SSB 3159 (LSB 5668XC (3) 84)

SENATE FILE _____

BY  (PROPOSED COMMITTEE ON COMMERCE BILL BY CHAIRPERSON McCOY)

A BILL FOR

An Act requiring a commercial breeder of dogs and cats to file evidence of financial responsibility with the department of agriculture and land stewardship, and making penalties applicable.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  Section 162.2, subsection 8, Code 2011, is amended to read as follows:
   8.
  a.  “Commercial breeder” means a person, engaged in the business of breeding dogs or cats, who sells, exchanges, or leases dogs or cats in return for consideration, or who offers to do so, whether or not the animals
 
dogs or cats are raised, trained, groomed, or boarded by the person. A person who owns or harbors three or fewer breeding males
 
dogs or females
 
cats is not a commercial breeder. However, a person who breeds any number of breeding male or female greyhounds for the purposes of using them for pari-mutuel wagering at a racetrack as provided in chapter 99D shall be considered a commercial breeder irrespective of whether the person sells, leases, or exchanges the greyhounds for consideration or offers to do so.
   b.  A dog or cat used for breeding includes either a female or male.
    Sec. 2.  Section 162.2, Code 2011, is amended by adding the following new subsections:
   NEW SUBSECTION.  15A.  “Financial institution” means a state bank as defined in section 524.103, a state bank chartered under the laws of any other state, a national banking association, a federally chartered savings and loan association, an out-of-state state chartered savings bank, a financial institution chartered by the federal home loan bank board, a non-Iowa chartered savings and loan association, or an association incorporated or authorized to do business under chapter 534.
   NEW SUBSECTION.  15B.  “Government entity” means the federal government, including the United States department of agriculture; the state, including the department; or a local government, including a city as defined in section 362.2 or a county as provided in chapter 331.
    Sec. 3.  NEW SECTION.  162.8A  Commercial breeder —— evidence of financial responsibility.
   A person applying for the issuance of an authorization as a commercial breeder as provided in section 162.8 shall provide the department with evidence of financial responsibility as required in this section. The evidence of financial responsibility shall be provided to the department before the authorization is issued.
   1.
  a.  The evidence of financial responsibility shall consist of a surety bond furnished by a surety authorized to do business in this state or an irrevocable letter of credit issued by a financial institution.
   b.  The evidence of financial responsibility shall be continuous in nature. The surety shall provide at least ninety days’ notice in writing to the person and the department indicating the surety’s intent to cancel the surety bond and the effective date of the cancellation. The person shall have sixty days from the date of receipt of the surety’s notice of cancellation to file a replacement.
   2.  The amount of the evidence of financial responsibility shall be based on information included in the application as certified by the person seeking to obtain the authorization.
   a.  The amount shall be based on the number of breeding dogs and breeding cats owned by the person, calculated as follows:
   (1)  For a person who does not currently hold an authorization as a commercial breeder, the calculation shall be based on the greatest number of breeding dogs or breeding cats owned by the person at any one time in the previous twelve months or the greatest number of breeding dogs or breeding cats that the person expects to own at any one time during the term of the authorization, whichever is more.
   (2)  For a person who currently holds an authorization as a commercial breeder, the calculation shall be based on the greatest number of breeding dogs or breeding cats that the person owned at any point during the term of the authorization.
   b.  Based on the calculation provided in paragraph “a”, the amount of the evidence of financial responsibility shall be as follows:

   (1)  For owning twenty or more but not more than fifty breeding dogs or breeding cats, ten thousand dollars.
   (2)  For owning more than fifty but not more than one hundred breeding dogs or breeding cats, twenty thousand dollars.
   (3)  For owning more than one hundred but not more than two hundred fifty breeding dogs or breeding cats, forty thousand dollars.
   (4)  For owning more than two hundred fifty breeding dogs or breeding cats, one hundred thousand dollars.
   c.  For purposes of paragraphs “a” and “b”, a person is deemed to own a breeding dog or breeding cat even if the person does not hold title to the breeding dog or breeding cat so long as the person otherwise possesses or controls the breeding dog or breeding cat.
   3.  The evidence of financial responsibility shall be conditioned upon the person’s compliance with the provisions of this chapter applicable to commercial breeders operating pursuant to an authorization, during the term of the authorization.
   4.  The surety’s or issuer’s liability extends to any person who serves as the custodian of the dog or cat for all actual and necessary expenses incurred by providing for care or disposition of a breeding dog or breeding cat obtained as provided in this subsection.
   a.  The custodian incurring the expense must have obtained the dog as a direct result of an enforcement action taken by a government entity against the person, or a criminal or civil action in which a government entity is a party. The enforcement action must be brought under any of the following:
   (1)  The federal Animal Welfare Act, 7 U.S.C. § 2131 et seq.
   (2)  This chapter or chapter 717B, including section 717B.4 or section 717B.5.
   b.  A person authorized as a commercial breeder may relinquish the breeding dog or breeding cat to a government entity or a custodian designated or approved by the government entity. The government entity may seize the breeding dog or breeding cat pursuant to an enforcement action or court order as provided by federal or state law.
   c.  The actual or necessary expenses incurred by a custodian designated or approved to provide for the care or disposition of the breeding dog or breeding cat as provided in this subsection include all of the following:
   (1)  Maintenance, including but not limited to providing veterinary examinations or treatment, sterilization, transportation, housing, and sustenance.
   (2)  Disposition, including transfer of title to another person or humane destruction in the same manner as provided in section 162.13.
   d.  Any private or public entity other than the state government or the United States government may be a custodian. A local government may be a custodian.
   5.  A custodian may bring a legal action in order to be indemnified for all actual and necessary expenses incurred when the custodian provides for the care and disposition of the dog or cat as provided in subsection 4.
   a.  The legal action may be taken against the surety on the bond or issuer of the irrevocable letter of credit in district court. The custodian may also be awarded court costs and reasonable attorney fees, which shall be taxed as part of the costs of the legal action.
   b.  The surety or issuer shall not be liable to pay for the amount received by the custodian as a result of an order to pay for dispositional expenses as provided in section 717B.4.
   c.  The aggregate liability of the surety or issuer shall not exceed the amount of the evidence of financial responsibility.
   6.
  a.  The department shall adopt rules as required to administer this section, including but not limited to rules providing for qualifications for a surety or financial institution, procedures for filing evidence of financial responsibility, including replacement bonds or letters of credit, requirements for the cancellation of the evidence of financial responsibility, and the liability of a surety or issuer after cancellation.
   b.  The form and submission of the evidence of financial responsibility shall be prescribed by the department.
    Sec. 4.  Section 162.12, Code 2011, is amended to read as follows:
   162.12  Denial or revocation of license or registration.
   1.  A certificate of registration may be denied
 
The department may deny an application for the issuance of an authorization to any animal shelter, pound, or research facility and a state license may be denied to any public auction, boarding kennel, commercial kennel, pet shop, commercial breeder, or dealer, or an existing certificate of registration or state license
 
a commercial establishment and the department may be revoked by the secretary if, after public hearing, it is determined
 
suspend or revoke an authorization issued to a commercial establishment if the department determines that the housing facilities or primary enclosures are inadequate under this chapter or if the feeding, watering, cleaning, and housing practices at the pound, animal shelter, public auction, pet shop, boarding kennel, commercial kennel, research facility, or those practices by the commercial breeder or dealer,
 
employed by the commercial establishment are not in compliance with this chapter or with the rules adopted pursuant to this chapter. The premises of each registrant or state licensee shall be open for inspection during normal business hours.
   2.  The department shall deny an application for the issuance of an authorization to operate as a commercial breeder and shall revoke an authorization issued to a person operating as a commercial breeder, if the person fails to comply with evidence of financial responsibility requirements as provided in section 162.8A.
    Sec. 5.  Section 717B.1, Code 2011, is amended by adding the following new subsection:
   NEW SUBSECTION.  3A.  “Department” means the department of agriculture and land stewardship.
    Sec. 6.  Section 717B.4, subsection 2, Code 2011, is amended to read as follows:
   2.  The hearing to determine if the animal is a threatened animal for purposes of disposition shall be a civil proceeding.

The hearing may be part of a hearing to determine the liability of a surety who issued a surety bond or a financial institution who issued an irrevocable letter of credit pursuant to section 162.8A.If
 
However, if the case is related to a criminal proceeding, the disposition shall not be part of that proceeding and shall not be considered a criminal penalty imposed on a person found in violation of this chapter.
    Sec. 7.  Section 717B.4, subsection 3, Code 2011, is amended by adding the following new paragraph:
   NEW PARAGRAPH.  0c.  A local authority shall be indemnified under this section prior to bringing a claim for indemnification on a surety bond or irrevocable letter of credit submitted to the department as evidence of financial responsibility pursuant to section 162.8A.
EXPLANATION
   GENERAL. Commercial breeders of dogs or cats are required to obtain a state license, or alternatively a permit if federally licensed, from the department of agriculture and land stewardship (Code section 162.2A). A license or permit is generally referred to as an authorization.
   EVIDENCE OF FINANCIAL RESPONSIBILITY —— APPLICATION AS A COMMERCIAL BREEDER. This bill requires that a person who applies for an authorization to operate as a commercial breeder (either issuance or renewal of a license or permit) must provide the department with evidence of financial responsibility in the form of a surety bond or irrevocable letter of credit issued by a financial institution (e.g., a bank).
   FINANCIAL CONDITIONS ASSOCIATED WITH MAINTAINING AN AUTHORIZATION. The bill requires a commercial breeder to maintain the evidence of financial responsibility, including by replacing any evidence that is canceled by the surety or issuer. The amount of the evidence is based on the greatest number of breeding dogs or cats owned or controlled by the person at any one time during the past 12 months, ranging from $10,000 to $100,000.
   USE OF THE EVIDENCE OF FINANCIAL RESPONSIBILITY —— CUSTODIANS. The evidence is used when the commercial breeder transfers custody of the animal to another person designated as the animal’s custodian. The purpose of the evidence of financial responsibility is to reimburse the custodian for the actual and necessary expenses incurred when providing for the care and disposition of the dog or cat as a result of a federal or state enforcement action. A custodian entitled to be reimbursed for expenses includes any private or public entity other than the state government or the United States government. 
   DISPOSITIONAL PROCEEDINGS INVOLVING THREATENED ANIMALS.  The bill provides for cases in which there is a dispositional proceeding in which a local government and the owner are parties to determine the disposition of a threatened dog or cat subject to alleged neglect or abuse (Code section 717B.5). The dispositional proceeding may be joined with the proceeding to determine the liability of the surety or issuer of irrevocable letter of credit. In any case, the owner who is a party in a dispositional proceeding is required to pay for the disposition of the dog or cat prior to the surety or issuer. 
   DISCIPLINARY ACTION. The department is required to revoke an authorization issued to a person operating as a commercial breeder for failing to comply with financial responsibility requirements.
   CIVIL PENALTIES. A person who fails to maintain evidence of financial responsibility is subject to a civil penalty as determined by the department, not to exceed $500, with each day that a violation continues constituting a separate offense.