"February 10, 2014
To: Lea Ellingwood
General Counsel
Indiana Horse Racing Commission
Pursuant to ‘71 IAC 2-12-1 Procedures,’ Indiana Breeder & Owner Protection, Inc. (IBOP) is requesting that the Indiana Horse Racing Commission (IHRC) consider the striking (repeal) of ‘71 IAC 10-3-20(b)’ from the Indiana Administrative Code. Please consider this correspondence as IBOP’s official petition to do so. Our view, which is explained below, is that ‘71 IAC 10-3-20(b)’ was not modified as required by changes to IC 4-31-12-16 and IC 4-31-13-1 effective as of January 1, 2014. We would appreciate this request be considered as an agenda item at the next regularly scheduled IHRC meeting.
In the 2013 legislative session, Senate Bill 609 (SB 609) was designed 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. As part of the preamble to those recommendations the IG's report states, "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." In our review, the “current system” has changed very little in light of the IG’s recommendations and, more importantly, the changes to the IHRC authorizing statute made by SB 609.
IBOP sees SB 609 as modifying certain aspects of the IHRC's authority by removing specific language. Effective January 1, 2014, the following change was 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
(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 violations 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 eliminated the language which allowed the IHRC to delegate their authority to fine a horseman or to revoke or to suspend a license to a “designee.” While the judges and stewards still have authority to issue fines and suspensions for violations, the Executive Director as a “designee” should not have that authority post-January 1, 2014. Simply put, IBOP’s view is that IC 4-31-12-16 does not have the same meaning after January 1, 2014, as it did before January 1, 2014. Otherwise, there would be no meaning or legislative intent to the removal of “designee” and the removal of "or in addition to a penalty assessed by the stewards and judges."
Similar to the “Medication of Race Horses” chapter, there are changes in the portion of the IHRC's authorizing statute regarding "Offenses and Enforcement" for non-medication violations. Using the same logic, removal of specific language from statute reduces the IHRC’s authority to delegate which, in turn, requires a modification of ‘71 IAC 10-3-20(b).’ The modifications as per SB 609 to IC 4-31-13-1 can be seen below:
SECTION 9. IC 4-31-13-1 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JANUARY 1, 2014]: Sec. 1. (a) The commission
(1)
(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.
At the September 17, 2013 IHRC meeting, you presented the commissioners in attendance with emergency rules that were characterized 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 was to '71 IAC 10-2-3 Summary suspension.' What you presented was a rule that removed subsection (d) which delegated the commission's authority to summarily suspend a license to the Executive Director. This change was approved. Eliminating the Executive Director's authority within this aspect of the disciplinary process was exactly what the IG had recommended and what was codified in SB 609. Here's how the change 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.
(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)
The impression you gave, which is confirmed by no further action prior to January 1, 2014, was that the staff's review of the administrative rules for SB 609-related changes was complete. We see the removal of ‘71 IAC 10-3-20(b)’ from the "Administrative Complaints" rule as necessary for the same reason ‘71 IAC 10-2-3(d)’ WAS removed.
As you may recall, 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 appear in the rule today. Given that the SB 609 removed, in two separate chapters of the pari-mutuel wagering statute, “commission’s designee” and "in addition to a penalty assessed by the stewards and judges,” ‘71 IAC 10-3-20(b)’ should have been modified by repeal. IBOP’s view is this should have been done prior to January 1, 2014. For your convenience, this administrative rule is copied below:
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 yet would need some attention should 71 IAC 10-3-20(b) be repealed per this petition.)
(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 should have eliminated also the IHRC's authority to keep ‘71 IAC 10-3-20(b)’ in the administrative code. In that light, we see no difference between what was already removed in ‘71 IAC 10-2-3’ and what we are petitioning to be removed in ‘71 IAC 10-3-20.’ What we find interesting is that the first line of ‘71 IAC 10-3-20(b)’ states that the IHRC "delegates to the executive director.......pursuant to the Act," yet beginning January 1, 2014, the "Act" no longer allows for the delegation of the actions outlined. Also, per the changes established by SB 609, the IHRC should no longer have the authority, with the exception of ruling a person off, to add their own penalty to a ruling by the judges and stewards, yet ‘71 IAC 10-3-20(b)’ currently allows for this type of action as well.
Overall, we don't see any way in which ‘71 IAC 10-3-20(b)’ should have been allowed to exist ‘as is’ in the Indiana Administrative Code after January 1, 2014. Yet, this subsection still remains with the rule of law. Please contact me with any questions.
Thank You,
Jim Hartman
IBOP Vice-President
CC: Executive Director Gorajec
Chairman Diener
Vice-Chairman Schaefer
Commissioner Schenkel
Commissioner Weatherwax
Commissioner Pillow"
March 7, 2014 Update: At their March 5th meeting, the IHRC did consider our petition and voted to keep 71 IAC 10-3-20(b) as is by denying the petition. This was not unexpected given that the IHRC staff did not include this rule in their original group of those administrative rules that needed changed due to changes in the law required by SB 609. Our goal, which was to get on record via the official transcript the IHRC staff's rationalization, was accomplished. We never expected Executive Director Joe Gorajec to give up any of his authority even in spite of the recommendations of the Indiana Inspector General (IG) and in spite of changes to Indiana law to implement the IG's recommendation.
Clearly, further action from the legislature will be required. We raised our concerns in March 2013 to those involved with the wording of SB 609 that the IHRC would not make the appropriate changes to their administrative rules. With the transcript from this meeting, we will now have the "see, we told you so" details to share with the key leaders in the Senate.
