[Federal Register Volume 89, Number 27 (Thursday, February 8, 2024)]
[Rules and Regulations]
[Pages 8530-8533]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-02290]


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FEDERAL TRADE COMMISSION

16 CFR Part 1

RIN 3084-AB79


Procedures for Oversight of the Horseracing Integrity and Safety 
Authority's Annual Budget

AGENCY: Federal Trade Commission.

ACTION: Final rule.

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SUMMARY: The Federal Trade Commission (``FTC'' or ``Commission'') is 
amending its rules pursuant to the Horseracing Integrity and Safety Act 
(``Act'') regarding the Commission's procedures for its oversight of 
the annual budget of the Horseracing Integrity and Safety Authority 
(``Authority''). The amendments to the Authority's budget oversight 
rules will streamline and improve the process for approving or 
disapproving the Authority's annual budget.

DATES: This rule is effective on February 8, 2024.

FOR FURTHER INFORMATION CONTACT: Sarah Botha, Attorney ((202-326-2036), 
[email protected]), Office of the Executive Director, Federal Trade 
Commission.

SUPPLEMENTARY INFORMATION:

Background

    The Horseracing Integrity and Safety Act of 2020, Public Law 116-
260, Title XII, 134 Stat 1182, 3252 (2020) (codified as amended at 15 
U.S.C. 3051-3060), recognizes the Authority as a self-regulatory 
nonprofit organization charged with developing and enforcing rules 
relating to racetrack safety, anti-doping, and medication control. See 
15 U.S.C. 3052. The Act expressly provides for Commission oversight of 
several aspects of the Authority's operations. For example, the 
Commission must approve any proposed rule or rule modification by the 
Authority relating to the Authority's bylaws, racetrack safety 
standards, anti-doping and medication control, and the formula or 
methodology for determining assessments. See id. In December 2022, 
Congress amended HISA to expand the Commission's oversight role over 
the Authority. See Consolidated Appropriations Act, 2023, Public Law 
117-328, Sec. 701, 136 Stat. 4459, 5231 (2022). As amended, the Act 
gives the Commission the power to issue rules under the procedures set 
forth in the Administrative Procedure Act, 5 U.S.C. 553, ``as the 
Commission finds necessary or appropriate to ensure the fair 
administration of the Authority . . . or otherwise in furtherance of 
the purposes of this Act.'' 15 U.S.C. 3053(e).
    In March 2023, relying in part on the new amendment, the Commission 
promulgated rules relating to the Authority's budget (``Budget Rule''). 
See 88 FR 18034 (Mar. 27, 2023). The Budget Rule, codified at 16 CFR 
1.150 through 1.152, sets forth the process whereby the Authority 
submits each year's proposed budget to the Commission for approval. 
Under the Budget Rule, after the Authority submits its proposed annual 
budget to the Commission, the Commission publishes the proposed budget 
in the Federal Register and the public is given an opportunity to 
comment. See 16 CFR

[[Page 8531]]

1.150(d). After the close of the comment period, and after 
consideration of any comments received, the Commission either approves 
or disapproves the proposed budget, using the criteria set forth in 16 
CFR 1.151(c).
    In June 2023, after the Commission promulgated the Budget Rule, the 
Authority submitted its proposed 2023 budget to the Commission, and the 
Commission published the proposed budget in the Federal Register. See 
88 FR 68610 (Oct. 4, 2023). After considering the Authority's budget 
submission and the public comments received, the Commission approved 
the Authority's 2023 budget on December 5, 2023.\1\ In September 2023, 
the Authority submitted its proposed 2024 budget to the Commission, and 
the Commission published the proposed budget in the Federal Register. 
See 88 FR 77582 (Nov. 13, 2023). The Commission reviewed the 
Authority's budget submission and the public comments and approved the 
Authority's 2024 budget on January 5, 2024.\2\
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    \1\ FTC, Order Approving the Budget for 2023 Proposed by the 
Horseracing Integrity and Safety Authority (Dec. 5, 2023), available 
at https://www.ftc.gov/system/files/ftc_gov/pdf/P222100CommissionOrderApprovingHISA2023Budget.pdf.
    \2\ FTC, Order Approving the Budget for 2024 Proposed by the 
Horseracing Integrity and Safety Authority (Jan. 5, 2024), available 
at https://www.ftc.gov/system/files/ftc_gov/pdf/P222100CommissionOrder2024HISABudget.pdf.
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    Based on comments received in response to the publication of the 
2023 and 2024 budgets, and in light of Commission experience in 
reviewing the two budgets, the Commission is revising the Budget Rule, 
16 CFR 1.150 through 1.152. The revisions to the Rule streamline the 
budget approval process by, among other things, providing for the 
immediate publication of the Authority's proposed budget in the Federal 
Register so long as certain procedural requirements are met. The 
amendments to the budget approval process still allow for meaningful 
public comment, and the Commission will still need to closely review 
the Authority's finances. Commission approval of the budget will happen 
only after the Commission is satisfied that the budget is consistent 
with and serves the goals of the Act in a prudent and cost-effective 
manner.
    Finally, the Commission is modifying Sec.  1.143, the section 
setting forth the formatting requirements for the Authority's 
submissions to the Commission, to account for the submissions mandated 
by Sec. Sec.  1.150 through 1.152.

Section by Section Analysis

    Sec.  1.143 Submissions to the Secretary. Section 1.143 currently 
sets forth the procedures whereby the Authority submits guidance, 
proposed rate increases, and proposed rules or rule modifications to 
the Commission. The Commission is modifying this section to account for 
the Authority's submissions required by the Budget Rule.
    Sec.  1.150 Submission of the Authority's proposed budget. 
Modifications to paragraph (a) change the budget submission date from 
September 1 to August 1 to give the FTC additional time to review the 
Authority's proposed budget. Changes to paragraph (b) clarify that the 
Authority does not have to post public comments to its website upon 
their arrival, but must still post comments on its website. Also, the 
Commission is moving from paragraph (b) to paragraph (c) the 
requirement that the Authority forward to the FTC any public comments 
received by the Authority and the Authority's response to them. The 
changes to paragraph (d) delegate to the Secretary the authority to 
publish the proposed budget in the Federal Register without a 
Commission vote. The Commission will still vote to approve or 
disapprove the budget after the public comment period has ended and the 
Commission has reviewed the comments submitted. The Commission also 
clarifies that while the proposed budget will still be published in the 
Federal Register, supporting materials will be made available to the 
public on regulations.gov.
    Sec.  1.151 Commission's decision on the Authority's proposed 
budget. Modifications to this section clarify that the Commission may 
require the Authority to submit additional information before the 
Commission approves or disapproves the proposed budget, and that the 
Commission will vote on the Authority's proposed budget no later than 
November 1, or as soon as practicable thereafter. Changes also remove 
the ``commercially reasonable terms'' element from the Commission's 
decision criteria. In lieu of this criterion, the FTC today proposes 
new provisions addressing oversight of the Authority's operations, 
which would include more specific vendor selection and competition 
requirements.\3\
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    \3\ Horseracing Integrity and Safety Authority Oversight, Notice 
of Proposed Rulemaking, published elsewhere in this issue of the 
Federal Register.
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    Sec.  1.152 Deviation from approved budget. An edit in paragraph 
(a) clarifies that the Authority may deviate from the approved budget's 
expenditure information in a year as to any line item by up to 10 
percent in a year without notifying the Commission. Edits in paragraphs 
(b) and (c) change the deadlines from 7 business days to 14 business 
days for the Commission to issue any decision to disapprove a proposed 
repurposing of funds to cover a line-item deviation of more than 10 
percent and for the Commission to issue any decision to disapprove a 
proposed means of covering a difference in the total approved 
expenditure.
    Because these rules relate solely to agency procedure and practice, 
publication for notice and comment is not required under the 
Administrative Procedure Act. 5 U.S.C. 553(b).\4\
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    \4\ For this reason, the requirements of the Regulatory 
Flexibility Act, 5 U.S.C. 601(2), 604(a), are also inapplicable. 
Likewise, the amendments do not modify any FTC collections of 
information within the meaning of the Paperwork Reduction Act, 44 
U.S.C. 3501 through 3521.
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List of Subjects in 16 CFR Part 1

    Administrative practice and procedure; Animal drugs; Animal 
welfare.

    For the reasons set forth in the preamble, the Federal Trade 
Commission amends part 1, title 16, chapter I, subchapter A of the Code 
of Federal Regulations as follows:

PART 1--GENERAL PROCEDURES

0
1. The authority citation for part 1 continues to read as follows:

    Authority: 15 U.S.C. 46; 15 U.S.C. 57a; 5 U.S.C. 552; 5 U.S.C. 
601 note.


0
2. Amend Sec.  1.143 by revising paragraph (a), paragraph (b) paragraph 
heading, (b)(1), (e), and (f) of to read as follows:


Sec.  1.143  Submissions to the Secretary.

    (a) Electronic submission. All submissions from the Authority to 
the Commission pursuant to the provisions of subpart S or U of this 
part, and all submissions to the Commission pursuant to 15 U.S.C. 
3053(a) (proposed rules or rule modifications), 15 U.S.C. 
3052(f)(1)(C)(iv) (proposed rate increases), or 15 U.S.C. 3054(g)(2) 
(guidance) must be emailed to the Secretary of the Commission at 
[email protected]. The subject line of the email must begin 
with ``HISA Submission:'' followed by a brief description of the 
submission.
    (b) Format for submissions--(1) Electronic format. All documents 
submitted to the Secretary under this section must be submitted in .pdf 
format or in some other electronic format specified by the Office of 
the Secretary.

[[Page 8532]]

The proposed text of Federal Register publications must also be 
submitted in a Microsoft Word or .rtf format.
* * * * *
    (e) Authority to reject documents for filing. The Secretary of the 
Commission may reject a document for filing that fails to comply with 
the Commission's rules.
    (f) Federal Register publication. For submissions required to be 
published in the Federal Register, if the conditions set forth in this 
section and Sec.  1.142 have been satisfied, the Commission will 
publish the Authority's submission in the Federal Register.

0
3. Revise subpart U to read as follows:

Subpart U--Procedures for Oversight of the Horseracing Integrity 
and Safety Authority's Annual Budget

Sec.
1.150 Submission of the Authority's proposed budget
1.151 Commission decision on the Authority's proposed budget
1.152 Deviation from approved budget

    Authority: 15 U.S.C. 3053(e).


Sec.  1.150  Submission of the Authority's proposed budget submissions.

    (a) Mandatory annual submission. The Authority must submit a 
proposed annual budget to the Commission every year, irrespective of 
whether there is a ``proposed increase in the amount required'' under 
15 U.S.C. 3052(f)(1)(C)(iv). The submission of the proposed budget for 
the following year must be made by August 1 of the current year, 
following the procedures set forth in Sec.  1.143. The Authority's 
annual budget will use the calendar year as its fiscal year.
    (b) Consideration of public comments. Before submitting its 
proposed budget to the Commission in August, the Authority must post 
the proposed budget on its website as early as practicable, with an 
invitation to the public to submit comments to the Authority on any 
aspect of the proposed budget. The Authority must post any pertinent 
comments it receives on its website, and it must review them to 
ascertain whether to revise the proposed budget in light of them.
    (c) Contents of submission. The Authority's proposed budget 
submission to the Commission must include the following:
    (1) Indication of Board vote. The Authority's proposed budget must 
be approved by a majority of its Board of Directors, or, in the case of 
a budget that exceeds the preceding year's budget by 5 percent or more, 
a two-thirds supermajority. The Authority's submission to the 
Commission must state the Board vote on the motion to approve the 
budget.
    (2) Revenue information. The proposed budget must identify both the 
estimated amount required from each State racing commission as 
calculated under 15 U.S.C. 3052(f) and all other sources of Authority 
revenue as well as any loans proposed to be obtained by the Authority.
    (3) Expenditure information. The proposed budget must identify 
expenditures separately for:
    (i) The racetrack safety program;
    (ii) The anti-doping and medication control program;
    (iii) All other programmatic expenditures other than for racetrack 
safety and anti-doping and medication control, such as the 
administration of the Authority or its technological needs;
    (iv) Repayment of any loans; and
    (v) Any funding shortfall incurred.
    (4) Line items. For both revenue and expenditure information, the 
Authority's proposed budget must provide sufficient information, by 
line item, as would be required for members of the Authority's Board of 
Directors to exercise their fiduciary duty of care. For example, the 
proposed budget's expenditure information for anti-doping and 
medication control might include separate line items for in-house 
salaries, the costs of testing of laboratory samples, the costs of 
arbitrators, and all the costs associated with contracting with an 
anti-doping and medication control enforcement agency. The proposed 
budget must include a narrative component that provides a brief 
explanation of each line item's utility in carrying out the purposes of 
the Horseracing Integrity and Safety Act.
    (5) Comparison of approved budget to actual revenues and 
expenditures. For each approved line item, the proposed budget must 
provide a comparison showing the actual revenues and expenditures for 
the current year along with a narrative component explaining why any 
line item is anticipated to deviate by 10 percent or more during the 
current year.
    (6) Public comments received and the Authority's response. The 
Authority must include with its submission all of the public comments 
that it received after posting the proposed budget on its website. The 
Authority must also provide an assessment of public comments relevant 
to the Commission's evaluation of the proposed budget. The Authority 
must also identify any changes made to the proposed budget in response 
to the comments received.
    (d) Publication of the proposed budget in the Federal Register. If 
the Secretary concludes that the Authority's submission complies with 
Sec.  1.150(c), then the Secretary will publish the Authority's 
proposed budget in the Federal Register with supporting materials 
available on regulations.gov. Members of the public will have 14 days 
after the date of publication in which to file comments on the proposed 
budget. Public comments should provide commenters' views as to the 
decisional criteria set forth in Sec.  1.151(c) and whether any line 
items should be modified.


Sec.  1.151  Commission decision on the Authority's proposed budget.

    (a) Commission approval required. The Authority's proposed budget 
takes effect only if approved by the Commission. The Commission will 
approve or disapprove the proposed budget after considering the public 
comments filed and the Commission's internal review of the Authority's 
submissions pursuant to Sec.  1.150. The Commission may, in its 
discretion, require the Authority to submit additional information to 
the Commission before the Commission approves or disapproves the 
proposed budget. The Commission will vote on the Authority's proposed 
budget no later than November 1, or as soon thereafter as practicable.
    (b) Conditional collection of fees allowed. The notice required to 
be sent to State racing commissions estimating the amount required from 
each State for the subsequent year must state that the amount required 
is based on the proposed annual budget, as approved by the Board of 
Directors, which takes effect only if approved by the Commission. State 
racing commissions (or covered persons in States that do not elect to 
remit fees) may nevertheless elect to remit fees, and the Authority may 
conditionally collect them, even before the Commission approves the 
proposed budget. If the Commission makes any modifications to line 
items under paragraph (d) of this section that have the net effect of 
reducing the budget, the Authority must, within 30 days, refund the 
proportionate amount owed to any State racing commission or covered 
person that has conditionally paid. If the Commission makes any 
modifications to line items under paragraph (d) of this section that 
have the net effect of increasing the budget, the Authority may obtain 
loans to make up the difference or may account for the difference as a 
funding shortfall incurred in the subsequent year's proposed budget.
    (c) Decisional criteria. The Commission will approve the proposed

[[Page 8533]]

budget if the Commission determines that, on balance, the proposed 
budget is consistent with and serves the goals of the Horseracing 
Integrity and Safety Act in a prudent and cost-effective manner and 
that its anticipated revenues are sufficient to meet its anticipated 
expenditures.
    (d) Modification of line items. In its decision on the proposed 
budget, the Commission may modify the amount of any line item.


Sec.  1.152  Deviation from approved budget.

    (a) When notice to the Commission is required. As to any line item, 
the Authority may deviate from the approved budget's expenditure 
information in a year by up to 10 percent in a year without providing 
prior notification to the Commission. If the Authority determines that 
it is likely to expend more than the approved expenditure for any line 
item by 10 percent or more, or if it will exceed its approved total 
expenditure by any amount, it must notify the Commission immediately 
upon such a determination.
    (b) Line-item deviations of more than 10 percent. If the Authority 
determines that it is likely to expend more than the approved 
expenditure for any line item by 10 percent or more, its notice to the 
Commission must indicate whether it intends to repurpose funds from one 
or more different line items to cover the increased expenditure. The 
Commission retains the discretion to disapprove such a proposed 
repurposing. The Commission must issue any decision to disapprove a 
proposed repurposing within 14 business days of receiving notice of the 
Authority's proposal to repurpose funds from another line item. If the 
Commission takes no action, the Authority's proposal takes effect as an 
amendment to its approved budget.
    (c) Total expenditure deviation. If the Authority determines that 
it is likely to expend more than the total approved expenditure, its 
notice to the Commission must indicate by what means it proposes to 
cover the difference. The Commission retains the discretion to 
disapprove the proposed means of covering the difference. The 
Commission must issue any decision to disapprove a proposed means of 
covering the difference within 14 business days of receiving notice of 
the Authority's proposal to cover the difference. If the Commission 
takes no action, the Authority's proposal takes effect as an amendment 
to its approved budget.

    By direction of the Commission,
Joel Christie,
Acting Secretary.
[FR Doc. 2024-02290 Filed 2-7-24; 8:45 am]
BILLING CODE 6750-01-P