1 1 BEFORE THE 2 TEXAS RACING COMMISSION 3 AUSTIN, TEXAS 4 5 6 7 COMMISSION MEETING 8 9 10 11 12 13 14 BE IT REMEMBERED that the above entitled 15 matter came on for hearing on the 20th day of February, 16 2002, beginning at 10:05 A.M. at Building E, 6100 Guadalupe, 17 Austin, Travis County, Texas, and the following proceedings 18 were reported by SHERRI SANTMAN FISHER, Certified Shorthand 19 Reporter for the State of Texas. 20 21 22 23 24 25 FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 2 1 APPEARANCES 2 3 Commissioners: TERRI LACY 4 MIKE RUTHERFORD 5 JIM SCHULZE 6 TREVA BOYD 7 R. DYKE ROGERS 8 JIMMY ARCHER 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 3 1 CHAIRPERSON LACY: The meeting is called to 2 order at 10:05 a.m. 3 Ms. Cook, if you'd call the roll. 4 MS. COOK: Treva Boyd? 5 COMMISSIONER BOYD: Here. 6 MS. COOK: David Garza? Colleen McHugh? Dyke 7 Rogers? 8 COMMISSIONER ROGERS: Here. 9 MS. COOK: Mike Rutherford? 10 COMMISSIONER RUTHERFORD: Here. 11 MS. COOK: Jimmy Archer? 12 MR. ARCHER: Here. 13 MS. COOK: Dr. Schulze? 14 COMMISSIONER SCHULZE: Here. 15 MS. COOK: Ms. Lacy? 16 CHAIRPERSON LACY: Here. 17 A quorum is present. We'll proceed with the 18 meeting. 19 We'll go to proceedings on rulemaking first, 20 consideration of and action on the following rules: The 21 adoptions of the rules at Tab 1. 22 Ms. Kennison, I'll recognize you for an 23 explanation. 24 MS. KENNISON: Commissioners, these amendments 25 were published as proposals in the Texas Register at various FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 4 1 times. There's been at least 30 days for comment. The only 2 comment received concerned the greyhound split sample 3 procedure. 4 303.99, the amendment is a housekeeping matter 5 to delete an incorrect cross-reference and insert the proper 6 section. 7 309.361, this amendment would hold purses in 8 greyhound stakes races until all drug testing had been 9 completed and cleared in the trial races as well as the 10 finals before a distribution of purse -- purses to affected 11 persons. 12 311.103 and 315.250, the purpose of the new 13 rule at 315.250 is to provide standards for greyhound 14 breeding farms as required by the Racing Act. Section 15 311.103 was amended to add the enforcement mechanism by 16 requiring kennel owners to provide documentation that the 17 greyhounds participating in Texas pari-mutuel racing are, in 18 fact, whelped from inspected farms. 19 Section 319.338, 319.363, Section 319.338 was 20 formerly 319.363. The rule was simply moved so that the 21 same procedure for storage of splits would apply to both 22 greyhounds and horses. 23 319.362 and 319.391, Section 319.362 was 24 amended to reflect the current practice of handling split 25 samples for horses. The amendment to 319.391 provides a FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 5 1 procedure to request the split, determine when a split is to 2 be performed, and maintain -- and how to maintain that split 3 sample for greyhounds. 4 The greyhound association commented on this 5 rule and said that it was unlikely that a greyhound would 6 produce sufficient urine for testing. Staff responded by 7 explaining that the drug testing laboratories had requested 8 the amount specified in the rule. Staff also explained that 9 the split specimen procedure is required by the Racing Act 10 for greyhounds as well as horses. That explanation was 11 accepted and there was no further comment. 12 Staff recommends these proposals be adopted. 13 CHAIRPERSON LACY: Any questions? 14 I'd entertain a motion to adopt these 15 amendments without changes. 16 COMMISSIONER ROGERS: So move. 17 COMMISSIONER RUTHERFORD: Second. 18 CHAIRPERSON LACY: Commissioner Rogers has 19 moved. Commissioner Rutherford has seconded. 20 All those in favor -- any discussion? 21 All those in favor signify by saying aye. 22 COMMISSIONERS: Aye. 23 CHAIRPERSON LACY: All those opposed? 24 The motion passes unanimously. 25 Now we'll move to the proposals at Tab 2. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 6 1 Ms. Kennison, I'll recognize you for an 2 explanation. 3 MS. KENNISON: Starting with Section 307.7, 4 the amendment would add a deadline for requesting a hearing 5 to contest an ejection or an exclusion. 20 days was chosen 6 to be consistent with the Racing Act's administrative 7 penalty provision. 8 309.351, this amendment is to establish a 9 deadline for associations to file their executed kennel 10 contracts with the Commission. Each of the greyhound 11 associations was presented with this proposal, and their 12 suggestions are reflected in this final version. 13 319.102 on the agenda has been pulled from the 14 agenda. Staff has decided to wait and perform additional 15 research on this issue. 16 323.201, this amendment is to reflect the 17 current procedure which no longer requires the disclosure of 18 arrests. The citation related to traffic is also updated. 19 307.62, the amendment to this rule would 20 provide notice at the stewards' and judges' hearings to 21 owners and kennel owners when redistribution of a purse may 22 be a possibility. 23 319.301, this amendment would explicitly state 24 that a negative result in a drug test for race animals and 25 the executive secretary's clearance is a precondition to FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 7 1 entitlement to purses. 2 Ms. Flowerday has a few remarks regarding the 3 notice provisions. 4 MS. FLOWERDAY: Commissioners, the last two 5 rules, 307.62 and 319.301, were added to the agenda at my 6 request as a follow-up to the discussion that was held at 7 the last Commission meeting involving an appeal from a drug 8 positive at a greyhound track. There were some issues 9 relating to whether or not the owner of the greyhound had 10 gotten notice of the judges' hearing. I did some research 11 and have included in your packets a copy of my memo that 12 outlines that legal research. 13 The bottom line is that I don't think, based 14 on my research, that an owner of a race animal has a 15 property interest in the purse until the race has been 16 cleared of all the drug tests. So the drug test -- a clean 17 drug test basically is a precondition to entitlement to the 18 purse. 19 What I'm suggesting that you do is consider 20 the policy choice of whether or not the owner should receive 21 notice of the judges' or stewards' hearings. I don't think 22 constitutionally they are required to receive notice; but if 23 you think that it's just sound policy to give them notice, 24 then I would suggest you adopt Section 307 -- or propose 25 Section 307.62. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 8 1 If you don't believe that that is necessary 2 and would rather just reiterate the policy that owners don't 3 have a property interest in the purse until all drug tests 4 are clean, then the staff is suggesting that you propose 5 319.301, which I think is just a statement of the law. 6 I'll be happy to answer any questions that you 7 may have. So basically those two sections I'm submitting 8 are an either/or. You would not necessarily propose both of 9 them. You would pick which policy you want the staff to 10 enforce. 11 CHAIRPERSON LACY: And staff has no opinion. 12 They're asking us to -- 13 MS. FLOWERDAY: Well, 307.62 would require 14 some additional work on our part, but it's minimal, so in 15 terms of cost it's not really a problem. So basically we 16 are just leaving it up to you for a policy choice. 17 COMMISSIONER SCHULZE: May I ask Ms. Flowerday 18 a question? 19 CHAIRPERSON LACY: Yes. 20 COMMISSIONER SCHULZE: It would seem to me 21 that 319.301 is a must. I mean, we need that to be clearly 22 spelled out, don't we? 23 MS. FLOWERDAY: Well, it already is spelled 24 out in the rules with respect to horse racing. It's just 25 not in the rules with respect to greyhound racing. And FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 9 1 that's why this is placed in the rules where it is so that 2 it is clear to both. I don't necessarily think -- I think 3 one option is for you to do neither. 4 COMMISSIONER SCHULZE: I see. 5 MS. FLOWERDAY: If you choose not to propose 6 either rule, then I would still make the argument, if it was 7 raised on appeal, that you're not entitled to notice, that 8 the constitution doesn't require it, and here's all the 9 legal reasons why. This would just clarify that and perhaps 10 obviate some of those challenges. 11 COMMISSIONER SCHULZE: Right. Well, I guess, 12 in my point of view, 319.301 is needed; and I'm uncertain 13 about 307.62. I don't want us to put an undue burden on the 14 agency to the extent that if we didn't -- if a horse or a 15 greyhound had multiple owners and somehow not everybody got 16 notified, you know, then have we made -- have we weakened 17 our position when we have a hearing because someone says 18 they should have been notified, they didn't get notified. 19 Do you follow where I'm going with this? 20 MS. FLOWERDAY: And that is a risk that Mike 21 Burleson and I just talked about this morning. It is one 22 more hurdle or hoop that the stewards and judges would have 23 to jump through before they held their hearing. They would 24 have to ascertain who the lead person is for the owner. I 25 don't think that this would require necessarily individual FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 10 1 notice to every single participant in a multiple owner. I 2 think it would require notice to the lead person in a 3 multiple owner. And we always have those people designated 4 when they come and get a multiple owner registration. 5 COMMISSIONER SCHULZE: We know who that is. 6 MS. FLOWERDAY: We know who the lead person 7 is. 8 I would suggest, though, that if you think the 9 better policy statement is reflected in 319.301, there is no 10 need to propose 307.62. That sends mixed signals. If 11 you're declaring in 319.301 that you're not entitled to the 12 purse until the drug tests are clear but then you say that 13 they're entitled to notice, you're creating some confusion 14 as to what the legal status of the owner truly is. 15 COMMISSIONER SCHULZE: I see your point. 16 Well, just one final point and then I'll be 17 quiet. I think that as a practical matter, when owners 18 place horses in the care and custody, or greyhounds, for 19 that matter, with a trainer, you know, I think it's 20 incumbent upon that trainer to keep them informed. 21 Now, this is a big problem in not just this 22 area, but owners are constantly getting bills for this and 23 that and, you know, why did the vet give my horse this or 24 that. And this is a problem that, to me, it's between the 25 profession of training greyhounds and horses and the owners FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 11 1 to work this out between themselves. I don't know that we 2 need to be in the middle of it. That's my personal 3 opinion. 4 COMMISSIONER RUTHERFORD: I think the notice 5 to the trainer is enough. And I also -- the way you read 6 the rules in 307.62 is that somebody that was a stallion 7 owner that gets a breeder's award, this means you've got to 8 notify him, too, the way I read it. 9 COMMISSIONER SCHULZE: That's a good point. 10 CHAIRPERSON LACY: Ms. Flowerday, in the -- 11 COMMISSIONER RUTHERFORD: And I don't think 12 that's our intent. 13 MS. FLOWERDAY: No. 14 COMMISSIONER RUTHERFORD: But I mean, we could 15 get something thrown out because the stallion owner wasn't 16 notified. 17 CHAIRPERSON LACY: In the Illinois Racing 18 Board case, was that -- the one that you mentioned in your 19 memo, did that involve a question about whether or not the 20 owner needed to be noticed? 21 MS. FLOWERDAY: I apologize. I left my copy 22 of the memo. Hold on just a second. 23 CHAIRPERSON LACY: The quote here indicates 24 that must be what that case was about and that the Seventh 25 Circuit determined -- okay. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 12 1 MS. FLOWERDAY: That's exactly what the case 2 was. The owner had not received notice and -- well, 3 actually, I take that back. I think in that particular case 4 the owner had actually received notice but they still raised 5 the issue about whether or not they had a property 6 interest. And so that was where this language came from. 7 Arguably, that language is just dicta; but it 8 was the only case that I found that squarely spoke to the 9 issue that I consider is critical to making that 10 constitutional determination: Does the owner have a 11 property interest in that purse. And this is the only Court 12 that I found that directly opined on that issue. 13 CHAIRPERSON LACY: Okay. Well, I think it 14 would be very helpful to pass one of these and it seems to 15 me that 319.301 reflects what we are doing today. 16 Any other comments? Any questions? 17 I would entertain a motion that we publish the 18 proposals for 307.7, 309.351, 323.201 in the Texas Register 19 and that we publish -- and then whoever makes the motion can 20 determine which one they want to propose -- that we publish 21 either 307.62 or 319.301 in the Texas Register. 22 COMMISSIONER BOYD: I so move. 23 CHAIRPERSON LACY: If you could so move one of 24 those two sections. 25 COMMISSIONER BOYD: Well, that we -- can we FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 13 1 act on 307.62 and 319.301 separately and just move to adopt 2 the other ones? 3 CHAIRPERSON LACY: Yes. Let's do that. 4 Okay. So, Ms. Boyd, let me restate your motion for you. 5 You're moving that we publish 307.7, 309.351, 323.201 in the 6 Texas Register. 7 COMMISSIONER BOYD: Correct. 8 CHAIRPERSON LACY: Is there a second? 9 COMMISSIONER SCHULZE: Second. 10 CHAIRPERSON LACY: Commissioner Schulze has 11 seconded. 12 All those in favor signify by saying aye. 13 COMMISSIONERS: Aye. 14 CHAIRPERSON LACY: All those opposed? 15 The motion passes unanimously. 16 Now I would entertain a motion to publish one 17 of 307.62 or 319.301 in the Texas Register. 18 COMMISSIONER ROGERS: I move that we publish 19 319.301 in the Texas Register. 20 CHAIRPERSON LACY: Commissioner Rogers has 21 moved that we publish 319.301 in the Texas Register. 22 Is there a second? 23 MR. ARCHER: Second. 24 CHAIRPERSON LACY: Commissioner Archer has 25 seconded. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 14 1 All those in -- any discussion? 2 All those in favor signify by saying aye. 3 COMMISSIONERS: Aye. 4 CHAIRPERSON LACY: All those opposed? 5 The motion passes unanimously. 6 Petitions for rulemaking, Tab 3, we have a 7 petition by Gulf Greyhound Park for an amendment to 8 309.313. 9 MR. SEVEDGE: My name is Barry Sevedge, 10 representing Gulf Greyhound Park. 11 We're requesting this amendment in the number 12 of kennels -- crates that are allowed in the kennels. What 13 we've discovered over time is that the active list is being 14 hurt or reduced because our kennels have a whole lot of dogs 15 that come in for schooling. That means that you have more 16 dogs that are awaiting to go to another track if they're not 17 competitive and then we have dogs awaiting for adoption. 18 By adding these two crates, it gives us two 19 more dogs per kennel to be in transition, whether they're 20 coming for schooling, going to another track, or going to 21 adoption. At the same time we've increased the number of 22 crates in our adoption kennel so that we have two crates for 23 every -- two adoption crates in the adoption kennel for 24 every kennel as well. 25 So between what we've done in the adoption FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 15 1 kennel and here, we end up with 72 extra crates for 2 greyhounds. And we're really not affecting the conditions 3 the greyhounds are in because you see our kennel was 4 designed to hold more than 60 crates or has the room to do 5 that without a center row of crates. And then the adoption 6 kennel is already in effect and is as roomy as it was drawn 7 originally as a stakes kennel. 8 CHAIRPERSON LACY: Any questions for 9 Mr. Sevedge? 10 COMMISSIONER SCHULZE: Mr. Sevedge, this is 11 probably a stupid question; but can a crate be equated to a 12 cage? 13 MR. SEVEDGE: Well, yes. 14 COMMISSIONER SCHULZE: Okay. It's just a 15 terminology issue, but I just thought -- I just needed to 16 know that for sure. 17 So the size has not changed. The -- as far as 18 the dogs' housing, they're in the same size enclosure that 19 they've been in in the past, et cetera. 20 MR. SEVEDGE: Right. They're still stainless 21 crates. They would be the same specifications as the ones 22 we already have. There's just two more of them in the 23 kennel. 24 COMMISSIONER SCHULZE: And how many adoption 25 crates are there? FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 16 1 MR. SEVEDGE: Well, there's at least -- 2 there's 36 and I think there's -- we have six extras. But 3 there's two for every kennel and about six extra. 4 COMMISSIONER SCHULZE: So is that adoption 5 area usually full? 6 MR. SEVEDGE: No, not usually. We are trying 7 to make sure, though, that as -- most of the dogs that 8 are -- that have raced at Gulf are going through our 9 adoption kennel, and so what we're trying to do is make 10 those crates available to make it easier. We have run into 11 situations in the past when we only had six, eight, 12 12 crates that we would -- from time to time wouldn't have 13 enough and then the kennels need to go to Greyhound Pets or 14 some other resource to get their dogs adopted. 15 By doing this, we're hoping that all the dogs 16 can be adopted through the on-track kennel -- excuse me, 17 on-track adoption program, which is the preferred way of 18 doing it because it's easier for -- we then put them into 19 our database, we know who adopted them, and we can keep 20 track better of what happens to them. 21 COMMISSIONER SCHULZE: Are those dogs mostly 22 adopted by local people in the Galveston, Harris County area 23 or are they adopted by people all over the country? 24 MR. SEVEDGE: If they're adopted from the 25 track, it's in the local area. And when I say "local area," FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 17 1 I'm talking 75, 80 miles. 2 COMMISSIONER SCHULZE: I see. 3 COMMISSIONER BOYD: So this will -- this will 4 not create any more congestion or burden on people taking 5 care of the dogs at all. It's just going to better keep 6 those other dogs in-house so you can kind of track them and 7 see -- and make sure they're taken care of and see what 8 happens to them. 9 MR. SEVEDGE: What's happening now, because 10 the -- if you bring dogs in to school, they're not on the 11 active list, they can't race. If you have dogs that grade 12 off, they're not on the active list, they can't race. When 13 we get ready to draw races this week, if we don't have 14 enough greyhounds in the compound, we can't draw races. And 15 we've run into this problem, especially towards the end of 16 the summer when you're traditionally low on greyhounds, that 17 we can't draw races or we draw a lot of mixed grade races, 18 which are not really the kind of racing product that you 19 want to put out to the public. 20 CHAIRPERSON LACY: Any questions for 21 Mr. Burleson? 22 Ms. Flowerday? 23 MS. FLOWERDAY: I just wanted to mention to 24 the Commissioners -- I wanted to make sure that you all have 25 the replacement page for this rule that -- in the original FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 18 1 drafting of the rule, we had inadvertently deleted the 2 language that required the crates to be made of stainless 3 steel or a comparable material. We didn't want to take that 4 out. So the replacement page re-includes that language. 5 CHAIRPERSON LACY: That's at (c)(2)? 6 MS. FLOWERDAY: Correct. 7 This is a rule that -- actually, I think 8 Gulf's request is something that the other greyhound tracks 9 are comfortable with. We have heard at various times 10 through the years that, "Gee, couldn't we have a few more 11 crates in there?" And that's the reason why our draft of 12 the rule is slightly different from what Gulf had 13 suggested. 14 We decided that rather than just allow 15 case-by-case exceptions to the general rule, we would just 16 change the general rule so that the executive secretary will 17 determine the number of crates that can be managed in the 18 kennel building without compromising the health and safety 19 of the greyhounds. So that might change from time to time, 20 but it would always be something that it would be a decision 21 that would be made at the management level of the agency in 22 consultation with the on-site vets and in considering the 23 particular circumstances of the track. 24 So Gulf might have 62 crates, but Corpus might 25 have 64 or 66. So it may be different depending on the -- FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 19 1 the kennel buildings are constructed differently at the 2 tracks. 3 CHAIRPERSON LACY: Thank you, Mr. Sevedge. 4 Any other questions? 5 I'd entertain a motion to publish the proposal 6 for 309.313 in the Texas Register. 7 COMMISSIONER SCHULZE: So move. 8 CHAIRPERSON LACY: Dr. Schulze has moved. 9 Do I hear a second? 10 COMMISSIONER ROGERS: Second. 11 CHAIRPERSON LACY: Commissioner Rogers has 12 seconded. 13 Any discussion? 14 All those in favor signify by saying aye. 15 COMMISSIONERS: Aye. 16 CHAIRPERSON LACY: All those opposed? 17 The motion passes unanimously. 18 We'll move to proceedings on occupational 19 licensees, and we have before us the proposal for decision 20 at Tab 4. 21 Ms. Kennison, if you'd give us a summary. 22 MS. KENNISON: Commissioners, this is a simple 23 positive test case specifically for Clenbuterol. The 24 proposal for -- the proposal for decision supports the 25 stewards fully. The only unusual aspect in this case was FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 20 1 there was a delay in the delivery of the split sample to the 2 testing facility. 3 Mr. Keeton was contacted April 5th of 2001. 4 He witnessed and shipped the item on the 11th of April. It 5 was then reshipped April 17th. And it arrived at LSU April 6 18th. 7 Most importantly, the integrity of the sample 8 was not compromised. There was no evidence of tampering. 9 And that's according to the lab at LSU. The sample arrived 10 with no evidence of any tampering whatsoever. The sample 11 was also confirmed for Clenbuterol at LSU. 12 The staff did not violate any Commission 13 rules. The split sample rule, 319.362, requires that the 14 split be shipped within 10 days of notification. This was 15 followed. The fact that the sample was returned through no 16 fault of the agency does not equate to a violation. 17 The appellants have complained that they 18 didn't receive adequate -- or that notice was inadequate as 19 to the possibility of a loss of purse. The act and the rule 20 also -- and also Rule 319.304 provide that the stewards may 21 order a disqualification and redistribution of the purse. 22 We have to assume that the owners and trainers involved in 23 Texas racing are aware of the rules. In fact, Dr. Hays 24 testified that he was aware of that possibility. Mr. Keeton 25 was certainly aware as he had already been affected and FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 21 1 penalized with a loss of a purse for Clenbuterol just two 2 months prior to this race. 3 Finally, there was some complaint about the 4 burden of proof, that the burden of proof should be on the 5 agency in an appeal. The legislature decided that the first 6 tribunal of these matters should be before the stewards to 7 determine whether there's a possible violation of the Rules 8 of Racing or the act. They left it to the agency to 9 determine the burden of proof in the event of an appeal. 10 They had an opportunity to make such a statement. It was 11 never made. 12 Once there is an adverse decision in the 13 stewards' or judges' hearing, the burden then shifts to the 14 appellant if he or she decides to appeal. To have an appeal 15 de novo or to start anew would mean a less efficient use of 16 resources and time for both parties. There is no 17 constitutional argument here, as there is sufficient notice 18 and an opportunity to be heard, both at the stewards' level 19 and, in the event of an adverse decision, also at SOAH. 20 Staff requests that the proposal for decision 21 be adopted. And I'd be happy to entertain any questions. 22 CHAIRPERSON LACY: I think what I'll do, 23 Ms. Kennison, is we'll come back to you for questions after 24 Mr. Bell comes forward. 25 MR. BELL: Good morning. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 22 1 CHAIRPERSON LACY: Good morning. 2 MR. BELL: My name is Hubert Bell, Jr., and I 3 represent the appellants in this case, Dr. Tommy Hays and 4 Toby Keeton. 5 If there ever was a case that screamed for 6 equity, this is it. A trainer is subject to the absolute 7 ensurer rule. That rule functions very similar to a strict 8 liability type standard where the trainer has absolutely no 9 excuse for any infraction; or if a horse enters a race that 10 tests positive subsequent to the race, the trainer cannot 11 say that, "Well, I accidentally administered some drug to 12 the horse but it was unintentional," or a veterinarian 13 administered a drug that was unintentional or a groom. 14 There's absolutely no excuse that the trainer can give. 15 In that situation and where the trainer is 16 held to such a high standard, then at least the Commission 17 staff should be required to follow the rules. In this case 18 there were a number of rules that were violated; and the 19 appellants have set out -- we've set out our position and 20 opposition, objections to the PFD, the proposal for 21 decision, in our written exceptions, so I will not repeat 22 those. But I would like to draw your attention to certain 23 sections of the proposal for decision. 24 Rule 319.362 provides that the split sample 25 must be sent to the testing lab within 10 days after FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 23 1 notification to the trainer of the positive test. It 2 doesn't say should or may. The rule specifically states it 3 must be sent within 10 days. That did not occur in this 4 case. Thus the rule was violated. Even though there may 5 have been human error or accident involved, a trainer is not 6 able to use that as a defense, so the Commission staff 7 shouldn't be able to use that as a defense. 8 And in this case, in the proposal for 9 decision, the administrative law judge also refers to the 10 right of the trainer or owner to be present when the split 11 sample is shipped to the lab. On page two of the proposal 12 for decision, in probably the latter part of that paragraph, 13 she acknowledges that "On April 11th, 2001, he," meaning 14 Mr. Keeton, "met with Mr. Neely to observe the packing of 15 the split sample for sending to the laboratory of the School 16 of Veterinary Medicine at Louisiana State University, LSU, 17 as was his right." He has a right to be present when the 18 specimen is shipped. 19 The specimen was returned, as Ms. Kennison 20 stated, and was reshipped again. But the appellant was 21 never notified of that and he was not allowed to be present 22 when that second shipment was made. If he would have -- the 23 trainer would have in this case more concern when he 24 discovers that there's been some problem with the shipment. 25 This shipment was sent on the 11th of April FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 24 1 and did not arrive, as Ms. Kennison stated, until the 18th 2 of April. So it floated around someplace for six or seven 3 days, either in the Airborne Express warehouse; and when it 4 was returned to the Commission, it was placed in an 5 unsecured, unlocked storage room and it was not frozen. 6 Also the Commission policies require that any 7 split sample be kept frozen and be kept in a secure facility 8 that's locked and not accessible to custodians or any other 9 personnel. The administrative law judge acknowledges that 10 on page six of her PFD, in the very last paragraph there, in 11 the very last sentence. 12 It states that "Access to rooms containing 13 refrigerators and freezers and the keys to those 14 refrigerators and freezers is restricted, and certain 15 persons, such as maintenance personnel, custodians, and 16 other authorized visitors, must be escorted at all times in 17 these rooms." That didn't occur in this case. 18 The Commission staff takes the position that 19 that policy only applies to head test technicians at the 20 track but not to anyone else. If that were the case, it 21 would completely defeat the rule, that one party or some 22 staff or person or personnel are required to keep the 23 specimen under lock and key and others are not. How could 24 the rule be adhered to under such -- and the integrity of 25 the specimen maintained if that were the case? FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 25 1 Also on that same page of the proposal for 2 decision, the administrative law judge acknowledges that the 3 fact that it wasn't shipped according to the plan was due to 4 an accident, simple human error, or activity. Again, a 5 trainer is not able to make those -- use those as defenses. 6 In the latter part of the middle paragraph on 7 that same page, the last sentence, the ALJ states that "The 8 appellants make a good point that the integrity of the 9 specimen must be preserved in order for the trainer to have 10 a chance to fend off sanctions." That is his only way to 11 defend the sanction is to have the test -- the split sample 12 tested at an independent or different lab to determine if 13 that lab reaches the same conclusion as the initial lab 14 did. 15 And the responsibility -- she goes on to say, 16 "And the responsibility for preservation of the specimen's 17 integrity lies in some measure with the staff." Now, that's 18 an understatement. It's the complete responsibility of the 19 staff to maintain the integrity of the specimen. The 20 trainer is never in possession of the specimen, so the only 21 party with access to it is the Commission staff. So total 22 responsibility lies with the staff. 23 On page nine, with regards to the requirement 24 for shipping the sample within the 10-day deadline, the 25 administrative law judge states that "Without question, the FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 26 1 sample was not effectively sent until after the 10-day 2 deadline, and the spirit of the rules would have called for 3 Mr. Keeton to be allowed to watch the re-sending." That did 4 not occur. That's another violation of the Commission rule 5 that should be balanced against the trainer's obligations 6 under the absolute ensurer rule. 7 And in the final paragraph on that same page, 8 the ALJ states, "It is true that the language of the rule 9 requires the sending of the specimen within 10 days in order 10 to ensure its integrity." 11 Finally, on page 13, and that's with regard to 12 the notice that Ms. Kennison mentioned, the notice of the 13 change in policy by the Commission where a situation -- 14 where a horse would be disqualified from the race if it 15 tested positive for Clenbuterol. Initially the policy was 16 that the trainer would be fined but the horse would not be 17 disqualified. In this case this was a trial for a -- where 18 the horses had to qualify for a future race, a final. This 19 was a race that was with a purse of approximately close to 20 $200,000. 21 The notice of this change in policy, as stated 22 on page 13 of the administrative law judge's decision, was 23 placed on the overnight for Manor Downs on March 29th, 24 2001. The race was run on March 25th, 2001. In this case 25 the owner is affected because his horse was not allowed to FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 27 1 run in the finals of this 200,000-dollar race and the notice 2 to him was not received or effectively given until after the 3 race was run. 4 And finally, the examiner in the very next 5 paragraph states, "The appellant makes a reasonable argument 6 that policy changes about penalties should be widely 7 disseminated to those who might be subject to the penalties 8 and that penalties should be reasonably uniform and 9 consistent." 10 I would be glad to attempt to answer any 11 questions that you might have. 12 CHAIRPERSON LACY: Thank you, Mr. Bell. 13 Any questions for Mr. Bell? 14 COMMISSIONER SCHULZE: I do have a question. 15 MR. BELL: All right. 16 COMMISSIONER SCHULZE: If -- just your 17 opinion, I guess. Do you think that if the sample were not 18 kept in a frozen state that it would be more likely or less 19 likely that Clenbuterol would be detected at LSU? 20 MR. BELL: Commissioner, there was some 21 testimony on that. Dr. Barker from LSU testified regarding 22 the effect of the freezing, unfreezing. Because the sample 23 initially was frozen. Then it was taken out to be shipped. 24 It was unfrozen. Then the Commission returned it to a 25 freezer. It was frozen again. Then it was shipped again, FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 28 1 so it was unfrozen again. And he felt that the effect would 2 be to decrease, if any, the level of Clenbuterol that would 3 be detected in a sample. 4 The odd thing in this case was that the A&M 5 chemist initially determined or estimated that the sample 6 contained one to 10 nanograms per milliliter of 7 Clenbuterol. Dr. Barker at LSU determined that it contained 8 66 nanograms per milliliter. So what you would expect to 9 happen didn't in this instance. 10 So to answer your question specifically, it's 11 not known what effect. You would think it would decrease. 12 That would seem reasonable. And that appeared to be -- that 13 was Dr. Barker's testimony. But in this case there was 14 something -- an unusual outcome here, effect. Even though 15 Doctor -- the A&M chemist stated that he -- his test, he was 16 unable to give a precise estimate of the level, that that 17 was his initial estimate. 18 COMMISSIONER SCHULZE: I just think that as a 19 general rule, the reason for freezing these samples is to 20 preserve the drug or chemical or agent that's being tested, 21 that that actually is to the benefit of the agency if it is 22 kept frozen, and, as a general rule, would be to the benefit 23 of the appellant in this case that it thawed. 24 MR. BELL: You would think that, yes. And the 25 results, as stated, for some reason, it increased. And FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 29 1 again, that goes back to the -- 2 COMMISSIONER SCHULZE: You'd have to have a 3 chemist to explain that one to us. 4 MR. BELL: Right. I don't know if it's known 5 what effect it might have. But again, that's why I think 6 there are at least three rules of the Commission that 7 require that the samples be maintained or handled in a 8 fashion that will ensure the integrity. That's the purpose 9 of those rules is to prevent any question being raised. 10 As I stated, this was a 200,000-dollar race. 11 There's a one-million-dollar race at Lone Star, the Texas 12 Classic, each year, approaching a million dollars, I think 13 925,000 this past year. What if the sample in that case of 14 the winning horse had been handled in this fashion? 15 COMMISSIONER SCHULZE: The trial race was not 16 a 200,000-dollar race. This positive occurred in a trial 17 race, did it not? 18 MR. BELL: That's correct. And the horse 19 qualified in that trial race for the finals. 20 COMMISSIONER SCHULZE: But the trial race was 21 not a 200,000-dollar race. 22 MR. BELL: That's correct. It was a small 23 purse for the trial race. But the horse qualified with the 24 second fastest time in that race. 25 COMMISSIONER SCHULZE: Thank you. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 30 1 MR. BELL: Sure. 2 CHAIRPERSON LACY: Any other questions? 3 Thank you, Mr. Bell. 4 I don't know if this question is for 5 Ms. Flowerday or Mr. Burleson. It is not possible that the 6 specimen being unfrozen would cause a false positive. Is 7 that correct? There's no way that because it was left on a 8 shelf unfrozen or unrefrigerated, you could end up with -- 9 thank you, sir. That was a shaking of the head no. Thank 10 you. 11 MS. FLOWERDAY: May I respond to your -- I 12 think -- and I think we have to be bound by what the 13 evidence was. And I'm in the same position as you in that I 14 did not attend any of the hearing, so I don't know exactly 15 what the testimony was. 16 I think based on the documents that are in 17 your packet, there is no real evidence as to what the effect 18 of the freezing and unfreezing had on the quality of the 19 sample. I think, generally speaking -- and Ms. Kennison can 20 stop me if I start saying something out of line. Generally 21 speaking, the assumption is that the longer a sample sits, 22 the more likely it is that whatever may be in that sample 23 will be degraded to the point that it can't be detected 24 under the split sample testing. 25 I think that the -- how I would characterize FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 31 1 what Mr. Bell is saying is that they're at least raising the 2 possibility that there was tampering of the sample and that 3 that maybe is the reason why Dr. Barker was able to estimate 4 a higher level than what Dr. Ray was able to estimate. I 5 don't think that there is any evidence in the record of any 6 tampering. In fact, I think the evidence is that the sample 7 was received at LSU sealed and that there was no evidence of 8 tampering. 9 COMMISSIONER SCHULZE: Well, would it be of 10 any benefit to have Dr. Ray try to explain why the 11 difference? Or is that worth knowing about? 12 MS. FLOWERDAY: I would recommend against 13 that. 14 COMMISSIONER SCHULZE: Okay. 15 CHAIRPERSON LACY: Any other questions? 16 COMMISSIONER BOYD: I guess I just have a 17 comment to make in reading what the ALJ found and stated, 18 stated that there was no evidence of tampering whatsoever, I 19 mean, that it was received as it was sent and goes step by 20 step to inform us that she felt like the sample was intact. 21 So, you know, based on her -- on the summary given is how 22 I'm going to make my decision, that there was, in fact, no 23 evidence that spending the weekend in the cooler or 24 examining the package as it was received, there was any 25 tampering involved. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 32 1 COMMISSIONER SCHULZE: I agree with 2 Commissioner Boyd. I think the -- you know, our rule states 3 as to when the shipment should be sent. And the rule is not 4 clear. It doesn't say that it must arrive by a certain date 5 or be delivered by a certain date. It doesn't even specify 6 that it be sent overnight. It just says it must be sent. 7 And, you know, honest mistakes are going to 8 happen from time to time; and I think when that happens, 9 each case stands on its own merits. I don't think you can 10 necessarily -- I think, as Mr. Bell states, you know, the 11 agency is responsible for the sample; but I don't think that 12 when things happen beyond the agency's control that that 13 automatically says, "Well, we lost that case. That one is 14 out the window. There's nothing we can do about it." I 15 don't think that's the case. 16 CHAIRPERSON LACY: Thank you, Commissioners. 17 Our options with respect to motions are to 18 adopt the proposal for decision, to decline to adopt the 19 proposal for decision, or to remand it back to the State 20 Office of Administrative Hearings for further proceedings or 21 to modify the proposal for decision. 22 So, Commissioners, I would entertain a motion 23 with respect to this proposal for decision. 24 COMMISSIONER BOYD: Madam Chair? 25 CHAIRPERSON LACY: Would you like me to go FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 33 1 back through the options? 2 COMMISSIONER BOYD: No. The options are 3 stated here, I think, adequately. I move to adopt the 4 decision by the ALJ. 5 CHAIRPERSON LACY: Commissioner Boyd has moved 6 to adopt the proposal for decision. 7 Is there a second? 8 MR. ARCHER: I second. 9 CHAIRPERSON LACY: Commissioner Archer has 10 seconded. 11 Is there any discussion? 12 All those in favor signify by saying aye. 13 COMMISSIONERS: Aye. 14 CHAIRPERSON LACY: All those opposed? 15 The motion passes unanimously. 16 Ms. Flowerday, if you'd direct the staff to 17 draft an order consistent with that vote. 18 We'll now move on to general business. At 19 this time of year we elect a vice-chair. Commissioner Garza 20 has been serving as our vice-chair. I would accept 21 nominations for a vice-chair for this year from one of my 22 fellow Commissioners. 23 Commissioner Boyd? 24 COMMISSIONER BOYD: I'd like to nominate 25 Commissioner Rogers. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 34 1 CHAIRPERSON LACY: Commissioner Boyd has 2 nominated Commissioner Rogers. 3 Is there a second? 4 COMMISSIONER SCHULZE: Second. 5 CHAIRPERSON LACY: Commissioner Schulze has 6 seconded. 7 Is there any discussion? Does anybody else 8 want to nominate anyone? Speak up quickly. 9 All those in favor of Commissioner Rogers for 10 vice-chair for the period January, 2002, to January, 2003, 11 signify by saying aye. 12 COMMISSIONERS: Aye. 13 CHAIRPERSON LACY: All those opposed? 14 The motion carries unanimously. 15 COMMISSIONER SCHULZE: Congratulations. 16 CHAIRPERSON LACY: I won't be here at the next 17 meeting now. 18 Mr. Craig, if you'd give us our budget and 19 finance update. 20 MR. CRAIG: Madam Chair, Commissioners, for 21 the record, my name is Tim Craig. I'm the chief financial 22 officer for the Racing Commission. My purpose this morning 23 is to update you on how we've been doing on our operating 24 budget for the first five months of this fiscal year. 25 Of our 4.3-million-dollar operating budget, FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 35 1 through the first five months we spent 1.7 million dollars. 2 We have a balance remaining for the next seven months of 2.6 3 million dollars, which should sufficiently get us through 4 the end of this fiscal year. 5 The caps that we are to maintain in Senate 6 Bill 1, our full-time equivalent employee cap, we are 7 currently under that by 1.5; and we've spent $557 of our 8 out-of-state travel authority of $5400. 9 That's all I have unless you all have any 10 questions. 11 CHAIRPERSON LACY: Any questions? 12 Thank you, Mr. Craig. 13 MR. CRAIG: You're welcome. 14 CHAIRPERSON LACY: We'll now move to 15 proceedings on racetracks. We have a request by Lone Star 16 Park at Grand Prairie for an exemption or deferred 17 compliance. 18 Did you want to speak? 19 MR. JOYCE: Yes, please. 20 CHAIRPERSON LACY: And this is at Tab 6, 21 Commissioners. 22 MR. JOYCE: Good morning, Commissioners. My 23 name is Eugene Joyce. I'm from Lone Star Park. And we are 24 requesting an exemption from the Texas Racing Commission 25 Rule 309.282, living quarters for licensees, for the 2002 FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 36 1 Thoroughbred season. 2 We have a greater demand during the 3 Thoroughbred season for dorm rooms. There is a higher 4 groom-to-horse ratio during that meet. And we rent trailers 5 to accommodate the horsemen. We add approximately 60 rooms 6 to handle the demand and they supplement our 153 permanent 7 dorm rooms that we currently have. 8 We are planning to construct as many as a 9 hundred additional dorm rooms as part of an overall stable 10 area improvement plan, and that has been incorporated into 11 the backstretch improvements that we are going forward with 12 to accommodate the Breeders' Cup in 2005. We're hoping to 13 begin later this year on construction, and it would be 14 complete by the end of 2004. 15 I do want to make a quick comment to 16 Commissioner Boyd. We spoke last night, and she made a 17 request to get some -- the city code from Grand Prairie 18 regarding temporary housing. I did not receive the message 19 from her until after 5:00 and didn't have a shot at getting 20 that from Grand Prairie, but I will make that available to 21 you hopefully by the end of the day. 22 But I will say this: That we do have city 23 officials inspect the buildings, including the fire 24 marshal. There is air conditioning in all the units. There 25 are smoke detectors in all of the units. And we do -- most FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 37 1 of the units are within about 40 to 50 yards of permanent 2 hot and cold shower facilities as well as restrooms. We add 3 an additional 15 portable toilets in the backstretch to 4 accommodate the extra people living there. 5 And with that, I'll entertain any questions 6 from the Commission. 7 COMMISSIONER SCHULZE: You say that -- I'm 8 sorry. 9 CHAIRPERSON LACY: I just wanted Ms. Flowerday 10 to quickly give us a history of this issue and then 11 Commissioner Schulze will -- 12 COMMISSIONER SCHULZE: Sure. 13 MS. FLOWERDAY: Commissioners, I think it was 14 in 1999 that Lone Star appeared before you and asked for an 15 exemption from this rule for the same purpose. They wanted 16 to add trailers in their backside. And at that time they 17 represented to you that they were in the course of kind of a 18 continual building project and that over the course of about 19 three to five years, they would be adding more dorm rooms. 20 For that reason, because they represented 21 that -- at the time the Commission voted only to extend the 22 exemption until December 31st of 1999. And at some point I 23 think in 2000 was when they built an additional dorm room. 24 And so because they were making progress on what they had 25 indicated to you, I chose not to cite them for not complying FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 38 1 with the rules and allowed them to continue to have their 2 trailers. 3 After the end of their Thoroughbred meet in 4 2001, however, I informed them that I thought they needed to 5 appear before you again and for you to make the decision as 6 to whether or not the way they were handling this 7 particular -- their compliance with this particular rule was 8 appropriate. 9 The rule does require the living quarters to 10 be in permanent structures. These trailers are not 11 permanent structures as evidenced by the fact that they 12 remove them after their Thoroughbred meet. They're not on 13 the grounds during the Quarter Horse meet. 14 Staff has no position on the exemption request 15 one way or the other. We just need guidance as to how we 16 need to enforce this rule as it relates to Lone Star Park. 17 CHAIRPERSON LACY: Thank you, Ms. Flowerday. 18 Commissioner Schulze? 19 COMMISSIONER SCHULZE: My question, I guess, 20 was partly answered there. But you say that you have more 21 permanent dorm rooms than the other Class 1 racetracks. 22 MR. JOYCE: Right. 23 COMMISSIONER SCHULZE: Is that right? You 24 have 153, which is the most of any Texas track. And you 25 feel the need to make more housing available on the FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 39 1 backside; is that correct? 2 MR. JOYCE: Correct. 3 COMMISSIONER SCHULZE: But our rule does not 4 require a certain number? It only requires that they be 5 permanent? 6 MS. FLOWERDAY: That's correct. Actually our 7 rule does not require living quarters at all. If the track 8 does not want to allow people to live on the backside, they 9 don't have to provide living quarters. I think we do allow 10 some people to sleep in certain types of tack rooms as long 11 as they meet certain requirements. But we don't require 12 living quarters. Our rule does say, though, that if the 13 track chooses to provide living quarters, they have to meet 14 certain standards. 15 COMMISSIONER SCHULZE: Why -- just explain to 16 us the demand and why do you need more and why don't you 17 just go ahead and build them? 18 MR. JOYCE: Well, the demand, I guess, stems 19 from the quality of the horses that arrive for the 20 Thoroughbred meet; and again, the trainers that show up have 21 a higher groom-to-horse ratio, and so there is that demand. 22 We are planning to build them. I guess the 23 question is why don't we build them right away. We have 24 planned to build them. I guess, you know, you can dream 25 about something, you can plan about something; but until you FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 40 1 schedule it, it doesn't become a reality. 2 We have scheduled that to begin later this 3 year. We are currently taking bids for the construction of 4 those dorm rooms. And we hope to have the additional 5 hundred rooms or as close to a hundred as we can get over 6 the next two years built. 7 CHAIRPERSON LACY: So you have scheduled this 8 project and it is out for bids. 9 MR. JOYCE: Correct. 10 COMMISSIONER SCHULZE: I guess I'm -- I have 11 two sort of contradictory issues here. In one way I'm 12 thinking that, you know, you've built a great grandstand and 13 you have a beautiful simulcast facility and you're arguably 14 setting the standard for Texas racing at Lone Star. Yet on 15 the backside you're not. You're not meeting the standard 16 with these portable -- these portable facilities. But by 17 the same token, if you say that you can't get them built by 18 this next Thoroughbred meet, I don't want people sleeping in 19 tack rooms. 20 MR. JOYCE: Right. 21 COMMISSIONER SCHULZE: I think that's -- we've 22 got a -- we've got a problem here that, you know, almost 23 like what's the lesser of two evils, I suppose. Can you get 24 them built if we said you've got to do it? Will you get 25 them built? FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 41 1 MR. JOYCE: I don't believe we could get them 2 built prior to this upcoming race meet. 3 COMMISSIONER SCHULZE: The meet is only -- how 4 many -- a couple of months away now or less. 5 MR. JOYCE: Right. 6 COMMISSIONER BOYD: I guess my question is: 7 Why did you wait? And the other thing is when you asked for 8 the exemption in '99, why didn't you go ahead and start 9 planning to -- you know, sooner than 2002 to get started on 10 building them? 11 MR. JOYCE: That's a good question. I can't 12 answer that for the simple reason I wasn't at Lone Star Park 13 back then. But I will get an answer for you if you need 14 that. I do know that we are moving forward to make 15 considerable backstretch improvements to accommodate the 16 Breeders' Cup; and in that process, the added dorm rooms are 17 part of that as well as a quarantine barn and additional 18 barns. So -- 19 COMMISSIONER BOYD: Well, I guess I wouldn't 20 have asked the question had I not wanted to know the 21 answers. But I do have that concern. I also understand 22 that the reason you have more need for facilities there at 23 Lone Star is because of the nature of the people that come 24 in more to Lone Star to race. And I think that we need to 25 be providing facilities for them, permanent facilities for FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 42 1 them. 2 I guess in looking at this deadline that 3 you've promised out here in 2004, that's a long time, given 4 the fact that in '99 you asked for the extension the first 5 time. So is there something magic about that in the way of 6 your -- of income and your long-range plan to where you're 7 putting the money before then, as why you can't get these 8 built before 2004? 9 I didn't say that very clearly. But your 10 long-range plan, has it -- is it meeting needs elsewhere 11 sooner so that you can get that done in 2004? 12 MR. JOYCE: Well, all I can say is that it 13 is -- it is scheduled to begin this year and the monies are 14 budgeted for that this year and we will go forward with that 15 process. 16 CHAIRPERSON LACY: I think what Commissioner 17 Boyd is asking, is there something you're putting in front 18 of this process? 19 MR. JOYCE: I don't believe so. 20 COMMISSIONER ROGERS: When you say that you're 21 going to begin this year, are you -- I mean, are you doing 22 this 50 at a time, 20 at a time, a hundred at a time? I 23 mean, how are you -- on this two-year construction project, 24 just -- 25 MR. JOYCE: I think the modules we're looking FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 43 1 at accommodate 30 residents apiece, so it would be in 2 modules of 30. And I believe we would start off with at 3 least a single unit housing 30 people and then -- 4 CHAIRPERSON LACY: When is that going to be 5 ready? 6 MR. JOYCE: I can't answer that question. 7 CHAIRPERSON LACY: Did they send you 8 prepared? 9 MR. JOYCE: What's that? 10 CHAIRPERSON LACY: Did they send you 11 prepared? 12 MR. JOYCE: Well, I can tell you that we 13 normally would schedule any kind of construction project 14 during the downtime between the race meets, and that would 15 be July 15th through September and then again after the 16 Quarter Horse meet. 17 CHAIRPERSON LACY: So are just 30 going to be 18 ready in 2004 or all 100 in 2004? 19 MR. JOYCE: As close to a hundred as we can 20 get to by the end of 2004. 21 COMMISSIONER ROGERS: So do you anticipate any 22 of those being ready for 2003? 23 MR. JOYCE: Yes. 24 COMMISSIONER BOYD: How many? 25 COMMISSIONER ROGERS: A number that you're FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 44 1 thinking about there? 2 MR. JOYCE: I'd like to have 60 ready by 3 2003. 4 COMMISSIONER ROGERS: And that's about how 5 many trailers you have now? 6 MR. JOYCE: Correct. That's the need right 7 now. That's the immediate need we need to address. 8 COMMISSIONER ROGERS: I guess my -- just as a 9 comment, I don't have any problem with an exemption in this 10 year. You obviously can't do them in the next three months 11 or the next two months. But we have spent almost the full 12 two years I've been on this Commission trying to see that 13 the lowest ranking track in the state abided by the rules 14 and it would seem to me that the same standard should be 15 applied to what is arguably the flagship track in the 16 state. 17 So just personally -- I'll just say to you all 18 I personally would be opposed to an exemption, but I would 19 like to see those 60 dorm rooms built for this coming year 20 rather than two years off. And I don't think that's -- I 21 don't think that's an astronomical thing to do. I think we 22 ought to treat the people on the backside as well as we 23 treat the people on the front side. 24 MR. JOYCE: We agree. 25 CHAIRPERSON LACY: Ms. Flowerday, is that FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 45 1 something that we could do? I mean, we could do exemption 2 or deferred compliance if we wanted part of the requirement 3 to be that 60 of those are ready by 2003? 4 MS. FLOWERDAY: I think you can condition your 5 granting of the exemption. You can make it a temporary 6 exemption to expire on such-and-such a day or -- 7 COMMISSIONER RUTHERFORD: How many rooms do we 8 require now for Lone Star? 9 MS. FLOWERDAY: We don't require any specific 10 number. 11 COMMISSIONER RUTHERFORD: Why are they 12 breaking the rules then if we're not requiring it except for 13 the -- 14 MS. FLOWERDAY: Because they're allowing 15 people to live in temporary structures. Our rules require 16 the structures to be permanent. 17 COMMISSIONER SCHULZE: Just out of curiosity, 18 what size are the rooms? 19 MR. JOYCE: 12 by 12. 20 COMMISSIONER SCHULZE: How many people per 21 room? 22 MR. JOYCE: Two. 23 COMMISSIONER SCHULZE: So two people in a 24 12-by-12 room. 25 MR. JOYCE: Correct. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 46 1 COMMISSIONER SCHULZE: And what's in that room 2 besides two beds and -- is there a sink? 3 MR. JOYCE: There's no -- there's no running 4 water to it. 5 COMMISSIONER SCHULZE: No running water. Is 6 it air conditioned? 7 MR. JOYCE: Air conditioned. 8 COMMISSIONER SCHULZE: Is there a dresser or 9 storage? 10 MR. JOYCE: A dresser, a mirror, and beds. 11 COMMISSIONER SCHULZE: Is there a window? 12 MR. JOYCE: Yes. 13 CHAIRPERSON LACY: And how close are the 14 shower facilities? 15 MR. JOYCE: I would say that most of them are 16 within 50 yards of a shower facility. 17 COMMISSIONER SCHULZE: I assume these portable 18 buildings are properly anchored if high winds came through 19 the area? 20 MR. JOYCE: Correct. 21 COMMISSIONER BOYD: And, Mr. Joyce, you say 22 that there are no other special projects that have put this 23 one behind. 24 MR. JOYCE: To my knowledge. 25 COMMISSIONER BOYD: To your knowledge. And FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 47 1 how far is it from your permanent structures to shower 2 facilities and restroom facilities? Is it about the same 3 distance or -- 4 MR. JOYCE: From some of the barns, it would 5 be a greater distance. Obviously the shower facilities are 6 at the permanent dorm rooms. Some of the shower facilities 7 would be up to a hundred yards away from where some of the 8 people sleep. 9 COMMISSIONER SCHULZE: But in the -- I'm 10 sorry. 11 COMMISSIONER BOYD: Go ahead. 12 COMMISSIONER SCHULZE: In the permanent 13 facility there is hot and cold running water in each room. 14 MR. JOYCE: There is -- no. There are shower 15 facilities in the dorm room. It's -- as it implies, a dorm 16 would not have running water in the room itself, but there 17 is a common area where you can bathe and use toilet 18 facilities. 19 COMMISSIONER SCHULZE: I lived four years in 20 some pretty lousy dorms at Texas A&M and they all had a sink 21 with hot and cold running water in the room. 22 MR. JOYCE: I should have went there. I went 23 to the wrong university. 24 COMMISSIONER SCHULZE: I think they ought to 25 have -- I mean, maybe permanent facilities don't have that; FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 48 1 but to me, that would seem like a person ought to be able to 2 get up, get a drink of water, or brush their teeth or comb 3 their hair without having to walk down the hallway. To me, 4 that's just basic living. 5 I volunteer for an organization called Habitat 6 For Humanity and we seek out decent shelter for people and 7 one of the things that we look for is running water. I've 8 personally dug ditches and taken water lines to people's 9 houses because they didn't have running water. So I think 10 that's pretty sad myself. 11 CHAIRPERSON LACY: Commissioners, we need to 12 determine how we're going to handle this request. And let 13 me just point out that one of the options that we have is to 14 make this a temporary exemption until a certain time 15 period. It seems to me that we should keep in mind that we 16 originally granted this exemption in 1999 to the end of 1999 17 and we're now more than two years past that without, as far 18 as I can tell, any progress on the part of Lone Star to take 19 care of this situation. 20 Any other questions or comments? 21 I'd entertain a motion to either approve this 22 request for an exemption temporarily with a deadline on it, 23 to approve it without a deadline, or not to approve. 24 COMMISSIONER ROGERS: I would move that we 25 grant the request for calendar year 2002 since that's what FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 49 1 we're in. 2 CHAIRPERSON LACY: Okay. So we grant an 3 exemption until the end of -- until 12-31-02. 4 COMMISSIONER ROGERS: 12-31-02. 5 CHAIRPERSON LACY: Commissioner Rogers has so 6 moved. 7 Is there a second? 8 COMMISSIONER RUTHERFORD: Second. 9 CHAIRPERSON LACY: Commissioner Rutherford has 10 seconded. 11 Is there any discussion? 12 COMMISSIONER SCHULZE: What's the motion 13 again? 14 CHAIRPERSON LACY: The motion in front of us 15 is that we grant a temporary exemption with respect to this 16 temporary housing until 12-31-02, at which point Lone Star 17 would have to come back to us either for another exemption 18 or to tell us that they've met the requirements. 19 COMMISSIONER SCHULZE: Is it time for 20 discussion? 21 CHAIRPERSON LACY: Yes. 22 COMMISSIONER SCHULZE: I guess a point of 23 discussion would be if we want to somehow -- I think this 24 gentleman is getting our message. But, you know, do we need 25 to put it in writing in the form of this motion that we -- FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 50 1 that there's a condition here that something needs to happen 2 so that -- if it expires on 12-31 of this year and there's 3 no racing at Lone Star again until April of '03, what 4 prohibits them from coming before us in February or March 5 with the same situation and saying, "Well, we just don't 6 have time to get it done. You know, we're going to start 7 racing in six weeks"? 8 COMMISSIONER ROGERS: I think, Commissioner, 9 the way I view this and the reason I left that motion open 10 is because I think we ought to give them the ability to 11 decide what plan they want to propose. I mean, it would 12 appear to me that the option for us is just not to allow the 13 trailers and then those people would not have a place to 14 stay on the grounds. 15 So we can't -- I don't think we can make them 16 build facilities. I think they want to build facilities. I 17 mean, so I think what we would be doing is saying to them 18 this is a problem that needs to be addressed and, if you 19 want to have temporary housing, we are not planning on 20 allowing that for the next session. 21 COMMISSIONER SCHULZE: Okay. 22 COMMISSIONER BOYD: Does your motion -- your 23 motion did not state how many permanent structures. 24 COMMISSIONER ROGERS: I don't think -- I mean, 25 my opinion is, from reading the rules, that I'm not sure we FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 51 1 can require them to build permanent structures. We can just 2 require them not to put -- not to put temporary housing on 3 the property. But I don't know if that's accurate, but 4 that's how I'm reading it. 5 So they have 153 permanent houses, which is 6 admirable if that's all they need; but if they need more, 7 they would need to build them before the next racing 8 season. My feeling would be that we just wouldn't allow 9 temporary housing on the track. 10 COMMISSIONER BOYD: After December 31. 11 COMMISSIONER ROGERS: But I mean, I didn't put 12 that in the motion. I think that's a business decision 13 they'll need to make. 14 COMMISSIONER SCHULZE: I think that's a good 15 point. I understand that. 16 COMMISSIONER BOYD: But I think I would feel 17 more comfortable if it were in the motion that we would not 18 allow temporary structures. 19 CHAIRPERSON LACY: I'm not sure that we can -- 20 I'm not sure that we can do that because the exemption will 21 expire. I mean, I suppose we -- I guess we could. But it 22 seems to me that the Commission, as it's composed on January 23 1, could come back in and change that entirely. 24 In other words, just because this group of 25 Commissioners says, "Okay. You've got to have it done by FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 52 1 12-31-02 or else," you know, as we've seen in the past, as 2 the Commission group changes, on 1-1-03 whoever is sitting 3 on this Commission could come back and say, "Well, yeah, we 4 said it was going to expire on '02, but here's how we're 5 going to handle it going forward." So I think even if we 6 put that in this motion, it's not going to happen. 7 COMMISSIONER BOYD: But are we assuming that 8 at the end of this year that they're not going to be allowed 9 to have temporary structures again with the motion? 10 MR. ARCHER: They would have to come before 11 the Commission and ask for an exemption. It would be up to 12 the Commission to decide to grant or not an exemption for 13 next year if they do not comply with building the structures 14 we're asking for. 15 COMMISSIONER RUTHERFORD: We'll know what kind 16 of progress they're making. 17 CHAIRPERSON LACY: After we've voted I'm going 18 to ask for some progress reports. And I'm going to tell you 19 that if I'm still on this Commission on January 1, '03, and 20 you all show up and nothing has happened, I'm going to be 21 mad. 22 MR. JOYCE: I understand. 23 COMMISSIONER BOYD: And I'm not inclined to 24 vote for another extension either. I mean, if that's the 25 motion we're making, with the thought in mind that we're not FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 53 1 going to do that, I'm not -- I'm not inclined to vote that 2 way either. 3 CHAIRPERSON LACY: Any other discussion? 4 COMMISSIONER SCHULZE: This is just a question 5 for Ms. Flowerday before we vote. Any plans of building 6 permanent structures they must present to you and you must 7 approve them; is that correct? 8 MS. FLOWERDAY: That's correct. 9 COMMISSIONER SCHULZE: And so we'll just leave 10 that in the hands of staff to determine that what's built is 11 proper. 12 MS. FLOWERDAY: That's part of our delegated 13 responsibility. 14 Madam Chair, may I make a comment? 15 CHAIRPERSON LACY: Yes, you may. 16 MS. FLOWERDAY: I wanted to make sure that the 17 Commission was aware that I raised this issue with Lone Star 18 officials last June. 19 CHAIRPERSON LACY: So June of 2001. 20 MS. FLOWERDAY: June of 2001 was when I 21 informed them, when I did my inspection, that they would 22 need to appear before the Commission. I asked them in 23 August if they wanted to put something on the agenda. I 24 asked them every meeting up until this one if they were 25 prepared to ask for an exemption or a rule change. I even FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 54 1 suggested that maybe they might want to go the rule change 2 route and delete the requirement that the facilities be 3 permanent. So I just wanted to make sure that you all were 4 aware of the timing. 5 CHAIRPERSON LACY: Any other comments? 6 COMMISSIONER BOYD: And to me, based on 7 that -- to me, this just opens the door for another 8 exemption, this motion. Excuse me. But to me, this just 9 opens the door for another exemption, be it, you know, the 10 votes up here change. Therefore, that's why I'm not 11 comfortable with that. 12 CHAIRPERSON LACY: Let's go ahead and vote on 13 this motion and see where we end up. 14 All those in favor signify by saying aye. 15 COMMISSIONERS: Aye. 16 CHAIRPERSON LACY: All those opposed? 17 COMMISSIONER BOYD: No. 18 CHAIRPERSON LACY: The motion passes five to 19 one. 20 MR. JOYCE: Thank you. 21 CHAIRPERSON LACY: Next time you come, be 22 prepared. Okay? 23 MR. JOYCE: Yes, ma'am. 24 CHAIRPERSON LACY: We take this very 25 seriously. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 55 1 Next we have a request by Sam Houston Race 2 Park for a change in ownership. 3 Mr. Bork? 4 And I will be recusing myself with respect to 5 this matter. 6 MR. BORK: Good morning, Commissioners. This 7 is just a continuation of the process that I believe you've 8 been witnessing for the last couple of Commission meetings 9 where some of the minor minority partners have been -- their 10 shares have been redeemed. And what's happened now is that 11 we have one corporation that's wholly owned by Maxxam that 12 now is the owner of another company a hundred percent. So 13 this is just merging those two companies together. It's 14 maybe even a continuing process. 15 There is an awful lot of corporations that 16 were created prior to the opening of Sam Houston Race Park 17 and due to the bankruptcy we went through in 1994. So this 18 is really a process of cleaning up some of the remaining 19 corporations that are out there and trying to put them all 20 into a much smaller window or tree, I guess, is the best way 21 to explain that. 22 CHAIRPERSON LACY: Any questions? 23 The motion would be to either approve or 24 disapprove this request. 25 COMMISSIONER RUTHERFORD: I move that we FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 56 1 approve it. 2 CHAIRPERSON LACY: Commissioner Rutherford has 3 made a motion. 4 Is there a second? 5 COMMISSIONER BOYD: Second. 6 CHAIRPERSON LACY: Commissioner Boyd has 7 seconded. 8 All those in favor, recognizing that I'm 9 recusing myself, signify by saying aye. 10 COMMISSIONERS: Aye. 11 CHAIRPERSON LACY: The motion passes by a vote 12 of five. 13 Ms. Flowerday, report on racetrack 14 inspections? 15 MS. FLOWERDAY: Commissioners, the racetrack 16 inspection report is behind Tab 8 in your notebooks. There 17 are -- as of the date that this report was printed, there 18 were some still outstanding matters with respect to Manor. 19 Manor opened this past weekend, and all of those items were 20 addressed prior to their opening. 21 CHAIRPERSON LACY: Any questions? 22 We'll now proceed into executive session. I'd 23 entertain a motion that we proceed into executive session to 24 deliberate personnel matters, specifically the performance 25 evaluation of the executive secretary. Do I have a motion? FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 57 1 COMMISSIONER SCHULZE: So move. 2 CHAIRPERSON LACY: Commissioner Schulze has 3 moved. 4 Do I have a second? 5 MR. ARCHER: Second. 6 CHAIRPERSON LACY: Commissioner Archer has 7 seconded. 8 All those in favor signify by saying aye. 9 COMMISSIONERS: Aye. 10 CHAIRPERSON LACY: The motion passes 11 unanimously. We'll go into executive session at 11:20. 12 (Recess from 11:20 a.m. to 11:55 a.m.) 13 CHAIRPERSON LACY: The Commission has 14 reconvened in open session. The time is now 11:55. 15 Old business? 16 New business, we need to set our next 17 meeting. And our options are the week of April 29th, the 18 week of May 6th, or the week of May 13th. 19 COMMISSIONER RUTHERFORD: When is the Derby? 20 CHAIRPERSON LACY: May 4th. So do we want to 21 skip that week and go to the next week? I'm looking at the 22 week of May 6th. Any problem -- I can't do it May 7th. Any 23 other problems that week? 24 COMMISSIONER BOYD: I have one on the 10th and 25 I have one on the 6th. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 58 1 CHAIRPERSON LACY: Okay. May 9th? Or we can 2 go to the next week of the 13th. Is May 9th workable for 3 everyone? 4 Ms. Flowerday, is that okay with the staff? 5 MS. FLOWERDAY: It's okay with us. 6 CHAIRPERSON LACY: Okay. We'll set our next 7 meeting for Thursday, May 9th. 8 Any other new business? 9 Yes, Ms. Flowerday. 10 MS. FLOWERDAY: Some of the Commissioners had 11 asked for a short update about Manor's opening weekend. And 12 based on Mr. Jackson's phenomenal memory, on Saturday they 13 wagered 140,000 and there were 1400 people in attendance, 14 which is pretty good. 15 From the racing standpoint, I was informed by 16 Mr. Burleson yesterday that the racing end of it went very 17 smoothly. We had had some problems in last year's meet with 18 some of the equipment, such as photo finish and video and 19 that sort of thing. It all worked very smoothly and went 20 well. 21 We still have a few issues with respect to 22 some of their pari-mutuel staff and we will continue to be 23 working with them to make sure they're fully understanding 24 of our requirements and make sure they follow the rules 25 properly, know what to do in case of emergencies. FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 59 1 COMMISSIONER ROGERS: What about their 2 fields. Do they seem to have enough horses? Have they got 3 full fields, partial fields? What does that look like? 4 MR. BURLESON: It won't be a problem. 5 CHAIRPERSON LACY: That's good. Good. 6 COMMISSIONER BOYD: Can we tell whether that's 7 impacted Lone Star adversely, or will, yet? 8 MR. BURLESON: No. I think that issue might 9 arise during the Thoroughbred meet. And I don't know that 10 we'll have ample horses at the Thoroughbred meet, but right 11 now for the Quarter Horse meet -- 12 COMMISSIONER BOYD: It's been okay. 13 MR. BURLESON: Yes, ma'am. 14 CHAIRPERSON LACY: Thank you, staff. 15 There being no other business, the meeting is 16 adjourned at noon. 17 (Proceedings concluded at 11:58 a.m.) 18 19 20 21 22 23 24 25 FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373 60 1 STATE OF TEXAS ) 2 COUNTY OF TRAVIS ) 3 I, SHERRI SANTMAN FISHER, a Certified 4 Shorthand Reporter in and for the State of Texas, do hereby 5 certify that the above-captioned matter came on for hearing 6 before the TEXAS RACING COMMISSION as hereinbefore set out. 7 I FURTHER CERTIFY that the proceedings of said 8 hearing were reported by me, accurately reduced to 9 typewriting under my supervision and control and, after 10 being so reduced, were filed with the TEXAS RACING 11 COMMISSION. 12 GIVEN UNDER MY OFFICIAL HAND OF OFFICE at 13 Austin, Texas, this 27th day of February, 2002. 14 15 16 17 ____________________________ 18 SHERRI SANTMAN FISHER Certification No. 2336 19 Expiration Date: 12/31/03 20 #02-2360 21 22 23 24 25 FISHER REPORTING P. O. BOX 142485 AUSTIN, TEXAS 78714-2485 (512) 477-1373