Petition for Writ of Certiorari — Federal Trade Commission, et al., Petitioners v. National Horsemen's Benevolent and Protective Association, et al.
Supreme Court briefOct 16, 2024
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No. XX-XX
In the Supreme Court of the United States
FEDERAL TRADE COMMISSION, ET AL., PETITIONERS
v.
NATIONAL HORSEMEN’S BENEVOLENT
AND PROTECTIVE ASS’N, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
ANISHA DASGUPTA
General Counsel
BENJAMIN F. AIKEN
Counsel
Federal Trade Commission
Washington, DC 20580
ELIZABETH B. PRELOGAR
Solicitor General
Counsel of Record
BRIAN M. BOYNTON
Principal Deputy Assistant
Attorney General
MALCOLM L. STEWART
Deputy Solicitor General
VIVEK SURI
Assistant to the Solicitor
General
MARK B. STERN
COURTNEY L. DIXON
CAROLINE W. TAN
Attorneys
Department of Justice
Washington, D.C. 20530-0001
SupremeCtBriefs@usdoj.gov
(202) 514-2217
QUESTION PRESENTED
Whether the enforcement provisions of the
Horseracing Integrity and Safety Act of 2020, 15 U.S.C.
3051 et seq.—which allow the Horseracing Integrity and
Safety Authority, a private entity, to assist the Federal
Trade Commission in enforcing the statute—violate the
private nondelegation doctrine on their face.
(I)
PARTIES TO THE PROCEEDING
The following parties are petitioners here and were
defendants-appellees below: the Federal Trade Commission, Chair Lina Khan, and Commissioners Rebecca
Kelly Slaughter, Alvaro Bedoya, Melissa Holyoak, and
Andrew N. Ferguson.
The following parties are respondents here and were
defendant-appellees below: Horseracing Integrity and
Safety Authority, Inc., Charles Scheeler, Steve
Beshear, Adolpho Birch, Leonard Coleman, Joseph De
Francis, Susan Stover, Bill Thomason, D.G. Van Clief,
Nancy Cox, Katrina Adams, Jerry Black, Joseph Dunford, Frank Keating, Kenneth Schanzer, Ellen
McClain, and Lisa Lazarus.
The following parties are respondents here and were
plaintiff-appellants below: National Horsemen’s Benevolent and Protective Association, Arizona Horsemen’s Benevolent and Protective Association, Arkansas
Horsemen’s Benevolent and Protective Association, Indiana Horsemen’s Benevolent and Protective Association, Illinois Horsemen’s Benevolent and Protective Association, Louisiana Horsemen’s Benevolent and Protective Association, Mountaineer Park Horsemen’s Benevolent and Protective Association, Nebraska Horsemen’s Benevolent and Protective Association, Oklahoma Horsemen’s Benevolent and Protective Association, Oregon Horsemen’s Benevolent and Protective
Association, Pennsylvania Horsemen’s Benevolent and
Protective Association, Washington Horsemen’s Benevolent and Protective Association, Tampa Bay Horsemen’s Benevolent and Protective Association, Gulf
Coast Racing L.L.C., LRP Group Ltd., Valle de Los
Tesoros Ltd., Global Gaming Lsp. L.L.C., and Texas
Horsemen’s Partnership L.L.P.
(II)
The following parties are respondents here and were
intervenor-appellants below: the State of Texas and the
Texas Racing Commission.
RELATED PROCEEDINGS
United States District Court (N.D. Tex.):
National Horsemen’s Benevolent & Protective
Ass’n v. Black, No. 21-cv-71 (May 4, 2023)
United States Court of Appeals (5th Cir.):
National Horsemen’s Benevolent & Protective
Ass’n v. Black, No. 22-10387 (Nov. 18, 2022)
National Horsemen’s Benevolent & Protective
Ass’n v. Black, No. 23-10520 (July 5, 2024)
United States Supreme Court:
Horseracing Integrity & Safety Authority, Inc. v.
National Horsemen’s Benevolent & Protective
Ass’n, No. 24A287 (filed Sept. 19, 2024)
(III)
TABLE OF CONTENTS
Page
Opinions below .............................................................................. 1
Jurisdiction .................................................................................... 1
Statement ...................................................................................... 2
Reasons for granting the petition ............................................... 6
A. The Fifth Circuit’s decision is incorrect ........................ 7
B. The question presented warrants this Court’s
review .............................................................................. 12
C. The Court should grant both this petition and
the Authority’s petition for a writ of certiorari .......... 14
Conclusion ................................................................................... 15
Appendix A — Court of appeals opinion
(July 5, 2024) ................................................ 1a
Appendix B — District court memorandum opinion
and order (May 4, 2023) ............................ 46a
Appendix C — Court of appeals order denying
rehearing (Sept. 29, 2024) ....................... 108a
TABLE OF AUTHORITIES
Cases:
Blodgett v. Holden, 275 U.S. 142 (1927) .............................. 13
Carter v. Carter Coal Co., 298 U.S. 238 (1936) ..................... 7
First Jersey Securities, Inc. v. Bergen,
605 F.2d 690 (3d Cir. 1979), cert. denied,
444 U.S. 1074 (1980).............................................................. 9
Haaland v. Brackeen, 599 U.S. 255 (2023) ......................... 13
Iancu v. Brunetti, 588 U.S. 388 (2019) ................................ 13
Moody v. NetChoice, LLC, 144 S. Ct. 2383 (2024) ......... 9, 10
Oklahoma v. United States:
62 F.4th 221 (6th Cir. 2023), cert. denied,
144 S. Ct. 2679 (2024) ............................................ 2, 12
144 S. Ct. 2679 (2024) ...................................................... 14
(V)
VI
Cases—Continued:
Page
R.H. Johnson & Co. v. SEC, 198 F.2d 690
(2d Cir.), cert. denied, 344 U.S. 855 (1952) ......................... 9
Sorrell v. SEC, 679 F.2d 1323 (9th Cir. 1982) ....................... 9
Sunshine Anthracite Coal Co. v. Adkins,
310 U.S. 381 (1940)........................................................ 4, 7, 8
Torres v. Texas Department of Public Safety,
597 U.S. 580 (2022).............................................................. 13
United States v. Hansen, 599 U.S. 762 (2023) .................... 11
United States v. Rahimi, 144 S. Ct. 1889 (2024) .......... 10, 12
United States v. Raines, 362 U.S. 17 (1960) ....................... 12
United States v. Vaello Madero,
596 U.S. 159 (2022).............................................................. 13
Walmsley v. FTC, No. 23-2687, 2024 WL 4248221
(8th Cir. Sept. 20, 2024), petition for cert. pending,
No. 24-420 (filed Oct. 10, 2024) .................................... 12, 13
Statutes:
Consolidated Appropriations Act, 2023,
Pub. L. No. 117-328, Div. O, Tit. VII, § 701,
136 Stat. 5231-5232 ............................................................... 5
Horseracing Integrity and Safety Act of 2020,
Pub. L. No. 116-260, Div. FF, Tit. XII,
134 Stat. 3252 (15 U.S.C. 3051 et seq.
(Supp. IV 2022)) .................................................................... 2
15 U.S.C. 3051(6) ............................................................... 3
15 U.S.C. 3052(a) ............................................................... 2
15 U.S.C. 3052(b)(1) .......................................................... 2
15 U.S.C. 3053 .................................................................... 2
15 U.S.C. 3053(a) ............................................................... 2
15 U.S.C. 3053(a)(9) ........................................................... 8
15 U.S.C. 3053(a)(10) ................................................... 8, 11
15 U.S.C. 3053(b)(2) ...................................................... 3, 8
VII
Statutes—Continued:
Page
15 U.S.C. 3053(c)(2) ........................................................... 3
15 U.S.C. 3053(e) ........................................................... 5, 8
15 U.S.C. 3054(a)(1) ......................................................... 11
15 U.S.C. 3054(c)(1)(A) ..................................................... 8
15 U.S.C. 3054(c)(1)(A)(iii) .............................................. 11
15 U.S.C. 3054(c)(2) ........................................................... 8
15 U.S.C. 3054(d)(1) .......................................................... 3
15 U.S.C. 3054(d)(2) .......................................................... 3
15 U.S.C. 3054(d)(3) ........................................................ 11
15 U.S.C. 3054(h) ............................................................... 3
15 U.S.C. 3055-3057........................................................... 2
15 U.S.C. 3057(c) ............................................................... 3
15 U.S.C. 3057(d) ............................................................... 3
15 U.S.C. 3058(b) ............................................................... 3
15 U.S.C. 3058(b)(1) .......................................................... 8
15 U.S.C. 3058(b)(2)(B) ..................................................... 3
15 U.S.C. 3058(c) ............................................................... 3
15 U.S.C. 3058(c)(1) ........................................................... 9
15 U.S.C. 3058(c)(3) ........................................................... 9
15 U.S.C. 3058(d) ............................................................... 9
Maloney Act, ch. 677, § 1, 52 Stat. 1070 ................................. 9
15 U.S.C. 78s(c) .................................................................... 4, 5
15 U.S.C. 78s(e) ........................................................................ 9
Miscellaneous:
H.R. Rep. No. 554, 116th Cong., 2d Sess. (2020) ................ 14
In the Supreme Court of the United States
No. XX-XX
FEDERAL TRADE COMMISSION ET AL., PETITIONERS
v.
NATIONAL HORSEMEN’S BENEVOLENT
AND PROTECTIVE ASS’N, ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
The Solicitor General—on behalf of the Federal
Trade Commission, Chair Lina Khan, and Commissioners Rebecca Kelly Slaughter, Alvaro Bedoya, Melissa
Holyoak, and Andrew N. Ferguson—respectfully petitions for a writ of certiorari to review the judgment of
the United States Court of Appeals for the Fifth Circuit
in this case.
OPINIONS BELOW
The opinion of the court of appeals (App., infra, 1a45a) is reported at 107 F.4th 415. The memorandum
opinion and order of the district court (App., infra, 46a107a) is reported at 672 F. Supp. 3d 220.
JURISDICTION
The judgment of the court of appeals was entered on
July 5, 2024. A petition for rehearing was denied on
(1)
2
September 9, 2024 (App., infra, 108a-110a). The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).
STATEMENT
1. Congress enacted and President Trump signed
the Horseracing Integrity and Safety Act of 2020
(Horseracing Act or Act), Pub. L. No. 116-260, Div. FF,
Tit. XII, 134 Stat. 3252 (15 U.S.C. 3051 et seq. Supp. IV
2022), in order to prevent doping and improve safety in
the horseracing industry. Congress modeled the Act’s
framework on the longstanding regulatory scheme used
in the securities industry, in which industry participants are subject to rules proposed by self-regulatory
private entities, which are in turn overseen by the Securities and Exchange Commission (SEC). See Oklahoma v. United States, 62 F.4th 221, 229 (6th Cir. 2023),
cert. denied, 144 S. Ct. 2679 (2024).
The Horseracing Act “recognized” the Horseracing
Integrity and Safety Authority (Authority)—a “private,
independent, self-regulatory, nonprofit corporation”—
“for purposes of developing and implementing a horseracing anti-doping and medication control program and
a racetrack safety program.” 15 U.S.C. 3052(a). The
Authority’s Board of Governors consists of four members from the horseracing industry and five members
from outside the industry. See 15 U.S.C. 3052(b)(1).
The Authority operates under the oversight of the Federal Trade Commission (FTC or Commission). See 15
U.S.C. 3053.
The Horseracing Act directs the Authority to propose rules concerning doping, racetrack safety, and
other subjects. See 15 U.S.C. 3055-3057. The Authority
must submit its proposals to the FTC “in accordance
with such rules as the Commission may prescribe.” 15
U.S.C. 3053(a). The FTC must approve a proposed rule
3
if it determines that the rule “is consistent with” the Act
and the Commission’s regulations. 15 U.S.C. 3053(c)(2).
A proposal takes effect only if the Commission approves
it. See 15 U.S.C. 3053(b)(2).
The Act requires various “[c]overed persons”—i.e.,
owners, breeders, trainers, jockeys, and other persons
involved in the horseracing industry—to register with
the Authority and to comply with the rules approved by
the FTC. See 15 U.S.C. 3051(6), 3054(d)(1) and (2). The
Authority may investigate violations of the rules. See
15 U.S.C. 3054(h). The Authority also may conduct disciplinary proceedings and impose civil sanctions upon
violators. See 15 U.S.C. 3057(c) and (d). A final decision
by the Authority to impose discipline is subject to de
novo review by an FTC administrative law judge (ALJ),
see 15 U.S.C. 3058(b), who “may conduct a hearing in
such a manner as the Commission may specify by rule,”
15 U.S.C. 3058(b)(2)(B). The ALJ’s decision is in turn
subject to de novo review by the Commission, and the
Commission may consider additional evidence that was
not presented to the Authority or the ALJ. See 15
U.S.C. 3058(c).
2. In 2021, various organizations including the National Horsemen’s Benevolent and Protective Association (private respondents) brought this suit in the U.S.
District Court for the Northern District of Texas. See
53 F.4th 869, 875. The private respondents named as
defendants the Authority and its officials (collectively
Authority), as well as the FTC and its members, and
their complaint asserted various constitutional challenges to the Act. See ibid. The State of Texas and the
Texas Racing Commission (state respondents) intervened to support the private respondents’ challenges.
See ibid.
4
In an earlier phase of this litigation, the Fifth Circuit
held that the Act, as originally enacted, violated a constitutional principle that is sometimes known as the private nondelegation doctrine. See 53 F.4th at 880. The
court explained that, under that doctrine, a private entity may aid a governmental agency in implementing a
federal regulatory scheme, but only if the private entity
“functions subordinately” to the agency and is subject
to the agency’s “authority and surveillance.” Id. at 881;
see Sunshine Anthracite Coal Co. v. Adkins, 310 U.S.
381, 399 (1940). The court determined that, under the
Horseracing Act in its original form, the FTC lacked
constitutionally sufficient control over the Authority’s
activities. See 53 F.4th at 880-890.
In reaching that conclusion, the Fifth Circuit highlighted a “key distinction” between the Horseracing
Act and the securities-industry self-regulatory scheme
on which the Act was modeled. 53 F.4th at 887. The
securities-industry scheme, the court emphasized, allows the SEC to “abrogate, add to, and delete from” the
rules of self-regulatory organizations as the SEC deems
“necessary or appropriate.” Ibid. (quoting 15 U.S.C.
78s(c)). The Act in its original form, in contrast, did not
grant the FTC comparable authority to abrogate or
modify the Authority’s rules. See ibid. Because the
FTC lacked the “final word on the substance of the
rules,” the court concluded that the FTC possessed insufficient control over the Authority’s actions. Ibid.
Congress responded by amending the Horseracing
Act to empower the FTC to “abrogate, add to, and modify” the rules promulgated under the Act “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 [Act] and
5
applicable rules approved by the Commission, or otherwise in furtherance of the purposes of this [Act].” 15
U.S.C. 3053(e); see Consolidated Appropriations Act,
2023, Pub. L. No. 117-328, Div. O, Tit. VII, § 701, 136
Stat. 5231-5232. That language is substantially identical to the language used in the statutes that empower
the SEC to oversee self-regulatory organizations in the
securities industry. See 15 U.S.C. 78s(c).
3. After Congress enacted the statutory amendments described above and the case was remanded for
further proceedings, the district court conducted a
bench trial and granted final judgment to the defendants. See App., infra, 46a-107a. As relevant here, the
court rejected the private-nondelegation challenge to
the amended Act. See id. at 81a-94a, 98a-99a.
The district court first held that the Authority’s role
in the rulemaking process does not violate the private
nondelegation doctrine. See App., infra, 83a-93a. The
court explained that, by amending the Act to give the
FTC the final word on the content of the rules, Congress had “cured the constitutional issues identified by
the Fifth Circuit.” Id. at 83a.
The district court also held that the Authority’s role
in enforcing the Act does not violate the private nondelegation doctrine. See App., infra, 98a-99a. The
court noted that “any Authority enforcement decision
will be reviewed by an ALJ and the FTC.” Id. at 98a.
4. The Fifth Circuit affirmed in part and reversed in
part. See App., infra, 1a-45a.
The court of appeals agreed with the district court
that, by amending the Act, Congress had “cured the private nondelegation flaw in the Authority’s rulemaking
power.” App., infra, 45a. “Because the FTC has [the]
ultimate say on what the rules are,” the court stated,
6
“the Authority’s power to propose horseracing rules
does not violate the private nondelegation doctrine.”
Id. at 14a.
The court of appeals concluded, however, that “the
FTC lacks adequate oversight and control over the Authority’s enforcement power.” App., infra, 33a. The
court concluded that “the Authority,” not “the agency,”
decides “whether to investigate a covered entity,”
“whether to subpoena the entity’s records or search its
premises,” “whether to sanction it,” and “whether to sue
the entity for an injunction or to enforce a sanction it
has imposed.” Id. at 21a. The court noted the argument
that the FTC possesses sufficient control because it
“can review sanctions at the back end” and can adopt
rules “to rein in the Authority’s enforcement actions.”
Id. at 22a, 25a. The court rejected that potential defense of the Act’s enforcement provisions, however, concluding that the Authority can still exercise substantial
enforcement powers “without any supervision by the
FTC.” Id. at 23a. The court accordingly declared that
the Act’s “enforcement provisions are facially unconstitutional.” Id. at 4a.
The court of appeals denied petitions for rehearing
filed by the Authority and the government. See App.,
infra, 108a-110a. The Authority applied to this Court
for a stay of the court of appeals’ mandate. See Stay
Appl., Horseracing Integrity & Safety Authority, Inc.
v. National Horsemen’s Benevolent & Protective Ass’n,
No. 24A287 (filed Sept. 19, 2024).
REASONS FOR GRANTING THE PETITION
In the decision below, the Fifth Circuit held that the
Horseracing Act’s enforcement provisions are unconstitutional on their face. That decision is incorrect. The
Fifth Circuit misapplied the private nondelegation doc-
7
trine, contravened this Court’s precedents limiting facial challenges, and misconstrued the scope of the
FTC’s statutory power to oversee the Authority.
The Fifth Circuit’s decision warrants this Court’s review. It holds an Act of Congress unconstitutional on
its face, conflicts with decisions of the Sixth and Eighth
Circuits rejecting facial challenges to the same statutory provisions, and produces harmful practical consequences. This Court should grant certiorari and reverse.
A. The Fifth Circuit’s Decision Is Incorrect
The Act’s enforcement provisions comply with the
private nondelegation doctrine. At a minimum, the provisions do not violate the Constitution on their face. The
court of appeals’ stated bases for its contrary conclusion
lack merit.
1. In Carter v. Carter Coal Co., 298 U.S. 238 (1936),
this Court explained that the Constitution prohibits the
federal government from vesting a private entity with
unchecked governmental power. The statute at issue in
that case allowed producers of two-thirds of the coal in
a particular district to set wages and hours for all producers in that district, without review by any federal
agency. See id. at 281-283. The Court held that the
statute violated the Constitution by delegating to “private persons” the unchecked “power to regulate the affairs of an unwilling minority.” Id. at 311.
In Sunshine Anthracite Coal Co. v. Adkins, 310 U.S.
381 (1940), however, this Court clarified that the federal
government may rely on private entities to assist it in
the performance of its functions. The statute at issue in
that case authorized local boards consisting of private
coal producers to propose minimum prices for coal, but
empowered the National Bituminous Coal Commission
8
(a governmental body) to approve, disapprove, or modify those prices. See id. at 388. The Court upheld the
scheme because the private boards “function[ed] subordinately” to a federal agency. Id. at 399. The Court
emphasized that the agency, not the boards, ultimately
“determine[d] the prices” and that the agency “ha[d]
authority and surveillance over the [private boards’] activities.” Ibid.
The Horseracing Authority’s role in the enforcement
of the Act satisfies those standards. The Authority
“function[s] subordinately” to the FTC and is subject to
the FTC’s “authority and surveillance.” Sunshine Anthracite, 310 U.S. at 399.
On the front end, the Commission can control the Authority’s enforcement activities through the exercise of
the FTC’s rulemaking power. The Act requires the Authority to propose rules concerning “investigatory powers,” “issuance and enforcement of subpoenas,” “access
to offices, racetrack facilities, other places of business,
books, records, and personal property,” “procedures for
disciplinary hearings,” and “civil sanctions for violations.” 15 U.S.C. 3053(a)(9) and (10), 3054(c)(1)(A). Those
rules take effect only if the FTC approves them. See 15
U.S.C. 3053(b)(2), 3054(c)(2). The Commission may
“abrogate, add to, and modify” those rules, just as it
may abrogate, add to, and modify the substantive rules
that govern the conduct of regulated parties. 15 U.S.C.
3053(e); see 15 U.S.C. 3054(c)(2).
On the back end, the FTC may review any sanctions
that the Authority imposes upon regulated parties. The
Commission or an aggrieved party may ask an FTC
ALJ to conduct de novo review of any such sanction.
See 15 U.S.C. 3058(b)(1). The Commission itself may
then review the ALJ’s decision de novo and may take
9
additional evidence as needed. See 15 U.S.C. 3058(c)(1)
and (3). The Act also empowers the ALJ or the Commission to stay a sanction pending review. See 15 U.S.C.
3058(d).
Longstanding practice confirms the statute’s constitutionality. Since 1938, Congress has authorized selfregulatory organizations in the securities industry to
discipline their members subject to oversight by the
SEC. See Maloney Act, ch. 677, § 1, 52 Stat. 1070. Like
the scheme at issue here, the securities laws empower
the SEC to review self-regulatory organizations’ disciplinary decisions. See 15 U.S.C. 78s(e). Multiple courts
of appeals have rejected private nondelegation challenges
to those organizations’ role in implementing the securities laws, citing the SEC’s power to supervise the organizations’ activities. See R.H. Johnson & Co. v. SEC,
198 F.2d 690, 695 (2d Cir.), cert. denied, 344 U.S. 855
(1952); First Jersey Securities, Inc. v. Bergen, 605 F.2d
690, 697 (3d Cir. 1979), cert. denied, 444 U.S. 1074
(1980); Sorrell v. SEC, 679 F.2d 1323, 1325-1326 (9th
Cir. 1982).
2. At a minimum, the court of appeals erred in holding that the Horseracing Act’s enforcement provisions
violate the private nondelegation doctrine on their face.
“For a host of good reasons, courts usually handle constitutional claims case by case, not en masse.” Moody
v. NetChoice, LLC, 144 S. Ct. 2383, 2397 (2024). “ ‘Claims
of facial invalidity often rest on speculation’ about the
law’s coverage and its future enforcement.” Ibid. (citation omitted). “And ‘facial challenges threaten to short
circuit the democratic process’ by preventing duly enacted laws from being implemented in constitutional
ways.” Ibid. (citation omitted).
10
“This Court has therefore made facial challenges
hard to win.” NetChoice, 144 S. Ct. at 2397. Indeed, a
facial challenge to a federal statute is the “most difficult
challenge to mount successfully.” United States v.
Rahimi, 144 S. Ct. 1889, 1898 (2024) (citation omitted).
The challenger must “establish that no set of circumstances exists under which the Act would be valid.”
Ibid. (citation omitted). If the Act complies with the
Constitution in even “some of its applications,” the facial challenge fails. Ibid.
In this case, the court of appeals made no meaningful effort to rebut the government’s argument that the
Act’s enforcement provisions have at least “some” valid
applications. Rahimi, 144 S. Ct. at 1898. The Authority
provides (24A287 Stay Appl. at 16) a simple example:
The Authority could seek to enforce its crop rule (which
limits how often a jockey may strike a horse with a riding crop during a horse race) by reviewing a video of the
race, and the Commission or an ALJ could then review
the Authority’s decision de novo by rewatching the
same video. In that scenario, the Authority would not
exercise any independent power. In practical effect, the
Authority would simply provide a recommendation that
the ALJ and the FTC could accept or reject. A private
entity’s provision of such a recommendation does not
raise any constitutional concerns.
3. The court of appeals nonetheless concluded that
the Act is facially invalid under the private nondelegation doctrine. See App., infra, 4a. The court’s stated
reasons for that conclusion lack merit.
First, the court of appeals distinguished the Act from
the securities-law self-regulatory scheme on the ground
that the SEC retains independent power to investigate
violations of the laws that agency administers. See
11
App., infra, 31a. But the FTC likewise retains independent power to investigate violations of the Horseracing
Act. The Act directs “the Commission” to “implement
and enforce” the Act’s provisions, 15 U.S.C. 3054(a)(1).
The Act also requires covered persons to “cooperate
with the Commission” “during any civil investigation”
and to “respond truthfully” “if questioned by the Commission.” 15 U.S.C. 3054(d)(3).
Second, the court of appeals denied that the FTC
could make rules to control the Authority’s investigative activities, stating that such an interpretation of the
Act “would rewrite the enforcement scheme Congress
enacted.” App., infra, 29a. But under the enforcement
scheme that Congress enacted, the Commission may
approve, add to, abrogate, or modify rules governing
matters such as “investigatory powers” and “procedures for disciplinary hearings.” 15 U.S.C. 3053(a)(10),
3054(c)(1)(A)(iii). To the extent the statute contains any
ambiguity on that point, the principle of constitutional
avoidance requires courts to resolve that ambiguity in a
way that saves the statute from constitutional attack.
See, e.g., United States v. Hansen, 599 U.S. 762, 781
(2023).
Third, the court of appeals described the Act as “facially permit[ting]” the Authority to engage in a broad
range of investigative activities. App., infra, 23a n.12.
For example, the court credited contested allegations
that, in one case, the Authority’s investigators had subjected an individual to “a coercive interrogation.” Ibid.
(citation omitted). Treating such allegations as a
ground for facial invalidation conflicts with this Court’s
precedents. A court reviewing a facial challenge should
focus on the circumstances in which the challenged statute is “most likely to be constitutional,” not those in
12
which the statute “might raise constitutional concerns.”
Rahimi, 144 S. Ct. at 1903.
Finally, the court of appeals emphasized that the Act
permits the Authority to “issue subpoenas” and “seek
injunctions.” App., infra, 3a. But the Authority has explained (24A287 Stay Appl. at 17) that it has never issued a subpoena or sought an injunction. Any constitutional challenge to the Authority’s ability to undertake
those enforcement measures is, at a minimum, premature. The “delicate power of pronouncing an Act of Congress unconstitutional is not to be exercised with reference to hypothetical cases.” United States v. Raines,
362 U.S. 17, 22 (1960).
B. The Question Presented Warrants This Court’s Review
The Fifth Circuit’s decision warrants this Court’s review because it conflicts with the decisions of two other
courts of appeals. Before the Fifth Circuit issued the
decision below, the Sixth Circuit rejected a facial challenge to the Act’s enforcement provisions. See Oklahoma v. United States, 62 F.4th 221 (2023), cert. denied,
144 S. Ct. 2679 (2024). The Sixth Circuit explained that
the “FTC’s rulemaking and rule revision power gives it
‘pervasive’ oversight and control of the Authority’s enforcement activities.” Id. at 231 (citation omitted). The
court also observed that “the FTC has full authority to
review the Horseracing Authority’s enforcement actions.” Ibid. The court determined that the Commission’s oversight powers “suffice[d] to defeat a facial challenge,” leaving further issues to be resolved as needed
in “as-applied challenge[s]” to “individual enforcement
action[s].” Id. at 231, 233.
After the Fifth Circuit issued the decision below, the
Eighth Circuit similarly rejected a facial challenge to
the Act’s enforcement provisions. See Walmsley v. FTC,
13
No. 23-2687, 2024 WL 4248221 (Sept. 20, 2024), petition
for cert. pending, No. 24-420 (filed Oct. 10, 2024). In
affirming the district court’s denial of a preliminary injunction in that case, the court stated that, “[b]ecause
the Commission has broad power to subordinate the Authority’s enforcement activities, the statute is not unconstitutional in all of its applications.” Id. at *4.
The Fifth and Eighth Circuits have acknowledged
the circuit conflict. In the decision below, the Fifth Circuit stated that it was “part[ing] ways with” the Sixth
Circuit, App., infra, 4a, and expressly rejected the arguments that had “persuaded the Sixth Circuit,” id. at
25a. In Walmsley, the Eighth Circuit similarly recognized that the Fifth and Sixth Circuits had “reached differing conclusions,” but “agree[d] with the Sixth Circuit
that the statute is not unconstitutional on its face.” 2024
WL 4248221, at *4.
Even apart from the circuit conflict, the decision below warrants further review because it invalidates a
federal statute. Judging the constitutionality of an Act
of Congress is “the gravest and most delicate duty” that
courts are called on to perform. Blodgett v. Holden, 275
U.S. 142, 148 (1927) (opinion of Holmes, J.). “[W]hen a
lower court has invalidated a federal statute,” this
Court’s “usual” approach is to grant review, even in the
absence of a circuit conflict. Iancu v. Brunetti, 588 U.S.
388, 392 (2019); see, e.g., Haaland v. Brackeen, 599 U.S.
255, 272 (2023); Torres v. Texas Department of Public
Safety, 597 U.S. 580, 586 (2022); United States v. Vaello
Madero, 596 U.S. 159, 164 (2022). This Court should
follow its usual approach here.
The practical significance of the question presented
underscores the need for this Court’s review. Congress
adopted the Act in response to a series of scandals and
14
accidents in the horseracing industry. See H.R. Rep.
No. 554, 116th Cong., 2d Sess. 17 (2020). In 2019, for
example, 441 thoroughbred horses in the United States
suffered fatal injuries—a fatality rate between two and
a half and five times greater than the rates in Europe
and Asia. See ibid. The decision below thwarts Congress’s efforts to protect the horseracing industry from
those problems.
C. The Court Should Grant Both This Petition And The
Authority’s Petition For A Writ Of Certiorari
The Authority has filed its own petition for a writ of
certiorari seeking review of the decision below. See Pet.
at i, Horseracing Integrity & Safety Authority, Inc. v.
National Horsemen’s Benevolent & Protective Ass’n
(filed Oct. 15, 2024). The Court should grant both this
petition and the Authority’s petition and should consolidate the cases.
Two other cases that are pending before this Court
overlap with this case. First, before the Fifth Circuit
issued the decision below, this Court denied a petition
for a writ of certiorari in Oklahoma, the case in which
the Sixth Circuit rejected a facial challenge to the Act’s
enforcement provisions. See Oklahoma v. United
States, 144 S. Ct. 2679 (2024) (No. 23-402). After the
Fifth Circuit issued its decision, the plaintiffs in that
case filed a petition for rehearing asking the Court to
reconsider the denial of certiorari. See Pet. for Reh’g,
Oklahoma, supra (No. 23-402). Second, the challengers
in Walmsley, the case from the Eighth Circuit, have
filed their own petition for a writ of certiorari. See Pet.
at i, Walmsley, supra (No. 24-420).
The petitions filed by the Authority and the government in this case provide better vehicles for resolving
the question presented than do the petitions in Okla-
15
homa and Walmsley. Granting certiorari in this case
would enable the Court to directly review the reasoning
of the only court of appeals that has held the Act facially
unconstitutional. The Oklahoma and Walmsley petitions, moreover, raise additional issues apart from the
facial validity of the Act’s enforcement provisions—
issues on which there is no circuit conflict and which do
not warrant the Court’s review at this time. See Gov’t
Br. in Opp. at 7-16, Oklahoma, supra (No. 23-402).
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted.
ANISHA DASGUPTA
General Counsel
BENJAMIN F. AIKEN
Counsel
Federal Trade Commission
OCTOBER 2024
ELIZABETH B. PRELOGAR
Solicitor General
BRIAN M. BOYNTON
Principal Deputy Assistant
Attorney General
MALCOLM L. STEWART
Deputy Solicitor General
VIVEK SURI
Assistant to the Solicitor
General
MARK B. STERN
COURTNEY L. DIXON
CAROLINE W. TAN
Attorneys
APPENDIX
TABLE OF CONTENTS
Page
Appendix A
Appendix B
Appendix C
— Court of appeals opinion
(July 5, 2024) ........................................... 1a
— District court memorandum opinion
and order (May 4, 2023)........................ 46a
— Court of appeals order denying
rehearing (Sept. 29, 2024)................... 108a
(I)
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 23-10520
NATIONAL HORSEMEN’S BENEVOLENT AND
PROTECTIVE ASSOCIATION; ARIZONA HORSEMEN’S
BENEVOLENT AND PROTECTIVE ASSOCIATION;
ARKANSAS HORSEMEN’S BENEVOLENT AND
PROTECTIVE ASSOCIATION; INDIANA HORSEMEN’S
BENEVOLENT AND PROTECTIVE ASSOCIATION;
ILLINOIS HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; LOUISIANA HORSEMEN’S BENEVOLENT
AND PROTECTIVE ASSOCIATION; MOUNTAINEER PARK
HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; NEBRASKA HORSEMEN’S BENEVOLENT
AND PROTECTIVE ASSOCIATION; OKLAHOMA
HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; OREGON HORSEMEN’S BENEVOLENT AND
PROTECTIVE ASSOCIATION; PENNSYLVANIA
HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; WASHINGTON HORSEMEN’S
BENEVOLENT AND PROTECTIVE ASSOCIATION; TAMPA
BAY HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; GULF COAST RACING, L.L.C.; LRP
GROUP, LIMITED; VALLE DE LOS TESOROS, LIMITED;
GLOBAL GAMING LSP, L.L.C.; TEXAS HORSEMEN’S
PARTNERSHIP, L.L.P., PLAINTIFFS-APPELLANTS
STATE OF TEXAS; TEXAS RACING COMMISSION,
INTERVENOR PLAINTIFFS-APPELLANTS
v.
JERRY BLACK; KATRINA ADAMS; LEONARD COLEMAN;
MD NANCY COX; JOSEPH DUNFORD; FRANK KEATING;
KENNETH SCHANZER; HORSERACING INTEGRITY AND
SAFETY AUTHORITY, INCORPORATED; FEDERAL TRADE
COMMISSION; COMMISSIONER NOAH PHILLIPS;
(1a)
2a
COMMISSIONER CHRISTINA WILSON; LISA LAZARUS;
STEVE BESHEAR; ADOLPHO BIRCH; ELLEN MCCLAIN;
CHARLES SCHEELER; JOSEPH DEFRANCIS; SUSAN
STOVER; BILL THOMASON; LINA KHAN, CHAIR;
REBECCA SLAUGHTER, COMMISSIONER; ALVARO
BEDOYA, COMMISSIONER; D.G. VAN CLIEF,
DEFENDANTS-APPELLEES
Filed:
July 5, 2025
Appeal from the United States District Court
for the Northern District of Texas
USDC Nos. 5:21-CV-71, 5:23-CV-77
Before KING, DUNCAN, and ENGELHARDT, Circuit
Judges.
STUART KYLE DUNCAN, Circuit Judge:
We again consider constitutional challenges to the
Horseracing Integrity and Safety Act of 2020 (“HISA”).
In HISA, Congress empowered a private corporation—
the Horseracing Integrity and Safety Authority (“Authority”)—to create and enforce nationwide rules for
thoroughbred horseracing. Last time, we held HISA
facially unconstitutional under the private nondelegation doctrine because the Authority’s rulemaking was
not subordinate to the Federal Trade Commission
(“FTC”). See Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black (Horsemen’s I), 53 F.4th 869 (5th Cir.
2022). At the time, we did not consider a separate nondelegation challenge to the Authority’s enforcement
power. Congress responded to our decision by amend-
3a
ing HISA, giving the FTC power to abrogate, add to, or
modify the Authority’s rules.
On remand, the district court held the amendment
cured HISA’s constitutional deficiencies because the
FTC now has general rulemaking power over the Authority’s activities. It also rejected claims raised by a
new plaintiff, Gulf Coast Racing LLC (“Gulf Coast”),
that HISA violates the Constitution’s Appointments
Clause because the Authority wields significant governmental authority. The plaintiffs all appealed, arguing
HISA is still constitutionally deficient under the private
nondelegation doctrine, the Due Process Clause, the Appointments Clause, and the Tenth Amendment.
We agree with nearly all of the district court’s wellcrafted opinion. Specifically, we agree that the FTC’s
new rulemaking oversight means the agency is no longer
bound by the Authority’s policy choices.
In other
words, the amendment solved the nondelegation problem with the Authority’s rulemaking power. We also
agree that HISA does not violate the Due Process
Clause by putting financially interested private individuals in charge of competitors. Further, we agree that,
under current Supreme Court precedent, see Lebron v.
Nat’l R.R. Passenger Corp., 513 U.S. 374 (1995), the Authority does not qualify as a government entity subject
to the Appointments Clause. Finally, we agree that
plaintiff Gulf Coast lacks standing to bring its Tenth
Amendment challenge.
We disagree with the district court in one important
respect, however: HISA’s enforcement provisions violate the private nondelegation doctrine. The statute
empowers the Authority to investigate, issue subpoenas,
conduct searches, levy fines, and seek injunctions—all
4a
without the FTC’s say-so. That is forbidden by the
Constitution. We therefore DECLARE that HISA’s
enforcement provisions are facially unconstitutional on
that ground. In doing so, we part ways with our esteemed colleagues on the Sixth Circuit. See Oklahoma
v. United States, 62 F.4th 221 (6th Cir. 2023) (rejecting
nondelegation challenge to HISA’s enforcement provisions).
Accordingly, the district court’s judgment is AFFIRMED in part and REVERSED in part.
I.
A.
BACKGROUND
HISA Framework
In 2020, HISA created a framework for enacting and
enforcing nationwide rules governing doping, medication control, and racetrack safety in the thoroughbred
horseracing industry. See 15 U.S.C. § 3054(a). See
generally Horsemen’s I, 53 F.4th at 873-75. To “develop[] and implement[]” these rules, HISA empowers a
“private, independent, self-regulatory, nonprofit corporation, to be known as the ‘Horseracing Integrity and
Safety Authority,’ ” subject to the “oversight” of the
FTC. §§ 3052(a), 3053.
Under HISA, the Authority writes all the rules—that
is, rules fleshing out the substantive areas covered by
HISA, as well as rules governing investigation, adjudication, and sanctions.1 The Authority submits proposed
See § 3057(a)(1), (c)(1) (power to establish substantive rules governing medication controls); § 3056(a)(1) (power to establish racetrack safety rules); §§ 3054(c), 3057(c) (power to “develop uniform
procedures and rules” governing investigations and adjudications
that afford due process); § 3057(d) (power to establish civil sanctions);
§§ 3054(c), 3054(c), (h) (investigatory and subpoena powers).
1
5a
rules to the FTC, which publishes them for public comment. § 3053(b)(1), (c)(1). Rules take effect only after
FTC approval, which must occur within 60 days of publication. The FTC “shall approve” a proposed rule if it
finds the rule “consistent” with the Act and with “applicable rules approved by the [FTC].” § 3053(c)(2). Originally, this “consistency review” did not allow the FTC
to reject a proposed rule based on its disagreement with
the Authority’s policy choices. Horsemen’s I, 53 F.4th
at 884-87. In Horsemen’s I, we held that this arrangement violated the private nondelegation doctrine by
making a private entity superior to a government
agency. Ibid. In response, Congress amended HISA
to give the FTC power to “abrogate, add to, and modify”
the Authority’s rules. § 3053(e).
The Authority also has the power to enforce HISA.
It does so by (1) exercising “subpoena and investigatory
authority,” § 3054(h); (2) imposing civil sanctions,
§§ 3054(i), 3057; and (3) filing civil actions seeking injunctions or enforcement of sanctions, § 3054( j). The
actual work of enforcing HISA involves a further delegation to other entities, however. For instance, HISA
directs the Authority to contract enforcement of doping
and medication rules to a private non-profit, the U.S.
Anti-Doping Agency (“USADA”), or other comparable
entity. § 3054(e)(1)(A), (B). 2 USADA then acts as “the
independent
. . .
enforcement organization” for
those rules, “implement[s]” HISA’s anti-doping programs, and exercises related powers “including indeSee Frequently Asked Questions, USADA, https://www.USADA.
org/resources/faq (last visited June 13, 2024) (“USADA is an independent, non-profit organization. It is not a branch or office of the
federal government.”).
2
6a
pendent investigations, charging and adjudication of
potential medication control rule violations, and the
enforcement of any civil sanctions for such violations.”
§ 3054(e)(1)(E)(i), (iii), (iv); § 3055(c)(4)(B). 3 USADA’s
decisions on such matters “shall be the final decision or
civil sanction of the Authority,” subject to de novo review by an administrative law judge (“ALJ”) and the
FTC. § 3055(c)(4)(B); § 3058.
B.
Procedural History
Horsemen’s I concluded that HISA’s delegation of
rulemaking power was facially unconstitutional. HISA
delegated rulemaking power to a private organization
(the Authority) whose policy choices could not be second-guessed by the agency (FTC). The Authority’s
rulemaking powers were therefore not subordinate to
the FTC, meaning HISA facially violated the private
nondelegation doctrine. Horsemen’s I, 53 F.4th at 872.
We did not consider the plaintiffs’ distinct nondelegation
challenges to the Authority’s investigative and enforcement powers nor their due process claims. Id. at 890
n.37. Finally, as noted, Congress responded to Horsemen’s I by empowering the FTC to “abrogate, add to,
and modify” the Authority’s rules. § 3053(e).
On remand, the National Horsemen’s Association
(“Horsemen”) and Texas continued to press their private nondelegation claims, arguing Congress’s amendment did not actually subordinate Authority rulemaking
to the FTC. They also continued to press their nonSimilarly, the Authority may contract out enforcement of the
racetrack safety program to “State racing commissions” or “other
State regulatory agencies.” § 3054(e)(2), (3); see also § 3056 (discussing racetrack safety program).
3
7a
delegation challenge to the Authority’s enforcement
powers (as well as their due process claims). In addition, a new plaintiff, Gulf Coast Racing (“Gulf Coast”),
raised separate challenges to HISA in a different division of the same district. See Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black (Black), 672 F. Supp.
3d 220, 224 (N.D. Tex. 2023). Gulf Coast claimed (1)
HISA’s directors qualify as “officers of the United
States” and are therefore subject to Article II’s appointment and removal requirements; and (2) HISA commandeers Texas in violation of the Tenth Amendment.
Gulf Coast’s suit was consolidated with the remanded
Horsemen’s I case. Id. at 230-31. Following a one-day
bench trial, the district court rejected all the plaintiffs’
claims.
As to private nondelegation, the district court followed the Sixth Circuit’s decision in Oklahoma, 62 F.4th
221. That court reasoned that Congress’s amendment
empowering the FTC to “abrogate, add to, and modify”
proposed rules “cured the constitutional issues identified by [Horsemen’s I]” by making the Authority’s rulemaking power “subordinate” to the FTC. Black, 672
F. Supp. 3d at 241, 243 (citing Oklahoma, 62 F.4th at
230, 232). As to the separate challenge to the Authority’s enforcement powers, the district court largely relied on its previous order rejecting the claim because
those powers “comport with due process.” See id. at
248. The court also relied on the fact that the FTC
could review civil sanctions and control enforcement
through rulemaking. Id. at 248-49; see also Oklahoma,
62 F.4th at 231. Finally, the court rejected the due
process claims because the Horsemen failed to show the
Authority’s directors have financial interests in regulating competitors. Black, 672 F. Supp. 3d at 252.
8a
As to Gulf Coast’s claims, the district court concluded
that our Horsemen’s I decision required it to reject them.
Specifically, the court reasoned that Horsemen’s I necessarily decided the Authority was a private entity, and
so its directors were not subject to the Appointments
Clause. Id. at 234-37. Alternatively, the court reasoned
that the Authority is private because “it is not government created, and its directors are not government appointed.” Id. at 234 (citing Lebron, 513 U.S. 374). Finally, the court rejected the Tenth Amendment commandeering argument for lack of standing. Id. at 250.
Accordingly, the district court entered final judgment dismissing all claims. The Horsemen, Texas, and
Gulf Coast timely appealed.
II.
STANDARD OF REVIEW
We review the district court’s legal conclusions following a bench trial de novo. Deloach Marine Servs.,
L.L.C. v. Marquette Transp. Co., 974 F.3d 601, 606 (5th
Cir. 2020). To prevail on their facial challenge, the
plaintiffs “must show that no set of circumstances exists
under which [HISA] would be valid.” Horsemen’s I, 53
F.4th at 878 (cleaned up) (citations omitted).
III.
DISCUSSION
The various plaintiffs raise these issues on appeal:
(A) Did Congress’s amendment to HISA cure the
private nondelegation problem with the Authority’s
rulemaking powers?
(B) Do the Authority’s enforcement powers separately violate the private nondelegation doctrine?
9a
(C) Does HISA violate due process by permitting
self-interested industry participants to regulate their
competitors?
(D) Are the Authority’s directors subject to the Appointments Clause?
(E) Does HISA violate the Tenth Amendment’s
anti-commandeering rule by forcing States to administer a federal program?
We consider each issue in turn.
A.
Private Nondelegation Challenge to Authority’s
Rulemaking.
We previously discussed the origins of the private
nondelegation doctrine in Horsemen’s I. See id. at 88081. In essence, the doctrine teaches that “a private entity may wield government power only if it ‘functions
subordinately’ to an agency with ‘authority and surveillance’ over it.” Id. at 881 & n.21 (citing Texas v. Rettig,
987 F.3d 518, 532 (5th Cir. 2021)); Pittston Co. v. United
States, 368 F.3d 385, 394 (4th Cir. 2004); United States
v. Frame, 885 F.2d 1119, 1128 (3d Cir. 1989)). 4 Or, as
our sister circuit has explained: “Congress may formalize the role of private parties in proposing regulations so long as that role is merely as an aid to a government agency that retains the discretion to approve, disapprove, or modify them.” Ass’n of Am. R.R.s v. U.S.
Dep’t of Transp. (Amtrak I), 721 F.3d 666, 671 (D.C. Cir.
2013) (cleaned up) (quoting Adkins, 310 U.S. at 388), vaSee also generally A.L.A. Schechter Poultry Corp. v. United
States, 295 U.S. 495, 537 (1935); Carter v. Carter Coal Co., 298 U.S.
238, 311 (1936); Currin v. Wallace, 306 U.S. 1, 15-16 (1939); Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 399 (1940).
4
10a
cated and remanded on other grounds, U.S. Dep’t of
Transp. v. Ass’n of Am. R.R.s (Amtrak II), 575 U.S. 43
(2015).
In Horsemen’s I, we ruled the Authority’s rulemaking power was an unconstitutional private delegation.
Our analysis focused on the fact that the Authority’s
proposed rules were subject only to the FTC’s limited
“consistency review,” which did not permit the agency
to second-guess the Authority’s policy choices. See
Horsemen’s I, 53 F.4th at 882-87. In response, Congress amended HISA to provide that:
[the FTC], 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). This new provision was borrowed
from the Maloney Act, which allocates authority between the SEC and private, self-regulatory organizations (such as the Financial Industry Regulatory Authority (“FINRA”)). See Oklahoma, 62 F.4th at 231-32.
Although HISA was originally modeled on the Maloney
Act, it lacked this provision until the recent amendment.
See Consolidated Appropriations Act, 2023, Pub. L. 117328, div. O, tit. VII, § 701, 136 Stat. 4459, 5231-32. As
noted, the district court followed the Sixth Circuit in ruling that the amendment cured the nondelegation problem with the Authority’s rulemaking power.
See
11a
Black, 672 F. Supp. 3d at 241 (citing Oklahoma, 62 F.4th
at 230, 232).
We agree with the district court and the Sixth Circuit
that the amendment cured the nondelegation defect
identified in Horsemen’s I. That defect lay in the
agency’s being at the mercy of the Authority’s policy
choices. See Horsemen’s I, 53 F.4th at 872 (“[T]he
FTC concedes it cannot review the Authority’s policy
choices.”). For instance, when the Authority issued
rules on the kinds of horseshoes permitted during races,
the FTC told objecting commenters it lacked the power
to question the Authority’s views. See id. at 885 (discussing Order Approving the Enforcement Rule Proposed by the Horseracing Integrity and Safety Authority, 26, FED. TRADE COMM’N (Mar. 25, 2022)). The
amendment has corrected that imbalance. Now, the
FTC may “abrogate, add to, and modify” the Authority’s
rules. § 3053(e). So, unlike before, if the FTC now disagrees with the policies reflected in the Authority’s
rules, it may change them. See Oklahoma, 62 F.4th at
230 (noting recent rule explaining that FTC’s “new
‘rulemaking power’ allows it to ‘exercise its own policy
choices’ ” (quoting Order Ratifying Previous Commission Orders 3, FED. TRADE COMM’N (Jan. 3, 2023))).
As the Sixth Circuit correctly observed, “§ 3053(e)’s
amended text gives the FTC ultimate discretion over
the content of the rules,” which “makes the FTC the primary rule-maker, and leaves the Authority as the secondary, the inferior, the subordinate one.” Ibid. (citing
Adkins, 310 U.S. at 388).
Appellants’ arguments to the contrary do not persuade us.
12a
First, the Horsemen argue the Authority remains superior because it continues to write the rules in the first
place and the agency must approve them if they hurdle
the low bar of consistency review. We disagree. The
problem was never that the private entity proposed the
rules; the problem was that the agency lacked power to
second-guess them once they were proposed.
See
Horsemen’s I, 53 F.4th at 884 (“The FTC’s oversight is
too limited to ensure the Authority functions subordinately to the agency.” (cleaned up) (quoting Adkins, 310
U.S. at 399)). Now the FTC has been given that power:
it can “abrogate” or “modify” Authority rules it disagrees with. § 3053(e). And that new power gives consistency review new bite. Previously, consistency review “exclude[d] . . . the Authority’s policy choices
in formulating rules.” Id. at 885. Now it implicitly includes review of those choices. The FTC must approve
only those rules “consistent with . . . applicable
rules approved by the [FTC],” and, thanks to the
amendment, it is the FTC that has final word over what
those rules are. § 3053(c)(2); see also Oklahoma, 62
F.4th at 231 (explaining that “the FTC’s later authority
to modify any rules for any reason at all, including policy disagreements, ensures that the FTC retains ultimate[] authority over the implementation of the
Horseracing Act”). 5
Texas contends § 3053(e) does not solve the nondelegation problem because it gives the FTC only limited rulemaking authority—
i.e., “to ensure the fair administration of the Authority.” Because
the FTC lacks plenary rulemaking authority, Texas argues, the Authority still effectively calls the shots. We disagree. Section
3053(e) empowers the FTC to engage in rulemaking, not only for
specified purposes, but also “otherwise in furtherance of the purposes of [HISA].” This language, borrowed from the Maloney Act,
5
13a
Next, the Horsemen argue the FTC’s new review
power creates a timing problem. Because the FTC may
alter only rules “promulgated” by the Authority, § 3053(e),
regulated entities may end up being subject to the Authority’s rules until the FTC can intervene and fix them.
We disagree. The FTC has 60 days to approve or disapprove a proposed rule. § 3053(c)(1). If the FTC is
concerned about a proposed rule going into effect, then
it can intervene and create safeguards to prevent that
from happening. See § 3053(a) (requiring Authority to
submit proposed rules to FTC “in accordance with such
rules as the [FTC] may prescribe”). For instance, the
agency could adopt a rule postponing the effective date
of a newly enacted rule. See Oklahoma, 62 F.4th at 232
(suggesting this). Or the agency could engage in emergency rulemaking to delay the effective date of a rule.
In any event, these are hypothetical problems that, if
they arise, can be addressed in as-applied challenges.
See Hersh v. United States ex rel. Mukasey, 553 F.3d
743, 762 (5th Cir. 2008) (holding that “as-applied challenges are preferred”). This is a facial challenge, however, and we cannot say that a potential timing gap in
FTC’s § 3053(e) review makes HISA unconstitutional in
all its applications. See United States v. Salerno, 481
U.S.739,745(1987) (holding that a facial challenger
“must establish that no set of circumstances exists under which the Act would be valid”). 6
gives the agency “broad authority to oversee and to regulate the
rules adopted by the [Authority] . . . , including the power to
mandate the adoption of any rules it deems necessary.” Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220, 233-34 (1987).
6
The Horsemen also argue that the Authority can circumvent the
FTC by issuing unreviewable guidance documents, such as dear colleague letters. We disagree. The Authority admits such guidance
14a
Finally, the Horsemen point to the SEC’s supervisory authority over private self-regulatory organizations like FINRA. They argue that, notwithstanding
§ 3053(e), the FTC still has less sway over the Authority
than the SEC does over FINRA. We again disagree.
We previously pointed out that the “key distinction” between the FTC and the SEC was the FTC’s lack of general rulemaking power. See Horsemen’s I, 53 F.4th at
887–88. “The SEC itself,” we explained, “can make
changes to FINRA rules, but the FTC can only recommend changes to the Authority’s rules.” Id. at 888 (citation omitted). But Congress has now amended HISA
to give the FTC the same general rulemaking authority
that the SEC has with respect to FINRA. See Oklahoma, 62 F.4th at 225 (reaching this conclusion).
In sum, we agree with the district court and the Sixth
Circuit that, in light of Congress’s amendment to HISA
in § 3053(e), the Authority’s rulemaking power is subordinate to the FTC’s. Because the FTC has ultimate
say on what the rules are, the Authority’s power to propose horseracing rules does not violate the private nondelegation doctrine.
B.
Private Nondelegation Challenge to Authority’s Enforcement.
Appellants next argue that, apart from its rulemaking powers, the Authority’s enforcement powers violate
the private nondelegation doctrine. Recall that the
Authority enforces HISA by levying sanctions, which
are ultimately subject to FTC review, and by bringing
would not have the force of law and, even if it did, the FTC has authority to review guidance documents, § 3054(g)(2), and to promulgate a rule overruling guidance it disagrees with.
15a
lawsuits. The Authority also has power to investigate
potential violations, although the actual investigatory
work is contracted to other private organizations, such
as USADA in the case of doping rules, or to state racing
commissions in the case of racetrack safety rules. See
supra I.A. Our Horsemen’s I decision did not address
this challenge to the Authority’s enforcement powers,
see 53 F.4th at 890 n.37, and on remand the district court
treated it as a due process claim and rejected it. See
Black, 672 F. Supp. 3d at 248-49. Appellants now bring
the claim to us, arguing that the Authority’s enforcement power is not subordinate to FTC oversight.
1.
Before addressing the merits of this claim, we must
address the Authority’s argument that it is premature.
Arguing both in terms of standing and ripeness, the Authority contends that it has not yet tried to enforce
HISA against the Horsemen and that any challenge to
the Authority’s enforcement power can be raised if and
when it does. We disagree for several reasons.
First, the Authority misunderstands the Horsemen’s
claim. They do not challenge some particular enforcement action undertaken by the Authority—claiming, for
instance, that the Authority issued an overbroad subpoena for medical records or lacked probable cause to
search a racetrack. Instead, the Horsemen argue that
HISA, on its face, vests the Authority with enforcement
power that is effectively unreviewable by the agency.
When a regulated entity raises “a purely legal challenge” like this one, “it is unnecessary to wait for the
Regulation to be applied in order to determine its legality.” Contender Farms, L.L.P. v. U.S. Dep’t of Agric.,
779 F.3d 258, 267 (5th Cir. 2015) (cleaned up) (citations
16a
omitted); see also Nat’l Env’t Developmental Ass’n’s
Clean Air Project v. EPA, 752 F.3d 999, 1008 (D.C. Cir.
2014) (“Petitioner’s challenge in this case presents a
purely legal question . . . It is unnecessary to wait
for the [statute] to be applied in order to determine its
legality.”); Susan B. Anthony List v. Driehaus, 573 U.S.
149, 163 (2014) (“Nothing in this Court’s decisions requires a plaintiff who wishes to challenge the constitutionality of a law to confess that he will in fact violate
that law.”).
Second, the Horsemen have a cognizable injury for
standing purposes. Pursuant to HISA, they have already
had to agree “to be subject to and comply with [Authority’s] rules, standards, and procedures”—including
rules requiring they cooperate with investigations, consent to searches, and comply with subpoenas. See 15
U.S.C. § 3054(c)-(f ). In other words, the Horsemen are
themselves “objects of the Regulation,” and so “there is
ordinarily little question” that they have standing to
challenge it. Contender Farms, 779 F.3d at 264-65
(quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 561-62
(1992)). And courts typically do not require a regulated party to “bet the farm” by violating a regulation
before allowing it to test its validity. Free Enter. Fund
v. PCAOB, 561 U.S. 477, 490 (2010); see also, e.g., Metro.
Wash. Airports Auth. v. Citizens for Abatement of Aircraft Noise, Inc., 501 U.S. 252, 265 n.13 (1991) (explaining that a separation-of-powers challenge to a board’s
veto powers was “ripe even if the veto power ha[d] not
been exercised to respondents’ detriment”).
Finally, the record shows several instances in which
the Authority has enforced HISA against the Horsemen. For example, the Authority has threatened one
17a
of the Horsemen’s members with sanctions if it did not
repair a racetrack railing. Additionally, the Authority
has both threatened and actually barred member racetracks in Texas from broadcasting races out of state because they failed to register with the Authority. More
generally, the Horsemen represent some 30,000 members and, when the parties filed their briefs, the Authority’s website already listed hundreds of enforcement
actions—and that number has now grown to over 1,500. 7
So, at a minimum, the Horsemen have shown a credible
threat that the Authority will bring enforcement actions
against their members in the future. See Driehaus, 573
U.S. at 164.
In sum, the Horsemen have standing to challenge the
Authority’s enforcement powers and that challenge is
ripe. We proceed to the merits.
2.
The Horsemen’s (as well as Texas’s) basic contention
is that HISA grants the Authority enforcement power
that is effectively unreviewable by the FTC. That
claim turns on the same standard as the challenge to the
Authority’s rulemaking addressed in Horsemen’s I:
the delegation is constitutional if, when enforcing HISA,
the Authority “ ‘functions subordinately’ to an agency
with ‘authority and surveillance’ over it.” 53 F.4th at
881 (quoting Rettig, 987 F.3d at 532). In other words,
the Authority may constitutionally enforce HISA only if
it acts “as an aid” to the FTC, which “retains the discretion to approve, disapprove, or modify” the private enSee generally Rulings, HORSERACING INTEGRITY & SAFETY
AUTH., https://portal.hisausapps.org/public-rulings (last visited
June 12, 2024) (listing 1,772enforcement rulings).
7
18a
tity’s enforcement actions. Ibid. (cleaned up) (quoting
Amtrak I, 721 F.3d at 671).8
While the constitutional standard is the same, the nature of the delegated authority is different this time
around. Horsemen’s I addressed delegation of legislative authority—the power to make rules. See Myers v.
United States, 272 U.S. 52, 186 (1926) (“The essence of
the legislative authority is to . . . prescribe rules for
the regulation of the society[.]”). Logically, we focused
on which actor—government agency or private entity?
—had final say over the content of those rules. See
Horsemen’s I, 53 F.4th at 884-87 (analyzing FTC’s lack
of authority over the Authority’s policy choices). Today, by contrast, we address delegation of executive authority.
The power to launch an investigation, to
search for evidence, to sanction, to sue—these are all
quintessentially executive functions. 9 And they have
As explained in Horsemen’s I, the D.C. Circuit’s Amtrak I decision was vacated only because the Supreme Court found Amtrak
was a governmental, as opposed to private, entity. 53 F.4th at 881
n.22 (citing Amtrak II, 575 U.S. at 46, 50-55). The D.C. Circuit’s
private nondelegation analysis, however, remains sound and has
been approved by our court. See ibid. (explaining that Amtrak I
“expressed the [private nondelegation doctrine] more precisely”
than prior formulations).
9
See, e.g., Bowsher v. Synar, 478 U.S. 714, 733 (1986) (“Interpreting a law enacted by Congress to implement the legislative mandate
is the very essence of ‘execution’ of the law.”); Morrison v. Olson,
487 U.S. 654, 696 (1988) (reasoning “the power to initiate an investigation” is executive power that must be subject to the Attorney General’s “unreviewable discretion”); Buckley v. Valeo, 424 U.S. 1, 138,
140 (1976) (per curiam) (concluding the “discretionary power to seek
judicial relief ” and “conduct[] civil litigation in the courts of the
United States for vindicating public rights” are exercises of Article
II executive power); Seila L. LLC v. CFPB, 591 U.S. 197, 225 (2020)
8
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been considered so from our Nation’s founding. 10 As
much as legislative power, the private nondelegation
(holding the CFPB director unconstitutionally exercised “executive
power” to “set enforcement priorities, initiate prosecutions, and determine what penalties to impose on private parties”); id. at 219
(holding the “power to seek daunting monetary penalties against private parties . . . [is] a quintessentially executive power”); Free
Enter. Fund, 561 U.S. at 504 (holding the “power to start, stop, or
alter individual Board investigations” is part of the executive power);
Collins v. Yellen, 594 U.S. ---, 141 S. Ct. 1761, 1786 (2021) (holding
the power “to issue subpoenas” is an “executive power”); id. at 1806
(Sotomayor, J., concurring in part and dissenting in part) (noting
“the power to impose fines” is an “executive power”); id. at 1805 (Sotomayor, J. concurring in part and dissenting in part) (arguing the
FTC had significant executive power because it had “wide powers of
investigation” and “broad authority to issue complaints and ceaseand-desist orders” (quoting Humphrey’s Ex’r v. United States, 295
U.S. 602, 620-21 (1935))); United States v. Grubbs, 547 U.S. 90, 98
(2006) (describing a search as an “exercise of executive power”); California v. Acevedo, 500 U.S. 565, 586 (1991) (Stevens, J., dissenting)
(“The Fourth Amendment is a restraint on Executive power.”).
10
See generally Dina Mishra, An Executive-Power Non-Delegation Doctrine for the Private Administration of Federal Law, 68
VAND. L. REV. 1509, 1545 (2015) (discussing “[c]ertain types of
tasks that seem quintessentially executive,” including “the tasks of
law enforcement—that is, of forcing compliance with the law”); id.
at 1546 (“Ratification-era history further supports the understanding that law enforcement consists of forcing compliance or imposing sanctions on law violators” (citing THE FEDERALIST No. 21, at
134-35 (Alexander Hamilton) (Clinton Rossiter ed. 1961))); Aditya
Bamzai & Saikrishna B. Prakash, The Executive Power of Removal, 136 HARV. L. REV. 1756,1764 (2023) (“Law execution was
the executive power’s principal component.”); Saikrishna Prakash,
The Essential Meaning of Executive Power, 2003 U. ILL. L. REV.
701, 737 (2003) (“Executive officers investigate, apprehend, and
prosecute potential lawbreakers. As the wielder of the executive
power, the president is the chief of these law enforcement executives.”); Ilan Wurman, In Search of Prerogative, 70 DUKE L.J. 93,
20a
doctrine forbids unaccountable delegations of executive
power. See, e.g., Amtrak II, 575 U.S. at 62 (Alito, J.,
concurring) (“Private entities are not vested with ‘legislative powers.’ Art. I, § 1. Nor are they vested with
the ‘executive Power,’ Art. II, § 1, cl. 1, which belongs to
the President.”).
Accordingly, we must determine
whether HISA delegates enforcement power to private
entities and, if so, whether that power is subordinate to
the FTC.
HISA divides enforcement authority among the
FTC, the Authority, and USADA, “each within the scope
of their powers and responsibilities under this chapter.”
§ 3054(a). Recall that USADA is the private non-profit
to whom the Authority must delegate anti-doping and
medication enforcement. See § 3054(e)(1)(A).11 So, the
answer to the question before us turns on what “powers
and responsibilities” each of these three entities has under HISA. Although HISA somewhat confusingly disperses the relevant provisions throughout the Act, we
can discern the following division of labor.
First, the Authority has responsibility for (1) investigating potential violations, including by issuing subpoenas (§ 3054(h)); (2) levying sanctions (§§ 3054( j)(1), 3057,
3058(a)); and (3) bringing suit against violators for in146-47 (2020) (arguing that law enforcement and prosecution powers have been considered core executive functions since the Founding).
11
The Authority also “may enter into agreements” with State racing commissions to enforce the racetrack safety program. See
§ 3054(e)(2)(A)(i), (3); §3056(c). The Authority remains in charge,
however, and dictates the “scope of work, performance metrics, reporting obligations, budgets, and any other matter [it] considers
appropriate.” § 3054(e)(2)(B).
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junctive relief or to enforce sanctions (§ 3054( j)(1)-(2)).
Second, actual enforcement of doping and medication
rules is done by USADA, which “implements” those
rules “on behalf of the Authority.” § 3054(e)(1)(E)(i).
In this regard, USADA’s responsibilities include “independent investigations, charging and adjudication of
potential medication control rule violations, and the
enforcement of any civil sanctions for such violations.”
§ 3055(c)(4)(B); see also § 3054(e)(1)(E)(iv). Third, the
FTC may ask an ALJ to review any sanction de novo,
§ 3058(b)(1), and the FTC may itself review the ALJ’s
decision de novo, either on its own motion or upon petition by an aggrieved party. § 3058(c).
The Act’s plain terms permit only one conclusion:
HISA is enforced by a private entity, the Authority.
The Authority decides whether to investigate a covered
entity for violating HISA’s rules. The Authority decides whether to subpoena the entity’s records or search
its premises. The Authority decides whether to sanction it. And the Authority decides whether to sue the
entity for an injunction or to enforce a sanction it has
imposed. To be sure, the Authority does not perform
these functions itself. Rather, HISA requires the Authority to contract with another private entity, USADA,
which undertakes enforcement “on behalf of the Authority.” § 3054(e)(1)(E)(i). The bottom line, though, is that
a private entity, not the agency, is in charge of enforcing
HISA.
Consider also what HISA does not say. It does not
empower the FTC to decide whether to investigate a
covered entity, whether to subpoena its records, whether to search its premises, whether to charge it with a
violation, or whether to sanction or sue it. Nor does the
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Act empower the FTC to countermand any of the Authority’s investigatory or charging decisions (or, more
precisely, USADA’s decisions). Nor does it require the
Authority or USADA to seek the FTC’s approval before
investigating, searching, charging, sanctioning, or suing. All these actions are enforcement actions, and, by
the plain terms of the Act, they can be done by the private entities without the FTC’s involvement.
The inescapable conclusion is that the Authority does
not “function subordinately” to the FTC when enforcing
HISA. Horsemen’s I, 53 F.4th at 881. That is not permitted under the private nondelegation doctrine. A
private entity that can investigate potential violations,
issue subpoenas, conduct searches, levy fines, and seek
injunctions—all without the say-so of the agency—does
not operate under that agency’s “authority and surveillance.” Ibid. Put another way, with respect to enforcement, HISA’s plain terms show that the Authority
does not merely act “as an aid” to the FTC because the
FTC does not “retain[] the discretion to approve, disapprove, or modify” the Authority’s enforcement actions.
Ibid. (cleaned up) (quoting Amtrak I, 721 F.3d at 671).
3.
One might counter, though, that the FTC at least
partially supervises the Authority because it can review
sanctions at the back end, after ALJ review. See
§§ 3055(c)(4)(B), 3058(b)(3)-(c)(3). That is true, and it
is the Authority’s best argument for why its enforcement power is subordinate to the FTC.
The argument nonetheless fails. Suppose the Authority sanctions a horse owner for a doping violation,
but the sanction is later reversed by the FTC. Does
23a
that make the Authority’s enforcement power subordinate to the agency? No, it does not. Consider everything the Authority was permitted to do up to that point:
launch an investigation into the owner, subpoena his records, search his facilities, charge him with a violation,
adjudicate it, and fine him. 12 Each and every one of
those actions is “enforcement” of HISA. Each can occur under HISA without any supervision by the FTC.
Moreover, penalties imposed by the Authority are not
automatically stayed pending appeal. See 16 C.F.R.
§ 1.148(a). So, any penalty goes into effect as soon as
the Authority makes its decision, unless the ALJ or FTC
Not only does HISA facially permit that, but it has already happened. For example, in one currently active and undecided FTC
appeal, it is uncontested that three private Authority investigators
showed up at the appellant’s residence and served her with a notice
of an alleged doping violation (there is no personal service requirement under the statute). The investigators then “subjected [the
appellant] to a coercive interrogation in a small room” and searched
“her barn and . . . her mother’s car” for banned substances.
Statement of Contested Facts and Specification of Additional Evidence, In re Lynch, 9423 F.T.C. 1, 3-4 (Mar. 1, 2024). She was then
fined $55,000 and banned from racing for 48 months. Id. at 5-6.
Authority investigators have also searched defendants’ property and
extracted fines under HISA’s strict liability regime for possession of
banned substances. For example, one veterinarian forgot to clean
out his trailer and still had two buckets of a newly banned substance
two weeks after the effective date. Private Authority investigators
searched his trailer, found the buckets, fined him $5,000, and banned
him from practice for 14 months. The ALJ affirmed on appeal.
All this despite the fact that the Authority and the ALJ conceded
that the appellant purchased the substance long before it was banned,
forgot it was in his trailer, and did not even attempt to use it on a
horse. In re Perez, 9420 F.T.C. 1, 5-6 (Mar. 18, 2024); see also In re
Poole, 9417 F.T.C. 1, 5-6, 10 (Nov. 13, 2023) (affirming an $18,000
fine and banning him from practice for 22 months for a similar inadvertent possession of a newly banned substance).
12
24a
exercises its discretion to implement a stay pending appeal. See § 3058(d).
It is no answer to say that the FTC can come in at the
tail-end of this adversarial process and review the sanction. As far as enforcement goes, the horse was already
out of the barn. (You knew that was coming.) Besides,
what if the sanctioned owner, instead of fighting the process, opts to settle for a lower fine? In that case, according to the Authority’s logic, no one has enforced
HISA. That is obviously not true. To the contrary,
the settlement scenario—which will likely happen often
—only underscores that it is the private entity that acts
as HISA’s enforcer in any meaningful sense.
Consider a hypothetical. Suppose a city structures
its speeding laws to let a group of private car enthusiasts
monitor speeds with their own radar guns, pull speeders
over, and ticket them. Fines are reviewed by the police
department and, ultimately, the mayor. Who enforces
the speeding laws? Anyone would say the private
group. After all, consider how many cases we decide
concerning whether the police have wrongly stopped
someone or used excessive force during the stop. See,
e.g., Terrell v. Town of Woodworth, No. 23-30510, 2024
WL 667690 (5th Cir. Feb. 19, 2024) (per curiam). All
would agree that the police were “enforcing” the law
when they stopped the person. The same goes for the
private entity in the hypothetical.
The Authority’s argument, moreover, does not work
even on its own terms. In addition to levying fines,
HISA empowers the Authority to sue people and racetracks to enjoin past, present, or impending violations.
See § 3054( j)(1) (providing “the Authority may commence a civil action against a covered person or race-
25a
track that has engaged, is engaged, or is about to engage, in acts or practices constituting a violation of this
chapter
. . .
to enjoin such acts or practices”);
§ 3054( j)(2) (allowing issuance of “a permanent or temporary injunction or restraining order . . . without
bond”). HISA gives the FTC no role in this process,
either before or after the fact. So, even assuming the
Authority is correct (and it is not) that the agency’s after-the-fact supervision of sanctions makes the Authority subordinate, the Authority is demonstrably not subordinate when it comes to suing violators for injunctions.
That is plainly an unsupervised delegation of executive
power that the Constitution does not tolerate. See
Buckley, 424 U.S. at 138 (“A lawsuit is the ultimate remedy for a breach of the law, and it is to the President
. . . that the Constitution entrusts [this] responsibility[.]”).
4.
The Authority next argues that the FTC could use its
new rulemaking authority to rein in the Authority’s enforcement actions or even require the Authority to preclear lawsuits with the agency. See § 3053(e) (empowering FTC to “abrogate, add to, and modify” the Authority’s rules). This argument persuaded the Sixth Circuit that at least a facial challenge to the Authority’s enforcement powers should fail. See Oklahoma, 62 F.4th
at 231 (through § 3053(e) rulemaking, “the FTC could
subordinate every aspect of the Authority’s enforcement,” which “suffices to defeat a facial challenge”).
And we have already found that the FTC’s rulemaking
power has some purchase in turning back a facial challenge to the Authority’s rulemaking power: as explained, the agency could ensure via rulemaking that no
26a
Authority rule could go into effect until the agency had
time to review it. See supra III.A. With great respect to our colleagues on the Sixth Circuit, however, we
are not convinced that this rulemaking argument can
save the Authority’s enforcement powers.
The Authority’s rulemaking argument would let the
agency rewrite the statute. In HISA, Congress set out
a definite enforcement scheme, dividing responsibilities
among the FTC, the Authority, and USADA. See
§§ 3054(e)(2), 3054(c)(1), 3054(e). HISA is quite clear
about this: it provides that those three entities “implement and enforce” the Act, “each within the scope of
their powers and responsibilities under this chapter.”
§ 3054(a)(1) (emphasis added). A mere agency cannot
alter that statutory division of labor. See, e.g., Gulf
Fishermen’s Ass’n v. Nat’l Marine Fisheries Serv., 968
F.3d 454, 460 (5th Cir. 2020) (“We will not defer to ‘an
agency interpretation that is inconsistent with the design and structure of the statute as a whole.’ ” (quoting
Util. Air. Regul. Grp. v. EPA, 573 U.S. 302, 321(2014)));
5 U.S.C. § 706(2)(C) (authorizing courts to set aside
agency action “in excess of statutory jurisdiction, authority, or limitations”). 13 As the Supreme Court reSee also Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 473
(2001) (holding that agency rulemaking “has no bearing upon”
whether a statutory delegation is constitutional); Hartford Underwriters Ins. v. Union Planters Bank, N.A., 530 U.S. 1, 6-7 (2000)
(“Where a statute names the parties granted the right to invoke its
provisions, such parties only may act.” (cleaned up) (citation omitted)); Bayou Lawn & Landscape Servs. v. Sec’y of Lab., 713 F.3d
1080, 1084-85 (11th Cir. 2013) (holding it “axiomatic that an agency’s
power to promulgate legislative regulations is limited to the authority delegate[d]to it by Congress” and that courts cannot “locate
. . . power in one agency where it had been specifically and ex13
27a
cently reiterated, even “statutory permission to ‘modify’
does not authorize ‘basic and fundamental changes in
the scheme’ designed by Congress.” Biden v. Nebraska, 600 U.S. ---, 143 S. Ct. 2355, 2368 (2023) (quoting
MCI Telecomms. Corp. v. Am. Tel. & Tel. Co., 512 U.S.
218, 225 (1994)). Yet that is just what the Authority
says the FTC could do through rulemaking.
Take the Authority’s power to seek injunctions.
HISA empowers the Authority to file suit to enjoin violations, while saying nothing about FTC involvement in
the process. See § 3054( j)(1). Yet the Authority suggests the FTC could, by rule, require the Authority to
preclear any such action with the agency. We disagree. That would let the agency amend the enforcement scheme delineated by statute. 14 The same goes
for investigatory and subpoena power: HISA unqualifiedly gives that power to the Authority, see § 3054(h),
pressly delegated by Congress to a different agency”); Union Pac.
R.R. v. Surface Transp. Bd.,863 F.3d 816, 823 (8th Cir.2017) (finding
express delegation to the Federal Railroad Administration precluded implied authority claimed by the private Board); Perot v.
FEC, 97 F.3d 553, 559 (D.C. Cir. 1996) (per curiam) (“We agree with
the general proposition that when Congress has specifically vested
an agency with the authority to administer a statute, it may not shift
that responsibility to a private actor[.]”); EPA v. EME Homer City
Generation, L.P., 572 U.S. 489, 509 (2014) (relying on the statute’s
“plain text and structure [to] establish a clear chronology of federal
and State responsibilities”).
14
Nor could the Authority claim that the statute is merely silent
about FTC pre-approval and that gap could be filled by rulemaking.
Our circuit has repeatedly rejected this “nothing-equals-something
argument” for conjuring agency authority out of thin air. Gulf
Fishermen’s, 968 F.3d at 460-61 (citing Texas v. United States, 809
F.3d 134, 186 (5th Cir. 2015), aff ’d by equally divided court, 579 U.S.
547 (2016) (per curiam)).
28a
and then requires the Authority to delegate it to
USADA, see §§ 3054(e)(1)(E)(iv), 3055(c)(4) (the Authority “shall” contract with USADA to “conduct and oversee” anti-doping and medication enforcement “including
independent investigations”). And the same goes for
charging and adjudicating violations and levying sanctions. See ibid. (the Authority “shall” contract with
USADA to “conduct and oversee . . . charging and
adjudication of potential medication control rule violations, and the enforcement of any civil sanctions for such
violations”); § 3054( j) (recognizing Authority’s power to
impose “civil sanctions”). Congress enacted this reticulated scheme. The agency cannot amend it by promulgating a rule.
Furthermore, when Congress wanted to put the FTC
in charge of enforcement, it knew how. Section 3059,
for instance, is a separate part of HISA targeting certain “unfair or deceptive” practices in selling horses. 15
With respect to that section, the Authority can only
“recommend” that the FTC “commence an enforcement
action.”16 § 3054(c)(1)(B). In other words, only here
did Congress limit the Authority’s enforcement discretion to “recommending” agency enforcement.
Cf.
§ 3054( j)(1) (providing “the Authority may commence a
civil action” seeking an injunction). Yet the Authority
contends that the agency could, by rulemaking, make
See § 3059 (deeming it an unfair or deceptive practice under
15U.S.C. § 45(c) to fail to disclose to a buyer that a horse was administered “a bisphosphonate” before its fourth birthday or any other
prohibited substance).
16
See § 3054(c)(1)(B) (providing the “Authority . . . with respect to an unfair or deceptive act or practice described in section
3059 of this title, may recommend that the Commission commence
an enforcement action”).
15
29a
every enforcement action subject to similar FTC approval. That would rewrite the enforcement scheme
Congress enacted. See Russello v. United States, 464
U.S. 16, 23 (1983) (“Where Congress includes particular
language in one section of a statute but omits it in another section of the same Act, it is generally presumed
that Congress acts intentionally and purposely in the
disparate inclusion or exclusion.” (cleaned up) (citation omitted)).
Additionally, the Sixth Circuit believed the FTC
could supervise the Authority through a slightly different kind of rulemaking—that is, by issuing rules governing how the Authority enforces HISA. See Oklahoma,
62 F.4th at 231. For instance, the agency could issue
rules against “overbroad subpoenas or onerous searches”
or “provid[ing] a suspect with a full adversary proceeding and with free counsel.” Ibid. Unhappily, we again
disagree with our sister circuit.
The Horsemen are not complaining about how the
Authority exercises its enforcement power. They are
complaining about where the enforcement power is
lodged: on its face, HISA empowers private entities to
enforce it and permits agency oversight only after the
enforcement process is over and done with (and then
only with respect to fines, not injunctions). If the
Horsemen were objecting only to overbroad subpoenas,
unwarranted searches, or lack of free counsel, perhaps
those complaints could be addressed through rulemaking or as-applied challenges. But their complaint is different. They contend that HISA facially delegates un-
30a
supervised enforcement power to private actors.
are right.17
They
In sum, HISA’s clear delineation of enforcement
power between the FTC, the Authority, and USADA
cannot be altered through rulemaking.
5.
Finally, the Authority defends its enforcement role
by analogizing it to the role of self-regulatory organizations (“SROs”)—specifically, FINRA—which assist the
SEC in enforcing securities laws. The Authority seeks
support in circuit cases concluding that FINRA’s enforcement role presents no private nondelegation problem. See, e.g., Oklahoma, 62 F.4th at 229, 232 (gathering cases).18 For their part, the Horsemen argue that,
Moreover, consider the revealing premise of this line of argument. Suppose the FTC issued a rule saying, “The Authority can
search racetracks only if it has probable cause.” Well and good, but
that rule still presupposes the Authority is the one doing the search.
Merely because the Authority would have to obey the Fourth
Amendment does not change the fact that a private entity is searching your racetrack without agency say-so. And it is no answer to
say that the agency could issue a rule saying, “The Authority can
search racetracks only if the FTC approves the search.” That rule,
as explained, would amend the statute’s division of authority. See
§ 3054(h) (“The Authority shall have subpoena and investigatory authority with respect to civil violations committed under its jurisdiction.”).
18
The Sixth Circuit relied on several cases upholding the constitutionality of FINRA to hold that “[i]n case after case, the courts have
upheld [the Maloney Act’s] arrangement, reasoning that the SEC’s
ultimate control over the rules and their enforcement makes the
SROs permissible aides and advisors.” Oklahoma, 62 F.4th at 229.
We do not read those cases quite so broadly. They relied largely
on the grounds that the SEC ultimately approves any proposed rules
and has its own generalized rulemaking power. See, e.g., R. H.
17
31a
for enforcement purposes, the FTC-Authority relationship is meaningfully different from the SEC-FINRA relationship. As we have before noted, HISA was modeled on the Maloney Act, which created FINRA. See
Horsemen’s I, 53 F.4th at 887; supra III.A. Moreover,
we concluded in Horsemen’s I that HISA lacked a key
feature of the Maloney Act empowering the SEC to “abrogate, add to, and delete” rules proposed by FINRA.
Horsemen’s I, 53 F.4th at 887. As discussed, Congress
added a similar provision to HISA, which remedied the
nondelegation problem with the Authority’s rulemaking
powers. Supra III.A.
We agree with the Horsemen that, for enforcement
purposes, HISA gives the Authority an enforcement
role meaningfully different from FINRA’s. Unlike the
SEC-FINRA relationship, HISA does not give the FTC
potent oversight power over the Authority’s enforcement such as the power to enforce HISA itself, deregister the Authority as the enforcing entity, or remove its
directors.
To begin with, Congress empowered the SEC to enforce FINRA’s rules if needed. The SEC can “in its
discretion, make such investigations as it deems necessary to determine whether any person has violated, is
violating, or is about to violate” the Maloney Act. 15
U.S.C. § 78u(a)(1). The SEC can also, on its own acJohnson & Co. v. SEC, 198 F.2d 690, 696 (2d Cir. 1952) (considering
only whether the SEC abused its discretion); Todd & Co. v. SEC, 557
F.2d 1008, 1012 (3d Cir. 1977) (considering only a nondelegation
challenge to the SEC’s legislative rulemaking authority); First Jersey Sec., Inc. v. Bergen, 605 F.2d 690, 697 (3d Cir. 1979) (same); Sorrell v. SEC, 679 F.2d 1323, 1325–26 (9th Cir. 1982) (same). But none
addressed a nondelegation challenge to executive power.
32a
cord, seek criminal sanctions, injunctive relief, or disgorgement. § 78u(c), (d), (d)(4). The FTC cannot.
See § 3054(c)(iii) (granting the Authority investigatory
power); § 3054(e) (granting the Authority and USADA
enforcement responsibility). The SEC has power to issue subpoenas, see §§ 77s(c), 78u(c), while HISA gives
the Authority that power, § 3054(h), (c)(ii). The SEC
can also revoke FINRA’s ability to enforce its rules,
§ 78s(g)(2), and step in and enforce any written rule itself, § 78o(b)(4). HISA gives the FTC none of these
tools.
Moreover, HISA diverges radically from the Maloney Act in empowering the Authority to sue. The SEC
alone has the power to bring civil suits, §§ 78u-1(a),
78u(d)(1), while HISA gives that power exclusively to
the Authority, § 3054( j)(1). Giving a private entity the
sole power to sue in federal court to enforce a statute
cuts to the core of executive power. See Buckley, 424
U.S. at 138 (“A lawsuit is the ultimate remedy for a
breach of the law, and it is to the President . . . that
the Constitution entrusts [this] responsibility[.]”). 19
One may reasonably ask whether HISA’s delegation of enforcement authority is supported by an analogous delegation in qui
tam statutes. We think not. The Horsemen note our decision in
Riley v. St. Luke’s Episcopal Hospital, 252 F.3d 749 (5th Cir. 2001)
(en banc), where we held that the False Claims Act (“FCA”) does
not violate Article I’s Take Care Clause. They argue that Riley
does not support HISA’s delegation because qui tam relators are
episodic and do not have a continuing relationship with the government. That is true, but we see a more fundamental distinction between the two statutes: under the FCA, the executive branch has
substantial power over qui tam relators that the FTC does not have
over the Authority. For example, the United States can intervene
in any qui tam litigation, take control of the litigation, veto settle19
33a
Finally, the SEC “retains formidable oversight
power to supervise, investigate, and discipline [FINRA]
for any possible wrongdoing or regulatory missteps.”
In re NYSE Specialists Sec. Litig., 503 F.3d 89, 101 (2d
Cir. 2007). The FTC does not. This “formidable” power
is manifest in the SEC’s ability to derecognize FINRA’s
regulatory role entirely, §§ 78s(a)(3), (h)(1); remove
FINRA board members for cause, § 78s(h)(4); remove
any individual FINRA member, § 78s(h)(2); and bar any
person from associating with FINRA, § 78o-3(g)(2).
HISA, on the other hand, “recognize[s] for purposes of
developing and implementing” the Act only “[t]he private, independent, self-regulatory, nonprofit corporation, to be known as the ‘Horseracing Integrity and
Safety Authority.’ ” § 3052(a). And only the Authority’s Board can remove members: directors by a twothirds vote and committee members for any reason. 20
* * *
In sum, we agree with the Horsemen that the FTC
lacks adequate oversight and control over the Authority’s enforcement power. HISA’s explicit division of
enforcement responsibility empowers the Authority
with quintessential executive functions and gives the
FTC scant oversight until enforcement has already occurred. Such backend review by the FTC does not subordinate the Authority. And the FTC’s general rulement agreements, and dismiss the suit “notwithstanding the objections of the [relator].” Id. at 753-54. HISA gives the FTC none
of those powers.
20
In saying all this, we express no opinion on whether the SECFINRA relationship poses any constitutional issues under the private nondelegation doctrine (or any other doctrine). Such questions are not posed by this case.
34a
making power provides no answer because executive
rulemaking cannot amend the plain division of enforcement power laid out in HISA’s text. Such a radical delegation differs materially from the SEC-FINRA relationship because the FTC lacks any tools to ensure that
the law is properly enforced. HISA’s enforcement provisions thus violate the private nondelegation doctrine.
C.
Due Process Challenge
We turn next to the Horsemen’s challenge based on
the Fifth Amendment’s Due Process Clause. They argue that HISA, both facially and as-applied, deprives
them of due process by permitting economically self-interested actors to regulate their competitors.
See
Carter Coal, 298 U.S. at 311 (government violates due
process by allowing regulation by “private persons
whose interests may be and often are adverse to the interests of others in the same business”). Specifically,
the Horsemen contend that Carter Coal does not require
proof of economic self-interest, only that the private
person “may be” adverse to those he regulates. They
then argue that several members of the Board and
standing committees violate the conflict of interest provisions due to their professions and prior financial interests. Finally, the Horsemen contend that the statute
fails to properly protect against self-interested actors
because it does not cover financial interests other than
interests in a covered horse, as opposed to a racetrack
or other facility.
The district court correctly rejected these claims.
As to the Horsemen’s facial challenge, the court concluded it was defeated by HISA’s conflict-of-interest
provisions. See Black, 672 F. Supp. 3d at 252. Those
provisions prohibit a range of individuals from serving
35a
as Board or independent committee members, § 3052(e),
including individuals with financial interests in, or who
provide goods or services to, covered horses; officials,
officers, or policy makers for an equine industry; and
employees, contractors, or immediate family members
of the prior individuals. § 3052(e)(1)-(4).
As to the as-applied challenge, the district court rejected it on the facts. Following a bench trial, the court
found the Horsemen relied only on the committee members’ biographical information but adduced no other evidence showing their adverse interests, financial or otherwise. See Black, 672 F. Supp. 3d at 252 (“HISA affords sufficient protection through its conflicts-of-interest provisions, and the plaintiffs have not met their burden to show unconstitutional self-dealing by directors,
committee members, or others associated with the
Authority.”). At most, the court observed that the
biographical information may show the members do
not qualify as “independent members.”
Ibid.;
§ 3052(b)(1)(A) (“[I]ndependent members [must be] selected from outside the equine industry.”). But, as the
court pointed out, even assuming that to be true, it says
nothing about the members’ financial interests. Black,
672 F. Supp. 3d at 252. On appeal, the Horsemen fail
to show any error by the district court here.
D.
Appointments Clause Challenge
A separate plaintiff, Gulf Coast, challenges the Authority’s structure under the Appointments Clause of
Article II.21 Recall that Gulf Coast raised this distinct
The Appointments Clause reads “[The President] shall nominate, and by and with the Advice and Consent of the Senate, shall
appoint . . . all other Officers of the United States, whose Ap21
36a
challenge in a suit later consolidated with the Horsemen’s. See id. at 230. Gulf Coast argues that, for constitutional purposes, the Authority is governmental, not
private, and so is subject to the Appointments Clause.
This means the Authority’s directors, if they are principal officers, must be appointed by the President with
Senate confirmation or, if they are inferior officers, by
the President, courts, or department heads according to
law. See Free Enter. Fund, 561 U.S. at 487-88; Cochran
v. SEC, 20 F.4th 194, 198 (5th Cir. 2021) (en banc). The
Authority’s directors are not appointed in any of these
ways,22 and so, if Gulf Coast is right, their appointment
would violate Article II.
The Authority and the FTC first respond that we
previously decided this question in Horsemen’s I. By
applying the private nondelegation doctrine to the Authority, they argue we necessarily determined the Authority is not governmental for constitutional purposes.
The district court took this view as well. See Black, 672
F. Supp. 3d at 234. That is understandable. Challenges based on private nondelegation, on the one hand,
and the Appointments Clause, on the other, appear mutually exclusive. For constitutional purposes, an entity
is either governmental or not. See, e.g., Lebron, 513 U.S.
at 378-79; Amtrak II, 575 U.S. at 50-51. That is why
the Horsemen themselves call Gulf Coast’s claim “funpointments are not herein otherwise provided for” but provides “the
Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of
Law, or in the Heads of Departments.” U.S. Const. art. II, § 2, cl.
2.
22
The directors are appointed by the Authority itself.
See
§ 3052(d)(3) (Board members are selected by the Authority’s nominating committee).
37a
damentally incompatible” with their private nondelegation challenge. Texas seems to agree, noting that Gulf
Coast’s Appointments Clause theory would apply only if
“the Court disagree[s]” with its assumption that the Authority is private.
That said, however, we cannot agree that we decided
this question in Horsemen’s I. The Appointments Clause
question was never posed. Party presentation is a fundamental constraint on appellate decision-making. See
United States v. Sineneng-Smith, 590 U.S. 371, 375-76
(2020) (“Courts . . . wait for cases to come to them,
and when cases arise, courts normally decide only questions presented by the parties.” (cleaned up) (citation
omitted)). The fact is that in Horsemen’s I, all parties
proceeded on the assumption that the Authority is private for constitutional purposes. See Horsemen’s I, 53
F.4th at 875 n.11 (“The Horsemen also claimed HISA
was unconstitutional under the . . . Appointments
Clause. The district court did not rule on those claims
and so they are not before us.”). No one suggested that
the Authority might qualify as a government entity or
that its directors were subject to the Appointments
Clause. So, because we did not settle the question previously, we can address it now. See Companion Prop.
& Cas. Ins. v. Palermo, 723 F.3d 557, 561 (5th Cir. 2013)
(“Appellate powers are limited to reviewing issues raised
in, and decided by, the district court.” (cleaned up) (citation omitted)); Alpha/Omega Ins. Servs. v. Prudential
Ins. of Am., 272 F.3d 276, 281 (5th Cir. 2001) (“[T]he law
of the case doctrine only applies to issues we actually
decided[.]”).
The basic premise of Gulf Coast’s argument is that
the Authority is part of the federal government for Ap-
38a
pointments Clause purposes. See Amtrak II, 575 U.S.
at 50-51. We of course recognize that HISA calls the
Authority private, as does the Authority’s own charter.
See § 3052(a) (“The private, independent, self-regulatory,
nonprofit corporation, to be known as the ‘Horseracing
Integrity and Safety Authority’ is recognized for purposes of developing and implementing [HISA].”); HISA
Charter (“The Corporation is organized and shall be operated as a nonprofit business league[.]”). But deeming an entity “private” does not settle whether it is legally part of the federal government. Otherwise, the
government could evade constitutional restrictions by
mere labeling. See Lebron, 513 U.S. at 397 (“It surely
cannot be that government, state or federal, is able to
evade the most solemn obligations imposed in the Constitution by simply resorting to the corporate form.”).
So, we must determine whether the Authority qualifies
as part of the federal government for constitutional purposes.
The analysis guiding that inquiry comes from Lebron. In that case, the Supreme Court examined “the
long history of corporations created and participated in
by the United States for the achievement of governmental objectives.” Id. at 386.23 The specific question before the Court was whether “Amtrak, though nominally
a private corporation, must be regarded as a Government entity for First Amendment purposes.” Id. at
See also id. at 386-91 (discussing corporations such as the first
and second Banks of the United States, the Panama Railroad Company, the United States Grain Corporation, the Reconstruction Finance Corporation, the Federal Deposit Insurance Corporation,
the Communications Satellite Corporation, the Corporation for
Public Broadcasting, and the Legal Services Corporation).
23
39a
383. The answer was yes. That was so, the Court
held, because “the Government create[d] [the Amtrak]
corporation by special law, for the furtherance of governmental objectives, and retain[ed] for itself permanent authority to appoint a majority of the directors of
that corporation.” Id. at 399. The Supreme Court
and circuit courts have since used Lebron’s analysis to
discern whether corporations are part of the government for constitutional purposes. Applying Lebron,
we conclude that the Authority is not a federal instrumentality for purposes of the Appointments Clause.
First, the Authority was not created by the federal
government “by special law,” ibid., but was incorporated under Delaware law shortly before HISA’s passage. Contrast this with Amtrak, which “Congress established” by enacting the Rail Passenger Service Act
of 1970. Id. at 383-84; see also Nat’l R.R. Passenger
Corp. v. Atchison, Topeka & Santa Fe Ry. Co., 470 U.S.
451, 454 (1985) (observing “Congress established the
National Railroad Passenger Corporation, a private,
for-profit corporation that has come to be known as
Amtrak”).
Second, the Authority was not created to further
“governmental objectives,” Lebron, 513 U.S. at 399, but
instead as a private association to address doping, medication, and safety issues in the thoroughbred racing industry. Again, contrast this with Amtrak, which Congress created “to avert the threatened extinction of passenger trains in the United States” and for other goals
Congress itself “establish[ed].” Id. at 383.
Third, the federal government does not “control[] the
operation of the [Authority],” nor has it “retain[ed] for
itself permanent authority to appoint a majority of the
40a
[Authority’s] directors.” Ibid. To the contrary, the
government has no role in appointing the Authority’s
Board. Once again, contrast this with Amtrak—where a
majority of its directors was appointed by the President.
Id. at 397-98; see also Amtrak II, 575 U.S. at 51 (observing that seven of nine Amtrak board members “are appointed by the President and confirmed by the Senate”);
cf. Free Enter. Fund, 561 U.S. at 484, 484-85 (noting the
PCAOB—despite being statutorily deemed “private”—
is a “Government-created, Government-appointed entity,” whose five members are “appointed . . . by
the [SEC]”).
Instead of engaging with Lebron, Gulf Coast argues
that Lebron’s analysis is not “the only way” to tell
whether a corporation is a government instrumentality.
That takes too narrow a view of precedent, however.
Lebron canvassed “the long history of corporations created and participated in by the United States” and set
out a detailed analysis to determine whether a particular corporation—despite its designation as “private”—
counts as a government instrument for constitutional
purposes. See 513 U.S. at 386, 386-91. That is precisely the question we must answer with respect to the
Authority. How can we, as an inferior court, simply
bypass Lebron? We cannot.
Gulf Coast tries to offer us a way around Lebron, but
it is a dead end. Gulf Coast argues that Lebron addressed only government-created corporations “that in
no way exercised government power.” But Lebron did
not limit itself in that way—to the contrary, it relied on
cases where Congress turned to private corporations to
“accomplish purely governmental purposes.” 513 U.S.
at 395 (quoting Cherry Cotton Mills, Inc. v. United
41a
States, 327 U.S. 536, 539 (1946)). 24 Furthermore, the
corporation actually addressed in Lebron—Amtrak—
itself exercised regulatory power, as the Supreme Court,
the D.C. Circuit, and our court have all recognized. See
Amtrak II, 575 U.S. at 51 (“Amtrak . . . cannot constitutionally be granted the regulatory power[.]” (citation
and quotation omitted)); Amtrak I, 721 F.3d at 671 (“No
case prefigures the unprecedented regulatory powers
delegated to Amtrak.”); Horsemen’s I, 53 F.4th at 889
(discussing how Congress gave “regulatory power to the
‘economically self-interested Amtrak’ ” (citation omitted)).
Gulf Coast tries to offer us a way around Lebron, but
it is a dead end. Gulf Coast argues that Lebron addressed only government-created corporations “that in
no way exercised government power.” But Lebron did
not limit itself in that way—to the contrary, it relied on
See Nebraska, 143 S. Ct. at 2366–67 (applying Lebron to conclude that the Missouri Higher Education Loan Authority is “an instrumentality of Missouri”); Free Enter. Fund, 561 U.S. at 486 (citing Lebron when referencing parties’ agreement that the Public
Company Accounting Oversight Board (“PCAOB”) “is ‘part of the
Government’ for constitutional purposes”); Amtrak II, 575 U.S. at
54-55 (explaining Lebron “provides necessary instruction” and
“teaches that, for purposes of Amtrak’s status as a federal actor or
instrumentality under the Constitution, the practical reality of federal control and supervision prevails over Congress’ disclaimer of
Amtrak’s governmental status”); Kerpen v. Metro. Wash. Airports
Auth., 907 F.3d 152, 158–59 (4th Cir. 2018) (applying Lebron to
conclude that the Metropolitan Washington Airports Authority
(“MWAA”) is not “a federal entity” because “MWAA was not created
by the federal government” and “is not controlled by the federal government”); Montilla v. Fed. Nat’l Mortg. Ass’n, 999 F.3d 751, 75961 (1st Cir. 2021) (applying Lebron to conclude that Fannie Mae and
Freddie Mac are not government actors).
24
42a
cases where Congress turned to private corporations to
“accomplish purely governmental purposes.” 513 U.S.
at 395 (quoting Cherry Cotton Mills, Inc. v. United
States, 327 U.S. 536, 539 (1946)). 25 Furthermore, the
corporation actually addressed in Lebron—Amtrak—itself exercised regulatory power, as the Supreme Court,
the D.C. Circuit, and our court have all recognized. See
Amtrak II, 575 U.S. at 51 (“Amtrak . . . cannot constitutionally be granted the regulatory power[.]” (citation and quotation omitted)); Amtrak I, 721 F.3d at 671
(“No case prefigures the unprecedented regulatory
powers delegated to Amtrak.”); Horsemen’s I, 53 F.4th
at 889 (discussing how Congress gave “regulatory power
to the ‘economically self-interested Amtrak’” (citation
omitted)). Gulf Coast also argues that, to determine
whether directors of a private entity are “Officers of the
United States,” we should focus on their duration in office and the nature of the entity’s power. We disagree.
The two principal cases Gulf Coast relies on for this argument addressed whether individuals already part of
the government should be considered “Officers.” So,
Buckley examined whether Federal Election Commission appointees wielded “significant authority pursuant
to the laws of the United States.” 424 U.S. at 126.
And Lucia v. SEC applied this same test to SEC ALJs.
585 U.S. 237, 244-45 (2018). Gulf Coast urges us to extend Buckley and Lucia well beyond their facts to analyze whether persons in a private entity are “Officers.”
Even if we were inclined to take that step, however, LebSee also Inland Waterways Corp. v. Young, 309 U.S. 517, 524 n.4
(1940) (“The corporations, of course, perform ‘governmental’ functions.” (citation omitted)); id. at 522 (“The banking system which
Congress thus established embodied a blend of governmental and
private purposes.”).
25
43a
ron would remain an insuperable hurdle. As explained,
Lebron addressed when a private entity qualifies as part
of the government for constitutional purposes. That is
precisely the question before us. Post-Lebron, no case
has applied Buckley to private actors. Instead, the Supreme Court has repeatedly applied Lebron for three
decades. See supra note 23. We are not at liberty to
displace the Supreme Court’s governing framework. 26
Finally, Gulf Coast argues that if Lebron is the test,
then the federal government can simply vest all executive power in a private corporation and avoid the Appointments Clause. This argument ignores the role of
the private nondelegation doctrine. The government
cannot delegate core governmental powers to unsupervised private parties. Pittston, 368 F.3d at 394. A
private entity can only act “subordinately to an agency
with authority and surveillance over it.” Horsemen’s I,
53 F.4th at 881 (quotations omitted). The private nondelegation doctrine thus corrals any attempts to evade
Lebron by giving unaccountable governmental power to
a pre-existing private entity.
In sum, Lebron is the governing test to determine
whether an entity is private or public and, under that
That principle also answers Gulf Coast’s reliance on a 2007 Office of Legal Counsel (“OLC”) opinion. The opinion argued that the
Appointments Clause applies to someone with significant and continuing government authority, whether he is a private or a government employee. Officers of the United States Within the Meaning
of the Appointments Clause, 31 Op. O.L.C. 73, 121-22 (2007). If the
opinion was suggesting its analysis as an alternative to Lebron (a
decision, it should be noted, the opinion cited, see id. at 121), that is
a suggestion only the Supreme Court could act upon, not a circuit
court bound by Lebron.
26
44a
test, the Authority is a private entity not subject to Article II’s Appointments Clause.
E.
Anti-Commandeering Challenge
Finally, we turn to Gulf Coast’s argument that HISA
unconstitutionally commandeers state officials. The
Constitution forbids Congress from “command[ing] the
States’ officers, or those of their political subdivisions,
to administer or enforce a federal regulatory program.”
Printz v. United States, 521 U.S. 898, 935 (1997); see
also New York v. United States, 505 U.S. 144, 165, 188
(1992). Gulf Coast argues HISA violates that principle
by coercing state racing commissions to remit fees to
fund the Authority’s operations. If state officials refuse, the Authority collects fees directly from covered
persons—but, in that event, HISA prohibits the state
from imposing taxes or fees to finance the state’s own
horseracing programs. See § 3052(f ). This scheme,
argues Gulf Coast, “puts a gun to the head of Texas” by
coercing state officials to administer a federal program
rather than a state program.
The problem with this claim, as the district court
pointed out, is that Gulf Coast lacks standing to raise it.
Specifically, Gulf Coast’s alleged injury—that it prefers
Texas’s racetrack safety rules to HISA’s—is “no injury
at all.” Black, 672 F. Supp. 3d at 250. As the district
court correctly reasoned, “[a] party cannot establish
constitutional injury by suggesting that he may be subject to rules he does not prefer.” Ibid.; see also, e.g.,
Consumers’ Rsch. v. Consumer Prod. Safety Comm’n,
91 F.4th 342, 350 (5th Cir. 2024) (holding that “merely
being subject to . . . regulations, in the abstract,
does not create an injury”).
45a
On appeal, Gulf Coast fails to explain how the district
court erred. It merely argues that the coercive pressure the funding scheme allegedly places on Texas will
lead it to implement HISA’s rules rather than the current Texas regulations, which makes Gulf Coast subject
to “a new set of unwanted (federal) regulations.”
Again, though, this does not explain why Gulf Coast experiences an injury sufficient to assert an anti-commandeering challenge to HISA.
IV.
CONCLUSION
In sum, we affirm the district court’s judgment that
(1) Congress’s recent amendment to HISA cured the
private nondelegation flaw in the Authority’s rulemaking power; (2) HISA does not violate due process; (3) the
Authority’s directors are not subject to the Appointments Clause under Lebron; and (4) Gulf Coast lacks
standing to challenge HISA on anti-commandeering
grounds.
We reverse the district court’s judgment in one respect. Insofar as HISA is enforced by private entities
that are not subordinate to the FTC, we DECLARE
that HISA violates the private nondelegation doctrine.
Accordingly, the district court’s judgment is AFFIRMED in part and REVERSED in part.
46a
APPENDIX B
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
LUBBOCK DIVISION
No. 5:21-CV-071-H
NATIONAL HORSEMEN’S BENEVOLENT AND
PROTECTIVE ASSOCIATION, ET AL., PLAINTIFFS
THE STATE OF TEXAS AND THE TEXAS RACING
COMMISSION, INTERVENOR-PLAINTIFFS
v.
JERRY BLACK, ET AL., DEFENDANTS
Filed:
May 4, 2023
MEMORANDUM OPINION AND ORDER
In hopes of standardizing horseracing regulation, the
Horseracing Integrity and Safety Act of 2020 (HISA)
empowered a private entity to draft nationwide regulations subject to the Federal Trade Commission’s review
and approval. In response, the plaintiffs claimed that
HISA was unconstitutional because it did not give the
FTC meaningful oversight—violating the private-nondelegation doctrine. Although this Court recognized
that the plaintiffs’ concerns were legitimate, it construed binding precedent as permitting Congress’s approach in its March 2022 order. The Fifth Circuit disagreed, explaining that precedent could not justify
47a
HISA and that it was unconstitutional because the FTC
lacked discretion to approve, disapprove, or modify the
proposed regulations. Answering the Fifth Circuit’s
call, Congress amended HISA to empower the FTC to
“abrogate, add to, and modify” the entity’s regulations.
Nevertheless, the plaintiffs continue to allege constitutional violations. But because Congress remedied the
offending provisions and brought the law within the
Fifth Circuit’s stated requirements, the plaintiffs’
claims fail.
Specifically, after remand, the original plaintiffs
continue to claim that HISA violates the privatenondelegation doctrine under Article I and the Due Process Clause. Dkt. No. 116. Texas and the Texas Racing Commission, as intervenor-plaintiffs, raise the same
arguments. Dkt. No. 155 at 22-25. Additionally, also
after remand, another court transferred a related case
to this Court. Gulf Coast Racing LLC v. Horseracing
Integrity & Safety Authority, No. 2:22-CV-146-Z (N.D.
Tex.), Dkt. No. 53. Those plaintiffs make the same
private-nondelegation claim, but only as an alternative
to their primary claim that HISA violates Article II’s
Appointments Clause and Article I’s Vesting Clause.
Dkt. No. 136. In their view, the private entity at issue
—the Horseracing Integrity and Safety Authority—is,
in reality, a public entity subject to the same requirements applicable to all public officers. No. 5:23-CV077, Dkt. No. 36 at 33. They also allege, albeit briefly,
that HISA violates the Tenth Amendment’s anticommandeering principles by requiring Texas to do the
federal government’s bidding. Id. at 57.
In light of Congress’s amendment to HISA and the
undisputed evidence following a bench trial, each of
48a
these arguments falls short.
First, the plaintiffs’
private-nondelegation argument reveals too much and is
barred by precedent. Previously, the plaintiffs argued
that “HISA violates the private nondelegation doctrine
because the FTC cannot modify the Authority’s rules.”
Dkt. No. 38 at 26. Now that Congress expressly authorizes the FTC to modify the Authority’s rules, the
plaintiffs retreat and admit their true view: that there
is nothing Congress could do to bring the HISA-Authority
arrangement within constitutional bounds. Dkt. No.
182 at 31-33, 37-38. But this argument ignores the long
history of the executive branch leveraging—with court
approval—expertise from private industry so long as
the industry remains subordinate to a supervisory federal agency. E.g., Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 388, 399 (1940) (allowing private parties to participate in price setting because the private
entities “function[ed] subordinately to the Commission”
and because the Commission retained “pervasive surveillance and authority” over the activities of the private
parties); see also Lebron v. Nat’l R.R. Passenger Corp.,
513 U.S. 374, 386-90 (1995) (detailing the “long history
of corporations created and participated in by the
United States for the achievement of governmental objectives” beginning in the 18th Century). The Court
understands the plaintiffs’ concerns with these arrangements, especially given how long horseracing has been
regulated at the local level. But because Congress
brought HISA within the Constitution’s limits as defined by the Fifth Circuit, the Court concludes that
HISA does not violate the private non-delegation doctrine.
Second, the plaintiffs’ facial and as-applied Fifth
Amendment Due Process argument fails for the same
49a
reasons this Court explained in its first order rejecting
it. The Court finds that the Authority is not a self-interested industry competitor creating a constitutional
violation. As a facial matter, HISA explicitly protects
against self-interest through structural safeguards
while preserving industry representation in the Authority. And the as-applied challenge fails because there is
no evidence of actual, unconstitutional self-dealing that
has harmed industry competitors.
Third, the plaintiffs’ appointment and removal arguments fail for a simple reason—the challenged entity at
issue (the Authority) is not a public, governmental actor
subject to these constitutional limitations. The Fifth
Circuit held as much in its panel opinion, so the plaintiffs’ assertion otherwise at this point is both contrary to
the law of the case and foreclosed by precedent. Moreover, even assuming that the Fifth Circuit left this issue
open, precedent makes clear that the Authority is private because it was not created by the government, and
it retains for itself permanent authority to appoint its
directors.
Finally, the plaintiffs lack standing to raise their
Tenth Amendment argument that HISA unconstitutionally commandeers the states. Although private plaintiffs are not automatically barred from bringing Tenth
Amendment claims, they must still demonstrate injury
that is traceable to the defendant’s conduct and redressable by the Court. But the private plaintiffs have no
traceable, redressable injury to assert because HISA allows Texas to either elect to collect fees of covered persons or, if not, the Authority will. HISA allows states
to “elect[]” to assess and collect fees on covered persons.
15 U.S.C. § 3052(f )(2)(A). But if the state does not
50a
make such an election, then the Authority steps in to do
so. § 3052(f )(3). In this way, covered persons like the
Gulf Coast plaintiffs will be regulated and subject to assessments even if they were to succeed on the anti-commandeering claim.
Although the private plaintiffs
clearly prefer to be regulated by Texas instead of the
Authority, the preference alone is insufficient to establish a redressable injury.
For all these reasons, the Court rejects the plaintiffs’
arguments and conclude that Congress cured the unconstitutional aspects of HISA’s original approach. Given
the parties’ desire for an expeditious resolution, the
Court’s opinion is sufficient to permit appellate review
but does not exhaust every possible vein of analysis. 1
1.
Findings of Fact
Following remand from the Fifth Circuit, the plaintiffs filed multiple motions for a preliminary injunction.
Dkt. Nos. 116; 124; 139. Given the plaintiffs’ requests
for expedited treatment and temporary emergency relief, the Court consolidated the hearing on the plaintiffs’
motions for preliminary injunction with the trial on the
merits. Dkt. No. 135; See also Fed. R. Civ. P. 65(a)(2).
The Court finds the following facts.
As explained infra in Parts 1.I through 1.L, the Court is operating on an expedited timeframe. After resolving multiple emergency motions, the Court consolidated these cases on April 11—
roughly three weeks ago. Trial was held last week on April 26.
Although the ADMC rule’s effective date was delayed until May 22
(Dkt. No. 180), the plaintiffs request resolution “as soon as possible.” Dkt. No. 181 at 8.
1
51a
A.
Congress enacts HISA with broad bipartisan support.
American horseracing has existed for centuries, and
throughout it “has been regulated by the States, local
communities, and private organizations.” Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black, 53 F.4th
869, 873 (5th Cir. 2022). Although popular even in the
colonial era, the growth of American horseracing in the
1850s was met with “a growing interest in the formation
of a national governing board to regulate racing.” Joan
S. Howland, Let’s Not “Spit the Bit” in Defense of “The
Law of the Horse”: The Historical and Legal Development of American Thoroughbred Racing, 14 MARQ.
SPORTS. L. REV. 473, 483 (2004). But it would take
more than 170 years for the first national horseracing
legislation to be signed into law. Nat’l Horsemen’s, 53
F.4th at 873.
After an increase in doping scandals and racetrack
fatalities, Congress passed HISA with broad bipartisan
support. Pub. L. No. 116-260, §§ 1201-12, 134 Stat.
1182, 3252-75 (2020) (codified at 15 U.S.C. §§ 3051-60).
On December 27, 2020, HISA was signed into law. Id.
For the first time in the long history of American
horseracing, HISA established a framework for national
regulation of certain aspects of the industry. 15 U.S.C.
§§ 3051-60. Specifically, HISA aims to establish nationwide rules over racetrack safety and anti-doping and
medication control (ADMC). Nat’l Horsemen’s, 53
F.4th at 873. HISA applies to all covered horses (thoroughbreds (§ 3051(4)), covered persons (all trainers, owners, breeders, jockeys, racetracks, and veterinarians,
among others (§ 3051(6)), and covered horseraces (those
horseraces with a substantial effect on interstate com-
52a
merce (§ 3051(5)). In other words, “[t]he Act’s reach is
broad,” and HISA creates a truly nationwide, comprehensive regulatory scheme for racetrack safety and
ADMC. Nat’l Horsemen’s, 53 F.4th at 873.
B.
A private entity, the Authority, is incorporated in
aid of HISA.
The Authority was incorporated as a nonprofit on
September 8, 2020. GPX 6 at 1; No. 5:23-CV-077, Dkt.
No. 47 at 5. HISA “recognize[d]” the Authority, a “private, independent, self-regulatory, nonprofit corporation . . . for purposes of developing and implementing a horseracing anti-doping and medication control
program and a racetrack safety program for covered
horses, covered persons, and covered horseraces.” 15
U.S.C. § 3052(a). HISA prescribes the makeup of the
Authority’s board of directors, including the number of
total directors (nine), independent directors (five), and
industry-member directors (four). § 3052(b)(1). The
initial directors are chosen by a nominating committee,
“comprised of seven independent members . . . set
forth in the governing corporate documents of the Authority.” § 3052(d). HISA also directs the Authority
to establish racetrack-safety and ADMC standing committees. § 3052(c).
C.
HISA creates a rulemaking procedure that attempts to allow the Authority to aid the FTC in
regulating thoroughbred horseracing.
HISA creates a regulatory framework that allows the
Authority to operate in aid of the FTC: The Authority
first drafts proposed rules, which are then submitted
for FTC approval. § 3053(a). Once a rule is received
by the FTC, it goes through notice and comment.
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§ 3053(a)-(b). HISA also requires FTC approval before a proposed rule can take effect. § 3053(b)(2).
The FTC is given sixty days to “approve or disapprove
the proposed rule or modification,” and the FTC “shall
approve” a proposed rule if it is consistent with the statute and applicable rules. § 3053(c).
D.
With oversight by the FTC, the Authority is
tasked with enforcement.
The Authority is empowered to enforce the rules it
aids the FTC in creating by investigating violations, imposing civil sanctions, and suing to enforce sanctions or
obtain injunctive relief. §§ 3058(a), 3057(d), 3054(h)( j). The Authority’s investigatory powers are subject
to “uniform procedures” reviewed and approved by the
FTC. § 3054(c). All civil sanctions imposed by the Authority are subject to two layers of FTC oversight.
First, all civil sanctions are subject to de novo review by
an Administrative Law Judge appointed by the FTC.
§ 3058(b). And the FTC can review de novo the ALJ’s
final decision. § 3058(c).
E.
The Authority is funded by private parties.
At its initial stage, the Authority is funded by loans.
See § 3052(f )(1). After that initial stage, the majority
of the Authority’s funding will derive from fees collected
from covered persons or state racing commissions.
§ 3052(f )(1)-(4).
Any “proposed increase” in fees
for covered persons must be reported to the FTC for
review and submitted for notice and comment.
§ 3052(f )(1)(c)(iv).
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F.
Multiple parties challenge HISA’s constitutionality.
This case involves many parties, consisting of the leadcase plaintiffs,2 the member-case plaintiffs,3 the intervenor-plaintiffs,4 the FTC defendants,5 and the Authority defendants. 6 Both plaintiff groups sued FTC-related defendants and Authority-related defendants.
The plaintiffs in the lead case are National Horsemen’s Benevolent and Protective Association, Arizona Horsemen’s Benevolent
and Protective Association, Arkansas Horsemen’s Benevolent and
Protective Association, Indiana Horsemen’s Benevolent and Protective Association, Illinois Horsemen’s Benevolent and Protective
Association, Louisiana Horsemen’s Benevolent and Protective Association, Mountaineer Park Horsemen’s Benevolent and Protective Association, Nebraska Horsemen’s Benevolent and Protective
Association, Oklahoma Horsemen’s Benevolent and Protective Association, Oregon Horsemen’s Benevolent and Protective Association, Pennsylvania Horsemen’s Benevolent and Protective Association, Tampa Bay Horsemen’s Benevolent and Protective Association, and Washington Horsemen’s Benevolent and Protective Association (hereinafter the Horsemen plaintiffs). Dkt. No. 149 at
2-10.
3
The plaintiffs in the member case are Gulf Coast Racing LLC,
LRP Group Ltd., Valle de Los Tesoros Ltd., Global Gaming LSP,
LLC, and the Texas Horsemen’s Partnership LLP (hereinafter the
Gulf Coast plaintiffs). Dkt. No. 142 at 7-8.
4
The intervenor-plaintiffs are the State of Texas and the Texas
Racing Commission. Dkt. No. 155.
5
The Authority defendants are Jerry Black, the Horseracing Integrity and Safety Authority, Lisa Lazarus, Steve Beshear, Adolpho
Birch, Leonard Coleman, Ellen McClain, Charles Scheeler, Joseph
DeFrancis, Susan Stover, Bill Thomason, D.G. Van Clief, Katrina
Adams, Nancy Cox, Joseph Dunford, Frank Keating, and Kenneth
Schanzner. Dkt. Nos. 142; 149.
6
The FTC defendants are the Federal Trade Commission, Lina
Khan, in her official capacity as Chair of the Federal Trade Commis2
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G.
The Fifth Circuit holds HISA unconstitutional.
In March 2021,the National Horsemen’s Benevolent
and Protective Association and twelve of its affiliates
(the Horsemen plaintiffs) filed suit against the FTC, its
commissioners, the Authority, and the Authority’s Nominating Committee members, challenging HISA’s constitutionality on several grounds. Dkt. No. 1 at 19-26.
In due time, the FTC defendants and the Authority defendants separately filed motions to dismiss (Dkt. Nos.
34; 36), and the Horsemen filed a partial motion for summary judgment, seeking declaratory and injunctive relief on their private-nondelegation and due-process
claims (Dkt. No. 37). After considering the briefing of
the parties and various amici, and after oral argument,
the Court concluded, based on what it viewed as binding
precedent, that HISA did not result in a constitutional
violation. Nat’l Horsemen’s Benevolent & Protective
Ass’n v. Black, 596 F. Supp. 3d 691, 725 (N.D. Tex. 2022),
rev’d and remanded, 53 F.4th 869 (5th Cir. 2022).
Thus, the Court denied the partial motion for summary
judgment (Dkt. No. 37) and noted that the plaintiffs had
abandoned their remaining claims (Nat’l Horsemen’s
Benevolent & Protective Ass’n, 596 F. Supp. 3d at 728).
The Court dismissed the plaintiffs’ complaint (Dkt. No.
23) with prejudice.
On appeal, the Fifth Circuit reversed in a thorough
opinion, holding that the FTC-Authority regulatory
scheme was unconstitutional because it gave the FTC
too little control over a private entity with regulatory
authority. Nat’l Horsemen’s, 53 F. 4th at 872. The
sion, Rebecca Kelly Slaughter, Alvaro Bedoya, Noah Phillips, and
Christine Wilson, all in their official capacities as Commissioners of
the Federal Trade Commission. Dkt. Nos. 142; 149.
56a
court explained that “[a] cardinal constitutional principle is that federal power can be wielded only by the federal government.” Id. As a result, “a private entity
may wield government power only if it ‘functions subordinately’ to an agency with ‘authority and surveillance’
over it.” Id. at 881. To explain the concept “more
precisely,” the court noted that it is within constitutional
bounds for Congress to “formalize the role of private
parties in proposing regulations so long as that role is
merely ‘as an aid’ to a government agency that retains
the discretion to ‘approve[ ], disapprove[ ], or modif[y]’
them.” Id. (quoting Ass’n of Am. R.R.s v. Dep’t of
Transp. [Amtrak I], 721 F.3d 666, 671 (D.C. Cir. 2013)).
But “[i]f the private entity does not function subordinately to the supervising agency, the delegation of
power is unconstitutional.” Id.
Applying these principles, the court held that the Authority was not subordinate to the FTC. Id. at 872-73.
“An agency does not have meaningful oversight if it does
not write the rules, cannot change them, and cannot
second-guess their substance.” Id. at 872. It was the
Authority, not the FTC, that had “the last word over
what rules govern our nation’s thoroughbred horseracing industry,” which rendered HISA unconstitutional.
Id.
Three aspects of HISA and the FTC-Authority relationship led the panel to this conclusion. First, the
court noted the Authority’s “sweeping rulemaking power”
and observed that “HISA’s generous grant of authority
to the Authority to craft entire industry ‘programs’
strongly suggests it is the Authority, not the FTC,” that
is in control. Id. at 882-83. Moreover, the court explained that the FTC’s ability to adopt interim final
57a
rules did not meaningfully alter the scope of the Authority’s power because such rulemaking is narrow and reserved for emergencies. Id. at 883.
Second, the court relied on the FTC’s limited power
to review proposed rules, which prevented the FTC
from reviewing the Authority’s policy choices. Id. at
884. The FTC’s review of proposed rules for consistency with HISA was “too limited to ensure the Authority ‘functions subordinately’ to the agency.” Id.
“[S]uch arms-length review hardly subjects the Authority’s rules to ‘independent’ oversight.”
Id. at 885.
Perhaps more importantly, the court explained that,
whatever the FTC’s consistency review would entail, it
excludes review of the Authority’s policy choices. Id.
Similarly, the FTC could not force the Authority to modify those choices; it could only make recommendations
to the Authority. Id. at 886. “The Act’s division of labor is clear: the Authority writes the rules; the agency
may suggest certain changes, but the Authority can take
them or leave them.” Id.
Finally, the Fifth Circuit noted that HISA’s FTC-Authority relationship was materially different from the
Maloney Act’s SEC-FINRA model, which has consistently withstood non-delegation challenges. Id. at 887.
Although FINRA, like the Authority, “is a private entity
empowered to draft and propose regulations” to a federal agency, there was “a key distinction” between the
two. Id. “Unlike HISA, the Maloney Act empowers
the SEC to ‘abrogate, add to, and delete from’ FINRA
rules ‘as the [SEC] deems necessary or appropriate[.]’ ”
Id. (quoting 15 U.S.C. § 78s(c) and citing Aslin v. Fin.
Indus. Regulatory Auth., Inc., 704 F.3d 475, 476 (7th
Cir. 2013) (observing that the SEC “may abrogate, add
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to, and delete from all FINRA rules as it deems necessary”)). The SEC’s rulemaking power, the court explained, “meaningfully distinguishes the SEC-FINRA
relationship from the FTC-Authority relationship.”
Id. The court recognized that while “FINRA plays an
important role in formulating securities industry rules,
its role is ultimately ‘in aid of’ the SEC, which has the
final word on the substance of the rules.” Id. The Authority, in contrast, has the final word on formulating
and proposing rules because of “the limits built into the
FTC’s oversight.” Id. Thus, the Fifth Circuit held
that “the FTC’s power to recommend modifications is
not equivalent to the power to require modifications.”
Id. at 888.
These reasons—combined with the Fifth Circuit’s
view that precedent did not require affirmance—led the
Court to hold that the Authority was not subordinate to
the FTC and, thus, the FTC-Authority structure violated the Constitution’s guarantee against private nondelegation. Id. at 890.
H.
Congress amends HISA.
Roughly six weeks after the Fifth Circuit’s decision,
Congress enacted, and the President signed into law, an
amendment to HISA. As amended, § 3053(e) now provides the FTC with authority to “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).
The defendants sought rehearing in the Fifth Circuit in
59a
light of the amendment, but the panel remanded the case
to this Court for further proceedings. Nat’l Horsemen’s,
No. 22-10387, Dkt. Nos. 223-24 (5th Cir. Jan. 31, 2023)
(denying rehearing and issuing mandate).
I.
The plaintiffs allege several post-remand emergencies.
Following remand, the plaintiffs in National Horsemen’s filed a Motion for a Preliminary Injunction (Dkt.
No. 116), asking the Court to enjoin the Authority from
implementing and enforcing HISA while the parties dispute whether Congress’s recent modification to HISA
makes the statute constitutional. Id. at 6. The plaintiffs proposed that the Court order an expedited briefing schedule on the motion so the Court could issue its
order by March 27, 2023—the date an anti-doping rule
was scheduled to (and eventually did) go into effect.
Dkt. No. 117. After considering the parties’ respective
positions, the Court declined to order expedited briefing
and instead set a regular briefing schedule. Dkt. No.
121.
On March 27, 2023—the very day that the anti-doping rule was approved and went into effect—the plaintiffs filed their Motion for an Emergency Preliminary
Injunction Against the Medication Rule. Dkt. No. 124.
The emergency motion focused specifically on the antidoping rule, alleging that it violated the Administrative
Procedure Act. Id. The Court ordered expedited
briefing for the emergency motion only. Dkt. No. 127.
In its order, the Court found that the anti-doping rule
issued without the notice required under the APA and
delayed the Rule’s effective date until May 1, 2023.
Dkt. No. 134.
60a
Five days later, the plaintiffs in Gulf Coast—a case
originally pending in the Amarillo Division—moved for
a temporary restraining order and preliminary injunction, seeking to enjoin the defendants from enforcing
HISA while the Court resolved the pending dispositive
motions. No. 2:22-CV-146-Z, Dkt. No. 50. This case
was transferred to the Lubbock Division of this Court
because of the substantial overlap of the claims in Gulf
Coast and National Horsemen’s, the similarity of the
parties, and the likelihood that the evidence involved
and objective of the plaintiffs in both cases would be
nearly identical. Gulf Coast, No. 5:23-CV-077-H, Dkt.
No. 53 at 4. After the transfer, the Court denied the
motion for temporary restraining order but reserved its
ruling on the motion for preliminary injunction. Gulf
Coast, No. 5:23-CV-077-H, Dkt. No. 59.
J.
The plaintiffs bring numerous constitutional
claims.
The Court found that Gulf Coast and National
Horsemen’s involved “a common question of law or fact”
and consolidated the two cases pursuant to Federal Rule
of Civil Procedure 42(a)(2). Dkt. No. 135 at 1.
i.
Gulf Cost Racing
The Gulf Coast plaintiffs’ operative complaint makes
the following constitutional claims: (1) the Authority’s
leadership-appointment process violates Article II’s Appointments Clause, (2) the Authority leadership-removal process violates Article II’s Vesting Clause, (3)
the Authority’s rulemaking constitutes “a naked delegation” of legislative power, (4) the rulemaking authority
that is delegated to the Authority violates the nondelegation doctrine because Congress has not supplied an
61a
intelligible principle, (5) the delegation of power to the
Authority violates the private-nondelegation doctrine,
(6) the Authority’s power to seek civil penalties from
covered persons violates the Seventh Amendment right
to a jury trial, (7) the Authority’s ability to adjudicate
private rights violates Article III, (8) HISA’s elect-orpreempt provision violates the Tenth Amendment’s
guarantee that the federal government cannot command
States to enforce federal law, and (9) HISA Rule 8400,
which requires covered persons to consent to inspection
as a condition of registration, violates the Fourth Amendment. Dkt. No. 142.
At the April 18, 2023 pretrial conference, the parties
discussed with the Court the possibility that the claims
might be narrowed in advance of trial. Dkt. No. 163 at
16-17. During the conference, the Gulf Coast plaintiffs
indicated they were abandoning an argument related to
the breed-expansion authority, which they called a subclaim of the private-nondelegation challenge. Id. at 13.
The next day, the Gulf Coast plaintiffs filed an advisory
that they would be willing to abandon “Claims 3-4 (public nondelegation), Claim 6 (Seventh Amendment),
Claim 7 (Article III), and Claim 9 (Fourth Amendment),” provided the defendants would not hold that
abandonment against them in another case or in an enforcement proceeding. Dkt. No. 161. The defendants
filed a notice advising that they agreed to these conditions (Dkt. Nos. 164; 165), so the Gulf Coast plaintiffs
have abandoned their third, fourth, sixth, seventh, and
ninth claims.
Thus, the Gulf Coast plaintiffs’ remaining claims are:
• An Article I, Section 2, Clause 2 Appointments
Clause challenge (Claim 1)
62a
• An Article II, Section 1 removal challenge (Claim
2)
• A private-nondelegation challenge (Claim 5),7 and
• An anti-commandeering challenge under the
Tenth Amendment (Claim 8).
ii.
National Horsemen’s
The Horsemen plaintiffs’ Original Complaint (Dkt.
No. 1) and First Amended Complaint (Dkt. No. 23)—
which was the operative complaint when the Court previously heard the defendants’ motions to dismiss and the
plaintiffs’ partial motion for summary judgment—
included an intelligible-principle claim and an Appointments Clause claim, but those were recognized as abandoned in the Court’s memorandum opinion and order
(Dkt No. 92 at 60 (“The plaintiffs abandoned their Appointments Clause claim (Claim II) and public nondelegation claim (Claim III), so they are dismissed.”)).
The Horsemen plaintiffs’ live complaint (Dkt. No.
149) asserts that HISA violates the Constitution in three
claims, none of which are abandoned:
• Delegation of legislative powers to a private entity in violation of Article I, Section 1,
• Delegation of executive powers to a private entity
in violation of Article II, Section 1, and
The plaintiffs do not identify the constitutional source of this
claim. Dkt. No. 142 at 45-49. The Fifth Circuit noted that “[c]ourts
and commentators differ over the locus of the constitutional violation” (Nat’l Horsemen’s, 53 F.4th at 881 n.23), but the parties do not
dispute that such a violation is cognizable under the Constitution, so
the Court does not reach this question.
7
63a
• A violation of the Fifth Amendment’s Due Process Clause—alleging that self-interested industry participants are given regulatory power over
their competitors.
iii. The intervenor-plaintiffs
The claims in the intervenor-plaintiffs’ operative
complaint mirror those in the Horsemen plaintiffs’ complaint. The intervenor-plaintiffs assert that HISA violates the constitution in two claims:
• Delegation of legislative and executive powers to
a private entity under Article I, Section I and Article II, Section II, and
• Violation of the Due Process Clause because selfinterested industry participants regulate their
competitors.
K.
Multiple motions are currently pending.
Pending before the Court is the Horsemen plaintiffs’
Motion for a Preliminary Injunction (Dkt. No. 116).
Also before the Court is the Gulf Coast plaintiffs’ Motion
for Summary Judgment (Dkt. No. 136) and Motion for a
Preliminary Injunction (Dkt. No. 139); the Authority
Defendants’ Motion to Dismiss (Dkt. No. 137); and the
FTC Defendants’ Motion for Summary Judgment (Dkt.
No. 138).
The Horsemen plaintiffs’ Motion for Preliminary Injunction (Dkt. No. 116) asserts that HISA is facially unconstitutional on three bases: First, the Horsemen argue that “the Authority is not subordinate when exercising legislative powers.” Id. at 8. They argue that the
Authority is delegated with rulemaking authority, more
so (according to the plaintiffs) than other permissible
64a
private delegations. Id. at 8-9. They also argue that,
post-amendment, HISA still requires the FTC to approve rules that are consistent with the statute. Id. at
9-12. The Horsemen argue that the FTC must be able
to approve, disapprove, or modify a rule at the time the
Authority proposes it. Id. at 11. And they argue that
the FTC is subordinate to the Authority because the
FTC cannot initiate rulemaking. Id. at 12-13. They
say the FTC cannot issue interim final rules. Id. at 13.
And they argue that the Authority has behaved inconsistently with the Act and the Rules by, for instance, extending effective dates of Rules without FTC permission. Id. at 13-14. They also argue that the Authority
exercises taxing-and-spending powers by issuing assessments. Id. at 15-16.
Excluding the abandoned claims, the Gulf Coast
plaintiffs’ Motion for Summary Judgment and Motion
for a Preliminary Injunction argue that HISA violates
Article II’s Appointments Clause because the Authority’s directors are “Officers of the United States” under
Lucia v. SEC, 138 S. Ct. 2044 (2018). No. 5:23-CV-077,
Dkt. No. 36 at 28. They also argue that HISA violates
Article II’s Vesting Clause because the President cannot remove the Authority’s directors. Id. at 34. They
then argue that HISA violates the nondelegation doctrine because the Authority exercises legislative power
in violation of the nondelegation doctrine (regardless of
whether the Authority is a private or public entity). Id.
at 37. The plaintiffs next argue that even if the Authority is a private entity, it violates the nondelegation doctrine. Id. at 45. Finally, the plaintiffs argue that
HISA violates the anti-commandeering doctrine. No.
5:23-CV-077, Dkt. No. 36 at 57.
65a
In addition to responding to the plaintiffs’ arguments, the FTC defendants argue in their Motion to Dismiss (Dkt. No. 137) that the plaintiffs do not have standing to assert an anti-commandeering claim because they
cannot enforce the rights of a state and Texas is not
joined in that claim. No. 5:23-CV-077, Dkt. No. 46 at
27-30. In their motion for summary judgment, the Authority defendants argue that the plaintiffs’ fail to prove
their claims. Dkt. No. 137.
L.
The Court received evidence and heard argument
at trial.
On April 26, the Court held a trial on the merits consolidated with the hearings of the plaintiffs’ motions for
preliminary injunction. Dkt. No. 178. The plaintiffs
admitted a number of exhibits, as well as witness testimony by declaration. Dkt. No. 179. The Horsemen
admitted 57 exhibits, including matters of public record
(e.g., HPX 14—HISA Racetrack Safety, 87 Fed. Reg. 435
(2022)); Authority guidance (e.g., HPX 26—Guidance of
the Horseracing Integrity and Safety Authority (November 29, 2022)); and biographies of Authority board
members (e.g., HPX 53-I—Biography of Jerry Black).
The Horsemen also presented three witnesses by declaration, who testified regarding the economic and practical effects of HISA (HPXs 58; 59; 61). The Gulf Coast
plaintiffs admitted exhibits in the public record, as well
as the meeting minutes of the Authority’s board of directors (GPXs 41-53) and the Authority’s balance sheet
(GPX 40). The Gulf Coast plaintiffs also presented
three witnesses by declaration—all agents of the plaintiff entities—who testified regarding the effect of HISA
on their businesses or association members. GPXs 2932.
66a
The FTC presented no evidence. The Authority
presented seven witnesses, who are agents of the Authority, veterinarians, and horse trainers. DXs 1-8.
Lisa Lazarus, the CEO of the Authority, testified regarding the benefits of HISA and the Authority on the
horseracing industry.
DXs 1-2.
The Authority’s
CFO, Jim Gates, disputed the economic impact estimated by the Gulf Coast plaintiffs. DX 3. Sara Langsam (DX 4), Susan Stover (DX 7), and Mary Scollay (DX
8) are veterinarians who testified regarding the benefits, in their view, of the Authority’s anti-doping and
medication control (ADMC) program. And Mark Casse
(DX 5) and Graham Motion (DX 6), horse trainers, testified about the positives of uniform regulation. After
the parties closed, the Court heard oral argument and
took its ruling under advisement.
2.
Standard of Review
When challenging the facial constitutionality of a
statute, a plaintiff must show “that no set of circumstances exists under which the [statute] would be valid.”
United States v. McGinnis, 956 F.3d 747, 752 (5th Cir.
2020) (alteration in original) (quoting United States v.
Salerno, 481 U.S. 739, 745 (1987)). As a result, “[a] facial challenge to a legislative Act is, of course, the most
difficult challenge to mount successfully.” Salerno,
481 U.S. at 745. “Facial challenges to the constitutionality of statutes should be granted sparingly and only as
a last resort.” McGinnis, 956 F.3d at 752-53 (citations
omitted).
In addition to clearing this high bar, a plaintiff must
also overcome the constitutional-doubt canon: “[W]here
a statute is susceptible of two constructions, by one of
which grave and doubtful constitutional questions arise
67a
and by the other of which such questions are avoided,
our duty is to adopt the latter.” United States ex rel.
Attorney General v. Delaware & Hudson Co, 213 U.S.
366, 408 (1909); see also ANTONIN SCALIA & BRYAN A.
GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 247 (2012) (“A statute should be interpreted
in a way that avoids placing its constitutionality in
doubt.”). The canon is not without limits, but “[i]t is
the Court’s settled policy, however, to avoid an interpretation of a federal statute that engenders constitutional
issues if a reasonable alternative interpretation poses no
constitutional question.” Gomez v. United States, 490
U.S. 858, 858 (1989). In light of this standard of review
and the Court’s findings of fact, the Court reaches the
following conclusions of law detailed in Parts 3-7.
3.
The plaintiffs’ Article II claims fail because the Authority is a private entity.
The Gulf Coast plaintiffs allege two violations of Article II of the Constitution. First, they claim that HISA
violates Article II’s Appointments Clause by creating
public officers—the Authority’s directors—who were
not appointed by the President with the advice and consent of the Senate. No. 5:23-CV-077, Dkt. No. 36 at 21.
Second, they claim that HISA violates Article II’s Vesting Clause because neither the President nor the FTC
on his behalf may remove the Authority’s directors,
which Gulf Coast believes are executive officials. Id. at
34. The Gulf Coast plaintiffs concede that their arguments fail if the Authority is a private entity. No. 5:23CV-077, Dkt. No. 61 at 9. More broadly, the plaintiffs
recognize that their Article II arguments and privatenondelegation arguments are mutually exclusive. Dkt.
No. 182 at 75.
68a
For two reasons, the Court finds that the Authority
is a private entity. First, in light of the Fifth Circuit’s
opinion, it is both the law of the case and foreclosed by
binding precedent. Second, even if that were not the
case, the Authority is a private entity under Lebron and
other relevant precedent because it is not government
created, and its directors are not government appointed.
This matters because private entities are not subject to
the constitutional requirements governing appointment
and removal of officers, and governmental entities are
not subject to private-nondelegation claims. Like the
rest of Article II, “the Appointments Clause says nothing” about private entities. Fin. Oversight & Mgmt.
Bd. For P.R. v. Aurelius Inv., LLC, 140 S. Ct. 1649, 1658
(2020).
Despite the Gulf Coast plaintiffs’ admission that finding the Authority to be private forecloses their arguments, they fail to squarely address the issue. Instead,
they merely state that the Authority is different than
other self-regulatory organizations (SROs) because it is
not a voluntary association. No. 5:23-CV-077, Dkt. No.
61 at 14. But this argument ignores both the Fifth Circuit’s opinion in this case and Lebron’s application here,
which weighs heavily in favor of the defendants’ argument that the Authority is private.
A.
The Fifth Circuit’s holding in this case rests necessarily on finding that the Authority is a private
entity.
On appeal, the Fifth Circuit held that the Authority
was a private entity that was improperly delegated government authority. Nat’l Horsemen’s, 53 F.4th at 872.
The Court explained that “HISA empowers a private entity called [the Authority]” to operate “under [FTC]
69a
oversight.” Id. The Court further explained that
“[t]he end result is that Congress has given a private entity the last word over what rules govern our nation’s
thoroughbred horseracing industry.” Id. This was a
constitutional issue, the Court concluded, because “Congress defies[the nondelegation doctrine]by vesting government power in a private entity not accountable to the
people . . . [C]ourts have distilled the 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. This holding is necessarily predicated on the Authority being a
private entity. Moreover, there is the simple fact that
the Fifth Circuit called the Authority a private entity
throughout its opinion. Id. at 872, 873, 881, 887 (the
terms “private entity” and “private entities” appear a
combined 31 times in the Fifth Circuit opinion). 8
Of course, “[n]ot all text within a judicial decision
serves as precedent.” BRYAN A. GARNER ET AL., THE
LAW OF JUDICIAL PRECEDENT 44 (2016) (collecting
cases). Only an appellate court’s holding—those parts
of the decision consisting of the “court’s determination
Like the Fifth Circuit, other courts to consider challenges to the
FTC-Authority structure have called the Authority a private entity.
Oklahoma v. United States, 62 F.4th 221 passim (6th Cir. 2023) (calling the Authority “a private entity beyond public control” and referring to private entities more than 40 times); Oklahoma v. United
States, No. 5:21-CV-104-JMH,2022 WL 1913419, at *11 (E.D. Ky.)
(“Plaintiffs make several alternative arguments in case the Court
finds the Authority to be a public entity, including that its structure
violates the Appointments Clause, its officers are not properly removable under Article II and the separation of powers, and it violates the public nondelegation doctrine. However, as repeatedly
stated herein, . . . the Authority is a private entity.”).
8
70a
of a matter of law pivotal to its decision”—are given the
weight of binding precedent (and therefore, likewise become the law of that particular case). Id. (quoting
Francis Bacon, “The Lord Keeper’s Speech in the Exchequer” (1617), in 2 THE WORKS OF FRANCIS BACON
477, 478 (Basil Montagu ed., 1887)). While “commentators and judges don’t uniformly define what counts as
a holding,” all agree that those propositions that are logically necessary to the outcome of the case are counted
within the holding. Id. at 45; see also United States v.
Johnson, 256 F.3d 895, 914-15 (9th Cir. 2001) (en banc)
(discussing whether a holding is limited to that which is
“necessary in some strict logical sense” or the broader
“necessarily decided”); Int’l Truck & Engine Corp. v.
Bray, 372 F.3d 717, 721 (5th Cir. 2004) (defining a holding as a statement “necessary to the result or constitut[ing] an explication of the governing rules of law”).
Additionally, in the Fifth Circuit, “[t]he law of the
case doctrine states that absent manifest error, or an intervening change in the law, an appellate court’s decision of a legal issue, whether explicitly or by necessary
implication, establishes the law of the case and must be
followed in all subsequent proceedings in the same
case.” Carnival Leisure Indus., Ltd. v. Aubin, 53 F.3d
716, 718-19 (5th Cir. 1995). Although the doctrine “does
not include determination of all questions which were
within the issues of the case and which, therefore, might
have been decided,” the doctrine “does mean that the
duty of a lower court to follow what has been decided at
an earlier stage of the case comprehends things decided
by necessary implication as well as those decided explicitly.” Terrell v. Household Goods Carriers’ Bureau,
494 F.2d 16, 19 (5th Cir. 1974) (cleaned up). Thus, an
issue of law or fact decided on appeal may not be reex-
71a
amined either by the district court on remand or by the
appellate court on a subsequent appeal. Todd Shipyards Corp. v. Auto Transp., 763 F.2d 745, 750 (5th Cir.
1985).
For example, in Cooper Tire & Rubber Co. v. Farese,
the Fifth Circuit explained that a prior panel “held that
the effective date of the separation agreement was ambiguous as a matter of law.” 248 F. App’x 555, 560-61
(5th Cir. 2007). In doing so, “the prior panel necessarily had to consider whether the contract’s apparent
ambiguities could or should be resolved by applying the
discretionary canons of construction.” Id. As a result, the court explained that the contract’s ambiguity
became “the law of the case, and the question of whether
the effective date of the separation agreement can be
determined on summary judgment is now closed.” Id.
Here, the Fifth Circuit’s decision is necessarily predicated on a finding that the Authority is a private entity.
The Fifth Circuit held that HISA violates the privatenondelegation doctrine because the statute delegates
legislative and executive powers to a private entity.
Nat’l Horsemen’s, 53 F.4th at 873 (applying “the settled
constitutional principle that forbids private entities
from exercising unchecked government power”). The
Fifth Circuit recognized that “HISA empowers a ‘private, independent, self-regulatory, nonprofit corporation”
—the Authority. Id. And the Fifth Circuit expressly
disclaimed the idea that it was addressing the publicnondelegation doctrine. Id. at 883. The animating
concern of the Fifth Circuit’s opinion—the “obnoxious”
delegation of governmental authority to unaccountable
private actors—is meaningless if the entity to whom
power is delegated is considered a public body. Thus,
72a
the Fifth Circuit has already held—either expressly or,
at the very least, by necessary implication—the Authority is a private entity, and the recent Congressional
amendment does nothing to disturb that holding.
Bound by both precedent and the law of the case, the
Court must deny the Gulf Coast plaintiffs’ Article II
claims.
The plaintiffs insist that the Court is not bound by
the Fifth Circuit’s private-entity holding. At trial,
counsel for the Gulf Coast plaintiffs argued that the Authority’s private-entity status was an uncontested assumption of the Fifth Circuit. Dkt. No. 182 at 70-72.
When asked, counsel indicated that Lebron was his best
case on this point, citing the following language: “[W]e
think that Atchison’s assumption of Amtrak’s nongovernmental status (a point uncontested by the parties in
that case . . . ) does not bind us here.” Id. at 68.
But the plaintiffs misread Lebron, which held that
Amtrak is a public entity for purposes of the First
Amendment. Lebron, 513 U.S. at 399. In Lebron,
Amtrak argued that another case, Atchison, foreclosed
the question of Amtrak’s status as a private entity. Id.
at 393-94. The Supreme Court identified two reasons
it was not bound by Atchison, and neither was that
Atchison rested on an uncontested assumption that
Amtrak was a private entity.
First, in Atchison,
Amtrak’s governmental status was irrelevant because in
any event no contractual obligation was imposed.
Nat’l R.R. Passenger Corp. v. Atchison Topeka & S.F.
RR. Co., 470 U.S. 451, 471 (1985) (stating that “neither
the Act nor the Basic Agreements created a contract between railroads and the United States”); Lebron, 513
U.S. at 393 (explaining that “[t]he Court said it did not
73a
have to consider th[e] question” of whether Amtrak was
a governmental entity). Therefore, with no contractual
obligation, the Atchison court “ha[d] no need to consider
whether an allegation of a governmental breach of its
own contract warrants application of the more rigorous
standard of review that the railroads urge[d] [it] to apply,” much less whether Amtrak was a governmental entity in the first place. Atchison, 470 U.S. at 470. Second, Lebron concluded that even if Amtrak were a governmental entity, there was an independent basis for the
court’s decision. See Lebron, 513 U.S. at 394. (concluding that “even if Amtrak is a Government entity,” the
statute claiming otherwise “suffices to disable that agency
from incurring contractual obligations on behalf of the
United States”—resolving the challenge). Thus, Lebron did not say that Atchison did not bind it because
Amtrak’s governmental status in that case was an uncontested assumption; rather, Atchison simply did not
need to resolve that issue—either expressly or by implication.
Moreover, the Fifth Circuit’s affirmative grant of relief in this case makes clear that it did not decide the
case based on an uncontested assumption. Writing for
the court, Judge Duncan emphasized that “Congress defies [the nondelegation doctrine] by vesting government
power in a private entity.” Nat’l Horsemen’s, 53 F.4th
at 872-73. The Fifth Circuit identified private-entity
status as an element—a necessary condition—of a private-nondelegation claim. See id. Thus, unlike where
Lebron distinguished Atchison—which denied relief—
here the opinion in question granted relief and, therefore, necessarily decided certain issues, including the
Authority’s status as a private entity. And not only
was that decision made in this same case, invo
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