RWB-35-10-00016-E Pre-Race Detention for Horses Owned by a Person Other Than the Person Who Owned the Horse at the Time of TCO2 Violation

9/1/10 N.Y. St. Reg. RWB-35-10-00016-E

NEW YORK STATE REGISTER

VOLUME XXXII, ISSUE 35

September 01, 2010

RULE MAKING ACTIVITIES

RACING AND WAGERING BOARD

EMERGENCY RULE MAKING

 

I.D No. RWB-35-10-00016-E

Filing No. 858

Filing Date. Aug. 13, 2010

Effective Date. Aug. 13, 2010

Pre-Race Detention for Horses Owned by a Person Other Than the Person Who Owned the Horse at the Time of TCO2 Violation

PURSUANT TO THE PROVISIONS OF THE State Administrative Procedure Act, NOTICE is hereby given of the following action:

Action taken:

Amendment of section 4120.14 of Title 9 NYCRR.

Statutory authority:

Racing, Pari-Mutuel Wagering and Breeding Law, sections 101(1), 301(1) and (2)(a)

Finding of necessity for emergency rule:

Preservation of general welfare.

Specific reasons underlying the finding of necessity:

This emergency rulemaking is necessary to preserve the general welfare. Article I Section 9 of the New York State Constitution states that pari-mutuel wagering is authorized so that “the state shall derive a reasonable revenue for the support of government.” In October, 2009, financial analysts announced that New York State faces a deficit of nearly $50 billion over the next three and a half years. The imposition of pre-race detention orders against innocent third-party owners of race horses would be cost prohibitive, force owners to relocate their race horses out of state to compete, and impair the state’s ability to derive reasonable revenue in support of government. In the present case, this rule is needed to suspend pre-race detention orders for at least 56 horses. The rulemaking will also amend the rule so that pre-race detention orders apply to persons, and not the horses, which are routinely transferred through sales or claiming races. The cost of pre-race detention for non-culpable owners offsets any potential profits that may be realized in purse money, and serves as a deterrent to race in New York for at least 8 months. The loss of even a few race horses in the state negatively impacts job creation and state revenue derived from pari-mutuel activities. This emergency rulemaking is need to provide valuable revenue for a state that faces multi-year deficits.

Subject:

Pre-race detention for horses owned by a person other than the person who owned the horse at the time of TCO2 violation.

Purpose:

To allow the Board to suspend or terminate a detention order as a result of a court order involving 3rd party ownership.

Text of emergency rule:

Subdivision (b) of Section 4120.14 is amended to read as follows:

(b) Each owner who is using a trainer at the time the trainer commits a repeat violation of Rule 4120.13 shall be required for eight months to race in pre-race detention all standardbred horses, except those the owner had with a different trainer on the date of the repeat violation and any replacements of them. This shall not apply unless the trainer's earlier violation happened within the past twelve months. [All horses of a trainer who has violated Rule 4120.13 more than once in the preceding 12 months shall be placed under pre-race detention, without regard to whether the horses are transferred to a new trainer, for a period of eight (8) months from the date of the most recent violation.] The racetrack operator sponsoring the race shall make such pre-race detention available, at the sole expense of the trainer, for at least six (6) hours before the start of the race program and as required by the judges. If during a detention period a trainer violates Rule 4120.13, then the detention period shall be extended for such time as the judges deem appropriate.

New subdivision (c) is added to section 4120.14 to read as follows:

(c) The board may suspend or terminate a detention order that inaptly applies to a third party due to a court action and the failure by a prior owner or trainer to disclose the pre-race detention requirement or to accept responsibility for its costs.

This notice is intended

to serve only as an emergency adoption, to be valid for 90 days or less. This rule expires November 10, 2010.

Text of rule and any required statements and analyses may be obtained from:

Mark Stuart, Assistant Counsel, New York State Racing & Wagering Board, One Broadway Center, Suite 600, Schenectady, New York 12305-2553, [phone], email: [e-mail]

Regulatory Impact Statement

1. Statutory authority: The Board is authorized to promulgate these rules pursuant to Racing Pari-Mutuel Wagering and Breeding Law sections 101 (1), 301(1) and (2)(a). Under section 101, the Board has general jurisdiction over all horse racing activities and all pari-mutuel thoroughbred racing activities. Section 301, subdivision (1), authorizes the Board to prescribe rules and regulations for harness racing. Section 301, subdivision (2), paragraph (a) directs the Racing and Wagering Board to prescribe rules and regulations for effectually preventing the administration of drugs or improper acts for the purpose of affecting the speed of harness horses in races in which they are about to participate.

2. Legislative objectives: To enable the New York State Racing and Wagering Board to preserve the integrity of pari-mutuel racing, while generating reasonable revenue for the support of government.

3. Needs and benefits: This rulemaking will give the Board the authority to modify or eliminate certain pre-race detention orders in cases where court action or the failure of a seller to disclose the order to a third-party buyer unjustly impacts the third-party buyer. It is necessary for the Board to adopt an emergency rule to relieve wholly innocent third parties of the pre-race detention orders.

The rulemaking will also change the rule that imposes a pre-race detention order against a horse, and makes such an order actionable against the owner. This is needed to avoid the problems of proving in an administrative hearing that a new owner had knowledge that a horse was under a pre-race detention order. Horses change ownership routinely through claiming races and out of state sales, where the board has little to no ability to ensure that the seller provides notice of the order to the new owner. Changing this rule would eliminate the issue of trying to determine innocent ownership of a horse that is under a pre-race detention order.

The issue of innocent third-party ownership arose as a result of a court proceeding challenging the Board's pre-race detention rule. The original case involved 81 horses trained by two different trainers, where, even though only two horses were found to have failed the excess TCO2 test, all of their 81 horses were subject to 8-month pre-race detention orders imposed by the New York State Racing & Wagering Board as required under Board Rule 4120.14.

Under Board Rule 4120.14, pre-race detention orders were applied to the horses that were under the trainer who was charged. Even if the horse was transferred to another trainer or new owner, the horse was subject to an eight-month pre-race detention order under the new trainer or owner.

In this case, the supreme court nullified the Board's pre-race detention rule. Eventually, the supreme court decision was overturned and the rule was declared valid by an appeals court. In the interim between the nullification decision and the validation decision, owners of some of the horses sold those horses. The lower court intervention clearly allowed the sales of the horses, and by the time the appeals court upheld the pre-race detention rule, 56 horses had been sold to different owners. The Board then had to apply the pre-race detention rule to the new owners. All of the owners of those horses subsequently appealed to the Board stating they are wholly innocent.

The court case brought to light the need to give the Board the authority to suspend pre-race detention orders in cases where, in the best interests of justice, a horse under a pre-race detention order is transferred to a new owner, and the seller failed to disclose such order.

4. Costs:

(a) Costs to regulated parties for the implementation of and continuing compliance with the rule: None. This rulemaking will allow the Board to relieve certain horse owners and innocent third-party horse owners from pre-race detention orders and the costs associated with such orders.

(b) Costs to the agency, the state and local governments for the implementation and continuation of the rule: None.

(c) The information, including the source(s) of such information and the methodology upon which the cost analysis is based: Board staff conducted a basic review of this rule by analyzing various scenarios where an owner of a harness race horse is relieved of a pre-race detention order. There will be no new cost to the agency.

Pre-race detention orders are currently appealable under the Board's adjudication rules and the State Administrative Procedure Act and this rulemaking will not expand the scope of matters that may be appealed. This rulemaking will only expand the scope of relief that the Board may grant.

There will be no costs to local government because the New York State Racing and Wagering Board is the only governmental entity authorized to regulate pari-mutuel harness racing activities.

(d) Where an agency finds that it cannot provide a statement of costs, a statement setting forth the agency's best estimate, which shall indicate the information and methodology upon which the estimate is based and the reason(s) why a complete cost statement cannot be provided. Not applicable.

5. Local government mandates: None. The New York State Racing and Wagering Board is the only governmental entity authorized to regulate pari-mutuel harness racing activities.

6. Paperwork: There will be no additional paperwork. The Board will utilize the existing documents for administrative adjudication to determine whether the suspension of a pre-race detention order is appropriate.

7. Duplication: None.

8. Alternatives: The Board considered tailoring the rule to provide relief only to the third-party owners. The idea was rejected because it would have failed to include potential third-party owners who may be victim of non-disclosure transactions in the future. This rule must be narrow enough to provide redress for an innocent party whose horse is under a pre-race detention order, and broad enough to encompass buyers who are victims of non-disclosure.

9. Federal standards: None.

10. Compliance schedule: Once submitted as an emergency rulemaking, the rule can be implemented immediately.

Regulatory Flexibility Analysis, Rural Area Flexibility Analysis and Job Impact Statement

This proposal does not require a Regulatory Flexibility Statement, Rural Area Flexibility Statement or Job Impact Statement as the amendment merely authorizes the Racing and Wagering Board to suspend orders of pre-race detention. These amendments do not impact upon State Administrative Procedure Act § 102(8), nor do they affect employment. The proposal will not impose an adverse economic impact on reporting, recordkeeping or other compliance requirements on small businesses in rural or urban areas nor on employment opportunities. The rule does not impose any significant technological changes on the industry for the reasons set forth above.