Administrative Rule of the Month - 71 IAC 5.5-1-6 Consent to Search and Seizure

Disclaimer: The following is not intended to be legal advice, but simply Indiana Breeder & Owner Protection Inc.'s position on the subject. In that light, IBOP has quoted certain court cases germane to the subject yet provided no specific cites. Always consult and rely on your own legal counsel for your legal advice.

The Indiana Horse Racing Commission (IHRC) would have you believe that as a licensee you have no rights to privacy or protection from an unreasonable search and seizure. In specific locations, like on the grounds of a racetrack in Indiana with a permit to conduct pari-mutuel wagering, including barns, stables, stalls, tack rooms, or feed rooms, you generally don't have much of a right to privacy, nor should you expect such a right. The long-held view is that the threat of being searched is a reasonable attempt by an administrative agency to deter any illegal activity connected to pari-mutuel horse racing. However, the IHRC believes that their powers to search and to seize are extremely broad and somehow extend beyond the grounds of a racetrack to anywhere they choose, for whatever reason, and at any time of their choosing.

In fact, the IHRC includes the following required attestation on their Multi-Purpose License Application regarding searches, "I hereby acknowledge that I will be subject to the searches, either in my presence or absence, provided for in Indiana Code 4-31-13, as amended, and the Indiana Rules and Regulations that authorize personal inspections, inspections of any personal property, and inspections of premises and property related to my participation in a race meeting by persons authorized by the Indiana Horse Racing Commission" This statement references both Indiana statute (Indiana Code 4-31-14) and what we presume is the Indiana Administrative Code (Indiana Rules and Regulations). The IHRC, purposefully, uses phrases like "any personal property" which creates the illusion of an absolute authority any time, any place, especially when tied to "premises and property related to my participation in a race meeting." Could "premises and property" actually mean a person's home, farm, barns, etc. when the owner is not there ("either in my presence or absence")?

On that same license application, the IHRC has the following required attestation regarding seizure, "I further acknowledge that the Indiana Horse Racing Commission may seize any article or substance which is found in my possession or control or in a location under my control which may be forbidden or is against the applicable Indiana Rules and Regulations." The word "any" as in "any article or substance" is another absolute statement that brings into question if there are any limits to the IHRC's ability to search and seize property. What we find interesting about the seizure attestation in the application is that only the Indiana Rules and Regulations is mentioned and not Indiana Statute. That's because the words 'seize' or 'seizure' don't appear anywhere in IHRC's authorizing statute, just the word search. The phrase "a location under my control" is also a very broad and nebulous description.

The Association of Racing Commissioners International (ARCI) Multi-Jurisdictional Owner's Application, which is used by the IHRC, takes a different approach to search and seizure in its Affidavit of Licensure, "I consent to a search within the grounds of any racetrack or racing association of my person and property, including premises and vehicles that I have the right to (or do) occupy or control, and to the seizure of articles related to unlawful conduct." For owners, the consent to search is only "within the grounds" of a racetrack because the ARCI is taking a more legal and constitutional approach to the model rule than the IHRC does with Indiana's administrative rules. However, the affidavit also has an owner attest to compliance with all rules and regulations of the locations in which would include our July Administrative Rule of the Month. (The ARCI Multi-Jurisdictional Owner's Application can be found at: http://www.in.gov/hrc/files/2013_RCI_Multi_web_app.pdf)

The ability to search anywhere at any time and to 'seize' any property is a power that the IHRC has essentially granted itself. Given that one of the tenants upon which Indiana Breeder and Owner Protection, Inc. (IBOP) was founded is the protection against "infringement of constitutional and civil rights," we decided to make '71 IAC 5.5-1-6 Consent to search and seizure' (71 IAC 5-1-6 in the standardbred administrative rulebook) our July 2014 Administrative Rule of the Month. In our view, the IHRC has stepped well beyond their authorizing statute with their 'search and seizure' administrative rules. As you read 71 IAC 5.5-1-6, which is copied below, keep this question in mind, what are limits to the search and seizure authority that the IHRC has placed upon itself? For definition purposes, a search is the examination of something that a person would normally consider private and seizure is the actual taking of a person's property.

71 IAC 5.5-1-6 Consent to search and seizure
Authority: IC 4-31-6-2
Affected: IC 4-31-13-4
Sec. 6. By acceptance of a license or by engaging in activities that require a license by the commission, a licensee consents to search and inspection by the commission or its agents and to the seizure of any prohibited medication, controlled substances,
paraphernalia, or devices in violation of state or federal law or these rules. Any seized drugs, medication, or other materials may be forwarded by the commission or its agents to the official chemist for analysis. The analysis of materials seized under the provisions of this section is not subject to 71 IAC 8.5-3. (Indiana Horse Racing Commission; 71 IAC 5.5-1-6; emergency rule filed
Jun 15, 1995, 5:00 p.m.: 18 IR 2850, 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; emergency rule filed May 12, 2008, 1:29 p.m.: 20080521-IR-071080353ERA)

First of all, you don't even have to be a licensee to fall under the scope of this administrative rule. You only have to be "engaging in activities that require a license" which is a definition that only the IHRC will control, irrespective of any individual opinion. But, do you see any limits for a search? We don't see anything but a forced consent to search that doesn't describe specifics of any location, for any particular purposes, or with any limitations on the timing or scope of a search. Do you see any limits for a seizure? While we do see the terms "prohibited medication" and "controlled substances", the administrative rule also uses the term "paraphernalia." One of the definitions of paraphernalia is 'personal belongings' which opens up for the IHRC to interpret that term as they see fit. So, is there a limit as to what can be seized? In our view, not under this administrative rule as written.

What we find interesting is that the Association of Racing Commissioner's International (ARCI) uses very similar language in their 'Consent to Search and Seizure' model rule: "By acceptance of a license, a licensee consents to search and inspection by the Commission or its agents and to the seizure of any prohibited medication, drugs, paraphernalia or devices in accordance with state/provincial and federal law." Our position has always been that the language in ARCI model rules have never been vetted for compliance versus Indiana statute to determine if a model rule would even be legal in Indiana. This is a good example as the IHRC seems to have followed the model rule to a degree, but at least the ARCI model rule requires searches and seizures to be done "in accordance with state/provisional and federal law' which is not even a consideration in Indiana's rule.

With any administrative rule, our first question is always, has the IHRC been granted explicit rulemaking authority via Indiana statute to even create such a 'search and seizure' rule? In this particular case, the answer is unequivocally 'no.' According to the Indiana's Administrative Rule Drafting Manual, the 'Authority Line' for any administrative rule "must give the citation of each Indiana statute (enabling statute) that expressly delegates rulemaking power to the agency to issue a rule on the subject matter of the accompanying rule." In other words, the IHRC is required to demonstrate where they gain the authority to create a specific administrative rule. In addition, the drafting manual states, "If the General Assembly has not expressly delegated authority to issue a rule, the authority line must give the citation of each statute that grants rulemaking power to the agency by implication."

In the case of '71 IAC 5.5-1-6', the IHRC cites IC 4-31-6-2 as providing their authority to create this 'search and seizure' rule. This very short aspect of Indiana statute is copied below:

IC 4-31-6-2
Procedures for license applications; license fees; adoption of rules
Sec. 2. The commission shall adopt rules under IC 4-22-2 establishing:
(1) procedures for license applications; and
(2) license fees.
As added by P.L.341-1989(ss), SEC.2.

While there is an explicit authorization for adopting administrative rules in IC 4-31-6-2, this authorization applies only for "procedures for a license application" and for "license fees." There is no explicit authority granted to the IHRC to create any 'search and seizure' rule. So, is there an implicit authorization to promulgate a search and seizure administrative rule in IC 4-31-6-2? To say 'yes' to that question, the IHRC would somehow have to believe that a consent to a search or to a seizure is a part of a necessary step-by-step process (procedure) for applying for a license. We find that to be a stretch, especially when considering that Indiana statute outlines the conditions under which the IHRC can refuse or deny a license application. None of those conditions allow for a refusal or a denial of a license application based a person's refusal to acknowledge the IHRC created 'search and seizure' administrative rule. Searches and seizures can fit the definition of a procedure; however, they would be procedures performed post-issuance of a license, not before.

IBOP's biggest concern with this particular administrative rule is with the unlimited authority the IHRC has granted to itself to conduct warrantless searches without probable cause. This self-appointed authority goes well beyond their statutory authority provided via IC 4-31 which is the pari-mutuel horse racing statute. So, what does the US Constitution have to say on this subject? The Fourth Amendment states, "The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized." The key phrase in the Fourth Amendment is "unreasonable searches and seizures," and more specifically, "unreasonable." In our view, many of the options the IHRC has provided itself within 71 IAC 5.5-1-6 are very unreasonable. But, can REASONABLE searches and seizures be done by an administrative agency without a warrant or probable cause?

Generally speaking, administrative searches of private property without a warrant have been held to be unconstitutional, especially a person's home. However, the US Supreme Court has upheld warrantless administrative searches for commercial property and have even done so when considering a warrantless administrative search of an unlicensed commercial stable outside of a racetrack. This exception to the administrative search warrant requirement "involves activities within a particular industry that has been subject to pervasive or long-standing governmental regulation" or what can be further described as "closely regulated industries." In effect, the courts view is that a person's involvement in a highly regulated industry should lower their expectation of privacy because of the government's interest in regulating that industry is increased. The pari-mutuel horse racing industry is definitely a "closely regulated" industry that could fit into the exception as long as warrantless administrative searches were considered to be reasonable. On the grounds of a racetrack, in most cases, would be considered reasonable. To be considered reasonable, especially when dealing with a potentially unreasonable government agency, courts have recognized that a warrantless administrative search is reasonable if three conditions are met.

First, the government agency must have a "substantial" interest in pursing any search. Simply, a horse racing commission's substantial interest would be their efforts to maintain the integrity of pari-mutuel horse racing. So, the substantial interest criterion would be fairly easy to meet. The second criterion is that any warrantless administrative search is being conducted as a necessity to further the agency's "regulatory scheme" which, in this case, can be defined as "a combination of elements (as statutes or regulations) that are connected, adjusted, and integrated by design: a systematic plan or program. This aspect of the three-pronged test is a little bit more difficult satisfy, and is designed to eliminate the arbitrary and "unbridled discretion [of] executive and administrative officers." We see any searches conducted outside of a racetrack under 71 IAC 5.5-1-6 as failing to meet this particular requirement. There is no design, or rhyme or reason, or administrative program associated with 71 IAC 5.5.-1-6. Yet, its the third court-established criterion where the IHRC's administrative 'search and seizure' rule fails miserably.

Any of the IHRC's attempted searches off premises of a racetrack, "in terms of the certainty and regularity of its application, [must] provid[e] a constitutionally adequate substitute for a warrant." To put this another way, the administrative rule (or statute) has to provide that any warrantless administrative search is being done pursuant to the law, has a defined and specific scope, and places limits on those conducting the search. In other words, the administrative rule or statute has to announce to the world that your property "will be subject to periodic inspections undertaken for a specific purpose." The administrative rule or statute that allows for warrantless administrative searches must also provide description of the "time, place, and scope" of any search. 71 IAC 5.5-1-6 allows for arbitrary and limitless actions by the IHRC, and therefore, in our view, needs to be removed from the Indiana Administrative Code as unconstitutional or modified significantly to comply with this long-established exception to the Fourth Amendment.

Below is how the Indiana statute (IC 4-31-13-4) reads that provides for the IHRC's statutory right of entry and authorization to search people or places. As mentioned earlier, the words 'seize' or 'seizure' appear no where in any portion of the IHRC's authorizing statute. You will also see that there is no authorization or expressed statutory authority granted to the IHRC to create any administrative rules on the subject. In our read, we are not even certain IC 4-31-13-4 meets the three criterion established by courts for affective warrantless administrative searches at a racetrack. However, our focus is on IC 4-31-13-4(5) which provides a much more limited capability to search places outside of a racetrack than the IHRC has granted itself through 71 IAC 5.5.-1-6.

IC 4-31-13-4
Right of entry by commission and representatives; searches of persons and property; violation; suspension
Sec. 4. (a) The commission and its representatives have the right of full and complete entry to any and all parts of the grounds and mutuel plants of permit holders.
(b) The commission, the commission's representatives, and the state judge investigating for violations of law or of the rules of the commission may permit persons authorized by them to search the following persons and areas:
(1) All persons who are within the racetrack premises and:
(A) licensed by the commission; or
(B) engaged in activities that require a license by the commission.
(2) Persons who have gained access to the racetrack premises by special permission.
(3) Vendors licensed by the commission when they are within the racetrack premises.
(4) Stables, rooms, vehicles, and other places within the racetrack premises that are used by those persons who may be searched under this section.
(5) Stables, rooms, and vehicles that are used or maintained by persons licensed by the commission and are located in areas outside of the racetrack premises where horses eligible to race at the racing meeting are stabled.
(c) If a licensee refuses to consent to a search under this section, the person shall be automatically suspended.
As added by P.L.341-1989(ss), SEC.2. Amended by P.L.50-1995, SEC.12.

IC 4-31-13-4(5) does add some specifics as to what locations can be searched as in "where horses eligible to race at the meeting are stabled." However, this subsection does seem to fail the final two tests for a warrantless administrative search to meet the any established exception. First, there is no specific program or design involved with a search conducted under this subsection. (For example, a search after receipt of a positive drug test would be part of a specific design.) Therefore, any off-track search would be considered to be arbitrary. Other than a somewhat of a more defined place, there are very few limits as to the regularity of possible searches, time frames, and the scope and limits of the search or those conducting a search. In our view, IC 4-31-13-4(5) also fails to meet any exception to the Fourth Amendment.