Petition for Writ of Certiorari — Texas, et al., Petitioners v. Jerry Black, et al.

Supreme Court briefOct 22, 2024

Ask Donna

What actually matters in this document.

Text

No. 24-___

In the Supreme Court of the United States

STATE OF TEXAS AND TEXAS RACING COMMISSION,

PETITIONERS

JERRY BLACK, 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

KEN PAXTON

Attorney General of Texas

BRENT WEBSTER

First Assistant Attorney

General

AARON L. NIELSON

Solicitor General

Counsel of Record

LANORA C. PETTIT

Principal Deputy Solicitor

General

BETH KLUSMANN

Assistant Solicitor General

OFFICE OF THE

ATTORNEY GENERAL

P.O. Box 12548 (MC 059)

Austin, Texas 78711-2548

Aaron.Nielson@oag.texas.gov

(512) 936-1700

QU E S TIO N P RE SE N TE D

In 2020, Congress enacted the Horseracing Integrity

and Safety Act (HISA) to, for the first time, federally

regulate the horseracing industry. 15 U.S.C. §§3051-60.

HISA gives the power to “develop[] and implement[] a

horseracing anti-doping and medication control program

and a racetrack safety program” to a “private, independent, self-regulatory, nonprofit corporation”—the

Horseracing Integrity and Safety Authority (the Authority). Id. §3052(a). Under HISA, the Authority proposes rules that are reviewed by the Federal Trade Commission (the FTC), id. § 3053(a), but the FTC is prohibited from rejecting the rules unless they violate HISA or

other applicable rules, id. §3053(c)(2). The Fifth Circuit

initially held that this delegation of legislative authority

is unconstitutional.

Congress reacted, not by altering this process, but by

giving the FTC the option (but not the duty) to undertake its own notice-and-comment rulemaking to abrogate, add to, and modify the Authority’s rules. Id.

§3053(e). Accordingly, unless and until the FTC decides

to intervene, the horseracing industry remains governed

by the Authority—a private entity operating outside of

any constitutional safeguards. And even if the FTC

choses to intervene, its statutory powers are limited.

The question presented is whether Congress has unconstitutionally delegated legislative authority to a private entity in HISA.

(I)

PA RTI E S TO T HE P R O C E E D I NG

Petitioners the State of Texas and the Texas Racing

Commission were intervenor plaintiffs-appellants below.

Respondents Jerry Black; Katrina Adams; Leonard

Coleman; MD Nancy Cox; Joseph Dunford; Frank Keating; Kenneth Schanzer; Lisa Lazarus; Steve Beshear;

Adolpho Birch; Ellen McClain; Charles Scheeler; Joseph

DeFrancis; Susan Stover; Bill Thomason; D.G. Van Clief;

the Horseracing Integrity and Safety Authority, Incorporated; the Federal Trade Commission; Chair Lina

Khan; Commissioner Rebecca Slaughter; Commissioner

Alvaro Bedoya; Commissioner Melissa Holyoak; and

Commissioner Andrew Ferguson were defendants-appellees below. 1

Respondents 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

Pursuant to Supreme Court Rule 35.3, Commissioners Holyoak and Ferguson were automatically substituted for their predecessors, Commissioners Christine Wilson and Noah Phillips.

(II)

Protective Association; Gulf Coast Racing, L.L.C.; LRP

Group, Limited; Valle de Los Tesoros, Limited; Global

Gaming LSP, L.L.C.; and Texas Horsemen’s Partnership, L.L.P. were plaintiffs-appellants below.

RE L ATE D P RO C E E D ING S

Nat’l Horsemen’s Benevolent & Protective Ass’n v.

Black, No. 5:21-CV-00071-H, U.S. District Court for the

Northern District of Texas. Judgment entered May

4, 2023.

Gulf Coast Racing, LLC v. Horseracing Integrity &

Safety Auth., No. 5:23-CV-00077-H, U.S. District Court

for the Northern District of Texas. Case transferred and

consolidated April 11, 2023.

Nat’l Horsemen’s Benevolent & Protective Ass’n v.

Black, No. 22-10387, U.S. Court of Appeals for the Fifth

Circuit. Judgment entered November 18, 2022.

Nat’l Horsemen’s Benevolent & Protective Ass’n v.

Black, No. 23-10520, U.S. Court of Appeals for the Fifth

Circuit. Judgment entered July 5, 2024.

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

Horsemen’s Benevolent & Protective Ass’n, No. 24A287,

U.S. Supreme Court. Administrative stay entered September 23, 2024.

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

Horsemen’s Benevolent & Protective Ass’n, No. 24-433,

U.S. Supreme Court. Petition for writ of certiorari filed

October 15, 2024.

Fed. Trade Comm’n v. Nat’l Horsemen’s Benevolent

& Protective Ass’n, No. 24-429, U.S. Supreme Court. Petition for writ of certiorari filed October 16, 2024.

(III)

TA BLE O F C O NTE N TS

Page

Question Presented.......................................................... I

Parties to the Proceeding .............................................. II

Related Proceedings ..................................................... III

Table of Authorities ...................................................... VI

Petition for a Writ of Certiorari ..................................... 1

Opinions Below................................................................. 3

Jurisdiction ....................................................................... 3

Constitutional and Statutory Provisions Involved ........ 3

Statement ......................................................................... 3

I. Horseracing Integrity and Safety Act ................ 3

A. The Authority ................................................. 3

B. The Authority’s rulemaking power ............... 6

C. The Authority’s enforcement power ............. 9

II. Procedural History............................................. 10

A. Texas’s complaint ......................................... 10

B. Texas’s first appeal ....................................... 12

C. Subsequent proceedings .............................. 14

Reasons for Granting the Petition................................ 16

I. Delegation of Legislative Power to a

Private Entity Is an Important Question

of Federal Law That Should Be Decided

by This Court ...................................................... 16

II. The Fifth Circuit’s Decision Conflicts

with This Court’s Precedent .............................. 18

A. The Fifth Circuit’s decision is contrary

to the Court’s private-nondelegation

precedent ....................................................... 19

B. The Circuits wrongly treated the FTC’s

optional supervision as sufficient ................ 21

(IV)

III. The Circuits Do Not Agree on the

Constitutional Test ............................................. 28

IV. This Question is Exceptionally Important ....... 30

Conclusion ...................................................................... 32

Appendix A — Court of Appeals Opinion

(July 5, 2024) ....................................... 1a

Appendix B — District Court Memorandum

Opinion and Order (May 4, 2023) ... 45a

Appendix C — Court of Appeals Order Denying

Rehearing (Sept. 9, 2024) .............. 104a

Appendix D — Court of Appeals Opinion

(Nov. 18, 2022) ............................... 107a

Appendix E — Relevant Provisions of the United

States Constitution ....................... 147a

Appendix F — Horseracing Integrity and Safety

Act .................................................. 148a

TA BLE O F AU T HO R I TIE S

Page(s)

Cases:

A.L.A. Schechter Poultry Corp. v. United States,

295 U.S. 495 (1935) ....................................................... 16

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

721 F.3d 666 (D.C. Cir. 2013) ........ 13, 22, 23, 25, 28, 30

Biden v. Nebraska,

143 S.Ct. 2355 (2023) .................................................... 25

Carter v. Carter Coal Co.,

298 U.S. 238 (1936) ....................................... 1, 19, 20, 21

City of Fort Worth v. Rylie,

602 S.W.3d 459 (Tex. 2020) .......................................... 10

Collins v. Yellen,

594 U.S. 220 (2021) ......................................................... 5

Consumers’ Rsch. v. FCC,

109 F.4th 743 (5th Cir. 2024), petition

for cert. filed, No. 24-354

(U.S. Sept. 30, 2024) ..................................................... 25

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

573 U.S. 930 (2014) ....................................................... 17

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

575 U.S. 43 (2015) ............................ 1, 13, 17, 19, 23, 32

DHS v. Regents of the Univ. of Cal.,

591 U.S. 1 (2020) ........................................................... 26

Free Enter. Fund v. PCAOB,

561 U.S. 477 (2010) ................................................. 10, 21

Gundy v. United States,

588 U.S. 128 (2019) ............................................. 1, 16, 17

Humphrey’s Ex’r v. United States,

295 U.S. 602 (1935) ......................................................... 5

VII

Cases (Ctd.):

Jarkesy v. SEC,

34 F.4th 446 (5th Cir. 2022), aff’d on

different grounds, 144 S.Ct. 2117 (2024).................... 10

Loving v. United States,

517 U.S. 748 (1996) ....................................................... 16

Lucia v. SEC,

585 U.S. 237 (2018) ......................................................... 5

MCI Telecomms. Corp. v. Am. Tel. & Tel. Co.,

512 U.S. 218 (1994) ....................................................... 25

Mistretta v. United States,

488 U.S. 361 (1989) ....................................................... 23

W.V. ex rel. Morrisey v. U.S. Dep’t of the Treasury,

59 F.4th 1124 (11th Cir. 2023) ..................................... 23

New State Ice Co v. Liebmann,

285 U.S. 262 (1932) ....................................................... 31

Ohio v. EPA,

144 S.Ct. 2040 (2024) .................................................... 12

Oklahoma v. United States,

62 F.4th 221 (6th Cir. 2023), cert.

denied, 144 S.Ct. 2679 (2024) .................... 14, 18, 19, 21

Panas v. Tex. Breeders & Racing Ass’n,

80 S.W.2d 1020 (Tex. App.—Galveston

1935, writ dism’d) ......................................................... 11

Paul v. United States,

140 S.Ct. 342 (2019) ...................................................... 17

Pittston Co. v. United States,

368 F.3d 385 (4th Cir. 2004) .................................. 29, 30

Riverbend Farms, Inc. v. Madigan,

958 F.2d 1479 (9th Cir. 1992) ................................ 29, 30

SEC v. Chenery Corp.,

332 US 194 (1947) ......................................................... 26

VIII

Cases (Ctd.):

Seila L. LLC v. CFPB,

591 U.S. 197 (2020) ..................................................... 1, 5

Sunshine Anthracite Coal Co. v. Adkins,

310 U.S. 381 (1940) .......................... 18-19, 20, 21, 28, 29

Texas v. Comm’r for Internal Revenue,

142 S.Ct. 1308 (2022) ....................................... 1, 2, 4, 18

Texas v. Rettig,

987 F.3d 518 (5th Cir. 2021) ........................................ 13

UARG v. EPA,

573 U.S. 302 (2014) ....................................................... 24

United States v. Frame,

885 F.2d 1119 (3d Cir. 1989) ........................................ 29

United States v. Martinez-Flores,

428 F.3d 22 (1st Cir. 2005) .................................... 22, 23

United States v. Palazzo,

558 F.3d 400 (5th Cir. 2009) ........................................ 22

Walmsley v. FTC,

No. 23-2687, 2024 WL 4248221

(8th Cir. Sept. 20, 2024), petition for cert.

filed, No. 24-420 (U.S. Oct. 10, 2024) .............. 18, 19, 21

Whitman v. Am. Trucking Ass’ns,

531 U.S. 457 (2001) ................................................. 22, 23

Consitutional Provisions, Statutes, and Rules:

U.S. Const.:

art. I, §1 ......................................................... 1, 16, 18, 19

art. II, §1 ......................................................................... 1

5 U.S.C. §706 ....................................................................... 25

Constitutional Provisions, Statutes, and

Rules (Ctd.):

15 U.S.C.:

§78s(c) ............................................................................ 13

§§3051-60 ................................................................. I, 1, 3

§3051(4) ........................................................................... 4

§3051(5) ........................................................................... 4

§3051(6) ........................................................................... 4

§3052(a) ............................................I, 4, 6, 17, 19, 24, 29

§3052(b) ..................................................................... 5, 21

§3052(c) .......................................................................... 24

§3052(d) ........................................................................... 5

§3052(f)(2) ....................................................................... 5

§3052(f)(3)........................................................................ 5

§3052(f)(3)(D) ................................................................. 6

§3052(f)(5)........................................................................ 5

§3053(a) ..................................................... I, 7, 19, 21, 24

§3053(a)-(c) .............................................................. 21, 25

§3053(b)(1) ................................................................. 7, 24

§3053(c) .......................................................................... 24

§3053(c)(2) .................................. I, 5, 7, 19, 21, 25, 28, 30

§3053(e) .............. I, 2, 8, 14, 19, 21, 22, 24, 25, 27, 28, 29

§3054(b) ........................................................................... 6

§3054(c) .......................................................................... 24

§3054(c)(1)(A) .................................................................. 9

§3054(c)(1)(B) ................................................................ 10

§3054(c)(2) ..................................................................... 24

§3054(e)(1)(A) ................................................................. 9

§3054(e)(1)(E) ................................................................. 9

§3054(g) ......................................................................... 24

§3054(g)(2) ..................................................................... 26

§3054(g)(3) ..................................................................... 26

§3054(h) ......................................................................... 24

§3054(j) .................................................................... 10, 24

Constitutional Provisions, Statutes, and

Rules (Ctd.):

15 U.S.C.:

§3054(l) ............................................................................ 4

§3054(l)(1) ...................................................................... 24

§3055 ................................................................................ 6

§3056 ................................................................................ 6

§3057 ................................................................................ 9

§3057(d)(3)(A) ................................................................. 9

§3058 .............................................................................. 24

§3058(b) ......................................................................... 10

§3058(b)(2)(A) ............................................................... 10

§3058(c) .......................................................................... 10

28 U.S.C. §1254(1) ................................................................ 3

Tex. Occ. Code:

§2021.002 ....................................................................... 11

§2022.001(a)................................................................... 11

§2033.051 ....................................................................... 11

§2033.151 ....................................................................... 11

16 C.F.R.:

§§1.150-.152 (2024) ......................................................... 8

§§1.153-.156 (2024) ......................................................... 8

16 Tex. Admin. Code:

§§309.1-.53 ..................................................................... 11

§§309.101-.299 ............................................................... 11

§§311.101-.112 ............................................................... 11

§§313.1-.450 ................................................................... 11

§§319.1-.112 ................................................................... 11

§§319.301-.364 ............................................................... 11

HISA Rule:

3247 ................................................................................ 10

8400 .................................................................................. 9

Supreme Court Rule 35.3 .................................................. II

Other Authorities:

Amicus Br. of Sen. McConnell, Horseracing

Integrity & Safety Auth. v. NHBPA,

No. 24A287 (U.S. Sept. 24, 2024) ................................ 18

Auth. Defs. Mot. to Stay Mandate,

NHBPA v. Black, No. 23-10520

(5th Cir. Sept. 16, 2024) ................................................. 4

Bituminous Coal Act of 1937, Pub. L. No. 75-48,

50 Stat. 72 (1937) .......................................................... 20

Caroline McLeod, Down to the Wire: The

Desperate Need for the Texas Racing

Industry to Catch Up to Other States,

50 Tex. Tech L. Rev. 307 (2018) .............................. 6, 10

Consolidated Appropriations Act of 2021,

Pub. L. No. 116-260 134 Stat. 1182 (2020) ................... 3

Consolidated Appropriations Act of 2023,

Pub. L. No. 117-328, 136 Stat. 4459 (2022) .................. 8

HISA, 2024 Q2 Metrics Report at 6,

https://perma.cc/37TF-HG6P ..................................... 10

HISA, Operational Bulletin, New Treatment

Record Type: Mandatory Attending

Veterinarian Inspection (June 25, 2024),

https://perma.cc/M39L-22R9 ........................................ 7

HISA, Other Announcements, Proposed

Supplemental Rule Series (Sept. 18, 2024),

https://perma.cc/7AJN-B9WS ...................................... 7

HISA, Press Release, HISA Announces Selection

of Drug Free Sport International as Partner to

Build Independent Anti-Doping and

Medication Control Enforcement Agency (May

3, 2022), https://perma.cc/MW6Y-GNPF..................... 9

XII

Other Authorities (Ctd.):

HISA, Press Release, HISA Releases Request for

Proposals on Furosemide (July 30, 2024),

https://perma.cc/7XP3-S9PV ........................................ 7

HISA, Regulations,

https://hisaus.org/regulations ....................................... 7

H.R. Rep. No. 116-554 (2020) ............................................ 31

John F. Manning, Lawmaking Made Easy,

10 Green Bag 2d 202 (2007) ......................................... 32

Nicholas R. Parrillo, Federal Agency Guidance: An

Institutional Perspective, Admin. Conf. of

United States (Oct. 12, 2017)................................. 26, 27

Order, Horseracing Integrity & Safety Auth. v.

NHBPA, No. 24A287 (U.S. Sept. 23, 2024) ............... 16

Order, NHBPA v. Black,

No. 22-10387 (5th Cir. Jan. 31, 2023). ......................... 14

Pet. for Writ of Cert., Dep’t of Transp. v.

Ass’n of Am. R.Rs., 575 U.S. 43 (2015)

(No. 13-1080), 2014 WL 953507................................... 17

Pet. for Writ of Cert., FTC v. NHBPA,

No. 24-429 (U.S. Oct. 16, 2024)...................................... 2

Pet. for Writ of Cert. Horseracing Integrity &

Safety Auth. v. NHBPA, No. 24-433 (U.S. Oct.

15, 2024) ........................................................................... 2

Pet. for Writ of Cert., Oklahoma v. United

States, No. 23-402 (U.S. Oct. 13, 2023) ......................... 6

Supplemental Tables of Equine Injury Database

Statistics for Thoroughbreds, The Jockey Club

(Mar. 12, 2020)

https://jockeyclub.com/pdfs/eid_11_year_

tables.pdf ....................................................................... 31

Tex. Att’y Gen. Op. No. DM-302 (1994) ........................... 11

PE T ITIO N F O R A W RIT O F C E RTIO RA RI

For more than two centuries, the States regulated

horseracing. Yet at the end of 2020, Congress enacted

the Horseracing Integrity and Safety Act, 15 U.S.C.

§§3051-60, to nationalize standards for track conditions

and the use of certain medications in the Thoroughbred

horseracing industry. Unable to reach consensus about

what those federal standards should be, however, Congress instead opted to create a rough blueprint for regulation, but with no specifics. And rather than giving authority to “fill up the details” to a federal agency, Gundy

v. United States, 588 U.S. 128, 157 (2019) (Gorsuch, J.,

dissenting) (citation omitted), Congress entrusted that

awesome regulatory power to a private entity: the

Horseracing Integrity and Safety Authority.

The Authority has no history of regulating horseracing, and with members privately selected, lacks the Constitution’s “checkpoints” designed “[t]o ensure the Government remains accountable to the public.” Texas v.

Comm’r for Internal Revenue (CIR), 142 S.Ct. 1308,

1309 (2022) (Alito, J., concurring in denial of review). No

wonder the Fifth Circuit has twice held that HISA flunks

the private-nondelegation doctrine. After all, “handing

off regulatory power to a private entity is ‘legislative delegation in its most obnoxious form.’” Dep’t of Transp. v.

Ass’n of Am. R.Rs. (Amtrak II), 575 U.S. 43, 62 (2015)

(Alito, J., concurring) (quoting Carter v. Carter Coal Co.,

298 U.S. 238, 311 (1936)).

Under our Constitution, “[a]ll legislative Powers

herein granted shall be vested in a Congress,” U.S.

Const. art. I, § 1, and “[t]he executive Power”—all of it—

“shall be vested in a President,” id. art. II, §1; see also

Seila L. LLC v. CFPB, 591 U.S. 197, 213 (2020). Here, by

handing off sovereign authority with preemptive force to

(1)

set and enforce rules governing private conduct to a private entity, Congress not only tossed aside federalism, it

also violated both Vesting Clauses.

After the Fifth Circuit initially concluded that

HISA’s grant of rulemaking power to the Authority violates the Constitution, Congress amended HISA to give

the Federal Trade Commission additional power to oversee the Authority’s rulemaking process. 15 U.S.C.

§3053(e). Bound by circuit precedent, the Fifth Circuit

concluded that the amendment cured HISA’s unconstitutionality with respect to rulemaking. The Fifth Circuit

also concluded, however, that nothing about that amendment salvaged HISA’s grant of enforcement power to

the Authority. The upshot is that the Fifth Circuit has

held that a federal statute is unconstitutional in a decision with far-reaching legal and practical implications for

an entire industry.

The State of Texas and the Texas Racing Commission

(collectively, Texas) agree with the Authority and the

FTC “that this case presents an important separationof-powers question,” CIR, 142 S.Ct. at 1309 (Alito, J.,

concurring in denial of review)—indeed, two such questions—and thus merits this Court’s review. Texas thus

does not oppose certiorari in petitions, which concern

whether HISA’s vesting of executive power in a private

entity violates the private-nondelegation doctrine. See

Pet. for Writ of Cert. at i, Horseracing Integrity &

Safety Auth. v. NHBPA, No. 24-433 (U.S. Oct. 15, 2024);

Pet. for Writ of Cert. at I, FTC v. NHBPA, No. 24-429

(U.S. Oct. 16, 2024). The Court, however, should also address the antecedent question of whether HISA’s vesting

of legislative power in that same private entity also violates the private-nondelegation doctrine. It makes little

sense for this Court to resolve whether the Authority can

enforce the rules it creates without first determining

whether the Authority lawfully can create those rules in

the first place.

O PI NIO NS BE LO W

The opinions of the court of appeals are reported at

107 F.4th 415 (Pet.App. 1a-44a) and 53 F.4th 869

(Pet.App. 107a-46a). The opinion of the district court is

reported at 672 F.Supp.3d 220 (Pet.App. 45a-103a). The

unreported order of the court of appeals denying en banc

review is reproduced at Pet.App. 104a-06a.

JU R ISD IC T IO N

The Fifth Circuit entered its judgment on July 5,

2024, and denied the Authority’s and FTC’s timely filed

petitions for en banc review on September 9, 2024. Texas

invokes the Court’s jurisdiction under 28 U.S.C.

§1254(1).

C O N STI TU TI O N AL A ND S TA TU TO RY

PRO V I SIO N S I NV O L V E D

Pertinent constitutional provisions and the Horseracing Integrity and Safety Act, 15 U.S.C. §§3051-60, are set

forth in the appendix to this brief. Pet.App. 147a-91a.

ST ATE ME N T

I. Horseracing Integrity and Safety Act

A. The Authority

Bucking more than 200 years of history, Congress in

2020 decided, for the first time, that horseracing should

be federally regulated. Congress thus enacted HISA as

part of the must-pass Consolidated Appropriations Act

of 2021, Pub. L. No. 116-260, §§1201-12, 134 Stat. 1182,

3252-75 (2020) (codified at 15 U.S.C. §§3051-60). HISA is

intended to broadly regulate every aspect of the

horseracing industry, encompassing:

• “all trainers, owners, breeders, jockeys, racetracks,

veterinarians, persons (legal and natural) licensed by

a State racing commission and the agents, assigns,

and employees of such persons and other horse support personnel who are engaged in the care, training,

or racing of covered horses,” 15 U.S.C. §3051(6);

• “any Thoroughbred horse, or any other horse made

subject to this chapter by election of the applicable

State racing commission or the breed governing organization for such horse,” id. §3051(4); and

• “any horserace involving covered horses that has a

substantial relation to interstate commerce, including

any Thoroughbred horserace that is the subject of interstate off-track or advance deposit wagers,” id.

§3051(5).

HISA thus regulates more than 67,000 horses and

35,000 individuals. See Auth. Defs. Mot. to Stay Mandate

Ex. 1 ¶ 4, NHBPA v. Black, No. 23-10520 (5th Cir. Sept.

16, 2024). And that is just for now. Under HISA, any

state racing commission or other specified group may

ask for another breed to be subject to the Authority’s jurisdiction, without input from Congress and subject only

to the Authority’s approval. 15 U.S.C. §3054(l).

Yet, although Congress concluded that there should

be nationwide standards, it bypassed the Constitution’s

“careful design … for making law,” CIR, 142 S.Ct. at

1309 (Alito, J., concurring in denial of review), neither

setting those standards itself in HISA nor even requiring

a federal agency to do so. Instead, Congress gave that

“sweeping” power, Pet.App. 129a, to the Authority, a

“private, independent, self-regulatory, nonprofit corporation,” 15 U.S.C. §3052(a), that was incorporated in

anticipation of HISA’s passage, ROA.4223-28 (incorporation), 4229-51 (bylaws). 1

The Authority is governed by a nine-member Board

of Directors, none of whom is appointed or removable by

the President or another federal official. See 15 U.S.C.

§3052(b), (d); ROA.4236; but see Lucia v. SEC, 585 U.S.

237 (2018) (holding that the Appointments Clause governs anyone who exercises significant authority under

federal law); Collins v. Yellen, 594 U.S. 220 (2021) (explaining that those wielding executive power must be removable by the President). And while the FTC must review the Authority’s rules, it does so only to ensure that

they are “consistent” with federal law; the FTC cannot

second guess the Authority’s policy choices. See 15

U.S.C. §3053(c)(2). Furthermore, the FTC—perhaps the

most prominent member of the headless fourth branch

of government—itself exists outside of the President’s

plenary control. See Humphrey’s Ex’r v. United States,

295 U.S. 602 (1935); but see Seila L., 591 U.S. at 216 &

n.2, 219 & n.4 (suggesting that the FTC’s removal restrictions are, and have always been, unconstitutional).

Nor is the Authority funded by appropriations from

Congress. See 15 U.S.C. §3052(f)(5). Instead, it charges

fees allocated against each State. See id. §3052(f)(2). At

the State’s putative option, a state racing commission—

a state entity that traditionally has been tasked with

overseeing horseracing—may collect and remit the required fees to the Authority or, if the state racing commission declines, the Authority will collect the fees directly from covered persons within the State. Id.

§3052(f)(2), (3). If a state racing commission refuses to

“ROA” refers to the paginated record on appeal on file with

the Fifth Circuit.

remit fees to the Authority, HISA may strip it of the

power to “impose or collect from any person a fee or tax

relating to anti-doping and medication control or racetrack safety matters for covered horseraces,” id.

§3052(f)(3)(D)—effectively nullifying most such commissions’ ability to perform the functions traditionally assigned to them by their States’ respective legislatures,

see Pet. for a Writ of Cert. at 28-29, Oklahoma v. United

States, No. 23-402 (U.S. Oct. 13, 2023).

B. The Authority’s rulemaking power

1. In HISA, Congress empowered the Authority to

create a comprehensive regulatory regime to govern an

industry that has been an “integral part of Texas culture”—as well as that of other States—“since before the

first settlers arrived.” Caroline McLeod, Down to the

Wire: The Desperate Need for the Texas Racing Industry to Catch Up to Other States, 50 Tex. Tech L. Rev. 307,

310 (2018). For example, Congress delegated power to

the Authority to “develop[] and implement[]” by rule a

horseracing anti-doping and medication-control program, 15 U.S.C. §3052(a), thus allowing the Authority to

impose federal restrictions on administering medication

to horses, create standards for “laboratory testing accreditation and protocols,” and determine which medications and substances will be permitted and at what levels,

id. §3055. Congress also empowered the Authority to develop and implement a racetrack-safety program complete with training and racing standards, lists of permitted and prohibited practices, a racing-surface qualitymaintenance system, and programs for injury- and fatality-data analysis. Id. §3056. The Authority’s rules

preempt any conflicting state laws. Id. §3054(b).

By the time this case reached the Fifth Circuit (for

the second time, infra pp.15-16), the Authority had

already created rules on racetrack safety, ROA.3246-93;

enforcement, ROA.3294-329; the assessment methodology for determining each State’s share of fees,

ROA.3330-54; registration of covered persons,

ROA.3355-59; and anti-doping and medication control,

ROA.3388-454. The Authority also has proposed “new

set[s] of supplemental rules relating to topics such as

cleanliness and security of receiving barns, the number

and location of restrooms on the backside, disclosure of

consumption of Prohibited Substances, and entering a

horse on the Veterinarian’s List.” 2 The Authority’s now

nearly 250 pages of rules are not in the Code of Federal

Regulations but rather are found on a private website.

See HISA, Regulations, https://hisaus.org/regulations.

2. When the Authority submits proposed rules to the

FTC, 15 U.S.C. §3053(a), the FTC is obligated to (1) publish them in the Federal Register for notice and comment, id. §3053(b)(1); and (2) approve them if they are

“consistent” with HISA and applicable FTC rules, id.

§3053(c)(2)—what the Fifth Circuit called “consistency

review,” Pet.App. 134a. Given that HISA broadly defines

the Authority’s power to create “standards,” “programs,” and “procedures,” such consistency review has

few, if any, teeth with respect to significant issues.

In fact, as recognized by the FTC itself on multiple

occasions, consistency review does not permit it to alter

or reject the Authority’s policy choices. E.g., ROA.3288

HISA, Other Announcements, Proposed Supplemental Rule

Series (Sept. 18, 2024), https://perma.cc/7AJN-B9WS; see also, e.g.,

HISA, Press Release, HISA Releases Request for Proposals on Furosemide (July 30, 2024), https://perma.cc/7XP3-S9PV; HISA, Operational Bulletin, New Treatment Record Type: Mandatory Attending

Veterinarian

Inspection

(June

25,

2024),

https://perma.cc/M39L-22R9.

(noting the Authority’s proposed rule was consistent

with HISA and that commenters raised only policy disagreements); 3319 (explaining that the FTC does not review “general policy”); 3326 (noting that policy differences do not demonstrate inconsistency with HISA).

Thus, unless the Authority outright violates federal law,

HISA broadly allows the Authority to make policy decisions respecting the horseracing industry.

3. After the Fifth Circuit held that Congress unconstitutionally delegated legislative power to the Authority, Pet.App. 145a-46a, Congress amended one subsection of HISA by, again, including it in a must-pass consolidated appropriations act. See Consolidated Appropriations Act of 2023, Pub. L. No. 117-328, §701, 136 Stat.

4459, 5231-32 (2022). Specifically, the FTC may now:

by rule in accordance with section 553 of title

5 … abrogate, add to, and modify the rules of the

Authority promulgated in accordance with

[HISA] as the [FTC] finds necessary or appropriate to ensure the fair administration of the

Authority, to conform the rules of the Authority

to requirements of [HISA] and applicable rules

approved by the [FTC], or otherwise in furtherance of the purposes of [HISA].

15 U.S.C. §3053(e).

To date, the FTC has used this new power to adopt

rules (1) requiring the Authority to submit its budget for

approval, 16 C.F.R. §§1.150-.152 (2024), and (2) requiring

strategic plans, year-end reports, risk management, and

transparency, id. §§1.153-.156. The FTC, however, has

not created any substantive regulations governing private conduct, nor has it undone or altered any of the Authority’s regulations of private conduct.

C. The Authority’s enforcement power

1. In addition to making the rules, the Authority also

enforces (and adjudicates) them—again, without meaningful oversight. Congress gave the Authority the ability

to determine what conduct is sanctionable and to set the

penalties for rule violations. See 15 U.S.C. §3057. Congress also empowered the Authority to issue rules “authorizing” “access to offices, racetrack facilities, other

places of business, books, records, and personal property

of covered persons,” “issuance and enforcement of subpoenas and subpoenas duces tecum,” and “other investigative powers.” Id. §3054(c)(1)(A). Unsurprisingly, the

Authority has issued a rule giving itself wide-ranging investigative authority. See HISA Rule 8400.

Congress further authorized the Authority to contract with another entity to act as the anti-doping and

medication-control “enforcement agency.” 15 U.S.C.

§3054(e)(1)(A). Accordingly, the Authority has contracted with Drug Free Sport International (DFSI), another independent, private entity. 3 In that contractual

role, DFSI is to, among other duties, implement the antidoping and medication-control program on behalf of the

Authority, as well as “testing, compliance and adjudication programs.” Id. §3054(e)(1)(E).

Sanctions issued by the Authority may include “lifetime bans from horseracing, disgorgement of purses,

monetary fines and penalties, and changes to the order

of finish in covered races.” Id. §3057(d)(3)(A). In the last

two years, the Authority has assessed $1.6 million in

See HISA, Press Release, HISA Announces Selection of Drug

Free Sport International as Partner to Build Independent AntiDoping and Medication Control Enforcement Agency (May 3,

2022), https://perma.cc/MW6Y-GNPF.

fines. 4 The Authority has also empowered itself to provisionally suspend individuals for certain violations prior

to their final adjudication. HISA Rule 3247. Further, the

Authority may bring suit in federal court to obtain injunctive relief to stop alleged rule violations and to enforce civil sanctions. 15 U.S.C. §3054(j).

2. Any civil sanctions imposed by the Authority may

be reviewed by an administrative law judge (ALJ) within

the FTC, followed by FTC review. Id. §3058(b)-(c); but

see Jarkesy v. SEC, 34 F.4th 446, 463-64 (5th Cir. 2022)

(holding that removal protections for ALJs within independent agencies are unconstitutional under Free Enterprise Fund v. PCAOB, 561 U.S. 477 (2010)), aff’d on different grounds, 144 S.Ct. 2117 (2024). While ALJ review

of claimed violations of the Authority’s rules is de novo,

review of any sanctions the Authority chooses to assess

is limited to whether they are “arbitrary, capricious, an

abuse of discretion, or otherwise not in accordance with

law.” 15 U.S.C. §3058(b)(2)(A). Additionally, the Authority may recommend that the FTC commence an action

for unfair or deceptive acts. See id. §3054(c)(1)(B).

II. Procedural History

A. Texas’s complaint

1. Although Texans have always loved horses, the

development of horseracing in Texas has been uneven

due to its longstanding associations with gambling. See

McLeod, supra, at 310-14. Gambling within Texas has

generally been banned “[f]or as long as the State of

Texas has been the State of Texas.” City of Fort Worth

v. Rylie, 602 S.W.3d 459, 460 (Tex. 2020). Indeed, parimutuel wagering on horseracing is constitutionally

See

HISA, 2024

https://perma.cc/37TF-HG6P.

Metrics

Report

permissible in Texas only because it depends not on

chance but rather on the speed of the horse and the skill

of the jockey. Cf. Panas v. Tex. Breeders & Racing Ass’n,

80 S.W.2d 1020, 1024 (Tex. App.—Galveston 1935, writ

dism’d); Tex. Att’y Gen. Op. No. DM-302, at 5-6, 6 n.6

(1994).

For nearly four decades, the Texas Racing Commission has been tasked with regulating horseracing and associated wagering in Texas. See Tex. Occ. Code

§2021.002. The nine-member Commission—comprised of

seven members appointed by the Governor and two ex

officio members, id. §2022.001(a)—has done so by adopting rules covering racetrack licenses, 16 Tex. Admin.

Code §§309.1-.53; licenses for owners, trainers, and jockeys, among others, id. §§311.101-.112; racetrack operations, id. §§309.101-.299; the rules of horseracing, id.

§§313.1-.450; medical treatment of horses, id. §§319.1.112; and testing for prohibited substances, id.

§§319.301-.364. The Commission may also pursue administrative penalties for violations of relevant law, as well

as suspend, revoke, or refuse to renew a license issued

under its authority. Tex. Occ. Code §§2033.051, .151. The

Commission has licensed over 14,000 individuals in Texas

as part of its comprehensive operations. ROA.6117.

2. To protect its sovereign interests, Texas and the

Commission intervened as plaintiffs in a suit brought by

a group of Horsemen’s Benevolent and Protective Associations (collectively, the NHBPA Plaintiffs) challenging

the constitutionality of HISA. ROA.1328-38. As relevant

here, Texas asserts that HISA’s delegation of legislative

and executive power to a private entity—the Authority—

violates the private-nondelegation doctrine. ROA.252932. Following summary-judgment motions, the district

court rejected such claims, ROA.2706-60, and all plaintiffs appealed. ROA.1562-65.

Unable to obtain relief before the statute went into

effect, Texas was forced to choose: (1) become subject to

HISA and surrender control over horseracing and its associated gambling activities or (2) avoid application of

HISA by surrendering the ability to simulcast Texas

races to other States. ROA.3083, 3086-87, 6123. Because

the former created complications under state law that

the Commission deemed untenable, the Commission has

opted for the latter. ROA.3086-87. This places Texas

racetracks “at a ‘competitive disadvantage’ to their …

peers.” Ohio v. EPA, 144 S.Ct. 2040, 2053 (2024); see also

ROA.4594, 6124 (describing industry losses in Texas due

to the decision not to simulcast).

B. Texas’s first appeal

The first time the case was before the Fifth Circuit,

that court focused on the Authority’s rulemaking authority. See Pet.App. 109a-11a. Surveying the handful of

cases to address the private-nondelegation doctrine, the

Fifth Circuit held that “a private entity may wield government power only if it ‘functions subordinately’ to an

agency with ‘authority and surveillance’ over it.”

Pet.App. 127a. It then held that the Authority was not

subordinate to the FTC: Congress granted the Authority

“‘sweeping’ power,” Pet.App. 129a-33a, that permitted it

“to craft entire industry ‘programs,’” which “strongly

suggests it is the Authority, not the FTC, that is in the

saddle,” Pet.App. 131a. The Fifth Circuit rejected the argument that the FTC provided the necessary oversight

because consistency review is “too limited to ensure the

Authority ‘function[s] subordinately’ to the agency.”

Pet.App. 134a-39a.

The Fifth Circuit then distinguished the relationship

that HISA creates between the Authority and the FTC

from that which the Maloney Act creates between the Financial Industry Regulatory Authority (FINRA) and the

Securities Exchange Commission. See Pet.App. 139a41a. The court explained that Congress gave the SEC authority to “abrogate, add to, and delete from” FINRA

rules as the SEC deemed “necessary or appropriate.” 15

U.S.C. §78s(c). Because the FTC lacked such power, the

court concluded that the FTC served as an advisor, rather than a supervisor, to the Authority. Pet.App. 140a. 5

Instead, the Fifth Circuit focused on litigation concerning Amtrak, which Congress had tasked with

“jointly” developing railroad performance standards

with the Federal Railroad Administration (FRA). Ass’n

of Am. R.Rs. v. U.S. Dep’t of Transp. (Amtrak I), 721

F.3d 666, 669 (D.C. Cir. 2013). There, the D.C. Circuit

concluded that “Amtrak enjoys authority equal to the

FRA,” id. at 671, which “vitiates the principle that private parties must be limited to an advisory or subordinate role in the regulatory process,” id. at 673. Although

this Court reversed the D.C. Circuit’s judgment because

Amtrak (for entity-specific reasons) is a public, not private, entity, see Amtrak II, 575 U.S. at 46, the Fifth Circuit found the D.C. Circuit’s analysis persuasive with respect to the Authority, Pet.App. 143a-45a. The Fifth Circuit accordingly concluded that HISA delegated “unsupervised government power to a private entity” and was

therefore unconstitutional. Pet.App. 145a-46a.

For similar reasons, the Fifth Circuit also distinguished Texas

v. Rettig, in which it had upheld a subdelegation by the Department

of Health and Human Services to a private board to certify that certain rates in Medicaid contracts were “actuarially sound.” 987 F.3d

518, 526 (5th Cir. 2021). See Pet.App. 142a-43a.

That conclusion never reached this Court because, as

noted above, see supra p.8, Congress amended HISA to

give the FTC the power to “abrogate, add to, and modify

the rules of the Authority,” 15 U.S.C. §3053(e). The Fifth

Circuit remanded the case for consideration of the impact of that statutory amendment. See Order, NHBPA

v. Black, No. 22-10387 (5th Cir. Jan. 31, 2023).

C. Subsequent proceedings

1. On remand, a separate case raising similar (but

not identical) challenges, brought by a group of racetrack

owners and other interested parties (collectively, the

Gulf Coast Plaintiffs), was consolidated with this case.

ROA.2213-18. After a bench trial, ROA.3028-205, the district court again found no constitutional infirmity,

Pet.App. 49a.

Regarding Texas’s only claim—private nondelegation—the district court concluded that the FTC’s new

authority to abrogate, add to, and modify the Authority’s

rules empowered the FTC to make its own policy choices,

thus supposedly curing any constitutional problem.

Pet.App. 81a-88a. The court also submitted that HISA

now paralleled FINRA’s relationship with the SEC,

Pet.App. 88a-89a, and leaned heavily on the Sixth Circuit

ruling upholding the constitutionality of HISA as

amended, Pet.App. 87a, 90a (discussing Oklahoma v.

United States, 62 F.4th 221 (6th Cir. 2023), cert. denied,

144 S.Ct. 2679 (2024) (rehearing pending)). With respect

to the Authority’s enforcement powers, the district court

found no constitutional violation due, in large part, to the

FTC’s ability to review sanctions de novo. Pet.App. 94a96a.

2. All plaintiffs again appealed. ROA.2825-31. This

time, the Fifth Circuit affirmed in part and reversed in

part.

First, the Fifth Circuit agreed with the Sixth Circuit

that the amendment to the FTC’s authority cured the

private-nondelegation problem with respect to the Authority’s rulemaking powers. Pet.App. 9a-11a. The court

focused on the FTC’s ability to “exercise its own policy

choices” through rulemaking if it disagreed with the Authority—a power it did not previously have. Pet.App.

11a. The court believed that allowing the FTC to make

its own rules would give consistency review “new bite”

because the FTC could adopt its own policies via rulemaking that the Authority would then be bound to follow.

Pet.App. 12a. Concluding that this was sufficient to ensure that the Authority functions subordinately to the

FTC, the court held that there was no unconstitutional

delegation of legislative authority. Pet.App. 14a.

Second, the Fifth Circuit held that the Authority’s

largely unsupervised ability to enforce HISA violated

the private-nondelegation doctrine with respect to executive power. Pet.App. 17a-33a. After all, the power to investigate, sanction, and sue—all of which the Authority

can do—are “quintessentially executive functions.”

Pet.App. 18a. Asking the same constitutional question as

before, the court considered whether the Authority

“functions subordinately to an agency with authority and

surveillance over it.” Pet.App. 17a (cleaned up). The

court rejected the argument that the FTC’s general (and

limited) back-end review gave it adequate supervisory

control over the Authority, emphasizing that the Authority can and does perform significant enforcement functions before the FTC reviews anything. Pet.App. 22a25a. The Fifth Circuit also disagreed that the FTC could

further subordinate the Authority’s enforcement powers

by exercising its rulemaking authority. Pet.App. 25a-

29a. 6 Accordingly, the court declared HISA unconstitutional to the extent it is enforced by private entities.

Pet.App. 44a.

The Authority and FTC defendants filed petitions for

rehearing en banc, which were denied. Pet.App. 104a06a. Upon the Authority’s request, this Court administratively stayed the issuance of the mandate. Order,

Horseracing Integrity & Safety Auth. v. NHBPA, No.

24A287 (U.S. Sept. 23, 2024).

RE A SO NS FO R GR A NTI NG T HE PE TI TIO N

I. Delegation of Legislative Power to a Private

Entity Is an Important Question of Federal Law

That Should Be Decided by This Court.

The Constitution provides that “[a]ll legislative Powers herein granted shall be vested in a Congress of the

United States.” U.S. Const. art. I, §1. Accordingly, it follows that “the lawmaking function belongs to Congress

and may not be conveyed to another branch or entity.”

Loving v. United States, 517 U.S. 748, 758 (1996) (citation omitted). And while the Court has struggled with

whether and how much authority Congress may delegate

to a public entity, see, e.g., Gundy, 588 U.S. 128, delegating such authority to a private entity is “unknown to our

law” and “utterly inconsistent with the constitutional

prerogatives and duties of Congress,” A.L.A. Schechter

Poultry Corp. v. United States, 295 U.S. 495, 537 (1935). 7

The Fifth Circuit also rejected the private Respondents’ remaining constitutional claims based on the Due Process Clause, Appointments Clause, and anticommandeering doctrine. Pet.App. 34a43a. As Texas raised no such claims, it does not discuss them here.

Texas bases its argument on the understanding that the Authority is, in fact, a private corporation. 15 U.S.C. §3052(a). Should

the Court disagree, HISA would be unconstitutional under the Appointments and Vesting Clauses for the reasons explained by the

Any delegation of rulemaking authority to a private entity thus lacks “even a fig leaf of constitutional justification.” Amtrak II, 575 U.S. at 62 (Alito, J., concurring).

Multiple members of this Court have recognized the

need for greater clarity with respect to delegation doctrines. To do so, the Court previously granted certiorari

in the Amtrak litigation to determine whether a provision of federal law “effect[ed] an unconstitutional delegation of legislative power to a private entity.” Pet. for a

Writ of Cert. at I, Amtrak II, 575 U.S. 43 (2015) (No. 131080), 2014 WL 953507, at *I; see Dep’t of Transp. v.

Ass’n of Am. R.Rs., 573 U.S. 930 (2014) (granting certiorari). But the Court could not answer the question because the delegatee in that case—Amtrak—is public.

Justice Alito, however, used both precedent and first

principles to explain why enforcing the private-nondelegation doctrine is essential, noting that “[e]ven the

United States accepts that Congress cannot delegate

regulatory authority to a private entity.” Amtrak II, 575

U.S. at 61 (Alito, J., concurring) (quotation marks omitted).

Since Amtrak II, at least five members of the Court

have called for reexamination of the standards applicable

to the nondelegation doctrine. See Gundy, 588 U.S. at

148-49 (Alito, J., concurring); id. at 149 (Gorsuch, J., dissenting, joined by Roberts, C.J., and Thomas, J.); Paul

v. United States, 140 S.Ct. 342, 342 (2019) (Kavanaugh,

J., statement respecting the denial of certiorari). And at

least three Justices have also specifically recognized “the

need to clarify the private non-delegation doctrine in an

Gulf Coast Plaintiffs in a forthcoming certiorari petition. Either

way, HISA cannot stand.

appropriate future case.” CIR, 142 S.Ct. at 1308 (Alito,

J., concurring in denial of review).

As described below, see infra pp.19-27, HISA falls on

the wrong side of the constitutional line, but that conclusion has not been apparent to the Circuits. In addition to

the Fifth Circuit, Pet.App. 14a, the Sixth and Eighth Circuits have concluded that Congress’s delegation of legislative authority to the Authority in HISA is consistent

with the Constitution’s declaration that all such power is

vested in Congress. U.S. Const. art. I, §1; Oklahoma, 62

F.4th at 230; Walmsley v. FTC, No. 23-2687, 2024 WL

4248221, at *2 (8th Cir. Sept. 20, 2024), petition for cert.

filed, No. 24-420 (U.S. Oct. 10, 2024). No further percolation is likely to alter this trend.

Guidance from this Court is necessary, even more so

because Congress appears to see this type of rulemaking

delegation as a model for other industries. See Amicus

Br. of Sen. McConnell at 4, Horseracing Integrity &

Safety Auth. v. NHBPA, No. 24A287 (U.S. Sept. 24,

2024). The Court should grant review to clarify whether

and when legislative authority may be given to a private

entity before delegation of rulemaking power to private

entities becomes further entrenched. Granting certiorari

here would allow the Court to do just that.

II. The Fifth Circuit’s Decision Conflicts with This

Court’s Precedent.

Certiorari is especially warranted because the Fifth

Circuit’s analysis conflicts with this Court’s cases. Although the Constitution vests legislative authority in

Congress alone, this Court’s precedent indicates that

private entities can play a role in the formulation of law—

albeit a limited one, such as suggesting an element of a

regulatory scheme to a federal agency. See, e.g.,

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

388 (1940). But HISA far transcends that limited role by

(1) granting a private entity the ability to craft rules governing an entire industry-wide program, 15 U.S.C.

§§3052(a), 3053(a); (2) precluding the FTC from rejecting those rules in most circumstances, id. §3053(c)(2);

and (3) giving the FTC only the option—not the duty—

to review any policies, id. §3053(e).

In holding this delegation meets constitutional standards, three Circuits have misconstrued the nature of the

constitutional principles at issue. Pet.App. 9a-14a; Oklahoma, 62 F.4th at 230; Walmsley, 2024 WL 4248221, at

*2. Merely giving the FTC the option—but not the obligation—to engage in its own notice-and-comment rulemaking, 15 U.S.C. §3053(e), does not cure the constitutional violation that results from giving the Authority the

power to make the rules in the first place.

A. The Fifth Circuit’s decision is contrary to the

Court’s private-nondelegation precedent.

The People agreed to submit to laws enacted by Congress, U.S. Const. art. I, §1—not “laws” adopted by private entities. That is why delegation to private entities is

“delegation in its most obnoxious form.” Carter Coal, 298

U.S. at 311; see also Amtrak II, 575 U.S. at 62 (Alito, J.,

concurring). Yet for far too long lower courts have applied a private-nondelegation doctrine derived, not from

what the Constitution says, but from fundamental misunderstandings about a pair of 80-year-old cases: Carter

Coal and Adkins. Properly understood, those cases confirm the Fifth Circuit’s error here.

In Carter Coal, Congress delegated the ability to set

maximum labor hours and minimum wages to private

groups of producers and miners. 298 U.S. at 310-11. Because this allowed “one person … to regulate the business of another,” the Court declared the law

unconstitutional. As the Court put it, the law created “an

intolerable and unconstitutional interference with personal liberty and private property.” Id. at 311.

As it did here, Congress then rewrote the law. In

Adkins, the Court examined the revised statute, the Bituminous Coal Act of 1937, which provided for the creation of twenty “district boards” that were to “operate as

an aid to the [National Bituminous Coal] Commission but

subject to its pervasive surveillance and authority.” 310

U.S. at 388. The Act provided that the number of members of each district board was subject to approval by the

Commission; the Commission could remove board members in certain circumstances; the board’s bylaws and

rules of procedure were subject to the Commission’s approval; and the Commission had some authority to approve, disapprove, or modify proposed rules of each

board regarding the sale of coal. See Bituminous Coal

Act of 1937, Pub. L. No. 75-48, §4(I)(a), (II)(a)-(c), 50

Stat. 72, 76-80 (1937). Significantly, although Congress

gave the boards the authority to propose minimum coal

prices, those proposed prices could be approved, disapproved, or modified by the Commission, but would not go

into effect absent action by the Commission. Id. §4(II)(a),

50 Stat. at 78. This time around, the Court rejected a

claim that private parties impermissibly set the minimum prices because the Commission, not the district

boards, made the decision. Adkins, 310 U.S. at 399.

Even apart from constitutional first principles, the

Fifth Circuit’s error (and that of the Sixth and Eighth

Circuits) is thus apparent. HISA hews much closer to

Carter Coal than Adkins. In Adkins, the private board

(1) had members subject to removal by the Commission

and (2) proposed only a small piece of a regulatory

scheme, which (3) could be approved, disapproved, or

modified by the Commission. Id. at 388, 399. Here, by

contrast, the Authority (1) has members who cannot be

appointed or removed by the FTC and (2) writes the entire regulatory scheme to govern the horseracing industry, which (3) the FTC must approve so long as it falls

within HISA’s broad delegation. 15 U.S.C. §§3052(b),

3053(a), (c)(2). That the FTC can now also engage in separate rulemaking (if it wants to) does not save this unconstitutional structure. See infra pp.21-27. Thus, as in

Carter Coal, Congress has delegated legislative authority to a private party, “legislative delegation in its most

obnoxious form.” 298 U.S. at 311.

B. The Circuits wrongly treated the FTC’s

optional supervision as sufficient.

The Fifth, Sixth, and Eighth Circuits have all concluded that the delegation of legislative power to the Authority is permissible because the FTC could override

the Authority through its own rulemaking. Pet.App. 9a11a; Oklahoma, 62 F.4th at 229-31; Walmsley, 2024 WL

4248221, at *2-3. But that is not the constitutional standard. As this Court has already explained, “[e]nacting

general rules through the required notice and comment

procedures is obviously a poor means of micromanaging

[an entity]’s affairs.” Free Enter. Fund, 561 U.S. at 504.

The possibility that the FTC might choose to make rules

does not detract from Congress’s decision to give the Authority the power to make rules in the first place.

1. In upholding HISA’s delegation of legislative authority, the Circuits have taken comfort in the FTC’s

new power to “abrogate, add to, and modify” the Authority’s rules. 15 U.S.C. §3053(e). When it adopted that subsection, though, Congress left intact the original unconstitutional delegation, id. §§3053(a)-(c), and instead

merely delegated additional authority to the FTC, id.

§3053(e). Accordingly, it is now up to the FTC to decide

whether it wishes to supervise the Authority (assuming

it can) or whether it wants to allow the Authority to continue to make the rules. Id. This amended scheme therefore is just as unconstitutional as the original.

Whether a delegation of authority is unconstitutional

is based on “the terms of Congress’ delegation”—in this

instance HISA—“not on the terms of the agency’s subsequent exercise of the delegated authority.” United

States v. Martinez-Flores, 428 F.3d 22, 27 (1st Cir. 2005)

(emphasis added) (following Whitman v. Am. Trucking

Ass’ns, 531 U.S. 457, 472-73 (2001)); see also United

States v. Palazzo, 558 F.3d 400, 404 n.4 (5th Cir. 2009)

(change in the underlying regulations did not impact the

delegation analysis). “Whether the statute delegates legislative power is a question for the courts, and an

agency’s voluntary self-denial”—or in this case, voluntary exercise (or not) of a supervisory power—“has no

bearing upon the answer.” Whitman, 531 U.S. at 473. Accordingly, just as an agency cannot “cure an unlawful

delegation of legislative power by adopting in its discretion a limiting construction of the statute,” id. at 472,

Congress cannot remedy the constitutional violation

here by giving the FTC the discretionary power to act

respecting the Authority’s rules.

The D.C. Circuit concluded that even the possibility

that a private entity might make industry rules violates

the Constitution. See Amtrak I, 721 F.3d at 669. Finding

that the statute permitted a private arbitrator to break a

stalemate between Amtrak and the FRA, the court concluded that it was possible for Amtrak’s standards to

take effect without the approval of a single government

official, violating the private-nondelegation doctrine. Id.

at 673-74. Even though a private arbitrator had not been

used, “that the recipients of illicitly delegated authority

opted not to make use of it is no antidote. It is Congress’s

decision to delegate that is unconstitutional.” Id. at 674.

Justice Alito agreed in Amtrak II, explaining that “even

the possibility of a private arbitrator” would violate the

Constitution. 575 U.S. at 62 (Alito, J., concurring). In

other words, the violation is complete upon the unlawful

delegation. Other circuits are in accord. 8

Constitutional logic is also supported by common

sense. The FTC is a busy agency—and may not always

have a quorum or a working majority. It thus cannot plenarily create or revise (or likely even read) every rule for

the horseracing industry. Instead, the Authority’s decisions will have a massive anchoring effect. Put another

way, Congress “could not, even if they wished, vote all

power to the President and adjourn sine die,” Mistretta

v. United States, 488 U.S. 361, 415 (1989) (Scalia, J., dissenting), even if Congress technically could revise such

presidential regulations later. The same principle applies

here. Given inertia, competing priorities, and the like,

the power to create rules in the first instance is too important for Congress to give away, and certainly to a private entity.

Regardless, even if the FTC somehow could regulate

every aspect of horseracing, it would take time. Yet the

Authority’s rules apply today. Because the FTC may

“abrogate, add to, and modify the rules of the Authority,”

See also, e.g., W.V. ex rel. Morrisey v. U.S. Dep’t of the Treasury, 59 F.4th 1124, 1140 (11th Cir. 2023) (applying Whitman to hold

a challenge is not mooted when the agency “had disclaimed an intention to enforce the alleged unconstitutional provision at all”);

Martinez-Flores, 428 F.3d at 27 (holding that, under Whitman, a

memorandum from the U.S. Attorney General is “irrelevant to the

nondelegation question”).

15 U.S.C. §3053(e), the Authority’s rules remain in effect

unless and until the FTC acts. And because the FTC cannot act instantaneously, the Authority’s rules necessarily

govern for some periods of time. This timing element was

a key feature of the Fifth Circuit’s decision with respect

to the Authority’s enforcement powers, Pet.App. 22a24a, and logically should apply with at least equal force

to the Authority’s antecedent rulemaking powers.

2. Clawing back sufficient power to remedy the unconstitutional delegation here faces another hurdle: “an

agency may not rewrite clear statutory terms to suit its

own sense of how the statute should operate.” UARG v.

EPA, 573 U.S. 302, 328 (2014). But that would be required here because HISA is structured to give primary

rulemaking authority to the Authority, not the FTC.

The Authority has the primary obligation to “develop[] and implement[] a horseracing anti-doping and

medication control program and a racetrack safety program.” 15 U.S.C. §3052(a). To that end, it may (among

other things) establish committees, id. § 3052(c); propose

rules setting laboratory and racetrack standards, identifying permitted substances, and setting a civil sanctions

schedule, id. §3053(a); develop procedures regarding access to offices, issuance of subpoenas, and other investigatory powers, id. §3054(c); issue guidance, id. §3054(g);

investigate civil violations, id. §3054(h); bring lawsuits,

id. §3054(j); and extend its authority to new breeds of

horses, id. §3054(l)(1). By contrast, the FTC is generally

limited to publishing items in the Federal Register, e.g.,

id. §3053(b)(1); approving the Authority’s proposals, id.

§§3053(c), 3054(c)(2); and reviewing the Authority’s assessment of sanctions, id. §3058.

But, under the Fifth Circuit’s theory, the FTC can

change all of this by using its own authority to modify the

Authority’s rules. Yet “permission to ‘modify’ does not

authorize ‘basic and fundamental changes in the scheme’

2355, 2368 (2023) (quoting MCI Telecomms. Corp. v. Am.

Tel. & Tel. Co., 512 U.S. 218, 225 (1994)). There is no way

to read HISA to conclude that the FTC, rather than the

Authority, is the primary regulator.

3. Relatedly, the Fifth Circuit also misunderstood

the grant of rulemaking authority to the FTC to be more

significant that it is. The Authority submits proposed

rules and proposed modifications of rules to the FTC for

publication and a limited consistency review, 15 U.S.C.

§3053(a)-(c). Now, the FTC can also “abrogate, add to,

and modify the rules of the Authority promulgated in accordance with” HISA. Id. §3053(e). In other words, both

the FTC and the Authority can propose and modify

rules. Thus, at most, the Authority serves as the FTC’s

equal in the rulemaking endeavor which, under the D.C.

Circuit’s rule in Amtrak I, is constitutionally insufficient.

The only non-ministerial legal obligation the FTC

has is to review proposed rules for compliance with

HISA, id. §3053(c)(2)—not unlike what a district court

might do with respect to a legal question in an APA challenge, 5 U.S.C. §706. But no one says that district courts

thereby supervise agencies. In fact, Congress itself could

perform the same function as the FTC by overriding

rules it dislikes. But “Congress could not say: ‘The defense budget is whatever Lockheed Martin wants it to

be, unless Congress intervenes to revise it.’” Consumers’

Rsch. v. FCC, 109 F.4th 743, 771 (5th Cir. 2024) (en banc),

petition for cert. filed, No. 24-354 (U.S. Sept. 30, 2024).

Indeed, if the FTC disagrees with a rule proposed by

the Authority, it cannot disapprove the rule on policy

grounds but must either (1) allow it to become law and

then engage in notice-and-comment rulemaking to modify it or (2) attempt to out-maneuver the Authority by its

own notice-and-comment rulemaking. As the Fifth Circuit hypothesized, if the FTC did not want a proposed

rule to take effect, it could adopt its own rule postponing

the effective date of the Authority’s rule or engage in

emergency rulemaking. Pet.App. 13a. But the FTC’s notice-and-comment process could take years—all the

while private parties and the States would be subject to

a rule promulgated by an entity without constitutional

authority to act at all.

4. Even putting the foregoing aside, the FTC has no

power to review—let alone reject—the Authority’s

“guidance.” 15 U.S.C. §3054(g)(2); accord SEC v.

Chenery Corp., 332 US 194 (1947) (regulators can make

policy either by rulemaking or particular cases). Although the Authority must submit any guidance to the

FTC, 15 U.S.C. §3054(g)(2), the guidance “take[s] effect

on the date on which the guidance is submitted,” no matter what the FTC thinks about it, id. §3054(g)(3). Guidance, however, can be used as a shortcut to effectively

change the law without notice-and-comment rulemaking.

See, e.g., Nicholas R. Parrillo, Federal Agency Guidance:

An Institutional Perspective at 4, Admin. Conf. of

United States (Oct. 12, 2017). And such material can have

so great an impact that an agency may be forced to maintain it even if a “memorandum” was not properly adopted

at the outset. See DHS v. Regents of the Univ. of Cal.,

591 U.S. 1, 33 (2020). HISA provides no apparent mechanism for the FTC to prevent the Authority from using

its broad statutory authority to issue sub-regulatory diktats.

This last power by itself is fatal to the Authority—

while also illustrating why the Court should not grant the

Association’s and FTC’s petitions without granting this

one. One reason guidance is so dangerous, even when it

is not formally binding, is that regulated parties know

that the regulator may act on that guidance by bringing

an enforcement action, the prospect of which is inherently coercive. See, e.g., Parrillo, supra, at 11 & n.15, 18788. Both the sovereign power to issue guidance and the

sovereign power to bring enforcement actions therefore

must be subject to plenary presidential control to prevent regulators from strongarming compliance with unlawful directions simply by threatening a lengthy and

costly investigation. In light of that reality, it is impossible to separate the Authority’s power to bring enforcement actions from its power to issue guidance.

***

When all these points are combined, the truth

emerges: the Authority now governs the horseracing industry—both de facto and de jure. The Fifth Circuit

should not have changed its conclusion about whether

Congress delegated legislative power to the Authority

merely because Congress added the words “abrogate,”

“add,” and “modify” to the list of verbs comprising the

FTC’s authority. 15 U.S.C. §3053(e). Given that three

circuits have now concluded this delegation is constitutional, the Court should intervene, especially because

this threshold question is logically antecedent to the

question presented in the Authority’s own petition. It

makes no sense for this Court to decide whether the Authority can enforce its rules until it is first clear that the

Authority lawfully can create rules to begin with.

III. The Circuits Do Not Agree on the Constitutional

Test.

Even apart from the Fifth Circuit’s and other Circuits’ conflicts with this Court’s precedent, they also do

not even agree among themselves. The private-nondelegation doctrine is the subject of general confusion in the

lower courts and has prompted muddled and inconsistent

tests. From helper to aid to advisor, however, none of the

tests employed by the circuit courts goes so far as to encompass the Authority’s role under HISA.

A. Finding a private-nondelegation violation, the

D.C. Circuit in Amtrak I explained that private entities

may “help a government agency make its regulatory decisions.” 721 F.3d at 670-71. In concluding that Amtrak

did not function subordinately to the FRA, that court reiterated that a private entity can be “an aid” to a federal

agency as long as the agency retains the discretion to

“approve[], disapprove[], or modif[y]” any proposed rule.

Id. at 671 (citing Adkins, 310 U.S. at 388). But unlike in

Adkins, in which the agency could “unilaterally change

regulations proposed to it by private parties,” Amtrak

“enjoy[ed] authority equal to the FRA,” making the delegation of authority unconstitutional if Amtrak were private. Id.

Here, by contrast, the Authority’s role cannot be described as “helping” the FTC make its decisions, because

the only decision the FTC is required to make is to decide

whether the Authority’s rules are contrary to statute—

not whether they are good policy, much less policy that

the President can defend to voters. 15 U.S.C. §3053(e).

For similar reasons, the Authority is not “an aid” to the

FTC. The FTC must approve any proposed rule that is

consistent with HISA, id. §3053(c)(2), and, again, can

counter them only with its own rulemaking, id. §3053(e).

So even if the FTC believes one of the Authority’s rules

is outright harmful, it is still uncertain whether the FTC

will fix it, rather than using its resources elsewhere. By

the D.C. Circuit’s measure, the Authority has been unconstitutionally delegated legislative authority.

B. Other circuits applying the private-nondelegation

doctrine have allowed private entities to perform only

limited, advisory roles. The Fourth Circuit has said that

the doctrine permits agencies to “employ private entities

for ministerial or advisory roles, but [agencies] may not

give these entities governmental power over others.”

Pittston Co. v. United States, 368 F.3d 385, 395 (4th Cir.

2004). And the Third Circuit permitted a private entity

to serve “advisory” and “ministerial” functions. United

States v. Frame, 885 F.2d 1119, 1129 (3d Cir. 1989). The

Ninth Circuit rejected a challenge to the Secretary of

Agriculture’s reliance on the Navel Orange Administrative Committee, explaining that “the Secretary is free to

seek advice from whatever sources he deems appropriate, so long as he or his delegate in the Department retains ultimate authority to issue the regulation.” Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479, 1488 (9th

Cir. 1992) (citing Adkins, 310 U.S. at 399).

The Authority’s role here is far from “ministerial” or

“advisory,” given that it was tasked with creating an

elaborate (and still growing) regulatory program from

scratch. 15 U.S.C. §3052(a). And the FTC has not sought

the Authority’s “advice.” Instead, the Authority is effectively equal to the FTC in some respects—and superior

in others. The Authority can make rules and issue guidance that the FTC can check only through its own rulemaking. Id. §3053(e).

Thus, in the words of the Fifth Circuit’s sister circuits, the Authority is not a “help” or an “aid” or a source

of “advice,” nor is it performing “ministerial” or “advisory” functions. Amtrak I, 721 F.3d at 670-71; Riverbend

Farms, 958 F.2d at 1488; Pittston Co., 368 F.3d at 395. It

is writing rules to govern an industry, and the FTC is

largely powerless to disapprove them. 15 U.S.C.

§3053(c)(2). The FTC’s ability to make its own rules to

counteract those of the Authority merely demonstrates

(at most) its equality with the Authority, not its supervision. The Fifth Circuit (along with the Sixth and Eighth)

stands contrary to the Third, Fourth, Ninth, and D.C.

Circuits in concluding that this type of delegation is constitutionally permissible. The Court’s intervention is

warranted.

IV. This Question is Exceptionally Important.

The question presented here is also exceptionally important. The horseracing industry is worth billions of

dollars and employs tens of thousands of people. Few

questions are more important than whether Congress

can delegate authority to a private entity to create (and

then enforce) an elaborate regulatory apparatus to govern an entire industry.

Congress, moreover, apparently intends to use HISA

as a model to govern other industries, Amicus Br. of Sen.

McConnell, supra, at 4—thus potentially creating a

country full of private entities empowered by Congress

to boss around not just other people but also the States.

The federalism implications are enormous. It is one thing

for the States to be subject to preemptive rules issued by

a federal agency subject to checks and balances and the

President’s political control; it is something else entirely

for separate Sovereigns to be regulated by private citizens no one voted for and not even the President can fire.

This Court’s review is essential before Congress

federalizes in this unconstitutional way even more industries that have been governed by the States for centuries.

Furthermore, as explained above, the question presented here is logically antecedent to the questions in the

Authority’s (No. 24-433) and the FTC’s (No. 24-429) petitions. The Court’s ability to effectively resolve those

questions presented thus may well hinge on its resolution

of this one. And no one disputes that the Authority’s and

FTC’s petitions warrant certiorari. Especially given that

multiple members of the Court have already publicly expressed interest in addressing the circumstances under

which Congress can delegate regulatory power to private entities, see supra pp.17-18, the Court should make

sure that the entire issue, rather than just part of it, is

before the Court.

Finally, the Authority’s rulemaking power threatens

the health, safety, and welfare of tens of thousands of

workers and horses. Horseracing injuries were already

decreasing before Congress created this scheme. 9 That

is unsurprising. Because of federalism, States can experiment, and successful innovation can spread. “This

Court,” however, “has the power to prevent an experiment.” New State Ice Co v. Liebmann, 285 U.S. 262, 311

(1932) (Brandeis, J., dissenting). It should not do so. And

the Court certainly should not allow Congress to empower a private entity—subject to capture and acting

outside of the Constitution—to write the rules. “The

Constitution’s deliberative process was viewed by the

Framers as a valuable feature, not something to be

See Supplemental Tables of Equine Injury Database Statistics

for Thoroughbreds, The Jockey Club (Mar. 12, 2020) https://jockeyclub.com/pdfs/eid_11_year_tables.pdf (cited in H.R. Rep. No.

116-554, at 17 n.1 (2020)).

lamented and evaded.” Amtrak II, 575 U.S. at 62 (Alito,

J., concurring) (citing John F. Manning, Lawmaking

Made Easy, 10 Green Bag 2d 202 (2007)). It is always in

the public interest for this Court to vindicate a core feature of the Constitution that, by design, “exists to protect

liberty.” Id. at 61.

C O NC LU SIO N

The petition for a writ of certiorari should be granted.

Respectfully submitted.

KEN PAXTON

Attorney General of Texas

BRENT WEBSTER

First Assistant Attorney

General

AARON L. NIELSON

Solicitor General

Counsel of Record

LANORA C. PETTIT

Principal Deputy Solicitor

General

BETH KLUSMANN

Assistant Solicitor General

OCTOBER 2024

OFFICE OF THE

ATTORNEY GENERAL

P.O. Box 12548 (MC 059)

Austin, Texas 78711-2548

Aaron.Nielson@oag.texas.gov

(512) 936-1700

APPENDIX

AP PE ND IX T A BL E O F C O N TE N TS

Appendix A — Court of Appeals Opinion

(July 5, 2024) ....................................... 1a

Appendix B — District Court Memorandum

Opinion and Order (May 4, 2023) ... 45a

Appendix C — Court of Appeals Order Denying

Rehearing (Sept. 9, 2024) .............. 104a

Appendix D — Court of Appeals Opinion

(Nov. 18, 2022) ............................... 107a

Appendix E — Relevant Provisions of the United

States Constitution ....................... 147a

Appendix F — Horseracing Integrity and Safety

Act .................................................. 148a

APPENDIX A

United States Court of Appeals

for the Fifth Circuit

United States Court of Appeals

Fifth Circuit

FILED

July 5, 2024

Lyle W. Cayce

Clerk

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

(1a)

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,

versus

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; COMMISSIONER CHRISTINE 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.

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 amending 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 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. BACKGROUND

A. 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 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.

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).

§ 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 independent 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 secondguessed 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

See

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.”).

Similarly, 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).

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 nondelegation

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.

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?

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 anticommandeering 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 880–

81. 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), vacated and

See 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).

10a

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. 117-328,

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 Black, 672 F.

Supp. 3d at 241 (citing Oklahoma, 62 F.4th at 230, 232).

11a

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.

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

12a

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

Next, the Horsemen argue the FTC’s new review

power creates a timing problem. Because the FTC may

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,

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).

13a

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

Finally, the Horsemen point to the SEC’s supervisory authority over private self-regulatory organizations

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

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.

14a

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 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

15a

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.

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 omitted);

see also Nat’l Env’t Development 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

16a

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 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

17a

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.

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 entity’s enforcement actions. Ibid. (cleaned up) (quoting Amtrak I,

721 F.3d at 671). 8

See generally Rulings, HORSERACING INTEGRITY & SAFETY

AUTH., https://portal.hisausapps.org/public-rulings (last visited

June 12, 2024) (listing 1,772 enforcement rulings).

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).

18a

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 been considered so

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) (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

19a

from our Nation’s founding. 10 As much as legislative

power, the private nondelegation 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

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 cease-and-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.”).

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, 146–47 (2020) (arguing that

law enforcement and prosecution powers have been considered core

executive functions since the Founding).

20a

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 injunctive 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,

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).

21a

§ 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

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 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

22a

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).

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 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

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

23a

“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 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

“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).

24a

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 racetrack 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

25a

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[.]”).

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 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

26a

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 recently 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

See 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

expressly 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”).

27a

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), 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

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

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 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

See § 3059 (deeming it an unfair or deceptive practice under

15 U.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).

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”).

29a

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 unsupervised

enforcement power to private actors. They are right. 17

In sum, HISA’s clear delineation of enforcement

power between the FTC, the Authority, and USADA

cannot be altered through rulemaking.

Finally, the Authority defends its enforcement role

by analogizing it to the role of self-regulatory

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.”).

30a

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, 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

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.

Johnson & 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.

31a

meaningfully different from FINRA’s. Unlike the SECFINRA 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 accord, 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

32a

law, and it is to the President ... that the Constitution entrusts [this] responsibility[.]”). 19

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

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 settlement agreements, and dismiss the suit “notwithstanding the objections of the

[relator].” Id. at 753–54. HISA gives the FTC none of those powers.

33a

Board can remove members: directors by a two-thirds

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 rulemaking 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 selfIn 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

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 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

35a

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

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 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 Appointments 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.

The directors are appointed by the Authority itself. See

§ 3052(d)(3) (Board members are selected by the Authority’s nominating committee).

36a

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 “fundamentally 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

37a

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 Appointments 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

38a

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 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. 24

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).

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, 759–61 (1st Cir. 2021) (applying Lebron to conclude that Fannie

Mae and Freddie Mac are not government actors).

39a

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, forprofit 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

[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”—

40a

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 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,

See 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.”).

41a

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, Lebron 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

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

42a

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

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

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.

43a

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”).

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

44a

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.

45a

APPENDIX B

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

LUBBOCK DIVISION

NATIONAL

HORSEMEN’S

BENEVOLENT

AND PROTECTIVE ASSOCIATION, et al.,

Plaintiffs,

THE STATE OF TEXAS

and THE TEXAS RACING

COMMISSION,

No. 5:21-CV-071-H

Intervenor-Plaintiffs,

JERRY BLACK, et al.,

Defendants

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-

46a

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 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 private-nondelegation 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-CV-077, Dkt. No. 36 at 33. They also allege, albeit briefly, that HISA violates the Tenth Amendment’s anti-commandeering principles by requiring

Texas to do the federal government’s bidding. Id. at 57.

47a

In light of Congress’s amendment to HISA and the

undisputed evidence following a bench trial, each of

these arguments falls short. First, the plaintiffs’ privatenondelegation 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 (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.

48a

Second, the plaintiffs’ facial and as-applied Fifth

Amendment Due Process argument fails for the same

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

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.