Compromise Tables Legislation Backed by Jackson

Proposed Kentucky legislation that sparked controversy in the Thoroughbred auction community was tabled Feb. 14 after a compromise was reached between the bill’s backers and several entities related to the commonwealth’s signature industry.

The compromise on House Bill 388, which sought the creation of laws that would require both disclosure of ownership and production of a veterinary history on horses offered for sale in Kentucky, was accepted by the House Committee on Licensing and Occupation during the group’s session at the Capitol Annex in Frankfort.

The bill will be tabled for at least the remainder of the 2007 legislative session so that principals taking stands on both sides of the key issues raised in the legislation can work toward an industry-wide consensus, officials said.

Negotiations will be conducted under the umbrella of a revised version of the Sales Integrity Task Force, which was formed in 2004 by the Thoroughbred Owners and Breeders Association in response to similar concerns raised then by horsemen regarding the auction industry.

“We are satisfied with the compromise,” said Jess Jackson, the billionaire winemaker and horseman who backed the bill under the guise of the Horse Owners’ Protective Association he helped form last year. “And we have all agreed that we need to meet a consensus for the betterment of the industry. Kentucky needs to take the lead in how this industry needs to be run.”

Those who argued that the bill was vague and would be difficult to implement also endorsed the compromise, which was primarily hammered out in a quickly-called meeting held at Keeneland Feb. 13 – the day before the scheduled committee hearing, and just five days after the bill was filed with the Kentucky legislature.

“I think there was a realization that these are complex issues that need perspective and study, and shouldn’t be in a bill that is introduced on a Friday and decided on the following Wednesday,” said Keeneland president Nick Nicholson. “We have agreed to come together internally to improve the industry. It doesn’t mean we will be complacent. We need more time and more collaboration.”

More collaboration means the Sales Integrity Task Force will likely swell from its original lineup of 22 members, as the compromise dictates that input will be encouraged from horsemen affiliated with other breeds in Kentucky. The group is required to submit quarterly updates to the House committee at the end of June and September before delivering a final report Dec. 31.

“The good thing is that we came to a satisfactory agreement within the industry, and not within the hallways of the state capitol,” said Dan Metzger, the president of TOBA, which hasn’t taken a stance on the legislation, but participated in the compromise negotiations at Keeneland. “We (TOBA) have to be careful about getting involved with ‘local’ issues, but Kentucky is the centerpiece of the industry. This is not only of national significance, but international significance as well.”

Echoing Metzger’s sentiments in his address before the committee, Nicholson claimed that public Thoroughbred auctions held in Kentucky account for half of all such sale dollars realized in the United States, and that Keeneland auctions in 2006 featured buyers from 42 countries on six continents.

In a post-hearing interview, Jackson and HOPA president Kevin McGee refuted charges that they tried to ambush the industry with an unexpected introduction of the legislation eight days into a 30-day session.

Jackson and McGee claimed HOPA originally planned to file the bill in 2008 and had begun informal discussions with industry representatives on the language, but were told by political advisers to move it up to this year’s session.

“The advice we received was to file it this year because there were no budgetary issues (for legislators) to deal with,” said McGee, who is also a corporate attorney for Jackson. “The ultimate goal is still to build up the integrity of the industry.”

Besides HOPA, Keeneland, and TOBA, other entities that participated in framing the compromise included the Consignors and Commercial Breeders Association, Fasig-Tipton, and the Kentucky Thoroughbred Association.

The original language of the bill called for disclosure of the owner(s) of a horse, including the date ownership began. If ownership of a horse was for less than 12 months, the names of the immediate previous owner would also have to be disclosed.

The ownership information of horses offered at public auction was to be included in the medical records repository, and be made available to "bona-fide potential purchasers." Any horse sold following entry in a public auction would be required to be withdrawn from the sale.

HB 388, which is sponsored by House Representatives Larry Clark, Joni Jenkins, and Dennis Keene, also sought disclosure of a horse’s immediate medical condition, including whether or not it was actively under the care of a veterinarian or had been administered therapeutic medication. Any medical conditions that arose during ownership of the horse would be included in disclosures, as would any administration of anabolic steroids.

Factual errors or omissions in disclosures that were found within a 60-day period following a sale would allow buyers to turn back the horse for a full refund. Critics of the bill say the 60-day period is too long, and would likely cause more lawsuits over disputed sales instead of reducing such legal action.

The committee also passed an amendment to a law passed last year involving dual agency, legislation that was also championed by Jackson and HOPA. The amendment calls for all contractual fee agreements involving agents to be done in writing, and for written bills of sales to be supplied to buyers.

Jackson in recent years has brought a pair of high-profile civil lawsuits against horsemen and related entities, legal actions that level charges of fraud in the purchase of certain horses and a farm made by the California businessman.