United States 

Department of 

Agriculture

Animal and 

Plant Health 

Inspection 

Service

April 2012

Regulatory Impact Analysis &

Initial Regulatory Flexibility Analysis

Proposed Rule

APHIS-2011-0003

RIN 0579-AD57

Revision of the Definition of Retail Pet Store

Policy & Program Development

Policy Analysis & Development
i

Summary

The current definition of retail pet store was established to ensure that the appropriate 

retail facilities were exempt from licensing requirements. Historically, such outlets included 

hobby breeders, as well as traditional “retail pet stores” that are subject to a degree of oversight 

by persons who physically enter 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. With the 

increased use of the Internet in the 1990s, some retailers began to offer their animals for sale 

remotely over the Internet and selling and transporting their animals nationwide. As a result, 

customers of these businesses are often unable to enter the retailer’s place of business to observe 

the animals before taking them home. Thus, APHIS believes that they lack sufficient public 

oversight to ensure the humane treatment and care of these animals. 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 

storefront, qualify as retail pet stores and are exempt from the licensing requirements, even if 

they lack the public oversight.

To ensure that each animal sold at retail for use as pets are monitored for their health and 

humane treatment, the proposed rule would narrow the definition of “retail pet store” to only 

those places 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. As a result of this 
ii

proposed change, entities that sell or intend to sell their animals remotely would have to comply

with the AWA regulations and standards and obtain an Animal Welfare Act (AWA) license, 

unless otherwise exempted from the regulations. The AWA provisions to which regulated 

entities would become subject include identification of animals, recordkeeping, facility

maintenance, periodic veterinary care, shelter construction, and sanitation, among others. 

APHIS’ regulations in § 2.1(a)(3)(iii) currently provide 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 the premises, for pets or exhibition. The 

proposed rule would expand this exemption to persons who maintain a total of four or fewer 

breeding females, regardless if those animals are sold at retail or wholesale. Persons who derive 

less than $500 gross income from the sale of animals, other than dogs, cats, and exotic or wild 

animals, would continue to be exempt from licensing requirements.

Should this 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 and would become subject to other AWA provisions as described below. 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 
iii

be required to be licensed as a result of this proposed rule. We base this estimate on the ratio of 

retail dog breeders to wholesale dog breeders, and the percentage of licensed wholesale breeders 

with more than four breeding females. There are currently about 1,020 retail breeders regulated 

by the States of Iowa, Kansas, and Missouri.1 In 2011, 48 percent of wholesale breeders 

regulated by USDA were located in those three States.2 We assume a similar percentage for 

retail breeders to arrive at a nationwide total (1,020/0.48 = 2,125). Current USDA and State data 

cover breeders with more than three breeding females. Our inspection data suggests that about 

69 percent of currently regulated wholesale breeders have more than four breeding females, 

based on a rough estimate of the average number of puppies across breeds at those facilities. 

Using these factors, we extrapolate that there are about 1,500 U.S. retail breeders who would be 

newly subject to regulation (2,125*0.69=1,466). 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); 

 

1

Internal APHIS communication.

2

2011 APHIS, Animal Care, data on licensed Class A breeders.
iv

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 non-compliance at pre-licensing inspections are veterinary

care, facility maintenance and construction, shelter construction, primary enclosure minimum 

space requirements, and cleaning and sanitation. Assuming patterns of non-compliance by retail 

breeders newly regulated by this rule would be similar to those observed in pre-licensing 

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. 

Although we have attempted to estimate the impact of this proposed rule, we do not 

currently have enough information to fully assess it, particularly information on the number of 

entities that may be affected or breadth of operational changes that may result. We encourage 
v

public comment on the number of entities that may be affected and the degree to which 

operations would be altered to comply with the rule. 

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.
vi

Table of Contents

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

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

Affected Entities and Potential Effects of the Action......................................................... 2

Initial Regulatory Flexibility Analysis.............................................................................. 13

Reasons Action is Being Considered............................................................................ 14

Objectives of and Legal Basis for the Rule .................................................................. 15

Potentially Affected Small Entities............................................................................... 15

Projected Reporting, Recordkeeping, and Other Compliance Requirements............... 16

Duplication, Overlap, or Conflict with Existing Rules and Regulations...................... 18

Alternatives to minimize Significant Economic Impacts of the Rule........................... 18
1

Introduction

APHIS is 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). 

The current definition of retail pet store was established to ensure that the appropriate retail 

facilities were exempt from licensing requirements. Historically, such outlets included hobby

breeders, as well as traditional “retail pet stores” that are subject to a degree of oversight by

persons who physically enter 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. With the increased 

use of the Internet in the 1990s, some retailers began to offer their animals for sale remotely over 

the Internet and selling and transporting their animals nationwide. As a result, customers of 

these businesses are often unable to enter the retailer’s place of business to observe the animals 

before taking them home. Thus, APHIS believes that they lack sufficient public oversight to 

ensure the humane treatment and care of these animals. Retail pet stores are exempt from the 

provisions of the Animal Welfare Act and are not required to obtain a license from APHIS. 

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 storefront, qualify as retail pet stores and are exempt from the 

licensing requirements, even if they lack the public oversight.

To ensure that animals at retail pet stores receive humane handling, care, and treatment, 

we are proposing to revise the definition of retail pet store so that it only includes those places 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 
2

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 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.

Benefits and costs of the rule are examined in accordance with Executive Orders 12866

and 13563, which direct agencies to assess all costs and benefits of available regulatory

alternatives and, if regulation is necessary, to select regulatory approaches that maximize net

benefits (including potential economic, environmental, public health and safety effects, and 

equity). Executive Order 13563 emphasizes the importance of quantifying both costs and 

benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The benefits of 

the rule are expected to justify the costs overall. Possible impacts on small entities are 

considered in accordance with the Regulatory Flexibility Act.

Affected Entities and Potential Effects of the Action

Currently, entities that qualify as “retail pet store,” and are therefore exempt from 

regulation, include any entity whose entire business consists of reselling pet animals to pet 

owners, for example, retail chain pet stores and virtual pet stores engaging in retail sales. In 

addition, any entity whose entire business consists of breeding and raising pet animals for direct 

retail sale to pet owners is also currently exempt, including breeders of pet animals of any size, 

from hobby to high volume, who sell their animals over the Internet.
3

The proposed rule would narrow the definition of “retail pet store” to only those places 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. As a result of 

this proposed change, entities that sell or intend to sell their animals to buyers who do not enter 

their facility would have to obtain an Animal Welfare Act (AWA) license and comply with the 

AWA regulations, unless otherwise exempted from the regulations. The AWA provisions to 

which regulated entities would become subject include identification of animals, recordkeeping, 

facility maintenance, periodic veterinary care, shelter construction, and sanitation, among others.

APHIS’ regulations in § 2.1(a)(3)(iii) currently provide 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 their premises, for pets or exhibition. 

The proposed rule would expand this exemption to persons who maintain a total of four or fewer 

breeding females. Persons who derive less than $500 gross income from the sale of animals, 

other than dogs, cats, and exotic or wild animals, would continue to be exempt from licensing 

requirements.

Although we have attempted to estimate the impact of this proposed rule, we do not 

currently have enough information to fully assess it, particularly information on the number of 

entities that may be affected, or the breadth of operational changes that may occur at affected 

entities as a result. We encourage public comment on the number of entities that may be affected 

and the degree to which operations would be altered to comply with the rule. 
4

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 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 retail dog breeders to wholesale dog breeders, and the percentage of licensed 

wholesale breeders with more than four breeding females. There are currently about 1,020 retail 

breeders regulated by the States of Iowa, Kansas, and Missouri.3 In 2011, 48 percent of 

wholesale breeders regulated by USDA were located in those three States.4 We assume a similar 

percentage for retail breeders to arrive at a nationwide total (1,020/0.48 = 2,125). Current USDA 

and State data cover breeders with more than three breeding females. Our inspection data 

suggests that about 69 percent of currently regulated wholesale breeders have more than four 

breeding females, based on a rough estimate of the average number of puppies across breeds at 

those facilities. Using these factors, we extrapolate that there are about 1,500 U.S. retail breeders 

who would be newly subject to regulation (2,125*0.69=1,466). 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. But those retailers for which each buyer visits their place of 

business prior to taking the purchased animal home would continue to be exempt. Below, we 

describe potential costs attributable to the proposed rule that may be incurred by newly regulated 

retail breeders. The costs are summarized in a concluding table. 

 

3

Internal APHIS communication.

4

2011 APHIS, Animal Care, data on licensed Class A breeders.
5

Should this rule be adopted, entities who sell pets 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 the 

storefront at any point in time, would need to acquire a license in accordance with AWA 

regulations and would become subject to other AWA provisions as described below. An annual 

license costs between $40 and $760, depending on the licensee’s yearly income from the sale of 

regulated animals.5The cost of a license is based on 50 percent of gross sales during the 

preceding business year for Class “A” dealers and on gross sales minus the amount paid for the 

animals during the preceding business year for Class “B” dealers.6 As an example, if 50 percent 

of a Class “A” dealer’s gross sales, or gross sales minus the amount paid for the animals for a 

Class ``B'' dealer, totals more than $500 but not more than $2,000, the annual cost of a license is 

$70. For an initial license, there is a $10 application fee in addition to the initial license fee. The 

license fees for each income category are shown in Table 1.

Table 1. License Fees for Class “A” and Class “B” Licensees

Income Categories(1)

Initial License Fee

Annual or Changed 

Over But Not Over Class of License Fee

$0 $500 $30 $40

500 2,000 60 70

2,000 10,000 120 130

10,000 25,000 225 235

25,000 50,000 350 360

50,000 100,000 475 485

100,000 ------ 750 760

(1)

Fifty percent of gross sales for Class “A” dealers and gross sales minus the amount paid for the animals for Class “B” dealers,

 

5

Persons who maintain four or fewer breeding female dogs, cats, and/or small exotic or wild mammals, or derive less than $500 

gross income from the sale of animals, other than dogs, cats, and exotic or wild animals, would be exempt from licensing 

requirements.

6 A Class “A” licensee is a person who breeds the animals that are sold. A Class “B” licensee is a person whose business 

includes the purchase and/or resale of any animal. 
6

as reported for the preceding business year.

In addition to obtaining a license, regulated entities must comply with animal 

identification and recordkeeping requirements. Dealers must individually identify regulated 

animals when those animals are delivered for transportation, transported, purchased, sold, or 

otherwise acquired or disposed of. The costs of complying with the identification requirements

are relatively small. While tattooing is an acceptable form of identification, tags are more 

commonly used. Appropriate official identification tags cost from 30 to 50 cents apiece in small 

volumes, and in larger quantities for as little as 12 cents each.7 In addition, each dog needs a 

collar, which can be purchased at retail for as little as $1 to $2.8 Thus, the cost of a collar and tag

ranges from $1.12 to $2.50 per dog. We estimate that there are about 246 dogs at a typical 

breeder’s facility that require identification over the course of a year.9

Dealers also have to keep and maintain records or forms that disclose certain information 

concerning animals purchased or otherwise acquired, owned, held, leased, or otherwise in their 

possession or under their control, or that are transported, sold, euthanized, or otherwise disposed 

of. In addition, the AWA regulations require a dealer that employs a part-time attending 

veterinarian or has a consultant arrangement with a veterinarian make formal arrangements that 

include a written program of veterinary care, and regularly scheduled visits to the dealer’s 

premises. For carriers and intermediate handlers, such records include a copy of the consignor’s 

written guarantee of payment for transportation of C.O.D. shipments; a shipping document; and, 

if needed, an acclimation statement indicating that the animal being transported can withstand 

temperatures lower than those temperatures specified in the regulations. In addition, the AWA 

 

7

Internet search of official USDA identification tag providers.

8

Internet seach of pet supply retailers.

9

In 2010, there were an average of 106 adults and 93 puppies at APHIS 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. 
7

regulations may require that instructions for the administration of food and water be attached to 

the outside of the primary enclosure used in transportation. We estimate that it requires a 

licensed breeder about 10 hours annually to comply with the licensing paperwork and 

recordkeeping requirements. At a rate of $13.07 per hour,10 this cost is estimated to total about 

$131 annually.

Licensed dealers 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. Neither the number of entities that would need to make 

changes, nor the extent of those changes is known. Therefore, the cost associated with any

alterations is also unknown. However, based on our experience with regulating wholesale 

breeders, the most common areas of regulatory non-compliance at pre-licensing inspections are 

veterinary care, facility maintenance and construction, shelter construction, primary enclosure 

minimum space requirements, and cleaning and sanitation. If newly regulated entities were to 

exhibit similar patterns of non-compliance, they could incur costs of coming into compliance as 

follows. 

 

10 May 2011 National Industry-Specific Occupational Employment and Wage Estimates, Bureau of Labor Statistics, 43-

9061,Office Clerk, General, median hourly wage.
8

Inadequate facility maintenance and construction was identified as a problem in about 

16.5 percent of pre-licensing inspections of wholesale breeders in 2010. Housing facilities must 

be structurally sound and kept in good repair; surfaces of housing facilities must be free of 

excessive rust, jagged edges or sharp points; floors, walls and other surfaces in housing facilities 

must be impervious to moisture; and floors have to be constructed in a manner that protects the 

dogs’ feet and legs from injury. We estimate that most repairs made to meet housing standards 

cost $50 to $100 or less in materials, and require 8 to 10 hours to complete. At a rate of $9.38

per hour,11 this labor would cost a breeder about $75 to $95. Ongoing, routine facility 

maintenance likely takes from 2 to 8 hours per week. Again at a rate of $9.38 per hour, this 

labor costs about $980 to $3,900 annually. Most breeders perform necessary repairs themselves, 

often with inexpensive and already available or easily obtainable materials. 

Insufficient veterinary care was identified as a problem at about 16 percent of prelicensing inspections of wholesale breeders in 2010. Licensees are required to establish, 

maintain and document a program of veterinary care in collaboration with their veterinarian, if 

the veterinarian is not a full-time employee of the licensee, or has a consultant agreement. 

Establishing such a program involves a site visit from the veterinarian. We estimate that such a 

site visit costs between $50 and $150. In addition, any specific veterinary issues identified 

during the inspection must be addressed.

Based on APHIS’ experience in regulating wholesale breeders, common veterinary care

concerns for adult dogs include ear issues, (injuries, infections, foreign bodies, ticks); eye issues 

(discoloration of the cornea, discharge, injuries, “cherry eye”); skin issues (hair loss, severe 

 

11 May 2011 National Industry-Specific Occupational Employment and Wage Estimates, Bureau of Labor Statistics, 39-2021, 

Nonfarm animal caretakers, median hourly wage.
9

scratching, wounds, inflamed reddened skin, hair mats); toenail issues (overgrowth or injuries); 

dental issues (tooth infections, loose teeth, painful mouth, drooling); and expired medication and 

vaccines (improper labeling, improper storage, etc.). Typically, when veterinary care issues are 

identified on an inspection report, it involves a small number of dogs. We estimate that 

addressing such issues costs from $75 to $300 per incident to resolve. One to three veterinary

care issues therefore costs between $75 and $900 to resolve.

Puppies need to be vaccinated. The American Animal Hospital Association (AAHA) and 

the American Veterinary Medical Association (AVMA) recommend core and noncore 

vaccinations, with all dogs needing core vaccines, while noncore vaccines are situation 

dependent. Distemper, hepatitis, parvovirus, and rabies are among the core vaccines. Rabies 

vaccinations are not given until a dog reaches at least 3 months of age. The cost of vaccinations 

varies widely in the United States depending on whether the vaccinations are done individually

or in combination, and whether they are provided through a public city or county shelter, at a

private practice, or by the breeders themselves. There are regional cost differences as well. 

Distemper, hepatitis, and parvovirus vaccinations are often combined with vaccinations for 

leptospirosis and parainfluenza (DHLPP). Prices for DHLPP vaccinations can range from $16 to 

$35.12 DHLPP is given to puppies at 6-8 weeks of age as an initial stimulus of antibodies and is 

given two more times at 2-3 week intervals for a complete series of 3 injections.13 The first 

vaccination in the series is typically administered by the breeder. With an average of 140 

 

12 A limited internet search for DHLPP prices included the following results: 

http://www.marvistavet.com/html/about_our_hospital.html; http://www.luvmypet.com/prices.html; 

www.buttecounty.net/publichealth/animal/Canine%20Distemper.pdf; http://mtnvet.com/plans_and_packages.htm; 

http://www.kaawsclinic.com/vaccinations-1539.

13 www.buttecounty.net/publichealth/animal/Canine%20Distemper.pdf
10

puppies14 per year at a facility, the annual cost of these vaccinations could be from $2,240 to 

$4,900. 

Inadequate cleaning and sanitation was identified as a problem in about 13 percent of prelicensing inspections of wholesale breeders in 2010. Excreta and food waste must be removed 

from primary enclosures daily; primary enclosures, food and water receptacles, and surfaces in 

contact with dogs must be cleaned and sanitized; an effective program for the control of insects, 

external parasites affecting dogs, and birds and mammals that are pests, must be established and 

maintained; and the interior of the animal cargo space must be kept clean during transportation. 

We estimate that routine sanitation and cleaning for a typical breeder’s facility can be 

accomplished in 1 to 2 hours daily. At a rate of $9.38 per hour,15 this labor cost totals about 

$3,420 to $6,850 annually. Many breeders perform necessary sanitation and cleaning 

themselves. 

Inadequate shelter construction was identified as a problem in about 4 percent of the prelicensing inspections of wholesale breeders in 2010. Breeders must provide adequate shelter

from the elements for all dogs under care. This may be accomplished in a variety of ways, 

including through the provision of dog houses. We estimate that there are 20 to 30 shelters on a 

typical facility, and a facility with a problem in this area could require 1 to 20 new shelters. An 

igloo style dog house retails for $80 to $120.16 Based on this unit cost range, breeders needing

from 1 to 20 new shelters to come into compliance could incur costs from $80 to $2,400. Dog 

houses can also be constructed at a lower cost from less expensive materials such as plywood. 

 

14 See footnote 5.

15 May 2011 National Industry-Specific Occupational Employment and Wage Estimates, Bureau of Labor Statistics, 39-2021, 

Nonfarm animal caretakers, median hourly wage.

16 Internet seach of pet supply retailers.
11

Problems with the primary enclosures for the dogs were identified in about 1 percent of 

pre-licensing inspections of wholesale breeders in 2010. The primary enclosures need to be in 

good repair and must meet a minimum space requirement that depends on the type (size) of dog. 

We estimate that the typical breeder has 30 to 40 primary enclosures, and a breeder with a 

problem in this area may require 1 to 30 new enclosures. A commercially manufactured kennel 

can cost from $220 to $260 for a 3-foot by 6-foot run.17 Based on these estimates, a breeder 

needing new enclosures to come into compliance could spend from $220 to $7,800. However, 

these enclosures vary widely in construction, materials, and size. Some are made of basic 

construction materials, and could cost much less if the breeder were to make them himself.

Table 2 summarizes the costs as described above that may incurred by newly regulated 

breeders and other dealers of dogs. 

Table 2. Costs attributable to the proposed rule that may be incurred by newly regulated 

breeders and other dealers of dogs.

Area of Possible 

Non-compliance Unit Cost (1)

Number of 

Affected 

Facilities (2)

Total Cost Range($1,000)

Licensing fees $10 application fee

$30-$750 licensing fee

(assume $70 to $235) (3) 

1,500 $105 $353

Identification $1.12-$2.50 for collars & 

tags (246 dogs per facility 

need identification) (4) 

1,500 $413 $923

Recordkeeping 10 hrs annually * 

$13.07/hour (BLS 43-

9061)

1,500 $196 $196

Facility 

Maintenance

8-10 hrs (preliminary) * 

$9.38/hr (BLS 39-2021)

$50 to $100 (materials)

2-8 hrs per week 

(ongoing) * $9.38/hr (BLS 

39-2021)

248 

$19

$12

$242

$23

$25

$968

Veterinary care $50 to $150 (site visit) 237 $12 $36

 

17 Internet search of pet supply retailers.
12

$75 to 300 (1 to 3 

veterinary care issues)

$16 to $35 for puppy 

vaccinations

$18

$531

$213

$1,161

Shelter 

Construction

$80 - $120 for a 

commercial igloo style 

dog house (1 to 20 new 

shelters)

65 $5 $156

Primary Enclosures $220 -$260 for a 

commercial 3’x6’ kennel 

(1 to 30 new enclosures)

21 $5 $164

Daily Sanitation & 

Cleaning per Year

1-2 hrs daily * $9.38/hr 

(BLS 39-2021) 194 $664 $1,328

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. 

The proposed rule would also potentially affect current Class A licensees (wholesale 

breeders). Expanding the licensing exemption from three or fewer breeding females to four or 

fewer breeding females could substantially reduce the number of these licensees. 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. 
13

We believe that the benefits of this proposed rule, especially enhanced animal welfare, 

would justify the costs. A benefit of the rule is in assuring that animals sold at retail receive 

humane handling, care and treatment in keeping with the requirements of the AWA. Without 

public oversight or licensing and inspection 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, USDA's Office of Inspector 

General found consumers who purchased dogs over the Internet had encountered health 

problems with their dogs.18 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 highvolume breeders that sell directly to the public, including sales over the Internet.19

The proposed rule 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. 

Initial Regulatory Flexibility Analysis

The Regulatory Flexibility Act requires agencies to evaluate the potential effects of their 

proposed and final rules on small businesses, small organizations and small governmental 

jurisdictions. Section 603 of the Act requires agencies to prepare and make available for public 

 

18 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.

19 See, for example, H.R. 835/S. 707, the Puppy Uniform Protection and Safety (PUPS) Act, http://thomas.loc.gov/cgibin/bdquery/z?d112:h.r.835:
14

comment an initial regulatory flexibility analysis that describes expected impacts of a proposed 

rule on small entities. 

Reasons Action is Being Considered

The current definition of retail pet store was established to ensure that the appropriate 

retail facilities were exempt from licensing requirements. Historically, such outlets included 

hobby breeders, as well as traditional “stores” that are subject to a degree of oversight by persons 

who physically enter 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. With the increased use of 

the Internet in the 1990s, many retailers who traditionally sold their animals to local customers 

began to offer their animals for sale remotely over the Internet and 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 storefront, 

qualify as retail pet stores and are exempt from the licensing requirements, even if they lack the 

public oversight.

Therefore, APHIS is proposing to revise the definition of retail pet store so that it only

includes those places 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.

Hobby breeders and other persons who engage in the de minimis activities involving such 
15

animals would continue to be exempt from licensing requirements regardless of their status or 

lack of status as a retail pet store. 

Objectives of and Legal Basis for the Rule

The Animal Welfare Act authorizes the Secretary of Agriculture 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 Animal and Plant Health Inspection Service. This proposed rule is necessary to 

ensure that animals at retail pet stores are monitored for their overall health, humane handling, 

care and treatment. 

Potentially Affected Small Entities

The entities affected by the proposed rule are likely to be considered small. They are 

persons who sell their 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 sales 

conducted exclusively over the Internet. Persons who maintain four or fewer breeding female 

dogs, cats, or small exotic or wild mammals, or derive less than $500 gross income from the sale 

of animals, other than dogs, cats, and exotic or wild animals, would be exempt from the proposed 

new licensing requirements. In addition, some current licensees would no longer be required to 

be licensed due to the increase of the exemption threshold from three to four breeding females.

The Small Business Administration (SBA) has established guidelines for determining 

which entities are to be considered small. Pet stores are identified in the North American 

Industry Classification System (NAICS) category 453910, Pet and Pet Supplies Stores. This

industry comprises establishments primarily engaged in retailing pets, pet foods, and pet 
16

supplies. The small-entity standard for this industry is annual sales of not more than $19 million. 

In 2007, there were about 8,880 pet and pet supply stores in the United States. 

Establishments primarily engaged in retailing pets, pet foods, and pet supplies via 

electronic home shopping, mail-order, or direct sale are classified within NAICS subsector 454, 

Nonstore Retailers, and specifically, within NAICS category 4541112, Electronic Shopping, 

Specialized Merchandise. An entity in this category is considered small if it generates not more 

than $30 million in annual sales. 

In 2007, there were about 13,500 establishments in NAICS category 4541112, with 

average sales of $5.4 million.

20

 The Economic Census does not report the number of entities 

with more than $30 million in annual sales, but less than 3 percent of the establishments in this 

category had more than $10 million in annual sales in 2007. Because this category includes 

many other enterprises besides those that sell pets to buyers who do not enter their facility to 

observe the animals prior to purchase and/or to take custody of the animals after purchase, we do 

not have a precise estimate of the number or size of entities that would be affected by this 

proposed rule. However, based on the above, the majority of establishments affected are likely 

to be considered small entities. 

Projected Reporting, Recordkeeping, and Other Compliance 

Requirements

Should this rule be adopted, some sellers of pets may need to become licensed and 

comply with animal identification and recordkeeping requirements, as well as meet standards of 

AWA regulations that address the following: Facilities and operations (including space, 

structure and construction, waste disposal, heating, ventilation, lighting, and interior surface 

 

20 U.S. Department of Commerce. Bureau of the Census. 2007 Economic Census.
17

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 non-compliance with the regulations at pre-licensing inspections are 

veterinary care, facility maintenance and construction, shelter construction, primary enclosure 

minimum space requirements, and cleaning and sanitation. If entities newly regulated under the 

proposed rule were to exhibit similar patterns of non-compliance, we estimate that they could 

incur costs that would total from $2.2 million to $5.5 million.

The proposed rule would also potentially affect current Class A licensees (wholesale 

breeders). Expanding the licensing exemption from three or fewer breeding females to four or 

fewer breeding females could substantially reduce the number of these licensees. 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. 
18

We do not currently have enough information to fully assess the potential impact of this

proposed rule, particularly information on the number of entities that may be affected or the 

breadth of operational changes that may occur at affected entities. We encourage public 

comment on the number of small entities that may be affected and the degree to which operations 

at those entities would be altered to comply with the rule. 

Duplication, Overlap, or Conflict with Existing Rules and Regulations

APHIS has not identified any duplication, overlap, or conflict of the proposed rule with 

other Federal rules.

Alternatives to minimize Significant Economic Impacts of the Rule

In developing the proposed rule, APHIS 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. 

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 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-faceto-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 
19

this alternative in our proposed change 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.

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. However, to our knowledge, only 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 
20

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.

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 highvolume breeder has not been established, we note that the PUPS Act21 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 varies according to the 

breed of the dog. For example, as noted in the Fall 2009 edition of the AKC Breeder,22 Labrador 

retrievers had a typical range of 5 to 10 puppies per litter, with an average of 7.6, while 

 

21 See footnote 15.

22 http://www.akc.org/enewsletter/akc_breeder/2009/fall/handbook.cfm.
21

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 liters 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 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. However, 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. 

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 option, which was to propose to increase the number of breeding females for dogs 
22

only and leaving 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.