## Facts

- The Animal Welfare Act (AWA) regulates “dealers” of covered animals but exempts “retail pet stores,” leaving that term to be defined by USDA regulation.
- A 1971 USDA regulation broadly defined “retail pet store,” which effectively exempted many small breeders selling directly to consumers.
- As online pet sales increased, USDA’s Animal and Plant Health Inspection Service (APHIS) identified concerns about “sight-unseen” transactions and animal welfare problems associated with unregulated breeders.
- In 2013, APHIS issued a final rule redefining “retail pet store” to require a face-to-face transaction at a location where the seller, buyer, and animal are physically present so the buyer can personally observe the animal before purchase or taking custody.
- The rule’s effect was to subject many Internet and shipment-based sellers to federal licensing and regulatory requirements under the AWA.
- APHIS also expanded a numerical “de minimis” exemption tied to the number of breeding females on the premises, allowing some smaller breeders to remain exempt even without face-to-face sales.
- Breeding clubs and related organizations sued under the Administrative Procedure Act (APA), alleging the rule exceeded statutory authority and was arbitrary and capricious; the Humane Society of the United States intervened to defend the rule.
- The parties filed cross-motions for summary judgment.

## Issues

1. Whether the AWA’s “retail pet store” exemption unambiguously barred APHIS from limiting the exemption to face-to-face sales locations.
2. If the term is ambiguous, whether APHIS’s 2013 definition was a reasonable interpretation of the statute.
3. Whether the rule was arbitrary and capricious for failing to reasonably address costs, impacts on small breeders, reliance interests, and the rule’s distinctions between face-to-face and sight-unseen sales.
4. Whether prior appellate approval of the earlier, broader regulatory definition prevented APHIS from adopting a narrower definition.

## Decision

- The court granted summary judgment for USDA and the intervenor and denied plaintiffs’ motion.
- The court held the AWA does not define “retail pet store” and the term is ambiguous as applied to Internet and sight-unseen sales.
- Applying Chevron deference, the court upheld APHIS’s face-to-face definition as a permissible construction aligned with the AWA’s humane-treatment purpose and responsive to changed market conditions.
- The court rejected the claim that prior judicial approval of the earlier definition constrained the agency from changing its interpretation.
- Under APA review, the court found APHIS considered significant comments, explained its choices, and adequately addressed cost and small-breeder concerns, including through the expanded de minimis exemption.

## Legal Principles

- When Congress leaves a statutory term undefined and ambiguous, courts defer to an agency’s reasonable interpretation adopted through rulemaking.
- An agency may change a longstanding interpretation of an ambiguous statute if it acknowledges the change and provides a reasoned explanation grounded in the statute and the administrative record.
- Under APA arbitrary-and-capricious review, a rule is upheld if the agency examined relevant considerations, responded to significant comments in a reasoned manner, and articulated a rational connection between the record and the regulatory choice.
- Prior judicial approval of one permissible agency interpretation does not bar the agency from adopting a different permissible interpretation later.

## Conclusion

The court upheld USDA’s 2013 rule narrowing the AWA “retail pet store” exemption to face-to-face transactions, concluding the statute’s exemption term is ambiguous, the agency’s revised definition is reasonable, and the rulemaking satisfied APA requirements.


Associated Dog Clubs of N.Y. State, Inc. v. Vilsack, 75 F. Supp. 3d 83 (D.D.C. 2014)