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In the Matter of the

June 2, 2011

IN THE MATTER OF THE ADOPTION OF N.J.A.C. 13:70-1.32 TO 1.41 AND N.J.A.C. 13:71-1.27 TO 1.36.


On appeal from regulations promulgated by the New Jersey Racing Commission.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted March 15, 2011

Before Judges Wefing, Baxter and Koblitz.

New Jersey Thoroughbred Horsemen's Association appeals from the promulgation of two sets of regulations on October 6, 2008 by the New Jersey Racing Commission (Commission). The first set of regulations, N.J.A.C. 13:70-1.32 to -1.41, establishes rules of procedure for thoroughbred racing, while the second set, N.J.A.C. 13:71-1.27 to -1.36, establishes identical rules for harness racing ("the rules" or "the regulations").

The regulations govern procedures for: transmitting contested cases for a hearing before the Office of Administrative Law, N.J.A.C. 13:70-1.32 and N.J.A.C. 13:71-1.27; providing interested parties with advance notice of issues the Commission intends to consider, N.J.A.C. 13:70-1.34 and N.J.A.C. 13:71-1.29; the submitting of comments and information to the Commission concerning pending agenda items, N.J.A.C. 13:70-1.35 and N.J.A.C. 13:71-1.30; requesting the Commission to place an issue on its upcoming meeting agenda, N.J.A.C. 13:70-1.36 and N.J.A.C. 13:71-1.31; distributing the Casino Simulcasting Special Fund monies, N.J.A.C. 13:70-1.37 and N.J.A.C. 13:71-1.32; determining the annual allocation of race dates, N.J.A.C. 13:70-1.38 and N.J.A.C. 13:71-1.33; waiving or relaxing the Commission's rules, N.J.A.C. 13:70-1.39 and N.J.A.C. 13:71-1.34; modifying any penalties previously imposed, N.J.A.C. 13:70-1.40 and N.J.A.C. 13:71-1.35; and specifying the qualifications of attorneys entitled to represent clients before the Commission, N.J.A.C. 13:70-1.41*fn1 and N.J.A.C. 13:71-1.36.*fn2

We reject appellant's contentions that the regulations: were adopted in violation of the Open Public Meetings Act (OPMA), N.J.S.A. 10:4-6 to -21; will "perpetuate the Commission's pervasive and institutionalized violations of the OPMA"; will delegate excessive authority to the Commission's Executive Director; fail to define key terms; fail to implement the requirements of the Casino Special Fund legislation; and improperly infringe upon the authority of the judiciary. We do, however, agree with appellant's assertion that the portion of the regulations that permits the Commission to recover misused funds fails to establish the criteria or the procedures for doing so. We also agree with appellant's argument that the portions of the regulations prohibiting all requests for the issuance of an administrative stay pending appeal, and directing that all court-ordered modifications of disbursements be deferred until the next grant cycle, are unsustainable. We therefore vacate those sections of the regulations and remand for revision. In all other respects, we approve the adoption of the regulations in question.

I.

The Commission is empowered "when consistent with [its] primary duty of regulating horse racing, to advocate the growth, development and promotion of the horse racing industry in [New Jersey], and [is vested with] the powers necessary or proper to enable it to carry out" its responsibilities. N.J.S.A. 5:5-22. It is required by N.J.S.A. 5:5-29 to meet publicly to transact its business, and the record indicates that the Commission members have met regularly, at least once every other month, to perform the Commission's statutory duties.

The Commission is also charged with administering a fund (Special Fund), which was established pursuant to the Casino Simulcasting Act (CSA), N.J.S.A. 5:12-205. In particular, the CSA authorizes Atlantic City casinos to simulcast horse races conducted in New Jersey and in other states, N.J.S.A. 5:12-193, and to accept wagers on such races, N.J.S.A. 5:12-194(a)(2), with the proceeds being deposited into the Special Fund, N.J.S.A. 5:12-207. The Commission is authorized to make certain mandatory distributions, N.J.S.A. 5:12-205(a)-(c), after which the monies remaining in the Special Fund are then distributed through a competitive process to New Jersey's four racetracks, and to various horsemen's organizations, in accordance with the criteria set forth in N.J.S.A. 5:12-205(d).

In a published opinion, In the Matter of: Consider Distribution of the Casino Simulcasting Special Fund (Accumulated in 2005) in the Amount of $1,820,699.42 Pursuant to N.J.S.A. 5:12-205(d), 398 N.J. Super. 7, 16-19 (App. Div. 2008), we voided the Commission's 2005 distribution of the discretionary portion of the Special Fund because the Commission had not provided clear notice to applicants about whether, and to what extent, each could comment on the disbursement requested by others. We held that the lack of such clear notice violated the provisions of the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -25:

The record permits an inference that these applicants understood the need to file a written request and had the ability to obtain the requests submitted by other applicants. But the record also demonstrates that there was no common understanding about whether or how one applicant could challenge, object to or present argument relevant to information provided by another applicant. Had the [Commission] followed its obligation under N.J.S.A. 5:12-210 to adopt rules and regulations necessary to effectuate the purposes of the CSA and its obligation to promulgate "rules of practice" required by N.J.S.A. 52:14B-3(2), the applicants would have notice of their obligations and opportunities as competitors.

[Casino Simulcasting, supra, 398 N.J. Super. at 18-19.]

We also held that the Commission's deliberations had not conformed with the OPMA, because although the Commission conducted its voting in public, its deliberations had been held behind closed doors:

In this case, the [Commission] disbursed nearly two million dollars without any public discussion or deliberation. The fact that the members of the [Commission] voted at a public meeting and ultimately explained the result does not cure the problem of private deliberations. [Id. at 16-17.]

We therefore invalidated the 2005 distribution, and directed the Commission to adopt rules of practice and procedure pursuant to the APA before taking further action to distribute the 2005 Special Fund in a public session. Id. at 19. Thereafter, we granted the Commission's request for remand of the 2006 Special Fund distribution.*fn3

On February 6, 2008, the Commission met in closed executive session to discuss the decision we rendered. According to unredacted portions of the meeting minutes, the Commission agreed that its "existing procedure[s] should be codified through a regulation."

The Commission proposed N.J.A.C. 13:70-1.32 to -1.41 and N.J.A.C. 13:71-1.27 to -1.36 on July 21, 2008. 40 N.J.R. 4295; 40 N.J.R. 4300. The stated purpose of the proposed regulations was to "set forth the procedures and practices utilized by the [Commission,]" as required by the Casino Simulcasting Special Fund decision. 40 N.J.R. 4296-98; 40 N.J.R. 4301-03.

On September 2, 2008, appellant submitted twenty-five comments to the proposed rules, and supplemental comments on September 16, 2008. Appellant's comments presented an array of criticisms, which ranged from challenging the adequacy of the impact statements and the amount of discretion accorded to the Executive Director, to the Commission's alleged noncompliance with the OPMA and APA.

On October 1, 2008, the Commission addressed each of appellant's comments, and rejected appellant's claims that the underlying purpose of the proposed regulations was to veil the Commission's violation of the OPMA and APA. The Commission asserted that its proposed rules of procedure conformed to applicable requirements, and it adopted the proposed rules without any further changes on October 6, 2008, to be effective on November 17, 2008. It is those rules that are the subject of this appeal.

II.

Before addressing appellant's substantive challenge to the content of the regulations, we address appellant's claim in Points III and IV that the process by which the Commission adopted the rules violated the provisions of the APA and the OPMA.

We start with Point IV, in which appellant argues first that the Commission violated the OPMA by failing to provide appellant and other interested parties with an advance copy of the draft rules before it voted to publish the rules for public comment in the New Jersey Register. Appellant argues that the April 30, 2008 vote to publish the rules should be declared "a nullity because the public did not know what the Commission voted upon."

The record reflects that at its April 30, 2008 meeting, the Commission reviewed drafts of the regulations that are the subject of this appeal, and, after publicly discussing some of the provisions, voted to release the draft rules for public comment. Counsel for appellant thereafter addressed the Commission, and complained that his client's request for a copy of the draft rules had been improperly denied by Commission staff. The chairman informed appellant's counsel that the Commission had just voted to make the rules public, and that the proposed regulations would be available to everyone once they were published.

Contrary to appellant's assertions, neither the APA nor the OPMA require an administrative agency such as the Commission to provide the public with an advance copy of the proposed rule before the rule is published for public comment. The APA is designed to establish an orderly process for public participation in rulemaking. N.J.S.A. 52:14B-4. It requires an agency to: publish a proposed rule for public comment, N.J.S.A. 52:14B-4(a)(1); notify the public of the time period during which it may submit comments on the proposed rule, ibid.; consider fully all written and oral submissions from the public respecting the proposed rule, N.J.S.A. 52:14B-4(a)(3); publish its responses to the public comments, N.J.S.A. 52:14B-4(a)(4); and, at the completion of that process, publish the newly-adopted rule, N.J.S.A. 52:14B-5. The record demonstrates that the Commission complied with each of these steps. Notably, nothing in the APA establishes a requirement that the public be provided with a copy of the proposed rule before it is published for public comment. We therefore reject appellant's argument that the Commission's failure to provide a copy of the proposed rules prior to publication violated the APA.

We turn to an analysis of whether the OPMA imposes such a requirement. The OPMA recognizes "that secrecy in public affairs undermines the faith of the public in government and the public's effectiveness in fulfilling its role in a democratic society." N.J.S.A. 10:4-7. Consequently, the OPMA seeks to ensure "the right of the public to be present at all meetings of public bodies, and to witness in full detail all phases of the deliberation, policy formulation, and decision making of public bodies[.]" Ibid. To vindicate this right, the OPMA requires adequate notice of any public meetings, and permits a reviewing court to void past actions taken in a noncompliant meeting, or to prospectively enjoin a public entity from future violations of the OPMA. N.J.S.A. 10:4-8, -15, -16.

Nonetheless, the OPMA also provides that "[n]othing in this act shall be construed to limit the discretion of a public body to permit, prohibit or regulate the active participation of the public at any meeting . . . ." N.J.S.A. 10:4-12 (emphasis added).*fn4 This language shows that with the exception of municipal governing bodies and boards of education, the underlying intent of the OPMA is to ensure access to the governmental process, not to require public input in that process. There is no requirement in the OPMA that a public body provide copies of materials it is reviewing in advance of publishing a proposed rule. We therefore reject appellant's claim that the Commission's failure to provide a copy of the proposed rules prior to releasing the rules for public comment on April 30, 2008 was in violation of the OPMA.

Appellant also argues in Point IV that the Commission violated the OPMA by improperly discussing our Casino Simulcasting Special Fund opinion in closed session during its meetings on February 6, April 30 and August 13, 2008. The minutes of the Commission's February 6, 2008 meeting reveal that the Commission went into executive session during that meeting to receive legal advice from its attorney concerning our opinion, which had been filed only a week or two earlier. As the Commission correctly argues, a portion of the OPMA, namely N.J.S.A. 10:4-12(b), authorizes public bodies to go into closed session to receive advice from legal counsel that is subject to the attorney-client privilege. Because this legal discussion was privileged, the Commission was entitled to redact its minutes accordingly. Ibid. We therefore reject appellant's contentions respecting the Commission's February 6, 2008 meeting.

As to the Commission's April 30, 2008 meeting, the minutes of the executive session clearly explain that counsel for the Commission again addressed the members concerning their legal obligations pursuant to both the OPMA and our Casino Simulcasting opinion. This closed door session, like the February 6 session, fell within the OPMA exception for the rendering of legal advice, as contained in N.J.S.A. 10:4-12(b).*fn5

Appellant also argues that the Commission discussed the regulations in closed session during its August 13, 2008 meeting. The meeting minutes do not bear out appellant's assertion that any such discussion occurred. We reject appellant's claim that at three of its meetings the Commission improperly shielded its discussion of the proposed rule from public scrutiny, and thus reject the claims in Point IV in their entirety.

III.

We turn to Point III, in which appellant argues that: 1) "the Commission's 'response' to the extensive [public][c]omments . . . is entirely devoid of substance"; and 2) the text of the "closed-door [m]inutes" of the April 30, 2008 meeting suffers from the identical infirmity.

As to the first of those two contentions, appellant's argument consists of less than one page and contains no references to the record and no legal argument. As such, it warrants no further discussion. Weiss v. Cedar Park Cemetery, 240 N.J. Super. 86, 102-03 (App. Div. 1990) (noting that an appellate court will not entertain an argument that is unsupported by references to the record and legal argument). Having undertaken our own review of the Commission's responses to the pubic comments, we are satisfied that the Commission's fifty pages of response are marked by a thorough and careful analysis of each comment submitted, and that the Commission's ...


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