Letters to the Commissioners - Input on Rulemaking Process

On May 14th, the following message was sent to horse racing stakeholders and organizations from Indiana Horse Racing Commission Executive Director Joe Gorajec:

"To All – Chairman McNaught has asked me to consider proposing to the Commission a policy on its rulemaking process. Specifically, the use of the emergency rulemaking process versus the general process.

Should you wish to comment on this issue, please file your thoughts by noon, Thursday, June 14, 2012."

Below is IBOP's response which was subsequently sent to each commissioner:

Joe,

Please consider this email as Indiana Breeder & Owner Protection, Inc’s (IBOP) response to the May 14, 2012 Indiana Horse Racing Commission (IHRC) request for input regarding a rulemaking policy.

Define an Emergency

Simply, emergency rules should be used when a true emergency exists. IBOP is not suggesting that there aren’t potentially legitimate emergencies that may require administrative rules to go into effect immediately. Just like the IHRC, the Indiana Gaming Commission (IGC) has the legal authority to use the emergency rulemaking process. The difference being that the language in the IGC’s authorizing statute attempts to define just what an emergency is, which is “the need for a rule is so immediate and substantial” that the regular rulemaking procedures are “inadequate.” As we know, when the IGC approves an emergency administrative rule, they are required by law to begin the regular rulemaking process within 30 days after adopting the emergency rule. In other words, their emergency rules can be in effect, but only temporarily until providing public notice, hold a public hearing, get the AG’s approval, etc.

Another view of defining an emergency can be found in the Pari-Mutuel Wagering on Horse Racing statute. Indiana law allows the IHRC to suspend a person’s license immediately and to do so prior to a hearing on the matter. This is called a summary suspension and the criteria in the law for a summary suspension of a license are if the licensee’s actions “constitute an immediate danger to the public health, safety, or welfare.” In your own administrative rules, the IHRC has expanded upon this language to “an immediate danger to the public health, safety, or welfare or compromise the integrity of operations at a track or satellite facility.” In creating this summary suspension administrative rule, we feel that the IHRC has actually defined what an emergency actually is.

We believe that if a proposed administrative rule doesn’t fit into a specific definition of an emergency, then the regular rulemaking process should be used.

Proper Legal Oversight & Proper Standards for Administrative Rules

Administrative rules, which carry the weight of a law, should be done more carefully and with proper legal oversight. The regular rulemaking process, which includes a review process by the AG, would help insure that all administrative rules are within the statutory authority of the IHRC (for example portions of the Out-of-Competition Testing rules) and within established standards for Administrative Rules in Indiana. Here’s a recent example that we believe would not have occurred had the regular rulemaking process been used:

One of the agenda items at the IHRC’s January 24th meeting was to introduce a brand new administrative rule regarding specific drug thresholds levels. Specifically, 71 IAC 8-1-4.2, the standardbred version of this rule, had three distinct versions. The first version of the standardbred rule that was emailed out to horsemen’s associations for comments included thresholds for five different drugs: clenbuterol, firocoxib, glycopyrrolate, methocarbamol, and DMSO. The second version, which was handed out at the commission meeting with a draft date of January 3, 2012, had thresholds for three drugs: clenbuterol, firocoxib, and DMSO. The third version of this rule, the one submitted to the Indiana Register as the Final Rule only listed a threshold for clenbuterol when filed on January 25th.

In reviewing the transcript of the January 24th meeting, the discussion on this emergency rule indicates that the IHRC fully intended to approve the draft rule handed out at the meeting with the three drug thresholds. However, the January 3rd draft presented to the commissioners was not submitted to the Indiana Register as the final rule. The “clenbuterol-only threshold rule” was in effective for 15 days when the IHRC staff filed the January 3rd draft rules to the Indiana Register as a brand new emergency rule. (Both rules submitted are easily accessed by the public online via the Indiana Register.) While only one emergency rule was approved by the commission, the Indiana Register now indicates that two versions of this emergency rule were approved. This first-time rule is now on the books as having one version from January 25th to February 8th and another version from February 8th and beyond. Having three different versions of any rule would never happen under the regular rulemaking process. Through the regular rulemaking process, once a Notice of Intent to Adopt has been filed, the language of the rule cannot be substantively changed. The regular rulemaking process is designed to also prevent administrative error.

IBOP has noticed a number of errors in the IHRC’s administrative rules, some of which have been submitted for review. In all instances where the IHRC has attempted to incorporate by reference any outside materials, there is a failure to meet the administrative rule standards to do so. Here’s a recent example:

Another administrative rule on the agenda at the January 24th IHRC meeting was an amendment to a rule on purse forfeiture for certain medication violations. The rule was being modified to defer penalties to those recommended by the Association of Racing Commissioners, International (ARCI) for specific bute, flunixin, ketoprofen and salix overages. No specific penalties are mentioned in the IHRC’s proposed rule with just a reference to “recommended penalties of the Association of Racing Commissioners, International.” Indiana law DOES allow for incorporation by reference in administrative rules to allow for a standard adopted by a national association to be included in an Indiana rule. So, the deferral to the ARCI penalties is allowed by law; however, any reference must be “fully and exactly described.”

Since the ARCI’s model rule recommendations change over time, this particular attempted incorporation by reference fails to meet the “fully and exactly described” standard required by Indiana law. For this rule to meet Indiana’s legal standard, it needs to be further described by “Version 5.00 – Revised December 9, 2011.” (We’ve found seven versions in a 10 minute internet search.) Indiana administrative rules are required to have any ‘incorporation by reference’ be fixed to a particular version of what is actually being referenced. (We’ve found similar errors in other IHRC administrative rules.) Plus, any outside materials incorporated by reference must be submitted to the Indiana Register which then adds an appropriate notation of those materials to the bottom of the administrative rule. In our view of the incorporation by reference portion of the Indiana statute, any rule that does not follow the correct incorporation by reference procedures is technically not in effect. We would suggest that the IHRC staff review all incorporations by reference currently within 71 IAC and make with necessary rule changes.

Other Administrative Rule Standards

Indiana statue regarding administrative rules requires certain sensitivity to the costs of regulations on small business. The statute also states that, to the extent possible, all administrative rules “shall” minimize the expenses to those being regulated, to taxpayers, and to those who are the consumers of the regulated product. Another standard is that each administrative rule is supposed to “achieve the regulatory goal in the least restrictive manner.” We feel that the use of the regular rulemaking procedures will better serve small businesses affiliated in and around the horse racing industry, those regulated, and the taxpayers in keeping these statutory requirements at the forefront of the IHRC’s rulemaking