Respondents Brief — Oklahoma, et al., Petitioners v. United States, et al.
Supreme Court briefMay 17, 2024
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No. 23-402
In The
OKLAHOMA, ET AL.,
v.
Petitioners,
UNITED STATES, ET AL.
On Petition for a Writ of Certiorari to the United
States Court of Appeals for the Sixth Circuit
BRIEF IN OPPOSITION
John C. Roach
RANSDELL ROACH &
ROYSE, PLLC
176 Pasadena Drive
Lexington, KY 40503
Pratik A. Shah
Counsel of Record
Lide E. Paterno
AKIN GUMP STRAUSS
HAUER & FELD LLP
2001 K Street, NW
Washington, DC 20006
(202) 887-4000
pshah@akingump.com
Counsel for the Horseracing Integrity and
Safety Authority Respondents
QUESTIONS PRESENTED
I. Whether the Horseracing Integrity and Safety
Act, as amended by Congress in direct response to
private-nondelegation concerns, fails to confer on the
Federal Trade Commission constitutionally adequate
supervision and control over a private organization’s
participation in the federal regulatory scheme.
II. Whether the Act unconstitutionally
commandeers the States in violation of the Tenth
Amendment.
(i)
ii
RULE 29.6 DISCLOSURE
Respondent Horseracing Integrity and Safety
Authority, Inc. is a nonstock, nonprofit corporation
organized under the General Corporation Law of the
State of Delaware. The Horseracing Integrity and
Safety Authority, Inc. has no parent corporation, and
no publicly held company has a 10% or greater
ownership interest in it. No other Respondent is a
nongovernmental corporation.
iii
TABLE OF CONTENTS
QUESTIONS PRESENTED......................................... i
RULE 29.6 DISCLOSURE .......................................... ii
INTRODUCTION ........................................................ 1
STATEMENT .............................................................. 3
REASONS FOR DENYING THE PETITION .......... 13
I.
II.
THE
PRIVATE-NONDELEGATION
QUESTION DOES NOT WARRANT
REVIEW .................................................... 14
A.
There Is No Conflict Among The
Courts Of Appeals ........................... 14
B.
The Sixth Circuit’s Decision Is
Faithful
To
This
Court’s
Precedents ....................................... 20
C.
This Case Is A Poor Vehicle
Because Several Of Petitioners’
Arguments Are Forfeited, Unripe,
And Ancillary To The Act’s
Operation ........................................ 31
THE
ANTI-COMMANDEERING
QUESTION DOES NOT WARRANT
REVIEW .................................................... 33
CONCLUSION .......................................................... 38
iv
TABLE OF AUTHORITIES
CASES:
Alpine Sec. Corp. v. FINRA,
No. 23-5129, 2023 WL 4703307 (D.C.
Cir. July 5, 2023) ............................................ 17, 19
Association of Am. R.Rs. v. U.S. Dep’t of
Transp.,
721 F.3d 666 (D.C. Cir. 2013) ............................. 18
575 U.S. 43 (2015) ................................................ 19
896 F.3d 539 (D.C. Cir. 2018) .............................. 19
Bond v. United States,
564 U.S. 211 (2011) .............................................. 33
Carter v. Carter Coal Co.,
298 U.S. 238 (1936) .............................................. 20
First Jersey Secs., Inc. v. Bergen,
605 F.2d 690 (3d Cir. 1979).................................. 16
Hodel v. Virginia Surface Mining &
Reclamation Ass’n, Inc.,
452 U.S. 264 (1981) .............................................. 34
Lance v. Coffman,
549 U.S. 437 (2007) .............................................. 33
Marbury v. Madison,
5 U.S. (1 Cranch) 137 (1803).................................. 1
v
Murphy v. National Collegiate Athletic
Ass’n,
584 U.S. 453 (2018) .................................. 34, 35, 37
National Fed’n of Indep. Bus. v.
Sebelius,
567 U.S. 519 (2012) .............................................. 36
National Horsemen’s Benevolent &
Protective Ass’n v. Black,
53 F.4th 869 (5th Cir. 2022) ............ 2, 9, 11, 14-17,
20, 23, 24
596 F. Supp. 3d 691 (N.D. Tex. 2022).................... 9
672 F. Supp. 3d 220 (N.D. Tex. 2023).... 2, 4, 14-17,
23, 24, 27, 30, 34
New York v. United States,
505 U.S. 144 (1992) ........................................ 35, 36
R.H. Johnson & Co. v. SEC,
198 F.2d 690 (2d Cir. 1952).................................. 17
Seila Law LLC v. Consumer Fin. Prot.
Bureau,
591 U.S. 197 (2020) .............................................. 32
Shearson/Am. Express, Inc. v.
McMahon,
482 U.S. 220 (1987) .......................................... 8, 20
Sorrell v. SEC,
679 F.2d 1323 (9th Cir. 1982) .............................. 16
vi
Sunshine Anthracite Coal Co. v. Adkins,
310 U.S. 381 (1940) ........... 8, 12, 15, 18, 19, 20, 21,
25, 26, 28, 29
Susquehanna Int’l Grp., LLP v. SEC,
866 F.3d 442 (D.C. Cir. 2017) .............................. 25
Tennessee Valley Auth. v. Hill,
437 U.S. 153 (1978) ................................................ 1
Texas v. Rettig,
987 F.3d 518 (5th Cir. 2021) ................................ 18
993 F.3d 408 (5th Cir. 2021) ................................ 18
Todd & Co. v. SEC,
557 F.2d 1008 (3d Cir. 1977)................................ 16
U.S. Postal Serv. v. Gregory,
534 U.S. 1 (2001) .................................................. 22
United States v. Salerno,
481 U.S. 739 (1987) .............................................. 22
United States v. Sineneng-Smith,
590 U.S. 371 (2020) .............................................. 31
Zadvydas v. Davis,
533 U.S. 678 (2001) .............................................. 22
vii
STATUTES:
15 U.S.C.
§ 78s(b) ............................................................ 17, 21
§ 78s(b)(2)(C) ........................................................ 25
§ 78s(b)(2)(C)(i) ....................................................... 8
§ 78s(b)(2)(D) ........................................................ 18
§ 78s(c) ...................................................... 10, 18, 21
§ 78s(d).................................................................. 21
§ 78s(e) .................................................................. 21
§ 3001 ...................................................................... 5
§ 3002 ...................................................................... 5
§ 3003 ...................................................................... 5
§ 3004 ...................................................................... 5
§ 3005 ...................................................................... 5
§ 3006 ...................................................................... 5
§ 3007 ...................................................................... 5
§ 3051(4) ................................................................. 5
§ 3051(5) ................................................................. 5
§ 3051(6) ........................................................... 5, 34
§ 3051(11) ............................................................... 5
§ 3052(a) ................................................................. 6
§ 3052(b) ................................................................. 7
§ 3052(c) .................................................................. 7
§ 3052(d) ................................................................. 7
§ 3052(e).................................................................. 7
§ 3052(f)(2) ........................................................ 5, 34
§ 3052(f)(2)(D) ................................................. 34, 35
§ 3052(f)(3) ............................................................ 37
§ 3052(f)(3)(B) ....................................................... 34
§ 3052(f)(3)(D) ....................................................... 35
§ 3053 ...................................................................... 6
§ 3053(a) ........................................................... 6, 23
§ 3053(b) ..................................................... 6, 21, 23
viii
15 U.S.C. (cont.)
§ 3053(b)(2) ..................................................... 18, 28
§ 3053(c) ................................................ 6, 18, 21, 23
§ 3053(c)(1) ........................................................... 28
§ 3053(c)(2) ..................................................... 24, 28
§ 3053(e).................................... 2, 10, 18, 21, 29, 30
§ 3054(a) ........................................................... 6, 35
§ 3054(a)(2)(A) ...................................................... 25
§ 3054(b) ..................................................... 5, 35, 36
§ 3054(c) .................................................................. 7
§ 3054(e)(2) ....................................................... 5, 37
§ 3054(k)(3) ............................................................. 5
§ 3054(l) ................................................................ 32
§ 3054(l)(3) ............................................................ 30
§ 3055 .................................................................... 25
§ 3055(b) ................................................................. 6
§ 3055(c)(4)(B) ...................................................... 30
§ 3055(d) ................................................................. 6
§ 3055(g)(1) ............................................................. 6
§ 3055(g)(2) ............................................................. 6
§ 3056 .................................................................... 25
§ 3056(b) ................................................................. 6
§ 3056(b)(2) ........................................................... 25
§ 3057 .................................................................... 25
§ 3057(a)(2) ............................................................. 6
§ 3057(c) .................................................................. 7
§ 3057(d) ................................................................. 7
§ 3058 .................................................................... 21
§ 3058(a) ................................................................. 7
§ 3058(b) ................................................................. 7
§ 3058(b)(3) ........................................................... 30
§ 3058(c) .................................................................. 7
§ 3058(c)(3) ........................................................... 30
§ 3060(a) ........................................................... 5, 37
ix
Bituminous Coal Act of 1937, § 4, pt.
II(a), 50 stat. 72, 78 .............................................. 20
REGULATIONS AND OTHER AUTHORITIES:
16 C.F.R. § 1.142(d) ................................................... 28
166 CONG. REC. H4981 (Sept. 29, 2020) ............. 3, 4, 5
166 CONG. REC. S5514 (Sept. 9, 2020) ........................ 4
88 Fed. Reg. 18,034 (Mar. 27, 2023) ......................... 27
88 Fed. Reg. 27,894 (May 3, 2023) ............................ 29
89 Fed. Reg. 8,578 (Feb. 8, 2024) .............................. 31
FTC, Order Approving The Enforcement
Rule Modification Proposed By The
Horseracing Integrity And Safety
Authority (Sept. 23, 2022) .................................... 26
FTC, Order Disapproving The AntiDoping And Medication Control Rule
Proposed By The Horseracing
Integrity And Safety Authority (Dec.
12, 2022) ......................................................... 26, 36
FTC, Order Ratifying Previous
Commission Orders As To
Horseracing Integrity and Safety
Authority’s Rules (Jan. 3, 2023) .................... 10, 27
H.R. REP. NO. 116-554 (2020) ..................................... 4
x
Press Release, Gillibrand Announces
Passage Of Her Horseracing Integrity
And Safety Act (Dec. 22, 2020) .............................. 5
Press Release, McConnell Leads Senate
Passage of Horseracing Integrity and
Safety Act (Dec. 21, 2020) ...................................... 5
INTRODUCTION
“While ‘[i]t is emphatically the province and duty
of the judicial department to say what the law is,’ it is
equally—and emphatically—the exclusive province of
the Congress *** to formulate legislative policies and
mandate programs and projects[.]” Tennessee Valley
Auth. v. Hill, 437 U.S. 153, 194 (1978) (quoting
Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177
(1803)). In this case, “constructive exchanges between
Congress and the federal courts” occurred in real time
both to advance the legislature’s pressing policy goals
and to address the judiciary’s asserted constitutional
concerns. Pet. App. 4a. As Chief Judge Sutton
observed, “[s]ometimes government works.” Id.
Following a series of high-profile equine deaths
and corruption scandals that threatened horseracing
under the prior patchwork of state-by-state
regulations, Congress enacted the Horseracing
Integrity and Safety Act (“HISA”) to save the sport.
HISA vests in the Federal Trade Commission (“FTC”)
exclusive authority to promulgate (or not) certain
horseracing rules following public notice-andcomment, based primarily on standards proposed by
the Horseracing Integrity and Safety Authority
(“Authority”), a private nonprofit standards-setting
organization. That arrangement is modeled on the
effective framework—uniformly upheld by the
courts—that has governed the relationship between
the Financial Industry Regulatory Authority
(“FINRA”) and the Securities and Exchange
Commission (“SEC”) for 85 years.
(1)
2
Two administrations have now supported HISA
and two bipartisan Congresses have embraced it—
including through an amendment in late 2022 that
fortified the FTC’s oversight. All three federal courts
that have resolved challenges to the amended Act have
reached the same conclusion: HISA is constitutional.
In seeking to manufacture a conflict, Petitioners
rely on a Fifth Circuit decision holding that HISA as
originally enacted violated the private-nondelegation
doctrine.
Under the version of the Act then
considered, the FTC lacked “the final word” because
only the Authority “wr[o]te[] the regulations and the
FTC c[ould] not modify them.” National Horsemen’s
Benevolent & Protective Ass’n v. Black, 53 F.4th 869,
887 (5th Cir. 2022) (“Black II”). “Not so anymore.”
Pet. App. 16a. In direct response to the Fifth Circuit’s
ruling, Congress enacted bipartisan legislation
expressly authorizing the FTC to “abrogate, add to,
and modify” HISA rules as the FTC “finds necessary
or appropriate.” 15 U.S.C. § 3053(e). Because that
amendment removes any doubt that the Authority is
“subordinate to the agency,” thereby resolving the
question
Petitioners
had
“accept[ed]”
was
“determinative” of their facial claim, the Sixth Circuit
unanimously upheld the Act. Pet. App. 13a.
The Sixth Circuit reached that conclusion—
confirmed so far by every federal judge to consider the
now-operative version of HISA, including the district
court on remand from the Fifth Circuit—“not because
it disagreed with the Fifth Circuit’s privatenondelegation jurisprudence but because it agreed.”
National Horsemen’s Benevolent & Protective Ass’n v.
Black, 672 F. Supp. 3d 220, 246 (N.D. Tex. 2023)
3
(“Black III”), appeal pending, No. 23-10520 (5th Cir.)
(“Black IV”). There is no reason for this Court to
disturb that consensus, particularly when other courts
of appeals are presently evaluating the same question
presented.
Nor is review warranted on Petitioners’ splitless
and meritless anti-commandeering challenge to
HISA’s fee-collection scheme.
What Petitioners
mischaracterize as a coercive threat is no more than a
“conditional
preemption”
regime
that
“fits
comfortably” within this Court’s case law: States have
a choice to collect and remit fees under HISA, or be
preempted from collecting duplicate fees for their own
regulation of the same matters that HISA rules
govern.
Pet. App. 23a-24a.
Petitioners’
counterarguments misunderstand the statutory
scheme, violate basic principles of constitutional
avoidance, and “run[] aground on contrary precedent”
from this Court. Pet. App. 25a. That is why no court
has disagreed with the Sixth Circuit’s holding.
The Petition should be denied.
STATEMENT
1. “[A] beloved tradition in the United States
since the early days of the Republic,” horseracing is a
fixture of American culture and a “major source of jobs
and economic opportunity.” 166 CONG. REC. H49814982 (Sept. 29, 2020) (Rep. Barr). Over the last
decade, however, “the joy of the races was marred by
accidents that endanger[ed] both the horses and the
riders.” Id. at H4980 (Rep. Pallone). In 2019 alone,
441 Thoroughbreds died from race-related injuries—a
fatality rate two-to-five times greater than in Europe
4
or Asia. H.R. REP. NO. 116-554, at 17 (2020). These
casualties sparked investigations by officials, concern
within the industry, and “even call[s] for this sport to
be abolished altogether.” 166 CONG. REC. S5514 (Sept.
9, 2020) (Sen. McConnell). At the heart of these
troubles was a “patchwork system” of state-by-state
regulations that led to “wide disparit[ies]” in
standards and enforcement and eroded the betting
public’s confidence. 166 CONG. REC. H4981 (Rep.
Tonko).
Recognizing the need for reform, a broad coalition
of stakeholders—including owners, breeders, trainers,
racetracks, jockeys, and veterinarians—formed a
“nonprofit business league,” now known as the
Authority, in September 2020 to develop uniform
standards for horseracing, similar to self-regulating
organizations in other fields. Pet. App. 306a. The
Authority’s bylaws ensure participation from a range
of constituents and are “replete with conflict-ofinterest provisions” to “protect[] against selfinterest[.]” Black III, 672 F. Supp. 3d at 252.
The highly publicized equine fatalities also lent
new urgency and support for action in Congress, which
had considered various horseracing bills over the prior
decade. See 166 CONG. REC. H4981-4982 (Rep. Barr).
Following the Authority’s incorporation, HISA was
introduced to the full House and Senate as “bipartisan,
bicameral progress” toward finally remedying the
“tragedies on the track.” 166 CONG. REC. S5514-5515
(Sen. McConnell). It was not only cheered by animalwelfare proponents, but also hailed by “limited
government conservative[s]” for creating the
framework for “a single, nationwide set of rules that
5
will result in smarter, more effective, and streamlined
regulation for the industry”—sorely needed given that
the “lack of uniformity ha[d] impeded interstate
commerce.” 166 CONG. REC. H4982 (Rep. Barr).
Passage of the “landmark” legislation, with
“almost 300 cosponsors in the House and Senate” and
“broad support” from the industry, was celebrated on
both sides of the aisle for “usher[ing] in a new era in
the sport.” Press Release, McConnell Leads Senate
Passage of Horseracing Integrity and Safety Act (Dec.
21, 2020); 1 Press Release, Gillibrand Announces
Passage Of Her Horseracing Integrity And Safety Act
(Dec. 22, 2020).2 President Trump signed HISA into
law in December 2020.
As a practical matter, HISA covers only those
races (and their participants) that have already been
regulated federally for decades. See 15 U.S.C. §§ 30013007; id. § 3051(4)-(6), (11).
Although rules
promulgated under HISA preempt State laws covering
the same racetrack-safety, anti-doping, and
medication-control matters, id. § 3054(b), States may
elect to participate in the regulatory regime, including
by collecting fees from covered persons, id.
§§ 3052(f)(2), 3054(e)(2), 3060(a). All federal and State
laws governing breeding, broadcasting, and criminal
conduct—and any other matters on which a HISA rule
has not been promulgated—remain “unaffected.” Id.
§ 3054(b), (k)(3).
1 http://tinyurl.com/59m9kywy.
2 http://tinyurl.com/mry9t5pb.
6
2. As Senator McConnell and other legislative
sponsors have explained, HISA was “modeled squarely
on the Maloney Act,” which has governed the SEC’s
relationship with FINRA and other self-regulatory
organizations (“SROs”) for over eight decades. Amicus
Br. of Sen. McConnell et al. at 11, Doc. 62. The Act
recognizes the Authority as a “private, independent,
self-regulatory, nonprofit corporation” that will help to
develop and implement “a horseracing anti-doping
and medication control program and a racetrack safety
program,” subject always to “Federal Trade
Commission oversight.” 15 U.S.C. §§ 3052(a), 3053.
The Authority may submit to the FTC a
“proposed rule, or proposed modification to a rule,”
relating to specified issues. 15 U.S.C. § 3053(a). But
the FTC alone may give those draft standards the force
of law by independently approving them following
notice-and-comment. Id. § 3053(b). To do so, the FTC
must determine that each proposed standard is
“consistent with” both the statute and the FTC’s rules.
Id. § 3053(c). The agency must be satisfied, therefore,
that any standard protects “the safety, welfare, and
integrity of covered horses, covered persons, and
covered horsesraces.” Id. § 3054(a). Beyond that
overall purpose, Congress directly prescribed the
content of some rules, e.g., id. § 3055(g)(1)-(2),
enumerated “[e]lements” and “[p]rohibition[s]” to be
incorporated in others, e.g., id. §§ 3055(d), 3056(b),
3057(a)(2), and provided various “[c]onsiderations” to
constrain the anti-doping, medication-control, and
racetrack-safety programs, e.g., id. §§ 3055(b),
3056(b).
7
Congress also specified contours for enforcement
of the program pursuant to “uniform procedures”
approved by the FTC, 15 U.S.C. §§ 3054(c), 3057(c)-(d),
and subject to strict fair-governance and conflict-ofinterest parameters, id. § 3052(b)-(e). Sanctions for
violation of an approved rule may be imposed only
consistent with “adequate due process, including
impartial hearing officers or tribunals,” and other
factors “designed to ensure fair[ness] and
transparen[cy].” Id. § 3057(c)-(d). The Authority
“shall promptly submit” to the FTC notice of any
sanction, id. § 3058(a), which “shall be subject to de
novo review” by an FTC-appointed administrative law
judge, id. § 3058(b). The administrative law judge’s
decision is subject to yet further review by the FTC
itself. Id. § 3058(c). The FTC will apply a de novo
standard to both “the factual findings and conclusions
of law,” may “allow the consideration of additional
evidence,” may “affirm, reverse, modify, set aside, or
remand for further proceedings,” and may “make any
finding or conclusion that, in the judgment of the
[FTC], is proper and based on the record.” Id.
3. In addition to those agency checks bookending
any Authority action, an amendment Congress
enacted during—and in response to—this litigation
ensures additional FTC oversight at all points along
the self-regulatory process.
Under the original version of HISA, the FTC
could recommend rule modifications but initiate its
own rulemaking only on an interim basis “if it had
‘good cause’ to do so and if the rule was ‘necessary to
protect’ the welfare of horses or the integrity of the
sport.’” Pet. App. 7a. Petitioners—three racetracks,
8
three associations/breeders of non-Thoroughbred
horses, and three states and their racing
commissions—brought a facial private-nondelegation
challenge to HISA on that basis.
Petitioners
acknowledged that “Congress may give private
entities a role in rulemaking so long as they ‘function
subordinately’ to the federal government,” CA6
Opening Br. 22 (quoting Sunshine Anthracite Coal Co.
v. Adkins, 310 U.S. 381, 399 (1940)). They also
conceded that “under the Maloney Act, the SEC has
ultimate power over and responsibility for the content
of federal law” and that “the Maloney Act, like HISA,
gives the SEC the power to ensure that a ‘proposed
rule change is consistent with the requirements of the
[Exchange Act].’” Id. at 44-45 (alterations in original)
(quoting 15 U.S.C. § 78s(b)(2)(C)(i)). “The difference,”
Petitioners argued as the linchpin of their case, was
that “the SEC—unlike the FTC—also retains the
governmental ‘power, on its own initiative, to
“abrogate, add to, and delete from” any [SRO] rule if it
finds such changes necessary or appropriate to further
the objectives of the Act.’”
Id. at 45 (quoting
Shearson/Am. Express, Inc. v. McMahon, 482 U.S.
220, 233-234 (1987)).
The district court dismissed Petitioners’ claim.
Pet. App. 63a-64a. Although the FTC’s power (under
the original version of HISA) “to approve, disapprove,
or recommend modification subject to continued
rejection” was “not the equivalent of drafting the rule
itself,” the court found that it “ensure[d] that the
Authority still ‘functions subordinately’ to the FTC
such that the FTC ‘determines’ the binding rules.”
Pet. App. 63a (quoting Adkins, 310 U.S. at 399). That
9
holding replicated the conclusion reached by the
Northern District of Texas in a parallel challenge.
National Horsemen’s Benevolent & Protective Ass’n v.
Black, 596 F. Supp. 3d 691, 724 (N.D. Tex. 2022)
(“Black I”).
The Fifth Circuit disagreed. Black II, 53 F.4th
869. Congress’s decision to “withh[o]ld” independent
rulemaking power from the FTC outside a “breakglass-in-case-of-an-emergency basis,” the Fifth Circuit
reasoned
in
November
2022,
“meaningfully
distinguishe[d] the SEC-FINRA relationship from the
FTC-Authority relationship.” Id. at 881, 883, 887.
That omission made “all the difference,” the Fifth
Circuit held, under the “settled” private-nondelegation
“principle that a private entity may wield government
power only if it ‘functions subordinately’ to an agency
with ‘authority and surveillance’ over it.” Id. at 873,
881, 888.
At oral argument in this case a few weeks later,
the Sixth Circuit suggested that a congressional
amendment conferring independent rulemaking
power on the FTC would remedy the constitutional
defect found by the Fifth Circuit. Oral Arg. Rec. 33:0033:13 (Dec. 7, 2022) (Sutton, C.J.) (“Why not just say
to [Congress,] this is easy, this was bipartisan, just put
the modification power straight in, it’ll be just like
FINRA and the SEC, problem solved?”).
Congress heard the judiciary’s concern and acted
swiftly to resolve it. At the end of December 2022,
Congress enacted and President Biden signed
bipartisan legislation amending the operative
language of HISA to provide the FTC with full
independent rulemaking authority:
10
The Commission, by rule in accordance with
section 553 of Title 5, may abrogate, add to,
and modify the rules of the Authority
promulgated in accordance with this
chapter as the Commission finds necessary
or appropriate to ensure the fair
administration of the Authority, to conform
the rules of the Authority to requirements of
this chapter and applicable rules approved
by the Commission, or otherwise in
furtherance of the purposes of this chapter.
15 U.S.C. § 3053(e). That language is drawn directly
from the parallel provision of the SEC-FINRA statute.
Id. § 78s(c).
The FTC ratified its prior rule approval decisions,
making clear that under the “broader rulemaking
power” Congress had conferred, it would “exercise its
own policy choices whenever it determines that the
Authority’s proposals, even if consistent with the Act,
are not the policies that the Commission thinks would
be best for horseracing integrity or safety.” FTC,
Order Ratifying Previous Commission Orders As To
Horseracing Integrity and Safety Authority’s Rules 3
(Jan. 3, 2023) (“Ratification Order”).3
4. a. “Sometimes government works,” Chief
Judge Sutton observed on behalf of a unanimous Sixth
Circuit upholding the amended Act. Pet. App. 4a. The
“productive
dialogue”
among
the
branches
“ameliorated the concerns underlying the nondelegation challenge”—which “the parties accept[ed]”
turned on one “determinative question”: “whether the
3 https://tinyurl.com/msswvdrf.
11
Horseracing Authority is inferior to the FTC.” Pet.
App. 5a, 13a. By conferring on the FTC “new
discretion to adopt and modify rules,” the amendment
Congress enacted “[i]n response” to the courts
“eliminate[d]” the “‘key distinction’ the Fifth Circuit
[had] identified” between HISA and the SEC-FINRA
statute that courts have blessed uniformly “[i]n case
after case.” Pet. App. 4a, 13a, 18a. HISA now
“correctly places the private Horseracing Authority in
a subordinate position to the public FTC,” which
maintains “‘the last word’ on federal law.” Pet. App.
4a (quoting Black II, 53 F.4th at 872), 18a.
That was enough to reject the facial challenge,
which Petitioners always presented “as one turning on
‘governmental oversight’ of and ‘accountability’ for the
Horseracing Authority’s activities.” Pet. App. 20a. To
the extent any doubts remain about enforcement
powers conferred in the Act—but never exercised by
Respondents—the Sixth Circuit noted the “reality”
that Petitioners had not raised “a categorical Article II
inquiry,” delved into “historical meaning,” or
otherwise briefed “the role private entities may, and
may not, play in law enforcement.” Id. The Court
“save[d] resolution of such questions, if such questions
there be, for a day when the Authority’s actions and
the FTC’s oversight appear in concrete detail,
presumably in the context of an actual enforcement
action.” Pet. App. 13a, 20a-21a.
Judge Cole “agree[d] in full” with the majority’s
discussion of the amended Act and wrote separately to
emphasize his view that even “the original statute was
constitutional because the private Authority has
always been subordinate to the FTC.” Pet. App. 29a,
12
34a. “HISA is remarkably similar to the constitutional
Maloney Act” and “matches” the agency-oversight
model “the Supreme Court upheld as ‘unquestionably
valid’” in Adkins. Pet. App. 36a-38a (quoting 310 U.S.
at 399).
b. The Sixth Circuit also affirmed the district
court’s rejection of Petitioners’ anti-commandeering
challenge to HISA’s fee-collection provision. Pet. App.
22a-27a. The Act “presents States with a choice, not a
command”: “States may elect to collect fees from the
industry and remit the money to the Horseracing
Authority,” in which case the States “gain[] discretion
over how the fees are collected”; “or States may
refuse,” in which case “the Authority collects the fees
itself” from private parties and the States are
preempted from imposing their own fees for the same
matters. Pet. App. 23a-24a. “This scheme fits
comfortably within the conditional preemption
framework,” the Sixth Circuit held, “[e]liminating
‘double taxation’ and fostering uniformity.” Pet. App.
24a, 26a.
Petitioners’ counterarguments “run[]
aground on contrary precedent,” “[l]egally [are] bereft
of support,” and “[f]actually *** falter[].” Pet. App.
25a-26a.
5. Petitioners filed a petition for rehearing en
banc on both their private-nondelegation and anticommandeering claims. The Sixth Circuit denied the
petition. Pet. App. 72a. No judge requested a vote.
13
REASONS FOR DENYING THE PETITION
All five federal judges that have reviewed the
operative version of HISA have concluded that it is
constitutional under the private-nondelegation
doctrine. That consensus follows from application of
the established agency-subordination standard that
Petitioners accepted below, that this Court’s
precedents set forth, and that courts of appeals have
relied on uniformly to uphold the materially identical
Maloney Act. Congress amended HISA to satisfy that
standard by conferring on the FTC the express
oversight the Fifth Circuit said the prior version of the
statute had omitted.
Petitioners’ worst-case
assumptions about how the FTC might exercise that
oversight, including their new focus on ancillary and
unripe features of the Act that have never
materialized, do not warrant this Court’s review.
Nor has any court disagreed with the Sixth
Circuit’s holding that HISA’s fee-collection scheme
does not commandeer the States. Contrary to the
premise of the question presented, the Act does not
“coerc[e] States into funding” anything. Rather,
States are given the choice to collect and remit fees
from “covered persons.” If a State declines, the
Authority steps in and ordinary preemption principles
prevent the State from collecting duplicate fees for its
own regulation of the same matters HISA rules
govern. That scheme “fits comfortably” within this
Court’s “conditional preemption” jurisprudence.
This Court should deny further review.
14
I.
THE PRIVATE-NONDELEGATION QUESTION
DOES NOT WARRANT REVIEW
A.
There Is No Conflict Among The
Courts Of Appeals
1. Petitioners are wrong that “[t]he Act at issue
in this case *** has split lower courts and judges”—at
least to the extent Petitioners are talking about the
Act now in effect (i.e., the only Act that matters). Pet.
25. No court has disagreed with the Sixth Circuit’s
holding that the operative version of HISA (as
amended) is constitutional. The Fifth Circuit ruled
that a prior version offended private-nondelegation
principles. But all five federal judges that have
resolved private-nondelegation challenges to the
amended Act have “conclud[ed] that Congress cured”
the alleged defects the Fifth Circuit identified in
“HISA’s original approach.” Black III, 672 F. Supp. 3d
at 226; see Pet. App. 4a-5a (amendment Congress
passed “[i]n response” to Black II “ameliorated the
concerns underlying the [private] non-delegation
challenge”); Pet. App. 29a, 34a (Cole, J., concurring)
(“agree[ing] in full with the majority’s discussion of
section 3053(e)’s amended text,” even while
“believ[ing] the original statute was constitutional”);
Hr’g Tr. at 44, Walmsley v. Federal Trade Comm’n, No.
3:23-cv-81 (E.D. Ark. July 21, 2023), Doc. 47 (denying
preliminary injunction on “lack of probability of
success on the merits” of private-nondelegation claim
based on “the Sixth Circuit opinion” and “Black one,
two, [and] three”), appeal pending, No. 23-2687 (8th
Cir.).
2. Nor is there “confusion” over the governing
framework. Pet. 22. “[T]he Sixth Circuit held the
15
amended HISA constitutional not because it disagreed
with the Fifth Circuit’s private-nondelegation
jurisprudence but because it agreed.” Black III, 672 F.
Supp. 3d at 246. Both courts adopted the same
standard drawn from this Court’s longstanding
precedent: “a private entity may wield government
power only if it ‘functions subordinately’ to an agency
with ‘authority and surveillance’ over it.” Black II, 53
F.4th at 881 (quoting Adkins, 310 U.S. at 399); see Pet.
App. 11a (“Adkins shows that a private entity may aid
a public federal entity that retains authority over the
implementation of federal law”).
While courts and commentators may “differ over
the locus of the constitutional violation” animating
private-nondelegation claims in other contexts, Black
II, 53 F.4th at 881 n.23; see Pet. 23-25, all parties and
courts across every such challenge to HISA (before and
after the amendment) have expressly “agree[d] that
the outcome turns on whether the private entity is
subordinate to the agency,” Black II, 53 F.4th at 881
n.23; see Pet. App. 13a (“As the case comes to us, then,
the determinative question is whether the
Horseracing Authority is inferior to the FTC.”); Pet.
App. at 30a (Cole, J., concurring) (agreeing “that the
main test for this issue is whether the private entity is
subordinate to the federal agency”); Black III, 672 F.
Supp. 3d at 240 (“The Constitution requires a private
entity wielding government power to function
subordinately to a federal agency’s authority and
surveillance.”). That is the opposite of a “fail[ure] to
coalesce.” Pet. 29.
The Fifth Circuit held that the original HISA
failed this “functions subordinately” standard (Pet. 25)
16
because “[t]he Authority, rather than the FTC, ha[d]
been given final say over HISA’s programs.” Black II,
53 F.4th at 872. Following Congress’s amendment—
enacted in direct response to that holding—courts
have concluded consistently that the version of HISA
now in effect “gives the FTC the final say over
implementation of the Act relative to the Horseracing
Authority.” Pet. App. 5a. As the Northern District of
Texas explained when upholding the amended Act on
remand from the Fifth Circuit, the Sixth Circuit
tracked the “one-to-one match between the issues
identified in [the Fifth Circuit’s] opinion and the
solutions passed by Congress.” Black III, 672 F. Supp.
3d at 246. Those holdings underscore the judicial and
legislative (and executive) agreement around “the
Constitution’s limits as defined by the Fifth Circuit”—
and around the shared understanding that Congress’s
amendment “brought the law within the Fifth
Circuit’s stated requirements.” Id. at 224-225.
3. No court has ever held that the 85-year-old
Maloney Act—“which governs the SEC’s relationship
with FINRA” and undisputedly provided the “model[]”
for
HISA—violates
the
private-nondelegation
doctrine. Pet. App. 61a (citing Amicus Br. of Sen.
McConnell et al. at 1, 10-11, No. 21-cv-0071 (N.D. Tex.
May 17, 2021), Doc. 53). On the contrary, “[i]n case
after case, the courts have upheld this arrangement,
reasoning that the SEC’s ultimate control over the
rules and their enforcement makes [FINRA and other
SROs] permissible aides and advisors.” Pet. App. 13a
(citing Sorrell v. SEC, 679 F.2d 1323, 1325-1326 (9th
Cir. 1982); First Jersey Secs., Inc. v. Bergen, 605 F.2d
690, 697 (3d Cir. 1979); Todd & Co. v. SEC, 557 F.2d
17
1008, 1012-1013 (3d Cir. 1977); R.H. Johnson & Co. v.
SEC, 198 F.2d 690, 695 (2d Cir. 1952)); see Black II, 53
F.4th at 877 (“The SEC-FINRA model, which inspired
the FTC-Authority relationship, *** has been
uniformly upheld against private-nondelegation
challenges.” (internal quotation marks and alterations
omitted)).
Against this unbroken line of circuit court
authority, Petitioners point to one single-judge opinion
concurring in the grant of an emergency injunction
pending appeal. Pet. 27-28 (citing Alpine Sec. Corp. v.
FINRA, No. 23-5129, 2023 WL 4703307 (D.C. Cir. July
5, 2023) (Walker, J., concurring)). The “enforcement
proceeding” (id.) that precipitated that interlocutory
opinion is conspicuously absent here, where
Petitioners do not allege even a threat of enforcement.
See pp. 32-33, infra. More critically, the outlier
opinion relies on the Constitution’s Appointments
Clause—an alternative claim that Petitioners in this
case abandoned on appeal after the district court
rejected it. Pet. App. 69a-70a.
Petitioners’ counsel’s own words in Alpine
undermine their feeble argument here that the
Authority’s powers “far exceed” those of FINRA. Pet.
26. As they told the D.C. Circuit—on behalf of FINRA
itself—HISA “put[s] the [Authority] on ‘equal footing
to FINRA in its role “in aid of” the federal agency that
retains ultimate rulemaking authority.’” Opp. to Stay
Mot. 19, No. 23-5129 (D.C. Cir. June 15, 2023) (quoting
Black III, 672 F. Supp. 3d at 245). But one need not
simply trust Petitioners’ counsel; a comparison of the
parallel language of the Maloney Act and HISA dispels
any doubt.
Compare, e.g., 15 U.S.C. § 78s(b)
18
(“consisten[cy]” approval standard) with id. § 3053(c)
(same); id. § 78s(c) (SEC’s plenary rulemaking power)
with id. § 3053(e) (FTC’s plenary rulemaking power).4
4. Unable to identify a split on HISA or the
Maloney Act, Petitioners search for “inconsistent
analyses” in fragments of opinions concerning
unrelated regulatory regimes. Pet. 22-25. Petitioners
omit that in Texas v. Rettig, 987 F.3d 518 (5th Cir.
2021), unlike here, the assignment of private-party
function was “authorized by an administrative agency,
rather than by Congress.” 993 F.3d 408, 410 (5th Cir.
2021) (Ho, J., dissenting from denial of rehearing en
banc). That distinction was critical to the judges who
dissented from the denial of rehearing and to the
(denied) certiorari petition. Id. at 415 (“[I]t is one
thing to bless a Congressional decision to involve
private parties in the rulemaking process. It is quite
another to allow an agency—already acting pursuant
to delegated power—to re-delegate that power out to a
private entity.”); Pet. for Cert. 20, Texas v.
Commissioner of Internal Revenue, No. 21-379 (U.S.
Sept. 3, 2021) (“[I]n Adkins, ‘it was Congress itself, not
the agency, that enlisted the assistance of private
parties in rulemaking.’”).
The Amtrak line of cases only reinforces the
subordination test consistently applied to HISA and
FINRA. See Association of Am. R.Rs. v. U.S. Dep’t of
4 If anything, FINRA’s powers are broader than the Authority’s
in relevant respects. Compare, e.g., 15 U.S.C. § 78s(b)(2)(D)
(FINRA rules “shall be deemed to have been approved” if SEC
fails to act within prescribed period), with id. § 3053(b)(2)
(Authority-proposed standards cannot take effect unless
approved by FTC).
19
Transp., 721 F.3d 666, 671 & n.5 (D.C. Cir. 2013)
(finding private-nondelegation violation because
agency could not “unilaterally change regulations
proposed to it,” contrary to SEC-FINRA cases that
“resemble Adkins”), vacated on other grounds, 575
U.S. 43, 53 (2015). As the D.C. Circuit explained (in a
remand decision Petitioners ignore), where a
“government agency could ‘hold the line’” against
“private interests,” such that “[n]o rule will go into
effect without the approval and permission of a
neutral federal agency,” the framework “raise[s] no
constitutional eyebrow.” Association of Am. R.Rs. v
U.S. Dep’t of Transp., 896 F.3d 539, 541, 545-547 (D.C.
Cir. 2018) (severing agency-constraining provision
that “broke from [Adkins’] mold” brought statute “back
into the constitutional fold”).
5. To the extent there is any concern that the
private-nondelegation doctrine is “underdeveloped”
(Pet. 4), the answer is to allow for further percolation
rather than to short-circuit decision-making among
the federal courts of appeals. The Fifth Circuit and
Eighth Circuit are currently reviewing district court
decisions rejecting identical private-nondelegation
challenges to HISA. Black IV, No. 23-10520 (5th Cir.);
Walmsley, No. 23-2687 (8th Cir.). And alongside the
Appointments Clause challenge to FINRA that
Petitioners highlight (at 27-28), the D.C. Circuit is
presently reviewing a private-nondelegation claim
against FINRA as well. Alpine, No. 23-5129 (D.C.
Cir.).
20
B.
The Sixth Circuit’s Decision Is
Faithful To This Court’s Precedents
1. The Sixth Circuit’s decision follows this
Court’s precedents. In Carter v. Carter Coal Company,
this Court invalidated a federal statute that directly
conferred power on private entities to regulate an
industry with zero governmental approval or
oversight. 298 U.S. 238, 310-311 (1936). In response,
Congress amended the law to “subordinate[] the
private coal producers to a public body (the Coal
Commission),” Pet. App. 11a, by granting the
Commission the power to “approve, disapprove, or
modify” the private boards’ proposals “to conform to
the requirements” of the statute, Bituminous Coal Act
of 1937, § 4, pt. II(a), 50 stat. 72, 78. Reviewing that
amended statute in Adkins, this Court blessed the
scheme as “unquestionably valid.” 310 U.S. at 399.
Based on those twin decisions and the parties’
“accept[ed] *** framing of the appeal,” the Sixth
Circuit joined the Fifth Circuit’s understanding that
the “determinative question is whether the
Horseracing Authority is inferior to the FTC.” Pet.
App. 13a; see Black II, 53 F.4th at 881 (“If the private
entity does not function subordinately to the
supervising agency, the delegation of power in
unconstitutional.”). The long-upheld SEC-FINRA
model provided an “illuminating” backdrop (Pet. App.
12a) in light of Petitioners’ acknowledgment (before
Congress’s amendment to HISA) that the Maloney Act
“subject[s]” SROs like FINRA “to the ultimate
authority” of an agency with “ultimate power over and
responsibility” for the regulatory scheme.
CA6
Opening Br. 44; see Shearson/Am. Express, 482 U.S.
21
at 233-234 (SEC “has broad authority to oversee and
to regulate the rules adopted by the SROs”).
Congress conformed HISA to that standard in
three critical respects. First, no HISA rule may take
on binding legal effect absent FTC approval. 15 U.S.C.
§ 3053(b). Like FINRA, the Authority merely proposes
standards and the FTC must independently
determine, following notice-and-comment, whether
each proposal is consistent with the statute and
applicable rules, id. § 3053(c); see id. § 78s(b). Second,
the
FTC
(post-amendment)
retains
plenary
rulemaking power of its own: Congress drew directly
from the Maloney Act in affording the FTC the
authority to “abrogate, add to, and modify” HISA rules
as the agency “finds necessary or appropriate” to
“ensure the fair administration of the Authority,”
“conform the rules” to the requirements of the statute
and applicable rules, or otherwise further “the
purposes” of the Act. Id. § 3053(e); see id. § 78s(c).
Third, mirroring the SEC-FINRA model, any
enforcement decision with final effect under HISA is
subject to two layers of de novo FTC review (followed
by Article III judicial review). Id. § 3058; see id.
§ 78s(d)-(e).
Given these “tried and true hallmarks of an
inferior body,” the Sixth Circuit hardly erred in
finding that the Authority—like FINRA under the
Maloney Act and the private coal boards in Adkins—
“is ‘subject to [the agency’s] pervasive surveillance and
authority.’” Pet. App. 13a, 17a (quoting Adkins, 310
U.S. at 388). As Chief Judge Sutton explained, the
FTC holds “ultimate discretion over the content of the
rules that govern the horseracing industry and the
22
Horseracing Authority’s implementation of those
rules”—“leav[ing] the Authority as the secondary, the
inferior, the subordinate” body, and “nothing more.”
Pet. App. 15a, 17a.
2. Petitioners’ caricature of the FTC’s oversight
as “a merely ministerial back-end role” (Pet. 17) rests
on worst-case assumptions about how the agency may
exercise that supervision, cherrypicked examples of
actions the agency has taken (all of which postdate the
complaint and most of which predate Congress’s
amendment), and strained interpretations that search
for constitutional problems.
Basic principles
governing facial challenges and constitutional
avoidance proscribe that approach. See, e.g., United
States v. Salerno, 481 U.S. 739, 745 (1987) (“A facial
challenge to a legislative Act is, of course, the most
difficult challenge to mount successfully, since the
challenger must establish that no set of circumstances
exists under which the Act would be valid.”); Zadvydas
v. Davis, 533 U.S. 678, 689 (2001) (“cardinal principle”
that statute must be interpreted to avoid
constitutional doubt where “fairly possible”); U.S.
Postal Serv. v. Gregory, 534 U.S. 1, 10 (2001)
(“presumption of regularity attaches to the actions of
Government agencies”).
Because HISA can be fairly construed to “give[]
the FTC the final say over implementation of the Act
relative to the Horseracing Authority,” that was
enough for the Sixth Circuit to reject Petitioners’ facial
challenge—even if “[t]he People may rightly blame or
praise the FTC for how adroitly (or, let’s hope not,
ineptly)” the agency exercises its oversight in any
particular instance. Pet. App. 5a, 16a. None of
23
Petitioners’ criticisms provides any reason to
invalidate a regulatory regime two bipartisan
Congresses enacted and two different Administrations
have embraced.
a. Petitioners allege primarily that the FTC’s
oversight is insufficient because “the FTC must
promulgate” Authority-proposed standards “so long as
they are ‘consistent’ with the Act and other rules.” Pet.
17 (quoting 15 U.S.C. § 3053(a)-(c)). But as all courts
to consider the question have agreed, Congress’s
amendment to HISA is “fatal to [Petitioners’]
arguments regarding consistency review.” Black III,
672 F. Supp. 3d at 245. The FTC’s new power to
“abrogate, add to, and modify” HISA rules renders
“‘irrelevant’ that the FTC conducts an initial review
for consistency with the statute and rules.” Id.
(quoting Black II, 53 F.4th at 888 n.35).
That conclusion flows directly from the Fifth
Circuit’s decision. The Fifth Circuit held that the
original Act violated the private-nondelegation
doctrine because limits on the FTC’s ability to “itself
*** make changes” to HISA rules meant the Authority
“ha[d] the final word on what those rules are.” Black
II, 53 F.4th at 887-888. “Not so anymore.” Pet. App.
16a.
By expressly conferring on the FTC the
previously withheld power to “abrogate, add to, and
modify” rules as the FTC finds “necessary or
appropriate,” HISA’s “amended text grants the FTC a
comprehensive oversight role.”
Pet. App. 14a.
Because HISA rules are subject to the FTC’s
“policymaking discretion” within Congress’s clear
guidelines, both “[w]hen the FTC decides to” exercise
its new independent rulemaking power and “when the
24
FTC decides not to act,” Congress’s amendment cured
the alleged constitutional infirmity. Pet. App. 15a.
Indeed, Congress’s amendment “eliminates” the
“‘key distinction’ the Fifth Circuit”—and Petitioners—
“identified between the Maloney and Horseracing
Acts.” Pet. App. 18a (quoting Black II, 53 F.4th at
887). “Before the amendment, [Petitioners] observed
that the SEC’s modification power gives the SEC
‘largely unbounded authority to craft the private
[SROs’] regulations as it sees fit.” Id. (alterations
omitted). The absence of such “unilateral authority to
modify the regulations” under the old version of HISA,
Petitioners argued, was “dispositive” in the Fifth
Circuit case and “equally dispositive” here. CA6 Oral
Arg. Rec. 8:19-8:44. Thus, by the terms of Petitioners’
own theory, negating “that distinction makes all the
difference” to “whether the private entity is
subordinate to the agency.” Black II, 53 F.4th at 888.
Regardless of the Authority’s ability to draft standards
“in the first instance,” Pet. 18, the FTC’s “authority to
modify [and abrogate] any rules for any reason at all,
including policy disagreements, ensures that the FTC
retains ultimate[] authority over the implementation
of the Horseracing Act,” Pet. App. 17a-18a.
b. In any event, the FTC’s “consistency” review
has real “teeth.” Black III, 672 F. Supp. 3d at 245.
Petitioners are wrong that this approval standard
excludes “policy objections from the FTC.” Pet. 18.
Evaluating whether proposals are “consistent with”
the Act, 15 U.S.C. § 3053(c)(2), requires determining
whether they “are consistent with ‘the safety, welfare,
and integrity of covered horses, covered persons, and
covered horseraces,’” Pet. App. 35a (Cole, J.,
25
concurring) (quoting 15 U.S.C. § 3054(a)(2)(A)),
pursuant to the many “[c]onsiderations” and
“[e]lements” Congress provided, 15 U.S.C. §§ 3055,
3056, 3057. That broad standard empowers the FTC
to disapprove, for example, a racetrack-safety proposal
that the FTC determines as a matter of policy is not
“consistent with the humane treatment of covered
horses.” Id. § 3056(b)(2).
In this context, that substantive determination is
tantamount to the “public interest” and “equitable
principles of trade” determination the SEC makes
under the Maloney Act—not as part of a “different in
kind” authority to wield the agency’s own freestanding
policy preferences, Pet. 26-27, but pursuant to the
agency’s parallel duty to review proposed rules under
an identical “consistent with the requirements of the
Act” standard, Susquehanna Int’l Grp., LLP v. SEC,
866 F.3d 442, 446-447 (D.C. Cir. 2017) (quoting 15
U.S.C. § 78s(b)(2)(C)).
Section 3053(c) also mirrors the Coal Act
standard this Court upheld as “unquestionably valid”
in Adkins. 310 U.S. at 399. Petitioners misleadingly
describe that statute as empowering the Coal
Commission to approve or disapprove proposed rules
“in its discretion.” Pet. 15. The relevant statutory text
limited the agency to “‘approv[ing], disapprov[ing], or
modify[ing]’ the private coal boards’ ‘proposed
minimum prices [and related terms] to conform to the
requirements of this subsection.’” Pet. App. 38a (Cole,
J., concurring). “[E]very court of appeals to address
the validity of such delegations under the Maloney Act
26
and the Coal Act, as noted, has upheld them.” Pet.
App. 18a.5
Although that is enough to doom this facial
challenge, the FTC’s actions remove any doubt. In
December 2022, for example, the FTC construed the
Act’s consistency standard as warranting disapproval
of the initially proposed anti-doping and medicationcontrol rules in the immediate wake of the Fifth
Circuit’s decision. The agency based its determination
on (i) the FTC’s independent judgment that “[t]he
bedrock principle of the Act is the need for uniformity,”
and (ii) the FTC’s policy goal of avoiding potential
“confusion *** for industry participants and
regulators.” FTC, Order Disapproving The AntiDoping And Medication Control Rule Proposed By The
Horseracing Integrity And Safety Authority 1-2 (Dec.
12, 2022) (“Anti-Doping Disapproval Order).6 Nothing
in HISA’s text dictated that outcome. The FTC also
has not hesitated to condition its approval of a
proposed standard on its own limiting interpretations.
See, e.g., FTC, Order Approving The Enforcement Rule
Modification Proposed By The Horseracing Integrity
And Safety Authority 14-16 (Sept. 23, 2022) (rejecting
5 The amended HISA now gives the FTC more power than the
reviewing agency in Adkins, which lacked the ability to initiate
rulemaking or later modify rules with respect to the minimumprice determination at issue. See 310 U.S. at 388, 397 (although
agency could “fix maximum prices when in the public interest it
deems it necessary,” agency could only “direct[]” private entities
to submit proposals on minimum prices).
6 https://tinyurl.com/rndfjr8b.
27
proposed provision as “unnecessary and overbroad”
and directing Authority “not to rely” on it).7
c. Petitioners “overlook[] another reality,” Pet.
App. 19a, in arguing that Congress’s amendment to
HISA merely gives the FTC an “ability to amend
already-existing rules at some point down the road”
from the approval of proposed standards, Pet. 18.
Section 3053(e)’s new text undisputedly confers on the
FTC not only “after-the-fact” power to modify rules,
id., but also the independent ability to “create new
rules” in the first place, Pet. App. 14a-15a; see Black
III, 672 F. Supp. 3d at 242 (“When the FTC
promulgates a new rule, it ‘add[s] to’ the rules of the
Authority.” (alteration in original)).
Under that additional power, the FTC will
“exercise its own policy choices whenever it
determines that the Authority’s proposals, even if
consistent with the Act, are not the policies that the
[FTC] thinks would be best for horseracing integrity.”
Ratification Order 3. The FTC has already done so, for
example, with a rule requiring its review of the
Authority’s proposed budget to advance the Act’s goals
“in a prudent and cost-effective manner.” 88 Fed. Reg.
18,034, 18,035 (Mar. 27, 2023).
This new “full-throated rulemaking power” is
baked into section 3053(c)’s approval/disapproval
process. Pet. App. 19a. “When the FTC reviews the
Horseracing Authority’s proposed rules, it asks not
just whether they are ‘consistent’ with the Act; it also
asks whether they are ‘consistent’ with other
‘applicable rules approved by the Commission.’” Id.
7 http://tinyurl.com/3h5cb5fm.
28
(quoting 15 U.S.C. § 3053(c)(2)). Although HISA
requires the FTC to approve or disapprove a proposal
within 60 days of publication in the Federal Register,
id. § 3053(c)(1), there is no deadline for the FTC to
publish the proposal in the first instance, see 16 C.F.R.
§ 1.142(d) (requiring Authority to submit standards
and accompanying documents “at least 90 days in
advance” of proposed publication, absent waiver). If
the FTC has concerns about an Authority proposal, the
FTC may publish its own proposed rule on the same
topic before publishing the Authority’s proposal. The
agency can then finalize its own rule before
determining
whether
the
Authority-proposed
standard is consistent with it. The Authority’s
proposal “shall not take effect” in the interim—or ever,
if the FTC disapproves it as inconsistent with the
agency’s own rule. 15 U.S.C. § 3053(b)(2); contra Pet.
19 (claiming incorrectly that industry will be “bound
by a regulation with which the FTC disagrees and
which no governmental officer approved”).
So there will never be a “deadlock” (Pet. 20): the
FTC’s “broad power to write and rewrite the rules”
according to its “policymaking discretion” ensures
“ultimate ‘law-making is not entrusted to the
[Authority].’” Pet. App. 15a (alteration in original)
(quoting Adkins, 310 U.S. at 399). Any hypothetical
delay between approval of an Authority-proposed rule
and a new FTC rule on the same subject is itself a
“policy choice” by the agency. Id.
Moreover, the FTC may exercise its new
rulemaking authority to delay the effective date of any
approved rule. See Pet. App. 19a. Little imagination
is needed to conceive of such a rule: the FTC already
29
enacted one “delaying the date of effectiveness” of the
approved anti-doping and medication-control program
by a few weeks to mitigate risk of “inconsistent
treatment of similarly situated horses” and
“uncertainty *** near[] [last year’s] Triple Crown
events.” 88 Fed. Reg. 27,894, 27,894-27,895 (May 3,
2023) (finding “good cause” to forgo “notice and
comment” under “section 553(b)(3)(B) of the APA,” as
incorporated in 15 U.S.C. § 3053(e)). That real-life
example of the FTC exercising its rulemaking power
on an expedited basis to protect its “policy concerns”
and prevent time-sensitive “harms that could
frustrate the purposes of the Act,” id., resolves any
lingering worry that rulemaking “[o]n average ***
takes years to complete,” Pet. 19.
d. Finally, Petitioners are wrong that the
Authority could wield other “governmental powers
without any FTC oversight at all.” Pet. 20. As a
threshold matter, Petitioners’ hyperbole is not
justiciable: Respondents have never even threatened
to carry out many of the hypothetical enforcement
activities Petitioners attack. See pp. 32-33, infra.
Even setting aside serious standing and ripeness
problems, the FTC would have “‘pervasive’ oversight
and control of the Authority’s enforcement activities”
to the extent they materialize. Pet. App. 16a (quoting
Adkins, 310 U.S. at 388). HISA limits the Authority
to acting “according to ‘uniform procedures’ reviewed
and approved by the FTC.” Pet. App. 64a. And the
FTC has “full authority to review the Horseracing
Authority’s enforcement actions.” Pet. App. 17a. No
challenged enforcement decision could have ultimate
legal effect unless the FTC, exercising independent
30
judgment and de novo review, “affirm[ed]” it.
U.S.C. §§ 3055(c)(4)(B), 3058(b)(3), (c)(3).
15
Such review “is even more substantial than the
SEC’s review of FINRA decisions.” Black III, 672 F.
Supp. 3d at 248; see Pet. App. 43a (Cole, J., concurring)
(“HISA, unlike the Maloney Act, unambiguously
empowers the FTC to obtain additional evidence not
in the record below[.]”). “All circuits that have ruled
on the issue have held that the Maloney Act’s
enforcement scheme is constitutional” because “the
agency retains de novo review of a private entity’s
enforcement proceedings.” Pet. App. 41a-42a (Cole, J.,
concurring).
Section 3053(e) now also “gives the FTC the tools
to step in” at any point to ensure that “the FTC, not
the Authority, ultimately decides how the Act is
enforced.” Pet. App. 16a-17a. That resolves every
specific (hypothetical) concern Petitioners raise. For
example, the FTC could “issue rules protecting covered
persons from overbroad subpoenas or onerous
searches.” Id.; contra Pet. 21. Similarly, the Act
empowers the FTC to “require that the Authority meet
a burden of production before bringing a lawsuit or
preclear the decision with the FTC.” Pet. App. 16a;
contra Pet. 20-21. And on top of the fact that
“[e]xtending the Act to new breeds” (Pet. 21) is
conditioned on a funding prerequisite “subject to
approval by the Commission,” 15 U.S.C. § 3054(l)(3),
section 3053(e) permits the FTC to “revoke” any breedexpanding decision or place additional “procedural
and substantive conditions” on it, Pet. App. 20a; contra
Pet. 21.
31
“Whether the FTC becomes a demanding
taskmaster or a lenient one, the FTC could
subordinate every aspect of the Authority’s
enforcement.” Pet. App. 17a. “That potential suffices
to defeat [this] facial challenge,” particularly given
that Petitioners “litigated this claim as one turning on
‘governmental oversight’ of and ‘accountability’ for the
Horseracing Authority’s activities” and “not as a
categorical Article II inquiry.” Pet. App. 17a, 20a.8
C.
This Case Is A Poor Vehicle Because
Several Of Petitioners’ Arguments Are
Forfeited, Unripe, And Ancillary To
The Act’s Operation
This case is a poor vehicle to review the privatenondelegation issue for at least three reasons.
First, Petitioners’ “accept[ance] [of] th[e] framing
of the appeal,” Pet. App. 13a, forecloses after-the-fact
arguments about “competing analytical frameworks,”
Pet. 22; see United States v. Sineneng-Smith, 590 U.S.
371, 375 (2020) (solidifying “principle of party
presentation”).
Before Congress’s amendment,
Petitioners argued that “HISA’s core constitutional
defect” was that it “stripp[ed] the federal government
of the ability to disapprove, modify, or abrogate
[Authority] rules in its discretion.” CA6 Reply Br. 4;
see First Am. Compl. ¶ 147, Dkt. 53 (“The Commission
has no authority to draft, revise, or modify the rules
8 In
fact, the FTC recently issued proposed rules to facilitate
“effective Commission oversight over the Authority,” including
with respect to any “investigations conducted,” “sanctions
imposed,” “subpoenas issued,” and “actions commenced” in
federal court. 89 Fed. Reg. 8,578, 8,578-8,580 (Feb. 8, 2024).
32
under HISA in any way; it may issue only those rules
prepared by the Authority.”). Congress then conferred
on the FTC that “core power,” which Petitioners had
acknowledged the SEC retains under the Maloney Act
but claimed the FTC lacked under the original version
of HISA. CA6 Reply Br. 6. The Sixth Circuit’s
subsequent decision, issued after supplemental
briefing addressing Congress’s amendment, simply
recognized what Petitioners’ counsel had argued: the
independent rulemaking power Congress expressly
afforded the FTC in direct response to this case and
the Fifth Circuit’s decision is “dispositive” of the
private-nondelegation claim as presented. CA6 Oral
Arg. Rec. 8:19-8:44. Petitioners cannot seek certiorari
to re-litigate a case differently than how “it c[a]me[]
to” the courts below. Pet. App. 20a.
Second, Petitioners’ new focus (at 20-22) on the
discrete civil action, subpoena, and breed-expansion
provisions is misplaced many times over. Petitioners
have never alleged that they have been, or imminently
will be, “aggrieved” by any purported “exercise of
executive power” they speculate the Authority may
one day exercise. Seila Law LLC v. Consumer Fin.
Prot. Bureau, 591 U.S. 197, 212 (2020). In fact, the
Authority has never issued a subpoena or filed a court
action against any covered person—let alone
Petitioners. And the challenged breed-expansion
provision applies only when “State racing
commission[s] or [non-Thoroughbred] breed governing
organization[s]”—e.g., Petitioners themselves—“elect”
to invoke it. 15 U.S.C. § 3054(l). No such entity has
made that triggering election or indicated any desire.
33
Petitioners’ abstract challenge to these neverexercised
provisions
reflects
“the
kind
of
undifferentiated, generalized grievance” that is not
redressable. Lance v. Coffman, 549 U.S. 437, 442
(2007); see Bond v. United States, 564 U.S. 211, 222,
225 (2011) (constitutional structural challenges
remain “subject to the Article III requirements, as well
as prudential rules”).
Perhaps for that reason,
Petitioners never “engaged with th[e]s[e] features of
the Act” in any serious manner below. Pet. App. 20a.
To the extent there are any concerns about a
particular enforcement activity Respondents may (or
may never) conduct, they should be resolved “when the
Authority’s actions and the FTC’s oversight appear in
concrete detail, presumably in the context of an actual
enforcement action.” Pet. App. 21a.
Third, even if Petitioners’ complaints were
properly presented and justiciable (and meritorious),
a ruling in their favor would implicate severability
questions never adjudicated below. The reality that
the civil-action, subpoena, and breed-election
provisions Petitioners emphasize have never been
exercised underscores that they are ancillary to the
Act’s operation. That is yet another reason why review
of the private-nondelegation issue should await an asapplied challenge when—or if—these provisions
actually threaten harm to a plaintiff.
II.
THE ANTI-COMMANDEERING QUESTION
DOES NOT WARRANT REVIEW
1. The second question presented rests on
Petitioners’ (repeated) mischaracterization of the
statutory scheme. The Act does not require “States to
fund” HISA’s regulatory scheme. Pet. 11; see Pet. i, 13,
34
30, 31 (framing Question Presented on contention that
Act coerces “States into funding” program). Rather,
HISA places the funding obligation on “covered
persons.” 15 U.S.C. § 3052(f)(2)(D), (3)(B). That term
includes racetracks, trainers, owners, and so on, but
excludes States. Id. § 3051(6); see Pet. App. 27a
(“Private parties pay for the Authority’s operations.”).
Should a State elect to participate, it need only “remit
fees” collected from covered persons (under whatever
method the State prefers), 15 U.S.C. § 3052(f)(2), not
contribute State dollars to “pay for the Authority[],”
Pet. 32-33; see Pet. App. 67a (explaining States’
voluntary participation would only involve remitting
“money owed to the federal government, as opposed to
State funds”).
2. Factual misstatements aside, every court to
have resolved this anti-commandeering claim has
rejected it. Pet. App. 22a-27a; Pet. App. 66a-68a;
Black III, 672 F. Supp. 3d at 225 (private party lacked
standing because “HISA allows states to ‘elect[]’ to
assess and collect fees on covered persons,” and “if the
state does not make such an election, then the
Authority steps in” (alteration in original)). For good
reason: HISA’s funding scheme “fits comfortably
within the conditional preemption framework”
permitted by this Court’s established precedents. Pet.
App. 24a; see Murphy v. National Collegiate Athletic
Ass’n, 584 U.S. 453, 476 (2018) (discussing Hodel v.
Virginia Surface Mining & Reclamation Ass’n, Inc.,
452 U.S. 264, 288-289 (1981)).
Far from “unconstitutionally coerc[ing]” the
States, Pet. 13, HISA “presents States with a choice,
not a command,” Pet. App. 23a. “States may elect to
35
collect fees from the industry and remit the money to
the Horseracing Authority,” in which case the States
“gain[] discretion over how the fees are collected.” Id.
(citing 15 U.S.C. § 3052(f)(2)(D)). Or “States may
refuse,” in which case “the Authority collects the fees
itself” and the States may not collect their own fees to
regulate the same “‘anti-doping and medication
control or racetrack safety matters.’” Id. at 23a-24a
(quoting 15 U.S.C. § 3052(f)(3)(D)).
Petitioners’ contrary view depends on at least
three misunderstandings of HISA and this Court’s
case law.
First, the Act does not “impose[] a
punishment” on a State that elects not to participate
in the fee-collection regime. Pet. 31. What Petitioners
strain to characterize as a “threat” to State
sovereignty, Pet. 4, 33-34, is “nothing more than a
typical preemption scheme,” Pet. App. 68a.
In
regulating covered persons, HISA also “confers on
[the] private entities (i.e., covered [persons]) a federal
right to engage in certain conduct subject only to
certain (federal) constraints.” Murphy, 584 U.S. at
478-479; see, e.g., id. § 3054(a), (b). “There is nothing
unconstitutional about Congress ‘offer[ing] States the
choice of regulating that activity according to [those]
federal standards or having state law pre-empted.’”
Pet. App. 24a (quoting New York v. United States, 505
U.S. 144, 173-174 (1992)).
Second, Petitioners are wrong that such
conditional preemption extends “beyond the scope of
the federal program itself” to preclude States from
taxing matters on which no HISA “regulations have
been passed.” Pet. 33. HISA’s general preemption
scheme makes clear that States are precluded only
36
from regulating and collecting fees “with respect to
matters” covered by rules “promulgated” under the
Act. 15 U.S.C. § 3054(b); see New York, 505 U.S. at
170 (preemption provisions should be viewed not
“alone,” but in context of statute “[c]onstrued as a
whole”).
As Petitioner States’ own experience
confirms, if no HISA rule is in effect with respect to a
particular matter, States are free to continue
regulating it—and to impose fees for that nonpreempted activity regardless of whether the States
have chosen to collect HISA fees. See Anti-Doping
Disapproval Order 2 (“State law will continue to
regulate the matters that the proposed rule would
have covered.”). Were there any doubt, the canon of
constitutional avoidance precludes reading the
statute, contrary to how Respondents and Petitioners
apply it themselves, to create a constitutional
problem.
Third,
Petitioners
say
this
conditional
preemption “‘serves no purpose other than to force
unwilling States’ to enforce a federal program.” Pet.
34 (quoting National Fed’n of Indep. Bus. v. Sebelius,
567 U.S. 519, 580 (2012) (opinion of Roberts, C.J.). 9
Wrong again. As the Sixth Circuit explained (and
Petitioners ignore), “ensur[ing] that a single entity[,]
whether a State or the Authority[,] imposes fees” on
the same covered persons for the same matters helps
Petitioners’ heavy reliance on financial-incentive cases to
support their related argument that this conditional preemption
scheme represents “a ‘gun to the[ir] head,’” Pet. 34 (quoting
National Fed’n, 567 U.S. at 581-582), is “bereft of support”
“[l]egally” and raises “factual problems” given Petitioners’ failure
to “quantify [their] expected loss,” Pet. App. 26a.
9
37
“[e]liminat[e]
‘double
taxation’
and
foster[]
uniformity”—more than “adequate grounds to
preempt parallel collection regimes.” Pet. App. 26a.
Moreover, the funding provision is part of a regulatory
scheme that allows for (but does not require) broader
State implementation and enforcement of HISA
programs “in accordance with” federal standards. 15
U.S.C. §§ 3054(e)(2), 3060(a).
3. In any event, the question presented is hardly
“outcome-dispositive here.” Pet. 4. Even if there were
any merit to Petitioners’ claim, the challenged
provision would be easily severable. It is clear
“Congress had known that States would be free” to
reject the fee-collection option. Murphy, 584 U.S. at
482. That is why HISA empowers the Authority to
collect those fees from covered persons. 15 U.S.C.
§ 3052(f)(3). Excising the double-taxation prohibition
would fully remedy any purported harm while leaving
the rest of the Act intact.
But no court has reached that severability
question, which would be bound up with resolution of
the merits in Petitioners’ favor. This Court should not
be the first—particularly when the Fifth Circuit is
presently considering a parallel anti-commandeering
claim. Black IV, No. 23-10520 (5th Cir.).
38
CONCLUSION
For the foregoing reasons, the petition for a writ
of certiorari should be denied.
Respectfully submitted.
John C. Roach
RANSDELL ROACH &
ROYSE, PLLC
Pratik A. Shah
Counsel of Record
Lide E. Paterno
AKIN GUMP STRAUSS
HAUER & FELD LLP
Counsel for the Horseracing Integrity and
Safety Authority Respondents
May 17, 2024
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.