Applicability Effect on Breeder Definition

Executive Director Gorajec:

Pursuant to 71 IAC 2-12-1 Procedures, Indiana Breeder & Owner Protection, Inc. (IBOP) is requesting that the Indiana Horse Racing Commission (IHRC) consider an amendment to 71 IAC 1.5-1-1 Applicability. IBOP would appreciate this amendment request be considered as an agenda item at the next regularly scheduled IHRC meeting. Please consider this correspondence as our petition for the commission to amend 71 IAC 1.5-1-1 to include, at minimum, Article 13.5 (Thoroughbred Development Program) to the list of articles currently mentioned in the rule. 71 IAC 1.5-1-1 currently reads as follows:

ARTICLE 1.5. FLAT RACING; DEFINITIONS
Rule 1. Definitions
71 IAC 1.5-1-1 Applicability
Authority: IC 4-31-3-9
Affected: IC 4-31
Sec. 1. The definitions in this rule apply to articles 1.5, 2, 3.5, 4.5, 5.5, 6.5, 7.5, 8.5, 9, 10, 11, and 12 of this title. (Indiana Horse Racing Commission; 71 IAC 1.5-1-1; emergency rule filed Jun 15, 1995, 5:00 p.m.: 18 IR 2815, eff Jul 1, 1995; readopted filed Oct 30, 2001, 11:50 a.m.: 25 IR 899; readopted filed Mar 23, 2007, 11:31 a.m.: 20070404-IR-071070030RFA)

As you can see, 71 IAC 1.5-1-1 does not already include 'Article 13.5 (Thoroughbred Development Program) which means that the flat racing definitions in Article 1.5 may not actually apply to the administrative rules governing the thoroughbred breed development program described in Article 13.5. The ordinary and plain meaning of the language used supports this view. More specifically, and more problematic, the current construction of 71 IAC 1.5-1-1 without Article 13.5 appears to prevent the industry recognized definition of a thoroughbred breeder from being incorporated into the thoroughbred program where breeder's awards are concerned. As I'm sure you know, the definition of breeder in the thoroughbred breeding industry differs from that of the other two racing breeds, and is accurately defined in Article 1.5 as follows:

71 IAC 1.5-1-19 "Breeder" defined
Authority: IC 4-31-3-9
Affected: IC 4-31
Sec. 19. "Breeder" means the owner of the horse's dam at the time of foaling for thoroughbreds. In the case of thoroughbreds, the commission will recognize the breeder as the person designated as such on the Jockey Club's Certificate for a particular horse. For quarter horses, appaloosas, arabians, and paint horses, "breeder" means the owner of the dam at the time of service. (Indiana
Horse Racing Commission; 71 IAC 1.5-1-19; emergency rule filed Jun 15, 1995, 5:00 p.m.: 18 IR 2816, eff Jul 1, 1995; readopted filed Oct 30, 2001, 11:50 a.m.: 25 IR 899; emergency rule filed Jan 21, 2004, 2:30 p.m.: 27 IR 1911; readopted filed Mar 23, 2007, 11:31 a.m.: 20070404-IR-071070030RFA)

While the definition of breeder in 71 IAC 1.5-1-19, as noted above, meets the thoroughbred industry's definition as the owner of the mare at the time of foaling, this definition appears to not currently be applicable via 71 IAC 1.5-1-1 to the thoroughbred breed development breeder awards without the incorporation of Article 13.5 into 71 IAC 1.5-1-1. Without Article 13.5 incorporated into 71 IAC 1.5-1-1, the definition of the breeder for the thoroughbred program appears to have taken on the definition of breeder from Article 1 when that applicability language was changed to its current wording by emergency rule on April 21, 2004.

71 IAC 1-1-1 Applicability, copied below, specifically applies the definitions "throughout this title" which would give the impression and appearance to include those articles not listed currently in 71 IAC 1.5-1-1. Of course, the "title" mentioned in 71 IAC 1-1-1 references, very broadly, Title 71 Indiana Horse Racing Commission. The ordinary and plain meaning of the the language used would support this view. What the Indiana racing industry has come to understand as a two rule book system; one for standardbreds and one for the flat racing breeds, appears to not be quite accurate in the definition of a thoroughbred breeder per IHRC rules.

ARTICLE 1. DEFINITIONS
Rule 1. Definitions
71 IAC 1-1-1 Applicability
Authority: IC 4-31-3-9
Affected: IC 4-31
Sec. 1. The definitions in this rule apply to [sic.] throughout this title. (Indiana Horse Racing Commission; 71 IAC 1-1-1; emergency rule filed Feb 10, 1994, 9:20 a.m.: 17 IR 1113; emergency rule filed Jun 15, 1995, 5:00 p.m.: 18 IR 2814, eff Jul 1, 1995; readopted filed Oct 30, 2001, 11:50 a.m.: 25 IR 899; emergency rule filed Apr 21, 2004, 3:45 p.m.: 27 IR 2753; readopted filed Mar 23, 2007, 11:31 a.m.: 20070404-IR-071070030RFA)

Based upon the breadth of the applicability of definitions in 71 IAC 1-1-1 and the more limited applicability in 71 IAC 1.5-1-1, the "standardbred" definition of breeder from 71 IAC 1-1-1 appears to be 'applied' by commission rules for determining an award eligible breeder in the thoroughbred breed development program in Article 13.5. By this apparent unfortunate oversight, the breeder definition applicable to Article 13.5; therefore, seems to be derived from the "standardbred" rule book through 71 IAC 1-1-18 which is copied below:

71 IAC 1-1-18 "Breeder" defined
Authority: IC 4-31-3-9
Affected: IC 4-31
Sec. 18. "Breeder" means the owner or lessee of the horse's dam at the time of breeding. (Indiana Horse Racing Commission; 71 IAC 1-1-18; emergency rule filed Feb 10, 1994, 9:20 a.m.: 17 IR 1115; readopted filed Oct 30, 2001, 11:50 a.m.: 25 IR 899; readopted filed Mar 23, 2007, 11:31 a.m.: 20070404-IR-071070030RFA)

The standardbred definition of breeder is, along with the quarter horse definition, the owner of the mare (dam) at the time of breeding. This definition of breeder in 71 IAC 1-1-18 is contrary to the recognized thoroughbred breeding industry definition, contrary to The Jockey Club definition of a thoroughbred breeder, and contrary to how the Indiana thoroughbred program has actually been promoted and paid breeder awards. Quite often in thoroughbred breeding, however, the owner of the mare at conception differs from the mare's owner at foaling.

IBOP recognizes that, as a current practice, the IHRC staff has been paying thoroughbred breeder awards as to the recognized thoroughbred breeding industry standards via the definition in 71 IAC 1.5-1-19. The current practice is the correct course of action for the thoroughbred breeding program in Indiana. However, the intent of the program does not appear to match the execution of the applicability rules. The current construct of 71 IAC 1.5-1-1 versus the current practice of paying thoroughbred breeder awards also appears to create a potential liability for claims to breeder awards already paid. Any person who has sold a mare in foal, where the resulting foal has become a registered Indiana-bred thoroughbred, could have a claim to any breeder awards based upon the performance of that foal. By the ordinary and plain meaning of the language used, past payments could be considered contrary to the construction of the IHRC rules when paid to the owner of the mare at the time of foaling.

Any potential liability is especially difficult to quantify given the significant increases in the thoroughbred foal crops in Indiana over the last five years. Many breeders and owners grew their operations through the acquisition of in foal mares either privately or via public sale to foal in Indiana. In reviewing just one of ITOBA's 2011 champions, we found an example of a potential claim of $25,000 from just races in 2011 where the owner of the mare at her breeding was different than the owner of the mare at the foal's birth. In addition, any potential liability expands as the larger thoroughbred foal crops begin to compete and to earn breeder awards. Plus, thoroughbred mares are being bred in the 2012 breeding season that would fall under the breeder definition in 71 IAC 1-1-18, not under 71 IAC 1.5-1-19.

While IBOP would rather not present a problem without a solution, we do believe that adding Article 13.5 under the specific references to applicability in 71 IAC 1.5-1-1 would fix the definition of a breeder for the thoroughbred program as of the effective date of any amendment and beyond. However, IBOP has no solution as to how to eliminate any prior liability for claims to thoroughbred breeder awards as per the apparent applicable definition in 71 IAC 1-1-18. Any other solution to the potential accumulating liability would be appreciated as well.

Thank you for your consideration of our request;

James Hartman
IBOP Vice-President

CC: Chairman McNaught
Commissioner Lauck
Commissioner Schaefer
Commissioner Grimes
Commissioner Barclay