OAG 10-009 | KOGC

Request By:
Burr Travis, Commissioner, Kentucky Horse Racing Commission

Opinion

Opinion By: Jack Conway, Attorney General; Tad Thomas, Assistant Deputy Attorney General

Opinion of the Attorney General

On January 5, 2010, and January 8, 2010, Burr Travis, Commissioner of the Kentucky Horse Racing Commission, requested an opinion of the Attorney General pursuant to KRS 15.020, asking "can agents of the Kentucky Horse Racing Commission ("KHRC") search and seize any and all material which the KHRC or its agents determine are relevant to a KHRC investigation?" Pursuant to long-standing policy of this office, written requests for opinions on the matter and supporting documentation were made to a number of potential interested parties including the KHRC, Churchill Downs Inc. ("Churchill Downs"), Keene-land Association, Inc. ("Keeneland"), the Jockeys' Guild, Inc., the National Thoroughbred Racing Association and the Thoroughbred Owners and Breeders Association. The KHRC provided correspondence responsive to that request, and Churchill Downs and Keeneland submitted a joint response.

Background

The KHRC is an independent state government agency with the power and duty to regulate the conduct of horse racing and pari-mutuel wagering on horse racing in Kentucky. 1 KRS 230.215(2) gives the KHRC "forceful control of horse racing in the Commonwealth with plenary power to promulgate administrative regulations prescribing conditions under which all legitimate horse racing and wagering thereon is conducted in the Commonwealth." This control includes "all powers necessary and proper to carry out fully and effectually the provisions of this chapter," 2 and KRS 230.260(8) grants the KHRC "full authority to prescribe necessary and reasonable administrative regulations and conditions under which horse racing at a horse race meeting shall be conducted in this state." These administrative powers of the KHRC have been broadly construed by the courts. 3

The jurisdiction of the KHRC extends over "all horse race meetings in this Commonwealth and over all associations and all persons on association grounds." 4, 5 Included in this jurisdiction is the power to "visit, investigate and have free access to the office, track, facilities, or other places of business of any licensee, or any person owning a horse or performing services regulated by this chapter on a horse. " 6 KRS 230.310(1) requires anyone who wants to participate in horse racing as an owner, trainer, jockey, or generally any capacity involved in the preparation, maintenance, and conduct of horse races, to obtain a license from the KHRC, and forbids practicing within the jurisdiction of the KHRC without one.

In accordance with its power under KRS 230.215(2) and 230.260(8) to promulgate necessary and reasonable administrative regulations for the regulation of horse racing, the KHRC has promulgated regulations allowing for warrantless search and seizure of items which may be evidence of a violation of its administrative regulations. 810 KAR 1:024 § 9 provides that, "To ensure compliance with these administrative regulations or to investigate possible infraction of these administrative regulations, the commission and its representatives shall have free access to all offices, files, records, enclosures, property and facilities owned or possessed by associations or located on association grounds." 810 KAR 1:025 § 1(3) provides, in relevant part,

(a) A licensee shall consent to a reasonable search of his property in possession by the commission or its representatives, the property being restricted to that on association grounds and including tack rooms, living or sleeping quarters, motor vehicles, trunks, boxes, and containers of any sort.

(b) Licensee shall consent to seizure of any object which may be evidence indicating a violation of an administrative regulation. 7

The KHRC license application also contains a consent clause that the applicant must sign requiring consent to search and seizure by the KHRC in matters regarding horse racing. The consent clause reads, in relevant part,

I consent to search and inspection by the KHRC or its agents to all properties in my possession under the jurisdiction of the KHRC or upon which I am conducting any activities related to racing in any investigation of any violation of rules, regulations, or steward's directives related to Racing under the jurisdiction of the KHRC. I consent to seizure of any and all materials which KHRC or its agents determine are relevant to a KHRC investigation.

Thus in obtaining a license to participate in horse racing from the KHRC, a licensee must consent to reasonable warrantless search and seizure of the licensee's property, by the KHRC or its representatives, in any area that is within the jurisdiction of the KHRC.

Generally, a search and seizure of homes or commercial premises by state actors without probable cause is in violation of the Fourth Amendment because the owner has an expectation of privacy. 8 New York v. Burger, 482 U.S. 691, 699 (1987). However, there is an "administrative search" exception to the warrant requirement, which allows warrantless searches of commercial premises by the representatives of a state agency conducted as part of a regulatory scheme, especially in a "closely regulated industry" such as liquor 9 or firearms. 10, 11 In order for the administrative search exception to apply, three criteria must be met:

(i) there must be a substantial government interest that informs the regulatory scheme pursuant to which the inspection is made;

(ii) the warrantless inspections must be necessary to further the regulatory scheme; and

(iii) the statute's inspection program, in terms of the certainty and regularity of its application, must provide a constitutionally adequate substitute for a warrant. 12 Burger, 482 U.S. 691 at 702-703, citing Donovan v. Dewey, 452 U.S. 594, 600-603 (1981).

The justification for the administrative search exception is that owners of commercial premises in closely regulated industries have a reduced expectation of privacy, in that the regulation is so obvious and pervasive that anyone choosing to participate in such an industry must be aware of the regulation, and participation in the industry entails voluntary consent to such regulation. 13 Administrative searches also serve the regulatory purpose of deterring possession of items that may be contrary to the regulatory scheme. 14 The evidentiary burden for an administrative search is determined by the reasonable legislative or administrative standards of the regulatory scheme, which can vary and are not limited to criminal probable cause. Camara v. Municipal Court, 387 U.S. 523, 538 (1967). 15

It is not disputed that the horse racing industry in Kentucky is a closely regulated industry which meets the Burger criteria for a warrantless search, 16 and that the KHRC and its agents have the authority to promulgate regulations authorizing such warrantless administrative searches and to conduct them. The present issue is the scope of those warrantless administrative searches, and what properties are subject to them.

Discussion

In his request for an opinion, Commissioner Travis argues that,

it is imperative that agents of the KHRC not only can search the vehicles of all licensees, barns, tack rooms, offices, or other locations, but can also search and seize drugs, syringes, diagnostic and therapeutic instruments without limitation which are relevant to a KHRC investigation. The vehicles of veterinarians are clearly their "places of business" as per KRS 230.260(7).

In their joint response, Churchill Downs and Keeneland argue the following:

The KHRC's regulatory scheme regarding search and seizure is constitutionally sufficient to the extent that it is interpreted as authorizing the search of owners, trainers, veterinarians, and other licensed service providers on association grounds for those items specifically enumerated in 810 KAR 1:025, § 3(12) and (13), and 810 KAR 1:018 §§ 3, 14, and 20, or other relevant items discovered incident to an otherwise proper search. 17

The consent language contained in the KHRC License Application does not constitute a constitutionally valid "voluntary consent" to warrantless search and seizure and, therefore, does not authorize search and seizure beyond the scope of the regulatory scheme itself.

This Office finds three specific points of importance at issue in the parties' communications: (1) where the KHRC may search, and specifically, whether the KHRC may search the vehicles of veterinarians, (2) what the KHRC may search for, and (3) whether the consent language in the KHRC License Application is a valid voluntary consent to warrantless administrative search and seizure. This Office makes the following findings, which are discussed in turn:

(1) The KHRC may make a warrantless administrative search of any property within its jurisdiction, including the vehicles of its licensees, with the exception of living quarters or sleeping quarters.

(2) The KHRC may search for any item reasonably believed to constitute evidence of a violation of a KHRC regulation.

(3) The consent language in the KHRC License Application is a valid voluntary consent to warrantless administrative search and seizure, as long as it is interpreted not to include living quarters or dormitories.

1. Properties of Licensees Subject to KHRC Administrative Search

KRS 230.260(1) gives the KHRC jurisdiction over any real property or facility owned by an association licensed to conduct horse racing, and any persons on those grounds. 18 As an administrative agency with jurisdiction over a closely regulated industry, the KHRC may promulgate regulations allowing reasonable administrative searches over properties within its jurisdiction, as long as those administrative searches meet the three Burger criteria. 810 KAR 1:025 § 1(3)(a) and (b) require that licensees consent to searches of their property on association grounds, and seizure of any items that may be evidence of a violation of an administrative regulation. Licensees explicitly consent to such warrantless search and seizure in the license application. Commissioner Travis urges that vehicles which are the property of licensees are subject to administrative search, and we agree, as the expectation of privacy in vehicles is already diminished because of the mobility and pervasive government regulation of vehicles. However, if the property on association grounds is purely living or sleeping quarters, it is not subject to an administrative search without a warrant, as the expectation of privacy in a private dwelling is not sufficiently diminished by its location on association grounds.

Vehicles already have their own distinct exception to the warrant requirement, independent of any administrative search exception available through the powers of the KHRC. Law enforcement officers with probable cause may search a vehicle without a warrant. California vs. Carney, 471 U.S. 386 (1985). The justifications for the vehicle exception are that, "it is not practicable to secure a warrant because the vehicle can be quickly moved out of the locality or jurisdiction in which the warrant must be sought," Carroll v. U.S., 267 U.S. 132, 153 (1925), and that the expectation of privacy in vehicles is diminished due to pervasive regulation of vehicles, Carney, 417 U.S. at 392. The same justifications for the vehicle exception apply to KHRC administrative searches of the vehicles of KHRC licensees; any contraband contained in the vehicle can be quickly driven off of association grounds, and the expectation of privacy of KHRC licensees is already diminished due to pervasive regulation. The only difference between the vehicle exception to the warrant requirement and KHRC administrative searches of vehicles on association grounds is that the standard is reasonable search, 19 and not probable cause, but the lower standard for KHRC administrative searches is permissible under Camara, 387 U.S. at 538. Allowing searches of licensees' vehicles for items that are evidence of violations of KHRC regulations also aids the deterrence goals of administrative searches by providing an incentive not to bring prohibited items onto association grounds.

The vehicle of the licensee does not need to be the licensee's place of business in order to be subject to administrative search, although that would strengthen the case even further. Administrative searches of the vehicles of licensed horse racing professionals in other jurisdictions have been found to be constitutional without any reference to business activities. Anobile v. Pellegrino, 303 F.3d 107, 123 (2d Cir. 2002).

However, not all property of licensees on association grounds is subject to KHRC administrative search. Living quarters, sleeping quarters, or dormitories used as residences located on association grounds are still considered private dwellings for Fourth Amendment purposes. Private dwellings are "ordinarily afforded the most stringent Fourth Amendment protection." U.S v. Martinez, 428 U.S. 543, 561 (1976). This protection applies to living quarters where a person may be only staying temporarily, such as a dormitory or hotel room. 20 Living quarters are not commercial premises, even if located within otherwise commercial areas, 21 and are not subject to administrative searches without a warrant. Should the resident of the living quarters or dormitory use it as a commercial center by regularly inviting people in for business purposes, it will be treated as commercial premises, Lewis v. U.S., 385 U.S. 206, 211 (1966), and thus subject to applicable administrative searches. But as long as they are not being used for business purposes, living quarters, sleeping quarters, or dormitories on association grounds are treated as homes for Fourth Amendment purposes, and are not subject to warrantless administrative searches.

It may be argued that motor homes or recreational vehicles of licensees are homes for Fourth Amendment purposes, and not subject to warrantless searches. The Supreme Court has explicitly rejected this argument. 22 As long as the vehicle of the licensee that is on association grounds is readily mobile and being used for transportation, it is subject to administrative search by the KHRC.

It must be noted that 810 KAR 1:025 specifically limits administrative searches of licensees' personal property to association grounds. The consent clause authorizes searches of properties in the licensee's possession "under the jurisdiction of the KHRC or upon which I am conducting any activities related to racing. " There are other properties than association grounds which are within the jurisdiction of the KHRC under KRS 230.260, such as secondary pari-mutuel wagering organizations or manufacturers of equine drugs, thus making the consent clause broader than 810 KAR 1:025 § 1(3). There are no administrative regulations explicitly authorizing administrative searches of licensees on those other properties. Under the consent clause, jockeys or trainers would be subject to administrative search were they to visit a manufacturer of equine drugs, or an SPMO, while under 810 KAR 1:025 § 1(3)(a) alone, they would not be. This Office does not opine at this time on whether an administrative search on properties within the jurisdiction of the KHRC but not on association grounds would be valid, nor on whether regulations authorizing such searches would be valid.

In sum, all property of KHRC licensees on association grounds that is not within living or sleeping quarters is subject to reasonable administrative searches by the KHRC.

2. Items Subject to KHRC Search and Seizure

810 KAR 1:024 § 9 gives agents of the KHRC "free access to all offices, files, records, enclosures, property and facilities owned or possessed by associations or located on association grounds" in order to ensure compliance with or investigate violations of its administrative regulations. 810 KAR 1:025 § 1(3)(a) requires licensees to consent to reasonable searches of their property, and (3)(b) requires consent to "seizure of any object which may be evidence indicating a violation of an administrative regulation. " Commissioner Travis argues that the KHRC "can search and seize drugs, syringes, diagnostic and therapeutic instruments without limitation which are relevant to a KHRC investigation." Churchill Downs and Keeneland argue that the KHRC is limited to searching "for those items specifically enumerated in 810 KAR 1:025, § 3(12) and (13), and 810 KAR 1:018 §§ 3, 14, and 20," which deal with drugs or devices used to enhance or interfere with horse performance, 23 "or other relevant items discovered incident to an otherwise proper search." While it is unclear the extent to which they disagree, to the extent that they do, we agree with Commissioner Travis. The KHRC may seize any object which may be evidence indicating a violation of its administrative regulations.

While the items specifically enumerated in 810 KAR 1:025, § 3(12) and (13), and 810 KAR 1:018 §§ 3, 14, and 20 are indicative of the types of items that the KHRC may search for, they are not intended to be exhaustive, and interpreting them as such would be an unjustified limitation on the power of the KHRC. There is no statute, regulation, or case limiting KHRC searches to those items specifically enumerated in its regulations. 24 While the powers of administrative bodies "are limited to those powers expressly conferred by statute or which exist by necessary and fair implication," Blue Boar Cafeteria v. Hackett, 227 S.W.2d 199, 201 (Ky. 1950), the KHRC is given an extremely broad grant of authority, Compton v. Romans, 869 S.W.2d 24, 27 (Ky. 1993). KRS 230.260 grants the KHRC "all powers necessary and proper to carry out fully and effectually the provisions of this chapter," and further adds that the powers listed include, but are not limited to, those powers specifically mentioned in KRS 230.260. The KHRC is limited by its statutory grant to regulation of horse racing, but within regulation of horse racing it has been given all powers reasonably necessary for the fulfillment of its statutory scheme, including the powers to search for and seize items which may be evidence of violations of its administrative regulations.

The items that the KHRC may search for cannot be limited to those specifically enumerated in the regulations cited by Churchill Downs and Keeneland, as it is impossible to completely specify in advance which items may be relevant to a KHRC investigation, and KHRC investigations may extend beyond items dealing with horse performance. In addition to regulations concerning drugs and devices used to increase horse performance, other KHRC regulations address other aspects of racing, such as agents or wagering, and the KHRC has full power to search for any items which may be violations of those regulations as well. 810 KAR 1:024 § 9 gives the KHRC the power to search the offices, files, and records owned by associations or on association grounds, demonstrating clear intent to allow searches for evidence of regulatory violations that are unrelated to horse performance. 25 KHRC administrative searches are still subject to reasonableness standards, and any searches for items that are not reasonably related to the regulatory purpose of the KHRC are still invalid.

3. Consent to Search and Seizure in the KHRC License Application

The license application required by any person wanting to participate in horse racing as an owner, trainer, jockey, or generally any profession involved in the preparation and conduct of horse racing contains a clause consenting to search of all properties in the licensee's possession under the jurisdiction of the KHRC and seizure of any materials deemed relevant to a KHRC investigation. The authority for the consent clause presumably derives from 810 KAR 1:025 § 1(3)(a) and (b), which require consent to reasonable search of property in the licensee's possession and seizure of any object which may be evidence indicating a violation of an administrative regulation. Churchill Downs and Keeneland submit that "the consent language contained in the KHRC license application does not constitute a constitutionally valid 'voluntary consent' to warrantless search and seizure and, therefore, does not authorize search and seizure beyond the scope of the regulatory scheme itself." We disagree. The consent clause is constitutionally valid, with the reservation that it does not extend to living or sleeping quarters within the jurisdiction of the KHRC.

Churchill Downs and Keeneland argue that the consent clause is an adhesion contract, relying on Anobile v. Pellegrino, 303 F.3d 107 (2d Cir. 2002). In Anobile, a case directly addressing the points at issue in this Opinion, the New York State Racing and Wagering Board ("Racing Board"), after finding equine drugs, syringes, and contraband at a racetrack, authorized a warrantless search of dormitories, barns, vehicles, and trailers, 26 and the plaintiffs were arrested as a result of banned syringes and drugs found during that search. The Racing Board license application contained a clause parallel to the consent clause in the KHRC license. 27 The Anobile court upheld the searches of barns, vehicles, and trailers, but found the searches of dormitory rooms to be unconstitutional for the reasons discussed in section 1, concluding that, "the plaintiffs' acceptance of their licenses and their signatures on the license application do not constitute effective consent to the dormitory searches conducted here." Anobile, 303 F.3d at 124. The Anobile court reasoned that "coercion may be found where one is given a choice between one's employment and one's constitutional rights," Anobile, 303 F.3d at 124, citing Garrity v. New Jersey, 385 U.S. 493, 496 (1967), and concluded that licensees of the Racing Board only consented to waiver of their rights of privacy in private dwellings due to coercion, making the consent invalid.

A proper reading of Anobile limits the invalidation of the consent waiver to searches of private dwelling areas. The Anobile court began its discussion of the consent clause by explicitly stating, "we need only address whether these waivers provide effective consent for the dormitory searches, as we have already concluded that the remainder of the search was constitutional." Anobile, 303 F.3d at 123. Any consent waiver to search other personal property that is not in a private dwelling remains constitutional, as such a consent is not a coerced waiver of a constitutional right, because there is no constitutional right to being a racing employee that is free from administrative searches. The Supreme Court has made it clear that the authority for administrative searches does not come from any consent waiver, but from the statutorily given regulatory authority of the agency. "In the context of a regulatory inspection system of business premises that is carefully limited in time, place, and scope, the legality of the search depends not on consent but on the authority of a valid statute." U.S. v. Biswell, 406 U.S. 311, 315 (1972). The KHRC does not need its licensees to sign the waiver in order to be able to do administrative searches of their property on association grounds; the consent clause is functionally an explicit reminder to licensees of the regulations they would subject themselves to, further strengthening the case that licensees have sufficient notice of the searches. The consent clause would only be a coerced waiver of a constitutional right if interpreted as providing consent for searches of private dwelling areas, which this Office advises against, and is otherwise valid.

If a search is valid, seizure of relevant items pursuant to that search is also valid, 28 so the KHRC is allowed to seize relevant items found pursuant to a lawful administrative search, and 810 KAR 1:025 § 1(3)(b) and the KHRC license application clause consenting to seizure of items relevant to an investigation in the license application present no special problems. If evidence of other criminal activity is found during an otherwise lawful administrative search, the search is still valid. Burger, 482 U.S. at 716; what is forbidden is an administrative search that is merely a pretext for evidence of general criminal activity. Burger, 482 U.S. at 716-7 n. 27.

It must be noted that 810 KAR 1:025 § 1(3)(a), and its counterpart for quarterhorse, Appaloosa, and Arabian racing, 811 KAR 2:020 § 2(3)(a), contain identical language providing that a licensee shall consent to "reasonable search of his property? on association grounds and including? living or sleeping quarters." For the reasons mentioned above, this Office advises that those regulations be amended to remove "living or sleeping quarters."

Conclusion

Accordingly, it is our opinion that:

(1) The KHRC may make a reasonable warrantless administrative search of any property of its licensees that is on association grounds, including vehicles, with the exception of private dwelling areas.

(2) The KHRC may make a reasonable warrantless administrative search of the property of its licensees for any items deemed relevant to a potential violation of a KHRC regulation, including but not limited to drugs, syringes, and related items.

(3) The clause in the KHRC license application consenting to reasonable warrantless administrative search for items relevant to a KHRC investigation is valid, except as it is interpreted to apply to private dwelling areas.

Footnotes

Footnotes

1 KRS. 230.225.

2 KRS 230.260.

3 See e.g. Ky. State Racing Commission v. Fuller, 481 S.W.2d 298, 301 (Ky. App. 1972) ("the Commission is vested with extensive authority over all person on racing premises for the purpose of maintaining honesty and integrity and orderly conduct of thoroughbred racing" ); Compton v. Romans, 869 S.W.2d 24, 27 (Ky. 1993) ("One can scarcely conceive of a broader statutory grant of regulatory authority").