According to New York Horse Rescue, they aren't permitted to sell directly to feed lots or kill buyers, either. NYHR has posted the following on their mare/foal web page:
"FOR INFORMATION ON THE 2006 FOALS PLEASE VISIT
www.BUTLER-FARM.COMPMU ranchers (under contract with Ayerst) are no longer allowed to sell their horses (foals, etc.) to a rescue organization, such as NYHR. They are also not permitted to sell to feed lots, kill buyers or at a livestock sale where there will be kill buyers. PMU ranchers are now only permitted to sell their horses at sanctioned auction sales.
NYHR will work with several former PMU ranchers that have lost their contracts with Ayerst. These former PMU ranchers are not subject to any selling restrictions and are in the process of reducing their herds of unneeded mares, foals, etc. The horses listed below are part of the herd of horses of a former PMU rancher that are in need of being rescued."
If you want to see the whole page:
http://nyhr.org/foal.html