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HISA, FTC Link Grim Headlines to HBPA’s Desire for ‘Status Quo’

In two separate court filings Thursday, the Horseracing Integrity and Safety Act (HISA) Authority and the Federal Trade Commission (FTC) both sharply criticized the National Horsemen's Benevolent and Protective Association (NHBPA)'s decision to seek an injunction that would delay the May 22 implementation of the Anti-Doping and Medication Control (ADMC) program.

What stood out was that neither the HISA Authority nor the FTC shied from trying to link the NHBPA's desire to maintain the “status quo” to the grim headlines that have dominated the sport over the past week.

“Seven horses died in the lead up to last weekend's [GI] Kentucky Derby,” the FTC's opening line in the May 11 filing stated. “Reporters, not mincing words, observed that the accidents 'overwhelmed' the [D]erby with 'the stench of death.' Congress passed HISA in 2020 to protect horses and prevent these kinds of tragedies, but the Horsemen Plaintiffs have repeatedly challenged the statute and the FTC's implementing rules.”

Drawing similarly from recent adverse events, the HISA Authority's response referenced a May 9 New York Times story that broke the news of Forte's failed New York State Gaming Commission drug test that ran under the sub-headline, “Horse racing is again caught up in a controversy.”

The HISA Authority alleged that, “Plaintiffs' request for 'state regulation' to forestall the federal regulatory scheme Congress mandated would plunge the industry back into the 'existential crisis' of inconsistent regulation [and] recent headlines provide fresh reminders…”

United States District Court Judge James Wesley Hendrix of the Northern District of Texas (Lubbock Division) will now have to weigh those assertions against those filed by the NHBPA in its May 5 request for the ADMC injunction.

The lawsuit initiated by the HBPA to try and derail HISA on alleged anti-constitutionality grounds is now past the two-year mark. The thrice-delayed ADMC is on target to begin in 10 days.

On Mar. 15, 2021, the NHBPA and 12 of its affiliates sued the FTC and HISA Authority personnel, seeking to permanently enjoin the defendants from implementing HISA, bringing claims under the private-nondelegation doctrine, public nondelegation doctrine, Appointments Clause, and the Due Process Clause.

Judge Hendrix dismissed that suit on Mar. 31, 2022. But the NHBPA plaintiffs appealed, leading to a Fifth Circuit Court reversal on Nov. 18, 2022, that remanded the case back to the Lubbock Division. In the interim, an amended version of HISA was signed into law Dec. 29, 2022. That fix was designed to make HISA compliant with the constitutional defects the Fifth Circuit had identified.

On May 6, 2023, Hendrix validated the newer version of HISA as constitutional. Now the NHBPA is planning another appeal back to the Fifth Circuit, and it wants the ADMC's rollout stopped while that process plays out.

The May 5 filing by the NHBPA explained the reasoning behind its request:

“An injunction is necessary because the industry cannot endure 'seismic change' in the short term that is undone shortly thereafter. The courts should not put the industry on a roller-coaster where the ADMC rules are in effect from May 22 to [some future date when] they go out of effect again if the Fifth Circuit finds the amended law unconstitutional.”

Hendrix, in a May 8 order, told the HISA Authority and the FTC that they had to reply to the NHBPA's motion for an injunction within 72 hours, signaling that he did not plan to let this decision linger.

“Plaintiffs are neither entitled to that relief nor to any other remedy,” the FTC's May 11 filing stated. “And the equities–both equine and otherwise–point decidedly against Plaintiffs.”

The FTC alleged that it “makes no difference that Plaintiffs previously prevailed on their nondelegation challenge before Congress amended HISA. And they do not argue about their chance of success on any of their other theories…. Because Plaintiffs stand almost no chance of success, their motion for a stay should be denied on that basis alone.”

The HISA Authority's filing put it this way: “Congress, the Executive, and both federal courts [have] come to the same correct conclusion: the Act is now constitutional. The HBPA Plaintiffs nevertheless ask for the extraordinary relief of an emergency nationwide injunction pending appeal…

“While Plaintiffs' speculation about irreparable harm from the ADMC rules is at best conflicted, an injunction of the ADMC rules would inflict certain injury on Defendants and the public interest,” the HISA Authority's filing stated.

“These final two factors weigh heavily against halting a federal regulatory scheme that has long been planned and that enjoyed substantial compliance in its brief initial rollout…”

“Because Plaintiffs have not shown that their appeal has substantial merit (let alone a likelihood of success) and have not demonstrated that the balance of equities tilts in their favor at all (let alone heavily), the Court should deny Plaintiffs' motion for an injunction pending appeal,” the HISA Authority's filing stated.

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HIWU Rules Will Make Positives Known Sooner

Following the reimplementation of the Horseracing Integrity and Safety Authority (HISA)'s Anti-Doping and Medication Control (ADMC) Program on May 22, it is unlikely that the public would not know about a positive test such as the one that Forte (Violence) allegedly had in the GI Hopeful S. for over eight months. That is according to a press release Wednesday outlining the Horseracing Integrity & Welfare Unit's (HIWU) rules concerning the publication of violation information.

In a story published in the New York Times Tuesday night, Joe Drape reported that Forte had tested positive after the Hopeful S., but no information on the positive result nor the medication involved has yet been made public.

After May 22, according to HIWU, that will no longer be the case.

In the case of an overage of a permitted substance, the violation will be published on the HIWU site when the party in question waves their right to a B sample, when a positive B sample is requested by the party in question and returned, or following the admission of a violation, whichever is earliest.

While the details of the Forte Hopeful S. test are not known, the B sample is typically sent for testing when the A sample returns positive, in this case, back in September.

The rule reads that public reporting will occur at the earliest of these situations:

After the imposition of a Provisional Suspension (if applicable).
In cases where there is an Adverse Analytical Finding (“AAF”), i.e., a positive test, after the B sample confirms the AAF or the Covered Person waives the testing of the B sample, assuming no Provisional Suspension has been imposed.
In non-AAF cases, after the service of the Charge Letter, if no Provisional Suspension has been imposed.
Following the admission of a violation by the Covered Person, if the alleged violation has not already been publicly reported pursuant to a., b., or c.

The press release also indicates that the public would be made aware of the substance responsible for the finding.

In the case of all medication violations, the public disclosure will include the following information after the resolution of violations.

The name of the Covered Person who committed the violation(s) and any Covered Horse(s) implicated by the violation;
The rule(s) violated;
The Prohibited Substance(s) or Prohibited Method(s) involved, if any;
The consequences imposed;
Any final decision or a summary thereof; and
Any review rights available in respect of the decision.

HIWU is not required to publicly report a matter if it would risk compromising an ongoing investigation or proceeding.

All information listed above will be posted on HIWU's website and available for viewing at any time.

The complete rules are posted on HIWU's website, here: https://www.hiwu.org/

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In Odd Legal Twist, NHPBA Criticizes Decision To Delay ADMC

Even as the National Horsemen's Benevolent and Protective Association (NHBPA) is trying to halt the Horseracing Integrity and Safety Act (HISA) for good, its attorneys filed a response in federal court Thursday that criticized the Federal Trade Commission (FTC)'s Apr. 27 order that mandated the third delay in nearly a year for the implementation of the Anti-Doping and Medication Control (ADMC) program, this time from May 1 to May 22.

The NHBPA told the court that the FTC's issuance of the order to delay the program without first providing a 30-day public comment period on the date switch goes against the provisions set forth in the Administrative Procedure Act (APA), which governs the process by which federal agencies develop and issue regulations.

The NHBPA also stated that the FTC's decision to delay the ADMC program is “totally inconsistent” with the FTC and HISA Authority's previous arguments that the program needed to be implemented as swiftly and as uniformly as possible.

The NHBPA filing also pointed out that although the FTC cited a desire not to cause “confusion” by implementing the ADMC on May 1, five days before the Triple Crown series starts with the May 6 GI Kentucky Derby, the FTC's decision to go with a May 22 start date instead puts the new effective date right in the midst of that series, after the May 20 GI Preakness S. but before the June 10 GI Belmont S.

“The Horsemen will not challenge the Order as lacking good cause because they believe any delay is good for their members, their horses, and their industry-they are seeking a permanent delay in the rule, after all. But they cannot help but note that for a second time in as many months the FTC and Authority have steamrolled over the fundamental principles of notice-and-comment at the heart of the APA,” stated the NHBPA's filing in United States District Court (Northern District of Texas, Lubbock Division).

“The FTC says its order does not need a period of public comment because it has 'good cause' to issue the rule immediately,” the NHBPA filing stated, quoting portions from the FTC order. “'Good cause' is an 'emergency power,' normally reserved for dire circumstances where life and limb are in danger. The mere existence of a statutory deadline doesn't cut it…. The Authority has represented that immediate implementation of the rule is necessary to preserve life and limb; it is hard now to understand how the FTC can find good cause to delay the rule if that's the legal standard. The policy rationale the Order gives is at best thin gruel.”

The FTC's “notice of delay” filed with the same court, also on Thursday, stated that, “Because the ADMC Rule governs the treatment of horses weeks before a covered race, some affected parties who are treating horses in a manner consistent with state requirements may find it difficult to come into compliance in the five days between the ADMC Rule's scheduled effective date and the Kentucky Derby on May 6. Even in the absence of conflicts between the ADMC Rule and applicable state regulations, implementing new testing requirements just days before the start of the Triple Crown creates an appreciable risk of errors, confusion, and inconsistent treatment of similarly situated horses-harms that could frustrate the purposes of the Act.”

The FTC stated that the HISA statute “authorizes the [FTC] to abrogate, add to, or modify the Authority's rules for specified reasons, including 'to ensure the fair administration of the Authority,' [and that while the] APA typically provides for notice-and-comment rulemaking, [that comment period is] not required with respect to a rulemaking when an 'agency for good cause finds…that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”

The FTC's filing continued: “Here, the [FTC] finds, for good cause, that notice and comment is impracticable and unnecessary with respect to the final rule. Given the short time remaining before commencement of the Triple Crown races, providing advance notice would delay the effect of the final rule until after the Kentucky Derby, defeating the rule's purpose. Obtaining comments after issuance of the rule is unnecessary because the full effect of the Commission's rule-which merely provides for a brief delay in the effective date of the ADMC Rule-will have occurred prior to the Commission's collection and consideration of any comments.”

The NHBPA countered with this explanation in its filing: “As the FTC has reminded us in the past, “[t]he bedrock principle of the Act is the need for uniformity.' [But now] the rules for the three Triple Crown races will not be uniform, because the Defendants have chosen May 22 rather than June 12 as the start date for the ADMC. As a result, the Kentucky Derby and the Preakness will be governed by state law, while the Belmont will be governed by the ADMC (unless it is enjoined or delayed again)…

“Now the FTC is saying that the Authority is not ready to roll?” the NHBPA filing asked rhetorically. “In Kentucky, home state of the Kentucky Derby, where a voluntary state implementation agreement with the Authority and the state racing commission was signed March 21, 2023? Again, if this were before the Court as an APA challenge, would this fly?

“Again, the Horsemen are not going to file an as-applied APA challenge that the Order is inconsistent with the Act's insistence on uniformity, because they believe the delay is good for the Horsemen and the industry,” the NHBPA filing stated. “But they must point out the absolute lack of respect for the Act and their own professed priority shown by Defendants.”

The ADMC program had originally been expected to go into effect July 1, 2022, according to its enabling law. That start date then got pushed back to Jan. 1, 2023. In mid-December 2002, that date got scrapped when the Federal Trade Commission (FTC) declined to approve the rules that would make the program operational by the start of 2023, citing legal issues.

The HISA Authority then ramped up for an expected Mar. 27 start date after receiving FTC clearance. The ADMC went briefly into effect for four days, but on Mar. 31, the federal judge handling this lawsuit issued a 30-day injunction that suspended the program, pushing the ADMC start date out to May 1.

TDN first reported on Apr. 25 that the ADMC's May 1 start date was in jeopardy after hearing testimony about it during Tuesday's Pennsylvania Horse Racing Commission meeting, when an official with that agency stated he had been contacted by HISA Authority officials on Apr. 21, informing him that the new start date was May 22.

The HISA Authority did not initially respond to an Apr. 25 request for confirmation from TDN on the date switch, but the FTC court filing and a subsequent press release on Thursday verified the change, citing a vote taken by FTC commissioners.

The NHBPA also took umbrage with the way that FTC order came about.

“One scratches one's head how it is that the FTC announced this order to the public [on] Apr. 27, but Authority staff was calling state commissions on Apr. 21 telling them that it was being delayed to May 22,” the NHBPA filing stated. “At best, the FTC gave the Authority a heads-up that it was making this delay decision. Much more likely, this was the Authority's decision all along, and the FTC ratified it because the FTC ratifies everything asked of it by the Authority…”

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Federal Judge in Texas Delays ADMC Thirty Days

A federal judge in Texas has issued a 30-day waiting period before the rules of HISA's Anti-Doping Medication and Control (ADMC) can take effect. Those rules went into effect Monday, Mar. 27.

During the month of April, therefore, HISA will turn back the job of collecting samples and testing back to the states, said Lisa Lazarus on a Friday night media call.

The ruling, issued Friday, was the latest in a long back-and-forth bitter struggle between pro-HISA and anti-HISA forces.

The ruling, issued Friday by the United States District Court, Northern District of Texas, Lubbock Division, was issued in response to a motion filed by the National HBPA arguing that the rule violated a provision of the Administrative Procedures Act (APA), which governs the process by which federal agencies develop and issue regulations. It includes requirements for publishing notices of proposed and final rulemaking in the Federal Register, and provides opportunities for the public to comment on notices of proposed rulemaking. The APA requires most rules to have a 30-day delayed effective date. The judge in the case only partially agreed.

After HISA was found unconstitutional by the Fifth Circuit Court, the group went back to the Federal Trade Commission to amend language that addressed that court's concerns.

“When Congress changes a statute in response to a court's opinion, the result is usually a second wave of litigation: Was the attempted remedy sufficient? What new arguments arise?” wrote the court. “But those larger questions are not yet before the Court. Currently, the plaintiffs make a narrow procedural claim that a new anti-doping rule violates the Administrative Procedure Act because not enough time passed between when the rule was published as final and when the rule took effect. When an agency issues a substantive rule—the type of rule that controls our behavior—it must ordinarily wait 30 days between when the final rule is issued and when it takes effect. This ensures that regulated parties have the time to challenge the rule's validity or bring themselves into compliance. But the anti-doping rule took effect the same day that it was published as final. As a result, the rule issued in violation of the APA, so the plaintiffs—and everyone else—will get their 30 days. The Court enjoins implementation or enforcement of the anti-doping rule until May 1, 2023.”

But the court only addressed that 30-day rule required by the APA, and not the HBPA's larger claims that HISA remains unconstitutional despite the added language.

“Plaintiffs' only new argument is that section 553(d), absent good cause, requires an agency rule to take effect 30 days after the final rule is published. In the interest of judicial economy—and because the plaintiffs only seek emergency relief as to the anti-doping rule—the Court will limit its analysis to the sole issue at hand: whether the FTC failed to comply with section 553's required 30-day waiting period and, if so, whether the plaintiffs are entitled to equitable relief,” the ruling reads.

“We launched Monday, for the most part things ran really smoothly,” said Lazarus. “We collected about 700 tests over the course of the week, obviously we're disappointed by the decision out of the Lubbock court, but it has to do with the FTC process, it's not strictly related to HISA. As a result, we're going to suspend operations for a few days, and get ready to go again on May 1, and hand it over back to the states to essentially run the programs. We're providing all the assistance we can to the states while respecting the federal order.”

The National HBPA issued a statement about the ruling Friday night.

“We are very pleased that the National HBPA has defeated HISA in the courts yet again,” said National HBPA CEO Eric Hamelback. “It was reckless and irresponsible of the Authority and the FTC to rush to implement these brand-new rules this weekend. Horsemen need time, and we were glad to stand for them once again. The Fifth Circuit Court of Appeals ruled that HISA was unconstitutional in our lawsuit before, and we expect they will do so again.”

HISA's outside counsel John Roach pointed out that states covered by HISA were using the same drug collectors they had been using before Mar. 27, and that they thought the confusion would be limited.

Lazarus said that HISA had considered and rejected the idea of trying to get the 30-day injunction overturned. “Ultimately we're here to serve the industry, and at this point it just creates chaos,” she said. “At this point, it's just 30 days, so we can plan for that, communicate that. So in weighing all the interests, we thought it was best to accept the decision, communicate it, plan for it and use this 30 days to continue to improve our processes. The ruling does make it clear that as of May 1, we're operational again. But I can take a 30-day break better than I can take real questions as to the validity.”

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