BEFORE THE
UNITED STATES DEPARTMENT OF AGRICULTURE
ANIMAL AND PLANT HEALTH INSPECTION SERVICE

DOCKET NO.:  APHIS-2011-0030

RESPONSE OF SHOW, INC., TO USDA APHIS’
HORSE PROTECTION ACT:  REQUIRING HORSE
INDUSTRY ORGANIZATIONS TO ASSESS AND ENFORCE
MINIMUM PENALTIES FOR VIOLATIONS

       FILED BY:
       DR. STEPHEN L. MULLINS,
       PRESIDENT
       SHOW, INC.
       POST OFFICE BOX 167
       SHELBYVILLE, TN 37162
       931/684-9506
       FAX:  931/684-9538

I. INTRODUCTION

The Animal and Plant Health Inspection Service (hereinafter “APHIS”) division of the United States Department of Agriculture (hereinafter the “USDA”) has proposed rulemaking “to amend the horse protection regulations to require horse industry organizations or associations that license Designated Qualified Persons to assess and enforce minimum penalties for violations of the Horse Protection Act (the Act) and the regulations.”  76 FED. REG. No. 103, at 30864.  APHIS alleges that its proposed rulemaking “would strengthen our enforcement of the Act and regulations by ensuring that minimum penalties are assessed and enforced consistently by all horse industry organizations and associations. . . .”  Id.
 
APHIS is, or certainly should be, fully aware that its proposed rulemaking is in direct contravention of the Horse Protection Act as written, constitutional requirements as well as fundamental principles of fairness.  Furthermore, APHIS is fully aware that instead of “strengthening enforcement” its proposed rulemaking will, in fact, lead to more unaffiliated events and non-compliant horses.  APHIS’ proposal simply does not effectuate the purposes of the Act.  Clearly, APHIS has no regard for the best interest of the Tennessee Walking Horse, nor the constitutional rights of those it regulates.

II. RESPONSE TO APHIS’ BACKGROUND “FACTS”
 
The Background “facts” set forth by APHIS in the Federal Register contains several misstatements concerning the events leading up to the current proposed rulemaking.  APHIS fails to acknowledge that as early as 2010, it attempted to force the certified HIOs to accept, assess and enforce the mandatory penalties it now proposes in the current rulemaking even though it was fully aware that it did not possess the authority to do so.
 
In early 2010, APHIS issued its Points of Emphasis for 2010 which included a mandatory penalty structure wherein APHIS directed that all HIOs implement prior to the 2010 show season.  Respondent SHOW opposed the mandatory penalties on the same grounds which will be set forth in detail herein below.   
 
On August 12, 2010, the USDA informed the certified HIOs they would be required to include the mandatory penalty structure in their rulebooks for 2011.  This mandate was followed-up by correspondence dated October 15, 2010, again attempting to mandate the inclusion of the USDA penalty structure and requiring submission of HIO rulebooks “on or before December 1, 2010” in direct contravention of HPR § 11.41 which requires HIOs to “furnish the Department by March 1 of each year with all such organization or association rulebooks . . . .”  (emphasis added).  Then, in January 2011, the USDA threatened to decertify Respondent SHOW for failing to include the mandatory penalties in its rulebook.  
 
All of these attempts to compel the HIOs to accept the mandatory penalty structure which is now the subject of the instant proposed rulemaking were made with the USDA’s full knowledge that they had no such authority to require HIOs to do so.  For APHIS to allege in the Federal Register that it advised the HIOs that the penalty structure “should be added to 2011 rulebooks” and that it attempted “to reach an agreement on protocol that all [HIOs] would adopt” is disingenuous at best.  The recitation of “facts” set forth by APHIS is either misguided, misinformed or an intentional attempt to mislead and cover up their unlawful bullying tactics.
 
Finally, on May 27, 2011, APHIS proposed the instant rulemaking in an attempt to secure the authority to impose mandatory penalties – despite the fact that APHIS had been representing to the HIOs that it possessed the authority it now seeks for over eighteen (18) months.  However, as set forth in detail herein below, the rulemaking proposed by the Department is unlawful pursuant to the Horse Protection Act as written as well as constitutional requirements.

III. INTEREST OF RESPONDANT
 
Respondent SHOW, Inc., (“SHOW”) is a corporation existing under the laws of the State of Tennessee with its principle place of business in Shelbyville, Tennessee.  SHOW is a Horse Industry Organization (HIO) certified by the USDA which became actively involved in the inspection of Tennessee Walking Horses on April 1, 2009.  SHOW was founded on the principles of “Sound Horses, Honest Judging, Objective Inspections and Winning Fairly” and encourages integrity within the Tennessee Walking Horse industry to “protect our horses and assure the future of real competition.” 
 
SHOW inspects both pleasure and performance horses.  In 2009, SHOW
inspected 33,137 horses, 23,870 in 2010 and, to date, has inspected 11,040 in 2011.
Clearly, there has been an impact to the SHOW inspection numbers as a result of a fair and compliant inspection process, including a fair and consistent penalty protocol.  
 
Since becoming an activated HIO in April 2009, the strategic goal and mantra of SHOW has been to “find and eliminating the sore horse.” SHOW has demonstrated its commitment to this strategic goal in all it has done during its two and one-half (2 1/2) years of existence.  To that end, SHOW has implemented a strategic plan which has included the following changes to its program to accomplish this goal, including, but not limited to, the following:
(1)      retained the services of an AAEP veterinarian as its President;
(2)      retained and selected only DQPs who have no conflicts of interest;
(3)      instituted a rigorous DQP training program which has been praised by  USDA  employees and others;
(4)      implemented the most comprehensive inspection process in the industry (to  such an extent that the USDA has incorporated several aspects into their  own inspections);
(5)      modified its hearing process to ensure that every ticket would be accounted  for and no special treatment would be allowed, no matter the violator;
(6)      developed a 3 year strategic plan;
(7)      restricted those allowed into the inspection area;
(8)      restricted those allowed into the holding area;
(9)      monitors application of lubricants in warm-up area;
(10) hoof testing of all pleasure horses
(11) monitoring of warm-up area;
(12) monitoring of trailer area;
(13) provided cameras to all DQPs;
(14) videotaping of ALL inspections;
(15) initiated a Hotline to report alleged acts of non-compliance;
(16)   instituted a protocol and penalty for a “bad image” horse which is not contained within the HPA or any other HIO’s penalty matrix;
(17) conducted seminars to educate trainers and owners on their responsibilities and to inform them of what is expected of them when presenting a horse for inspection before SHOW;
(18) conducted seminars in conjunction with Dr. Tracey Turner, USDA consultant and private equine practitioner, and Andrew Elsbree, past president American Farriers Association and private farrier in New York; 
(19) invited industry experts to observe its inspection process and make suggestions; and
(20) instituted initiatives and penalties for judges to ensure horses which enter  the ring are compliant.

As a result of the initiatives it has implemented, SHOW has been more successful at “finding and eliminating the sore horse” than any other HIO and/or the USDA.  While SHOW is disappointed in the statistics from an industry perspective, the hard numbers prove that SHOW is clearly effectuating the purpose of the HPA and its regs.  In its first eighteen (18) months since becoming an active HIO, SHOW 
(1) suspended 126 trainers for one (1) year for a finding of bilateral    sensitivity – more than any other HIO or the USDA in its history;

(2) suspended 2 individuals for swapping horses – never before found or    prosecuted by any other HIO or the USDA;

(3) issued a lifetime suspension for pressure shoeing – never before found    or prosecuted by the USDA; and

(4) issued a lifetime suspension for use of a cruel device to aid in checking
a horse found to be bilaterally sensitive and bad image – never before found or prosecuted by any other HIO or the USDA.

The consistency of SHOW’s inspection process has also overcome one of the most common criticisms levied against the HIO system – that HIO inspections are less stringent when the USDA is not present at an event to observe their DQPs’ performance.  Clearly, SHOW has done more in just over two and one-half (2 ½) years to effectuate the purposes of the Act than has been accomplished by all other HIOs and/or the USDA, to date.  
 
IV. PERTINENT LEGAL BACKGROUND
A. RESPONSIBILITY FOR ENFORCEMENT OF HPA
 
The HPA is clear that primary responsibility for enforcement of the Act rests with the USDA.  The Act authorizes representatives of the Department, known as “Veterinary Medical Officers” (hereinafter “VMOs”), to “inspect any horse show, horse exhibition, or horse sale or auction” to determine if a horse is “sore”.  15 U.S.C. § 1823(e).     
 
If an alleged violation is found to have occurred, the violator may be subject to either criminal or civil penalties under the Act.  15 U.S.C. § 1825.  Section 1825 sets out the maximum penalties (both criminal and civil) which may be imposed for violations of the HPA.  However, the clear language of the HPA states:
  “No penalty shall be assessed unless such person is given notice
  and opportunity for a hearing before the Secretary . . . .”
 15 U.S.C. § 1825 (emphasis added).
Consequently, under the HPA, ONLY the USDA has authority to issue ANY penalty for violations of the Act. 

B. THE HIO CERTIFICATION PROCESS AND HIO SYSTEM OF REGULATION

While Congress delegated primary enforcement responsibilities for the HPA to the USDA, it mandated that the USDA “prescribe by regulation requirements for the appointment by the management of any horse show, horse exhibition, or horse sale or auction of persons qualified to detect and diagnose a horse which is sore or to otherwise inspect horses for the purposes of enforcing this chapter.”  See 15 U.S.C. § 1823(c) (emphasis added).  In response, the USDA promulgated regulations which set up procedures whereby private organizations, referred to as Horse Industry Organizations (hereinafter “HIOs”), could be certified by the Department, and who could in turn, certify inspectors, known as Designated Qualified Persons (hereinafter “DQPs”) to be available for show managers to hire to inspect horses for compliance with the HPA and the organization’s rulebook.  9 C.F.R. § 11.7.  
 
Horse Industry Organizations (“HIOs”) are in fact just that – private, industry-led organizations set up for the purpose of self-regulation.  HIOs are private organizations, not state actors.  As such, HIOs set up their own systems of administration and adopt their own rulebooks that control events they affiliate.  HIOs function as any other private and/or voluntary organization such as homeowner associations, athletic associations, etc. Courts have traditionally refused to exercise jurisdiction over such private organizations unless there is evidence of “fraud, bad faith, corruption, or other misconduct in the promulgation or application of the bylaws” of the organization.  Holder v. Celsor, 914 S.W.2d 496 (Tenn. Ct. App. 1995).
 
HIOs have no authority to issue penalties under the HPA.  Under the explicit language of the HPA, a HIO inspector is only certified “to detect and diagnose a horse which is sore or otherwise inspect horses for the purposes of enforcing [the Act]”.  15 U.S.C. § 1823(c).  Any penalty levied by an HIO is the result of a violation of that HIO’s rules. A HIO penalty is a private, non-state action, and therefore, not subject to the due process requirements imposed upon state actors.  See Wolotsky v. Huhn, 960 F.2d 1331 (6th Cir. 1992)(analyzing various tests to determine if conduct at issue is “fairly attributable to the state”). SHOW has in fact implemented additional aspects of self regulation not found or required by the HPA or Regulations all for the purpose of ensuring the Industry as a whole complies with the HPA. For APHIS to now attempt to abuse SHOW’s voluntary self regulation practices to ensure that APHIS overcomes its inability and ineffectiveness in enforcing the HPA is ludicrous and goes beyond the law and common sense.

V. SHOW’S REPSONSE TO DEPARTMENT’S PROPOSED RULEMAKING

A. APHIS’ PROPOSED RULEMAKING VIOLATES THE EXPRESS LANGUAGE OF THE HORSE PROTECTION ACT

1. “15 U.S.C. § 1825 Violations and Penalties” Allows ONLY the Secretary to Assess Penalties and Enumerates the Factors Which Must Be Considered

 The Horse Protection Act, 15 U.S.C. § 1825 “Violations and penalties” explicitly states
(b) Civil Penalties, review and enforcement
(1) . . . No penalty shall be assessed unless such person is given notice and opportunity for a hearing before the Secretary with respect to such violation.  The amount of such civil penalty shall be assessed by the Secretary by written order.  In determining the amount of such penalty, the Secretary shall take into account all facts relevant to such determination, including the nature, circumstances, extent, and gravity of the prohibited conduct and, with respect to the person found to have engaged in such conduct, the degree of culpability, any history of prior offenses, ability to pay, effect on ability to continue to do business, and such other matters as justice may require.
(2) Any person against whom a violation is found and a civil penalty assessed under paragraph (1) of this subsection may obtain review in the court of appeals of the United States for the circuit in which such person resides or has his place of business . . . .  The findings of the Secretary shall be set aside if found to be unsupported by substantial evidence.
(c) Disqualification of offenders; orders; civil penalties applicable; enforcement procedures
In addition to any fine, imprisonment, or civil penalty authorized under this section, any person who was convicted under subsection (a) or this section or who paid a civil penalty assessed under subsection (b) of this section . . . may be disqualified by order of the Secretary after notice and an opportunity for hearing before the Secretary, from showing or exhibiting any horse, judging or managing any horse show, horse exhibition, or horse sale or auction. . . .
The provisions of subsection (b) of this section respecting the assessment, review, collection, and compromise, modification, and remission of a civil penalty apply with respect to civil penalties under this subsection.
(d) Production of witnesses and books, papers and documents; depositions; fees; presumptions; jurisdiction
(1) The Secretary may require by subpoena the attendance and testimony of witnesses and production of books, paper and documents . . . .
(2) The attendance of witnesses, and the production of books, papers and documents, may be required . . . in the case of disobedience to a subpoena the Secretary, or any party . . . may invoke the aid of any appropriate district court of the United States . . . .
. . .
(5) The United States district courts . . . are vested with jurisdiction specifically to enforce, and to prevent and restrain violations of this chapter, and shall have jurisdiction in all other kinds of cases arising under this chapter, except as provided in subsection (b) of this section.

15 U.S.C. § 1825 (emphasis added).

The language adopted by Congress in passing the Horse Protection Act could not be any clearer – ONLY THE SECRETARY HAS THE AUTHORITY TO IMPOSE A CIVIL PENALTY AND/OR DISQUALIFICTION AND MAY DO SO ONLY AFTER “SUCH PERSON IS GIVEN NOTICE AND OPPORTUNITY FOR A HEARING BEFORE THE SECRETARY WITH RESPECT TO SUCH VIOLATION”.  15 U.S.C. § 1825 (emphasis added).  Furthermore, any person receiving a civil penalty issued under subsection (b) or disqualification issued under subsection (c), “may obtain review in the court of appeals of the United States for the circuit in which such person resides or has his place of business . . . .”  Id.  
 
The law is well-settled that the use of the word “shall” indicates a mandatory duty that is not subject to discretion by the agency.  Lopez v. Davis, 531 U.S. 230, 241 (2001).  Congress’ command to the USDA concerning the imposition of penalties under the HPA is absolute – only the Secretary may issue a penalty under the HPA after notice and opportunity for hearing before the Secretary with right of appeal to a United States Court of Appeals. 
 
Under well-settled principles of statutory construction, Congress is not required to “articulate all the acts an agency may not engage in simply to guarantee that mandatory prescriptions are followed.”    APHIS’ proposed scheme of mandating penalties through the HIOs is in direct contravention to the express language of 15 U.S.C. § 1825 and is, therefore, unlawful.

2. 15 U.S.C. § 1823(c) Allows Industry Inspectors to Only Detect, Diagnose and/or Inspect

As set out hereinabove, Congress mandated that the USDA “prescribe by regulation requirements for the appointment by the management of any horse show, horse exhibition, or horse sale or auction of persons qualified to detect and diagnose a horse which is sore or to otherwise inspect horses for the purposes of enforcing this chapter.”  See 15 U.S.C. § 1823(c).  The express language of this enabling statue provides that industry inspectors may only “detect”, “diagnose” and “inspect”.  The enabling statute does NOT provide industry inspectors with the authority to impose any agency penalty whatsoever.  As a matter of fact, the enabling language in the HPA for the establishment of the HIOs and DQPs was to allow show managers to escape or minimize liability if they used the DQPs. Ironically APHIS is not requiring show managers implement and require “mandatory penalties” – because it has no authority to require a private party like a show manager (or an HIO) to issue penalties. That right and obligation is left solely to the Secretary by the clear language of the HPA. 
 
Clearly, Congress was cognizant of the potential for constitutional due process violations if a nongovernmental entity was allowed to impose the penalties set forth in the Act at 18 U.S.C. § 1825 without ever having the opportunity to challenge their penalties before an Article III court.   The mandatory penalty scheme proposed in the current rulemaking violates the express language of the enabling statute, 15 U.S.C. § 1823(c), and is, therefore, unlawful.

B. THE PROPOSED MANDATORY PENALTIES WILL CONVERT HIOs INTO STATE ACTORS COMPELED TO COMPLY WITH DUE PROCESS REQUIREMENTS

The mandatory penalties proposed by the USDA are a clear attempt to circumvent the constitutional due process rights of those regulated under the Act.  The Department is required by the HPA to provide alleged violators with notice and opportunity for a hearing “before the Secretary” with a right to appeal to the United States Court of Appeals.  18 U.S.C. § 1825.  The proposed mandatory penalties are nothing more than an “end run” to avoid the constitutional due process requirements placed on the Department.
 
APHIS is a governmental entity which cannot, under law, deprive an individual of his property without constitutional due process of law.  As stated hereinabove, HIOs function as any other private and/or voluntary organization such as homeowner associations, athletic associations, etc. Courts have traditionally refused to exercise jurisdiction over such private organizations unless there is evidence of “fraud, bad faith, corruption, or other misconduct in the promulgation or application of the bylaws” of the organization.  Holder v. Celsor, 914 S.W.2d 496 (Tenn. Ct. App. 1995).  Any penalty levied against a violator by an HIO is a private, non-state action, and therefore, not subject to the due process requirements imposed upon state actors.  See Wolotsky v. Huhn, 960 F.2d 1331 (6th Cir. 1992)(analyzing various tests to determine if conduct at issue is “fairly attributable to the state”). 
 
The USDA would, without question, be held liable for the actions of HIOs in the imposition of mandatory penalties and any corresponding deprivation of rights of the individuals affected.  A governmental entity may be held liable for the actions of a private organization if (1) “the State creates the legal framework governing the conduct”; (2) if it delegates its authority to the private sector”; or (3) “if it knowingly accepts the benefits derived from unconstitutional benefits derived from the unconstitutional behavior.”   Nat. Collegiate Athletic Assc. v. Tarkanian, 488 U.S. 179, 192 (1988).  Private parties may also be “found to be state actors if they were ‘jointly engaged with state officials in the challenged action’” or there existed a “sufficiently close nexus between the State and the challenged action of the regulated entity.”  Id. at 192, 200.  “In determining whether an ostensibly private organization is a state actor for purposes of the Federal Constitutions’ Fourteenth Amendment, public entwinement in the organization’s management and control will support a conclusion that the organization ought to be charged with a public character and judged by constitutional standards.”  Brentwood Academy v. Tennessee Secondary School Athletic Assc., 531 U.S. 288 (2001).  See also Dennis v. Sparks, 449 U.S. 24, 27 (1980)(holding private parties were state actors because they were “jointly engaged with state officials in the challenged action” and were “willful participants in joint action with the State or its agents”). 
 
Without question, all HIOs would be found to be “state actors” if the proposed mandatory penalties are required.  The Agency’s attempt to “entwine” itself in the activities of private organizations through the imposition of mandatory penalties would be “contrary to constitutional right, power, privilege or immunity” under 5 U.S.C. § 706(2)(B) and are, therefore, unlawful and unenforceable. 

C. PENALTY AND “APPEAL” SCHEME PROPOSED IN RULEMAKING VIOLATES DUE PROCESS REQUREMENTS

The fundamental principles of constitutional due process require (1) notice and (2) a hearing appropriate to the nature of the case.   To determine if due process requirements have been satisfied, Courts look to three (3) factors:  (1) the private interest affected by the official action; (2) the risk of an erroneous deprivation of a protected interest; and (3) the government interest(s) at stake. 
 
The mandatory penalty scheme of enforcement and the proposed “appeal” process in no way satisfies the requirements of constitutional due process.  The Department is proposing to require the HIOs to develop an appeal process in which an appeal would be granted by the HIO and would have to be “heard and decided by the HIO or the violator would have to begin serving the penalty within 60 days . . . .”  Further, “HIOs would be free to set whatever policies they determine to be necessary to meet that requirement.”  76 FED. REG. No. 103, at 30867 (emphasis added).  
 
As discussed hereinabove, Congress has specifically mandated that only the Secretary has the authority to impose penalties under the HPA after a hearing before the Secretary and taking into account specific, enumerated factors.  18 U.S.C. § 1825(b).  Furthermore, under the HPA, each alleged violator is entitled to an appeal to a United States Court of Appeals.  For the Agency to now take the position that each HIO will be required to impose a federally-mandated penalty after an “appeal” pursuant to each HIO’s “appeals process” is absurd.
 
The law is clear on this issue – if the initial stages of a state-action disciplinary proceeding is delegated to a private party (such as a HIO), the agency which has delegated the authority must grant a de novo review of the decision.   Such is not the case in the proposed rulemaking scheme, and therefore, it is unlawful.
 
The de novo review required in order for APHIS to mandate the proposed penalties is, in fact, an entire new trial on the merits.  However, both APHIS and the Office of Inspector General have recognized the inability of APHIS to effectively prosecute cases under the HPA.  In the proposed rulemaking, APHIS admits enforcement “proceedings may be time-consuming and expensive, and our resources for prosecuting such cases are limited.”  76 FED. REG. No. 103, at 30866.  Additionally, in the 2010 OIG audit of APHIS, the OIG stated on page 14:
According to the Horse Protection Act, APHIS employees have the authority to inspect horses and initiate civil proceedings against individuals who are suspected of having abused their horses. Because these proceedings can be long, expensive, and have unpredictable results, APHIS has structured its enforcement process so that horse industry organizations and DQPs are the primary parties responsible for issuing immediate penalties to individuals for violating the Horse Protection Act. Such violations are not, however, civil penalties but rather violations deriving from the operating plan horse industry organizations sign with APHIS so that their DQP training programs can be accredited and their shows can be affiliated with an accredited organization.
(emphasis added). 
 
From a factual standpoint, the OIG recognizes that the “penalties” issued by the HIOs are not required under the HPA or regulations but come from the voluntary agreement by the HIOs under previous Operating Plans. Since there are no Current Operating Plans there are no required penalties!
 
Under these circumstances, for APHIS to take the position that it can provide de novo trials on the hundreds of violations it would be required to review is absolutely absurd.  Consequently, the mandatory penalty scheme proposed by APHIS is wholly incapable of providing the constitutional due process protections required by law and it is, therefore, unlawful.

D. THE REGULATIONS AND APHIS’ INTERPRETATION AND ENFORCEMENT ARE UNCONSTITUTIONAL AS OVERLY VAGUE AND SUBJECTIVE

As outlined in the preceding section, constitutional due process requires (1) notice and (2) a hearing appropriate to the nature of the case.  The notice requirement of constitutional due process includes that a party be able to identify with “ascertainable certainty” the standards with which an agency expects a party to conform.   However, the “standards” set forth in the HPR, specifically the “scar rule” and “sensitivity” determinations, are so outdated and vague as to render them unenforceable.  The OIG itself recognizes that the standards for inspection are suspect wherein on page 7 it states “Because inspections are performed by hand, their quality and results can vary greatly.” In addition and as stated in the American Horse Council  response “The hand inspection process can result in a variation of opinion between informed and well-intentioned individuals, and as a result, some have expressed concerns that the DQP inspection incorporates a level of subjectivity in evaluating each specific horse.” This same concept of variation of opinions and subjectivity applies to and impacts not only the DQPs but also VMOs and trained veterinarians. Furthermore, APHIS’s inability to consistently interpret and enforce its regulations creates a total lack of notice as is required for due process.
 
If an agency’s regulations, interpretations and enforcement are so vague and inconsistent that a reasonable person is unable to identify with “ascertainable certainty” the standards with which the agency expects the parties to conform, then the agency has violated the due process notice requirement.  Such is the case with the subjective language of the current regulations as well as APHIS’ interpretation and enforcement of the regulations.  On many occasions, the VMOs charged with enforcing the Act are unable to agree on what is, or is not, a violation – especially when attempting to interpret and/or apply the subjective “scar rule” regulation and sensitivity determinations.  Additionally, despite joint training on these issues, VMOs and industry DQPs are often in disagreement as to what constitutes a violation of the HPA and/or HPR.  Furthermore, in recent years, APHIS VMOs have articulated varying “standards” during training sessions for both industry inspectors and the general public.  Consequently, these subjective regulations and interpretations are violations of the due process notice requirement, and therefore, are unlawful. 

E. APHIS’ SCHEME TO RETAIN REVIEWING AUTHORTY OVER THE HIOs VIOLATES DUE PROCESS REQUIREMENTS AND DOUBLE JEOPARDY

The proposed rulemaking sets forth that in proposed regulation § 11.25(e), APHIS would retain “the authority to initiate enforcement proceedings with respect to any violation of the Act, including violations for which penalties are assessed in accordance with proposed § 11.25, and to impose the penalties authorized by the Act if the Department determines that such actions are necessary to fulfill the purpose of the Act and the regulations.”  76 FED. REG. No. 103, at 30867.  In light of requiring federally mandated penalties, § 11.25(e) would violate not only constitutional due process but also double jeopardy – in addition the HPA.  
 
Apparently, APHIS would like to reserve final reviewing authority to allow it to impose additional penalties beyond those it is attempting to mandate to HIOs but does not reserve for itself the duty to review the imposition of an HIO penalty to protect the constitutional due process rights of the individuals it regulates and to conform with the express language of the HPA. Furthermore, APHIS would like to reserve for itself the right to impose it own penalties TWICE – once at the HIO level and again if it sees fit after “review” and initiating an enforcement proceeding.  It is difficult to imagine a more clear-cut case of double jeopardy.  Consequently, the scheme proposed by APHIS is unlawful.

VI. THE MANDATORY PENALTY SCHEME DOES NOT
EFFECTATE THE PURPOSES OF THE HORSE PROTECTION ACT

The mandatory penalty structure which APHIS now proposes would not effectuate the purposes of the Act – the elimination of soring.  In fact, just the opposite could occur if mandatory penalties were to be imposed.  Soring could actually INCREASE under the scenario proposed by the APHIS.
 
First, the HIOs, such as SHOW, who are actually effectuating the purpose of the Act through fair and consistent process, would, for all practical purposes, be destroyed.  If the USDA requires mandatory penalties and the other items they are proposing as stated in the APHIS response to the OIG Audit, the HIOs would have no other independent responsibility other than to assign DQPs. This would be more than a close nexus under case law – the HIOs would be agents or subcontractors of the USDA itself. Therefore, owners and trainers would automatically gravitate to the HIOs who are involved in lax and/or ineffective enforcement of the Act and their Rules in order to avoid receiving tickets which would result in the imposition of a “mandatory penalty.”  Trainers and owners and especially non-compliant trainers and owners would have no incentive to attend events with HIOs who fairly and consistently follow the Act and its regulations.  As a result, those HIOs who are actually doing their job through fair and consistent enforcement of their Rules would be penalized and likely driven out of existence. 
 
Secondly, the USDA has traditionally wholly ignored the existence of an entire segment of the industry which participates at non-affiliated events sometimes referred to as “outlaw shows.”  At these “outlaw shows” there is absolutely no inspection process as required by the HPA and its regulations.  By failing, or refusing, to have mandatory inspections as required by HPA and its regulations, management of these shows are, by definition, in violation of the Act and Regs.  See 15 U.S.C. § 1824.  These shows number in the hundreds each year with thousands of horses shown with little to no inspection process.   
 
The USDA has been aware of the existence of the “outlaw shows” for years but has wholly failed to address their existence or the undetected, undocumented violations which occur at these shows.  In 2002, the USDA recognized that it needed to “devote its limited resources toward increasing its inspections at shows that are not affiliated with an HIO.”  See Am. Horse Protection Assc. v. USDA, Civil Action No. 01-00028 (D.C. July 9, 2002).  However, since 2002, to this Respondent’s knowledge, the USDA has attended no unaffiliated or “outlaw” shows prior to this year.  Additionally, to this Respondent’s knowledge, the USDA has never pursued a case against the management of one of these unaffiliated/outlaw shows despite management’s refusal to comply with 15 U.S.C. § 1824. 
 
While this Respondent has no personal knowledge of what, if any, violations may be occurring at these unaffiliated/outlaw events, the evidence is clear that individuals currently serving suspensions from SHOW HIO are participating at these events.  By way of example, Respondent would refer to the following instances.  Evidence documenting these violations has previously been provided to the USDA and Respondent will make same available again upon request by the Department.  However, the names of the individuals involved have been withheld to protect their privacy:
 1.  Evidence of Violator who is currently serving a Lifetime suspension  participating at unaffiliated/outlaw shows during 2010.
 2.  Evidence of Violator showing at an unaffiliated/outlaw show in Lewisburg,  Tennessee, while serving a one (1) year suspension for a bi-lateral sensitivity  violation from SHOW.
 3.  Evidence of Violator participating at an unaffiliated/outlaw show while serving  a lifetime suspension levied by SHOW.

SHOW has no authority to further penalize these individuals for violation of their suspensions, and to SHOW’s knowledge, the USDA has taken no action against them for
violation of their suspensions.
 
The weakening of HIOs, such as SHOW, which are committed to consistent enforcement of the HPA and its Regs, and increasing the number of participants at unaffiliated/outlaw shows through the imposition of “mandatory penalties” would not effectuate the stated purpose of the Act – the elimination of soring.  Consequently, the adoption of the proposed penalty scheme would not give effect to Congress’ express intention, and therefore, could not be upheld.  See Chevron U.S.A., Inc. v. Nat. Resources Defense Council, 467 U.S. 837 (1984)(holding that if Congress has clearly spoken on the issue, that intention is law and must be given effect).  
 
Additionally, as discussed hereinabove, the de novo review which would be required in order to legalize the imposition of mandatory penalties by a private organization, such as an HIO, far exceeds the capabilities of APHIS’ limited resources.  The length of time it would take for an appeal from an HIO penalty to work its way through the Secretary’s appeal system and to a U.S. Court of Appeals as required by the Act would slow enforcement to a halt.  It would, literally, take years to enforce the first mandatory penalty against an alleged violator.  SHOW does not believe this scenario can possibly be said to accomplish the purposes of the Act.

VII. PRACTICAL AND ECONOMIC IMPACT
 
As set forth above, there are numerous legal reasons the proposed APHIS Rulemaking must fail as a matter of law. From a practical and common sense standpoint and from an economic impact standpoint it must not be allowed. As articulated, the current Rulemaking is proposing “minimum” penalties for violations of the HPA. If the USDA is allowed to require these “minimum” penalties, what prevents it from next year requiring additional “minimum” penalties? What prevents it from providing “maximum” penalties? What prevents it from requiring penalties that are not even allowed in the Horse Protection Act itself? What prevents the USDA from taking a horse away from an individual who is “found guilty” by an HIO of a minor infraction of the HPA such as a 6.1 ounce chain (a heavy chain)?  Where does the ability of the USDA and APHIS to require “minimum”, “maximum” or absurd penalties stop?
 
Under our Constitution there are certain inalienable rights. Congress enacts the law and the legislative branch enforces it. For APHIS and the USDA to be allowed to propose and implement penalties that go above and beyond the law as enacted by Congress and from a practical and common sense standpoint do not make any sense and do not comply with our Constitution must be rejected. 
 
The USDA in this Rulemaking also states that there is no economic impact to this Rulemaking. That is just plain false. Not only would there be an economic impact to the “minimum penalties” as described in Section V above, but the requirement of the proposed “appeal” process would be extremely costly. By its own admission the impact of enforcing the HPA is “time-consuming and expensive.”  The effect of this Rulemaking would be an unfunded mandate which in the current environment is an intentional abuse of authority and process. 
 
APHIS had admitted that the enforcement and hearing/appeal processes are “time-consuming and expensive, and our resources for prosecuting such cases are limited”. In spite of this, the proposed Rulemaking would require the HIO to be the entity which not only certifies the DQP to diagnose and detect a sore horse but also to then hire the inspector who collects the information about the sore horse to then also investigates, prosecutes and adjudicates the penalty that the Horse Protection Act now requires that the Secretary perform. 
 
The HIO has no investigative responsibility, capability, personnel or funding to perform OIG type investigations. The USDA itself separates inspection from investigation and prosecution. OIG has paid investigators who perform the following functions;
1. Investigate all the specifics of the information provided by the VMO
2. Verify the name, address, etc of the Trainer
3. Verify the name, address etc of the Owner, exhibitor, etc
4. Investigate, interview all parties regarding allegations, payments by owners, entry fees, etc
5. Ensure all other facts and data so that the US attorney can bring a case.

Then, a separate arm of US government – the US attorney and Administrative Law Judge, are engaged. Under Section 6 of the HPA the Secretary has the following capabilities, none of which are available to the HIOs;
 
(1) The Secretary may require by subpoena the attendance and testimony of witnesses and the production of books, papers, and documents relating to any matter under investigation or the subject of a proceeding. Witnesses summoned before the Secretary shall be paid the same fees and mileage that are paid witnesses in the courts of the United States.
(2) The attendance of witnesses, and the production of books, papers, and documents, may be required at any designated place from any place in the United States. In case of disobedience to a subpoena the Secretary, or any party to a proceeding before the Secretary, may invoke the aid of any appropriate district court of the United States in requiring attendance and testimony of witnesses and the production of such books, papers, and documents under the provisions of this Act.
(3) The Secretary may order testimony to be taken by deposition under oath in any proceeding or investigation pending before him, at any stage of the proceeding or investigation. Depositions may be taken before any person designated by the Secretary who has power to administer oaths. The Secretary may also require the production of books, papers, and documents at the taking of depositions.
(4) Witnesses whose depositions are taken and the persons taking them shall be entitled to the same fees as paid for like services in the courts of the United States or in other jurisdictions in which they may appear. (emphasis added).
(5) The United States district courts . . . are vested with jurisdiction specifically to enforce, and to prevent and restrain violations of this chapter, and shall have jurisdiction in all other kinds of cases arising under this chapter, except as provided in subsection (b) of this section.(emphasis added).

These are real costs that an HIO is financially unable to bear if the USDA is successful in this illegal Rulemaking.  
 
An HIO has no responsibility or funding other than to inspect and inform show management of any alleged violation. The USDA is attempting to use a private association to circumvent normal due process of investigation, prosecution and adjudication thru this Rulemaking. The economic impact on the HIO’s if required to follow the USDA mandatory penalty concept would be huge and is simply not capable of being absorbed by any HIO. 
 
Again, by its own admission the impact of enforcing the HPA is “time-consuming and expensive” For the USDA to state there is no economic impact is beyond the pale and misleading.

VIII. CONCLUSION
 
The proposed scheme mandates federal agency penalties be imposed by a private organization with no set procedure of appeal, no right of appeal to the Secretary or an Article III Court AND the Agency would have the right to impose additional penalties as it sees fit.  As discussed hereinabove, the number of violations of an individual’s constitutional rights and violations of the express language of the HPA are difficult to enumerate.  The penalty and appeal scheme proposed by APHIS is so far beyond the pale it is hard to imagine that any consideration whatsoever was given to the constitutional rights of the those it regulates, much less the intent and express language of Congress in passing the HPA.
 
Furthermore, the proposed scheme simply does not effectuate the purposes of the Act.  Instead, it would lead to increased incidents of soring, an increase in the number of wholly unregulated events and an appeal process that would move at a glacial pace allowing alleged violators to continue to participate.  
 
Respondent SHOW believes the current Act and regulations are sufficient to protect the interest of the horse and do not violate the constitutional rights of the individuals it regulates.  SHOW seeks to continue to improve its enforcement of the HPA and HPR as well as its working relationship with the USDA under the law as it currently exists.
 
Respectfully submitted,
__________________________
DR. STEPHEN L. MULLINS,
PRESIDENT
SHOW, INC.
POST OFFICE BOX 167
SHELBYVILLE, TN 37162
931/684-9506
FAX:  931/684-9538