A question Indiana Breeder & Owner Protection, Inc. (IBOP) has posed many times, either through our newsletters, letters to the commissioners, blog articles, etc. is 'what are the limits to the Indiana Horse Racing Commission's (IHRC)authority?' The IHRC believes and acts as if their authority is unlimited. Their penchant for the use of emergency rulemaking to create 'law,' without any meaningful oversight, creates an environment where the IHRC continually steps beyond their actual statutory authority. Within "their environment," which are their administrative rules in the Indiana Administrative Code (IAC), it's still fairly easy to point out when the IHRC goes beyond their statutory authority. We've pointed this out many times, and a few times, the IHRC has modified administrative rules based upon IBOP petitions.
However, the biggest problem with the IHRC's unchecked power is that no one in the legislature, attorney general's office, or the Governor's office reviews the administrative rules the IHRC creates. Plus, the IHRC doesn't want to give up any authority in their rulemaking which provides for their control over horsemen whether they are within their statutory authority or not. This month's Administrative Rule of the Month takes a look at how the IHRC goes beyond their statutory authority with how they define their 'jurisdiction.'
Both the standardbred and flat racing rulebooks have 'jurisdiction' definitions, and to keep things simple we are going to use '71 IAC 1.5-1-50 "Jurisdiction" defined' as our example. Now, most every administrative agency's authorizing statute as determined by the Indiana legislature has a 'definitions' chapter. The IHRC's authorizing statute 'IC 4-31 Pari-Mutuel Wagering On Horse Racing' has IC 4-31-2 as the 'Definitions' chapter. In the Indiana Administrative Code, an administrative agency can, if authorized by statute, create additional definitions as necessary to implement the State's laws. And, here's how 71 IAC 1.5-1-50 reads:
71 IAC 1.5-1-50 "Jurisdiction" defined
Authority: IC 4-31-3-9
Affected: IC 4-31
Sec. 50. "Jurisdiction" of the commission means the state of Indiana. (Indiana Horse Racing Commission; 71 IAC 1.5-1-50;
emergency rule filed Jun 15, 1995, 5:00 p.m.: 18 IR 2819, 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)
It's easy to see that the IHRC is defining their jurisdiction as the entire state of Indiana. Merriam-Webster defines jurisdiction in a number of ways: 1) the power, right, or authority to interpret and apply the law, 2a) the authority of a sovereign power to govern or legislate, 2b) the power or right to exercise authority : control, 3) the limits or territory within which authority may be exercised. So, the IHRC believes their "power," "authority," "control," and "territory" is the entire state. Effectively, the IHRC is claiming that its regulatory jurisdiction is the entire state of Indiana. We disagree, and actually, Indiana statute disagrees in a number of ways as well.
First, the idea that the IHRC has to create a definition of their jurisdiction in their rulebooks is actually laughable because the whole idea of an authorizing statute IS to define the limits of an administrative agency's authority. The 'Definitions' chapter in Indiana law (IC 4-31-2) does not include a 'jurisdiction' definition because the entirety of the law is simply a definition in and of itself. Yet, the IHRC's arrogance and/or defiance leads to such a definition as "the State of Indiana." Had the Indiana legislature felt it was necessary to specifically define the IHRC's geographical jurisdiction, they would have.
Second, 'IC 4-31 Pari-Mutuel Wagering On Horse Racing' is not the only aspect of Indiana law that addresses horse racing which we are sure will come as a surprise to the IHRC. However, IC 4-31 is the only 'Article' that gives the IHRC any authority over horse racing and more specifically "pari-mutuel" horse racing. The Indiana legislature was very specific in IC 4-31-1-1 which provides that the applicability of the law “does not apply to horse racing meetings at which pari-mutuel wagering is not permitted.” Therefore, the opposite is true in defining the jurisdiction of the IHRC to only horse racing meetings at which pari-mutuel wagering IS permitted which doesn't take place across the entire state of Indiana, only at race tracks during recognized meetings.
The Indiana legislature in ‘IC 15-19-3 Regulation of Horse Racing’ grants no authority to the IHRC over other horse racing within Indiana. Yet, with this particular administrative rule, the IHRC defines their ‘jurisdiction’ as the entire state. Given the purpose of the IHRC as outlined in ‘IC 4-31-1-2’ and the legislative intent expressed in ‘IC 4-31-5.5 Satellite Facilities,’ the IHRC’s jurisdiction is actually only over locations WITHIN the state that provide pari-mutuel wagering on live horse racing and those off-track simulcasting locations that can provide pari-mutuel wagering on horse racing on races in Indiana and around the country. By statue, the IHRC's jurisdiction is defined as being only at Indiana race tracks and at all licensed OTB's, and not beyond.
Third, the authority line in 71 IAC 1.5-1-50 claims that IC 4-31-3-9 gives the IHRC the authority to even create a jurisdiction definition that encompasses the entire state. An administrative agency is required to cite from where they get their rulemaking authority with each administrative rule. In reviewing IC 4-31-3-9, the only possible portion of this statute that provides the IHRC discretionary rulemaking authority is IC 4-31-3-9(a)(1)(H) which states, "any other regulation that the commission determines is in the public interest in the conduct of recognized meetings and wagering on horse racing in Indiana." What the law actually allows for is rulemaking at recognized race meetings and places where people can wager on horse racing which is a very limited definition when compared to the IHRC's 'entire state of Indiana' claim. Again, the law only allows rulemaking, and therefore, exercise of authority, at the two tracks and at all licensed OTB's.
Fourth, statutory construction, which is a set of interpretation guidelines established by courts that apply to laws and to administrative rules, does not allow for any interpretation that would lead to an absurd result. Here's a great example of the IHRC's absurdity with their definition of their jurisdiction. State law, through IC 4-31-13-1(a)(3), allows the IHRC to "rule off" a person from a race track "if necessary in the public interest to maintain proper control over recognized meetings." The IHRC expands upon this authority (unnecessarily) in "71 IAC 2-10-1 Exclusion of patrons and licensed and unlicensed persons." In this administrative rule, the IHRC concludes that their authority allows for "exclusions under this section shall be for all of the premises under the regulatory jurisdiction of the commission, including satellite facilities." Given their definition of jurisdiction, the IHRC's own administrative rule gives them the ability to exclude someone from their "regulatory jurisdiction" which they define as the entire state of Indiana. This, of course, is absolutely absurd that the IHRC can rule someone off and exclude them from the entire state of Indiana.
Again, the problem is that no one within Indiana government keeps tabs on the legality of the rules or the rulemaking procedures at the IHRC. However, IBOP is attempting to change that by challenging the IHRC's jurisdiction definitions and about 80 other administrative rules. (This challenge includes the entirety of '71 IAC 10 Due Process and Disciplinary Action" where the IHRC really goes beyond their statutory authority.) Administrative rules in the IAC expire on January 1st of the seventh year from there adoption and must be readopted. The majority of the IHRC's rulebooks are due to be readopted as of January 1, 2014. The IHRC has already, without a vote at a meeting, filed a Notice to Intent to Readopt for those rules: http://www.in.gov/legislative/iac/20130731-IR-071130345RNA.xml.html. Effectively, the IHRC is saying 'we're good with these rules and we are readopting them 'as is' as of January 1st.' No further action is necessary, and no further review takes place.
However, under a provision in Indiana law, IBOP has requested that these 80 or so rules "be considered separately" from the Notice of Intent to Readopt. What this means is that simply providing a basis with the request to be considered separately, those rules are now required to go through the regular rulemaking process and cannot be readopted by another emergency rule. We've selected those 80 or so rules based primarily on the IHRC's overstepping their statutory boundaries. With almost every single request for rules to be considered separately, we included the following basis, "Given the IHRC’s past history of exclusively using the emergency rulemaking process to promulgate administrative rules, the public interest would be served by a more extensive review of this administrative rule which would finally include a public hearing and a review for statutory authority, for statutory compliance, for consistency with public policy, and for any effects on small businesses." In addition, each request had at least one other reason/basis for the request. This 'Administrative Rule of the Month' is a great example of the additional information (basis) provided to the IHRC.
We will develop more of the ideas behind our requests in future 'Administrative Rule of the Month' articles as well as keep you up to date as to how the IHRC reacts to them. To help ensure that the IHRC follows the law, we are also providing copies of each request to Indiana's Legislative Rules Oversight Committee. A new law that was established as of July 1st gives this committee more responsibility in taking an active role in monitoring an administrative agency's rulemaking. We're confident IBOP's requests and the bases (yes, that's the plural of 'basis')for each request will be eye-openers to this committee. With these requests, we are trying to facilitate real change with the IHRC's rulemaking procedures and to make sure all administrative rules stay within their statutory boundaries. (As horsemen, if you don't know the deck is stacked against you by the IHRC's administrative rules, then go back and read everything we have posted to this website.)
To meet our objectives, we need your help and your support. You can help by sending a link to this article to every horseman on your email list. The more people that are aware of IBOP's effort, the better. And, you can support this effort by considering a donation to IBOP. We'll be able to do more through this process with your support than without. This is an opportunity that only comes along once every seven years.
