BILL NUMBER: AB 2384 CHAPTERED 09/26/02 CHAPTER 923 FILED WITH SECRETARY OF STATE SEPTEMBER 26, 2002 APPROVED BY GOVERNOR SEPTEMBER 25, 2002 PASSED THE ASSEMBLY AUGUST 31, 2002 PASSED THE SENATE AUGUST 29, 2002 AMENDED IN SENATE AUGUST 28, 2002 AMENDED IN SENATE AUGUST 21, 2002 AMENDED IN ASSEMBLY APRIL 8, 2002 INTRODUCED BY Committee on Governmental Organization (Horton (Chair), Strickland (Vice Chair), Canciamilla, Chavez, Harman, Maldonado, Nation, Reyes, Wesson, Wiggins, and Wright) FEBRUARY 21, 2002 An act to amend, add, and repeal Section 19613 of, and to add Section 19612.7 to, the Business and Professions Code, relating to horse racing, and declaring the urgency thereof, to take effect immediately. LEGISLATIVE COUNSEL'S DIGEST AB 2384, Committee on Governmental Organization. Horse racing. Existing law relating to harness races provides for the distribution of a portion of the parimutuel pool for purses, and provides for the allocation of the purse money. Under existing law, no horse owner's license or license to conduct a race meeting may be issued unless the applicant's liability for workers' compensation is secured. Existing law provides that any termination of liability coverage results in the immediate automatic suspension of the license during the period of that termination, and is also a ground for revocation of the license. This bill would provide that, with respect to a harness race meeting, a portion of the money allocated for purses may be used to pay for obtaining, providing, or defraying the cost of workers' compensation coverage for stable employees and drivers of licensed standardbred trainers. The bill would require a written agreement, subject to the approval of the board, between the racing association that conducts the live harness race meeting and the organization representing the horsemen participating at the race meeting specifying the portion, if any, to be used for these purposes. It would require this portion to be jointly administered by the racing association and the organization representing the horsemen. This bill also contains provisions incorporating amendments to Section 19613 of the Business and Professions Code proposed by AB 2619 and AB 2931 to become operative only if those two bills become effective on or before January 1, 2003, and (2) each of those bills amends Section 19613 of the Business and Professions Code, in which case the amendments of, or additions of, Section 19613 in AB 2619 and AB 2931 shall be repealed. This bill would declare that it is to take effect immediately, as an urgency statute. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 19612.7 is added to the Business and Professions Code, to read: 19612.7. With respect to a harness race meeting, in addition to any other distributions, a portion of the money allocated for purses pursuant to this chapter may be used to pay for obtaining, providing, or defraying the cost of workers' compensation coverage for stable employees and drivers of licensed standardbred trainers. This portion of the purse money, if any, shall be specified in a written agreement between the racing association that conducts the live harness race meeting and the organization representing the horsemen participating at the race meeting, and shall be jointly administered by the racing association and the organization representing the horsemen. This agreement is subject to the approval of the board. SEC. 2. Section 19613 of the Business and Professions Code, as amended by Section 11 of Chapter 198 of the Statutes of 2001, is amended to read: 19613. (a) Except as provided in subdivisions (b), (c), (d), (e), and (f), the portion deducted for purses pursuant to this chapter shall be paid to or for the benefit of the horsemen at the racing meeting, and may include obtaining, providing, or defraying the cost of workers' compensation coverage for stable employees and jockeys of licensed trainers. (b) Any association other than a fair that conducts a thoroughbred racing meeting shall pay to the owners' organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to owners, an amount not to exceed two-thirds of 11/2 percent of the portion, and to a trainers' organization for administrative expenses and services rendered to trainers and backstretch employees an amount equivalent to one-third of 11/2 percent of the portion. That association shall also pay an amount for a pension plan for backstretch personnel to be administered pursuant to Section 19613.8 equivalent to an additional 1 percent of the portion. The remainder of the portion shall be distributed as purses. (c) Any other association may pay to the horsemen's organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to horsemen an amount out of the portion as may be determined by the association by agreement or otherwise, but, in all events, shall include, relative to a thoroughbred horsemen's organization racing, 1 percent of the portion for a pension plan for backstretch personnel pursuant to Section 19613.8. The remainder of the portion shall be distributed as purses. (d) Notwithstanding subdivisions (b) and (c), any association conducting a fair racing meeting or conducting a mixed breed racing meeting shall pay to the horsemen's organizations contracting with the association with respect to the conduct of races for their respective breeds of horses at the meetings for administrative expenses and services rendered to their respective horsemen those amounts out of the portion as determined by the horsemen's organization for the respective breeds with the approval of the board. Pursuant to this subdivision, amounts not to exceed 3 percent of the portion for the owners' and trainers' organizations shall be distributed to any thoroughbred owners' and trainers' organizations contracting with an association for a fair racing meeting or participating in mixed breed racing meetings as follows: two-thirds of 1 percent to the owners' organization and one-third of 1 percent to the trainers' organization for administrative expenses and services rendered to both owners and trainers, 1 percent for welfare funds, and 1 percent for a pension program for backstretch personnel, to be administered pursuant to Section 19613.8. (e) Any association other than a fair that conducts a quarter horse racing meeting, except a mixed breed meeting, shall pay to the horsemen's organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to horsemen, an amount not to exceed 3 percent of the portion. The remainder of the portion shall be distributed as purses. (f) For racing meetings other than thoroughbred meetings, if no contract has been signed between the association conducting the racing meeting and the organization representing the horsemen by the time the racing meeting commences, the distribution of purses shall be governed by the following: (1) If the association conducted a racing meeting within the past 15 months and a contract was in existence for that meeting with the horsemen's organization and the association is conducting a subsequent meeting for the same breed or mixed breeds, the amounts payable to the horsemen's organization under subdivision (c) shall be computed under the provisions of the last signed contract between the parties. (2) This subdivision applies regardless of the cause of the failure to execute a contract, whether that failure is a result of inadvertence or otherwise. (3) For racing meetings that do not come within paragraph (1), the board shall, within 15 days after the commencement of the racing meeting, determine the amounts payable to the horsemen's organization for administrative expenses and services, and provide for the direct payment of those amounts. (g) Amounts distributed pursuant to this section are derived from owners' purses. (h) For the purposes of this section, the following definitions shall apply: (1) "Owner" means a person currently licensed by the board as an owner of a thoroughbred racehorse. (2) "Trainer" means a person currently licensed by the board as a trainer of a thoroughbred racehorse. This section shall remain in effect only until January 1, 2006, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2006, deletes or extends that date. SEC. 3. Section 19613 is added to the Business and Professions Code, to read: 19613. (a) Except as provided in subdivisions (b), (c), (d), (e), and (f), the portion deducted for purses pursuant to this chapter shall be paid to or for the benefit of the horsemen at the racing meeting, and may include obtaining, providing, or defraying the cost of workers' compensation coverage for stable employees and jockeys of licensed trainers. (b) Any association other than a fair that conducts a thoroughbred racing meeting shall pay to the owners' organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to owners, an amount not to exceed two-thirds of 11/2 percent of the portion, and to a trainers' organization for administrative expenses and services rendered to trainers and backstretch employees an amount equivalent to one-third of 11/2 percent of the portion. That association shall also pay an amount for a pension plan for backstretch personnel to be administered pursuant to Section 19613.8 equivalent to an additional 1 percent of the portion. The remainder of the portion shall be distributed as purses. (c) Any other association may pay to the horsemen's organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to horsemen an amount out of the portion as may be determined by the association by agreement or otherwise, but, in all events, shall include, relative to a thoroughbred horsemen's organization racing, 1 percent of the portion for a pension plan for backstretch personnel pursuant to Section 19613.8. The remainder of the portion shall be distributed as purses. (d) Notwithstanding subdivisions (b) and (c), any association conducting a fair racing meeting or conducting a mixed breed racing meeting shall pay to the horsemen's organizations contracting with the association with respect to the conduct of races for their respective breeds of horses at the meetings for administrative expenses and services rendered to their respective horsemen those amounts out of the portion as determined by the horsemen's organization for the respective breeds with the approval of the board. Pursuant to this subdivision, amounts not to exceed 3 percent of the portion for the owners' and trainers' organizations shall be distributed to any thoroughbred owners' and trainers' organizations contracting with an association for a fair racing meeting or participating in mixed breed racing meetings as follows: two-thirds of 1 percent to the owners' organization and one-third of 1 percent to the trainers' organization for administrative expenses and services rendered to both owners and trainers, 1 percent for welfare funds, and 1 percent for a pension program for backstretch personnel, to be administered pursuant to Section 19613.8. (e) Any association other than a fair that conducts a quarter horse racing meeting, except a mixed breed meeting, shall pay to the horsemen's organization contracting with the association with respect to the conduct of racing meetings for administrative expenses and services rendered to horsemen, an amount not to exceed 3 percent of the portion. The remainder of the portion shall be distributed as purses. (f) For racing meetings other than thoroughbred meetings, if no contract has been signed between the association conducting the racing meeting and the organization representing the horsemen by the time the racing meeting commences, the distribution of purses shall be governed by the following: (1) If the association conducted a racing meeting within the past 15 months and a contract was in existence for that meeting with the horsemen's organization and the association is conducting a subsequent meeting for the same breed or mixed breeds, the amounts payable to the horsemen's organization under subdivision (c) shall be computed under the provisions of the last signed contract between the parties. (2) This subdivision applies regardless of the cause of the failure to execute a contract, whether that failure is a result of inadvertence or otherwise. (3) For racing meetings that do not come within paragraph (1), the board shall, within 15 days after the commencement of the racing meeting, determine the amounts payable to the horsemen's organization for administrative expenses and services, and provide for the direct payment of those amounts. (g) Amounts distributed pursuant to this section are derived from owners' purses. (h) For the purposes of this section, the following definitions shall apply: (1) "Owner" means a person currently licensed by the board as an owner of a thoroughbred racehorse. (2) "Trainer" means a person currently licensed by the board as an owner and trainer or as a trainer of a thoroughbred racehorse. This section shall become operative on January 1, 2006. This section shall remain in effect only until January 1, 2008, and as of that date is repealed, unless a later enacted statute, that is enacted before January 1, 2008, deletes or extends that date. SEC. 4. Sections 2 and 3 of this bill incorporate changes to Section 19613 of the Business and Professions Code, as amended by Section 11 of Chapter 198 of the Statutes of 2001, proposed by AB 2619 and AB 2931. Those sections shall only become operative if (1) both AB 2619 and AB 2931 are enacted and become effective on or before January 1, 2003, and (2) each of those bills amends Section 19613 of the Business and Professions Code, as amended by Section 11 of Chapter 198 of the Statutes of 2001, in which case Sections 2 and 3 of this bill shall become operative, for the dates provided in those sections, and shall prevail over the amendments to Section 19613, as amended by Section 11 of Chapter 198 of the Statutes of 2001, proposed by AB 2619, and AB 2931, and Section 19613, as proposed to be added by Section 2 of AB 2619 shall not become operative. However, if AB 2931 is enacted and becomes effective before January 1, 2003, the amendment to Section 19613 of the Business and Professions Code, as added by Section 11.5 of Chapter 198 of the Statutes of 2001, proposed by Section 4 of that bill shall be given effect. SEC. 5. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: On July 1, 2002, the cost of workers' compensation coverage for horse trainers rose by 30 to 60 percent. In order to immediately authorize use of specified funds to assist in offsetting the increased cost of workers' compensation coverage, so that horse trainers do not let their coverage lapse or leave the state, resulting in the state lacking sufficient numbers of properly insured horse trainers, it is necessary that this act take effect immediately. Also, in order to permit a prompt and orderly transition on the board of directors of the organization representing thoroughbred owners, it is necessary that this act take immediate effect.