Mile High Greyhound Park, Inc. v. Colorado Racing Commission

Opinion by

Judge NEY.

Plaintiffs, Mile High Greyhound Park, Inc. and Racing Associates of Colorado, Ltd., are the owners and operators of greyhound and horse racing tracks located in Colorado. They appeal from a judgment upholding a Colorado Racing Commission rule which requires race tracks to install and maintain, at their own expense, video surveillance systems in pari-mutuel wagering areas. We affirm.

In May 1998, the Commission, upon the recommendation of the Division of Racing Events, adopted a rule requiring all race tracks and related simulcast facilities to install video surveillance systems in pari-mutu-el areas to monitor lines, cashier and seller windows, and money/accounting rooms, at the race tracks' expense. The Commission was to be responsible for the costs of the equipment needed to review, audit, and duplicate the recordings made by the surveillance systems.

Plaintiffs' lHeense applications for the 1998 season were accepted by the Commission, conditioned on plaintiffs' installation of video surveillance systems at their respective race tracks at their own expense.

Pursuant to § 24-4-106, C.R.8.1999, plaintiffs sought review of this administrative action. They requested a declaratory judgment that the portion of the rule requiring the race tracks to pay for the installation and maintenance of the surveillance systems was contrary to the statute that enables the Commission to license and regulate pari-mutuel wagering at race tracks. Plaintiffs also sought injunctive relief, attorney fees, and expenses.

By deferring to the Commission's "reasonable" interpretation of its enabling statute, the trial court ruled that imposition of such a requirement was proper under § 12-60-501(1)(a), C.R.S.1999. This appeal followed.

Plaintiffs contend that placing the burden of the cost of installing and maintaining the surveillance systems on them exceeds the Commission's statutory authority as provided in §§ 12-60-501(2)(a) & (4), CRS. 1999, which mandates that the costs of regulation of pari-mutuel wagering are the Commission's responsibility. We disagree.

Plaintiffs have sought judicial review of the Commission's rulemaking authority, in contrast to an administrative adjudication or quasi-judicial determination. See Colorado Ground Water Commission v. Eagle Peak Farms, - Ltd., 919 P.2d - 212, 217 (Colo.1996)(defining rulemaking as "the issuance of regulations or the making of determinations which are addressed to indicated but unnamed or unspecified persons or situations").

Since agency rules are presumed valid, plaintiffs have the burden of establishing their invalidity by demonstrating that the rulemaking body exceeded its statutory authority. Wine & Spirits Wholesalers of Colorado, Inc. v. Colorado Department of Revenue, 919 P.2d 894 (Colo.App.1996). An agency's construction of its own governing statute is entitled to great weight. Amax, Inc. v. Colorado Water Quality Control Commission, 790 P.2d 879 (Colo.App.1989).

The Colorado Racing Act empowers the Commission to license and regulate pari-mu-tuel wagering at race tracks. Section 12-60-501(2)(a) provides, in pertinent part, that:

[The commission shall, at its own expense, regulate the operations of pari-mutuel machines and equipment, the operations of all money rooms, accounting rooms, and sellers' and cashiers' windows, and the weighing of jockeys and of greyhounds ....

Additionally, § 12-60-501(4) provides that:

The commission shall, at its own expense, specifically regulate the operation by instate simulcast facilities of pari-mutuel machines and equipment, the operation of all money and accounting facilities, and the operation of sellers' and cashiers' windows

[[Image here]]

Plaintiffs argue that the language of these two sections of the statute plainly states the legislative intent that the Commission bear the costs of installing and maintaining the surveillance systems because the undisputed purpose of the surveillance cameras is regulation of the wagering process.

The Commission maintains that the licen-sure requirement at issue here is authorized by § 12-60-501(1)(a), which provides that all race tracks engaged in pari-mutuel wagering "be constructed, maintained, and operated in accordance with the laws of this state and the rules of the commission." Accordingly, the Commission argues that race track equipment, maintenance, and operation costs-such as the installation and maintenance of the surveillance system-are to be borne by the race tracks. In contrast, it acknowledges that the costs associated with the equipment required to review, audit, and duplicate the recordings made by the surveillance systems are the Commission's responsibility.

A court reviewing an interpretation of a statute by an ageney must engage in a two-part test. See Wine & Spirits Wholesalers of Colorado, Inc. v. Colorado Department of Revenue, supra (adopting the analysis of Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)).

The court first must determine if the legislature has directly spoken to the precise question at issue. If the intent is clearly articulated in the statute, the court is required to give effect to such unambiguously expressed intent. Wine & Spirits Wholesalers of Colorado, Inc. v. Colorado Department of Revenue, supra.

Here, the applicable statutory language does not speak to the precise issue. The two statutes fail to address directly the delineation between the expenses to be borne by the race tracks as construction, maintenance, and operation costs, and those expenses that are to be borne by the Commission as regulation costs.

If the statute is silent or ambiguous with respect to the specific issue, the inquiry becomes whether the agency's interpretation is based on a permissible construction of the statute. When the statute is implicitly silent as to the issue to be determined, "a court may not substitute its own construction of a statutory provision for a reasonable interpretation made by the administrator of an agency." Wine & Spirits Wholesalers of Colorado, Inc. v. Colorado Department of Revenue, supra, 919 P.2d at 897.

We conclude the Commission's interpretation-that the installation of video surveillance systems is governed by § 12-60-501(1)(a)-is permissible. The construction, maintenance, or operation expenses contemplated by § 12-60-501(1)(a) could reasonably include the installation, maintenance, and operation of the equipment at issue.

In contrast, as set forth in §§ 12-60-501(2)(a) & (4), the costs of duplication, evaluation, and utilization of such information by the Commission to investigate violations or enforce its requirements, are regulatory. Such regulatory costs are to be borne by the Commission pursuant to §§ 12-60-501(2)(2) & (4).

In other words, the costs of doing business and complying with licensing rules, which includes the cost of equipment necessary for the collection of information used by the Commission to regulate, are the race tracks' responsibility under § 12-60-501(1)(a). The utilization of such information to regulate and monitor the operation of pari-mutuel wagering at race tracks must be borne by the Commission under § 12-60-501@2)(a) & (4). Hence, we conclude that this interpretation was the intent of the legislature when it distinguished regulatory costs of the Commission from the costs of operation or of doing business, which include compliance with licensing rules.

Thus, the trial court properly upheld the Commission's interpretation of the rule in concluding that it did not exceed legislative authorization as intended by the statute. Barela v. Beye, 916 P.2d 668 (Colo.App.1996) (a reviewing court's task is to determine statutory intent, and then assure that the administrative regulation or rule at issue is consistent).

Judgment affirmed.

Judge TAUBMAN concurs. Judge JONES dissents.