Dennis L. and Margaret J. Knudsen - Page 11




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          improvements to the land.7  In addition, petitioners spent                  
          $261,348 on equipment used to maintain the property.                        
               The USDA conducted two annual inspections of ERE’s                     
          facilities.  The USDA requires that exotic animal breeding                  
          facilities be constructed and maintained according to USDA                  
          regulations.8  To comply with USDA’s requirements, petitioners              
          incurred large expenses installing infrastructure on the                    
          property.  For example, petitioners constructed metal and                   
          concrete buildings, maintained heat inside the buildings, and               
          built walkways throughout the property.  During the years at                
          issue, ERE was in compliance with or received variances from all            
          USDA requirements.9                                                         
               In 2000, petitioners started building a home on the                    
          property.  Petitioners decided to live on the property because              
          Mrs. Knudsen often drove to the property alone at night to feed             
          the animals, and petitioners wanted to keep better watch over               

               7The improvements to the land consisted of $1,119,478 for              
          buildings and $412,774 for landscaping.                                     
               8The USDA regulates the following:  Housing, ventilation,              
          lighting, interior surfaces, primary enclosures, sanitation, pest           
          control, feeding and watering, outdoor shelter, compatibility of            
          animals housed together, record keeping, adequate veterinary                
          care, handling, and transportation.                                         
               9In 2001, the USDA informed petitioners that they were not             
          in compliance with a new USDA regulation.  The new regulation               
          required an 8-foot perimeter fence for potentially dangerous                
          animals.  Mrs. Knudsen applied for a variance from the new                  
          regulation, and the USDA granted Mrs. Knudsen’s request because             
          the existing structures were sufficient.                                    






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