John Dollarhite and his $90,000 USDA fine

update There's an update to the story at the end.

John Dollarhite is a breeder located in Nixa, Missouri. Between April of 2008 and December of 2009, Dollarhite sold 619 animals in 56 separate transactions to two different pet stores. Large volume sales of pets require that the breeder be licensed with the USDA. By being licensed, the facility is periodically inspected by USDA APHIS inspectors to ensure the animals are being adequately cared for. Dollarhite did not get the necessary USDA license, so all of the sales were in violation of USDA APHIS regulations.

Recently, Dollarhite received a letter from the USDA informing him that he has been fined $90,643 for his actions. The letter also stated that if he didn't pay this fine the matter would be referred to the USDA's Office of the General Council for litigation. The letter also warned Dollarhate that he could be facing a fine of $10,000 for each infraction of the law.

Various Tea Party-like publications, including Andrew Breitbart's Big Big Government, and individual web sites, such as Bungalow Bill's, expressed outrage over the fee being proposed and the "big government" abuse against poor little folk such as Dollarhite. A small protest was held last week, and another one is planned outside the office of Congressmen Billy Long on June 2nd. Both of Missouri's senators, Claire McCaskill and Roy Blunt, have been pulled into the fracas.

The USDA has been characterized as "federal thugs", the issuance of the fine has been called unconstitutional, and many claim the Dollarhites civil rights have been violated. Those contesting the fee also contend that, since the breeder's sales were contained within the state, the USDA has no jurisdiction.

There will always be those who use the term "thug" for any action of the government. And there will always be those who are quick to claim how any action by the government is unconstitutional. However, the Constitution contains provisions for Congress to enact laws, and agencies to enforce the laws. Yes, even acts of commerce that exist solely intrastate. What puzzles me more about the outrage over Dollarhite is that similar high fines have been levied against other breeders in Missouri for the same actions, yet no one protested these actions. A case in point was the USDA action against Marilyn Shepherd, in 2004 (pdf).

In 2004, the USDA filed a complaint against Marilyn Shepherd for violations of the Animal Welfare Act. Between the months of April and December in 2002, while operating without a valid USDA license, Shepherd sold 165 dogs on 26 different occasions to an agent who lives in Missouri for a pet store located in Kansas.

Shepherd contends, in her defense, that since the activity happened solely within the state of Missouri, she didn't need a USDA license. However, as the judge ruled, Shepherd was aware that the dogs were intended for a pet store in another state, and thus her actions were a violation of the Animal Welfare Act.

But, I can hear some folks say, how does this apply to the Dollarhites? After all, they sold directly to the pet stores, and the pet stores were located within Missouri.

The Animal Welfare Act still applies, as noted in the USDA AWA FAQ, because it covers any pet breeder who sells to brokers, pet stores, or research facilities. A breeder, such as Dollarhite, who sells to pet stores is considered a wholesaler, not a retailer. The authority to regulate wholesale pet breeders, even those operating entirely intrastate, is granted in Article 1 Section 8 Clause 3 of the US Constitution, otherwise known as the "Commerce Clause". The ability of Congress to enact laws that impact on purely intrastate commerce was upheld in the landmark Wickard v. Filbrun decision, that states a local action falls under the domain of the Commerce Clause if it "exerts a substantial economic effect on interstate commerce".

You can find a reflection of Wickard v. Filbrun decision in the Congressional Statement applicable to the Animal Welfare Act:

The Congress finds that animals and activities which are regulated under this chapter are either in interstate or foreign commerce or substantially affect such commerce or the free flow thereof, and that regulation of animals and activities as provided in this chapter is necessary to prevent and eliminate burdens upon such commerce and to effectively regulate such commerce, in order—

(1) to insure that animals intended for use in research facilities or for exhibition purposes or for use as pets are provided humane care and treatment;

(2) to assure the humane treatment of animals during transportation in commerce; and

(3) to protect the owners of animals from the theft of their animals by preventing the sale or use of animals which have been stolen.

The Congress further finds that it is essential to regulate, as provided in this chapter, the transportation, purchase, sale, housing, care, handling, and treatment of animals by carriers or by persons or organizations engaged in using them for research or experimental purposes or for exhibition purposes or holding them for sale as pets or for any such purpose or use.

(emph. mine)

Agree or not, there are several decades of law backing the USDA's actions...but the issue still remains, why the Dollarhites? Why are the folks so outraged about the USDA action against the Dollarhites not equally outraged against the actions taken against Shepherd, or other breeders, such as Cindy Brook?

The reason could be because the Dollarhites are selling *pet rabbits, not puppies.

Most people, on reading about an unlicensed breeder selling 619 puppies in a year's period, would assume, rightfully, that the breeder is a puppy mill—a large scale commercial dog breeder operating outside the law. Few people will stand up for puppy millers. However, since the Dollarhites were selling rabbits, somehow the issue is different. According to the pundits arguing in support of the Dollarhites, a person selling 619 bunnies in 18 months is small potatoes, Mom-and-Pop—an operation that isn't much more than a neighborhood "lemonade stand".

To the USDA, though, it makes no difference if the Dollarhites were selling puppies or bunnies—the law is the same for both. Selling over 600 pets in 18 months makes the breeder a large scale commercial wholesaler, who must be licensed.

Perhaps the people are more outraged about the Dollarhite situation because of the circumstances. The Dollarhites have talked about setting up Dollarvalue Rabbitry with their son as a lesson to him on fiscal responsibility. They stated that they didn't know they needed to be licensed, though the USDA has a record of them requesting information on obtaining a license in 2006. When this information** came out, Dollarhite stated that he was investigating licensing requirements for selling rabbit meat, but didn't start selling rabbits as pets until 2008. However, a search in the Internet Archives Wayback machine on the Dollarvalue Rabbitry web site URL shows us that the Dollarhites were selling rabbits as pets online starting in 2006.

Still, the Dollarhites weren't required to have a USDA license to sell a few rabbits as pets directly to the public via the internet. It was when they started selling the rabbits to the Silver Dollar "petting zoo" in Branson and to Petland in Springfield that they violated the law—something that is clearly defined in the information material related to AWA licensing. It was invoices to these establishments that brought the USDA to the rabbit breeder's door.

(And when did lemonade stands need invoicing?)

If the outrage about the Dollarhite USDA action is related purely to the amount of the fine, consider the fine levied against the aforementioned Marilyn Shepherd: $50,000 for selling 156 puppies in 26 separate transactions. Extrapolating from the fine levied against Shepherd to the one levied against Dollarhite, the $90,000 fine seems neither excessive nor unusual.

What's important to remember is that there are set fines for set actions. It is up to the judge to adjust the fine based on circumstances, something that the lawyer for the Dollarhites should be aware of. As an example of a judicial action to adjust a fine, the judge found Shepherd to have willfully violated AWA, but he still knocked the fine down to $25,000.

Now, the USDA can enter into a consent decree with the Dollarhites, reducing or even eliminating the fine. Cindy Brook entered into a consent decree about her violation, as did another breeding operation run by Floyd and Sharon Harrell. In addition, the USDA can also enter into a settlement agreement, such as the one Donald Johnson entered into. Regardless of approach taken, the USDA is constrained in their actions by the laws it is chartered to uphold—and that includes the amount of fine to levy for specific actions.

In 2010, the USDA Office of Inspector General released an audit of the department, APHIS responsible for enforcement of the Animal Welfare Act. Among the findings is the following:

Although APHIS previously agreed to revise its penalty worksheet to produce “significantly higher” penalties for violators of AWA, the agency continued to assess minimal penalties that did not deter violators. This occurred because the new worksheet allowed reductions up to 145 percent of the maximum penalty. While we are not advocating that APHIS assess the maximum penalty, we found that at a time when Congress tripled the authorized maximum penalty to “strengthen fines for violations,” the actual penalties were 20 percent less using the new worksheet as compared to the worksheet APHIS previously used.

(emph. mine)

It's a free country if people want to have their little demonstrations. I would hope, though, that the members of Congress not allow small but vocal demonstrations to trigger them into using their influence to undermine the laws under which the USDA operates. After all, it was Congress that enacted these laws, and it's the same Congress that recently tripled the fines that the USDA is supposed to apply. For McCaskill, Blunt, or Long to do so, undermines the rule of law and introduces a note of noisy chaos into the orderly application of the law.

As for the Dollarhites and the media coverage of their case, all I can do is recommend that publications, big or small, do a little fact checking before they begin beating their drums.

update The USDA has offered to waive the fee provided the Dollarhites never re-apply for a license, allow an inspection to ensure they no longer breed the rabbits, and provide documentation as to the disbursement of the animals.

This is actually close to what I expected to have happen, and matches previous USDA actions in the past. The leniency comes from the fact that this is the Dollarhite's first violation and they've already shown willingness to get out of the business.

Unfortunately, the pundits who frothed up this kerfuffle are unaware of how the USDA works, and seem incapable of investigating past actions to determine likely outcomes. Of course not, mustn't let facts get in the way of a good rant.

It is still unfortunate that Congressional members interceded. They are the ones, after all, that set the laws. Either they support their own laws, or they get out of the business of making them.

*And guinea pigs. The Dollarhites also began raising guinea pigs at the request of Petland in Springfield.

*The Dollarhites have also stated that the USDA only contacted them a couple of times, and that the people they have been in contact with have made several statements about the state of the rabbitry, the laws, and so forth. I have submitted a FOIA (Freedom of Information Act) request to the USDA for details regarding communications with the Dollarhite and will issue an update to this story when I receive them.