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Opinion
No. 03-003, 2003 WL 549132
February 10, 2003
Summary
of Opinion
The Attorney General was asked whether
the Maryland Racing Commission could delegate administration of special Maryland
bred funds to bred associations. The
Attorney General said it could delegate details of administration of the funds
to those associations, but not policy decisions, at least without setting policy
standards and reviewing the rules made by the associations.
Text
of Opinion
RACING -- BUDGETARY ADMINISTRATION
‑ DELEGATION AND SUBDELEGATION -- MARYLAND RACING COMMISSION MAY DELEGATE
MINISTERIAL DUTIES RELATED TO ADMINISTRATION OF BRED FUNDS
J. Michael Hopkins
Acting Executive Director
Maryland Racing Commission
500 North Calvert Street
Baltimore, MD 21202
Dear Mr. Hopkins:
Prompted by questions from the
Legislative Auditor, your predecessor asked for our opinion about the extent to
which the Maryland Racing Commission (the "Commission") may delegate
administration of two funds established under the Maryland Horse Racing Act.
With respect to administration of the Maryland‑Bred Race Fund, which
subsidizes races and related awards involving thoroughbred horses bred in
Maryland, the Commission has assigned certain functions to the Maryland Horse
Breeders Association, Inc. ("MHBA"). With respect to the Maryland
Standardbred Race Fund, which subsidizes races and related awards involving
standardbred horses bred in Maryland, the Commission has assigned similar
functions to an administrator ‑ a staff position that the Commission has
created by regulation.
For the reasons stated below, it is our
opinion that the Commission may delegate administrative and ministerial duties
related to the Maryland‑Bred Race Fund to the MHBA, in light of functions
assigned to that entity by the Legislature. The delegation of similar duties
with respect to the Maryland Standardbred Race Fund to an administrator employed
by the Commission is also permissible. In either instance, the Commission may
not delegate discretionary functions specifically assigned to the Commission by
statute. For example, the MHBA and the administrator may devise schedules of
races subsidized by the respective funds, but those schedules are subject to the
Commission's approval.I
The Bred Funds
The General Assembly has created two
funds (collectively referred to as the "Bred
Funds") under the auspices of the Commission to promote, respectively, the
thoroughbred and standardbred (harness) industries in the State.
A. Maryland-Bred Race Fund
The Maryland-Bred Race Fund was created
in 1962. Chapter 137, Laws of Maryland 1962, now codified at Annotated Code of
Maryland, Business Regulation Article ("BR"), ss 11-529 through 11-541.
Each thoroughbred track in Maryland must allocate certain percentages of the
parimutuel pools for its races to the Fund.1 The Fund may also receive money
from other sources. See, e.g., BR ss 11-804 (payments derived from bets made on
out-of-state races); 11‑804. [FN1] (payments received with respect to the
simulcasting of standardbred races in Maryland to other jurisdictions). [FN2]
[FN1].
In particular, the tracks are required to allocate to the Fund designated
percentages of the "breakage" and "takeout" from each
parimutuel pool. BR ss 11‑515, 11‑525(d). A parimutuel pool consists
of the total amount wagered on a race. The "takeout" is the part of
the parimutuel pool not returned to bettors. The "breakage" is the
cumulative amount remaining after the winnings of successful bettors are rounded
down to the next lowest multiple of 10 cents. BR s 11‑101(b), (e), (l),
(u).
[FN2].
Under BR s 11‑804, the breakage and takeout derived from bets made on
out‑of‑state races are allocated "in a way normally applicable
to parimutuel betting on racing the licensee holds." Under BR s
11‑804.1, payments received by a Maryland track with respect to
simulcasting of its races to other jurisdictions are allocated to various
purposes, including the applicable Bred Fund, pursuant to an agreement between
the track and other components of the racing industry.
The Maryland‑Bred Race Fund
provides financial support for the "Maryland‑Bred Race Program,"
a series of races in which only thoroughbred horses bred in Maryland may
participate. [FN3] Each thoroughbred track is to provide for the running of such
races as part of that program. BR s 11‑536. In order to be eligible for
those races, a horse must be registered with the MHBA, a private entity. BR s
11‑537. The criteria for such registration with the MHBA are established
by statute. BR s 11‑538. [FN4] An owner or breeder aggrieved by an MHBA
decision not to register a horse may appeal that decision to the Commission.
COMAR 09.10.01.49B.
[FN3].
In addition, up to 5% of the Fund may be devoted to special races for horses
conceived, but not necessarily foaled (i.e., born), in Maryland. BR s
11‑535(d).
[FN4].
In order to qualify for registration a horse must have been foaled in Maryland
and one of the following criteria must be satisfied:
(1) the breeder of the horse has maintained a place of abode in Maryland
for more than nine months immediately before registration;
(2) the breeder of the horse keeps breeding stock continually in
Maryland;
(3) the horse was conceived in Maryland during the previous [breeding]
season; or
(4) the horse's [mother] was sent to Maryland to foal and after foaling,
[attempts were made to impregnate the mother] by a Maryland stallion during the
season of the horse's birth.
BR
s 11‑538. According to its website, the MHBA charges a fee ranging from
$50 to $300 for registration. See <www.mdhorsebreeders.com/MdBdFn.cfm>
B. Maryland Standardbred Race Fund
The Maryland Standardbred Race Fund
(the "Standardbred Fund"), a similar fund for harness racing, was
created in 1971. Chapter 771, Laws of Maryland 1971, now codified at BR ss
11‑623 through 11‑636. Like the thoroughbred tracks, harness tracks
are required to forward to the Fund designated percentages of the takeout and
the breakage from each parimutuel pool. BR ss 11‑613(a)(2)(i),
11‑615(a), 11‑617(b). Also, like the Maryland‑Bred Race Fund,
the Standardbred Fund may receive monies from other sources, as well. See BR s
11‑403(a)(8) (distributions from Special Fund consisting of various fees
and taxes); BR s 11‑804 (payments derived from bets made on
out‑of‑state races); BR s 11‑804.1 (payments received with
respect to the simulcasting of standardbred races in Maryland to other
jurisdictions).
The Standardbred Fund provides
financial support for two racing programs that include races run at each of the
harness tracks in the State. BR s 11‑631. First, the Foaled Stakes Program
is a series of races in which only standardbred horses foaled (born) in Maryland
may compete. To be eligible for those races, a horse must be registered with the
Maryland Standardbred Race Fund Advisory Committee, an entity created by
statute. BR ss 11‑625, 11‑ 632. The statutory registration criteria
are similar to those for the Maryland‑ Bred Race Fund. BR s 11‑632.
An owner or breeder may appeal to the Commission from a refusal of the Advisory
Committee to register a horse. COMAR 09.10.02.43D.
Second, the Sires Stakes Program is a
series of races in which only standardbred horses sired by Maryland stallions
may participate. For a horse to be eligible for those races, the horse's sire
(father) must be registered with both the Advisory Committee and the United
States Trotting Association, and certain other criteria must be satisfied. BR s
11‑633. [FN5] A denial of registration by the Advisory Committee may be
appealed to the Commission. COMAR 09.10.02.53H.
[FN5].
The horse's sire must have been at stud in Maryland for a full breeding season,
and the offspring must have been conceived during that season. BR s
11‑633(2)‑(3).
C. Administration of the Bred Funds
The Legislature has charged the
Commission with administering the Bred Funds. BR ss 11‑535(a)(1),
11‑629(a)(1). With respect to each fund, the Commission is to rely on the
"help and advice" of an Advisory Committee consisting of
representatives from various segments of the pertinent racing industry. Id.
[FN6] The Commission is to deposit with a bank or trust company the monies
allocated to the Bred Funds, and to ensure that those funds are secured by
collateral. BR ss 11‑535(b), 11‑629(b). Payments may be made from
the Bred Funds only upon order of the Commission. BR ss 11‑ 535(a)(2),
11‑629(a)(2).
[FN6].
The Maryland‑Bred Race Fund Advisory Committee consists of five members
appointed by the Commission with the approval of the Secretary of Labor,
Licensing and Regulation. One of the members must also be a member of the
Commission. The other four members of the Advisory Committee are to be appointed
on the recommendation of racing‑related entities: two must be recommended
by and be members of the MHBA; one must be recommended by the mile thoroughbred
track licensees, and one must be recommended by the Maryland State Fair and
Agricultural Society, Inc. (Timonium). BR s 11‑532.
The
Maryland Standardbred Race Fund Advisory Committee is also appointed by the
Commission with the approval of the Secretary of Labor, Licensing and
Regulation. One of the members is to be nominated by the Chairman of the
Commission and be a member of the Commission. One member is to be nominated by
the Chairman to represent a harness racing licensee. Two members are to be
nominated by the organization representing a majority of the standardbred
breeders in the State (with one being a "commercial breeder"). One
member is to be nominated by the Cloverleaf Standardbred Owners Association,
Inc. (a group representing a majority of the standardbred owners and trainers in
the State). BR s 11‑626.
In
each case, the member of the Commission who serves on an Advisory Committee is
the chairman of that Advisory Committee. BR s 11‑533; BR s 11‑627.
On the recommendation of the respective
Advisory Committees, the Commission is to set the parameters for the race
programs supported by the Bred Funds ‑ i.e., the Commission is to
determine the number of races in each program and, for each race, the amount of
the purse, the date of the race, the distance, and the amount of the breeder's
awards. BR ss 11‑539(a)(1)‑(5), 11‑634(b)(1)‑ (5). In
addition, the Commission is to set "any other condition necessary to carry
out the purpose" of the Bred Fund races. BR ss 11‑539(a)(6),
11‑ 634(b)(7). [FN7]
[FN7].
In addition to these conditions, with respect to Standardbred Fund races, the
Commission also is to set the nomination and registration procedures for horses,
again on the recommendation of the Advisory Committee. BR s 11‑ 634(b)(6).
We understand that the Commission
relies on the MHBA for administration of the programs supported by the
Maryland‑Bred Race Fund. In particular, the Commission looks to the MHBA
to ensure that registered thoroughbreds meet the requirements for Marylandbred
horses; to oversee the deposit of monies into the Fund's bank account; to
calculate and distribute awards from the Fund; to maintain records of payments
from the Fund; and to coordinate the race schedule for the Maryland‑Bred
Race Program. Pertinent to the functions performed by the MHBA, the Commission
has adopted a regulation that governs the day‑today administration of the
Maryland‑Bred Race Fund. That regulation details the allocation of the
Fund to race purses, owner's awards, breeder and stallion awards, and other
purposes related to Maryland‑bred thoroughbreds. COMAR 09.10.01.49A, C,
F‑P.
Under that regulation, the MHBA
receives 5% of all monies allocated to the Maryland‑Bred Race Fund, after
the deduction of prescribed amounts, as compensation for administration of the
Fund. COMAR 09.10.01.49D. The regulation also requires that the MHBA render a
satisfactory accounting to the Commission of monies it receives. COMAR
09.10.01.49E.
With respect to the Standardbred Fund,
the Commission has adopted regulations governing registration of standardbred
horses, for the Foaled Stakes and Sired Stakes programs, eligibility of horses
to start in Fund races, the amount and distribution of purses and breeder
awards, and related matters. COMAR 09.10.02.43,.53. The regulations also provide
for the appointment by the Commission of an administrator to supervise the daily
operation of the Standardbred Fund. COMAR 09.10.02.54‑1. The administrator
is to be selected by the Advisory Committee, but serves at the pleasure of the
Commission, which also determines the administrator's compensation and benefits.
Id.
Currently, the administrator works from
an office at Rosecroft Raceway where she oversees the collection of revenue due
the Standardbred Fund, [FN8] verifies eligibility of participants in
Standardbred Fund races, generates lists of eligible horses, supervises certain
aspects of the races, and calculates and distributes awards from the Fund. In
addition, the administrator inspects Maryland breeding farms and their horses
and performs other duties to ensure that horses being registered to participate
in Standardbred Fund races satisfy the statutory criteria. See <www.msrfonline.com/pages/About_MSRF.htm>
(Standardbred Fund website).
[FN8].
Monies allocated to the Standardbred Fund by harness track licensee are
deposited into an account in the names of the Standardbred Fund and the
Commission (using the Commission's tax identification number). The Commission
conducts an accounting of these deposits at the end of the calendar year. A
reconciliation is then made regarding any overpayment or underpayment by the
tracks to the Fund.
D. Legislative Audit
During a recent audit of the
Commission, the Legislative Auditor questioned whether the Commission had
delegated its responsibilities for the Bred Funds contrary to State law. The
Legislative Auditor recommended that the Commission assume responsibility for
administering the Funds "unless an Opinion from the Office of the Attorney
General is obtained that supports the delegation of administering the Funds to
private entities."
II
Analysis
A. Delegation of Authority by an
Administrative Agency
It is not unusual for the Legislature
to delegate a measure of governmental power to a private organization. [FN9] See
71 Opinions of the Attorney General 189, 190‑93 & n.2 (1986).
Nevertheless, it is also a general principle of administrative law that an
administrative agency cannot, in the absence of express legislative
authorization, delegate its statutory powers or functions such that it abdicates
the exercise of discretion or judgment in favor of that of a private entity.
Opinion No. 94‑050 (October 5, 1994) (unpublished). "This
nondelegation doctrine arises largely from concern for the loss of public
accountability that would result from the relinquishment by an administrative
agency of its powers and functions to a private entity." 73 Opinions of the
Attorney General 295, 302 (1988); see also Perot v. Federal Election Commission,
97 F.3d 553, 559 (D.C.Cir. 1996) (when the legislature specifically vests an
agency with authority to administer a statute, the agency may not shift that
responsibility to a private actor).
[FN9].
Strictly speaking, the term "delegation" typically refers to a grant
of authority by a legislature to an administrative agency. See, e.g., Christ v.
Department of Natural Resources, 335 Md. 427, 445, 644 A.2d 34 (1994). In this
opinion, we use that term to refer to the subdelegation of authority by the
administrative agency to an entity or an employee.
Even within an agency, the delegation
of authority may be restricted in some instances. See Quesenberry v. Washington
Suburban Sanitary Commission, 311 Md. 417, 425, 535 A.2d 481 (1988) (official
specifically charged with making a quasi‑judicial administrative decision
could not delegate ultimate responsibility for that decision within the agency).
In other instances, a board or commission may not delegate discretionary
functions specifically conferred on it by the Legislature without providing
prior instruction and subsequent review of the exercise of the delegated
authority. See 61 Opinions of the Attorney General 734 (1976) (delegation by
Board of Public Works to its administrator); 50 Opinions of the Attorney General
180 (1965) (delegation by Board of Trustees of State Colleges to its
administrative assistant).
However, these limitations on
delegation do not mean that an agency may not delegate administrative duties
that are ministerial in nature. 61 Opinions of the Attorney General at 736; see
also 73 C.J.S. Public Administrative Law and Procedure, s 56, pp. 513‑15;
Krug v. Lincoln Nat. Life Ins. Co., 245 F.2d 848, 853 (5th Cir. 1957). Express
statutory authority is not required for the delegation of such authority, and
legislative intent to permit delegation within an agency may be inferred. EEOC
v. Raymond Metals Products Co., 385 F. Supp. 907, 921‑22 (D.Md. 1974),
aff'd in part and rev'd in part on other grounds, 530 F.2d 590 (4th
Cir. 1976). In short, the delegation of ministerial duties is permitted when it
is not inconsistent with the enabling statute.
Finally, the grant
of broad rulemaking authority to an agency may be a source of authority for
delegation of some of its functions. Fleming v. Mohawk Wrecking and Lumber Co.,
331 U.S. 111, 121‑22 (1947); District of Columbia v. White, 435 A.2d 1055,
1056‑57 (D.C.App. 1981).
Applying the
general principles outlined above, we think the Commission may delegate many of
its duties with respect to administration of the Bred Funds.
B. Administration
of Maryland‑Bred Race Fund by MHBA
In the legislation
establishing the Maryland Bred Race Fund, the General Assembly delegated to the
MHBA the administrative function of assessing the qualifications of thoroughbred
horses and registering them to participate in the Maryland‑Bred Race
Program. It seems a logical division of labor for the same entity to make the
initial determination of other details of the program. Thus, the Commission may
rely on the MHBA to assist with other functions related to the Maryland Bred
Race Program. The MHBA may propose when the Bred Fund races are to be run, how
many there shall be, the distance provisions for such races, the purses, and the
amounts of the breeders' awards assigned to each race.
The Commission's
regulation reflects the agency's longstanding administrative construction of the
Bred Fund statutes, which gives rise to a strong presumption that its
construction is correct. Lussier v. Maryland Racing Commission, 343 Md. 681,
696‑97, 684 A.2d 804 (1996). Moreover, the actions of the MHBA regarding
the administration of the Maryland‑Bred Race Fund are also subject to the
review of the Advisory Committee, which is directed by statute to help and
advise the Commission. BR ss 11‑531 through 11‑534.
In our view, the
Commission's delegation to the MHBA is permissible if the Commission provides
the necessary prior instruction to the MHBA and retains final authority with
respect to those decisions that the Legislature specifically assigned to the
Commission. For example, the Commission may delegate to the MHBA the task of
arranging a schedule of Fund‑supported races and, in accordance with the
Commission's regulations, computing
In sum, it is not
inappropriate for the Commission to delegate ministerial functions to the MHBA,
so long as it retains ultimate authority for those discretionary decisions that
the Legislature has assigned to the Commission.
C. Administration
of Standardbred Fund
With respect to
administration of the Standardbred Fund, the Commission has by regulation
created the position of administrator of the Fund. [FN10] The administrator of
the Standardbred Fund is appointed by the Commission, serves at the pleasure of
the Commission, and is paid the salary and benefits determined by the
Commission. We understand that the administrator performs duties assigned by the
Commission in accordance with Commission regulations governing the Standardbred
Fund. By virtually any definition, the administrator is an employee of the
Commission. [FN11]
[FN10].
The Legislature has granted the Racing Commission broad authority to adopt rules
governing horse racing in Maryland. See BR s 11‑210. In a case involving a
challenge to regulations adopted by the Racing Commission, the Court of Appeals
stated that "where the Legislature has delegated such broad authority to a
state administrative agency to promulgate regulations in an area, the
regulations are valid under the statute if they do not contradict the statutory
language or purpose." Lussier v. Maryland Racing Commission, 343 Md. 681,
688, 684 A.2d 804 (1996).
[FN11].
A popular dictionary defines "employee" as "a person hired by
another, or by a business firm, etc., to work for wages or salary."
Webster's New World Dictionary (2d ed.), p.459. We have not been asked, and
therefore do not address, what other personnel laws may apply to the
administrator.
In an opinion
issued approximately 25 years ago, Attorney General Burch recognized the need
for the Commission's Harness Racing Board, [FN12] which then had responsibility
for the Standardbred Fund, to rely on an employee to carry out its
responsibility to promote Maryland‑bred racing through the Fund. See 62
Opinions of the Attorney General 755 (1977). That opinion discussed whether the
statute establishing the Standardbred Fund implicitly authorized payments from
the Fund for the salary and expenses of an employee to administer the Fund and
to "perform the duties of planning and preparation for the races funded by
it." Id. at 755. Noting that the relevant portions of the statute regarding
the Fund were identical to those regarding the Maryland‑Bred Race Fund and
that, by law, both Funds were to be administered by the Commission, the opinion
concluded that "the expenses of administration and promotion that
reasonably relate to the purposes of the creation of the Fund and the
advancement of standardbred racing may properly be paid out of the Fund."
Id. at 756 (emphasis added). [FN13]
[FN12].
From 1977 to 1984, the Commission was bifurcated into the Thoroughbred Racing
Board and the Harness Racing Board. See Chapter 728, Laws of Maryland 1977;
Chapter 500, Laws of the awards and other payments due from the Fund. For that
purpose, the Commission has set forth in regulation elaborate instructions as to
the criteria for the scheduling of races and the computation of awards. But the
Commission must not abdicate its statutory role. The actual schedule of races
and payments from the Fund must remain subject to Commission approval. The
Commission must retain and exercise ultimate control over the administration of
the Funds. The Commission must maintain a bank account into which funds are
deposited and ensure that the funds are secured by collateral.
[FN13].
This opinion overruled a 1963 opinion that concluded that the statute creating
the Maryland‑Bred Race Fund did not authorize expenditures from that Fund
to defray the expenses of an employee to promote racing supported by the Fund.
See 48 Opinions of the Attorney General 372 (1963).
The designation of
an administrator does not entail any unusual or unwarranted delegation of the
Commission's responsibilities. In our view, the situation is no different than
if the Commission assigned its regular staff to carry out the ministerial
functions involved in administering the Fund. Moreover, the administrator's
decisions concerning administration of the Fund are subject to the review of the
Advisory Committee that is designated by statute to help and advise the
Commission. So long as the Commission remains ultimately responsible for
decisions as to the number, dates, and distances of races, the amounts of purses
and breeder's awards, and the other responsibilities assigned to it by the
General Assembly, the Commission may look to its staff to provide the necessary
assistance to accomplish those purposes.
III
Conclusion
In our opinion,
the Commission may delegate to the MHBA administrative and ministerial duties
related to the Maryland‑Bred Race Fund. Similarly, the Commission may
delegate to an administrator employed for that purpose administrative and
ministerial duties related to the Maryland Standardbred Race Fund. In either
case, the Commission may not delegate discretionary functions assigned to it by
the General Assembly without providing prior instruction and subsequent review
for the MHBA and the administrator, and the Commission must retain final
authority over those discretionary functions.
Very truly yours,
J. Joseph Curran,
Jr.
Attorney General
Bruce C. Spizler
Assistant Attorney General
Robert N. McDonald
Chief Counsel Opinions & Advice
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