Request By:
Mr. Edward H. Flint, President
Kentucky Horsemen's Benevolent
and Protective Association
13 Pembroke Road
Louisville, Kentucky 40220
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas C. Jacobs, Deputy Attorney General
This is in response to your recent inquiry concerning two new rules proposed by the Kentucky State Racing Commission.
Those two new rules appear in the Kentucky Administrative Register, Volume 5, No. 2, September 1, 1978, as follows:
"810 KAR 1:003. Licensing . . . Section 6 . . . (7) The association shall, on request of the commission, submit for its consideration all proposed contracts treating with the following; television, radio, and/or motion-picture rights; pari-mutual labor and equipment; purse and stakes distribution and other benefits accruing to horsemen's organizations; vi[d]eo tape, film patrol, and photo-finish equipment; and any lease agreements which may be necessary to conduct a race meeting. These documents shall not become effective until approved by the commission and/or the senior steward-chief administrator. "
"810 KAR 1:006. Racing Associations . . . Section 38 . . . The association, shall, prior to publication and circulation of its stakes nomination blanks and the initial condition book of any race meeting, submit its proposed program for the consideration of the commission. These documents shall not become effective until approved by the commission and/or the senior steward-chief administrator. "
Specifically, you ask if the Racing Commission has the authority to promulgate the above rules.
Ky. Rev. Stat. (KRS) 230.215 makes clear the Legislature's intent to give the Racing Commission broad control over thoroughbred racing in Kentucky. KRS 230.260 gives the Racing Commission the authority to carry out not only the policies expressed in KRS 230.215 but all other statutory provisions relating to racing (See KRS 230.210-230.360). This policy is steeped in tradition both in the Commonwealth of Kentucky and in racing as it has been known in this country from colonial times forward. We, therefore, acknowledge the broad authority of the Racing Commission to promulgate regulations regulating the conduct of racing in the Commonwealth of Kentucky.
The rulemaking power of an administrative agency is, however, limited by established principles of administrative law to what is reasonably related to accomplishing the purpose of the governing statute. (See
Butler v. United Cerebral Palsy, Ky., 352 S.W.2d 203;
Louisville & Jefferson County Board of Health v. Haunz, Ky., 451 S.W.2d 407;
Kentucky State Board of Business Schools v. Electronic C.P.I., Ky., 453 S.W.2d 534.) With specific application to the Racing Commission, the limitation has been stated to be that a regulation of the Commission must have "an ascertainable relevancy" to the object of the governing statute,
State Racing Commission v. Latonia Agricultural Association, 136 Ky. 173, 123 S.W. 681, or be necessary and proper to accomplish the stated object of the racing statutes,
Douglas Park Jockey Club v. Talbott, 173 Ky. 685, 191 S.W. 474 ( error dismissed, 249 U.S. 619, 39 S. Ct. 260, 63 L. Ed. 804).
The fact that racing, like the alcoholic beverage business, has been said in some early cases to have such potential evil that the state could prohibit it entirely does not mean that it can be subjected to arbitrary or unreasonable regulation or to regulations not reasonably related to accomplishing the purpose of the governing statute. In
Roe v. Commonwealth, Ky., 405 S.W.2d 25 (1966), the Court said that where the state chooses to regulate an industry, rather than to prohibit it, as it might have done, the regulations must be reasonable.
Also, in Portwood v. Falls City Brewing Company, Ky., 318 S.W.2d 535 (1958), a regulation of the Alcoholic Beverage Control Board, which prohibited illuminated advertising signs in retail beer establishments, was held invalid because the regulation had no rational connection with the purpose of the alcoholic beverage statutes. See also,
Commonwealth, Alcoholic Beverage Control Board v. Burke, Ky., 481 S.W.2d 52 (1972), where a statute prohibiting employment of female bartenders was held invalid on the ground, among others, that there was "neither a rational connection nor a fair and substantial relation between the claimed objective of the statute (to properly regulate the sale of liquor or beer) and a . . . provision prohibiting . . . women . . . bartenders. . . ."
In light of the above principles, it is necessary for us to look again to the statement of objects and purposes in the racing statutes hereinbefore quoted.
In summary, the stated objects and purposes are as follows:
(1) To foster and encourage the thoroughbred horse breeding industry within the Commonwealth and to encourage the improvement of the breed of thoroughbred horses.
(2) To encourage the business of legitimate thoroughbred racing with pari-mutual wagering thereon in the Commonwealth on the highest possible plane.
The statute provides that to accomplish the above purposes, the Racing Commission may adopt rules and regulations:
(1) To prescribe the conditions under which all legitimate thoroughbred racing and wagering thereon is conducted so as to encourage the improvement of the breed of thoroughbreds.
(2) To regulate and maintain thoroughbred racing of the highest quality and free of any corrupt, incompetent, dishonest, or unprincipled thoroughbred racing practices, and to maintain thoroughbred racing so as to dissipate any cloud of association with the undesirable and maintain the appearance as well as the fact of complete honesty and integrity of racing.
The latter area of regulation obviously is designed to accomplish the policy and intent stated in KRS 230.215, that the conduct of thoroughbred racing, or the participation in any way in such racing, or the entrance to or presence where such racing is conducted, is a privilege to be granted or denied by the Commission. This clearly has relation only to the matters of honesty and integrity and could have no intent to give the Commission a purely arbitrary power in this area.
It is highly significant that the stated objects and purposes, and the stated regulatory powers of the Commission, are confined to conduct of "racing" , the objects and purposes being to see that "racing" is conducted on a high plane, that "racing" is conducted so as to encourage improvement of the breed, and that persons participating in or attending "racing" be honest and of integrity. Plainly, it is the conduct of "racing" that is to be regulated, and this has been recognized by the Racing Commission in entitling its regulations the "RULES OF RACING. "
Although the Racing Commission has broad regulatory power over all aspects of the conduct of racing, there is no basis in the statutes for any power in the Racing Commission to regulate the various activities of a racing association that have nothing to do with the staging of the racing, the quality of integrity of the racing and wagering programs or the improvement of the breed of thoroughbred horses. In the category over which the Commission has no jurisdiction are such things as newspaper and other media advertising, printing of programs, magazine features, food and drink concessions, television, radio or motion picture rights, labor conditions (including hours, wages, pensions, etc.), leases of maintenance vehicles or passenger cars, physical plant improvements, and the like. Many of these areas are under the jurisdiction of other regulatory agencies, such as the Department of Labor, the Alcoholic Beverage Control Board, the State Fire Marshall, the Planning and Zoning Commission, etc.
Of course, the dividing line between racing and non-racing activities may, in limited instances, not be capable of being drawn with clear distinction, but the fact remains that the statute intends a distinction between those activities as to existence of regulatory authority of the Racing Commission. It would seem that contemporaneous construction over the many years of regulation of thoroughbred racing in Kentucky may be the best source from which to draw the line of distinction. In over seventy years of regulated racing in Kentucky, it has never been considered that such things as television, radio and/or motion picture rights, labor relations, catering and concessions, or leasing of non-racing facilities, are racing activities within the regulatory power of the Racing Commission. It must, therefore, be considered that they are not.
It is our opinion that the proposed rule first set out above is not valid to the extent it purports to apply to contracts for television, radio and/or motion picture rights, labor relations, catering and concessions, and leases for non-racing facilities.
While the general rules of law, as set out above, would apply generally to the second proposed regulation, our opinion with regard to same should be tempered somewhat by reason of recent action of the Kentucky General Assembly. That body, in its 1978 Regular Session, enacted House Bill 616 (Acts 1978, ch. 190, Now KRS 230.400) entitled THOROUGHBRED DEVELOPMENT FUND. The purpose of this legislation is to provide enhanced purses for Kentucky bred horses competing at races held at Kentucky tracks. Subsection 7 of KRS 230.400 provides that:
"The Kentucky State Racing Commission shall adopt such rules and regulations as necessary to carry out the provisions and purposes of this section, including the adoption of such rules and forms as may be appropriate to the proper registration of Kentucky stallions and Kentucky bred thoroughbreds with the official registrar, and shall administer the Kentucky thoroughbred program created thereby in a manner designed to promote and aid in the further development of the thoroughbred breeding industry in Kentucky, to upgrade the quality of thoroughbred racing in Kentucky and to improve the quality of thoroughbred horses bred in Kentucky."
We can only assume that the regulation 810 KAR 1:006, Section 38 is an attempt to carry out that legislative mandate. In that regard, we find it duly appropriate that the Commission undertake its duties to supervise the allocation of funds to be distributed pursuant to the program. It is, therefore, our opinion that the Kentucky State Racing Commission may promulgate regulations which provide it an overseer role over the types and conditions of races being scheduled in Kentucky. We do not, however, find either in the law applicable to racing commission regulations generally or in KRS 230.400 any authority for the Kentucky State Racing Commission to pre-approve or to decline to approve stakes nomination blanks and condition books. Although KRS 230.400 is silent as to the method the Racing Commission may use to police the development fund, we do not believe that the power to regulate implies the power to pre-approve or disapprove as envisioned by the second sentence of the proposed new rule.
We trust that this adequately answers the questions presented in your recent letter to this office. If further information is necessary, we would be glad to provide same upon your request.