Opposition Brief — Texas, et al., Petitioners v. Jerry Black, et al.

Nos. 24-465, 24-472, 24-489

In The

TEXAS, ET AL.,

v.

Petitioners,

JERRY BLACK, ET AL.

NATIONAL HORSEMEN’S BENEVOLENT AND PROTECTIVE

ASSOCIATION, ET AL.

Petitioners,

v.

HORSERACING INTEGRITY AND SAFETY AUTHORITY,

INCORPORATED, ET AL.,

GULF COAST RACING, L.L.C., ET AL.

Petitioners,

v.

HORSERACING INTEGRITY AND SAFETY AUTHORITY,

INCORPORATED, ET AL.,

ON PETITIONS FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF IN OPPOSITION

John C. Roach

RANSDELL ROACH &

ROYSE, PLLC

176 Pasadena Drive,

Building One

Lexington, KY 40503

859-276-6262

Pratik A. Shah

Counsel of Record

Lide E. Paterno

AKIN GUMP STRAUSS

HAUER & FELD LLP

2001 K Street NW

Washington, DC 20006

202-887-4000

pshah@akingump.com

Counsel for the Horseracing Integrity and

Safety Authority Respondents

QUESTIONS PRESENTED

I. Whether the rulemaking provisions of the

Horseracing Integrity and Safety Act facially violate

the private-nondelegation doctrine.

II.

Whether the Act facially violates the

Constitution’s Appointments Clause.

(i)

ii

RULE 29.6 STATEMENT

Respondent Horseracing Integrity and Safety

Authority, Inc. is a nonstock, nonprofit corporation

organized under the General Corporation Law of the

State of Delaware. The Horseracing Integrity and

Safety Authority, Inc. has no parent corporation, and

no publicly held company has a 10% or greater

ownership interest in it. No other Respondent is a

nongovernmental corporation.

iii

TABLE OF CONTENTS

QUESTIONS PRESENTED......................................... i

RULE 29.6 STATEMENT ...........................................ii

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

STATEMENT OF THE CASE .................................... 2

A. Legal Background ...................................... 2

B. Proceedings Below...................................... 8

REASONS FOR DENYING THE

PETITIONS ............................................................... 11

I. HISA’S RULEMAKING PROVISIONS

DO NOT WARRANT REVIEW ...................... 12

A. There Is No Conflict Among The

Lower Courts ............................................ 12

B. The Decisions Upholding HISA’s

Rulemaking Scheme Are Faithful To

This Court’s Precedents ........................... 17

II. THE

APPOINTMENTS

CLAUSE

QUESTION DOES NOT WARRANT

REVIEW .......................................................... 28

A. Gulf Coast Lacks Standing To Raise

The Appointments Clause Claim ............ 28

B. There Is No Conflict Among The

Lower Courts ............................................ 29

C. This Court’s Precedents Do Not

Support The Appointments Clause

Challenge .................................................. 32

III. THE COURT SHOULD GRANT THE

AUTHORITY’S PETITION ON THE

CONSTITUTIONALITY OF HISA’S

ENFORCEMENT PROVISIONS ................... 35

CONCLUSION .......................................................... 37

iv

TABLE OF AUTHORITIES

CASES:

Alpine Sec. Corp. v. FINRA,

No. 23-5129, 2023 WL 4703307 (D.C. Cir.

July 5, 2023) ...................................................... 31

Aslin v. FINRA,

704 F.3d 475 (7th Cir. 2013) ............................. 31

Association of Am. R.Rs. v. U.S. Dep’t of

Transp.,

721 F.3d 666 (D.C. Cir. 2013) ............... 16, 17, 34

575 U.S. 43 (2015) ............................................. 16

896 F.3d 539 (D.C. Cir. 2018) ........................... 16

Buckley v. Valeo,

424 U.S. 1 (1976) ............................................... 33

Carter v. Carter Coal Company,

298 U.S. 238 (1936) ........................................... 17

Consumers’ Rsch., Cause Based Com., Inc. v.

FCC,

88 F.4th 917 (11th Cir. 2023) ........................... 15

Consumers’ Rsch. v. FCC,

67 F.4th 773 (6th Cir. 2023) ............................. 15

Financial Oversight & Mgmt. Bd. for P.R. v.

Aurelius Inv., LLC,

590 U.S. 448 (2020) ..................................... 32, 33

v

First Jersey Secs., Inc. v. Bergen,

605 F.2d 690 (3d Cir. 1979)............................... 14

Free Enter. Fund v. PCAOB,

561 U.S. 477 (2010) ........................................... 34

Lebron v. National R.R. Passenger Corp.,

513 U.S. 374 (1995) ......................... 30, 32, 34, 35

Lucia v. SEC,

585 U.S. 237 (2018) ........................................... 33

National Horsemen’s Benevolent &

Protective Ass’n v. Black,

596 F. Supp. 3d 691 (N.D. Tex. 2022)................. 9

Oklahoma v. United States,

5:21-cv-104-JMH, 2022 WL 1913419

(E.D. Ky. June 3, 2022) ..................................... 30

62 F.4th 221 (6th Cir. 2023) ....... 6, 7, 12, 13, 14,

15, 17, 19, 20, 21, 22, 23, 24, 25, 26, 35

Pittston Co. v. United States,

368 F.3d 385 (4th Cir. 2004) ....................... 14, 15

R.H. Johnson & Co. v. SEC,

198 F.2d 690 (2d Cir. 1952)............................... 14

Shearson/Am. Express, Inc. v. McMahon,

482 U.S. 220 (1987) ........................................... 25

Sorrell v. SEC,

679 F.2d 1323 (9th Cir. 1982) ........................... 14

vi

Sunshine Anthracite Coal Co. v. Adkins,

310 U.S. 381 (1940) ................. 6, 7, 15, 17, 23, 26

Susquehanna Int’l Grp., LLP v. SEC,

866 F.3d 442 (D.C. Cir. 2017) ........................... 23

Todd & Co. v. SEC,

557 F.2d 1008 (3d Cir. 1977)............................. 14

TransUnion LLC v. Ramirez,

594 U.S. 413 (2021) ........................................... 29

Turbeville v. FINRA,

874 F.3d 1268 (11th Cir. 2017) ......................... 31

United States v. Frame,

885 F.2d 1119 (3d Cir. 1989)....................... 14, 15

United States v. Salerno,

481 U.S. 739 (1987) ........................................... 20

United States Postal Serv. v. Gregory,

534 U.S. 1 (2001) ............................................... 20

Walmsley v. Federal Trade Comm’n,

117 F.4th 1032 (8th Cir. 2024) ......... 7, 8, 12, 13,

22, 24, 30, 32

Zadvydas v. Davis,

533 U.S. 678 (2001) ........................................... 20

CONSTITUTION AND STATUTES:

U.S. CONST. art. II § 2 cl. 2..................................... 32

vii

15 U.S.C.

§ 78o(a)(1) .......................................................... 31

§ 78o(b)(1)(B) ..................................................... 31

§ 78s(b)(2)(C) ..................................................... 23

§ 78s(b)(2)(D) ..................................................... 23

§ 3051(5) ............................................................ 29

§ 3051(11) .......................................................... 29

§ 3052(a) .............................................................. 4

§ 3053 ................................................................... 4

§ 3053(a) .............................................................. 4

§ 3053(b) ........................................................ 4, 21

§ 3053(b)(2) .................................................. 23, 26

§ 3053(c) ................................................... 4, 21, 23

§ 3053(c)(1) ........................................................ 25

§ 3053(c)(2) .................................................. 22, 25

§ 3053(e)....................................... 6, 19, 24, 27, 28

§ 3054(a) .............................................................. 4

§ 3054(a)(2)(A) ................................................... 22

§ 3054(c) ........................................................... 4, 5

§ 3054(g)(2) ........................................................ 28

§ 3055 ................................................................. 22

§ 3055(b) .............................................................. 5

§ 3055(d) .............................................................. 5

§ 3055(g)(1) .......................................................... 5

§ 3055(g)(2) .......................................................... 5

§ 3056 ................................................................. 22

§ 3056(b) .............................................................. 5

§ 3056(b)(2) ........................................................ 22

§ 3057 ......................................................... 4, 5, 22

§ 3057(a)(2) .......................................................... 5

§ 3057(c) ............................................................... 5

§ 3057(c)(2) .......................................................... 5

§ 3057(d) .............................................................. 5

viii

15 U.S.C. (cont.)

§ 3058(a) .............................................................. 5

§ 3058(b) .............................................................. 5

§ 3058(c) ............................................................... 5

§ 3058(c)(3) .......................................................... 5

Bituminous Coal Act of 1937, § 4, pt. II(a),

50 stat. 72 .......................................................... 17

OTHER AUTHORITIES:

16 C.F.R. § 1.142(d) ................................................ 26

166 CONG. REC. H4981 (Sept. 29, 2020) .............. 2, 3

166 CONG. REC. S5514 (Sept. 9, 2020) ................. 2, 3

86 Fed. Reg. 54,819 (Oct. 5, 2021) ......................... 28

88 Fed. Reg. 18,034 (Mar. 27, 2023) ................ 25, 27

88 Fed. Reg. 27,894 (May 3, 2023) ......................... 27

FTC, Order Approving The Enforcement

Rule Modification Proposed By The

Horseracing Integrity And Safety

Authority (Sept. 23, 2022) ................................. 24

FTC, Order Disapproving The Anti-Doping

And Medication Control Rule Proposed

By The Horseracing Integrity And Safety

Authority (Dec. 12, 2022) .................................. 24

ix

FTC, Order Ratifying Previous Commission

Orders As To Horseracing Integrity and

Safety Authority’s Rules (Jan. 3, 2023)............. 25

H.R. REP. NO. 116-554 (2020) .................................. 2

Press Release, Gillibrand Announces

Passage Of Her Horseracing Integrity

And Safety Act (Dec. 22, 2020)............................ 3

Press Release, McConnell Leads Senate

Passage of Horseracing Integrity and

Safety Act (Dec. 21, 2020) ................................... 3

INTRODUCTION

Following a series of high-profile equine deaths

and corruption scandals that threatened horseracing

under the prior patchwork of state-by-state

regulations, Congress enacted the Horseracing

Integrity and Safety Act (HISA) to save the sport. The

Act protects athletes (equine and human), the betting

public, and the integrity of horseracing through the

development and uniform enforcement of racetracksafety, medication-control, and anti-doping rules. To

effectuate that goal, HISA invokes the expertise of the

Horseracing Integrity and Safety Authority

(Authority), a private nonprofit organization, subject

to the approval, oversight, and independent power of

the Federal Trade Commission (FTC).

That

arrangement is modeled on the effective framework—

uniformly upheld by the courts—that has governed

the relationship between the Financial Industry

Regulatory Authority (FINRA) and the Securities and

Exchange Commission (SEC) for 85 years.

Two administrations have now supported HISA.

Two bipartisan Congresses have embraced it—

including through an amendment in late 2022 that

fortified the FTC’s oversight. And every single federal

judge that has considered the two questions presented

by the petitions—whether the amended HISA’s

rulemaking provisions facially violate the privatenondelegation doctrine and whether the Act violates

the Appointments Clause—has rejected them

uniformly.

The Court should deny review of those splitless

questions and instead grant the petitions by the

Authority and the Solicitor General presenting the

(1)

2

only question on which the courts of appeals conflict:

whether HISA’s enforcement provisions facially

violate the private-nondelegation doctrine.

STATEMENT OF THE CASE

A.

Legal Background

1. “[A] beloved tradition in the United States

since the early days of the Republic,” horseracing is a

fixture of American culture and a “major source of jobs

and economic opportunity.” 166 CONG. REC. H49814982 (Sept. 29, 2020) (Rep. Barr). Over the last

decade, however, “the joy of the races [wa]s marred by

accidents that endanger[ed] both the horses and the

riders.” Id. at H4980 (Rep. Pallone). In 2019 alone,

441 Thoroughbreds died from race-related injuries—a

fatality rate two-to-five times greater than in Europe

or Asia. H.R. REP. NO. 116-554, at 17 (2020). These

casualties sparked investigations by officials, concern

within the industry, and “even call[s] for this sport to

be abolished altogether.” 166 CONG. REC. S5514

(Sept. 9, 2020) (Sen. McConnell). At the heart of these

troubles was a “patchwork system” of state-by-state

regulatory schemes that led to “wide disparit[ies]” in

standards and enforcement and eroded the betting

public’s confidence. 166 CONG. REC. H4981 (Rep.

Tonko).

Recognizing the need for reform, a broad coalition

of stakeholders—including owners, breeders, trainers,

racetracks, jockeys, and veterinarians—formed a

“nonprofit business league,” now known as the

Authority, to develop uniform standards for

horseracing, similar to self-regulating organizations in

3

other fields. Pet. App. 37a. 1 The Authority “was

incorporated under Delaware law” in September 2020.

Pet. App. 39a, 51a. Its bylaws are “replete with

conflict-of-interest provisions” governing its privately

appointed Board. Pet. App. 101a.

The highly publicized equine fatalities and

corruption scandals also brought new urgency and

support for action in Congress, which had considered

various horseracing bills over the prior decade. See

166 CONG. REC. H4981-4982 (Rep. Barr). Following

the Authority’s incorporation, HISA was introduced to

the full House and Senate as “bipartisan, bicameral

progress” toward finally remedying the “tragedies on

the track.”

166 CONG. REC. S5514-5515 (Sen.

McConnell). It was not only cheered by animalwelfare proponents, but also hailed by “limited

government conservative[s]” who sought a framework

for “smarter, more effective, and streamlined

regulation for the industry”—sorely needed given that

the “lack of uniformity ha[d] impeded interstate

commerce.” 166 CONG. REC. H4982 (Rep. Barr).

Passage of the “landmark” legislation, with

“almost 300 cosponsors in the House and Senate” and

“broad support” from across the industry, was

celebrated on both sides of the aisle for “usher[ing] in

a new era in the sport.” Press Release, McConnell

Leads Senate Passage of Horseracing Integrity and

Safety Act (Dec. 21, 2020);2 Press Release, Gillibrand

Announces Passage Of Her Horseracing Integrity And

1 Citations are to the appendix filed in case no. 24-472.

2 http://tinyurl.com/59m9kywy.

4

Safety Act (Dec. 22, 2020).3 President Trump signed

HISA into law in December 2020.

2. HISA was “model[ed]” on and is “materially

indistinguishable from the Maloney Act,” which has

governed the SEC’s relationship with FINRA and

other self-regulatory organizations for over eight

decades. Amici Br. of Sen. McConnell et al. in Support

of Stay Appl. 5, 10, Horseracing Integrity & Safety

Auth. v. National Horsemen’s Benevolent & Protective

Ass’n, No. 24A287 (U.S. Sept. 24, 2024). HISA

recognizes the Authority as a “private, independent,

self-regulatory, nonprofit corporation” that will help to

develop and implement “a horseracing anti-doping

and medication control program and a racetrack safety

program,” subject always to “Federal Trade

Commission oversight.” 15 U.S.C. §§ 3052(a), 3053.

The Authority may submit to the FTC a

“proposed rule, or proposed modification to a rule,”

relating to the racetrack-safety, anti-doping, and

medication-control programs. 15 U.S.C. §§ 3053(a),

3054(c), 3057. But the FTC alone may give those draft

standards the force of law by independently approving

them following notice-and-comment. Id. § 3053(b). To

do so, the FTC must determine that each proposed

standard is “consistent with” both the statute and the

FTC’s own rules. Id. § 3053(c). The agency must be

satisfied, therefore, that any standard protects “the

safety, welfare, and integrity of covered horses,

covered persons, and covered horsesraces.” Id.

§ 3054(a). Beyond that overall purpose, Congress

3 http://tinyurl.com/mry9t5pb.

5

directly prescribed the content of some rules, e.g., id.

§ 3055(g)(1)-(2),

enumerated

“[e]lements”

and

“[p]rohibition[s]” to be incorporated in others, e.g., id.

§§ 3055(d), 3056(b), 3057(a)(2), (c)(2), and provided

various “[c]onsiderations” to constrain the antidoping, medication-control, and racetrack-safety

programs, e.g., id. §§ 3055(b), 3056(b), 3057(d).

The Authority may enforce HISA’s programs,

including by investigating and disciplining violations

by covered persons who register under the Act,

pursuant only to those “uniform procedures and rules”

that are approved by the FTC. See, e.g., 15 U.S.C.

§§ 3054(c), 3057. Any sanction imposed for violation

of an FTC-approved rule pursuant to FTC-approved

penalties must be consistent with “adequate due

process, including impartial hearing officers or

tribunals,” and other factors “designed to ensure

fair[ness] and transparen[cy].” Id. § 3057(c)-(d). The

Authority “shall promptly submit” to the FTC notice of

any sanction, id. § 3058(a), which “shall be subject to

de novo review” by an FTC-appointed administrative

law judge and by the Commissioners themselves,

id. § 3058(b)-(c). The FTC may “affirm, reverse,

modify, set aside, or remand for further proceedings,”

and may “make any finding or conclusion that, in the

judgment of the [FTC], is proper and based on the

record.” Id. § 3058(c)(3).

3. Beyond those agency checks, an amendment

Congress enacted during—and in response to—this

litigation ensures additional, ongoing FTC oversight

at all points.

6

In November 2022, in a precursor appeal, the

Fifth Circuit held that HISA (as originally enacted)

violated the private-nondelegation doctrine. Pet. App.

107a-146a.

Under the version of the Act then

considered, only the Authority “wr[o]te[] the

regulations and the FTC c[ould] not modify them.” Id.

at 139a. Because the FTC lacked “the final word,” the

Fifth Circuit held, the Authority did not “function

subordinately” to the agency. Id. at 139a-140a

(quoting Sunshine Anthracite Coal Co. v. Adkins, 310

U.S. 381, 399 (1940)).

“Not so anymore.” Oklahoma v. United States, 62

F.4th 221, 231 (6th Cir. 2023). In direct response to

the Fifth Circuit’s ruling, in December 2022, Congress

enacted (and President Biden signed into law)

bipartisan legislation authorizing the FTC to

“abrogate, add to, and modify” HISA rules as the FTC

“finds necessary or appropriate” to (i) “ensure the fair

administration of the Authority,” (ii) “conform the

rules of the Authority” to requirements of the Act and

applicable rules, or (iii) otherwise “further[] *** the

purposes” of the Act. 15 U.S.C. § 3053(e). That

language, drawn directly from the Maloney Act,

“eliminates” “the ‘key distinction’” the Fifth Circuit

previously identified with the SEC-FINRA statute.

Oklahoma, 62 F.4th at 232 (quoting Pet. App. 140a).

Indeed, the Sixth Circuit had suggested this specific

remedy at oral argument in a parallel challenge. Oral

Arg. Rec. 33:00-33:13, Oklahoma, No. 22-5487 (6th

Cir. Dec. 7, 2022) (Sutton, C.J.) (“Why not just say to

[Congress,] this is easy, this was bipartisan, just put

the modification power straight in, it’ll be just like

FINRA and the SEC, problem solved?”).

7

The Sixth Circuit subsequently rejected the

private-nondelegation challenge. The amendment

Congress enacted “[i]n response” to the Fifth Circuit’s

decision made the Authority “subordinate to the

agency.” Oklahoma, 62 F.4th at 225, 229. The FTC’s

new “rulemaking and rule revision power gives it

‘pervasive’ oversight and control of the Authority’s

enforcement activities” and the Authority’s role “in the

rulemaking context.” Id. at 231 (quoting Adkins, 310

U.S. at 388). Accordingly, “[t]he Authority wields

materially different power from the FTC, yields to

FTC supervision, and lacks the final say over the

content and enforcement of the law—all tried and true

hallmarks of an inferior body.” Id. at 229. Judge Cole

“agree[d] in full” and wrote separately to emphasize

his view that even “the original statute was

constitutional because the private Authority has

always been subordinate to the FTC.” Id. at 237, 239.4

The Eighth Circuit subsequently “agree[d] with

the Sixth Circuit that the statute is not

unconstitutional on its face.” Walmsley v. Federal

Trade Comm’n, 117 F.4th 1032, 1039 (8th Cir. 2024).

Because the FTC “has the final say over the rules,

there is no impermissible private delegation” with

respect to “the Act’s rulemaking structure.” Id. at

1038. And because the FTC “has broad power to

4 This Court denied certiorari in the Oklahoma case on

June 24, 2024. Oklahoma v. United States, No. 23-402 (U.S.).

Following issuance of the Fifth Circuit’s decision in this case, the

Oklahoma petitioners filed a rehearing petition focused on the

circuit split over the facial constitutionality of HISA’s

enforcement proceedings. The Authority and the Solicitor

General filed responses on November 6, 2024.

8

subordinate the Authority’s enforcement activities,”

“the statute’s enforcement provisions are not

unconstitutional on their face and in all of their

applications.” Id. at 1039-1040.5

B.

Proceedings Below

1. Although “the Thoroughbred industry

overwhelmingly supported” HISA and “has adjusted to

this regime,” Amici Br. of Thoroughbred Industry

Participants in Support of Stay Appl. 2, 9, Horseracing

Integrity & Safety Auth., supra, No. 24A287 (U.S.

Sept. 25, 2024), a faction long opposed to any reforms

has brought a series of challenges to the Act.

Those challengers include the lead Petitioners, a

national horsemen’s association and several of its

state chapters. In 2021, those Petitioners brought suit

in the Northern District of Texas to challenge HISA’s

constitutionality. See Pet. App. 53a & n.2 (discussing

“lead-case plaintiffs”). They named as defendants the

Authority and its officials (Respondents here), as well

as the FTC and its commissioners. See id. at 53a nn.56.

The State of Texas and the Texas Racing

Commission (collectively, “Texas”) intervened to

support the plaintiffs’ challenge. See id. at 53a n.4. In

2022, the district court rejected plaintiffs’

constitutional challenge, holding that HISA, as

originally enacted, did not “facially violate[] the

private-nondelegation doctrine” because the Authority

5 The plaintiffs in the Eighth Circuit case filed a certiorari

petition on October 10, 2024. Walmsley v. Federal Trade

Comm’n, No. 24-420 (U.S.). The Authority and the Solicitor

General filed responses on November 6, 2024.

9

“function[ed] subordinately to the FTC, guided by

Congressional standards.”

National Horsemen’s

Benevolent & Protective Ass’n v. Black, 596 F. Supp. 3d

691, 696 (N.D. Tex. 2022).

While an appeal from that initial decision was

pending at the Fifth Circuit, a collection of racetracks

in Texas and a partnership of horsemen who race

there (collectively, “Gulf Coast”) filed another facial

challenge in the Northern District of Texas. See Pet.

App. 53a & n.3 (listing “member-case plaintiffs”).

They raised the same private non-delegation claims as

in the parallel case, but also a “mutually exclusive”

Appointments Clause claim on the ground that the

Authority was not private for constitutional purposes.

Id. at 38a, 69a. The Texas racetracks have never been

subject to HISA rules because Texas has essentially

elected to avoid the Act’s reach. Specifically, as its

counsel explained at trial, Texas “opted to stop” the

transmission of in-state racing for out-of-state

wagering, thereby negating the statutory interstatecommerce element necessary to trigger application of

HISA to horseracing in the State. ROA.3086-3087.

2. On remand from the Fifth Circuit’s 2022

decision declaring the original version of HISA

unconstitutional, the two cases were consolidated. See

Pet. App. 59a. The horsemen’s association, Texas, and

Gulf Coast each filed amended complaints challenging

the amended Act on several facial constitutional

grounds. See id. at 59a-61a. Following full briefing

and a bench trial on the merits, the district court

rejected the consolidated challenges and granted final

judgment in favor of the Authority and the FTC. Id.

10

at 45a-103a. The court concluded that “Congress

answered the call” and “cured the constitutional

issues.” Id. at 81a, 89a.

On appeal, the Fifth Circuit affirmed in part and

reversed in part. It agreed that “the amendment

solved the nondelegation problem with the Authority’s

rulemaking power.” Pet. App. 3a. “[T]he Authority’s

rulemaking power is subordinate to the FTC’s,” the

court reasoned, “[b]ecause the FTC has ultimate say

on what the rules are.” Id. at 14a. HISA thus “give[s]

the FTC the same general rulemaking authority that

the SEC has with respect to FINRA.” Id.

The Fifth Circuit also agreed with the district

court that HISA does not violate the Appointments

Clause. Pet. App. 35a-42a. “The basic premise of Gulf

Coast’s argument,” the court explained, “is that the

Authority is part of the federal government for

Appointments Clause purposes.” Id. at 37a. Applying

this Court’s “governing test to determine whether an

entity is private or public” for constitutional purposes,

the Fifth Circuit held that “the Authority is a private

entity not subject to Article II’s Appointments Clause.”

Id. at 42a.6

The Fifth Circuit disagreed with the district court

in only “one important respect”—concluding, on a

facial basis, that “apart from its rulemaking powers,

6 The Fifth Circuit also affirmed the district court’s

holdings that “HISA does not violate the Due Process Clause” and

that “Gulf Coast lacks standing to raise” its claim “that HISA

unconstitutionally commandeers state officials.” Pet. App. 3a,

42a-43a. Petitioners do not seek review of those holdings.

11

the Authority’s enforcement powers violate the private

nondelegation doctrine.” Pet. App. 4a, 14a.

The Fifth Circuit denied timely rehearing

petitions limited to the constitutionality of the Act’s

enforcement provisions. Pet. App. 104a. Petitioners

did not request rehearing on the rulemaking or

Appointment Clause questions.

3. On October 28, 2024, this Court granted the

Authority’s emergency application to stay the Fifth

Circuit’s mandate pending the disposition of the

Authority’s certiorari petition seeking review of

whether HISA’s enforcement provisions facially

violate

the

private-nondelegation

doctrine.

Horseracing Integrity & Safety Auth., supra, No.

24A287; see Horseracing Integrity & Safety Auth. v.

National Horsemen’s Benevolent & Protective Ass’n,

No. 24-433 (U.S. Oct. 15, 2024). The Solicitor General

has also filed a certiorari petition seeking review of

(only) that question.

Federal Trade Comm’n v.

National Horsemen’s Benevolent & Protective Ass’n,

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

REASONS FOR DENYING THE PETITIONS

All eleven federal judges that have reviewed the

operative version of HISA have concluded that its

rulemaking scheme is constitutional under the

private-nondelegation doctrine. That consensus

follows from application of the established agencysubordination standard that Petitioners accepted

below, that this Court’s precedents set forth, and that

courts of appeals have relied on uniformly to uphold

the materially identical Maloney Act.

Congress

amended HISA to satisfy that standard by conferring

12

on the FTC the express oversight the Fifth Circuit said

the prior version of the statute had omitted.

Petitioners’ worst-case assumptions on a facial

challenge about how the FTC might exercise that

supervision and control do not warrant this Court’s

review.

Nor does the “fundamentally incompatible”

Appointments Clause question warrant review. As a

threshold issue, the only parties pressing that claim

are not even subject to HISA rules. Standing aside, no

court has disagreed with the Fifth and Eighth Circuits’

holdings that the Authority is a private entity not

subject to the Appointments Clause. That conclusion

flows directly from this Court’s well-settled

precedents.

The petitions should be denied.

I.

HISA’S RULEMAKING PROVISIONS DO

NOT WARRANT REVIEW

A.

There Is No Conflict Among The Lower

Courts

1. Every court that has resolved a materially

identical challenge to HISA—and every single judge

sitting on those courts (without exception)—has

reached the same conclusion: “the Act’s rulemaking

structure does not violate the private nondelegation

doctrine.” Walmsley, 117 F.4th at 1038 (“agree[ing]

with the Sixth and Fifth Circuits,” the Eastern District

of Arkansas, and the Northern District of Texas); see

Oklahoma, 62 F.4th at 228-231; Pet. App. 9a-14a, 78a94a. Even as the Fifth Circuit reached the opposite

determination on the validity of HISA’s enforcement

13

provisions, it held that the Act’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.’” Pet. App. 11a (quoting

Oklahoma, 62 F.4th at 230). Likewise, although

Judge Gruender dissented from the Eighth Circuit’s

majority opinion based on his view that “HISA’s

enforcement provisions facially violate the private

nondelegation doctrine,” he “concur[red]” in the

majority’s rejection of the private-nondelegation

challenge to HISA’s rulemaking provisions. Walmsley,

117 F.4th at 1041-1044 (Gruender, J., concurring in

part and dissenting in part).

That consensus refutes any suggestion that there

is “confusion” over the framework governing the

private-nondelegation

challenge

to

HISA’s

rulemaking structure. NHBPA Pet. 19; Texas Pet. 28.

Indeed, “all parties” and courts across every privatenondelegation challenge to HISA’s rulemaking

structure have expressly “agree[d] that the outcome

turns on whether the private entity is subordinate to

the agency.” Pet. App. 128a n.23; see, e.g., Oklahoma,

62 F.4th at 229 (“As the case comes to us, then, the

determinative question is whether the Horseracing

Authority is inferior to the FTC.”); id. at 237 (Cole, J.,

concurring) (agreeing “that the main test for this issue

is whether the private entity is subordinate to the

federal agency”); Walmsley, 117 F.4th at 1039

(“join[ing] the other two circuits” in concluding that

“the rulemaking structure of the Act does not violate

the private nondelegation doctrine” because “the

14

Authority is subordinate to the Commission”); Pet.

App. 9a (same).

No court has ever held that the Maloney Act’s 85year-old rulemaking framework—which undisputedly

provided the “model[]” for HISA—violates the privatenondelegation doctrine either. Pet. App. 10a (citing

Oklahoma, 62 F.4th at 231-232). On the contrary, “[i]n

case after case,” the courts of appeals “have upheld

this arrangement” on the ground that the SEC’s

“ultimate control” makes FINRA and other selfregulatory organizations “permissible aides and

advisors.” Oklahoma, 62 F.4th at 229 (citing Sorrell v.

SEC, 679 F.2d 1323, 1325-1326 (9th Cir. 1982); First

Jersey Secs., Inc. v. Bergen, 605 F.2d 690, 697 (3d Cir.

1979); Todd & Co. v. SEC, 557 F.2d 1008, 1012-1013

(3d Cir. 1977); R.H. Johnson & Co. v. SEC, 198 F.2d

690, 695 (2d Cir. 1952)). That is the opposite of a

“muddled and inconsistent” approach. Texas Pet. 28.

2.

Unable to identify any conflict on the

constitutionality of the rulemaking scheme in HISA or

the parallel Maloney Act framework, Petitioners

instead search for “general confusion” among decisions

similarly rejecting private-nondelegation challenges

to other regulatory schemes. Texas Pet. 28; see also

NHBPA Pet. 9-19. Far from “stand[ing] contrary” to

those decisions, Texas Pet. 30, however, the Fifth

Circuit cited them (and others) as “teach[ing]” the

private-nondelegation doctrine it applied in upholding

HISA’s rulemaking regime, Pet. App. 9 (citing, e.g.,

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)). As the Sixth Circuit explained,

15

Pittson and Frame “hold this line” “between

impermissible delegation of unchecked lawmaking

power to private entities and permissible participation

by private entities in developing government

standards and rules.” Oklahoma, 62 F.4th at 228.

Similarly, although Petitioners repeatedly cite

decisions “in the Universal Service Fee context” as

reflecting purported “differences among the lower

courts,” NHBPA Pet. 8-9; see also id. at 11, 13, 18,

those decisions drew on the HISA cases to adjudicate

private-nondelegation challenges. For example, the

Sixth Circuit quoted Chief Judge Sutton’s earlier

Oklahoma ruling in explaining that “[a] private entity

must be subordinate to a federal actor in order to

withstand a non-delegation challenge.” Consumers’

Rsch. v. FCC, 67 F.4th 773, 795 (6th Cir. 2023)

(quoting Oklahoma, 62 F.4th at 229). The Eleventh

Circuit quoted the Fifth Circuit in explaining that “[i]f

the private entity does not function subordinately to

the supervising agency, the delegation of power is

unconstitutional.” Consumers’ Rsch., Cause Based

Com., Inc. v. FCC, 88 F.4th 917, 926 (11th Cir. 2023)

(quoting Pet. App. 128a). If those decisions were “at

odds” with the HISA cases they cite, NHBPA Pet. 9, it

would be news to the judges who authored them.7

7 To be sure, the Universal Service Fee cases also raise

public-nondelegation issues and distinct private-nondelegation

issues concerning agency subdelegation, which are not at issue

here. As Texas itself has previously recognized, those features

materially distinguish the relevant constitutional inquiry. Pet.

for Cert. 20, Texas v. Commissioner, No. 21-379 (U.S. Sept. 3,

2021) (“[I]n Adkins, ‘it was Congress itself, not the agency, that

16

The only decision Petitioners cite that upheld a

private non-delegation challenge to a rulemaking

scheme is the D.C. Circuit’s (since-vacated) decision

concerning Amtrak. See Texas Pet. 28-29. The

Amtrak line of cases only reinforces the conclusion

courts have reached on HISA’s and the Maloney Act’s

rulemaking scheme. See Association of Am. R.Rs. v.

U.S. Dep’t of Transp., 721 F.3d 666, 671 & n.5 (D.C.

Cir. 2013) (finding private-nondelegation violation

because agency could not “unilaterally change

regulations proposed to it,” contrary to Maloney Act

cases that “resemble Adkins”), vacated on other

grounds, 575 U.S. 43, 53 (2015). As the D.C. Circuit

explained (in a remand decision Petitioners ignore),

where a “government agency could ‘hold the line’”

against “private interests,” such that “[n]o rule will go

into effect without the approval and permission of a

neutral federal agency,” the framework “raise[s] no

constitutional eyebrow.” Association of Am. R.Rs. v.

U.S. Dep’t of Transp., 896 F.3d 539, 541, 545-547 (D.C.

Cir. 2018) (severing agency-constraining provision

that “broke from [Adkins’] mold” brought statute “back

into the constitutional fold”). And here, the Fifth

Circuit made clear that it was applying the same

standard that its “sister circuit” applied in Amtrak.

enlisted the assistance of private parties in rulemaking.’”). In

any event, to the extent pending certiorari petitions from the

Universal Service Fee decisions (see Nos. 23-456, 23-743, 24-354)

concern the legislative functions that Petitioners raise here, that

is yet another reason to limit the Court’s review of HISA to the

delegation of enforcement power, which is not at issue in the

Universal Service Fee petitions.

17

Pet. App. 9a (citing Ass’n of Am. R.Rs., 721 F.3d at

671).

B.

The Decisions Upholding HISA’s

Rulemaking Scheme Are Faithful To

This Court’s Precedents

1. The uniform decisions upholding HISA’s

rulemaking scheme follow this Court’s precedents. In

Carter v. Carter Coal Company, this Court invalidated

a federal statute that directly conferred power on

private entities to regulate an industry with zero

governmental approval or oversight. 298 U.S. 238,

310-311 (1936). In response, Congress amended the

law to “subordinate[] the private coal producers to a

public body (the Coal Commission),” Oklahoma, 62

F.4th at 228, by granting the Commission the power

to “approve, disapprove, or modify” the private boards’

proposals “to conform to the requirements” of the

statute, Bituminous Coal Act of 1937, § 4, pt. II(a), 50

stat. 72, 78. Reviewing that amended statute in

Adkins, this Court blessed the scheme as

“unquestionably valid.” 310 U.S. at 399.

Based on those twin precedents, the Fifth Circuit

(like every other court of appeals to consider HISA’s

rulemaking) explained that “a private entity may

wield government power only if it ‘functions

subordinately’ to an agency with ‘authority and

surveillance’ over it.” Pet App. 9a (quoting Pet. App.

127a-128a & n.21). As the horsemen’s association has

acknowledged,

“[t]he

Fifth

Circuit

followed

established precedent from this Court and other

circuits in asking whether the FTC exercises pervasive

surveillance and control over the Authority.” NHBPA

18

Resp. to Stay Appl. 17, Horseracing Integrity & Safety

Auth., supra, No. 24A287 (U.S. Sept. 30, 2024). There

is no “conflict[] with this Court’s cases” on the

governing framework. Texas Pet. 18.

To the extent there is any “misunderstanding[],”

Texas Pet. 19, it is on Petitioners’ part. Below, Texas

urged that

“the

Authority

must

‘function

subordinately’ to the FTC” to meet the established

private-nondelegation standard. Texas Opening Br. 2

(Jul. 5, 2023), C.A. Doc. 74. Yet in response to the

Authority’s stay application, Texas argued for the first

time that the FTC’s oversight was not “relevant” to the

constitutional analysis because Congress cannot

confer any power on private entities “at all—no matter

how they are supervised.” Texas Resp. to Stay Appl.

18, 21, Horseracing Integrity & Safety Auth., supra,

No. 24A287 (U.S. Sept. 30, 2024). Now, Texas

backtracks, contending (like the horsemen’s

association) merely that the degree of oversight the

FTC issues is not “sufficient.” Texas Pet. 21. All of

Petitioners’ objections to the appellate courts’ privatenondelegation holdings—i.e., that the FTC is a “busy

agency,” that the court of appeals construed the FTC’s

authority to be “more significant tha[n] it is,” that the

“the FTC might choose” not to act, and that it may

“take time” for the agency to act, Texas Pet. 21, 23,

25—only reinforce that everyone agrees the relevant

analysis “turns on whether the private entity is

subordinate to the agency,” Pet. App. 128a n.23.

2. The Fifth Circuit held that the original version

of HISA failed that standard because “[t]he Authority,

rather than the FTC, ha[d] been given final say over

19

HISA’s programs.”

Pet. App. 109a.

Following

Congress’s amendment—enacted in direct response to

that holding—courts (including the Fifth Circuit) have

concluded consistently that the version of HISA now

in effect “gives the FTC the final say over

implementation of the Act relative to the Horseracing

Authority.” Oklahoma, 62 F.4th at 225. “Now, the

FTC may ‘abrogate, add to, and modify” the

Authority’s rules,” so if the FTC “disagrees with the

policies reflected in the Authority’s rules, it may

change them.” Pet App. 11a (quoting 15 U.S.C.

§ 3053(e)).

That is “the same general rulemaking authority

that the SEC has with respect to FINRA.” Pet. App.

14a (citing Oklahoma, 62 F.4th at 225). Indeed,

FINRA itself urged affirmance of the district court

judgment in this case. Br. of Financial Industry

Regulatory, Inc. as Amicus Curiae in Supp. of Defs.Appellees (Aug. 11, 2023), C.A. Doc. 123; 8 see also

FINRA Opp’n to Mot. for Inj. Pending Appeal 19,

Alpine Sec. Corp. v. FINRA, No. 23-5129 (D.C. Cir.

June 15, 2023) (HISA “put[s] the [Authority] ‘on equal

footing to FINRA in its role “in aid of” the federal

agency’” (quoting Pet. App. 89a)). “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.” Pet. App. 14a.

3. Petitioners’ caricature of the FTC’s oversight

rests on worst-case assumptions about how the agency

might exercise that supervision and strained

8 The Fifth Circuit struck FINRA’s amicus brief without

explanation. See C.A. Doc. 154 (Aug. 29, 2023).

20

interpretations of the Act seeking to create

constitutional problems. Basic principles governing

facial challenges and constitutional avoidance

proscribe that approach. See, e.g., United States v.

Salerno, 481 U.S. 739, 745 (1987) (“A facial challenge

to a legislative Act is, of course, the most difficult

challenge to mount successfully, since the challenger

must establish that no set of circumstances exists

under which the Act would be valid.”); Zadvydas v.

Davis, 533 U.S. 678, 689 (2001) (“cardinal principle”

that statute must be interpreted to avoid

constitutional doubt where “fairly possible”); United

States Postal Serv. v. Gregory, 534 U.S. 1, 10 (2001)

(“presumption of regularity attaches to the actions of

Government agencies”).

The Authority remains subordinate to the FTC’s

“policymaking discretion” (within Congress’s clear

guidelines) both “[w]hen the FTC decides to” exercise

its new independent rulemaking power and “when the

FTC decides not to act.” Oklahoma, 62 F.4th at 230.

Petitioners nevertheless fret that the FTC may decide

it does not “wish[] to supervise the Authority”

seriously and may shirk its oversight responsibilities.

Texas Pet. 22; see, e.g., id. at 23 (suggesting the FTC

may not “even read” proposals submitted to it). But

because HISA can be fairly construed to give the FTC

“ultimate say on what the rules are,” Pet. App. 14a,

that is enough to reject Petitioners’ facial challenge

regardless of how the agency exercises its “ultimate

discretion over the content of the rules” in any

particular instance, Oklahoma, 62 F.4th at 230. All

courts agree that “the FTC bears ultimate

responsibility” for any rule promulgated under HISA:

21

“The People may rightly blame or praise the FTC for

how adroitly (or, let’s hope not, ineptly)” it carries out

its oversight. Id. at 231.

None of Petitioners’ specific criticisms displace

that consensus following this Court’s precedents.

a. Petitioners allege primarily that the FTC’s

oversight is insufficient because the Authority “writes

the entire regulatory scheme to govern the horseracing

industry,” which “the FTC must approve so long as it

falls within HISA’s broad delegation.” Texas Pet. 21.

According to them, it does not matter that a standard

the Authority proposes cannot “take effect unless” the

FTC independently determines, following notice-andcomment review, that the proposal is “consistent with”

the Act and the agency’s own rules. 15 U.S.C.

§ 3053(b)-(c).

Petitioners minimize that agency

determination as “bare bones ‘consistency’ review”

that gives the Authority “power to have [HISA] rules

rubber-stamped into federal law.” NHBPA Pet. 15.

Congress’s amendment to HISA is “fatal to

[Petitioners’] arguments regarding consistency

review.” Pet. App. 87a. The FTC’s new power to

“abrogate, add to, and modify” HISA rules renders

“‘irrelevant’ that the FTC conducts an initial review

for consistency with the statute and rules.” Id.

(quoting Pet. App. 141a n.35). As the Fifth Circuit

explained, “[t]he problem was never that the private

entity proposed the rules”; the original version of

HISA violated the private-nondelegation doctrine,

according to that court, because the FTC used to

“lack[] power to second-guess them once they were

proposed.”

Pet. App. 11a-12a.

But under the

22

amendment Congress passed in direct response to that

ruling, “the FTC has been given that power.” Pet. App.

12a. Regardless of the Authority’s ability to draft

standards “in the first place,” Texas Pet. 3, 19, 21, the

FTC’s “authority to modify [and abrogate] any rules

for any reason at all, including policy disagreements,

ensures that the FTC retains ultimate[] authority,”

Pet. App. 12a (second alteration in original) (quoting

Oklahoma, 62 F.4th at 231); see Walmsley, 117 F.4th

at 1038 (“If the Commission disagrees with policies

reflected in the Authority’s rules, then the

Commission may change them[.]”).

b.

In any event, the FTC’s front-end

“consistency” review has real “bite.” Pet. App. 12a.

Petitioners are wrong that the FTC cannot disapprove

proposed standards “on policy grounds.” Texas Pet.

25. Evaluating whether proposals are “consistent

with” the Act, 15 U.S.C. § 3053(c)(2), requires

determining whether they “are consistent with ‘the

safety, welfare, and integrity of covered horses,

covered persons, and covered horseraces,’” Oklahoma,

62 F.4th at 240 (Cole, J., concurring) (quoting 15

U.S.C. § 3054(a)(2)(A)), pursuant to the many

“[c]onsiderations” and “[e]lements” Congress provided,

15 U.S.C. §§ 3055, 3056, 3057. That broad standard

empowers the FTC to disapprove, for example, a

racetrack-safety proposal that the FTC determines as

a matter of policy is not “consistent with the humane

treatment of covered horses.” Id. § 3056(b)(2).

In this context, that substantive determination is

tantamount to the “public interest” determination the

SEC makes under the Maloney Act pursuant to an

23

identical “consistent with the requirements of the Act”

standard. Susquehanna Int’l Grp., LLP v. SEC, 866

F.3d 442, 446-447 (D.C. Cir. 2017) (quoting 15 U.S.C.

§ 78s(b)(2)(C)). If anything, FINRA’s powers are

broader than the Authority’s in relevant respects.

Compare, e.g., 15 U.S.C. § 78s(b)(2)(D) (FINRA rules

“shall be deemed to have been approved” if SEC fails

to act within prescribed period), with id. § 3053(b)(2)

(Authority-proposed standards cannot take effect

unless approved by FTC).

Section 3053(c) also mirrors the Coal Act

standard this Court upheld as “unquestionably valid”

in Adkins. 310 U.S. at 399. The relevant statutory

text

limited

the

agency

to

“‘approv[ing],

disapprov[ing], or modify[ing]’ the private coal boards’

‘proposed minimum prices [and related terms] to

conform to the requirements of this subsection.’”

Oklahoma, 62 F.4th at 241 (Cole, J., concurring). That

language refutes Petitioners’ suggestion of some

material difference between the “affirmative act”

required by the agency to give effect to a proposal in

Adkins, and approval following “consistency review by

the FTC” here. NHBPA Pet. 16 n.10; see also Texas

Pet. 20-21 (implying distinction between approval

standards). “[E]very court of appeals to address the

validity of such delegations under the Maloney Act

and the Coal Act, as noted, has upheld them.”

Oklahoma, 62 F.4th at 232.

Although that is enough to doom Petitioners’

facial challenge, the FTC’s actions remove any doubt.

In December 2022, for example, the FTC construed the

Act’s consistency standard as warranting disapproval

24

of the initially proposed anti-doping and medicationcontrol rules in the immediate wake of the Fifth

Circuit’s decision in the predecessor appeal. The

agency based its determination on (i) the FTC’s

independent judgment that “[t]he bedrock principle of

the Act is the need for uniformity,” and (ii) the FTC’s

policy goal of avoiding potential “confusion *** for

industry participants and regulators.” FTC, Order

Disapproving The Anti-Doping And Medication

Control Rule Proposed By The Horseracing Integrity

And Safety Authority 1-2 (Dec. 12, 2022).9 The FTC

also has not hesitated to condition its approval of a

proposed standard on its own limiting interpretations.

See, e.g., FTC, Order Approving The Enforcement Rule

Modification Proposed By The Horseracing Integrity

And Safety Authority 14-16 (Sept. 23, 2022) (rejecting

proposed provision as “unnecessary and overbroad”

and directing Authority “not to rely” on it).10

c.

Petitioners “overlook[] another reality,”

Oklahoma, 62 F.4th at 232, in arguing that “the

Authority’s rules necessarily govern for some periods

of time,” Texas Pet. 24, because the FTC’s section

3053(e) power kicks in “only later,” “once an Authoritydrafted rule is in place,” NHBPA Pet. 15-16. HISA’s

amended text undisputedly confers on the FTC not

only “after-the-fact” (id.) power “to modify the

Authority’s rules,” Texas Pet. 24-25, but also the

independent ability to “create new rules” in the first

place, Oklahoma, 62 F.4th at 230; see Walmsley, 117

F.4th at 1038 (“The power to ‘add to *** the rules of

9 https://tinyurl.com/rndfjr8b.

10 http://tinyurl.com/3h5cb5fm.

25

the Authority’ thus enables the Commission to adopt

new rules.”). “This language, borrowed from the

Maloney Act, gives the agency ‘broad authority to

oversee and to regulate *** [as] it deems necessary.’”

Pet. App. 12a n.5 (quoting Shearson/Am. Express, Inc.

v. McMahon, 482 U.S. 220, 233-234 (1987)).

Under that “broader rulemaking power,” the FTC

will “exercise its own policy choices whenever it

determines that the Authority’s proposals, even if

consistent with the Act, are not the policies that the

Commission thinks would be best for horseracing

integrity or safety.” FTC, Order Ratifying Previous

Commission Orders As To Horseracing Integrity and

Safety Authority’s Rules 3 (Jan. 3, 2023).11 The FTC

has already done so, for example, with a rule requiring

the agency’s review and approval of the Authority’s

proposed budget to advance the Act’s goals “in a

prudent and cost-effective manner.” 88 Fed. Reg.

18,034, 18,035 (Mar. 27, 2023).

This new “full-throated rulemaking power” is

now baked into section 3053(c)’s approval/disapproval

process. Oklahoma, 62 F.4th at 232; see Pet. App. 12a.

“When the FTC reviews the Horseracing Authority’s

proposed rules, it asks not just whether they are

‘consistent’ with the Act; it also asks whether they are

‘consistent’ with other ‘applicable rules approved by

the Commission.’” Oklahoma, 62 F.4th at 232 (quoting

15 U.S.C. § 3053(c)(2)). Although HISA requires the

FTC to approve or disapprove a proposal within 60

days of publication in the Federal Register, 15 U.S.C.

11 https://tinyurl.com/msswvdrf.

26

§ 3053(c)(1), there is no deadline for the FTC to

publish the proposal in the first instance, see 16 C.F.R.

§ 1.142(d) (requiring Authority to submit standards

and accompanying documents “at least 90 days in

advance” of proposed publication, absent waiver). If

the FTC has concerns about an Authority proposal, the

FTC may publish its own proposed rule on the same

topic before publishing the Authority’s proposal. The

agency can then finalize its own rule before

determining

whether

the

Authority-proposed

standard is consistent with it. The Authority’s

proposal “shall not take effect” in the interim—or ever,

if the FTC disapproves it as inconsistent with the

agency’s own rule. 15 U.S.C. § 3053(b)(2).

All of this refutes Petitioners’ argument that “the

Authority serves as the FTC’s equal in the rulemaking

endeavor” or even as “the primary regulator.” Texas

Pet. 25. The FTC’s “broad power to write and rewrite

the rules” according to its “policymaking discretion”

ensures “ultimate ‘law-making is not entrusted to the

Authority.’” Oklahoma, 62 F.4th at 230 (alteration

omitted) (quoting Adkins, 310 U.S. at 399). Any

hypothetical delay between approval of an Authorityproposed rule and a new FTC rule on the same subject

is itself a “policy choice” by the agency. Id.

Moreover, the FTC may exercise its new

rulemaking authority to delay the effective date of any

approved rule. See Pet. App. 13a. Little imagination

is needed to conceive of such a rule: the FTC already

enacted one “delaying the date of effectiveness” of the

approved anti-doping and medication-control program

to mitigate risk of “inconsistent treatment of similarly

27

situated horses” and “uncertainty *** near[] [last

year’s] Triple Crown events.” 88 Fed. Reg. 27,894,

27,894-27,895 (May 3, 2023) (finding “good cause” to

forgo “notice and comment” under “section

553(b)(3)(B) of the APA,” as incorporated in 15 U.S.C.

§ 3053(e)).

That real-life example of the FTC

exercising its rulemaking power on an expedited basis

to protect its “policy concerns” and prevent timesensitive “harms that could frustrate the purposes of

the Act,” id., resolves any lingering worry that

rulemaking “could take years,” Texas Pet. 26.

d. Petitioners’ ancillary examples about

particular rulemaking functions only demonstrate the

futility of their challenge. The budget rule the FTC

promulgated over 18 months ago—confirming that the

Authority must submit proposed budgets for FTC

review and approval, and that the FTC may “modify

any line item” in the proposals, 88 Fed. Reg. at 18,03418,036—forecloses any suggestion that HISA

necessarily “gives the Authority final say over the fees

it charges,” NHBPA Pet. 9. Petitioners acknowledge

that the FTC rule constitutes “oversight of the

Authority’s budget, which is what leads to the fee that

is set.” Id. at 11 n.5. But brandishing the facial nature

of their challenge as a shield, Petitioners argue that

the Court must “limit its consideration to the statute

on its face” and turn a blind eye to the federal

regulation that “the FTC sua sponte adopted.” Id.

Petitioners are free to bring an as-applied challenge to

the FTC’s budget rule if they believe the agency has

exercised too much control over the Authority, but

they cannot leverage that same concern to claim

facially that the FTC has too little control under the

28

Act. See id. at 9 (alleging HISA “provides zero

oversight for the FTC in setting the Authority’s

budget”).

Petitioners are also wrong that the Authority

“exercise[s] final discretion” over HISA policy by

“rewrit[ing] rules through sub-regulatory policymaking.” NHBPA Pet. 17, 19; Texas Pet. 26-27. The

FTC’s own rules mandate that Authority guidance

“does not have the force of law.” 86 Fed. Reg. 54,819,

54,819 (Oct. 5, 2021) (“distinguish[ing] HISA

Guidance from a proposed modification to a rule”).

Moreover, the Authority must submit guidance to the

FTC, 15 U.S.C. § 3054(g)(2), paving the way for the

agency to override any guidance it dislikes through its

plenary rulemaking authority, id. § 3053(e); see Pet.

App. 13a. And if any guidance actually imposed a new

legal obligation on industry participants—or

established a concrete “prospect” that the Authority

would “act on that guidance by bringing an

enforcement action,” Texas Pet. 27—it would exceed

the Authority’s power and would be ripe for an asapplied challenge.

II.

THE APPOINTMENTS CLAUSE QUESTION

DOES NOT WARRANT REVIEW

A.

Gulf Coast Lacks Standing To Raise

The Appointments Clause Claim

Gulf Coast is alone in pressing an Appointments

Clause claim that even the other Petitioners have

acknowledged is “‘fundamentally incompatible’ with

their private nondelegation challenge.” Pet. App. 36a.

But no one disputes that the Texas-based racetracks

have never been subject to HISA rules. See Stay Appl.

29

7, 24, Horseracing Integrity & Safety Auth., supra, No.

24A287. As Texas explains, the State has “avoid[ed]

application of HISA by surrendering the ability to

simulcast Texas races to other States.” Texas Pet. 12.

That simulcast signal enables interstate betting;

where no “interstate off-track” betting occurs and no

advance deposit wagers are permitted (as was already

the case in Texas pre-HISA), the horserace is not

“covered” by the Act. 15 U.S.C. § 3051(5), (11).

Accordingly,

Petitioners

have

confirmed

throughout this litigation that “Texas is not running

covered races.” ROA.2768; see also ROA.3086-3087

(Texas’s counsel). As a result of the State’s deliberate

“decision not to simulcast” or allow advance deposit

wagering, Texas Pet. 12, Gulf Coast is not subject to

HISA’s rules—and thus has not suffered an injury-infact that is fairly traceable to the alleged

Appointments Clause violation.

That poses a

threshold jurisdictional hurdle to the Appointments

Clause claim that Gulf Coast (and “only” Gulf Coast)

presents. Gulf Coast Pet. 2; see TransUnion LLC v.

Ramirez, 594 U.S. 413, 431 (2021) (standing required

“for each claim”).

B.

There Is No Conflict Among The Lower

Courts

Standing and ripeness aside, the Appointments

Clause challenge is not certworthy. Gulf Coast says

“there is now a circuit split on the question of HISA’s

constitutionality.” Gulf Coast Pet. 32. But the conflict

is limited to the question of whether HISA’s

enforcement provisions facially violate the privatenondelegation doctrine. As Gulf Coast acknowledges,

30

that issue is “alternative” to the question of whether

HISA violates the Appointments Clause. Pet. i.

Indeed, the other Petitioners recognize that the two

challenges are “mutually exclusive.” Pet. App. 36a,

65a.

All courts faced with the academic argument that

HISA is unconstitutional under the Appointment

Clause have shot it down. Walmsley, 117 F.4th at

1041 (“We agree with the Fifth Circuit that the Act

does not conflict with the Appointments Clause.”); Pet.

App. 35a-42a, 65a-78a. Both the Fifth and Eighth

Circuits applied the same straightforward analysis:

“[t]he requirements of the Clause apply only to officers

of the United States”; under governing precedent from

this Court, “[t]he members of the Board are *** not

officers of the United States”; “so their appointments

are not governed by the Appointments Clause.”

Walmsley, 117 F.4th at 1041 (citing Lebron v. National

R.R. Passenger Corp., 513 U.S. 374, 400 (1995)); Pet.

App. 42a (“In sum, Lebon 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.”). The

Oklahoma plaintiffs rightly abandoned their

Appointments Clause claim on appeal after the

district court similarly held that “the Authority is a

private entity,” and “[t]herefore, the Court need not

consider Plaintiffs’ alternative arguments regarding

the Authority as a public entity,” “including that its

structure violates the Appointments Clause.”

Oklahoma v. United States, 5:21-cv-104-JMH, 2022

WL 1913419, at *11 (E.D. Ky. June 3, 2022).

31

That consensus aligns with the uniform

determinations “that FINRA, like its predecessor [the

National Association of Securities Dealers], is a

private entity.” Pet. App. 75a (citing cases). Gulf

Coast’s attempts to distinguish the Maloney Act cases

fail. Registering with the Authority to participate in a

covered race is no more or less “voluntary” than

“belong[ing]” to FINRA to “participat[e]” in the

securities market (Gulf Coast Pet. 31-32): a securities

dealer cannot do business without registering with

FINRA. 15 U.S.C. § 78o(a)(1), (b)(1)(B); see Aslin v.

FINRA, 704 F.3d 475, 476 (7th Cir. 2013). FINRA (or

its predecessor) “has since 1939 been the only

registered national securities association,” and can

“levy sanctions that carry the force of federal law.”

Turbeville v. FINRA, 874 F.3d 1268, 1270 & n.2 (11th

Cir. 2017). That 85-year reality contradicts Gulf

Coast’s assertion that a purported “right of exit” is the

“relevant distinction” that makes application of Article

II to HISA “fundamentally different” from the longupheld Maloney Act. Gulf Coast Pet. 15, 31-32. There

is no “confus[ion]” and no need for “clarif[ication].”

Gulf Coast Pet. 14, 31.12

12 Gulf Coast points to one single-judge opinion concurring

in the grant of an emergency injunction pending an appeal

involving FINRA. Gulf Coast Pet. 31 (citing Alpine Sec. Corp. v.

FINRA, No. 23-5129, 2023 WL 4703307 (D.C. Cir. July 5, 2023)

(Walker, J., concurring)). That interlocutory non-precedential

opinion, arising out of a “corporate death penalty” sanction, does

not move the needle.

32

C.

This Court’s

Support The

Challenge

Precedents Do Not

Appointments Clause

1. The plain text of Article II and cases

interpreting it confirm that if an entity’s directors “are

not officers of the United States, but instead are some

other type of officer, the Appointments Clause says

nothing about them.” Financial Oversight & Mgmt.

Bd. for P.R. v. Aurelius Inv., LLC, 590 U.S. 448, 459

(2020); see U.S. CONST. art. II § 2 cl. 2 (prescribing

appointments methods for “Officers of the United

States” holding offices “established by Law”). That

fundamental principle is fatal to Gulf Coast’s claim

because, as all courts and other parties recognize, the

Authority’s Board members are private officers.

This Court’s settled precedent, Lebron, 513 U.S.

374, “set[s] out a detailed analysis to determine

whether a particular corporation—despite its

designation as ‘private’—counts as a government

instrument for constitutional purposes.” Pet. App.

40a. That established test leaves no doubt on which

side of the line the Authority lands. See Walmsley, 117

F.4th at 1041 (“A private corporation must be

regarded as a governmental entity for constitutional

purposes only in limited circumstances,” and “[t]he

Lebron standard is not satisfied here.”). “First, the

Authority was not created by the federal government

‘by special law’”; it was “incorporated under Delaware

law shortly before HISA’s passage,” when there was

still uncertainty whether a majority of the (bipartisan

and bicameral) Congress would enact the Act or

President Trump would sign it. Pet. App. 39a.

33

“Second, the Authority was not created to further

‘governmental objectives,’ but instead as a private

association to address doping, medication, and safety

issues in the thoroughbred racing industry.” Id.

(citation omitted). Third, instead of having “retained

for itself permanent authority to appoint a majority of

the Authority’s directors,” the “government has no role

in appointing the Authority’s Board.” Id. (alterations

and citation omitted).

2.

Rather than dispute those factual

determinations (shared by every court to consider the

question), Gulf Coast seeks to “displace [this] Court’s

governing framework” for answering “precisely the

question” at the heart of the Appointments Clause

challenge. Pet App. 40a-41a. Under Gulf Coast’s

novel theory, an entity qualifies as public if a federal

statute “bestows” responsibilities by which the entity

“exercise[s] significant authority.” Gulf Coast Pet. 1516. Gulf Coast draws its test from Buckley v. Valeo,

424 U.S. 1 (1976) (concerning Federal Election

Commissioners), Lucia v. SEC, 585 U.S. 237 (2018)

(concerning SEC administrative law judges), and

other cases about federal agencies. Yet those cases

concern officials who indisputably were federal

“appointee[s],” Buckley, 424 U.S. at 126, so “[t]he sole

question” was whether the officials were “‘Officers of

the United States’ or simply employees of the Federal

Government,” Lucia, 585 U.S. at 244. Buckley and

Lucia “do not *** set forth the critical legal test

relevant” to determining whether an entity’s officials

are “federal” in the first place. Financial Oversight &

Mgmt. Bd., 590 U.S. at 468; see Pet. App. 41a (refusing

to “extend Buckley and Lucia well beyond their facts”).

34

Lebron itself brings to a “dead end” (Pet. App.

40a) Gulf Coast’s contention that the precedent does

not apply to any entity that “exercises regulatory

authority.” Pet. 14. Not only does Lebron “rel[y] on

cases where Congress turned to private corporations

to ‘accomplish purely governmental purposes,’” but

this Court and others have recognized that “the

corporation actually addressed in Lebron—Amtrak—

itself exercised regulatory power.” Pet. App. 40a-41a

(quoting Lebron, 513 U.S. at 395); see, e.g., Association

of Am. R.Rs., 721 F.3d at 671.

Gulf Coast’s new theory also contradicts other

precedents that have “since used Lebron’s analysis to

discern whether corporations are part of the

government for constitutional purposes.” Pet. App.

38a & n.24. For example, the Public Company

Accounting Oversight Board (PCAOB) is subject to

Article II not because it “exercise[s] ‘significant

executive power’” (which resolves the separate

question whether its members are federal officers or

federal employees), Gulf Coast Pet. 17 (quoting Free

Enter. Fund v. PCAOB, 561 U.S. 477, 514 (2010)), but

because

it

was

“Government-created”

and

“Government-appointed,” and thus “part of the

Government for constitutional purposes,” Free Enter.

Fund, 561 U.S. at 485-486 (quoting Lebron, 513 U.S.

at 397). On that basis, the Court distinguished the

PCAOB from “private self-regulatory organizations in

the securities industry,” such as FINRA, which are not

subject to Article II. Id. at 484-485.

Gulf Coast worries that Congress may

“circumvent[]” the Appointments Clause by handing

35

regulatory power to a private entity. Gulf Coast

Pet. 1. But “[t]he private nondelegation doctrine ***

corrals any attempts to evade Lebron” by requiring the

private entity to act “subordinately to an agency with

authority and surveillance over it.” Pet. App. 42a.

Gulf Coast’s theory would rob the privatenondelegation doctrine of any continuing vitality:

“[S]ubordination does not matter to [Gulf Coast’s]

analysis” because a private entity would lose its

private nature whenever Congress directs it to act

under federal law. Gulf Coast Pet. 19; see id. at 28-29.

There is no reason for this Court to go out of its way to

consider a never-accepted academic theory when the

established private-nondelegation doctrine’s agencyoversight

analysis

already

protects

the

“[a]ccountability considerations” that motivate

Petitioners’ concerns. Oklahoma, 62 F.4th at 230.

III. THE COURT SHOULD GRANT THE

AUTHORITY’S

PETITION

ON

THE

CONSTITUTIONALITY

OF

HISA’S

ENFORCEMENT PROVISIONS

Rather than consider claims all lower courts have

rejected, the Court should grant the petitions by the

Authority and the Solicitor General (Nos. 24-429, 24433) and limit its review to whether HISA’s

enforcement provisions facially violate the privatenondelegation doctrine. That is the only question on

which the courts of appeals actually conflict. It is the

sole basis on which any court has sustained a

constitutional challenge to the operative version of

HISA. See NHBPA Pet. 20 (“[I]t is this Court’s

practice to review decisions that strike down acts of

36

Congress, *** not those that uphold them.”). And all

parties agree the question is certworthy. See NHBPA

Pet. 3; Texas Pet. 2; Gulf Coast Pet. i, 32.

“The Court’s ability to effectively resolve” that

question does not “hinge on its resolution” of the

separate questions Petitioners present here. Texas

Pet. 1, 31. The Appointments Clause question is

“alternative” to the private-nondelegation questions.

Gulf Coast Pet. i.

And under the privatenondelegation doctrine, Petitioners challenged the

constitutionality of “the Authority’s enforcement

powers” “apart from” their challenge to the

constitutionality of “its rulemaking powers.” Pet. App.

14a. The appellate courts’ conflicting answers to the

former question, despite their uniform rejection of the

latter, undermine any suggestion that those distinct

claims are inextricably intertwined.

37

CONCLUSION

The petitions for a writ of certiorari should be

denied.

Respectfully submitted.

John C. Roach

RANSDELL ROACH &

ROYSE, PLLC

Pratik A. Shah

Counsel of Record

Lide E. Paterno

AKIN GUMP STRAUSS

HAUER & FELD LLP

Counsel for the Horseracing Integrity and Safety

Authority Respondents

November 12, 2024