economy, Vol. 76, 

No. 2. (Mar. - Apr., 1968), pp. 169-217.
11

lick” gait. A uniform minimum penalty removes uncertainty for show participants and the 

administrative burden for HIOs of setting penalty amounts. Reduction in soring due to the 

foreknowledge of uniform penalties will help create a more level playing field for show 

participants and enhance competition. 

A uniform minimum penalty should enhance the reputation of the walking horse industry

and help to restore the integrity of the walking horse shows and breeds. Competitive shows 

encourage more competitors and draw enthusiastic fans. Successful walking horse shows can 

have a positive impact on a region’s economy. Horses with the natural ability to produce the 

distinctive high-stepping gait will be more highly prized for breeding, thereby improving the 

overall value of the breed.

The proposed rule will not impose costs on the HIOs or show participants, other than for 

those individuals who incur penalties for violation of the HPA. Individuals that do not violate 

the HPA will be unaffected by the minimum penalty protocol. Any costs of administering the 

regulations already are directly or indirectly passed along to all participants that compete in the 

walking horse shows. The Administrator of the Animal and Plant Health Inspection Service has 

determined that this action will not have a significant economic impact on a substantial number 

of small entities.