Administrative Rule of the Month - 71 IAC 14-2-1 Stallion Registration

Regular followers of the Indiana Breeder & Owner Protection, Inc. (IBOP) 'Administrative Rule of the Month' or anyone who has read our 'Letters to the Commission' and newsletters know of our concerns regarding the abuses of and the mistakes involved with the Indiana Horse Racing Commission's (IHRC) emergency rulemaking authority. We don't see many instances where true emergencies exist, yet in the history of the existence of the IHRC only one administrative rule has ever completed the more extensive and more scrutinized regular rulemaking process. And, in that lone case, our view was that the emergency rulemaking should have been used to correct an typographical error that significantly changed the meaning of the rule. (This rule became the subject of our 'Administrative Rule of the Month' for August, 2013. http://ibopindy.blogspot.com/2013/08/administrative-rule-of-month-71-iac-75.html)

So, there are times where the emergency rulemaking process does make much more sense. With that in mind, we made '71 IAC 14-2-1 Stallion registration' our 'Administrative Rule of the Month.' At their September, 17, 2013 meeting, the IHRC considered a change to this standardbred stallion registration rule to require that a stallion be registered before covering any mares. (A similar rule change was made to the thoroughbred stallion registration requirements in 2010.) Rather than copy the proposed rule change, which was a very minor change, we've copied the discussion on this change from the official transcript from that meeting. After reviewing the discussion, you'll understand the specifics of the change and maybe why it made sense to consider this rule change an emergency. The discussion, and the questions posed by Commissioner Barclay (now a former commissioner) to truly understand the implications, was one of the best examples we can find of a commissioner actually being engaged in the process. See if you agree, but make sure you read our final comments. The consideration of this emergency rule was item #7 on the agenda presented by Jessica Barnes, the IHRC's Director of Racing & Breed Development.

"CHAIRMAN DIENER: Number seven, Standardbred Breed Development.

JESSICA BARNES: In front of you you have a proposed emergency rule dealing with the registration of Indiana stallions. Under our current rule if a stallion comes in late to the state, so after our October 1st deadline, the stallion can be registered for the current season but may be registered up until July 15th so up until the close of the breeding season.

One of the things that we are finding is happening is mare owners are breeding to a new stallion that's in the state. And for some reason that stallion owner is forgetting to register the stallion so they are missing that July 15th deadline. And then after the July 15th deadline, there is no recourse for that stallion to be able to be registered. So somebody has bred their mare to a stallion in Indiana thinking it was registered with the Commission, and, in fact, it's not.

So this rule makes the clarification that the stallion has to be registered prior to covering any mares. So if a mare owner is breeding to a new stallion in Indiana, they have the opportunity to look on our website for our list, make a phone call to our office and say is that stallion registered and verify that that stallion was registered at that point in time to make sure that that stallion is Indiana eligible.

And in the old case if they call us, we can tell them, no, it's not registered, but they have up until July 15th. So the mare owner would breed to that stallion. And the stallion owner wouldn't fulfill their duty by July 15. And they would be out of luck.

This makes it cleaner for everyone. It protects the mare owner breeding to a stallion, as long as they have taken the proper steps to verify that the stallion is registered with the Commission.

And once again, it's an emergency rule because the registration deadline is October 1st. Any stallion registered after this deadline will fall under this new requirement. So what we will do once this rule is approved, is we will send a letter out to all of our stallion owners so they know that the stallion has to be registered prior to covering any mares that comes in late to the state.

CHAIRMAN DIENER: Questions of Jessica on the proposed change of stallions must be registered for the current breeding season? Is "current breeding season" a defined term that everyone knows what it is? In other words, I don't want to leave some ambiguity here.

JESSICA BARNES: I think it's defined -- there's actually two places it's defined. It's defined in B of this rule.

CHAIRMAN DIENER: February 15.

JESSICA BARNES: To July 15th.

CHAIRMAN DIENER: That's the same as the breeding season?

JESSICA BARNES: Yes.

CHAIRMAN DIENER: Okay. Questions from Commissioners about this proposed change to the Standardbred rules?

COMMISSIONER BARCLAY: What's the impact? So, say, the stallion is not registered. It's then bred. What happens to the mare?

JESSICA BARNES: The mare would actually have a foal that would not be eligible for Indiana programs. It would be eligible only to open races. It wouldn't be eligible to any of the breed development programs at all.

Under the rule change, this actually gives that mare owner a method to verify that that stallion is registered. So if they are going to breed their mare, that stallion has to be registered with us. Where in the past if somebody, if stallion owner A brought in a new stallion, and a mare owner called us up and said this stallion is new to the state, is it registered with the Commission, my answer would be, I would look it up and say, no, it's not registered, but technically they have until July 15th. So a lot of times that mare owner would breed their horse to the stallion with good faith that the stallion owner was going to fulfill what he needed to do.

Under this scenario, the mare owner when they call up and they say that, when I tell them, no, the stallion is not registered, then they know that it has to be registered before the mare is bred. Provides some protection to the mare owner.

COMMISSIONER BARCLAY: We're comfortable that the foal owner -- the stallion was in Indiana at that time that the breeding happened. We are comfortable that that foal is now ineligible for any Indiana bred purses in the future, even though they are able to establish the stallion was in the state of Indiana.

JESSICA BARNES: Yes. And there has actually been a couple of instances where stallions have not been registered on time, and we have denied them. They have actually appealed to the Breed Development Advisory Committee and the Standardbred Advisory Board because my approach has been if they're going to ask for an exception to a rule or a waiver of a rule, I would like to have the support of the breed development committee and the advisory board in bringing it forward to the Commission.

So there has been instances where a stallion was not properly registered. Somebody appealed to me. I actually took this in front of the advisory board and the breed development committee. And they have said, you know, this stallion owner didn't do their due diligence. They should have taken care of their paperwork. So they didn't think it was fair for somebody that did their due diligence and completed everything and got the registration in on time to allow a foal to be Indiana eligible that didn't fall under that scenario.

COMMISSIONER BARCLAY: I'm asking what if I'm the innocent purchaser of that foal, and I'm lead to believe that the stallion was in the state of Indiana, and I'm under the belief that I can race that horse in the state of Indiana for Indiana bred purses, what happens to me as the innocent purchaser of that foal who then learns it wasn't properly registered, and that the owner of the mare didn't confirm the registration?

JESSICA BARNES: The horse would be ineligible. I think that purchaser would have some recourse with the stallion owner or the mare owner that they purchased the foal from is who they would have to go back to.

CHAIRMAN DIENER: Go ahead, Joe.

JOE GORAJEC: I just want to piggyback on Jason's inquiry. The hypothetical that you just gave, is it based upon what's gone on in the past or what will go on in the future if this rule is approved?

COMMISSIONER BARCLAY: Either way. I want an explanation of what we've done in the past and understanding with this rule that was the implication.

JOE GORAJEC: Jessica, correct me if I'm wrong, what we've done in the past, as I think Jessica just mentioned, is that the innocent bystander who was lead to believe is out of luck. That's what's happened in the past. If this rule is passed, okay, that innocent bystander can't be as innocent as before because at the time she bred that horse, the stallion would have to have been registered. Okay. And she has, he or she would have had the opportunity to call, to look on the website and to verify that that stallion is indeed registered. So there won't be in the future, if the Commission approves this rule, quote the innocent bystander because that person would have had all the information available to them at the time of breeding.

JESSICA BARNES: The mare owner would still have a responsibility to check and verify that the stallion is registered.

CHAIRMAN DIENER: Further questions from the Commissioners? Can you represent the Standardbred Breed Development Committee supports this change?

JESSICA BARNES: Actually, the Standardbred Breed Development and Standardbred Advisory Board supports this.

CHAIRMAN DIENER: Thank you. I am ready for a vote. This is an emergency rule because of.

JESSICA BARNES: Because the deadline is October 1st. So any stallion registered after that deadline will fall under this. And just trying to provide, trying to close that gap for people if it's not approved now, it will be a whole other year.

COMMISSIONER SCHAEFER: So moved.

COMMISSIONER BARCLAY: Second.

CHAIRMAN DIENER: All in favor?

THE COMMISSION: "Aye."

CHAIRMAN DIENER: Amended rule passes as an emergency rule."

Well, do you agree that considering this administrative rule change on an emergency basis was the right move? We do. Do you agree that there are significant implications (love the "innocent bystander" term) if the change in the rule was not made and that the commissioners understood what those were? We do. Would you believe that the IHRC staff never filed this commission-approved rule change with the Indiana Register? We do.

In order for a rule to become effective, not only is a majority vote of the commissioners required, but the rule has to be filed with the Indiana Register. So, after all the importance, after all the urgency for an October 1st registration deadline, the IHRC staff never filed the rule. Yet, all other emergency rule changes approved by the IHRC that day were filed, most of them on October 3rd. Even as of today, '71 IAC 14-2-1 Stallion registration' remains unchanged, and can be found at the following link: http://www.in.gov/legislative/iac/T00710/A00140.PDF?.

We've notified Chairman Diener of this issue as past history tells us that the IHRC staff attempts to hide their mistakes and the individual commissioners are too disengaged from what should be their responsibility to 'inspect what they expect.' If we get a response, we'll let you know.

March 7, 2014 Update: While we didn't get a direct response from Chairman Diener about the most recent staff oversight, the standardbred stallion registration rule was filed with the Indiana Register on March 3rd which was almost six month after the commissioners approved this "emergency." The emergency rule filed with the Indiana Register, including how the rule was changed, can be seen at the following link: http://www.in.gov/legislative/iac/20140305-IR-071140066ERA.xml.html.

With the administrative rule now being effective as of March 3rd, the IHRC has now created two sets of registration rules for the 2014 breeding season. The issue that this rule was designed to eliminate, which was stallions covering mares prior to their registration or ultimately not being registered at all, has not been solved. If any standardbred stallion is registered late, they would more than likely rely on the IHRC's website and stallion registration form which don't indicate there has been a change in the registration requirements. Here's the Indiana Stallion Registration page: http://www.in.gov/hrc/2359.htm and here is the actual registration form, take a look at the second page: http://www.in.gov/hrc/files/2014_Stallion_Reg_Form.pdf.