It sounds like he pulled it so that he can work on a better version and resubmit.
Personally, I'm in favor of a well written one. This one just had too many flaws. It was providing loopholes to the wrong kind of people.
I'm not surprised that PETA and HSUS are helping. As long as the assemblyman doesn't give in to them, whatever if they want to hand him their money. Californias love their pets; they would never approve of something that ended pet ownership. They would approve of something that stopped puppy mills.
The thing is, they need to find a way to distinguish between legitimate and illegitimate breeders. So the cat/dog is registered. So what. WHO are they registered with? There's a lot of bad registries. I think this will be the hardest part, especially for new breeds and variations within breeds (traditional siamese and persians). If we ever reached the point where we could ONLY buy purebreds, you'd see a lot of people who just want a plain kitty and would be more likely to own the non-extreme styles of these breeds. There's a lot to take into account there.
The rest of the bill seems fixable. There needs to be a breeder limit to prevent puppy mills. Not a limit on the number of breeders, but a limit on how many unaltered pets, and how many litters a year. It doesn't have to be really low, just something low enough to allow larger breeders (like Nial) but remove the mills and the BYBs. A lot of BYBs breed for money, and it won't be worth it if their limited to only 1 litter per queen per year. Fees for unalters should be minimal, fines for having an unapproved alter should be high enough to offset the cost of any money the BYB would have made off a litter. (And the animal should be rehomed.)
They also need to change the regulations for how soon the animal is altered. It seems reasonable to fine people for unaltered animals UNLESS they have a permit. In which case, they can have, I don't know, 20? unaltered, unregistered animals that are under 1 year of age. That gives plenty of time for breeders to decide what to do with a cat. At one year, there are two options: a) the cat is registered as a breeder, counts toward the breeders limit, and the breeder fee is paid or b) the animal is fixed. Only registered breeders get this option, they only get it for cats under year, and there's a limit to deter people from breeding the cats early. If a female gets pregnant, that cat is consequently disqualified from this exemption, fees and registration must be done, and the cat counts towards the limit. 20 is probably not a reasonable number, not sure how many kittens under one a large breeder has running around. But you get the idea.
Anyway, I think the hardest part is just deciding what it means for a cat to be "registered". What registry, what about new breeds, what about "oops" litters, what about non-showable variants of a breed, etc. If they can figure that out, the rest should be easier.
This also should all be phased in slowly. If it happens right away, there will very quickly be not enough pets to go around, which is exactly what PETA and HSUS want. As less animals arrive in petstores and shelters, there will need to be more breeders falling under the guidelines. It takes years for a breeder to get up to speed, so the whole timeline will need to be 10 years or so.
Is there any reason why the ethical breeders don't try to work out a suggestion themselves? Are there just too many unethical breeders gumming things up? It seems that, if you guys could create something, it might be a really good option. After all, it's in your best interest. It would prevent people from tarnishing your reputations, and there would be more people interested in purchasing your cats (simply cause they have no where else to go)!