Reply Brief — Bill H. Walmsley, et al., Petitioners v. Federal Trade Commission, et al.

No. 24-420

In the Supreme Court of the United States

____________________

BILL H. WALMSLEY; JON MOSS; IOWA HORSEMEN’S

BENEVOLENT AND PROTECTIVE ASSOCIATION,

Petitioners,

v.

FEDERAL TRADE COMMISSION, ET AL.,

Respondents.

____________________

On Petition for a Writ of Certiorari

to the United States Court of Appeals

for the Eighth Circuit

____________________

REPLY BRIEF FOR THE PETITIONERS

____________________

BRETT D. WATSON

Brett D. Watson, Attorney

at Law, PLLC

P.O. Box 707

Searcy, AR 72145

(501) 281-2468

AUSTIN L. RAYNOR

Counsel of Record

FRANK D. GARRISON

JOSHUA M. ROBBINS

Pacific Legal Foundation

3100 Clarendon Blvd.,

Suite 1000

Arlington, VA 22201

(202) 888-6881

araynor@pacificlegal.org

Counsel for Petitioners

i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ....................................... ii

INTRODUCTION ....................................................... 1

ARGUMENT ............................................................... 2

I.

The Second Question Presented

Warrants Review ........................................... 2

II.

The Court Should Grant Review

In This Case ................................................... 5

CONCLUSION............................................................ 8

ii

TABLE OF AUTHORITIES

Cases

Ass’n of Am. R.R. v. U.S. Dep’t of Transp.,

721 F.3d 666 (D.C. Cir. 2013), vacated

on other grounds, 575 U.S. 43 (2015).................... 4

Bowen v. Kendrick,

487 U.S. 589 (1988) ............................................... 7

FTC v. Nat’l Horsemen’s Benevolent & Prot. Ass’n,

No. 24-429 (filed Oct. 16, 2024) ............................. 1

Horseracing Integrity & Safety Auth.,

Inc. v. Nat’l Horsemen’s Benevolent

& Prot. Ass’n,

No. 24-433 (filed Oct. 15, 2024) ............................. 1

Jackson v. United States,

143 S. Ct. 2457 (2023) ........................................... 7

Loper Bright Enters. v. Raimondo,

No. 22-451 .............................................................. 7

Monasky v. Taglieri,

589 U.S. 68 (2020) ................................................. 5

Nat’l Horsemen’s Benevolent & Prot.

Ass’n v. Black,

107 F.4th 415 (5th Cir. 2024) ................................ 3

Oklahoma v. United States,

62 F.4th 221 (6th Cir. 2023) .................................. 3

Pittston Co. v. United States,

368 F.3d 385 (4th Cir. 2004) .............................. 4-5

Relentless, Inc. v. Dep’t of Com.,

144 S. Ct. 325 (2023) ............................................. 7

iii

Students for Fair Admissions, Inc. v.

President & Fellows of Harvard Coll.,

142 S. Ct. 895 (2022) ............................................. 7

Sunshine Anthracite Coal Co. v. Adkins,

310 U.S. 381 (1940) ............................................... 3

Texas v. Comm’r of Internal Rev.,

142 S. Ct. 1308 (2022) ........................................ 3-4

Trump v. NAACP,

139 S. Ct. 2779 (2019) ........................................... 7

United States v. Frame,

885 F.2d 1119 (3d Cir. 1989) .............................. 4-5

United States, ex rel. Polansky v.

Exec. Health Res., Inc.,

599 U.S. 419 (2023) ............................................... 3

Other Authorities

Brief Amicus Curiae of Senator Mitch

McConnell, et al., Horseracing Integrity &

Safety Authority, Inc. v. Nat’l Horsemen’s

Benevolent & Prot. Ass’n,

No. 24A287 (Sept. 24, 2024) .................................. 4

HISA, Regulations,

https://hisaus.org/regulations ............................... 4

Petition for a Writ of Certiorari, Horseracing

Integrity & Safety Auth., Inc. v. Nat’l

Horsemen’s Benevolent & Prot. Ass’n,

No. 24-433 (filed Oct. 15, 2024) ......................... 1, 6

1

INTRODUCTION

All parties agree that the first question

presented—whether HISA unlawfully delegates

enforcement power to the Authority—warrants this

Court’s review. See Gov’t Resp. Br. 4; Authority Resp.

Br. 11-17. The courts of appeals are squarely divided

on that question; multiple Justices of this Court have

highlighted the need to clarify the scope of the private

nondelegation doctrine; and the question of HISA’s

constitutionality

carries

substantial

practical

significance. Respondents dispute only two points.

First, they contend that the Court should not

review the second question presented—whether HISA

unlawfully delegates rulemaking power to the

Authority. See Gov’t Resp. Br. 4-5; Authority Resp.

Br. 17-19. But the two questions are interrelated, and

answering both is critical to provide much-needed

guidance to the lower courts. Although the government

contests the presence of a direct circuit split on the

second question, it cannot deny that the courts are in

disarray over the proper standard.

Second, respondents contend that the Court

should grant their petitions arising out of the Fifth

Circuit and hold this petition. See Gov’t Resp. Br. 5;

Authority Resp. Br. 19-20; see also FTC v. Nat’l

Horsemen’s Benevolent & Prot. Ass’n, No. 24-429 (filed

Oct. 16, 2024); Horseracing Integrity & Safety Auth.,

Inc. v. Nat’l Horsemen’s Benevolent & Prot. Ass’n, No.

24-433 (filed Oct. 15, 2024). Contrary to respondents’

arguments, this case is the cleanest, most complete

vehicle for review. Even if the Court were inclined to

grant the Fifth Circuit petitions, it should also grant

and consolidate this petition to ensure the

2

presentation of a wide range of perspectives on a

significant constitutional question.

ARGUMENT

I.

The Second Question Presented Warrants

Review

This Court should decline respondents’ invitation

to segregate the validity of the Authority’s rulemaking

powers from its enforcement powers. Particularly

where both questions are squarely presented, there is

no persuasive reason to bifurcate them and resolve

only one. And there are compelling reasons to grant

both.

A. Most significantly, the merits of the two

questions are intertwined.

Respondents do not

dispute that, were the Court to grant review on the

first question presented and then reverse the decision

below or clarify the relevant test, it would be

appropriate for the lower courts on remand to

reconsider their answer to the second question

presented as well. Because the Eighth Circuit applied

the same “subordination” test in resolving both

questions, see Pet. App. 5a-6a, any clarification of the

governing test (or its application) in resolving the first

question would necessarily call into question the court

of appeals’ resolution of the second question. There is

no reason for the Court not to resolve that question

itself.

The two questions are intertwined at the

statutory level, too. Respondents contend that the

rulemaking power contained in 15 U.S.C. 3053(e)

grants the FTC expansive power to revise the statute’s

allocation of responsibilities “to subordinate” the

Authority to the FTC. Pet. App. 9a. The Fifth Circuit

3

rejected that argument as to enforcement powers on

the ground that it “would let the agency rewrite the

statute.” Nat’l Horsemen’s Benevolent & Prot. Ass’n v.

Black, 107 F.4th 415, 431 (5th Cir. 2024). But the

Fifth Circuit inexplicably accepted virtually the same

argument as to rulemaking, agreeing that the FTC

could impose extra-statutory limitations on the

Authority’s powers in that context. See id. at 425.

Those twin holdings are in serious tension with each

other, and the Court’s construction of Section 3053(e)

would likely impact both questions presented.

B. Although the two questions are related, they

are sufficiently distinct that granting both would

provide materially more guidance to the lower courts

than granting the first question alone. In particular,

the two questions likely implicate discrete historical

traditions that could inform application of the

governing test in different ways. As the Sixth Circuit

explained, the lawfulness of enforcement delegation

may turn on “founding-era or contemporary analogs

showing the role private entities may, and may not,

play in law enforcement.” Oklahoma v. United States,

62 F.4th 221, 233 (6th Cir. 2023); cf. United States, ex

rel. Polansky v. Exec. Health Res., Inc., 599 U.S. 419,

442 (2023) (Kavanaugh, J., concurring).

The

rulemaking delegation, by contrast, may implicate a

different historical tradition.

The need for guidance is particularly acute here,

given that the Court has not addressed the private

nondelegation doctrine in over 80 years. See Sunshine

Anthracite Coal Co. v. Adkins, 310 U.S. 381, 399

(1940). As multiple Justices have recognized, the

doctrine cries out for clarification. See, e.g., Texas v.

Comm’r of Internal Rev., 142 S. Ct. 1308, 1308-09

4

(2022) (statement of Alito, J., respecting the denial of

certiorari). Resolving both questions would provide a

far clearer picture to the lower courts of the doctrine’s

scope and contours.

C. Regardless of its relationship to the first

question presented, the constitutionality of the

Authority’s

rulemaking

power

independently

warrants review. That power is highly significant in

its own right. See HISA, Regulations, https://hisaus.

org/regulations (listing hundreds of pages of

regulations). And the second question presented

implicates several other statutes that similarly

delegate rulemaking—not just enforcement—power to

private entities.

See, e.g., Pet. 18-19; see also

McConnell Amicus Br. 4, Horseracing Integrity &

Safety Authority, Inc. v. Nat’l Horsemen’s Benevolent

& Prot. Ass’n, No. 24A287 (Sept. 24, 2024) (arguing

that the “Act adheres to a well-established model of

federal regulation associated with other important

areas of our economy”).

The circuits are divided over the proper standard

for assessing delegations like this one. See Pet. 15-16

(discussing Pittston Co. v. United States, 368 F.3d 385

(4th Cir. 2004); United States v. Frame, 885 F.2d 1119

(3d Cir. 1989); Ass’n of Am. R.R. v. U.S. Dep’t of

Transp., 721 F.3d 666 (D.C. Cir. 2013), vacated on

other grounds, 575 U.S. 43 (2015)). The government

contends (at 5) that the standards articulated in

Pittston and Frame “were dicta” because both

decisions “upheld the challenged statutes against

private nondelegation claims,” but it does not dispute

that petitioners would have prevailed under those

standards. See Pittston, 368 F.3d at 395 (“Congress

may employ private entities for ministerial or

5

advisory roles, but it may not give these entities

governmental power over others.”); Frame, 885 F.2d

at 1129 (similar). And although the government notes

(at 5) that this Court vacated the D.C. Circuit’s

decision in American Railroads “after determining

that the entity at issue was not actually a private

body,” it does not contest that the Court left untouched

the D.C. Circuit’s nondelegation logic.

Even if the Court were inclined to view the

government’s fine-grained distinctions as obviating a

direct split, the courts of appeals are plainly in

disarray about how to assess delegations of

rulemaking authority to private entities.

That

confusion warrants this Court’s intervention. See,

e.g., Monasky v. Taglieri, 589 U.S. 68, 76 (2020)

(noting grant of certiorari “in view of differences in

emphasis among the Courts of Appeals”).

II. The Court Should Grant Review In This

Case

A. This case is the best available vehicle for

resolving both questions presented. See Pet. 27-29.

The Eighth Circuit fully addressed the relevant issues

and the questions are presented free from any

threshold hindrance.

The Authority complains that the “decision below

arises in a preliminary-injunction context” and

“resolved only whether the challengers had ‘show[n] a

fair chance of success on the merits.’ ” Authority Resp.

Br. 20 (quoting Pet. App. 5a, 13a).

That

characterization misapprehends the court of appeals’

decision, which—despite arising in a preliminary

posture—definitively

resolved

the

questions

presented. See, e.g., Pet. App. 6a (holding that “the

6

Act’s rulemaking structure does not violate the

private nondelegation doctrine”); id. at 10a (similar

for enforcement provisions). There is no further

analysis for the lower courts to conduct on those

questions.

Respondents also suggest that the Fifth Circuit

case is a better vehicle because the Fifth Circuit is “the

only court of appeals that has found a constitutional

violation.” Gov’t Resp. Br. 5; see Authority Resp. Br.

19-20 (similar). But the court below had the benefit of

the Fifth Circuit’s decision and squarely addressed its

reasoning (as well as that of the Sixth Circuit). See

Pet. App. 6a, 9a.

Moreover, in at least one respect, the decision

below presents a more complete suite of arguments

than does the Fifth Circuit’s opinion. As noted,

respondents’ defense of the statute depends on an

aggressive reading of the rulemaking power contained

in 15 U.S.C. 3053(e). Pet. App. 9a; see id. at 8a-10a

(holding, for example, that the FTC may require the

Authority to obtain agency preapproval before filing

suit in court). But that interpretation lacks an

intelligible principle and thus runs straight into the

public nondelegation doctrine. An interpretation that

creates a constitutional problem cannot be justified as

a matter of constitutional avoidance, as respondents

claim. See, e.g., Pet. 24, Horseracing Integrity &

Safety Auth., No. 24-433, supra. Unlike the Fifth

Circuit, the court below directly addressed the public

nondelegation

implications

of

respondents’

construction. See Pet. App. 11a-12a.

The Authority further suggests (at 20) that the

Fifth Circuit case is a superior vehicle because the

court there ruled “on a full record following trial.”

7

That distinction is irrelevant, as petitioners assert a

facial challenge based on a pure question of law:

whether HISA unlawfully confers sovereign power on

the Authority, a private entity. Nothing about that

question hinges on factual development. See, e.g.,

Bowen v. Kendrick, 487 U.S. 589, 600 (1988)

(observing that facial challenges enable courts to

“consider[ ] the validity of statutes without . . . a record

as to how the statute had actually been applied”).

B. Even if the Court were inclined to grant the

petitions arising from the Fifth Circuit, it should also

grant this petition to facilitate a complete

presentation of the available arguments. See, e.g.,

Relentless, Inc. v. Dep’t of Com., 144 S. Ct. 325 (2023)

(granting petition and ordering case to be argued in

tandem with Loper Bright Enters. v. Raimondo, No.

22-451); Jackson v. United States, 143 S. Ct. 2457

(2023) (granting and consolidating cases from the

Third and Eleventh Circuits); Students for Fair

Admissions, Inc. v. President & Fellows of Harvard

Coll., 142 S. Ct. 895 (2022) (granting petitions from

the First and Fourth Circuits); Trump v. NAACP, 139

S. Ct. 2779 (2019) (granting and consolidating cases

from the Second, Ninth, and D.C. Circuits). The scope

of the private nondelegation doctrine is an important

question, and the Court’s resolution of that question

would benefit from a wide range of perspectives.

8

CONCLUSION

For all these reasons and those stated in the

petition for a writ of certiorari, the petition should be

granted.

Respectfully submitted,

BRETT D. WATSON

Brett D. Watson, Attorney

at Law, PLLC

P.O. Box 707

Searcy, AR 72145

(501) 281-2468

AUSTIN L. RAYNOR

Counsel of Record

FRANK D. GARRISON

JOSHUA M. ROBBINS

Pacific Legal Foundation

3100 Clarendon Blvd.,

Suite 1000

Arlington, VA 22201

(202) 888-6881

araynor@pacificlegal.org

Counsel for Petitioners

NOVEMBER 2024