Certified Final Objection No. 98 of the
Joint Legislative Committee on Administrative Rules
At its meeting on March 20, 1998, the Joint Legislative Committee on Administrative Rules (Committee) voted, pursuant to RSA 541-A:13, IV, to enter a preliminary objection to Final Proposal 97-198 containing proposed rules of the Pari-Mutuel Commission (Commission) relative to adjudicative proceedings, rulemaking hearings, rulemaking petitions and petitions for declaratory rulings. The objection was based upon the issues outlined in the annotations to the rules.
At its meeting on July 17, 1998, the Committee voted, pursuant to RSA 541-A:13, V(d), to enter a final objection to Final Proposal 97-198. The final objection has been filed with the Director of the Office of Legislative Services for publication in the New Hampshire Rulemaking Register. The effect of a final objection is stated in RSA 541-A:13, VI:
After a final objection by the committee to a provision of a rule is filed with the director under subparagraph V(d), the burden of proof thereafter shall be on the agency in any action for judicial review or for enforcement of the provision to establish that the part objected to is within the authority delegated to the agency, is consistent with the intent of the legislature, is in the public interest, or does not have a substantial economic impact not recognized in the fiscal impact statement. If the agency fails to meet its burden of proof, the court shall declare the whole or portion of the rule objected to invalid. The failure of the committee to object to a rule shall not be an implied legislative authorization of its substantive or procedural lawfulness.
Incomplete Rules for Adjudicative Proceedings
The Committee objected that Pari 201 in Final Proposal 97-198 is, pursuant to Committee Rule 402.02(b)(2), contrary to legislative intent by leading to requirements, limitations or prohibitions being set outside the process mandated by RSA 541-A:3, and, pursuant to Committee Rules 403.01(d) and 403.02(c), contrary to the public interest by not being clear and understandable and capable of uniform enforcement.
The Commission’s rules on adjudicative proceedings are limited to those incorporated by reference in Pari 201. The Committee noted that the incorporated rules are model due process rules developed by the Association of Racing Commissioners. The Committee determined that Pari 201 does not include all necessary elements of adjudicative proceedings. For example, Pari 201 does not contain any requirements regarding written motions (e.g., whether they are allowed; whether other parties must be given copies; the response period for other parties), the order of hearings, the behavior of parties and representatives, and proposals for decisions. The Committee noted that the document containing the rules being incorporated by reference includes rules on all of these topics, but those rules were specifically excluded from the incorporation by reference.
The Commission indicated in its objection response, dated May 1, 1998, that "while RSA 541-A:16, I(b)(2) requires agencies to adopt rules governing adjudicative hearings, it is silent as to the specifics of such rules." It was the Committee’s determination, however, that although the statute does not list elements required to be addressed in the rules, agencies’ adjudicative hearings rules must be sufficient to provide due process. In the Committee’s view, if the hearings rules do not address foreseeable elements of the hearings process, and the agency only deals with such elements when they arise, there is a far greater likelihood that due process will be violated because there is an increased possibility for arbitrary or unequal treatment.
The Committee also noted that, subsequent to the filing of the objection response, the General Court clearly specified its intent regarding the extent of adjudicative proceedings rules by passing HB 256 (1998, 298). This law specifies subject areas which every agency must address in their rules on adjudicative proceedings.
The Committee also determined that, to the extent the Board develops hearings procedures, it is required to adopt them pursuant to the process established in RSA 541-A:3. Pursuant to RSA 541-A:22, I, no rule is valid or binding unless it has been filed in accordance with the requirements of RSA 541-A. The Committee concluded that, without properly adopted rules, if one or more of the issues arise(s), the Commission is forced to either make an arbitrary decision which may violate due process, or develop rules outside the rulemaking process in violation of RSA 541-A:3 and RSA 541-A:22, I. Additionally, the Committee concluded that if Pari 201 does not adequately address an issue, the rules are unclear and not capable of uniform enforcement because readers cannot determine what procedures are required to be followed.
Authority for Disciplinary Action by Stewards
The Committee objected that Pari 201 in Final Proposal 97-198 is, pursuant to Committee Rule 401.01(c), beyond the authority of the Board, and pursuant to Committee Rule 402.02(b)(2), contrary to legislative intent by conflicting with a specific statutory provision.
The rules incorporated by reference in Pari 201 include provisions for "proceedings by stewards" which allow stewards to hold disciplinary hearings and take disciplinary actions against licensees of the Commission.
The Committee noted that the Commission has general authority to prescribe the duties of the stewards. RSA 284:8 requires the Commission to "specify the duties to be performed by its assistants and employees," and RSA 284:20 states that "stewards shall exercise such powers and perform such duties at each race meet as may be prescribed by the rules and regulations of the commission."
However, it was the Committee’s view that some powers and duties cannot be delegated by an agency absent a specific grant of authority. Further, RSA 541-A:22, III(a) forbids the imposition of fines and penalties by rules without specific statutory authority. The Committee noted that RSA 284 provides no specific authority for stewards to hold adjudicative proceedings or impose fines and penalties. All statutes which refer to the authority to hold hearings and impose discipline (such as RSA 284:13 and RSA 284:16) specifically grant such authority to the Commission.
Additionally, the Committee has previously entered a final objection regarding the same issue. On January 21, 1994, the Committee entered a final objection to Pari 300, relative to horse racing. That chapter, like Pari 201 in the current proposal, allows stewards to impose penalties, such as fines and suspensions, on the licensees of the Commission. The Committee objected that the rules authorizing such actions by the stewards were beyond the authority of the Commission and contrary to legislative intent by conflicting with specific statutes.
The Committee noted that lack of authority would not be an issue if the stewards were only making proposed decisions. However, the Committee noted that the rules contain no provisions regarding proposals for decisions or confirmation votes by the Commission. The Committee determined that the rules call for decisions to be made by the stewards, with such decisions being final unless appealed to the Commission.
For the foregoing reasons, the Committee determined that Pari 201 was beyond the authority of the Commission and contrary to legislative intent by conflicting with RSA 541-A:22, III(a), RSA 284:13 and RSA 284:16.
Scope of Incorporation by Reference
The Committee objected that Pari 201 in Final Proposal 97-198 is, pursuant to Committee Rule 403.01(d), contrary to the public interest by not being clear and understandable.
The Commission’s rules on adjudicative proceedings are limited to those incorporated by reference in Pari 201. The Committee noted that the incorporated rules are model due process rules developed for horse racing. The Commission has stated its intent that these rules apply in all hearings, including those hearings dealing with greyhound racing. The Committee determined that to the extent that the incorporated rules contain references to horses and horse racing and proceedings by stewards, but are applied to greyhound hearings, the rules are unclear.