WREGULATORY AGENCY ACTION

WREGULATORY AGENCY ACTION

that CCA has petitioned BCE to adopt theproposed rule, and that the membership ofFriesen and Boland in CCA requires themto recuse themselves. They also contendthat public member John Bovre, who wasappointed in June 1993, has not had enoughtime to review and understand these issues,and allege that Bovre has "close ties to theCCA." These chiropractors forwarded theirconcerns regarding the alleged conflicts ofinterest to the Fair Political Practices Com-mission (FPPC) for consideration. Accord-ingly, BCE refrained from taking any actionon the formal adoption of section 317(y)until its January meeting, in order to give theFPPC sufficient time to address the chiro-practors' concerns. Further, the Board notedthat if the section on infectious diseases isformally adopted, it will become section317(x), since no section 317(x) currentlyexists (see above).

Rulemaking Update. The followingis a status update on other BCE rulemak-ing proposals detailed in recent issues ofthe Reporter

BCE Examination of Chiropractorswith Mental/Physical Illness. In Novem-ber 1992, BCE proposed amendments tosection 315, Title 16 of the CCR, whichwould authorize it to require an examina-tion of a chiropractor when it suspects thata mental or physical illness is affecting thesafety of the chiropractor's practice. BCEmust renotice this rulemaking proposalsince it did not forward the action to OALwithin one year of the original notice, asrequired by Government Code section11346.4.

- Exam Appeal Process Regulation.The Board's proposed adoption of section353, Title 16 of the CCR, which wouldimplement an appeals process for thoseapplicants who fail BCE's practical exam-ination 113:4 CRLR 189], must also berenoticed due to lapse of the one-year pe-riod in Government Code section11346.4.

-Diversion Program Regulation.BCE's proposed adoption of section315.1, Title 16 of the CCR, which wouldcreate a voluntary diversion program forsubstance-abusing chiropractors, will alsoneed to be renoticed, as the one-yeardeadline expired on November 13. [13:CRLR 190]

U LEGISLATION

AB 667 (Boland). The Pharmacy Lawregulates the use, sale, and furnishing ofdangerous drugs and devices. Existinglaw prohibits a person from furnishing anydangerous device, except upon the pre-scription of a physician, dentist, podia-trist, or veterinarian. However, this prohi-bition does not apply to the furnishing of

any dangerous device by a manufactureror wholesaler or pharmacy to each otheror to a physician, dentist, podiatrist, orveterinarian, or physical therapist actingwithin the scope of his or her license undersales and purchase records that correctlygive the date, the names and addresses ofthe supplier and the buyer, the device, andits quantity. As amended March 29, thisbill would provide that the prohibitiondoes not apply to the furnishing of anydangemus device by a manufacturer orwholesaler or pharmacy to a chiropractoracting within the scope of his/her license.

Existing law authorizes a medical de-vice retailer to dispense, furnish, transfer,or sell a dangerous device only to anothermedical device retailer, a pharmacy, a li-censed physician and surgeon, a licensedhealth care facility, a licensed physicaltherapist, or a patient or his or her personalrepresentative. This bill would addition-ally authorize a medical device retailer todispense, furnish, transfer, or sell a dan-gerous device to a licensed chiropractor.[A. Health]

AB 2294 (Margolin). The Chiroprac-tic Act provides that a license to practicechiropractic does not authorize the prac-tice of medicine, surgery, osteopathy, den-tistry, or optometry, nor the use of anydrug or medicine now or hereafter in-cluded in materia medica. As amendedMay 25, this bill would also provide thata license to practice chiropractic does notauthorize the treatment of infectious dis-ease, nor the substitution of chiropracticfor immunization. This bill would providefor the submission of these amendmentsto the voters; they shall become effectiveonly when approved by the electors. [A.Inactive File]

U RECENT MEETINGSAt its October 14 meeting in Los An-

geles, the Board reviewed draft amend-ments to section 317.1, Title 16 of theCCR, regarding chiropractic referral ser-vices. [13:4 CRLR 190] Among otherthings, the draft amendments would pro-vide that a nonrefundable application feeof $500 for the first 500 members, and anadditional $50 fee for one to fifty addi-tional members, must be submitted withthe referral service application; duringtimes when the service uses an answeringmachine, the recording must not give outany referral information, but must eitherrequest that the caller call back at a latertime or request information from the callerso a person can return his/her call; thereferral service must refer the caller to thenext chiropractor on the list in such amanner so that each member receives anequal percentage of referrals on a monthly

basis; each advertisement for a referralservice shall disclose that members havepaid a subscription fee, or indicate that theservice is a "for profit" business; referralservice members must pay an annual feeof $100 to BCE for each service theybelong to; referral services must discloseto member chiropractors the need to reg-ister with BCE as a referral service mem-ber; and referral services must provideBCE with monthly updates identifyingchiropractors who have been added to orremoved from the service. The Board tookno action with regard to the draft lan-guage; at this writing, the proposal has notbeen published in the California Regula-tory Notice Register.

At its October 14 and December 9meetings, BCE discussed draft amend-ments to section 349, Title 16 of the CCR,which would interpret section 6(d) of theChiropractic Act. The proposed amend-ments would provide that prior to beingscheduled for the practical portion of theCalifornia Board examination, an appli-cant must show proof of either NationalBoard of Chiropractic Examiners status orsuccessful completion of the written por-tion of the California licensure examina-tion; the amendments would also providethat National Board status means success-ful completion of Parts I, II, III, and phys-iotherapy. The Board is expected to con-tinue its discussion of this proposal at afuture meeting.

U FUTURE MEETINGSMay 5 in Sacramento.3uly 7 in San Diego.September 8 in Sacramento.October 13 in Los Angeles.December 15 in Sacramento.

CALIFORNIA HORSERACING BOARDExecutive Secretary:Roy Wood(916) 263-6000

T he California Horse Racing Board(CHRB) is an independent regulatory

board consisting of seven members. TheBoard is established pursuant to the HorseRacing Law, Business and ProfessionsCode section 19400 et seq. Its regulationsappear in Division 4, Title 4 of the Cali-fornia Code of Regulations (CCR).

The Board has jurisdiction and powerto supervise all things and people havingto do with horse racing upon which wager-ing takes place. The Board licenses horseracing tracks and allocates racing dates. Italso has regulatory power over wagering

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REGULATORY AGENCY ACTION

and horse care. The purpose of the Boardis to allow parimutuel wagering on horseraces while assuring protection of the pub-lic, encouraging agriculture and the breed-ing of horses in this state, generating pub-lic revenue, providing for maximum ex-pansion of horse racing opportunities inthe public interest, and providing for uni-formity of regulation for each type ofhorse racing. (In parimutuel betting, allthe bets for a race are pooled and paid outon that race based on the horses' finishingposition, absent the state's percentage andthe track's percentage.)

Each Board member serves a four-yearterm and receives no compensation otherthan expenses incurred for Board activi-ties. If an individual, his/her spouse, ordependent holds a financial interest ormanagement position in a horse racingtrack, he/she cannot qualify for Boardmembership. An individual is also ex-cluded if he/she has an interest in a busi-ness which conducts parimutuel horse rac-ing or a management or concession con-tract with any business entity which con-ducts parimutuel horse racing. Horse own-ers and breeders are not barred from Boardmembership. In fact, the legislature hasdeclared that Board representation bythese groups is in the public interest.

On October 21, Governor Wilson ap-pointed Robert Tourtelot to CHRB to re-place departing Board member WilliamLansdale; Tourtelot is a partner in the LosAngeles law firm of Tourtelot and Butler.At its November 18 meeting, the Boardpassed a resolution of commendation hon-oring Lansdale for his eight years of ser-vice as a CHRB member.

*MAJOR PROJECTS

CHRB Selects New Executive Secre-tary. On October 18, CHRB held a specialmeeting to interview candidates for theposition of Executive Secretary. SinceMay 28, Roy Minami had served as In-terim Executive Secretary; Minami wasappointed to the position after CHRB dis-missed former Executive Secretary Den-nis Hutcheson on February 26. [13:4CRLR 190; 13:2&3 CRLR 200] Prior to thespecial meeting, CHRB's Selection Com-mittee had reduced the number of candi-dates from 77 to four; at the special meet-ing, CHRB interviewed three of the appli-cants. Each candidate was asked to re-spond to questions concerning his/her per-spectives on the efficient and economicoperation of the Board's equine drug test-ing policy; the prevalence of illicit drugsin the horse racing industry and thepublic's perception of the problem; theboundaries of industry regulation; and theexpansion of simulcast wagering.

At a regular meeting of the Board onOctober 29, Commissioner StefanManolakas thanked all of the candidatesand moved to extend the position of Exec-utive Secretary to Roy Wood; Wood, whocame through the racing ranks as a breederand trainer, most recently served as Direc-tor of Racing for the Texas Racing Com-mission, and was previously a state racingsteward in Louisiana. CHRB unani-mously approved the motion to offer theposition to Wood, subject to a backgroundcheck; Wood was subsequently approvedfor the position and began his new job onJanuary 1. Minami will continue to serveas CHRB Assistant Executive Secretary.

CHRB Establishes Bylaws Commit-tee. At the Board's October 29 meeting,CHRB Chair Ralph Scurfield reported onthe implementation of SB 118 (Maddy)(Chapter 575, Statutes of 1993), which-among other things-amends the HorseRacing Law to require that CHRB ap-prove the bylaws of all horsemen's asso-ciations, as well as any changes to thebylaws. [13:4 CRLR 197] Scurfield re-ported that CHRB staff had requested thehorsemen's organizations to send copiesof their bylaws to the Board for review; inaddition to Scurfield, CommissionersRobert Tourtelot and George Nicholawwill serve on the Bylaws Committee.

At CHRB's November 18 meeting,Commissioner Tourtelot reported that theBylaws Committee is also reviewing sec-tion 2040, Title 4 of the CCR, which statesthat CHRB recognizes the necessity ofhorse owners and trainers to negotiate andto covenant with the racing associations asto the conditions for each race meeting,the distribution of commissions andpurses not governed by statutory distribu-tion formulae, and other matters relatingto welfare, benefits and prerogatives of theparties to the agreement. Section 2040requires CHRB, in order to fulfill its dutiesto the public in authorizing the conduct ofan uninterrupted, orderly race meetingduring the licensed term of such meetings,to acknowledge horsemen's organizationswhich represent horse owners and trainersof thoroughbred racehorses, standardbred(harness) racehorses, quarter horse race-horses, appaloosa racehorses, and Arabianracehorses; for each breed of racehorse,CHRB must acknowledge only onehorsemen's organization as the organiza-tion empowered exclusively to contractwith racing associations for the conduct ofa race meeting. Under section 2040(b), analternate organization may seek to repre-sent the horse owners and trainers of aparticular breed. If that organization sub-mits a petition signed by at least 30% ofthe licensed horse owners and trainers of

that breed, CHRB must conduct a plebi-scite among the licensed horse owners andtrainers of racehorses of that breed, andthen-based on the plebiscite-determinethe one organization to be acknowledgedas representing the horse owners and train-ers of that breed. Tourtelot reported thatthe Committee has decided to propose arule change to provide that a petition mustbe signed by 10% rather than 30% of thelicensed horse owners and trainers of anyone breed. Once a successful petition fora plebiscite has been submitted, the Com-mittee believes that the percentage neededto replace the existing organization with anew organization should be 50% plus onevote. The Committee also plans to amendsection 2040 to provide that the petitionmust be submitted to CHRB within sixmonths from the time it is initiated.

Tourtelot also reported that the Com-mittee intends to first review the bylawsof the thoroughbred horsemen's associa-tion, the California Horsemen's Benevo-lent and Protective Association (CHBPA),but noted that it will review those of theother horsemen's organizations as well.He added that the intent of SB 118 doesnot require CHRB to rewrite the bylaws ofany organization, but to review and ap-prove them to ensure that they are fair andequitable with respect to the representa-tion of owners and trainers on the board ofdirectors of the organization. Tourtelotsaid that on reviewing CHBPA's bylaws,the Committee found them to be inequita-ble with respect to the board of directors;according to the Committee, the ratio onCHBPA's board, which consists of eigh-teen members, should be no less thantwelve licensed owners and six licensedtrainers. The Committee further believesthat CHBPA's board of directors shouldinclude at least four directors from south-ern California and four directors fromnorthern California; among other things,the Committee also recommended thatCHBPA comply with its existing regula-tions which provide for an election ofthree directors each year and schedule anelection for 1994.

At the Board's December 16 meeting,Tourtelot reiterated the recommendationsmade by the Committee at CHRB's No-vember meeting, and added several more.For example, Tourtelot said that the by-laws should require that notice be given tomembers when the nomination of CHBPAdirectors is on the Association's agendafor a meeting; CHBPA should add lan-guage stating that no CHBPA funds maybe spent to campaign by or for any candi-date for the CHBPA Board of Directors;and the bylaws should be changed to re-quire a new election of the entire board of

California Regulatory Law Reporter * Vol. 14, No. 1 (Winter 1994)


directors starting after January 1, 1994.The Committee also made suggestions onconflict of interest provisions, the noticerequirement for special meetings, thenumber of CHBPA board members re-quired for a quorum, the availability ofminutes for CHBPA member viewing, andthe filing of financial reports with CHRB.Commissioner Tourtelot pointed out thatBylaws Committee recommendations aremerely suggestions to CHBPA of whatCHRB believes the Association's bylawsshould provide in order to achieve an eq-uitable representation of owners and train-ers on CHBPA's board of directors.Tourtelot noted that if the changes aremade, CHRB should approve the bylawsas consistent with SB 118; if CHBPA de-cides not to make the changes and CHRBdoes not approve the bylaws, Tourtelotstated that CHBPA stands a chance ofbeing disenfranchised by CHRB and willnot be recognized as the acknowledgedorganization representing thoroughbredhorsemen. CHBPA representative RobertForgnone commented that CHBPA hadnot received any prior indication of thespecific proposals that the Bylaws Com-mittee was considering and thus was notprepared to respond to the recommenda-tions; he noted that CHBPA needs to re-search and discuss several issues, andasked that CHRB schedule a formal hear-ing to allow CHBPA an opportunity toaddress the recommendations. BoardChair Scurfield explained that CHRB wasnot yet taking action on these issues; at thiswriting, they are scheduled to be discussedat the Bylaws Committee's January meet-ing and reported to the full Board at itsJanuary meeting.

CHRB Reviews CHBPA's PoliticalActivities. At CHRB's October 29 meet-ing, Rod Blonien, representing certainmembers of CHBPA, addressed CHRBconcerning the CHBPA board of directors'recent authorization of the expenditure ofapproximately $400,000 for political ac-tivities at the State Capitol during the nextfourteen months. Blonien expressed con-cern about the large amount of funds au-thorized and the purposes for which theywill be used (which allegedly include anattempt to repeal SB 118 (Maddy) (seeabove) and support for people who opposeSenator Maddy). He commented thatsome CHBPA members do not share thephilosophies of the current CHBPA board,and thus object to the use of these fundsfor political purposes; Blonien requestedthat CHRB take some sort of action withregard to what Blonien characterized asthe inappropriate expenditure of funds byCHBPA. Deputy Attorney General CathyChristian remarked that although the

Board has the authority to review the mat-ter, it could not take action at that timesince the matter was not on the agenda; theBoard agreed to put the issue on its No-vember agenda. Although the Board wasunable to take immediate action at theOctober meeting, Chair Scurfield re-quested that CHBPA refrain from spend-ing "an inordinate amount of money" forpolitical purposes before action could betaken at the next CHRB meeting. CHBPAChief Operating Officer Brian Sweeneyagreed that-subject to the approval of theCHBPA Board-CHBPA would neitherspend nor commit any more money prorata than it spent during last year for thesame efforts, until the next CHRB meet-ing.

At CHRB's November 18 meeting,Blonien repeated his concerns on behalfof CHBPA members who do not supportthe political activities of CHBPA's currentboard of directors. He argued that he andother dissatisfied CHBPA members arerequired to belong to CHBPA in order toretain their licenses and earn a livelihood,and state law requires them to pay a por-tion of their winning purses to CHBPA.According to Blonien and the Pacific LegalFoundation, when the CHBPA board usesthose compelled funds to state a politicalopinion which differs from those of someCHBPA members, the first amendmentrights of those members are being violated.Blonien requested that CHRB limitCHBPA's political expenditures to $50,000annually and restrict it to hiring only onelobbyist to represent CHBPA on issues thatare strictly related to providing services tothoroughbred horsemen.

CHBPA representative Tom Ready re-sponded that the purpose of the organiza-tion is to benefit thoroughbred horsemen,and CHBPA's political activities are nec-essary to fulfill that purpose; Ready alsonoted that CHBPA had filed a complaintfor declaratory relief against its "dissi-dent" members. However, CommissionerTourtelot stated that Article 6, Section I ofCHBPA's Articles of Incorporation pro-vides that "no substantial part of activitiesof this corporation shall consist of carry-ing on propaganda or otherwise attempt-ing to influence legislation." Tourtelotnoted that CHBPA's budget of $400,000for political activities is approximately25% of its nonpension funds, and com-mented that he considers the figure to besubstantial.

Deputy Attorney General Cathy Chris-tian opined that Business and ProfessionsCode sections 19420 and 19440 giveCHRB authority over CHBPA, and thatthe Horse Racing Law provides for CHRBapproval of actions taken by CHBPA, in-

cluding the approval of CHBPA's bylaws,a project which is now under way as man-dated by SB 118 (see above). Christianstated that the declaratory relief actionfiled by CHBPA against some of its mem-bers will allow a court to determine therelevant issues. In the interim, CHRBunanimously ordered CHBPA to cease anyfurther expenditures relative to politicalcontributions or lobbying of any nature,until further ordered by CHRB or by thecourt. At this writing, CHRB's order pro-hibiting CHBPA from making these ex-penditures remains in effect.

Track Safety Standards. On October1, CHRB republished notice of its intentto adopt new sections 1471-1475, Title 4of the CCR, to implement Business andProfessions Code section 19446, whichrequires CHRB to establish safety stan-dards governing the uniformity and con-tent of track facilities in California. [13:4CRLR 194; 13:2&3 CRLR 203] On No-vember 18, CHRB held a public hearingon the proposed regulatory action. TrackSafety Subcommittee member RichardFontana reported that several legislatorsexpressed concern about the proposed lan-guage of section 1471(c), which wouldprovide that the track safety standardsshall not require the removal or replace-ment of, or any substantial modificationto, any rail or other object installed at aracing association, fair, or CHRB-ap-proved training facility prior to the effec-tive date of section 1471, if in CHRB'sjudgment "substantial compliance" withthe safety requirements of the regulationscan be attained by the racing associationor fair pursuant to alternate methodologiesor technology proposed and implementedby such racing association or fair; accord-ing to some critics, the use of the term"substantial compliance" would allow as-sociations to come into less than absolutecompliance with the standards.

Following discussion, CHRB agreedto delete the word "substantial" from sec-tion 147 1(c), and directed staff to releasethe modified language for an additionalfifteen-day public comment period. Asamended, section 1471 (c) would providethat the track safety standards shall notrequire the removal or replacement of, orany substantial modification to, any rail orother object installed at a racing associa-tion, fair, or CHRB-approved training fa-cility prior to the effective date of section1471, if in CHRB's judgment there is ashowing by the racing association or fairthat compliance with the safety standardsof the regulations can be attained by alter-nate methodologies, technologies, pro-grams, practices, means, devices, or pro-cesses proposed and implemented by such



racing association or fair, which will pro-vide equal or superior safety for racingparticipants. CHRB also modified pro-posed section 147 1(d) to provide that,upon the effective date of the track safetystandards, a racing association, fair, orCHRB-approved training facility may re-quest, in writing, no less than 90 calendardays prior to the date upon which theracing meeting is to commence, thatCHRB make a determination, based on thefactors set forth in section 1471(c), thatany rail or other object installed prior tothe effective date of section 1471 is ex-empt from the track safety standards; theoriginal language required such a requestbe made no less than 180 calendar daysprior to the date upon which the racingmeeting is to commence.

At its December 16 meeting, CHRBadopted the modified rulemaking pack-age; at this writing, the rulemaking file isbeing reviewed by the Office of Adminis-trative Law (OAL).

Certificates of Registration. On De-cember 3, CHRB published notice of itsintent to amend section 1633, Title 4 of theCCR, which would clarify when, why, andby whom a certificate of registration of ahorse may be removed from the racingsecretary's office. As amended, section1633 would provide that a certificate ofregistration filed with the racing secretaryto establish eligibility to enter a race shallbe released only to the trainer of record;the owner(s) named in the certificate; atthe request of the owner(s) or his/her au-thorized agent, to a person designated bythe owner(s) in writing; or, if unclaimed atthe end of the meeting, to the Board.Under no circumstances shall any personremove and hold a certificate of registra-tion to prevent a horse from racing or toremove a legal owner's name without au-thorization. At this writing, the Board isscheduled to hold a public hearing on theproposed amendment on January 28.

Safety Helmet Requirements. On De-cember 3, CHRB published notice of itsintent to amend section 1689, Title 4 of theCCR, regarding the safety helmet require-ment for persons riding horses on the race-track and within the inclosure of the track.As amended, section 1689 would require allpersons, including owners and trainers, towear a properly fastened safety helmet whenmounted on a racehorse or mounted in or ona sulky when on the racetrack; owners andtrainers would not be required to wear asafety helmet if mounted on a pony horse.At this writing, CHRB is scheduled to holda public hearing on the proposed amend-ments on January 28.

Name Change. On December 3,CHRB published notice of its intent to

amend section 1456, Title 4 of the CCR,which currently provides-among otherthings-that credentials issued by the Na-tional Association of State Racing Com-missioners (NASRC) to its members, pastmembers, and staff shall be honored byracing associations for admission into thepublic inclosure when presented thereforby such persons; CHRB's amendmentswould reflect NASRC's name change tothe Association of Racing CommissionersInternational, Inc. At this writing, theBoard is scheduled to hold a public hear-ing on the proposed change on January 28.

Appeals. On December 3, CHRB pub-lished notice of its intent to amend section1761, Title 4 of the CCR, to clarify thatappeals to the Board from the decisions ofstewards must be received by a CHRBemployee at any of the Board's offices,and to clarify that the CHRB Chair sus-tains, dismisses, or issues stay orders. Atthis writing, the Board is scheduled to holda public hearing on the proposed changeon January 28.

Parimutuel Wagering Prohibitions.On December 3, CHRB published noticeof its intent to amend section 1969, Title 4of the CCR, which prohibits parimutuelwagering by certain persons on duty at arace meeting or in a satellite wageringfacility. Currently, the section refers to thesatellite facility supervisor and assistantsatellite supervisor as persons who areprohibited from wagering while on duty ata satellite wagering facility; the Board'sproposed changes would replace the term"satellite" with "simulcast." At this writ-ing, CHRB is scheduled to hold a publichearing on the proposed change on Janu-ary 28.

On December 10, CHRB publishednotice of its intent to amend section 1980,Title 4 of the CCR, which currently pro-vides that certain persons are prohibitedfrom participating in parimutuel wageringand from being present within any racinginclosure during a recognized race meet-ing; among other things, the Board'samendments would delete the word "rac-ing" from the term "racing inclosure,"since the term "inclosure" is now specif-ically defined in Business and ProfessionsCode section 19410. At this writing, theBoard is scheduled to hold a public hear-ing on the proposed change on January 28.

Also on December 10, CHRB pub-lished notice of its intent to amend section198 1, Title 4 of the CCR, which providesthat racing associations shall exclude andeject from their inclosures persons whoare prohibited from participating in pari-mutuel wagering and from being presentwithin any racing inclosure during a rec-ognized race meeting, and that no associ-

ation shall knowingly issue any admissionticket or credential to such persons, andany admission ticket or credential is voidif held by such person. CHRB's amend-ments would specify that simulcast wa-gering facilities and fairs, in addition toracing associations, have the responsibil-ity to exclude and eject from their in-closures persons who are prohibited fromparticipating in parimutuel wagering andfrom being present within any inclosure.At this writing, the Board is scheduled tohold a public hearing on the proposedchanges on January 28.

Farrier's License. On December 3,CHRB published notice of its intent toadopt section 1504, Title 4 of the CCR,which would set forth the criteria for ob-taining a farrier's occupational license.Among other things, section 1504 wouldprovide that an applicant for an original orrenewal license as a practicing farrier mustpass a written examination and a practicalexamination prescribed by CHRB and ad-ministered by its agents. The Board's pro-posal is similar to its 1992 proposal toadopt section 1500.7, Title 4 of the CCR;however, the Board failed to adopt section1500.7 and forward it to OAL for reviewand approval within one year of the noticepublication, as required by the Adminis-trative Procedure Act. [13:2&3 CRLR 203;13:1 CRLR 131] At this writing, CHRB isscheduled to hold a public hearing on theproposed adoption of section 1504 on Jan-uary 28.

Trainer/Assistant Trainer Require-ments. On December 3, CHRB publishednotice of its intent to adopt section 1503,Title 4 of the CCR, which would set forththe criteria for obtaining a license as atrainer or assistant trainer. Among otherthings, section 1503 would require a can-didate for an original license as a traineror assistant trainer to successfully com-plete the written, practical, and oral partsof the trainer's examination. An individualcurrently licensed as a trainer or assistanttrainer in other racing jurisdictions, andwho has held such license for a minimumof one year in good standing, would besubject to taking any or all portions of thetrainer's examination as prescribed by theBoard and administered by its agents. Atrainer currently licensed as a trainer orassistant trainer and who wishes to changehis/her license from harness to other typesof flat racing, or other types of flat racingto harness, would be required to take thecomplete trainer's examination. At thiswriting, CHRB is scheduled to hold a pub-lic hearing on the proposed section onJanuary 28.

Rulemaking Update. The followingis a status update on other CHRB rulemak-

California Regulatory Law Reporter • Vol. 14, No. I (Winter 1994)


ing proposals described in detail in previ-ous issues of the Reporter:

* Simulcast Wagering Regulations.On October 4, OAL approved CHRB'samendments to section 2056 through2061, Title 4 of the CCR, which conformCHRB regulations to reflect legislativechanges regarding satellite wagering andchanges in simulcast technology andequipment. [13:4 CRLR 192]

- Criteria for Filing Financial Com-plaints. On October 4, OAL approvedCHRB's amendments to section 1876,Title 4 of the CCR, which establish newparameters concerning the nature andtimeliness of financial complaints whichmay be filed with the Board. [13:4 CRLR195; 13:2&3 CRLR 202]

* California-Bred Breeder's Award.On October 4, OAL approved CHRB'samendments to section 1814, Title 4 of theCCR, which sets forth the terms, condi-tions, and procedures concerning thebreeder award incentive program for Cal-ifornia-bred horses; the amendmentsbring the section into compliance withBusiness and Professions Code sections19567 and 19617.2. [13:4 CRLR 192]

- Jockey Safety Vest Requirement. OnOctober 26, OAL approved CHRB'sadoption of section 1689.1, Title 4 of theCCR, which prohibits a jockey or appren-tice jockey from riding in a race unless thejockey or apprentice jockey wears a safetyvest. [13:4 CRLR 192]

- Items Included in Weight. On Octo-ber 26, OAL approved CHRB's amend-ment to section 1684, Title 4 of the CCR,which states that the jockey's safety vestshall not be included in the jockey'sweight. [13:4 CRLR 192]

- Payment of Fines. At this writing,OAL is reviewing CHRB's proposedamendments to section 1532, Title 4 of theCCR, which would change the methods bywhich fines imposed by stewards are paidby licensees and processed. [13:4 CRLR192-93]

* Permission to Carry Firearms. Atthis writing, OAL is reviewing CHRB'sproposed amendments to section 1875,Title 4 of the CCR, which pertains to theauthorization procedures that must becomplied with in order for a person tocarry firearms at any facility withinCHRB's purview of control; the amend-ments would provide that no licensee oremployee of the racing association or itsconcessionaires shall possess a firearmwhile on the grounds of a facility withinCHRB's purview or control unless suchpossession has been authorized by state orfederal law, and unless the documentationof such authorization is on his/her person.[13:4 CRLR 193]

- Occupational Licensing. At thiswriting, OAL is reviewing CHRB's pro-posed amendments to section 1481, Title4 of the CCR, which would add newclasses of occupational licenses. [13:4CRLR 193]

- Trainer's Duty to Ensure LicensedParticipation. Prior to the scheduled Oc-tober 29 public hearing, CHRB withdrewits proposal to amend section 1895, Title4 of the CCR, which currently specifiesthat trainers may not employ unlicensedpersons and must notify CHRB if there arepersonnel changes; the Board was consid-ering deleting the requirement that train-ers notify the Board if they have personnelchanges. At this writing, CHRB is notexpected to pursue the proposed regula-tory action.

- Refusal Without Prejudice. On No-vember 17, OAL approved CHRB's amend-ment to section 1493, Title 4 of the CCR,which precludes applicants who have faileda Board certification test from reapplying fora license at any subsequent or other racemeeting. [13:4 CRLR 193]

- Record and Transcript of StewardHearings. On November 29, OAL ap-proved CHRB's amendment to section1537, Title 4 of the CCR, which specifiesthe circumstances under which a verbatimrecord or transcript of hearings held beforethe stewards shall be prepared. [13:4CRLR 193]

- CHRB Approval of Concession-aires. At its October 29 meeting, CHRBheld a public hearing on its proposedamendments to section 1440, Title 4 of theCCR, which would require that any personor entity who contracts to act as a conces-sionaire at a racetrack submit to the Boardspecified forms and applications for pur-poses of CHRB approval. [13:4 CRLR193] The amendments would remove to-talizer companies, simulcast service sup-pliers, video production companies, tim-ing companies, and photofinish compa-nies from the rule; such entities must belicensed under newly proposed section1440.5 (see below). The amendments wouldalso delete an existing licensure require-ment for concessionaires, and codify thecurrent approval procedure. Following thehearing, the Board unanimously adoptedthe amendments, which await review andapproval by OAL.

- CHRB Licensing of Contractorsand Subcontractors. On October 29,CHRB conducted a public hearing on itsproposed adoption of section 1440.5, Title4 of the CCR, which would require anyentity acting as a totalizer company, si-mulcast service supplier, video productioncompany, timing company, or photo finishcompany to procure a license from the

Board; the licensing process would re-quire ownership disclosure and back-ground investigations to determine acontractor's qualifications, fitness, andreputation. [13:4 CRLR 193-94] The newrule would also set forth the fees each typeof entity is required to pay to CHRB; bylicensing these entities, the Board wouldgain a full range of disciplinary optionsshould a contractor or subcontractor fail toperform. Following the hearing, the Boardadopted the amendments, which await re-view and approval by OAL.

- License Application Regulations. Atits October 29 meeting, the Board held apublic hearing on its proposed amend-ments to section 1433, Title 4 of the CCR,which describes the appropriate applica-tions which must be submitted by a Cali-fornia fair or an association making appli-cation for a license to conduct a horseracing meeting. [13:4 CRLR 193] Theamendments would require a written state-ment from the association regarding itsplans to simulcast the races of otherbreeds, including a list of races in a pro-posed simulcast program. Additionally,the association would be required to dis-close the proposed post times for each raceand the type of electronic device to be usedon the track. At the conclusion of the hear-ing, CHRB adopted the proposed amend-ments; at this writing, the rulemaking fileis awaiting review and approval by OAL.

- Obedience to Security Officers andPublic Safety Officers. On October 29,CHRB held a public hearing on its amend-ments to section 1930, Title 4 of the CCR,which would enlarge the authority ofstewards, CHRB, and security officers ofracing associations. [13:4 CRLR 1931Under the current rule, all licensees mustobey an order from stewards, CHRB, asecurity officer of an association, or anypublic safety officer of any police, fire, orlaw enforcement agency only if such orderis given for the purpose of controlling ahazardous situation or occurrence. Theamendments would strike the languagepertaining to hazardous situations and oc-currences, and require obedience to anyorder given to those listed above if theorder is lawful, regardless of the circum-stances. Following the hearing, the Boardunanimously adopted the amendments; atthis writing, the rulemaking file awaitsreview and approval by OAL.

- License Subject to Conditions andAgreements. At its October 29 meeting,the Board held a public hearing on itsproposed amendments to section 1485,Title 4 of the CCR, which would requireall licensees to strictly comply with anycondition imposed by the Board; cur-rently, the section allows CHRB to place

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restrictions, limits, and/or conditions on alicense but does not require licensee com-pliance with such actions. [13:4 CRLR194] The amendments would also deletelanguage in the regulation which allowslicensees, upon CHRB's endorsement, torequest classification changes in their li-censes without having to submit a newapplication. At the conclusion of the hear-ing, CHRB adopted the amendment; atthis writing, the rulemaking file awaitsreview and approval by OAL.

- Stewards to Make Inquiry. On Octo-ber 29, CHRB held a public hearing on itsproposed amendments to section 1750,Title 4 of the CCR, which would relievestewards of the responsibility of investi-gating complaints. With the proposedamendment of section 1765 (see below),CHRB's investigative staff would be ex-clusively responsible for investigatingcomplaints. [13:4 CRLR 194] The amend-ments to section 1750 would delete thewords "investigation" and "complaint,"and clarify the intent of the section whichspecifically addresses the running of therace; the stewards will remain responsiblefor inquiry into objections, protests, andappeals relevant to the running of the race.After the hearing, the Board unanimouslyadopted the amendments, which await re-view and approval by OAL.

- Written Complaints. At its October29 meeting, CHRB held a public hearingon its proposed amendment to section 1765,Title 4 of the CCR, which would require thatwritten complaints filed with the stewards bereferred to the Board's investigative unit forevaluation and further action. [13:4 CRLR194] These amendments would relieve thestewards from investigating complaintswhich may come before them in a hearingand place responsibility for investigationwith the Board. At the conclusion of thehearing, CHRB unanimously adopted theamendments which await review and ap-proval by OAL.

- Registration of Colors. On October29, CHRB held a public hearing on itsproposed amendments to section 1780,Title 4 of the CCR, which states that racingcolors shall be registered with the clerk ofthe course when registering a horse withinan inclosure [13:4 CRLR 193]; althoughthe section currently requires that a horseowner register a horse's racing colors withCHRB when filing an application fora horseowner's license, this requirement is rarelyenforced. After the hearing, the Board unan-imously adopted the amendment, whichawaits review and approval by OAL.

U LEGISLATION

AB 142 (Tucker). Existing law pro-vides for the determination and recogni-

tion of organizations of horsemen to re-ceive distributions of purses for the bene-fit of horsemen. As amended March 22,this bill would require the organizationrepresenting thoroughbred horsemen to bean organization whose members are own-ers of a racehorse that has started in aCalifornia licensed race in the precedingcalendar year and who, in the current cal-endar year, own a horse eligible to enter aCalifornia licensed race. The bill wouldrequire that each member of the organiza-tion hold a valid horse owner license is-sued by CHRB and not be licensed by theBoard in any other capacity or classifica-tion. [A. GO]

AB 702 (Tucker). Existing law per-mits CHRB, by regulation, to authorizethe entering of thoroughbred and Appa-loosa horses in quarter horse races at adistance not exceeding five furlongs atquarter horse meetings, mixed breedmeetings, and fair meetings. Existing lawrequires that minor breeds of horses makeup more than half of the number of horsesin the race. As introduced February 23,this bill would delete the requirement thatCHRB provide for this type of race byregulation, and delete the requirement thatminor breeds of horses make up more thanhalf of the number of horses in the race.[A. GO]

AB 1556 (Tucker). Existing law per-mits CHRB to adopt rules governing, per-mitting, and regulating mutuel wageringon horse races under the system known asthe parimutuel method of wagering. Thatwagering may be conducted only by aperson licensed under the Horse RacingLaw to conduct a horse racing meeting,and only within the enclosure and on thedates for which horse racing has been au-thorized by the Board. As introducedMarch 4, this bill would delete the restric-tion permitting wagering only on the datesfor which horse racing has been author-ized by the Board. [A. GO]

SB 638 (Maddy). Under existing law,no license to conduct a horse racing meet-ing upon a track may be issued unless thetrack has been inspected and approved byCHRB. As amended September 8, this billwould instead provide that no license toconduct a horse racing meeting upon atrack may be issued unless the track hasbeen inspected by the Board within 30days prior to the date of application for alicense. This provision would becomeoperative on January 1, 1995. [S. InactiveFile]

AB 991 (Tucker), as amended June 7,would permit any association planning toconduct quarter horse racing to apply tothe Board, and would require the Board togrant authority to conduct thoroughbred

racing as part of a night racing program, ifspecified conditions are met. [A. GO]

AB 1003 (Brulte). Under existing law,of the total amount handled by satellitewagering facilities, 0.1% is required to bedistributed to the Equine Research Labo-ratory at the UC Davis School of Veteri-nary Medicine. As amended April 15, thisbill would instead require 93% of 0.1% tobe distributed to the Equine Research Lab-oratory, and 7% of 0.1% to be distributedto the Equine Research Center at the Cal-ifornia State Polytechnic University, Po-mona. [A. W&M]

AB 1209 (Tucker), as introducedMarch 2, would require every veterinarianwho treats a horse within a racing enclo-sure to report to the official veterinarian ina manner prescribed by him/her, in writingand on a form prescribed by the Board, thename of the horse treated, the name of thetrainer of the horse, the time of treatment,any medication administered to the horse,and any other information requested bythe official veterinarian. [S. Inactive File]

AB 362 (Tucker). Under existing law,there are two versions of Business andProfessions Code section 19533; how-ever, because of conflicts between the twosections, that version of section 19533 lastenacted prevails over that version of sec-tion 19533 enacted earlier. As introducedFebruary 9, this bill would repeal the ver-sion of section 19533 enacted earlier. [S.GO]

AB 1936 (Costa). Under existing law,racing associations in California may au-thorize out-of-state betting systems to ac-cept wagers on horse races conducted bythose associations, as prescribed; racingassociations which authorize a bettingsystem located outside this state to acceptwagers on a race must distribute certainsums as license fees, purses, and commis-sions. As amended May 25, this billwould, with respect to thoroughbred rac-ing only, revise the distribution of theamount remaining after payment of thelicense fee by requiring 5% to be depos-ited with the official registering agency forthoroughbreds for distribution as breederawards, owner premiums, and stallionawards, and requiring the remainingamount to be distributed 50% to the asso-ciation conducting the race as commis-sions, and 50% to the horsemen as purses.[S. GO]

AB 274 (Hoge). Existing law permitsCHRB to authorize any licensed associa-tion or satellite wagering facility to acceptwagers on races conducted in this statecomprising the program of racing gener-ally known as the Breeders' Cup and fea-ture races conducted in this state having agross purse of $50,000 or more. As



amended August 26, this bill would deletethe authorization to accept wagers onraces conducted in this state comprisingthe program of racing generally known asthe Breeders' Cup, and permit fairs andlicensed associations to accept wagers onany featured race in this state having agross purse of $20,000 or more if wager-ing is offered and under the conditionsspecified in the bill. [A. Inactive File]

AB 1762 (Tucker). Existing law pro-vides that no application for a horseowner's license or for a license to conducta race meeting shall be granted unless theapplicant's liability for workers' compen-sation is secured in accordance with law.As introduced March 4, this bill wouldprovide that no person shall be licensed asa trainer, owner, trainer-driver, or in anyother capacity in which that person acts asthe employer of other licensees at a racemeeting, unless his/her liability forworkers' compensation coverage has beensecured in accordance with law; prohibitCHRB from issuing or renewing any li-cense until the applicant has certain docu-ments on file with the Board relating toworkers' compensation coverage; andprohibit an association conducting a rac-ing meeting from permitting the entry ofany horse for a race unless the entry formis accompanied by a valid certificate ofworkers' compensation insurance. [S. In-active File]

SB 29 (Maddy). Existing law providesfor the distribution to the horsemen aspurses of a portion of the total amountwagered on horse races. As amended July14, this bill would require that an amountequal to 10% of the total advertised pursebe distributed as a bonus payment for Cal-ifornia-bred thoroughbred horses, as de-scribed.

Existing law requires every licenseeconducting a horse racing meeting, eachracing day, to provide for the running of atleast one race limited to California-bredhorses, to be known as the "California-Bred Race." This bill would repeal thatprovision. [A. GO]

SB 847 (Presley). Existing law pro-vides that an association licensed to con-duct a racing meeting in the southern zonemay operate a satellite wagering facility ata location approved by CHRB if the loca-tion is eligible to be used as a satellitewagering facility during any of specifiedperiods. As amended April 27, this billwould expressly authorize an associationlicensed to conduct a racing meeting inRiverside County to operate a satellite wa-gering facility at a location approved bythe Board under those conditions. [A. GO]

SB 549 (Hughes). The Gaming Regis-tration Act regulates the operation of gain-

ing clubs, and prohibits any person fromowning or operating a gaming club with-out first obtaining a valid registration fromthe Attorney General. "Person" includesan officer or director, as specified. Asamended April 12, this bill would provide,notwithstanding any other provision oflaw, that a racing association licensed byCHRB, as specified, which has a class ofsecurities registered under the SecuritiesExchange Act of 1934, may operate agaming club if the officers, directors, andbeneficial owners of more than 10% of theshares of stock of the racing associationare registered with the Attorney Generaland no person owning 5% or more of theshares of stock of the racing association isdetermined by the Attorney General to beunfit to own an interest in a gaming club.This bill would provide for reimburse-ment of the Attorney General for the actualcosts of investigating and processing ap-plications for registration, and would pro-hibit the denial of an applicant's registra-tion by reason of its, or any affiliate's,ownership or operation of a business thatconducts parimutuel wagering in accor-dance with the laws of the state in whichthat wagering is conducted. [A. GO]

SCA 29 (Maddy). Existing provisionsof the California Constitution permit cer-tain kinds of gaming in this state, includ-ing wagering on the results of horse rac-ing, bingo for charitable purposes, and theoperation of a state lottery. Existing pro-visions of the California Constitution re-quire the Legislature to prohibit casinos ofthe type currently operating in Nevada andNew Jersey. As amended July 1, this mea-sure would create the California GamingControl Commission, and would autho-rize the Commission to regulate legalgaming in this state, subject to legislativecontrol. The measure would also create aDivision of Gaming Control within theOffice of the Attorney General, and permitthe legislature to impose licensing fees onall types of gaming regulated by the Com-mission to support the activities of theCommission and the Division. The mea-sure would provide for the regulation ofbingo by the Commission, and providethat the proceeds of those games shall beused exclusively to further the charitable,religious, or educational purposes of anonprofit organization or institution thatis exempt from state taxation.

Existing statutory law establishes theCalifornia State Lottery Commission andrequires it to administer the CaliforniaState Lottery Act of 1984. Under existingstatutory law, CHRB regulates horse rac-ing and wagering thereon. This measurewould permit the legislature to provide forthe regulation of parimutuel wagering on

horse racing and the state Lottery by theGaming Control Commission.

This measure would exclude from themeaning of the term "gaming" merchantpromotional contests and drawings con-ducted incidentally to bona fide businessoperations under specified conditions, andcertain types of machines that award addi-tional play. The measure would prohibitthe state Lottery from using any slot ma-chine whether mechanical, electrome-chanical, or electronic.

The measure would require the legisla-ture to provide for the recording and re-porting of financial transactions by com-mercial gaming establishments. The mea-sure would also define the term "casino"for the purpose of the prohibition againstcasinos. [S. GO]

AB 1418 (Tucker). Existing law re-quires the execution of an agreement be-tween, among others, the racing associa-tion conducting the meeting and the satel-lite wagering facility as a prerequisite tothe transmission of the audiovisual signalof the live racing and the conduct of wa-gering at the satellite wagering facility. Asamended September 8, this bill would per-mit the agreement to contain a provisionrequiring the payment of a proximity feeto a racing association or fair as a condi-tion of receiving the audiovisual signal ofthe live meeting under the circumstancesspecified in the bill. [A. Conference Com-mittee]

AB 1764 (Tucker). Under existinglaw, CHRB may authorize an associationthat conducts a racing meeting in this stateto accept wagers on the results of out-of-state feature races and out-of-state harnessor quarter horse feature races or stakeraces or other designated races under pre-scribed conditions. As introduced March4, this bill would define "out-of-state" forpurposes of these provisions to mean any-where outside this state within or outsidethe United States. [A. Inactive File]

* RECENT MEETINGS

At its October 29 meeting, the Boarddiscussed the Association of Racing Com-missioners International's (ARCI) amend-ment to its trifecta rule (Section V, Para-graph L of the ARCI Parimutuel WageringRules). The previous version of the ruleprohibited any coupled entries in trifectacontests; as amended, the ARCI rule al-lows coupled entries when the race inquestion has Grade I status, provided thatthe relevant state racing commission ap-proves the change. CHRB noted that thisamendment is not contrary to existingCHRB policy and regulations, since sec-tion 1979, Title 4 of the CCR, alreadyallows coupled entries for trifectas con-

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ducted by California racing associations;accordingly, CHRB unanimously con-curred in the amendment.

At its November 18 meeting, CHRBreaffirmed the California Western Appa-loosa Association (CWAA) as the officialorganization to represent Appaloosahorsemen in California; this action fol-lowed a CHRB-conducted election to de-termine whether Appaloosa owners andtrainers wanted the CWAA to be replacedby Cal-Western Appaloosa Racing, Inc. Inthe mail-in election, which ended on Oc-tober 29, CWAA received 114 votes to 89for Cal-Westem.

At its December 16 meeting, the Boardunanimously voted to reelect RalphScurfield as CHRB Chair and DonaldValpredo as Vice-Chair.

U FUTURE MEETINGSApril 28 in Los Angeles.May 20 in Cypress.

NEW MOTOR VEHICLEBOARDExecutive Secretary:Sam W. Jennings(916) 445-1888

P ursuant to Vehicle Code section 3000et seq., the New Motor Vehicle Board

(NMVB) licenses new motor vehicle deal-erships and regulates dealership reloca-tions and manufacturer terminations offranchises. It reviews disciplinary actiontaken against dealers by the Department ofMotor Vehicles (DMV). Most licenseesdeal in cars or motorcycles.

NMVB is authorized to adopt regula-tions to implement its enabling legisla-tion; the Board's regulations are codifiedin Chapter 2, Division I, Title 13 of theCalifornia Code of Regulations (CCR).The Board also handles disputes arisingout of warranty reimbursement schedules.After servicing or replacing parts in a carunder warranty, a dealer is reimbursed bythe manufacturer. The manufacturer setsreimbursement rates which a dealer occa-sionally challenges as unreasonable. In-frequently, the manufacturer's failure tocompensate the dealer for tests performedon vehicles is questioned.

The Board consists of four dealermembers and five public members. TheBoard's staff consists of an executive sec-retary, three legal assistants and two sec-retaries.

*MAJOR PROJECTS

Board Proposes Rulemaking Pack-age. On December 31, NMVB published

notice of its intent to amend sections 585and 598 and adopt new section 593. 1, Title13 of the CCR. According to NMVB, theamendments to sections 585 and 598 willformalize the current Board procedure bywhich the Executive Secretary files a pro-test only after it is determined the submit-ted protest comports with form, content,and timeliness requirements. The amend-ments will delegate the authority for deter-mining the timeliness of a protest to theExecutive Secretary, and further definethe procedures by which the Board staffassigns filing dates in relation to the datethe document was received at the Board'soffices or mailed by certified or registeredmail. Proposed new section 593.1 woulddescribe the means for removing ambigu-ity from written notices under VehicleCode section 3062 and thus decrease thelikelihood of disputes over sufficiency ofnotice for actions under that section. Atthis writing, NMVB is scheduled to holda public hearing on these proposedchanges on February 14 in Sacramento.

* LEGISLATIONAB 699 (Bowen), as amended June 10,

would change the name of NMVB to theFranchise Dispute Resolution Board; re-vise references to NMVB in other provis-ions of existing law; and enlarge theBoard's scope of authority to include reg-ulation of all franchisee-franchisor rela-tionships and authorize the charging ofcertain fees, as specified. [A. W&M]

AB 802 (Sher), as amended March 30,would prohibit a licensed vehicle dealerfrom advertising the amount or percentageof any down payment, the number of pay-ments or period of repayment, the amountof any payment, or the amount of anyfinance charge without making clear andconspicuous disclosure of specified infor-mation. The bill would require advertise-ments to made in a prescribed manner. IA.Trans]

AB 1665 (Napolitano), as introducedMarch 4, would prohibit any manufac-turer, manufacturer branch, distributor, ordistributor branch licensed under the Ve-hicle Code from preventing a dealer fromselling and servicing new motor vehiclesof any line-make, or parts and productsrelated to those vehicles, at the same es-tablished place of business approved forsale and service of new motor vehicles byany other manufacturer, manufacturerbranch, distributor, or distributor branch,if the established place of business is suf-ficient to enable competitive selling andservicing of all new motor vehicles, parts,and other products sold and serviced atthat established place of business. [A.Trans]

SB 1081 (Calderon). Under existinglaw, every conditional sales contract, de-fined to include certain contracts for thesale or bailment of a motor vehicle, isrequired to contain certain disclosures, asspecified. As amended May 26, this billwould establish a seller's right of rescis-sion based on the seller's inability to as-sign the contract, and would require theright of rescission to be included in condi-tional sales contracts. The bill would spec-ify the conditions under which the sellermay rescind a contract, including requir-ing the seller to send a Notice of Cancel-lation to the buyer, as specified; however,the bill would specify circumstances inwhich, after rescission, the seller may re-possess the vehicle without notice. Thebill would provide that a seller is liable ina civil action to a buyer for any damagescaused by an unauthorized rescission. Thebill would prohibit conditional sales con-tracts from containing a seller's right ofrescission based on inability to assign thecontract, except as provided by the bill.

Existing law prohibits various activi-ties in connection with the advertising orsale of motor vehicles by, among others,vehicle dealers licensed by the Depart-ment of Motor Vehicles. This bill wouldprohibit a licensed dealer from rescindinga contract for the sale of a vehicle andsubsequently engaging in any unlawful,unfair, or deceptive act or practice, asspecified, or stating an intent to rescind acontract pursuant to the right of rescissionprovided by the bill without having theability to comply with the requirements ofthe bill.

The bill would state that the provisionsregarding conditional sales contracts onlyapply to contracts entered into on or afterJanuary 1, 1994. IA. Desk]

* LITIGATION

In Automotive Management Group,Inc. v. New Motor Vehicle Board, 20 Cal.App. 4th 1002 (Dec. 2, 1993), plaintiffAutomotive Management Group (AMG)challenged the finding of an administra-tive law judge (ALJ) and the trial courtthat AMG's protest regarding its termina-tion as a franchised dealer of MitsubishiMotor Sales of America, Inc,. was un-timely. Finding that NMVB did not reviewthe finding of the ALJ and render a finalagency decision, the Sixth District Courtof Appeal remanded the matter to theBoard for appropriate proceedings.

Because AMG failed to maintain suffi-cient lines of credit (called "flooring") tobuy vehicles from Mitsubishi, as requiredby the franchise agreement, Mitsubishinotified AMG of its intention to terminatethe franchise on January 9, 1990. After

California Regulatory Law Reporter - Vol. 14, No. 1 (Winter 1994) 16

Documents

WREGULATORY AGENCY ACTION