Rule2022-20785
Procedures for Review of Final Civil Sanctions Imposed Under the Horseracing Integrity and Safety Act
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 4, 2022
Effective
October 4, 2022
Issuing agencies
Federal Trade Commission
Abstract
To implement the Horseracing Integrity and Safety Act of 2020, the Federal Trade Commission issues a final rule to establish procedures for the review by an Administrative Law Judge of final civil sanctions imposed by the Horseracing Integrity and Safety Authority and the review by the Commission of the decision of the Administrative Law Judge.
Full Text
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<title>Federal Register, Volume 87 Issue 191 (Tuesday, October 4, 2022)</title>
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[Federal Register Volume 87, Number 191 (Tuesday, October 4, 2022)]
[Rules and Regulations]
[Pages 60077-60083]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-20785]
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FEDERAL TRADE COMMISSION
16 CFR Part 1
Procedures for Review of Final Civil Sanctions Imposed Under the
Horseracing Integrity and Safety Act
AGENCY: Federal Trade Commission.
ACTION: Final rule.
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SUMMARY: To implement the Horseracing Integrity and Safety Act of 2020,
the Federal Trade Commission issues a final rule to establish
procedures for the review by an Administrative Law Judge of final civil
sanctions imposed by the Horseracing Integrity and Safety Authority and
the review by the Commission of the decision of the Administrative Law
Judge.
DATES: This rule is effective on October 4, 2022.
FOR FURTHER INFORMATION CONTACT: Austin King (202-326-3166), Associate
General Counsel for Rulemaking, Office of the General Counsel, Federal
Trade Commission, 600 Pennsylvania Avenue NW, Washington, DC 20580.
SUPPLEMENTARY INFORMATION:
I. Background on Horseracing Integrity and Safety Act
The Horseracing Integrity and Safety Act of 2020 (``Act''),\1\
enacted on December 27, 2020, directs the Federal Trade Commission
(``Commission'') to oversee the activities of a private, self-
regulatory organization called the Horseracing Integrity and Safety
Authority (``Authority'').
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\1\ 15 U.S.C. 3051 through 3060.
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The Act, in 15 U.S.C. 3058, provides for the review of final civil
sanctions imposed by the Authority against covered persons for
violations of the Authority's safety, performance, and anti-doping and
medication control rules. The violations are determined through a
disciplinary process governed by 15 U.S.C. 3057(c). Under 15 U.S.C.
3058(b), an Administrative Law Judge reviews the final civil sanction
de novo after conducting a hearing. Under 15 U.S.C. 3058(c), the
Commission may review the decision of the Administrative Law Judge on
its own initiative or by granting the application of the Authority or a
person aggrieved by that decision. The Commission's existing procedural
rules in part 3 for practice before an Administrative Law Judge and
review by the Commission, which pertain to competition and consumer
protection matters prosecuted by Commission complaint counsel, provide
useful guidance but do not address the new type of practice provided
for in the Act, in which the Commission is not a party but is instead
reviewing activities and decisions by the Authority.
Accordingly, the Commission, through this final rule, adds a new
subpart T to part 1 of its Rules of Practice to establish procedures
and standards for the review of final civil sanctions imposed by the
Authority.
II. Contents of the Final Rule
A. Section 1.145--Submission of Notice of Civil Sanctions
The Act, in 15 U.S.C. 3058(a), requires the Authority to ``promptly
submit to the Commission notice'' of a ``final civil sanction'' the
Authority has imposed against a ``covered person'' \2\ for a violation
of ``the rules or standards of the Authority.'' \3\ The notice is to be
provided in a format specified by the Commission. The final rule
describes the contents of the notice, defines ``promptly'' as within
two days, and specifies the manner of submission.
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\2\ The Act, in 15 U.S.C. 3051(6), defines ``covered person'' to
``mean[ ] all trainers, owners, breeders, jockeys, racetracks,
veterinarians, persons (legal and natural) licensed by a State
racing commission and the agents, assigns, and employees of such
persons and other horse support personnel who are engaged in the
care, training, or racing of covered horses.''
\3\ Although section 3058(a) refers to final civil sanctions
imposed by the Authority ``for a violation committed . . . pursuant
to the rules or standards of the Authority,'' 15 U.S.C. 3058(a)
(emphasis added), the Act elsewhere empowers the Authority only to
impose civil sanctions for ``rule violations.'' 15 U.S.C.
3057(d)(1). Accordingly, the final rule uses the language of ``rule
violations'' and not ``standards.''
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B. Section 1.146--Review of Civil Sanctions by an Administrative Law
Judge
The Act requires an Administrative Law Judge to conduct a de novo
review of the final civil sanction imposed by the Authority when an
application for review, filed either by the Commission or by the person
subject to the sanction, is filed within 30 days of submission of the
notice of the sanction to the Commission.\4\ The Act does not grant the
Administrative Law Judge the discretion to refuse to conduct such a
review.
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\4\ See 15 U.S.C. 3058(b)(1).
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Although the Act requires the Administrative Law Judge to conduct a
de novo review of the final civil sanction imposed by the Authority, it
does not specify the standard of review or level of deference the
Administrative Law Judge should apply to the factual findings
supporting the sanction or the application of governing law to those
facts. The Act empowers the Commission to ``specify by rule'' the
manner in which the Administrative Law Judge conducts the hearing and
requires that the rule ``conform to section 556 of title 5.'' \5\
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\5\ 15 U.S.C. 3058(b)(2)(B) (citing Administrative Procedure
Act).
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The record established through the Authority's internal
disciplinary hearing process under 15 U.S.C. 3057(c) and the
Authority's implementing Rule Series 8300, which the Commission
approved, is consistent with the due process guarantees of the
Administrative Procedure Act, 5 U.S.C. 556. As the Commission
previously recognized:
Rule Series 8300 sets forth seven specific rule provisions
detailing the processes by which substantive violations are
adjudicated, appealed, and punished. These provisions address the
requirements of 15 U.S.C. 3057(c)(2)(B)-(F), such as hearing
procedures, standards for burdens of proof, presumptions,
evidentiary rules, appeals, and confidentiality and public reporting
of decisions, as well as the overarching requirement of Sec.
3057(c)(3) that there be ``adequate due process, including impartial
hearing officers or tribunals commensurate with the seriousness of
the alleged . . . violation and the possible civil sanctions.'' \6\
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\6\ Fed. Trade Comm'n, Order Approving the Enforcement Rule
Proposed by the Horseracing Integrity and Safety Authority, at 15-16
(Mar. 25, 2022) (``Order Approving Enforcement Rule'') (ellipsis in
original), <a href="https://perma.cc/H9SJ-F9WA">https://perma.cc/H9SJ-F9WA</a>.
For example, Authority Rule 8340, based on the requirements in 15
U.S.C. 3057(c)(2), provides that the initial hearing before the
Racetrack Safety Committee or the Authority's Board allow ``a full
presentation of evidence,'' \7\ including testimony taken under
oath,\8\ the admission of hearsay evidence only with sufficient
reliability,\9\ and the application of privilege rules.\10\ At such
hearings, each ``party is entitled to present his case or defense by
oral or documentary evidence, to submit rebuttal evidence, and to
conduct such limited cross-examination as may be required for a
[[Page 60078]]
full and true disclosure of the facts.'' \11\ The initial decision may
be appealed to the Board of the Authority,\12\ which may accept,
reject, or modify the initial decision; remand the matter for further
proceedings; or ``[c]onduct further proceedings on the matter as
appropriate, including . . . in extraordinary circumstances and at the
Board's discretion, the taking of additional testimony before the Board
under oath.'' \13\ The Commission recognized that these procedures
represent the ``essential hallmarks of due process'' and ``with the
sliding-scale approach to discipline evidenced in its proposals, the
Authority's Enforcement proposed rule provides `adequate due process'
that is `commensurate' with the available sanctions.'' \14\
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\7\ See Fed. Trade Comm'n, Notice of HISA Enforcement Proposed
Rule, 87 FR 4023, 4030 (Jan. 26, 2022) (proposing Rule 8340(g)),
<a href="https://www.federalregister.gov/documents/2022/01/26/2022-01663/hisa-enforcement-rule">https://www.federalregister.gov/documents/2022/01/26/2022-01663/hisa-enforcement-rule</a>.
\8\ Id. (proposing Rule 8340(e)).
\9\ Id. (proposing Rule 8340(g)) (``The Board or the Racetrack
Safety Committee may admit hearsay evidence if it determines the
evidence is of a type that is commonly relied on by reasonably
prudent people.'').
\10\ See id.
\11\ Id. (proposing Rule 8340(h)).
\12\ Id. (proposing Rule 8350(a), (b)). The Board applies a
deferential standard of review to the initial decision. See Rule
8350(f) (``The Board shall uphold the decision unless it is clearly
erroneous or not supported by the evidence or applicable law.'').
\13\ Id. (proposing Rule 8350(g)).
\14\ Order Approving Enforcement Rule, at 27-28 (citing 15
U.S.C. 3057(c)(3)).
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Consistent with the de novo review for civil sanctions provided by
section 3058(b) and the due process protections reflected in 5 U.S.C.
556, and in furtherance of judicial economy and efficiency, the
Commission therefore determines that the hearing record established
before the Authority should be relied upon by the Administrative Law
Judge to the extent possible. This record may be supplemented--but not
supplanted, except in atypical circumstances--by facts adduced at a
hearing before the Administrative Law Judge.
Accordingly, the Commission's rule establishes hearing procedures
for three distinct circumstances. First, if the factual record
developed before the Authority is uncontested and considered complete
by the parties, the Administrative Law Judge will not hold an
evidentiary hearing and will rely on the factual record developed
before the Authority to make a de novo assessment of the final civil
sanction; in such cases, the hearing will consist of the parties'
submission of proposed findings of fact and conclusions of law,
briefing, and, at the discretion of the Administrative Law Judge, oral
argument.
Second, if the parties do not contest the factual record before the
Authority but show good cause to supplement it, the Administrative Law
Judge will conduct an evidentiary hearing presumptively lasting no more
than 8 hours for each party requesting supplementation (but which may
be extended for good cause by the request of a party or on the
Administrative Law Judge's own initiative) and will consider the same
argument and briefing materials described above to make a de novo
assessment of the final civil sanction. If the Administrative Law Judge
or the Commission seek supplementation of the record, the body seeking
supplementation will issue an order describing the requested evidence
and the procedures for holding the hearing before the Administrative
Law Judge.
Third, if the person aggrieved by the final civil sanction makes a
proffer of weighty, probative, and substantial evidence and compelling
argument to support its contention that the disciplinary process before
the Authority failed to comply with the procedures required under 15
U.S.C. 3057(c) or implementing rules approved by the Commission, or
that it otherwise lacked adequate due process, the person may seek an
extended evidentiary hearing before the Administrative Law Judge to
supplement--or, if warranted, to supplant--the record developed before
the Authority; in such cases, the Authority will have an opportunity to
show that the final civil sanction it imposed was not the result of
inadequate due process.
C. Section 1.147--Review by the Commission of the Decision of the
Administrative Law Judge
The Act provides that the Commission may review the decision of the
Administrative Law Judge on its own motion or by granting an
application for review filed by the Authority or the person aggrieved
by the decision issued by the Administrative Law Judge.\15\ During the
review, the Commission or one of the parties may seek consideration of
additional evidence. The decision whether to grant an application for
review lies entirely within the Commission's discretion.
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\15\ 15 U.S.C. 3058(c).
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The Commission does not review directly the civil sanction remedy
imposed by the Authority. Rather, the Commission reviews de novo the
factual findings and conclusions of law made by the Administrative Law
Judge.\16\
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\16\ 15 U.S.C. 3058(c)(3)(B).
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D. Section 1.148--Stay of Proceedings
Under 15 U.S.C. 3058(d), the initiation of a review by an
Administrative Law Judge or the Commission will not itself stay the
sanction imposed by the Authority. Rather, to stay the sanction, the
person aggrieved by the sanction must first move for a stay before the
Administrative Law Judge, who will grant the application when it
satisfies the traditional four-prong balancing test governing stays:
(1) the likelihood of the applicant's success on review; (2) whether
the applicant will suffer irreparable harm if a stay is not granted;
(3) the degree of injury to other parties or third parties if a stay is
granted; and (4) whether the stay is in the public interest.\17\
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\17\ See Hilton v. Braunskill, 481 U.S. 770, 776 (1987).
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If the Administrative Law Judge denies the application for a stay,
the person aggrieved by the sanction may move immediately to seek a
stay before the Commission, which will grant a stay if it concludes the
party has satisfied its burden that a stay is warranted under the
traditional four-part test. A person aggrieved by the decision of the
Administrative Law Judge may also seek a stay from the Commission if
the Commission has decided to review the decision of the Administrative
Law Judge.
E. Section 1.149--Adoption of Miscellaneous Rules
Part 4 of the Commission's Rules of Practices sets forth
miscellaneous rules, including those related to appearances, time, and
service, that are adopted by express reference, with minor
modifications for a part 1 review proceeding.
III. Rulemaking Requirements
Because this final rule relates solely to agency procedure and
practice, publication for notice and comment is not required under the
Administrative Procedure Act.\18\ For this reason, the requirements of
the Regulatory Flexibility Act are also inapplicable.\19\ Likewise, the
final rule does not modify any Commission collections of information
within the meaning of the Paperwork Reduction Act.\20\
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\18\ 5 U.S.C. 553(b).
\19\ 5 U.S.C. 601(2), 604(a).
\20\ 44 U.S.C. 3501 through 3521.
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List of Subjects in 16 CFR Part 1
Administrative practice and procedure.
For the reasons set forth in the preamble, the Federal Trade
Commission amends title 16, chapter I, subchapter A of the Code of
Federal Regulations as follows:
PART 1--GENERAL PROCEDURES
0
1. The authority citation for part 1 continues to read as follows:
[[Page 60079]]
Authority: 15 U.S.C. 46; 15 U.S.C. 57a; 5 U.S.C. 552; 5 U.S.C.
601 note.
0
2. Add subpart T to read as follows:
Subpart T--Procedures for Review of Final Civil Sanctions Imposed
under the Horseracing Integrity and Safety Act
Sec.
1.145 Submission of notice of civil sanctions.
1.146 Review of civil sanction by an Administrative Law Judge.
1.147 Review by the Commission of the decision of the Administrative
Law Judge.
1.148 Stay of proceedings.
1.149 Adoption of miscellaneous rules.
Authority: 15 U.S.C. 3058.
Sec. 1.145 Submission of notice of civil sanctions.
(a) Requirement to file. If the Horseracing Integrity and Safety
Authority (Authority) imposes a final civil sanction under 15 U.S.C.
3057(d) for a covered person's violation of a rule of the Authority,
the Authority must submit notice of the sanction to the Federal Trade
Commission (Commission) no later than two days after the sanction has
been issued for the sanction to be enforceable.
(b) Format and procedure for submission of notice. The notice
submitted to the Commission must:
(1) Be emailed to the Secretary of the Commission (Secretary) at
<a href="/cdn-cgi/l/email-protection#5e3b323b3d2a2c3130373d3837323730392d1e382a3d70393128"><span class="__cf_email__" data-cfemail="30555c555344425f5e595356595c595e5743705644531e575f46">[email protected]</span></a>;
(2) Contain the subject line ``HISA Civil Sanction Notice'';
(3) Clearly indicate that it relates to a civil sanction imposed on
a covered person resulting from a violation of an Authority rule;
(4) Include contact information for an employee at the Authority
responsible for communications regarding review of the civil sanction;
(5) Be sent in portable document format (or .PDF) or such other
format as the Secretary may permit;
(6) Contain only public information; and
(7) Be served the same day upon the person aggrieved by the
sanction in accordance with 16 CFR 4.4(b) as made applicable to review
proceedings under this part.
Sec. 1.146 Review of civil sanction by an Administrative Law Judge.
(a) Application for review. An application for review of a final
civil sanction imposed by the Authority may be filed by the Commission
or by the person aggrieved by the civil sanction. Any such application
must: be filed within 30 days of the submission of the notice of civil
sanctions under Sec. 1.145; state the civil sanction imposed; include
a copy of the final Authority decision imposing the sanction; and be
served on the Authority (and, if filed by the Commission, served on the
aggrieved person) in accordance with 16 CFR 4.4(b) as made applicable
to review proceedings in this part.
(1) Application by aggrieved person. An application filed by an
aggrieved person also must state in no more than 1,000 words the
reasons for challenging the sanction and whether the person requests an
evidentiary hearing conducted by the Administrative Law Judge; if a
hearing is requested, the applicant must state whether the hearing is
sought to supplement or to contest facts in the record found by the
Authority. Each issue must be plainly and concisely stated. Further,
the applicant must provide support for each issue raised, citing to the
Authority's record when assignments of error are based on the record,
and citing to the principal legal authorities the applicant relies
upon, whether statutes, regulations, cases, or other authorities.
Except for good cause shown, no assignment of error by the aggrieved
party may rely on any question of fact or law not presented to the
Authority. Within 10 days of being served with the application, the
Authority may file a response limited to no more than 1,000 words
stating the reasons the sanction should be upheld and whether an
evidentiary hearing conducted by the Administrative Law Judge is either
unnecessary, or necessary to supplement or to contest facts in the
record found by the Authority.
(2) Application by the Commission. When the Commission on its own
initiative files an application, the application must identify matters
that the Commission finds material to the Administrative Law Judge's
review of the civil sanction imposed by the Authority, whether or not
raised by the aggrieved person or the Authority. Notice to the parties
of the opportunity for further factual development of the record
through an evidentiary hearing conducted by the Administrative Law
Judge under paragraph (c) of this section shall be given when the
Commission believes that supplementation of the record would
significantly aid the decisional process.
(b) Nature of review by the Administrative Law Judge. Under 15
U.S.C. 3058(b)(2)(A), the Administrative Law Judge must determine when
reviewing matters under this subpart:
(1) Whether the person has engaged in such acts or practices, or
has omitted such acts or practices, as the Authority has found the
person to have engaged in or omitted. In making this determination, the
Administrative Law Judge may rely on the factual record developed
before the Authority and may supplement that record by evidence
presented in an administrative hearing under paragraph (c) of this
section;
(2) Whether such acts, practices, or omissions are in violation of
the Horseracing Integrity and Safety Act, 15 U.S.C. 3051 through 3060,
or the rules of the Authority as approved by the Commission. The
Administrative Law Judge will make this determination de novo; and
(3) Whether the final civil sanction of the Authority was
arbitrary, capricious, an abuse of discretion, prejudicial, the result
of a conflict of interest, or otherwise not in accordance with law. The
Administrative Law Judge will make this determination de novo.
(c) Administrative hearings--(1) Duties and powers of the
Administrative Law Judge and rights of the parties. (i) The
Administrative Law Judge has the duty and is granted the necessary
powers to conduct fair and impartial hearings, to take all necessary
action to avoid delay in the disposition of proceedings, and to
maintain order. To effectuate those goals, the hearing conducted by the
Administrative Law Judge under 15 U.S.C. 3058(b)(2)(B) shall include
(but is not limited to):
(A) Administering oaths and affirmations;
(B) Issuing orders requiring answers to questions;
(C) Compelling admissions, upon request of a party or on its own
initiative;
(D) Ruling upon offers of proof and receiving evidence;
(E) Regulating the course of the hearing;
(F) Holding conferences for settlement, simplification of the
issues, or other proper purposes;
(G) Ruling on procedural and other motions; and
(H) Issuing a decision.
(ii) All parties are entitled to the right of due notice, cross-
examination, presentation of evidence, objection, motion, argument, and
all other rights essential to a fair hearing consistent with 5 U.S.C.
556.
(2) The factual record. In reviewing the final civil sanction and
decision of the Authority, the Administrative Law Judge may rely in
full or in part on the factual record developed before the Authority
through the disciplinary process under 15 U.S.C. 3057(c) and
disciplinary hearings under Authority Rule Series 8300. The record may
be supplemented by an evidentiary hearing
[[Page 60080]]
conducted by the Administrative Law Judge to ensure each party receives
a fair and impartial hearing. Within 20 days of the filing of an
application for review, based on the application submitted by the
aggrieved party or by the Commission and on any response by the
Authority, the Administrative Law Judge will assess whether:
(i) The parties do not request to supplement or contest the facts
found by the Authority;
(ii) The parties do not seek to contest any facts found by the
Authority, but at least one party requests to supplement the factual
record;
(iii) At least one party seeks to contest any facts found by the
Authority;
(iv) The Commission, if it filed the application for review, seeks
supplementation of the record; or
(v) In the Administrative Law Judge's view, the factual record is
insufficient to adjudicate the merits of the review proceeding.
(3) Hearings for which neither a party nor the Commission requests
to supplement or contest the facts found by the Authority and whose
record the Administrative Law Judge deems sufficient. When neither a
party nor the Commission requests to supplement or alter the factual
record before the Authority, and the Administrative Law Judge has not
determined the factual record is insufficient, the factual record will
be deemed closed, and no evidentiary hearing will be held. In such
cases, the administrative hearing conducted by the Administrative Law
Judge will be limited to briefing by the parties, unless the
Administrative Law Judge elects to hear oral argument. Within 30 days
of the application for review, each party will concurrently file with
the Secretary for consideration by the Administrative Law Judge
proposed findings of fact, conclusions of law, and a proposed order,
together with a supporting legal brief providing the party's reasoning.
Such filings, limited to 7,500 words, must be served on the other party
and contain references to the record and authorities on which they
rely. Reply findings of fact, conclusions of law, and briefs, limited
to 2,500 words, may be filed by each party within 10 days of service of
the initial filings.
(4) Hearings for which no party contests facts found by the
Authority but at least one party or the Commission seeks to supplement
the record or for which the Administrative Law Judge determines that
supplementation is necessary. When a party or the Commission seeks to
supplement the record, or when the Administrative Law Judge determines
the factual record is insufficient, the factual record developed before
the Authority will be considered the initial record before the
Administrative Law Judge. The record will be supplemented by evidence
presented in a hearing before the Administrative Law Judge.
(i) The Administrative Law Judge will conduct an evidentiary
hearing lasting no more than 8 hours for each party or the Commission
seeking supplementation. The hearing may be extended by request of a
party, the Commission, or on the Administrative Law Judge's own
initiative, for good cause. When a party seeks to supplement the
record, the hearing will be limited to:
(A) An opening statement by the party requesting supplementation of
no more than 15 minutes;
(B) Direct examination by the party requesting supplementation,
with opportunity for cross-examination by the other party; and
(C) The admission of documentary evidence. When the Administrative
Law Judge or the Commission seek supplementation of the record, the
Administrative Law Judge or the Commission may issue an order allowing
the consideration of additional evidence, describing the additional
evidence sought, and prescribing the procedures for holding the hearing
before the Administrative Law Judge.
(ii) Within 30 days of the hearing's conclusion, each party will
concurrently file with the Secretary for consideration by the
Administrative Law Judge proposed findings of fact, conclusions of law,
and a proposed order, and a supporting legal brief explaining the
party's reasoning. Such filings, limited to 7,500 words, must be served
upon the other party and contain references to the record and
authorities on which they rely. Reply briefs, limited to 2,500 words,
may be filed by each party within 10 days of service of the initial
filings.
(iii) The Administrative Law Judge must hear closing statements
from the parties within 10 days of the date on which reply briefs are
due if either party, in its reply brief, requests the opportunity to
make a closing statement.
(5) Hearings in which a party seeks to supplant facts found by the
Authority. (i) In an application for review, an aggrieved person may
request an extended hearing before the Administrative Law Judge to
supplant facts found by the Authority. The extended hearing may last up
to 40 hours. To receive an extended hearing, the aggrieved person must
make a proffer of weighty, probative, and substantial evidence and
compelling argument in support of its contention that the disciplinary
process before the Authority failed to comply with the requirements of
15 U.S.C. 3057(c) or of the Authority's Rule Series 8300, or that
prejudicial errors, procedural irregularities, or conflicts of interest
were present in, or committed during, the Authority's proceeding and
resulted in a failure to provide the ``adequate due process'' required
under section 3057(c)(3). Extended hearings are disfavored and granted
only in these circumstances. For applications for review in which
applicants request an extended hearing, the total application is
limited to 2,500 words (instead of the ordinary 1,000 words).
(ii) The Authority may file a response to the request for an
extended hearing within 10 days of being served with the application
for review, limited to 2,500 words (instead of the ordinary 1,000
words). The Authority may, in its response, elect to concede that the
contention of procedural inadequacy has substantial evidence in support
of it. Presented with such a concession, the Administrative Law Judge
must order the final civil sanction set aside without prejudice and
remand the matter to the Authority.
(iii) The Administrative Law Judge will issue a decision resolving
the request for an extended hearing within 10 days of the date on which
the Authority's response is due. If the request for an extended hearing
is granted in part or in full, the extended hearing will be limited to
the same elements listed in paragraph (c)(4) of this section, adjusted
as deemed necessary by the Administrative Law Judge.
(iv) The final factual record will consist of:
(A) Those facts found by the Authority that, in the determination
of the Administrative Law Judge, were found in a process that was
consistent with 15 U.S.C. 3057(c), the Authority's Rule Series 8300,
and adequate due process; as well as
(B) Any new facts adduced at the hearing and found by the
Administrative Law Judge.
(6) Evidence--(i) Burden of proof. The burden of proof is on the
Authority to show, by a preponderance of the evidence, that the covered
person has violated a rule issued by the Authority, but the proponent
of any factual proposition is required to sustain the burden of proof
with respect thereto.
(ii) Admissibility. Only relevant, material, and reliable evidence
will be admitted. Evidence, even if relevant, may be excluded if its
probative value
[[Page 60081]]
is substantially outweighed by the danger of unfair prejudice or
confusion of the issues, or if the evidence would be misleading, cause
undue delay, waste time, or present duplicative evidence. Evidence that
constitutes hearsay may be admitted if it is relevant, material, and
bears satisfactory indicia of reliability.
(iii) Presentation of evidence. A party is entitled to present its
case or defense by sworn oral testimony and documentary evidence, to
submit rebuttal evidence, and to conduct such cross-examination as, in
the discretion of the Administrative Law Judge, may be required for a
full and true disclosure of the facts. The Administrative Law Judge
must exercise reasonable control over the mode and order of
interrogating witnesses and presenting evidence so as to make the
presentation effective for the ascertainment of the truth while
avoiding needless consumption of time and to protect witnesses from
harassment or undue embarrassment.
(iv) Adverse witnesses. Adverse parties, or officers, agents, or
employees thereof, and any witnesses who appears to be hostile,
unwilling, or evasive, may be interrogated by leading questions and may
also be contradicted and impeached by the party calling them.
(v) Objections. Objections to evidence must be timely and must
briefly state the grounds relied upon. The transcript must not include
argument or debate thereon except as ordered by the Administrative Law
Judge. Rulings on all objections must appear in the record.
(7) In camera treatment of material. (i) A party or third party may
obtain in camera treatment for material, or portions thereof, offered
into evidence only by motion to the Administrative Law Judge. The
Administrative Law Judge has the authority to order such material,
whether admitted or rejected, be placed in camera only after finding
that its public disclosure will likely result in a clearly defined,
serious injury to the party requesting in camera treatment or after
finding that the material constitutes sensitive personal information.
``Sensitive personal information'' includes, but is not limited to, an
individual's Social Security number, taxpayer identification number,
financial account number, credit card or debit card number, driver's
license number, state-issued identification number, passport number,
date of birth (other than year), and any sensitive health information
identifiable by individual, such as an individual's medical records.
(ii) Material made subject to an in camera order will be kept
confidential and not placed on the public record. Parties must not
disclose information that has been granted in camera status or is
subject to confidentiality protections pursuant to a protective order
in the public version of proposed findings, briefs, or other documents.
Parties who seek to use material obtained from a third party subject to
confidentiality restrictions must show that the third party has been
given at least 10 days' notice of the proposed use of such material.
(d) Decision by the Administrative Law Judge--(1) When filed. The
Administrative Law Judge must file a decision within 30 days of closing
statements or, if no closing statements are ordered, within 30 days of
the date on which reply findings of fact, conclusions of law, and
briefs are due. The Administrative Law Judge may extend this time
period for up to 30 days for good cause. The decision must be filed
within 60 days of the conclusion of the administrative hearing.
(2) Content. The decision by the Administrative Law Judge must be
based on a consideration of the whole record relevant to the issues
decided and must be supported by reliable and probative evidence. The
decision must include a statement of findings of fact (with specific
page references to principal supporting items of evidence in the
record) and conclusions of law, explaining the reasons for the
decision, and an appropriate order. Rulings containing information
granted in camera status must be issued such that only counsel for the
parties receive an unredacted confidential version of the ruling and
that only a version of the ruling redacting confidential information is
placed on the public record.
(3) Disposition. In the decision, the Administrative Law Judge may:
(i) Affirm, reverse, modify, set aside, or remand for further
proceedings, in whole or in part, the final civil sanction of the
Authority; and
(ii) Make any finding or conclusion that, in the judgment of the
Administrative Law Judge, is proper and based on the record.
(4) Final decision; waiver upon Commission review. A decision by
the Administrative Law Judge will constitute the final decision of the
Commission subject to judicial review under 5 U.S.C. 704 without
further proceedings unless a notice or an application for review to the
Commission is timely filed under Sec. 1.147. Any objection to any
ruling by the Administrative Law Judge or to any finding, conclusion,
or a provision of the order in the decision of the Administrative Law
Judge that is not made a part of an appeal to the Commission will be
deemed to have been waived.
Sec. 1.147 Review by the Commission of the decision of the
Administrative Law Judge.
(a) Notice of review by the Commission. The Commission may on its
own motion review any decision of an Administrative Law Judge issued
under Sec. 1.146 by providing written notice to the Authority and any
other party within 45 days of the issuance of the decision. The order
will set forth the scope of such review and the issues to be considered
and will set a briefing schedule. If no party has filed an application
for the Commission to review the decision of the Administrative Law
Judge and the Commission does not initiate a review on its own motion,
the decision of the Administrative Law Judge becomes the final decision
of the Commission for purposes of 5 U.S.C. 704 without the need for
further agency proceedings 46 days after its issuance.
(b) Application for review and response--(1) Timing. The Authority
or a person aggrieved by the decision of the Administrative Law Judge
under Sec. 1.146 may petition the Commission for review of such
decision by filing an application for review with the Secretary of the
Commission within 30 days of the issuance of the decision.
(2) Contents of application and response. (i) The application must
specify the party or parties against whom the appeal is taken and
specify the decision and order or parts thereof appealed from. The
application, limited to 1,000 words, must provide the reasons it should
be granted by addressing the matters the Commission considers in
determining whether to grant the application under paragraph (b)(4)(i)
of this section. Unless the application is denied, the applicant must
perfect its application by filing its opening brief consistent with the
requirements in paragraph (c)(3)(i) of this section.
(ii) Any other party to the matter may respond to the application
no later than 10 days after it is filed by providing the reasons,
limited to 1,000 words, it should not be granted by addressing the
matters the Commission considers in determining whether to grant the
application under paragraph (b)(4)(i) of this section.
(3) Effect of denial of application for review. If an application
for review is denied, the decision of the Administrative Law Judge
becomes the final decision of the Commission for
[[Page 60082]]
purposes of 5 U.S.C. 704 without the need for further agency
proceedings.
(4) Discretion of the Commission--(i) In general. A decision
whether to grant an application for review is subject to the sole
discretion of the Commission. The Commission will issue an order
resolving an application for its review as expeditiously as possible.
The Commission may decide to grant review of only one issue or any
subset of all the issues raised in the application for review.
(ii) Matters to be considered. In determining whether to grant an
application for review, in full or in part, the Commission considers
whether the application makes a reasonable showing that:
(A) A prejudicial error was committed in the conduct of the
proceeding before the Administrative Law Judge; or
(B) The decision involved:
(1) An erroneous application of the anti-doping and medication
control or racetrack safety rules approved by the Commission; or
(2) An exercise of discretion or a decision of law or policy that
warrants review by the Commission.
(c) Nature of review on the merits--(1) Standard of review. The
Commission reviews de novo the factual findings and conclusions of law
made by the Administrative Law Judge.
(2) Consideration of additional evidence. In those cases in which
the Commission believes it requires additional information or evidence
before issuing a final decision, the Commission, in its discretion, may
withhold issuing its decision until it obtains additional information
or evidence.
(i) Order by Commission. The Commission may issue on its own motion
an order allowing the consideration of additional evidence and
prescribing the procedures for doing so.
(ii) Motion by a party. A party may file a motion to have the
Commission consider additional evidence at any time before the issuance
of a decision by the Commission. The motion must show, with
particularity, that:
(A) Such additional evidence is material; and
(B) There were reasonable grounds for failure to submit the
evidence previously.
(iii) Commission determination. Upon motion by a party, the
Commission may:
(A) Accept or hear additional evidence itself; or
(B) Remand the proceeding to the Administrative Law Judge for the
consideration of additional evidence.
(3) Briefing schedule--(i) Opening brief. If the Commission grants
an application for review, the applicant must perfect its application
by filing its opening brief, limited to 7,500 words (without leave of
the Commission), within 30 days of the Commission's order granting the
application for review. The opening brief must contain, in the
following order:
(A) A subject index of the matter in the brief, with page
references, and a table of cases with page references;
(B) A concise statement of the case, which includes a statement of
facts relevant to the issues submitted for review, and a summary of the
argument, which must contain a succinct, clear, and accurate statement
of the arguments made in the body of the brief;
(C) A list of the questions presented on appeal that the Commission
has agreed to hear;
(D) The argument, clearly presenting the points of fact and law
relied upon in support of the position taken on each question, with
specific page references to the record and the legal or other material
relied upon; and
(E) A proposed order for the Commission's consideration.
(ii) Answering brief. The opposing party may respond to the opening
brief by filing an answering brief, limited to 7,500 words (without
leave of the Commission), within 30 days of service of the opening
brief. The answering brief must contain a subject index, with page
references, and a table of cases with page references, as well as
arguments in response to the applicant's appeal brief.
(iii) Reply brief. The applicant may file a reply to an answering
brief within 14 days of service of the answering brief. The reply
brief, limited to 2,500 words, must be limited to rebuttal of matters
in the answering brief and must not introduce new material. The
Commission will not consider new arguments or matters raised in reply
briefs that could have been raised earlier in the principal briefs. No
further briefs may be filed except by leave of the Commission.
(iv) Word count limitation. The word count limitations in this
section include headings, footnotes, and quotations, but do not include
the cover, table of contents, table of citations or authorities,
glossaries, statements with respect to oral argument, any addendums
containing statutes, rules or regulations, any certificates of counsel,
and any proposed form of order. Extensions of word count limitations
are disfavored and will only be granted when a party can make a strong
showing that undue prejudice would result from complying with the
existing limit.
(4) Oral argument. Oral arguments will be held in all cases on
review to the Commission unless the Commission orders otherwise or upon
request of any party made at the time of filing of its brief. Unless
the Commission orders otherwise, argument will be held within 30 days
of the deadline for filing reply briefs and will be limited to 20
minutes per side.
(5) Decision--(i) Timing. The Commission will issue its final
decision within 30 days of oral argument or, if no argument is held,
within 30 days of the deadline for the filing of reply briefs. The
Commission may extend this time period by up to 30 days for good cause.
(ii) Content; resolution. The Commission will include in its
decision a statement of the reasons or bases for its action and any
concurring and dissenting opinions. Based on its decision, the
Commission may:
(A) Affirm, reverse, modify, set aside, or remand for further
proceedings before the Administrative Law Judge, in whole or in part,
the decision of the Administrative Law Judge; and
(B) Make any finding or conclusion that, in the judgment of the
Commission, is proper and based on the record.
Sec. 1.148 Stay of proceedings.
(a) In general. Review by an Administrative Law Judge or by the
Commission under this subpart will not operate as a stay of a final
civil sanction of the Authority unless the Administrative Law Judge or
the Commission orders such a stay.
(b) Application for a stay--(1) Before the Administrative Law
Judge. A person subject to a final civil sanction imposed by the
Authority may apply to the Administrative Law Judge for a stay of all
or part of that sanction pending review by the Administrative Law
Judge. Any application for a stay is limited to 1,000 words, must be
filed concurrently with the application for review of the sanction, and
must be served on the Authority in accordance with the provisions of 16
CFR 4.4(b) that are applicable to service in review proceedings under
this part. The Authority may file an opposition, limited to 1,000
words, within 7 days of being served with the application for a stay.
The Administrative Law Judge must resolve the stay application within
10 days of the date on which the Authority's opposition is due.
(2) Before the Commission--(i) Expedited application for a stay.
The party aggrieved by the sanction and denied a stay by the
Administrative Law Judge under paragraph (b)(1) of this section may
file an expedited
[[Page 60083]]
application for a stay with the Commission within 3 days of the
Administrative Law Judge's denial. An expedited application for a stay
is limited to 1,000 words and must be served on the Authority in
accordance with the provisions of 16 CFR 4.4(b) that are applicable to
service in review proceedings under this part. The Authority may file
an opposition, limited to 1,000 words, within 3 days of service of the
expedited application. The application and opposition should address
the factors in paragraph (d) of this section the Commission considers
in resolving a stay application. The Commission will issue its decision
on the stay application as soon as practicable.
(ii) Application for a stay after the Commission decides to review
the Administrative Law Judge's decision. If the Commission grants the
application for review of the decision of the Administrative Law Judge,
or orders review of the decision on its own motion, the person subject
to the sanction may apply to the Commission for a stay of the sanction
pending the Commission's decision. In this circumstance, the aggrieved
person may seek a stay of the sanction before the Commission a second
time under this paragraph (b)(2)(ii) even if the person was previously
denied an expedited application for a stay under paragraph (b)(2)(i) of
this section. The application for a stay, limited to 1,000 words, must
be filed within 7 days of the Commission's order granting the
application for review or ordering review under Sec. 1.147(a), and
must be served on the Authority in accordance with the provisions of 16
CFR 4.4(b) that are applicable to service in review proceedings under
this part. The Authority may file an opposition, limited to 1,000
words, within 7 days of being served with the stay application.
(c) Content of stay application and opposition. An application for
a stay of the sanction, and any opposition to the application, must
provide the reasons a stay is or is not warranted by addressing the
factors described in paragraph (d) of this section, and the facts
relied upon, and may include supporting affidavits or other sworn
statements, and a copy of the relevant portions of the record.
(d) Factors considered in deciding a stay application. The parties,
the Administrative Law Judge, and the Commission must address the
following factors, in advocating for or against, or in resolving, a
stay application:
(1) The likelihood of the applicant's success on review;
(2) Whether the applicant will suffer irreparable harm if a stay is
not granted;
(3) The degree of injury to other parties or third parties if a
stay is granted; and
(4) Whether the stay is in the public interest.
Sec. 1.149 Adoption of miscellaneous rules.
Part 4 of this subchapter is adopted into this subpart and governs
proceedings under this subpart, and, within Sec. Sec. 4.2 and 4.4,
references to ``part 3'' shall include this subpart.
By direction of the Commission.
April J. Tabor,
Secretary.
[FR Doc. 2022-20785 Filed 10-3-22; 8:45 am]
BILLING CODE 6750-01-P
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</html>Indexed from Federal Register on October 4, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.