AHC 1998 Year-End Review

The 105th Congress completed its legislative work on October 21, 1998, however they officially adjourned on December 22 following the Presidential impeachment vote. In what may be remembered as one of the most controversial years in our nation's history, the 105th Congress was able to pass legislation that will affect the nation's equine industry. The American Horse Council work with Congress to successfully gain funding for equine research and recreational trails, prevent tax increases for horse owners and stave off prohibition of horse racing via Internet.

Internet/Interactive Gaming
Bills introduced in both the Senate (S. 474) and House (H.R. 4427) intended to prohibit gambling via the Internet were major legislative concerns for the horse industry during the 105th Congress. The "Internet Gambling Prohibition Act" would have amended Section 1084 of the U.S. Code, more commonly referred to as the "wire statute," so that gambling over the Internet, or other interactive services, would be illegal in the U.S. Of great concern to the horse industry was that any change to the wire statute could have had an impact on existing, legal, pari-mutuel betting activities and future opportunities for the industry.

The horse industry held many meetings with Senator Jon Kyl (R-AZ), the original sponsor of the bill and other Members of Congress. Ultimately, the industry was able to develop language in the Senate that, while not completely exempting the horse industry, would have exempted many of the current activities, such as merging pools, simulcasting, telephone and intrastate interactive wagering, that are used by the racing industry. The Senate passed this version of the Internet Gambling Prohibition Act 90 to 10 as part of a bill providing funding for the Commerce, Justice and State Departments.

The House was not as quick to act upon H.R. 4427, and the House Judiciary Committee concluded this Congress dealing with the presidential impeachment process. The House did not vote on any Internet Gambling legislation and the issue died with the end of the 105th Congress. While the House did not hold a vote on the legislation there was much interest in the issue by several Members. This issue will be re-invisited in the 106th Congress and the AHC must be prepared to work with Members and staff to ensure the horse industry is considered.

Taxes
The 105th Congress did consider several pieces of legislation that would have an impact on the nearly $1.9 billion in taxes paid by the horse industry each year. The AHC was successful in defeating the bills that would have caused an increase in the taxes paid by the horse industry.

Gaming
Perhaps the most inconspicuous tax issue that would have had the most devastating effect on the horse industry was Senator Dan Coats' (R-IN) amendment to eliminate the allowed offset of gambling winnings with documented losses. This amendment would, in effect, have been an excise tax on gambling winnings and made such income the only income subject to a tax on gross earnings. Such a tax would likely lead to less money being bet at races, which would decrease the amount shared by the state, the track and horse owner. The AHC, with substantial support from the industry, was able to defeat this legislation. It is likely that similar legislation will be introduced in the 106th Congress and the AHC must be prepared to deal with it when it is re-introduced.

Passive Losses
While the AHC continued to push for changes in the passive loss requirements for the horse industry and make some progress, ultimately the provisions were not changed. There has been discussion within the industry to focus more attention on decreasing the holding period for horse owners as it applies to capital gains from 24 months to 18 months.

Recreational Trails Program
Perhaps the largest legislative achievement of the AHC during the 105th Congress was securing $230 million for building and maintaining the Nation's trails system over the next 6 years. The Recreational Trails Program was included as part of a larger transportation bill called the Transportation Equity Act for the 21st Century, or TEA-21.

The funding levels provided by TEA-21 are $30 million in 1998, $40 million in 1999 and $50 million in each year 2000-2003. These funds will be divided among the 50 states, and each state will provide funds to individual organizations and civic groups for trail development and maintenance for both motorized and non-motorized recreational trails.

Funding for Equine Research
As Congress adjourned it passed the Fiscal Year 1999 budgets for the entire federal government. Through the work of the AHC, these budgets included funding that will be very beneficial to the horse industry in the coming year. The 1999 United States Department of Agriculture's (USDA) budget includes funding for several programs that will provide the horse industry with much-needed money to improve the health and welfare of horses in the U.S.

Contagious Equine Metritis (CEM) and the newly discovered CEM-like organism found in Kentucky and California will be studied with $200,000 going to the University of Kentucky for CEM research and $300,000 set aside for research into the new CEM-like organism. Along with this equine specific research, Congress also provided USDA with $3.1 million for general research into emerging infectious animal diseases, and $3.5 million for the maintenance and improvement of an animal disease laboratory in Plum Island, New York.

Equine Welfare
The AHC also secured funding for equine welfare issues in the FY 1999 budget for USDA. A total of $400,000 is provided for the continued development and enforcement of rules and regulations regarding the commercial transportation of horses to slaughter facilities. These rules will help ensure that horses receive the humane treatment they deserve during transportation to these facilities. USDA also received $361,000 for the continued enforcement of the Horse Protection Act.

Music Licensing
Before adjourning Congress passed legislation carving out some small businesses from the current legal mandate that they pay licensing fees for music played in their establishments. Despite the efforts of the horse industry, the final exemption was so limited it could not include race tracks, horse shows or rodeos which are obligated to pay fees to music licensing societies for music played over the radio and television.

Bills introduced in Congress by Congressman Jim Sensenbrenner (R-WI) and Strom Thurmond (R-SC) would have exempted small business operators from paying licensing fees for playing radios and televisions at their establishments, provided the performances were incidental to the main purpose of the establishment. Despite the efforts of the AHC, the bill finally agreed to by the Senate and House only exempts businesses under 2,000 square feet, or businesses that use no more than four TVs or six speakers.

The AHC worked with Senator Thurmond and Senate leadership to include an exemption for facilities where the primary purpose was hosting sporting events (racetracks, horse show grounds, rodeo arenas, etc). This approach was attempted in order to include racetracks and other equine venues but not include every large facility. Unfortunately, most Members of Congress believed this type of exemption was too broad, would exempt too many large facilities and could not be passed. Therefore the "sports exemption" was not included in the final bill, the "Copyright Term Extension Act of 1997," that was passed by Congress.

Temporary Agricultural Workers
Not passed by the 105th Congress was a bill addressing the issue of temporary/seasonal alien agricultural workers. This provision would have made it easier for horse operations to employ temporary/seasonal alien workers during the busy breeding and training seasons. Currently, a horse breeding or training operation that wishes to employ temporary/season alien workers must use the H-2A program, which a recent government study criticized as being too bureaucratic.

While the 105th Congress did not pass the provision, it did receive much attention and was close to passing at the end of Congress. Organizations like the AHC are already working to capitalize on the favorable attitude held by members at the end of Congress. Meetings are already being planned by agricultural organizations wishing to pass this legislation. The AHC is a part of this planning process and will continue working for the industry on this issue in the 106th Congress.

Animal Waste Disposal
Two bills were introduced in the 105th Congress that dealt with the growing concern surrounding the disposal of animal waste in the U.S. The purpose of the bills introduced was to protect the public health and water quality by establishing controls over animal waste disposal from "animal feeding operations."

As written the bills could have applied to racetracks, training facilities and large breeding operations.

The U.S. Department of Agriculture and Environmental Protection Agency are also considering plans to increase controls on the disposal of animal waste. These plans are being developed under the authority of the "Clean Water Act," and a draft proposal is expected sometime early in 1999.

Regulatory Issues

Horses as Livestock
The AHC and American Association of Equine Practitioners (AAEP) joined together to develop an educational White Paper explaining the possible effects of changing the legal status of horses from livestock, to some other designation, such as companion animal. The paper was prompted because of efforts in several states to legally change the status of horses.

The paper addressed several issues that some may fail to consider when taking into account the legal status of horses. For example, the U.S. Department of Agriculture provides much-needed technical expertise and monetary support for equine disease research. This support could be greatly impacted if horses were no longer considered livestock. In addition, taxes on horse owners and breeders could be affected if horses were no longer considered livestock.

The paper was provided to Breed Registries, Sport and Trail organizations and others involved in the industry, as a service for them to provide to their members.

COLT
During the 1997/1998 election cycle, the AHC launched a broader political fundraising effort through its political action committee, COLT.

Because of changes the regulations of the Federal Election Commission, the AHC was allowed to solicit the individual members of its member organizations with the organizations prior approval.

The American Association of Equine Practitioners, the American Quarter Horse Association, the Arabian Horse Registry of America, The Jockey Club and the United States Trotting Association allowed such a solicitation of their individual members. Thanks to the willingness of these organizations and their members to participate in this important effort, COLT was able to raise more than $61,000 for the 1997/1998 election cycle. While this is not a great deal of money compared to other organizations, it is a start upon which to build.

The AHC hopes to include more organizations and raise more political money during the 1999-2000 election cycle. More money allows the AHC to have an even greater impact on the election process and elect more Members of Congress that know and understand the importance of the horse industry in the United States.

The American Horse Council, the national legislative representative for the horse industry, works daily with Congress, federal agencies and the industry itself to create an environment that benefits horses and the people who depend on, care about and enjoy them. A non-profit organization, the AHC's activities are funded entirely through membership dues. They proudly represent all breeds, disciplines and activities as well as owners, breeders, veterinarians, farriers, competitors, trainers, jockeys, breed registries, horsemen's associations, race tracks, horse shows and rodeos, commercial suppliers and state horse councils.

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