Administrative Rule of the Month - 71 IAC 5.5-3-3(a)(4) Other Responsibilities

Indiana Breeder and Owner Protection, Inc. (IBOP) established the Administrative Rule of the Month to point out areas where the Indiana Horse Racing Commission (IHRC), in our opinion, has stepped beyond their statutory authority, flat out made mistakes with administrative rules, or created administrative rules that just don't quite work. Each month, there are many choices as we have about 7 years worth of options. This month's edition is going to focus on an administrative rule, which carries the rule of law in Indiana, that appears to just not work from an enforcement perspective, and could compromise the IHRC's ability to maintain control over a recognized race meeting, which is their statutory mandate.

The administrative rule we are going to review is '71 IAC 5.5-3-3(a)(4) Other responsibilities,' which is a list of 30 'other responsibilities' of trainers while racing in Indiana. This is just one of the trainer responsibility rules on the books. Needless to say, trainers, and rightly so, have quite a few responsibilities. Below is a copy of the rule, and to keep things brief, we've removed all but the specific subsection we'd like to focus on. If you'd like to see this administrative rule in its entirety, simply follow this link: http://www.in.gov/legislative/iac/T00710/A00055.PDF?. 71 IAC 5.5-3-3(a)(4) describes a trainer's requirement to maintain what is routinely called a 'badge list' or 'stable roster' as used by the IHRC. We're going to use the term badge list through this article as that seems to be the term of choice with horsemen.

71 IAC 5.5-3-3 Other responsibilities
Authority: IC 4-31-3-9
Affected: IC 4-31
Sec. 3. (a) A trainer is responsible for the following:
(1)-(3) REMOVED
(4) Providing a list to the commission of the trainer's employees on association grounds and any other area under the jurisdiction of the commission. The list shall include each employee's:
(A) name;
(B) occupation;
(C) occupational license number.
The commission shall be notified by the trainer, in writing, within twenty-four (24) hours of any change.
(5)-(30) REMOVED
(Indiana Horse Racing Commission; 71 IAC 5.5-3-3; emergency rule filed Jun 15, 1995, 5:00 p.m.: 18 IR 2856, eff Jul 1, 1995; emergency rule filed June 8, 1999, 9:30 a.m.: 22 IR 3121, eff May 26, 1999 [NOTE: IC 4-22-2-37.1 establishes the effectiveness of an emergency rule upon filing with the secretary of state. LSA Document #99-107(E) was filed with the secretary of state June 8, 1999.]; emergency rule filed Jun 22, 2000, 3:05 p.m.: 23 IR 2778; readopted filed Oct 30, 2001, 11:50 a.m.: 25 IR 899; emergency rule filed Jan 21, 2004, 2:30 p.m.: 27 IR 1914; emergency rule filed Mar 10, 2006, 11:00 a.m.: 29 IR 2214; errata filed Apr 10, 2006, 2:00 p.m.: 29 IR 2546; emergency rule filed Mar 20, 2007, 1:43 p.m.: 20070404-IR-071070198ERA, eff Mar 16, 2007 [IC 4-22-2-37.1 establishes the effectiveness of an emergency rule upon filing with the Publisher. LSA Document #07-198(E) was filed with the Publisher March 20, 2007.]; readopted filed Mar 23, 2007, 11:31 a.m.: 20070404-IR-071070030RFA; emergency rule filed Mar 19, 2009, 11:07 a.m.: 20090401-IR-071090195ERA, eff Mar 12, 2009 [IC 4-22-2-37.1 establishes the effectiveness of an emergency rule upon filing with the Publisher. LSA Document #09-195(E) was filed with the Publisher March 19, 2009.]; emergency rule filed Mar 23, 2010, 1:27 p.m.: 20100331-IR-071100170ERA; emergency rule filed Mar 3, 2011, 11:50 a.m.: 20110309-IR-071110100ERA)

What's very easy to see is that its the trainer's responsibility to provide information to the IHRC regarding their employees and to notify the IHRC of any changes which would mean existing employees leaving the trainer's employment and new employees added through the racing season. It's our belief that since the IHRC is the regulatory body that issues every license, and since an employing trainer is required to sign the license applications for his or her employees, that the IHRC can maintain their own 'badge list' as licenses are issued. That is a pretty simple thought, yet still, the IHRC requires a trainer to notify the IHRC WHAT THEY ALREADY SHOULD KNOW! Keeping track of a trainer's badge list for his or her employees would be a very simple process.

Here's an example of how the system currently works. Through a public records request to the IHRC, IBOP was able to acquire the IHRC's Trainer Stable Roster for 2012 for the then Indiana Horsemen's Benevolent and Protective Association President Randy Klopp. The form (2 pages) can be found at the following link: http://freepdfhosting.com/ca5c10c473.pdf. What you'll see is that this badge list/stable roster was created on April 3, 2012 with the three grooms in Mr. Klopp's employment listed accordingly, along with five owners and a listing of four horses. Given that this badge list was completed in early April, there is a possibility that the license office wasn't open, so having a trainer supply an initial list of employees makes for good sense, especially if they were going to be working on the backside of a track. As licenses are issued early in the racing season, the IHRC could easily refer to the initial list for verification purposes and then add to the badge list as new employees are hired. But, of course, the IHRC does not and place the responsibility on the employing trainer.

However, above the signature line you'll see the IHRC's statement spelling out Mr. Klopp's, and all other trainers, responsibilities to maintain such a badge list with a very specific reference to the sentiment of 71 IAC 5.5-3-3(a)(4), "It shall be the trainer's responsibility to maintain with the commission an up-to-date roster of owners, current employees, and others having access to the trainer's assigned premises. This roster shall contain all information considered pertinent by the commission. Changes in ownership of horses, new or discharged grooms, and additional and/or deletion of horses on this roster must be reported." We do recognize that a trainer should report to the IHRC those licensees leaving his or her employ. That's a must for the IHRC to maintain control over a recognized race meeting. But, doesn't the fact that the IHRC issues a license mean that they are granting a licensee access, not only "to the trainer's assigned premises," but to the entire backside of a track? The trainer is required to sign the license application for his or her employees, so shouldn't that be notice enough to the IHRC?

So, let's see how this requirement to maintain an up-to-date badge list works in practice. Through a public records request to the IHRC, IBOP was able to acquire the 2012 license application for a groom named Mimi Gilbert. (The IHRC, as they should have, removed non-public information, namely a social security number.) The application can be found at: http://freepdfhosting.com/f0b55c36cc.pdf. The license application is signed by Ms. Gilbert on August 25, 2012, so there was about two months of racing left in Indiana when she was licensed. Per 71 IAC 5.5-3-3(a)(4), the responsibility of the employing trainer, Randy Klopp, was then required to notify the IHRC to add Ms. Gilbert to his badge list. Again, given the fact that the IHRC approved Ms. Gilbert's application, they could have updated Mr. Klopp's badge list very easily. But, of course, they didn't. According to the IHRC's documents, Mr. Klopp didn't update his badge list either to include Ms. Gilbert's employment as required by 71 IAC 5.5.-3-3(a)(4). So, obviously, there is a break down of a system that is necessary to maintain proper control over a recognized race meeting. Based upon our public records request, the IHRC could not produce any documents that Mr. Klopp updated his badge list beyond the initial April 3, 2012 submission.

When we requested Mr. Klopp's badge list, we also requested any changes as required by 71 IAC 5.5-3-3(a)(4). Here's exactly how the request was worded, "Copies of the submission(s) to the commission of the name, occupation, and license number as required by 71 IAC 5.5-3-3(a)(4), including any changes, submitted by Randy Klopp during and/or for calendar years 2012, 2011, and 2010." The only documentation of Mr. Klopp's employees that the IHRC could provide was the two pages signed on April 3, 2012 in the link above. In other words, the IHRC had no record of any changes to Mr. Klopp's badge list, meaning no employee changes on record, beyond April 3, 2012. Upon receipt of those two stable roster pages, we questioned the IHRC's records pointing out that they had already provided us a signed license application for Ms. Gilbert under Mr. Klopp's signature as part of a prior public records request. Yet, the IHRC had no records as required by 71 IAC 5.5-3-3(a)(4). We expressed our concern to the IHRC that either they were not enforcing or selectively enforcing what is designed to, as we said, "maintain proper control over a race meet." The IHRC's General Counsel Lea Ellingwood responded with the following email:

-----Original Message-----
From: Ellingwood, Lea
To: Jim Hartman
Sent: Fri, Feb 15, 2013 4:04 pm
Subject: Open Records Request; Commission meeting

Jim,

I have been assured by staff that the documents I forwarded to you are the only documents maintained by the commission which might be responsive to your request for information submitted to the commission under 71 IAC 5.5-3-3(a)(4). For that reason, we consider this particular request completed; however, if there’s another document which might have licensee’s occupational license number on it that you’d like to request, we would be happy to process that upon receipt.

On another note, I wanted to remind you that your item regarding the cost of split sample testing is still scheduled to be on the agenda for the next Commission meeting, which is scheduled for February 22nd. I’ve attached the link to the notice: http://www.in.gov/hrc/files/February_22_2013_Commission_Meeting_Notice.pdf for your reference. Just so you’re aware, we have not sent any information to the Commissioners regarding this issue other than that already provided to them for the December 14, 2012 meeting.

Best regards,


Lea

Lea Ellingwood | General Counsel | ph: 317-233-3119
Indiana Horse Racing Commission | 1302 N. Meridian Street, Suite 175 | Indianapolis, IN | 46202
-------------------------------------------------------------------------------------------------

Obviously, if Mr. Klopp did comply with 71 IAC 5.5-3-3(a)(4) and reported Ms. Gilbert's employment to the IHRC, there was no record available. Our basic premise with this rule is that the IHRC clearly knew Ms. Gilbert became licensed as a groom under Mr. Klopp's signature, so it would have been easy to add Ms. Gilbert as an employee of Mr. Klopp. Further review of Ms. Gilbert's application raises some interesting questions, however.

In reviewing the application, Mr. Klopp signed Ms. Gilbert's groom license application as employer; however, under item #12, Mr. Klopp is not listed AS Ms. Gilbert's employer. According to IHRC General Counsel Lea Ellingwood, this information was not redacted. According to the license application, no one was employing Ms. Gilbert and there is no date of employment indicated. The employer information being blank raises a number of questions. Why in the world would the IHRC issue a license to a groom with an incomplete application with no apparent employer other than Mr. Klopp's signing as employer? We've asked the IHRC, with no response as of yet, if the IHRC regularly approves licenses in this manner with no employer information stated?

Given that the IHRC is now investigating the Indiana HBPA for alleged misuse of benevolence funds, we are wondering if Ms. Gilbert did, in fact, work for Mr. Klopp. Given no direct employer information, could Ms. Gilbert's application have been solely for the purpose of gaining a license to apply for benevolence funds from the IHBPA Benefit Trust? We raise this question very cautiously as last month, IBOP received an audio file which is purported to be Ms. Gilbert explaining such a scenario to another horseman. Since IBOP has no investigative authority, and we are in no position to substantiate the validity of this audio file, we have notified the IHRC we are in possession of this audio file and offered to provide it to them upon their request.

What we can do to delve into this subject a bit further is to file additional public records request to the IHRC for more license applications. As a start, this past week, we filed a request for all license applications signed by Mr. Klopp in 2012 and in 2013. We'd like to know just how many employees should have been reported under 71 IAC 5.5-3-3(a)(4), which of course, is a number the IHRC already should know from their license application process. The net result of our public records request should be a complete badge list as required by 71 IAC 5.5-3-3(a)(4). Somebody ought to know.

Administrative Rule of the Month - 71 IAC 13-1-3 Information To Be Submitted With a Registration

The section of Indiana law that provides the formula for the distribution of slot revenues to horse racing interests is IC 4-35-7-12. The formula includes allocations to each breed for backside benevolence, equine promotion and welfare, purses, breed development funds, and the horsemen's associations. When the law was first established in 2007, the title for this particular section read "Part of adjusted gross receipts that must be devoted to purses, horsemen's associations, and the gaming integrity fund." After the most recent changes in the 2013 legislative session the title for IC 4-35-7-12 now reads "Mandatory support for the horse racing industry; allocation among breeds; regulatory oversight." Even though the title now includes "regulatory oversight," the Indiana Horse Racing Commission (IHRC) has always had the statutory responsibility of the oversight of these funds.

While new subsections have been added to the IC 4-35-7-12 over the last six years of legislative action, the oversight responsibility of the IHRC has always read as follows:

"(h) Money distributed under this section (Note: meaning section 12) may not be expended unless the expenditure is for a purpose authorized in this section and is either for a purpose promoting the equine industry or equine welfare or is for a benevolent purpose that is in the best interests of horse racing in Indiana or the necessary expenditures for the operations of the horsemen's association required to implement and fulfill the purposes of this section. The Indiana horse racing commission may review any expenditure of money distributed under this section to ensure that the requirements of this section are satisfied. The Indiana horse racing commission shall adopt rules concerning the review and oversight of money distributed under this section and shall adopt rules concerning the enforcement of this section. The following apply to a horsemen's association receiving a distribution of money under this section:
(1) The horsemen's association must annually file a report with the Indiana horse racing commission concerning the use of the
money by the horsemen's association. The report must include information as required by the commission.
(2) The horsemen's association must register with the Indiana horse racing commission."

The IHRC has the responsibility to make sure that slot funds are used only for the intended purposes of supporting the horse racing industry and only "for a purpose authorized in this section." What the law also did was grant the IHRC rulemaking authority "concerning the review and oversight of money distributed under this section" which leads to Indiana Breeder and Owner Protection, Inc.'s (IBOP) Administrative Rule of the Month. With that rulemaking authority, the IHRC has established an entire section in the Indiana Administrative Code entitled "Registered Horsemen's Associations." We are going to focus on parts of '71 IAC 13-1-3 Information to be submitted with a registration' which defines part of the requirements that horsemen's associations must provide to be considered to receive benevolence funding, equine welfare and promotion funding, and funding for the administrative budgets of the association. First, a little background.

No later than September 1st each year, prospective horsemen's associations who claim to represent "owners and trainers" for each breed and, with thoroughbreds, an additional association claiming to represent "owners and breeders" can apply for registration. In the history of these registration applications, only once have two competing organizations ever filed applications for slot funding in the same category. Per commission regulations, not Indiana law, the IHRC must approve a registration application for the upcoming year by December 31st if there are no competing applications for registration. Below is '71 IAC 13-1-3' and we are going to focus specifically on '71 IAC 13-1-3(3) and 71 IAC 13-1-3(5).'

71 IAC 13-1-3 Information to be submitted with a registration
Authority: IC 4-31-3-9; IC 4-35-7-12
Affected: IC 4-31; IC 4-35
Sec. 3. In addition to the information described in section 2(b) of this rule, the registration of a horsemen's association to
receive monies allocated pursuant to IC 4-35-7-12 shall include, but not be limited to, the following information:
(1) A proposed budget for the calendar year (or, in the case of a registration under section 1(c) of this rule, the calendar
years) to which the registration applies that separately identifies general categories for the expenditure of funds anticipated
to be paid by the permit holders to the horsemen's association for:
(A) equine promotion or welfare pursuant to IC 4-35-7-12(b)(1);
(B) backside benevolence pursuant to IC 4-35-7-12(b)(2); and
(C) the purposes provided for in IC 4-35-7-12(f) in the amount provided for by IC 4-35-7-12(d)(1)(A)(ii) and IC 4-35-
7-12(d)(1)(A)(iii), IC 4-35-7-12(d)(2)(C)(ii), or IC 4-35-7-12(d)(3)(A)(ii).
(2) A specific description of the accounting, auditing, internal control, and reporting procedures that will be maintained by
the horsemen's association with respect to the three (3) separate accounts required by section 8(a)(7) of this rule during the
calendar year for which payments will be made, as well as the name and contact information of the individuals responsible
for each function.
(3) A certification by the board of directors of the horsemen's association that the expenditures from funds paid by the permit
holders for (1)(A) and (1)(B), above [subdivision (1)(A) and (1)(B)], are in the best interests of horse racing in Indiana for
the breed represented by the horsemen's association.
(4) A conflict of interest policy approved by the commission that has been executed by all of the officers, directors, and
employees of the horsemen's association.
(5) Certification by an officer of the horsemen's association that no monies distributed pursuant to IC 4-35-7-12 have been
used in either the current year or will be used from the budget year for either:
(A) a contribution to a candidate or committee; or
(B) lobbying, as defined in IC 2-7-1-9.
(6) Any other information requested by the commission or its executive director.
(Indiana Horse Racing Commission; 71 IAC 13-1-3; emergency rule filed Jul 11, 2008, 2:13 p.m.: 20080723-IR-071080595ERA;
emergency rule filed Sep 10, 2012, 2:01 p.m.: 20120912-IR-071120525ERA; emergency rule filed Apr 4, 2013, 1:05 p.m.:
20130410-IR-071130134ERA)

At their October 29th meeting, the IHRC was scheduled to consider the applications of the Indiana Horsemen's Benevolent and Protective Association (IHBPA), the Indiana Standardbred Association (ISA), the Quarter Horse Racing Association of Indiana (QHRAI), and the Indiana Thoroughbred Owners and Breeders Association (ITOBA). There were no competing applications for registration. Chairman Bill Diener admonished all four horsemen's associations for submitting incomplete applications and suggested that in the future incomplete applications will not be considered. With each submission, there was a "Staff Report" that provided the commissioners a review of the application. To be fair, the QHRAI submission was deemed to have not provided a particular certification letter for an IHRC requirement, but the staff considered that their application demonstrated that they did meet the requirement.

The Staff Report for each applicant for 2014 funding can be found at: http://freepdfhosting.com/6c710668f3.pdf.

The applications from the IHBPA, ITOBA, and ISA, however, were all deficient in providing a certification under 71 IAC 13-1-3(5) which only requires a single officer (President, Vice-President, Secretary, or Treasurer) to certify that no slot funds were used as political contributions or for lobbying. 71 IAC 13-1-3(5) is simply incorporating a requirement from the law that prohibits slot fund to be used in these ways. Shame on the IHBPA, ITOBA, and ISA as this statutory requirement has been in effect from day one. Since 71 IAC 13-1-3(5) is based in a statutory requirement, we're not suggesting there's a problem with the requirement. However, 71 IAC 13-1-3(3) might be a different story.

71 IAC 13-1-3(3) requires that the entire board of directors of a prospective horsemen's association certify that the monies spent on equine promotion and welfare and backside benevolence "are in the best interests of horse racing in Indiana." The staff reports cited both ITOBA and the ISA as having not provided the required certification under 71 IAC 13-1-3(3). First of all, for the IHRC staff to cite ITOBA for not providing this certification is absolutely ridicules, but what else is new. Per statute, ITOBA doesn't receive equine welfare and promotion money nor do they receive backside benevolence funds. Yet, they are required to certify that the funds they don't receive are used in the best interests of horse racing. Perhaps the IHRC staff should read the law. The ITOBA application was approved for 2014 anyway. However, the ISA does receive equine promotion and welfare funding as well as backside benevolence funding, and their application was approved as well.

What we found interesting is that the IHRC staff in their report didn't consider a lack of certification under 71 IAC 13-1-3(3), or 71 IAC 13-1-3(5) for that matter, as being substantive deficiencies! Here's the exact statement on the IHBPA, ISA, and ITOBA applications, "The Commission staff finds no substantive deficiencies in the application for registration." What! First, 71 IAC 13-1-3(5) is based in Indiana state law, so any certification is substantive according to the Indiana legislature. Second, 71 IAC 13-1-3(3) is a fundamental extension of the law as well and beyond substantive in the IHRC oversight. 71 IAC 13-1-3(3) mirrors a huge part of the IHRC's required oversight.

71 IAC 13-1-3(3) was added to the Indiana Administrative Code in April, 2013, but approved by the IHRC at their March meeting. The addition of this subsection was a specific request by Chairman Diener. Here's what he said, direct from the official transcript, "This commission when it operates and considers applications for registration, we have to meet the standard that expenditures of state directed funds by these horsemen's associations are in the best interest of horse racing in Indiana and that particular breed. This commission is not in the business of micromanaging horsemen's associations and how they operate, but we felt that or I felt -- I'm the proponent of this rule. I felt that it was important that the Board of Directors of the association, when they submit their applications, certify that their proposed budgets meet the same statutory standard."

We understand the sentiment behind Chairman Diener's remarks; however, this rule is not about "proposed budgets." The rule is about "expenditures from funds paid" which is past tense and not prospective as in a proposed budget. This is a requirement about what has already happened, as required by Indiana law. Now, imagine a new board member's position regarding past slot fund use by a horsemen's association. Realistically, we don't see how the IHRC can require a board member to sign off on expenditures that pre-dated their involvement with the board. In the case of the IHBPA, we don't see how the IHRC can require a certification from a new board member, or any board member for that matter, to sign off on the activities of the Indiana HBPA Benefit Trust and their expenditures since the IHBPA is the the only organization that has a separate structure and a separate board for its benevolence activities.

An approval of the registration of a horsemen's association to receive slot funding by the IHRC should require each commissioner and each staff member involved in the application review to sign an affidavit stating that all expenditures of slot funds have met the statutory standard of being in the best interests of horse racing in Indiana. The law requires the IHRC to be the ultimate guarantor of compliance with the statute, so this is not an unreasonable thought. Also, in our view, the requirement in 71 IAC 13-1-3(3) doesn't actually go far enough as any ex-board member or any ex-employee should be required to sign a similar affidavit if slot funds were received during their tenure.

No one should be able to leave a board or leave employment with a horsemen's association to potentially avoid the scrutiny of how slot funds were handled under their watch. Plus, any current employee, including Executive Directors of a horsemen's association, or appointees to a committee of a horsemen's association or benefit trust that has any potential influence over how slot funds are distributed or is in a position to determine who qualifies to receive benevolence funding should have to sign a similar affidavit. Yet, according to the IHRC's administrative rules, they don't. Many times individual board members are not in positions to fully understand or scrutinize the daily activities of others, especially employees, and are generally provided only summaries of those activities. Having all individuals involved with the handling of slot funds provide a written statement is a must. How else can the integrity of the use of slot funds be maintained? How else do you hold all parties accountable for their actions or inactions? That's what Indiana law mandates.

Administrative Rule of the Month - 71 IAC 10-3-20 Administrative Complaints

In the 2013 legislative session, Senate Bill 609 (SB 609) became the 'horse racing' bill. While the bill expanded to include changes to how slot revenues will be distributed to the horse racing industry, SB 609 was originally intended to implement recommendations of Indiana's Inspector General (IG) stemming from the investigation into the practices of the Indiana Horse Racing Commission (IHRC). There were a number of reforms recommended to the IHRC and the legislature in the IG's report regarding the IHRC's due process and disciplinary action procedures. Here's a direct quote from the IG's report, "Our investigation, however, revealed that this current system provides many challenges which may, in fact, be detrimental to the horse racing community as the adjudication is currently being applied by the HRC." That's a very strong statement, yet mostly ignored by the IHRC.

Knowing that the IHRC's system WAS "detrimental to the horse racing community" and considering the general lack of any appreciable implementation of those recommendations by the IHRC led certain legislators to create aspects of SB 609 to force the IHRC's hand to reform their procedures. Or, so those certain legislators thought. This month's Administrative Rule of the Month takes a look at '71 IAC 10-3-20 Administrative complaints' which was an administrative rule highlighted in the IG's report and targeted by changes in SB 609. But first, let's look at how SB 609 modified certain aspects of the IHRC's authority.

In reviewing any change to the law, keep in mind that, once modified, the law cannot have the same meaning as before the change. With that in mind, consider the language that SB 609 strikes from the IHRC's authority to penalize horsemen for medication violations. Effective January 1, 2014, the following change will be made to a portion of the 'Medication of Race Horses' section of Indiana law:

SECTION 8. IC 4-31-12-16 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2014]: Sec. 16. The commission or the commission's designee, as determined under the rules of the commission, on its own motion or in addition to a penalty assessed by the stewards and judges, may impose one (1) or more of the following sanctions against a licensee who violates sections 2 through 13 of this chapter:
(1) Revocation of a license held by the licensee.
(2) Suspension of a license held by the licensee.
(3) A civil penalty not to exceed five thousand dollars ($5,000).

One of the concerns that the IG had regarding adjudication of penalties at the IHRC was the lack of involvement of the commission, meaning the commissioners themselves, in lieu of the Executive Director ("the commission's designee"). The IG's report expressed a concern that having to navigate through multiple levels of the IHRC staff is essentially ".....the same persons (or their co-workers) who have issued the violations, thereby challenging the appearance of impartiality." The IG also felt that "this current procedure loses the independence the HRC Commission could add by being the adjudicating body." SB 609 eliminates the IHRC from being able to create rules to delegate their authority to fine a horseman or to revoke or to suspend a license. While the judges and stewards will have authority to issue fines and suspensions for violations, the Executive Director will not, or might we say, should not, given the changes to the law.

In addition, SB 609 strikes from the law the language "or in addition to a penalty assessed by the stewards and judges." Normally, most violations are of the variety of small fines and minor suspensions. Beginning January 1, 2014, if the judges or stewards create a ruling on an alleged violation, neither the Executive Director nor the commissioners can increase that penalty, or might we say, should not, given the changes to the law.

There is also a similar change in the portion of the IHRC's authorizing statute regarding "Offenses and Enforcement" for non-medication violations. You'll see that effective January, 1, 2014, the commission cannot delegate to the Executive Director ("the commission's designee") the ability to penalize a horseman. In addition, the commissioners will not have the authority to increase penalties for non-medication violations issued by the judges or stewards. Here's how the law will read:

SECTION 9. IC 4-31-13-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2014]: Sec. 1. (a) The commission or the commission's designee, as determined under the rules of the commission, on its own motion or in addition to a penalty assessed by the stewards and judges, may issue orders under IC 4-21.5 to:
(1) issue, deny, suspend, diminish, or revoke permits and licenses as authorized by this article; and
(2) impose civil penalties, in addition to any other penalty imposed by the commission on a person who violates this article or a rule or an order of the commission. and
(3)
(b) The commission or the commission's designee, as determined under the rules of the commission, on its own motion or in addition to a penalty assessed by the stewards and judges, may issue orders under IC 4-21.5 to rule a person off one (1) or more permit holders' premises, if necessary in the public interest to maintain proper control over recognized meetings.
(b) Except as provided in IC 4-31-12-16, (c) A civil penalty imposed against a licensee under subsection (a)(2) may not exceed five thousand dollars ($5,000). For purposes of subsection (a)(2), each day during which a violation of this article or a rule or an order of the commission continues to occur constitutes a separate offense.
(c) (d) Civil penalties imposed under this article shall be deposited in the state general fund.

At their September 17, 2013 meeting, the commissioners were presented with and approved emergency rules that were characterized by the IHRC's General Counsel Lea Ellingwood as "the administrative rules that we believed would require some kind of adjustment, amendment, or creation" given the changes in the law. One of those changes, which is copied below, was to '71 IAC 10-2-3 Summary suspension' which is a suspension of license without a hearing. What you will see is that subsection (d), which delegates the commission's authority to summarily suspend a license to the Executive Director, is being removed from the administrative rule book. Eliminating the Executive Director's authority within this disciplinary process and the duplication of the process was what the IG had recommended. Here's how the rule was presented to the commissioners:

71 IAC 10-2-3 Summary suspension
Authority: IC 4-31-3-9
Affected: IC 4-21.5-4; IC 4-31-13
Sec. 3. (a) If the judges determine that a licensee's actions constitute an immediate danger to the public health, safety, or welfare, or are not in the best interest of racing, or compromise the integrity of operations at a track or satellite facility, the judges may summarily suspend the license pending a hearing pursuant to the provisions of IC 4-21.5-4.
(b) A licensee whose license has been summarily suspended by the judges is entitled to a hearing following a written request by the licensee.
(c) The judges shall conduct a hearing on the summary suspension in the same manner as other disciplinary hearings. At a hearing on a summary suspension, the sole issue is whether the licensee's license should remain suspended pending a final disciplinary hearing and ruling.
(d) Notwithstanding the provisions of 71 IAC 10-3-20, the commission delegates to the executive director the authority to summarily suspend licenses at any time that a live race meeting is not being conducted on association premises or when the judges are not otherwise available. The commission delegates to the executive director the authority to summarily suspend licenses at satellite facilities at any time. In the event of a summary suspension by the executive director and if the licensee makes a written request for a hearing, a hearing on the summary suspension shall be conducted by the commission or an administrative law judge as quickly as is practicable. (Indiana Horse Racing Commission; 71 IAC 10-2-3; emergency rule filed Feb 10, 1994, 9:20 a.m.: 17 IR 1198; emergency rule filed Jan 27, 1995, 3:30 p.m.: 18 IR 1505; emergency rule filed Nov 30, 1995, 1:00 p.m.: 19 IR 688; emergency rule filed Mar 25, 1997, 10:00 a.m.: 20 IR 2162; emergency rule filed Feb 13, 1998, 10:00 a.m.: 21 IR 2426; readopted filed Oct 30, 2001, 11:50 a.m.: 25 IR 899; readopted filed Mar 23, 2007, 11:31 a.m.: 20070404-IR-071070030RFA)

However, we don't think the changes to 71 IAC 10-2-3 go far enough. To understand this statement, you'd have to read our Administrative Rule of the Month from July: (http://ibopindy.blogspot.com/2013/07/administrative-rule-of-month-71-iac-10.html). We had our suspicions that the IHRC wouldn't voluntarily modify a certain aspect of '71 IAC 10-2-3 Summary Suspension' to conform with what is required by SB 609. We'll make certain legislators aware, yet, the summary suspension is not this month's rule of the month, remember it's '71 IAC 10-3-20 Administrative Complaints.' The impression given by Ms. Ellingwood at the last commission meeting indicated that the staff's review of the administrative rules for SB 609-related changes is complete. We see their review as far from over and that is where the "Administrative Complaints" rule comes into play.

Prior to the IG's report, 71 IAC 10-3-20 was titled as "Preliminary reports" instead of "Administrative complaints." In his report, the IG stated, "We also recommend the elimination or modification of the “preliminary report” procedure granted by promulgation to the HRC Executive Director. 71 IAC 10-3-20(b)." In January, 2012, instead of eliminating 71 IAC 10-3-20(b), the IHRC chose to modify the "preliminary report" rule by simply changing those two words to "administrative complaint" as they appeared in the rule. Certain legislators were not amused by the IHRC's indifferent attitude to this supposed modification of this administrative rule. Take a quick read of 71 IAC 10-3-20(b) while keeping in mind the striking of "the commission's designee" and "in addition to a penalty assessed by the stewards and judges" by SB 609.

71 IAC 10-3-20 Administrative complaints
Authority: IC 4-31-3-9
Affected: IC 4-31-13
Sec. 20. (a) If the commission determines that a person regulated under the Act has violated the Act or a rule or order adopted
under the Act in a manner that constitutes a ground for disciplinary action under the Act, the commission may assess an administrative penalty against that person as provided by this section.
(b) The commission delegates to the executive director the authority to prepare and issue administrative complaints pursuant
to the Act. If, after examination of a possible violation and the facts relating to that possible violation, the executive director
determines that a violation has occurred, the executive director shall issue an administrative complaint that states the facts on which the conclusion is based, the fact that an administrative penalty is to be imposed, the amount to be assessed, and any other proposed sanction, including suspension, or revocation. Furthermore, when the judges have issued a ruling that a violation has occurred, the executive director may issue an administrative complaint identifying the underlying ruling that serves as the basis for the administrative complaint, the fact that an administrative penalty is to be imposed, the additional amount to be assessed, and any other proposed sanction including additional suspension or revocation. The amount of the penalty may not exceed five thousand dollars ($5,000) for each violation. Each day or occurrence that a violation continues may be considered a separate violation. In determining the administrative penalty, the executive director shall consider the seriousness of the violation.
(Please note that subsections(c) through (f) were removed for brevity's sake.)
(Indiana Horse Racing Commission; 71 IAC 10-3-20; emergency rule filed Feb 10, 1994, 9:20 a.m.: 17 IR 1208; emergency rule filed Jan 27, 1995, 3:30 p.m.: 18 IR 1507; errata filed Mar 23, 1995, 4:30 p.m.: 18 IR 2126; readopted filed Oct 30, 2001, 11:50 a.m.: 25 IR 899; emergency rule filed Mar 20, 2007, 1:43 p.m.: 20070404-IR-071070198ERA, eff Mar 16, 2007 [IC 4-22-2-37.1 establishes the effectiveness of an emergency rule upon filing with the Publisher. LSA Document #07-198(E) was filed with the Publisher March 20, 2007.]; readopted filed Mar 23, 2007, 11:31 a.m.: 20070404-IR-071070030RFA; emergency rule filed Jan 25, 2012, 12:20 p.m.: 20120201-IR-071120056ERA)

Effectively, the changes to SB 609 will eliminate the IHRC's authority to keep 71 IAC 10-3-20(b) in the administrative code. By design, SB 609 was supposed to make sure 71 IAC 10-3-20(b) was eliminated. Remember, per SB 609, the IHRC will no longer have the authority to delegate the ability to penalize to the Executive Director, yet 71 IAC 10-3-20(b) does delegate that ability. What we find interesting is that the first line of 71 IAC 10-3-20(b) "delegates to the executive director.......pursuant to the Act," yet beginning January 1, 2014, the "Act" will not allow for that delegation. Also, per SB 609, the IHRC will no longer have the authority to add their own penalty to a ruling by the judges and stewards, yet 71 IAC 10-3-20(b) currently allows for that to happen via an administrative complaint.

We don't see any way in which 71 IAC 10-3-20(b) should exist on January 1, 2014. Yet, the IHRC staff failed to present this administrative rule as part of those that needed modification in light the changes required by SB 609. Was the IHRC staff attempting to misguide the commissioners or was 71 IAC 10-3-20(b) simply overlooked? We'll try to find out by filing a petition directly with the commissioners to have 71 IAC 10-3-20(b) removed from the Indiana Administrative Code by citing the changes made by SB 609. Another 'strike out,' if you will. And, evidently, we'll also have to let certain legislators know how the IHRC staff has reacted to SB 609.