Invalidating Indiana's Multiple Medication Violations Penalties

If you read the May 1, 2014 press release from the Indiana Horse Racing Commission, you'll find the following statement, "At its April 30, 2014 public meeting, the Indiana Horse Racing Commission (“IHRC”) unanimously voted (5-0) to approve the Association of Racing Commissioners (“RCI”) national uniform medication rules and multiple medication violation penalties." We see this statement as absolutely false especially when considering the multiple medication violation (MMV) "national uniform" rule. The actual "national uniform" rule REQUIRES that additional penalties be levied against multiple medication offenders based upon a points system. The new Indiana rule, instead of using the word "shall" as in the national model rule, uses the term "may" which creates an entirely new meaning to the rule by making the MMV penalties an option in Indiana. Overall, this change to "may" means that the IHRC can now (and will) selectively enforce this rule based upon who is involved.

Here's how IHRC Executive Director Joe Gorajec attempted to explain Indiana's deviation from what was supposed to be a national standard after Commissioner Steve Schaefer asked the IHRC Staff for their explanation:

JOE GORAJEC: I'll take first crack at it, and then Lea can follow up. It is that one of the things that we were concerned about is, you know, we all know what "shall" means. And we all know what "may" means. And we always look, and we are obligated to look when we have a positive test with regard to mitigating circumstances or exacerbating circumstances.

This is a rule that's really not going to be utilized very often just because the nature of how it's written. There can be very few people that fall, whose repetitive nature in violations fall under the rule. Having said that, when we call a positive test, it might be a positive test for a relatively benign drug that calls for a relatively small penalty. But based upon other points, that person might have might trigger a significant suspension. And that's okay.

But the fact of the matter is we need to look at the facts surrounding the positive test. And we might determine that there is, there is a positive on a drug that the way the drug got in the horse's system, the trainer is completely innocent, so to speak, but will have to call a positive regardless just because the horse raced with that drug in its system.

If we have a "shall," then we've got to do what we've got to do. If we have a "may," then we can consider it. We did that in deference to the horsemen. Like I said, this isn't going to come up often, but the rule calls for some significant sanctions when the points trigger the penalty. You know, we just want to make sure it's deserved. If it is, then we'll do it. And if it's not, we'll have a way to reconsider it.

COMMISSIONER SCHENKEL: Thank you. (Official Transcript, IHRC Meeting, April 30,2014: Page 367, Line 6 through Page 38, Line 16)

In short, while Mr. Gorajec suggests that the "may" was inserted "in deference to the horsemen," our view is that, like many aspects of Indiana horse racing, who is involved will determine the penalty, not the specifics of any medication.

Just two weeks after the approval of the MMV penalty rules, a second version of the MMV rule was distributed for industry comment. In our view, this second version, which was subsequently approved, moves Indiana's MMV rule even further from the national standard. In her email to industry stakeholders, IHRC Equine Medical Director Angela Demaree said, "Please feel free to contact me with any questions." So, we did by simply asking, "Why are the changes to the Multiple Medication Violation rules necessary?" We never received a response. Our public input on the second version was as follows:

"Dr. Demaree, while IBOP has a fundamental disagreement with MMV points only being an option in Indiana and open to selective application, we do have a concern with these proposed rules. As written, and based upon the language used to incorporate outside materials into 71 IAC 8-1-.7.1 and 71 IAC 8.5-1-7.1, we believe that these administrative rules could be easily invalidated should an MMV penalty ever be issued. Upon request, we'll be glad to expand on this concern at the next commission meeting."

As expected, we were never asked to expand on our view of how the technical flaws in the IHRC's administrative rules could be used to invalidate the MMV penalties. We offered, they declined. Given that the IHRC can now selectively enforce this rule as they see fit, and considering that the Executive Director has a tendency to allow medication violations to accumulate before notifying a trainer or owner, this article shares with everyone the arguments that could be used to invalidate the multiple medication violation penalties rule. What we are going to describe is exactly what we would have shared with the IHRC upon their request. While IBOP is not a trainer organization, we do realize that what impacts a trainer can have a pronounced impact on an owner and his or her horses ability to run.

Disclaimer: Our view on this subject is not intended to provide any legal advice. Always seek you own independent legal counsel.

The flaw in the IHRC's MMV administrative rules is an attempt to incorporate an Association of Racing Commissioners International (ARCI) document into the IHRC's rulebooks via the Indiana Administrative Code. As seen below in the flat racing rulebook, the IHRC attempts to incorporate penalty levels for medications, "as provided in the most recent version of the Uniform Classification Guidelines of Foreign Substances and Recommended Penalties and Model Rule as revised by the ARCI in August 1996 and any other subsequent revision effective after said date, which are incorporated by reference herein..." You can also see the phrase "may be assigned points" versus the actual ARCI Model Rule that states, "shall be assigned points" in the last line we've copied.

71 IAC 8.5-1-7.1 Multiple medication violations
Authority: IC 4-31-3-9
Affected: IC 4-31-12
Sec. 7.1. (a) A trainer who receives a penalty for a medication violation based upon a horse testing positive for a Class 1-5 medication with Penalty Class A-D, as provided in the most recent version of the Uniform Classification Guidelines of Foreign Substances and Recommended Penalties and Model Rule as revised by the ARCI in August 1996 and any other subsequent revision effective after said date, which are incorporated by reference herein, may be assigned points based upon the medication's ARCI Penalty Guidelines as follows:
(The balance of the administrative rule was not copied in for the sake of brevity.)

An agency's ability to incorporate outside materials by reference into administrative rules is governed by Indiana statute in IC 4-22-2-21. More specifically, IC 4-22-2-21(a)(2) allows for a "standard adopted by.........a nationally recognized organization or association." The ARCI's medication penalty classes would qualify as such a standard. Therefore, there is no question that the IHRC has the ability to incorporate the ARCI's medication penalty classes into their administrative rules. However, there are other aspects of Indiana law that the IHRC must follow to legally do so, yet fails to do so. More specifically, they fail on meeting the requirements of IC 4-22-2-21(b) and IC 4-22-2-21(d) which can be seen below:

IC 4-22-2-21
Incorporation by reference
Sec. 21. (a) If incorporation of the text in full would be cumbersome, expensive, or otherwise inexpedient, an agency may
incorporate by reference into a rule part or all of any of the following matters:
(1) A federal or state statute, rule, or regulation.
(2) A code, manual, or other standard adopted by an agent of the United States, a state, or a nationally recognized organization or association.
(3) A manual of the department of local government finance adopted in a rule described in IC 6-1.1-31-9.
(b) Each matter incorporated by reference under subsection (a) must be fully and exactly described.
(c) An agency may refer to a matter that is directly or indirectly referred to in a primary matter by fully and exactly describing the primary matter.
(d) Whenever an agency submits a rule to the attorney general, the governor, or the publisher under this chapter, the agency shall also submit a copy of the full text of each matter incorporated by reference under subsection (a) into the rule, other than the following:
(1) An Indiana statute or rule.
(2) A form or instructions for a form numbered by the commission on public records under IC 5-15-5.1-6.
(3) The source of a statement that is quoted or paraphrased in full in the rule.
(4) Any matter that has been previously filed with the:
(A) secretary of state before July 1, 2006; or
(B) publisher after June 30, 2006.
(5) Any matter referred to in subsection (c) as a matter that is directly or indirectly referred to in a primary matter.
(e) An agency may comply with subsection (d) by submitting a paper or an electronic copy of the full text of the matter incorporated by reference.
As added by P.L.31-1985, SEC.10. Amended by P.L.34-1993, SEC.2; P.L.6-1997, SEC.4; P.L.90-2002, SEC.9; P.L.28-2004, SEC.43;
P.L.123-2006, SEC.4.

IC 4-22-2-21(b) requires that, "Each matter incorporated by reference under subsection (a) must be fully and exactly described." Here's where the attempted incorporation by reference by the IHRC fails. First, "as provided in the most recent version of the Uniform Classification Guidelines of Foreign Substances and Recommended Penalties and Model Rule as revised by the ARCI in August 1996 and any other subsequent revision effective after said date, which are incorporated by reference herein" requires a horsemen to know what the "most recent version" actually is. Indiana law, and therefore, IHRC administrative rules don't work that way.

If you do an internet search of "Uniform Classification Guidelines of Foreign Substances and Recommended Penalties and Model Rule," you can find a number of different versions of this document. There's no direction anywhere in the IHRC's MMV rules as to which version is the most recent. We have copies of nine different versions and the ARCI's own revision schedule indicates there have been 10 different versions since December of 2010. To be "fully and exactly described," a specific version of this document from a specific date must be mentioned in the IHRC administrative rules.

The phrase "as revised" is also a failure as Indiana law doesn't allow for any action by an outside organization, which in this case is the ARCI, to impact the Indiana Administrative Code by those actions. No outside organization can change the policy of an Indiana agency like the IHRC. In other words, the ARCI does not set any policy in Indiana, the Indiana Horse Racing Commission does. Indiana law allows the IHRC to consider ARCI Model Rules, but does not allow for any future changes in those ARCI Model Rules to automatically modify the IHRC's administrative rules.

Where the IHRC really fails in their versions of MMV penalties is with IC 4-22-2-21(d), "Whenever an agency submits a rule to the attorney general, the governor, or the publisher under this chapter, the agency shall also submit a copy of the full text of each matter incorporated by reference under subsection (a) into the rule...." With the IHRC's use of emergency rulemaking, their approved rules go straight to the "publisher" which is Legislative Service Agency (LSA). With any administrative rule, the IHRC is required to "submit a copy of the full text of each matter incorporated by reference..." So, this aspect of Indiana law requires the IHRC to submit a specific and dated version of the ARCI's document. However, in the history of the IHRC, they have never once submitted the full text of any materials they are attempting to incorporate in their rules. (Yes, there are other IHRC administrative rules that can be invalidated for the same reasons, including the new cobalt threshold.) With incorporations by reference that actually follow Indiana law, LSA includes a footnote to the administrative rule that "fully and exactly" describes what materials are being incorporated down to a specific date and version number. That is the only way in which a person could truly understand what outside material are being incorporated into an administrative rule.

In actuality, under Indiana law, neither of the Multiple Medication Violations are currently in effect, yet both were filed as such with LSA on July 3, 2014: http://www.in.gov/legislative/iac/20140709-IR-071140251ERA.xml.pdf . IC 4-22-2-36, which is copied below, governs the effective date of administrative rules without exceptions.

IC 4-22-2-36
Effective date of rules
Sec. 36. A rule that has been accepted for filing under section 35 of this chapter takes effect on the latest of the following dates:
(1) The effective date of the statute delegating authority to the agency to adopt the rule.
(2) The date that is thirty (30) days from the date and time that the rule was accepted for filing under section 35 of this chapter.
(3) The effective date stated by the agency in the rule.
(4) The date of compliance with every requirement established by law as a prerequisite to the adoption or effectiveness of the
rule.
As added by P.L.31-1985, SEC.25.

More specifically, IC 4-22-2-36 establishes that administrative rules take effect on the "latest" of four specific requirements. One of those requirements is IC 4-22-2-36(4) "the date of compliance with every requirement established by law...." While the IHRC has attempted to incorporate ARCI materials, they have failed to fully describe those materials and they have failed to provide a specific copy of those materials to LSA as required by Indiana law. Therefore, the Multiple Medication Violations administrative rules have not met the requirements to be effective and are technically not in effect under Indiana law. No one should be able to be penalized under MMV rules that are currently in the IHRC's rulebooks. That, in our view, puts everyone on the same basis rather than being the ones who "shall" get a penalty in Indiana.

In addition, Indiana law allows for claiming that an administrative rule is invalid under "IC 4-22-2-45 Invalidity of rule; assertion; limitation" for failure "based on rulemaking procedures that were followed or should have been followed..." Therefore, based upon rulemaking procedures that should have been followed, IBOP is now claiming 71 IAC 8-1-.7.1 and 71 IAC 8.5-1-7.1 to be invalid under Indiana law due to the IHRC's failure to follow the requirements of IC 4-22-2-21.