OVERVIEW
First and foremost, it is imperative to recognize and express thoughtful gratitude to every single donor who has contributed to the FAST Legal/Preservation Fund before, during and following the Celebration show during which we met our Phase I fundraising goal. If it were not for the generosity of our industry, we would not have been able to achieve the progress we have made in our quest to preserve the show horse industry for future generations to come.
Second, we must recognize that a legal effort of this magnitude versus a government entity is no small undertaking; it can be time consuming and costly. We are very fortunate to have identified a talented and accomplished law firm in KDW who has a demonstrated record of successfully advocating for organizations like ours in their quest to achieve fair and reasonable outcomes. Equally as important, we are fortunate to have industry supporters with considerable legal experience who are spending countless hours consulting, reviewing, analyzing and providing supporting data to assist the KDW counsel in preparing the response to the rulemaking proposal. Without the support of those people, our expenses would be considerably greater!
Lastly, we need to be particularly mindful that this is an industry wide effort. This is not limited to any particular walking horse organization, show or even The Celebration. In these types of matters, someone or some organization must step forward to sign on as the client; this is more of a liability to that person(s) or organization than an asset to potentially become the target of interest by the government. It is not a celebrated position to be in but more of a sacrifice for the betterment of the industry as a whole. We are appreciative of the McGartlands, SHOW and The Celebration for their willingness to expose themselves in this manner to provide for the industry as a whole a venue to wage the battles that need to be fought to preserve our show horse.
To quote an industry supporter: “We are "walking horse strong" - everyone who is still standing who owns one, regardless of shoe, or even those who just loves this amazing horse. We have lost a lot of participants over the years because of government over reach and harassment. Those of us remaining are dedicated and determined - every one matters - every one counts. Stand together. Stand strong - walking horse strong.”
CONTENDER II
Who are the clients: Mike and Lee McGartland, Contender Farms and SHOW, an affiliate owned by The Celebration.
How is this suit funded: This suit is being funded by legal fee recovery from Contender I/Contender I appeal. Fund balance is as follows:
Total fee recovery $268,148.04
Bills paid through October 6, 2016 $110,354.61
Total Balance $157,793.43
Who provides direction for the attorney’s in this case: Mike and Lee McGartland and SHOW/The Celebration represented by Mike Inman, CEO.
Summary of the case and its progress:
In June 2012, SHOW challenged the USDA’s rules requiring HIOs to assess mandatory minimum suspension penalties against those people based on DQP inspections. The United States Court of Appeals for the Fifth Circuit ruled that HIOs cannot enforce the HPA by penalizing people; only the USDA is authorized to enforce the HPA. The HPA means what it says: No penalty shall be assessed for violation of the HPA except after notice by the Secretary, an opportunity for a formal hearing and only by written order of the Secretary.
Nonetheless, the USDA continued to claim that entrants had violated the law using three unlawful protocols, processes and programs. The USDA decides that entrants violated the Act using the IES Investigative and Enforcement Process and the Protocol for Foreign Substance Penalty to decide that entrants have violated the HPA and assesses penalties without giving notice a case has been opened or affording the accused an opportunity for a hearing. The Agency also treats the penalties assessed by HIOs as establishing that people who enter horses that are disqualified based on DQP inspections are responsible for violations of the HPA. Finally, the USDA has published on its website lists that falsely identified people as having been determined to have violated the HPA. These publications are issued based on the USDA’s FOIA Electronic Reading Room Enforcement Lists Policy.
On June 8, 2015, the USDA was requested to remove these misleading lists from its website. The USDA’s Enforcement Actions List for 2010 through 2015, falsely identifies 2,532 people as having been determined by the Agency to have violated the HPA. Of those, 2,345 were unlawfully labeled violators under the Protocol for Foreign Substance Penalty and IES Investigative Process and issued a Form 7060 penalty.
The USDA also published a searchable list that misleadingly identified about 2.400 people as “violators.” This list reflected the USDA’s unlawful decisions that people violated the HPA based on the IES Investigative and Enforcement Process and Protocol for Foreign Substance Penalty.
There were also 15 additional USDA lists of “violators” based on HIO records. Five lists, for the years 2010 through 2014, identified more than 12,000 people as “persons responsible for violations.” These lists have misled the public and elected officials into believing that the almost 15,000 people, who never received notice of an alleged violation, never had a USDA complaint filed against them, never were afforded the opportunity for a formal hearing before the Secretary and have never had the Secretary determine they violated the Act, have violated federal law.
On February 29, 2016, a lawsuit was filed to have these lists removed. The purpose of the lawsuit, filed in the district court in Fort Worth, Texas, is to put an end to the USDA’s unlawful enforcement programs. The court has been requested to declare unlawful the USDA’s use of the IES Investigative and Enforcement Process, the Protocol for Foreign Substance Penalty and the HIO Penalty Program, which the USDA uses to determine a violation of the Act and to penalize people. The Court is being asked to declare unlawful the USDA’s publication of the lists. Finally, the Court is requested to enjoin the USDA from continuing these unlawful actions and practices.
Some of the results sought in filing the lawsuit may have been achieved. Only one list – the USDA/APHIS Enforcement Actions Lists – remains on the website. But the USDA can reinstate others if it so decides. And the USDA continues to use the IES Investigative and Enforcement Process and Protocol on Foreign Substance Penalty without notice or hearing to an accused that they may have violated the HPA. The Agency continues to punish people with the issuance of a Form 7060, which it publishes on its website, identifying the “Violator” and “Violation.”
The case is moving forward after some delay. In September, the Court permitted the filing of the Second Amended Complaint over the USDA’s opposition. It also recommended that the USDA’s Motion to Sever SHOW from the lawsuit be denied, which recommendation the USDA has objected to in district court. The Court has before it two discovery requests the Plaintiffs filed to which the USDA objected. The USDA asked for an extension of time to answer, which Plaintiffs opposed. Plaintiffs have requested leave to file a Third Amended Complaint that challenges the USDA’s policy and actions in publishing the lists as a violation of the Freedom of Information Act. Finally, Plaintiffs have filed a motion to modify the schedule so the case can be resolved more expeditiously and economically. All these matters await decision.
The case is progressing. It is time consuming and expensive. The end may not yet be in sight, but it is getting closer.
RULE MAKING
Who are the clients: The Celebration and its Board of Directors represented by Mike Inman, CEO
How is this suit funded: This suit is being funded by donations from friends of the industry. Fund balance is as follows:
Fund Raised $508,259.24
Less legal bills paid thru 9/27/2016 $244,903.86
Balance $263,365.38
Who provides direction for the attorney’s in this case: The Celebration Board of Directors represented by Mike Inman, CEO has appointed a Leadership Council comprised of Frank Eichler, attorney, Mike Inman, Celebration CEO, Jeffrey Howard, Celebration and FAST board member, David Howard, past Celebration board member, Steve Smith, TWHBEA President, Terry Dotson, PSHA board member and Duke Thorson, WHOA board member. The leadership council appointed Frank Eichler as the point of contact for KDW.
The FAST Board is then privy to the invoices and work of KDW prior to approving payment of their bills. The Celebration is also monitoring the progress and privy to the work of KDW.
Summary of the case and its progress:
Significant work has been done on drafting comments to the various aspects of the proposed rule. The simplicity of that statement does not do justice to what is involved in that process. There are approximately 30 pages in just the provisions of the proposed rule alone and approximately 100 pages of written statements in the complete Notice of Proposed Rulemaking which includes the USDAs discussion. The provisions of the proposed rule and the APHIS discussion were closely analyzed to determine if they warranted a comment – and most if not all did. It was incumbent on us to not only provide a reasoned analysis and comment on why this Rulemaking is illegal but in many instances to correct the APHIS misstatements or omissions. Sometimes something left uncorrected or unsaid can be problematic.
As you are well aware, many of the provisions in the proposed rule making would result in significant changes for the Tennessee Walking Horse Industry. For those provisions that warranted comment, the contents of the comment had to be carefully crafted and developed. Developing comments to a particular provision many times required analysis of statutes or case law to support the comment. The process also frequently required parsing through the provisions of old notices of proposed rulemakings pertinent to the regulations in question, scientific reports, and/or other documentary evidence. If we did not have the evidence, many times we had to conduct research or outreach to get it. And then, of course, the comment to the provision actually had to be drafted and edited numerous times by our attorney Joe Wilson, his staff, as well as others on the Leadership Council. To assure the accuracy of our positions, we have also solicited comments from other attorneys that have participated in the Mandatory Penalty lawsuit and while we and they believe we have a great position, the concern of course is that the USDA will just pas the Rulemaking and let it all be handled in Court. Currently the Industry Response is just over 100 pages and we expect to finalize it in the next 2 weeks.
We have purposefully tried to be thorough, detailed, and cover every item and possibility with the comments for several reasons:
- • out of an abundance of caution to assure that we are not failing to get into the record information needed to challenge any final rule in court.
- • it gives others who may wish to challenge the rule themselves a basis to challenge it.
- • it can develop support for our position among the public, Congress and, yes, even perhaps the USDA and APHIS.
We have proposed a solution to APHIS in our Response that we believe is a superior alternative than the elimination of the Industry, which is the Independent HIO with scientific objective inspections.
Our economic consultants have continued to work on their analysis of the economic impact that the Proposed Rule would have, principally on the Association and other Tennessee Walking Horse shows. We may be able to get a final rule that comes out of the Proposed Rule overturned due to deficiencies in APHIS’ economic analysis of the Proposed Rule which appears to be substantial and which we believe others may point that out as well.
We analyzed pros and cons, basis and strategy for bringing a lawsuit challenging APHIS’s refusal to grant expedited treatment to our FOIA requests and at this time we have not pursued that path.
We drafted numerous letters to USDA regarding, among other things, the deficiency in their inspection protocol in light of the substantial inconsistent results between VMO inspections at the Celebration. This involved analysis of VMO inspection results. These letters to the USDA were important in developing both points and evidence in support of the comments to the Proposed Rule.
As we all recognize, the proposed rule is not just a “bet the company affair” for any particular individual, show or participant but a bet the entire industry affair.
NEXT STEPS—Kickoff Fundraising Phase II for $500,000.00 to bring out total to $1,000,000.00
It is clear that a legal undertaking of this magnitude is time consuming, highly technical and costly. The alternative? We do nothing, accept the conditions of the USDA via rule making and allow the show industry as a whole to be reduced to a keg shod horse. Clearly, for those who have enjoyed the Tennessee Walking show horse for generations, the latter is simply unacceptable. Legal fees for September and October are estimated to cost between $125,000 – $150,000 which will exhaust our current fund balance by the end of October. Therefore, we will need to launch Phase II of our fundraising initiative to provide the needed resources to carry the case forward. Shortly, the fundraising committee will begin reaching out to you again to seek your participation in joining the fight to save our show horse industry. Donor fatigue is a concern for everyone in the industry; however, this fight, if we lose it, will gravely affect the livelihood of many within our industry, not to mention the devastating effects on the economic impact especially in the southern region of the United States and lastly and most importantly, the passion that will be ruined for the thousands of exhibitors that have enjoyed and continue to enjoyed exhibiting our show horse in all its various disciplines.
As we continue this fight and enter into Phase II of our fundraising efforts, it is imperative that this vision is not limited to just horse owners and exhibitors. If the show horse as we know it is reduced to a keg shod horse for exhibition purposes as the proposed rules suggest, the economic impact will be devastating. Consider the effects on these industries; we need to get them engaged:
- • real estate brokers and agents
- • feed, hay, shavings growers, manufacturers, distributors
- • agricultural equipment owners, sales and repairs
- • agricultural facility product suppliers
- • equine product sales, suppliers, distributors
- • truck and trailer sales and repairs
- • agricultural and property insurance brokers and sales
- • municipal taxing authorities who stand to lose significant tax support if the industry is devastated by these rule changes and industry supporters begin to abandon their property interest in middle Tennessee.
- • Restaurants, fuel stations, cleaners, department stores—all of those places that industry participants patronize during and in between horse shows
- • the many employees who earn their living within the industry—trainers, farriers, grooms, farm assistants
- • the State of Tennessee who collects substantive tax support from the many corporate structures registered throughout the industry
- • the many, many charities that benefit from the horse shows the industry conducts throughout the year
