Petition for Writ of Certiorari — National Horsemen's Benevolent and Protective Association, et al., Petitioners v. Horseracing Integrity and Safety Authority, Inc., et al.
Supreme Court briefOct 22, 2024
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No. 24-_______
In the Supreme Court of the United States
________________
NATIONAL HORSEMEN’S BENEVOLENT
AND PROTECTIVE ASSOCIATION, ET AL.,
v.
HORSERACING INTEGRITY AND
SAFETY AUTHORITY, INC., 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
__________
DANIEL R. SUHR
Counsel of Record
Center for
American Rights
747 N. LaSalle St. #210
Chicago, IL 60654
414.588.1658
dsuhr@
americanrights.org
CHRISTOPHER E. MILLS
Spero Law LLC
557 East Bay St. #22251
Charleston, SC 29413
FERNANDO M. BUSTOS
Bustos Law Firm, P.C.
5504 – 114th St.
Lubbock, TX 79424
PETER ECABERT
National HBPA
836 Euclid Ave. #207
Lexington, KY 40502
QUESTION PRESENTED
1. Whether the Horseracing Integrity and Safety Act
grants legislative power to a private corporation, the
Horseracing Integrity and Safety Authority, Inc., in
violation of Article I, Section I, Clause I (“the private
non-delegation doctrine”).
ii
PARTIES TO THE PROCEEDINGS
1. Petitioners (Plaintiffs-Appellants below): the
National Horsemen’s Benevolent and Protective
Association (NHBPA), 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.
2. Intervenor Concurrent Petitioners: the State
of Texas and the Texas Racing Commission.
3. Consolidated Concurrent Petitioners: Gulf
Coast Racing LLC, LRP Group Ltd., Valle de Los
Tesoros Ltd., Global Gaming LSP LLC, and Texas
Horsemen’s
Partnership
LLP.
4. Private Respondents (Defendants-Appellees
below): the Horseracing Integrity and Safety
Authority, Inc., Charles Scheeler, Steve Beshear,
iii
Adolpho Birch, Leonard Coleman, Joseph De
Francis, Susan Stover, Bill Thomason, D.G. Van
Clief, Nancy Cox, Katrina Adams, Jerry Black,
Joseph Dunford, Frank Keating, Kenneth
Schanzer, Ellen McClain, and Lisa Lazarus.
5. Federal Respondents (Defendants-Appellees
below) include the Federal Trade Commission,
Chair Lina Khan, Commissioner Rebecca Kelly
Slaughter,
Commissioner
Alvaro
Bedoya,
Commissioner
Melissa
Holyoak,
and
Commissioner Andrew N. Ferguson.
iv
RULE 29.6 DISCLOSURE
Pursuant to Rule 29.6, National Horsemen’s
Benevolent and Protective Association, et al., disclose
the following:
A. National Horsemen’s Benevolent and Protective
Association (HBPA) has no parent corporation, and
no publicly held company has a 10% or greater
ownership interest in it.
B. Arizona HBPA has no parent corporation, and no
publicly held company has a 10% or greater
ownership interest in it.
C. Arkansas HBPA has no parent corporation, and no
publicly held company has a 10% or greater
ownership interest in it.
D. Indiana HBPA has no parent corporation, and no
publicly held company has a 10% or greater
ownership interest in it.
E. Illinois HBPA has no parent corporation, and no
publicly held company has a 10% or greater
ownership interest in it.
F. Louisiana HBPA has no parent corporation, and no
publicly held company has a 10% or greater
ownership interest in it.
G. Mountaineer Park HBPA has no parent
corporation, and no publicly held company has a
10% or greater ownership interest in it.
H. Nebraska HBPA has no parent corporation, and no
publicly held company has a 10% or greater
ownership interest in it.
v
I. Oklahoma HBPA has no parent corporation, and
no publicly held company has a 10% or greater
ownership interest in it.
J. Oregon HBPA has no parent corporation, and no
publicly held company has a 10% or greater
ownership interest in it.
K. Pennsylvania HBPA has no parent corporation,
and no publicly held company has a 10% or greater
ownership interest in it.
L. Tampa Bay HBPA has no parent corporation, and
no publicly held company has a 10% or greater
ownership interest in it.
M. Washington HBPA has no parent corporation, and
no publicly held company has a 10% or greater
ownership interest in it.
vi
LIST OF ALL PROCEEDINGS
United States District Court for the Northern District
of Texas
National Horsemen’s Benevolent & Protective Ass’n v.
Black, No. 21-cv-71 (March 31, 2022)
National Horsemen’s Benevolent & Protective Ass’n v.
Black, No. 21-cv-71 (May 4, 2023)
United States Court of Appeals for the Fifth Circuit
National Horsemen’s Benevolent & Protective Ass’n v.
Black, No. 22-10387 (Nov. 18, 2022)
National Horsemen’s Benevolent & Protective Ass’n v.
Black, No. 23-10520 (July 5, 2024)
United States Supreme Court
Horseracing Integrity & Safety Authority, Inc. v.
National Horsemen’s Benevolent & Protective Ass’n,
No. 24A287 (filed Sept. 19, 2024)
Federal Trade Commission, et al. v. National
Horsemen’s Benevolent & Protective Ass’n, No. 24-429
(filed Oct. 16, 2024)
Horseracing Integrity & Safety Authority, Inc. v.
National Horsemen’s Benevolent & Protective Ass’n,
No. 24-433 (filed Oct. 15, 2024)
State of Texas et al. v. Jerry Black, et al., No. 24-____
(filed Oct. 22, 2024)
vii
TABLE OF CONTENTS
Page
Questions Presented ..................................................... i
Parties to the Proceedings ...........................................ii
Rule 29.6 Disclosure ................................................... iv
List of All Proceedings ................................................ vi
Table of Contents ....................................................... vii
Appendix...................................................................... ix
Table of Authorities ..................................................... x
Decisions Below ........................................................... 1
Statement of Jurisdiction ............................................ 1
Pertinent Constitutional and Statutory Provisions ... 1
Introduction.................................................................. 2
Statement of the Case ................................................. 5
Argument ..................................................................... 6
I. This Court should take Question
Presented 2 on legislative delegation as
well as QP1...................................................... 6
A. The panel decision permits the private
delegate the policy discretion to set fees
levied on industry participants, which
splits from other circuit courts that
limit private delegates to only fee
collection. ......................................................... 9
B. Private delegates may advise and
recommend; the Fifth Circuit departs
from its colleagues by permitting the
Authority to write binding rules. ................. 13
viii
C. The Fifth and Sixth Circuits are split
on whether to permit sub-regulatory
guidance from private delegates. ................. 17
II. This case is the optimal vehicle for the
Court to consider the Horseracing Act. ....... 20
Conclusion .................................................................. 23
ix
APPENDIX
Appendix A Opinion in the United States Court of
Appeals for the Fifth Circuit
(July 5, 2024) .............................. App. 1a
Appendix B Opinion in the United States District
Court for the Northern District of
Texas,
Lubbock
Division
(May 4, 2023) ............................ App. 45a
Appendix C Order of the United States Court of
Appeals for the Fifth Circuit denying
rehearing
en
banc
(September 9, 2024) ............... App. 104a
Appendix D Opinion in the United States Court of
Appeals for the Fifth Circuit
(November 18, 2022) .............. App. 107a
Appendix E Relevant portions of the U.S.
Constitution ............................ App. 147a
Appendix F Horseracing Integrity and Safety Act
................................................. App. 148a
x
TABLE OF AUTHORITIES
Cases
Page(s)
A.L.A. Schechter Poultry Corp. v. United States,
295 U.S. 495 (1935) ................................................. 7
Ass’n of Am. R.Rs. v. Dep’t of Transp.,
721 F.3d 666 (D.C. Cir. 2013) ......................... 14, 16
Dep't of Transp. v. Ass'n of Am. Railroads,
575 U.S. 43 (2015) ................................................. 14
Bowsher v. Synar,
478 U. S. 714 (1986) ................................................ 2
Carter v. Carter Coal Co.,
298 U.S. 238 (1936) ................................................. 6
Consumers’ Rsch. v. FCC,
63 F.4th 441 (5th Cir. 2023) .................................. 18
Consumers’ Rsch. v. FCC,
67 F.4th 773 (6th Cir. 2023) ............................ 11, 13
Consumers’ Rsch. v. FCC,
88 F.4th 917 (11th Cir. 2023) ................................ 13
Consumers’ Rsch v. FCC,
72 F.4th 107 (5th Cir. 2023) ................................. 18
Free Enter. Fund v. Pub. Co. Accounting Oversight
Bd.,
537 F.3d 667 (D.C. Cir. 2008) ................................. 2
xi
Goetz v. Glickman,
920 F. Supp. 1173 (D. Kan. 1996) ........................ 12
Goetz v. Glickman,
149 F.3d 1131 (10th Cir. 1998) ............................. 12
Gundy v. United States,
588 U.S. 128, (2019) ................................................ 7
Marsh v. J. Alexander’s LLC,
905 F.3d 610, 637 (9th Cir. 2018) ......................... 17
McCulloch v. Maryland,
17 U. S. 316 (1819) ................................................ 12
Mistretta v. United States,
488 U.S. 361 (1989) ............................................... 13
Nat’l Cable Television Ass’n v. United States,
415 U.S. 336 (1974) ................................................. 9
Nat’l Horsemen's Benevolent & Protective Ass’n v.
Black,
107 F.4th 415 (5th Cir. 2024) .................................. 1
Nat’l Horsemen's Benevolent & Protective Ass’n v.
Black,
672 F. Supp. 3d 220 (N.D. Tex. 2023) ..................... 1
Oklahoma v. United States,
62 F.4th 221 (6th Cir. 2023) .... 12, 13, 15, 18, 21, 22
xii
Pittston Co. v. United States,
368 F.3d 385 (4th Cir. 2004) ........................... 12, 21
Riverbend Farms, Inc. v. Madigan,
958 F.2d 1479 (9thCir. 1992) ................................ 14
Rutledge v. Pharm. Care Mgmt. Ass’n,
592 U.S. 80 (2020) ................................................. 20
Skinner v. Mid-America Pipeline Co.,
490 U.S. 212 (1989) ................................................. 9
State v. Williams,
198 Wis. 2d 516 (1996) ............................................ 2
Sunshine Anthracite Coal Co. v. Adkins,
310 U.S. 381 (1940) ................................................. 8
Texas v. Comm’r,
142 S. Ct. 1308 (2022) ............................................. 4
Texas v. EEOC,
933 F.3d 433 (5th Cir. 2019) ................................. 18
Texas v. Rettig,
987 F.3d 518 (5th Cir. 2021) ................................ 16
Texas v. Rettig,
993 F.3d 408 (5th Cir. 2021) ................................... 6
United States v. Frame,
885 F.2d 1119 (3d Cir. 1989) ................................. 12
xiii
U.S. Telecom Ass’n v. FCC,
359 F.3d 554 (D.C. Cir. 2004) ............................... 13
Walmsley v. Fed. Trade Comm’n,
No. 23-2687, 2024 WL 4248221 (8th Cir.
Sept. 20, 2024) ........................................... 14, 19, 20
Wellness Int’l Network, Ltd. v. Sharif,
575 U.S. 665 (2015) ................................................. 2
Whitman v. Am. Trucking Ass’ns,
531 U.S. 457 (2001) ......................................... 11, 18
STATUTES
15 U.S.C. Chapter 57A ................................................ 1
15 U.S.C. § 3052(a) ...................................................... 3
15 U.S.C. § 3053(a) .................................................... 11
15 U.S.C. § 3054(a)(2)(B) ............................................. 3
15 U.S.C. § 3055(a)(1) ................................................ 14
15 U.S.C. § 3056(a)(1) ................................................ 14
28 U.S.C.§1254(1) ........................................................ 1
49 U.S.C. § 40101 ...................................................... 14
REGULATIONS
47 C.F.R. § 54.702(b) .................................................. 18
xiv
Horseracing Integrity and Safety Authority’s
Racetrack Safety Rules
87 Fed. Reg. 435 (July 1, 2022) .............................. 19
Horseracing Integrity and Safety Authority’s
Annual Budget,
88 Fed. Reg. 18034 (March 27, 2023) ..................... 11
OTHER AUTHORITIES
Horseracing Integrity and Safety Authority’s
Annual Budget,
88 Fed. Reg. 18034 (March 27, 2023) ..................... 11
Private Delegation Outside of Executive Supervision,
45 Harv. J.L. & Pub. Pol’y 837, 925 (2022) ............ 21
Tenure of Office and the Treasury,
87 Geo. Wash. L. Rev. 1299, 1346 (2019) ............... 22
DECISIONS BELOW
The opinion of the court of appeals is reported at
107 F.4th 415 (5th Cir. 2024) and reproduced at App.
1a-44a. The opinion of the district court is reported at
672 F. Supp. 3d 220 (N.D. Tex. 2023) and reproduced
at App. 45a-103a. The unreported order of the court of
appeals denying petitions for rehearing is reproduced
at App. 104a-106a.
STATEMENT OF JURISDICTION
The court of appeals entered judgment on July 5,
2024. App., 1a. The court of appeals denied the
Authority and FTC’s petitions for rehearing en banc
on September 9, 2024. App., 104a. The Horsemen
invoke
the
Court’s
jurisdiction
under
28
U.S.C.§1254(1). The Authority and FTC filed
certiorari petitions, Nos. 24-429 and 24-433.
PERTINENT CONSTITUTIONAL
AND STATUTORY PROVISIONS
The relevant constitutional provision is Article I,
Section I, Clause I (“All legislative Powers herein
granted shall be vested in a Congress of the United
States…”). The relevant statutory provisions are
found in the Horseracing Integrity and Safety Act, as
amended, 15 U.S.C. Ch. 57A, which is included in the
appendix, 148a-191a.
2
INTRODUCTION
In our system of government, “checks and balances
were the foundation of a structure of government that
would protect liberty.” Bowsher v. Synar, 478 U. S.
714, 722 (1986). They are also “frequently
inconvenient, particularly on the person or the
institution being checked and balanced.”1 To get
around
these
annoying
checks-and-balances,
Congress sometimes employs “novel policy inventions
and corresponding structures” that have resulted in a
“‘Fifth Branch’ of the Federal Government,” with
private or quasi-public corporations exercising
governmental powers. Free Enter. Fund v. Pub. Co.
Accounting Oversight Bd., 537 F.3d 667, 700 (D.C. Cir.
2008) (Kavanaugh, J., dissenting). Such private
“delegations
threaten
liberty
and
thwart
accountability by empowering entities that lack the
structural protections the Framers carefully devised.”
Wellness Int’l Network, Ltd. v. Sharif, 575 U.S. 665,
701 (2015) (Roberts, C.J., dissenting).
Congress delegated government power to a private
corporation in the Horseracing Integrity and Safety
Act. Congress designated a pre-existing entity, the
Horseracing Integrity and Safety Authority, Inc. (“the
Authority”), to regulate horseracing nationwide—
thereby avoiding the inconveniences of accountability,
transparency, due process, and democratic control
that would have come with a traditional government
agency. The Act grants the Authority “safety,
performance, and anti-doping and medication control
1 State v. Williams, 198 Wis. 2d 516, 541 (1996) (Bablitch, J.,
concurring).
3
authority over covered persons similar to such
authority of the State racing commissions” (15 U.S.C.
§ 3054(a)(2)(B)), making the Act’s purpose clear: to
strip the states of their historic role regulating
horseracing and give the powers of the state
regulatory commissions over to one national
regulator. Like a state commission, this new regulator
develops the rules, enforces the rules, adjudicates
violations of the rules, and charges fees on licensed
individuals to fund those functions. But this
regulator—the Authority—is a “private, independent,
self-regulatory, nonprofit corporation,” not a
government agency. 15 U.S.C. § 3052(a). The Act also
makes the Federal Trade Commission a figurehead
over the Authority but grants little or no practical
power to the FTC to control the Authority (indeed,
doing so would defeat the purpose). As a result, a
private corporation is writing and enforcing the rules,
setting the fees, and deciding the policies governing an
entire industry.
Under the Act, the 30,000 members of the National
Horsemen’s Benevolent and Protective Association
and its state and local affiliates (“the Horsemen”) are
subject to an unaccountable private corporation which
runs a private police department, private prosecutor’s
office, and private system of administrative law
judges. The Fifth Circuit rightly found this
unconstitutional, and the Horsemen acquiesce to the
petitions for certiorari from the Authority and FTC to
finally resolve the constitutionality of the Authority’s
exercise of executive enforcement power.
The Horsemen also petition on their own to secure
review of the Authority’s concomitant exercise of
4
legislative power: writing rules, setting fees, and
deciding policy. The Fifth Circuit’s framework for
reviewing and upholding the Authority’s exercise of
legislative power conflicts with the opinions of the
Third, Fourth, Sixth, Eleventh, and D.C. Circuits
when reviewing similar private non-delegation cases.
This Court’s review is necessary to resolve the
Article I framework for legislative delegations as well
as the Article II framework for executive delegations.
Indeed, when Justice Alito noted “the need to clarify
the private non-delegation doctrine in an appropriate
future case,” he did so concerning “[w]hat was
essentially a legislative determination” in regulatory
rule-making, not an exercise in executive power. Texas
v. Comm’r, 142 S. Ct. 1308, 1308-09 (2022) (statement
respecting the denial of certiorari). The Court should
grant certiorari on both questions presented.
And respectfully, that review should be applied in
this case, not the pending cases from the Sixth or
Eighth Circuits (Nos. 23-402 and 24-420). This case is
brought by the leading national trade association for
thoroughbred horsemen, the people actually regulated
by HISA. It includes a state as a party. It arises after
a bench trial, not on a preliminary injunction or
motion to dismiss. The Petitioners presented and
preserved the full panoply of arguments below. And,
perhaps most pertinent, it is the only case where the
lower court actually found the Act unconstitutional.
5
STATEMENT OF THE CASE
For the convenience of the Court, the Horsemen
adopt Texas’s thoughtful and thorough account of the
legislative and procedural history in their brief in
opposition to the stay in the companion emergency
application (No. 24A287).
6
ARGUMENT
This Court’s primary private delegation case was
decided nearly a century ago. Carter v. Carter Coal
Co., 298 U.S. 238 (1936). There, the Court struck down
a legislative delegation “to private persons whose
interests may be and often are adverse to the interests
of others in the same business,” calling it “legislative
delegation in its most obnoxious form.” Id. at 311. As
Congress continues to try “novel policy inventions and
corresponding structures,” Free Enter. Fund, 537 F.3d
at 700 (Kavanaugh, J., dissenting), the Court must
again enforce the Constitution’s limits by setting forth
these principles in light of modern precedent,
particularly on the separation of powers and vesting
clauses.
I.
This Court should take Question Presented 2
on legislative delegation as well as QP1.2
Just as the executive power of enforcement is
vested in the President and the executive agencies
responsible to him by Article II, so the legislative
power is vested in Congress by Article I. Congress may
delegate that power to agencies subject to an
intelligible principle. A different rule applies for
private parties, however: “Delegation of legislative
power to private entities is ‘unknown to our law’ and
‘utterly inconsistent with the constitutional
prerogatives and duties of Congress.’” Texas v. Rettig,
993 F.3d 408, 410 (5th Cir. 2021) (Ho., J., dissenting
2 The Horsemen style this as a separate petition rather than a
“conditional cross-petition” because they acquiesce in certiorari
on the Authority and FTC petitions, whereas the traditional
conditional cross-petitioner opposes certiorari.
7
from denial of rehearing en banc) (quoting A.L.A.
Schechter Poultry Corp. v. United States, 295 U.S. 495,
537 (1935)). With private entities, “there is not even a
fig leaf of constitutional justification,” because
“[p]rivate entities are not vested with ‘legislative
Powers.’” Dep’t of Transp. v. Ass’n of Am. R.Rs.
(Amtrak II), 575 U.S. 43, 62 (2015) (Alito, J.,
concurring). “Even the United States accepts that
Congress ‘cannot delegate regulatory authority to a
private entity.’” Id. at 61.
And yet, that is what Congress has done here: it
has delegated legislative powers to a private
corporation to set the policy governing the horseracing
industry. What is legislative power? It is the
“formulation of generally applicable rules of private
conduct.” Ass’n of Am. R.Rs., 575 U.S. at 70 (Thomas,
J., concurring in the judgment). Accord Gundy v.
United States, 588 U.S. 128, 153 (2019) (Gorsuch, J.,
dissenting) (“When it came to the legislative power,
the framers understood it to mean the power to adopt
generally applicable rules of conduct governing future
actions by private persons.”). Put differently, “to the
extent that [a] decision involves an exercise
of policy discretion,
it
requires
an
exercise
of legislative power.” Ass’n of Am. R.Rs., 575 U.S. at
90 (Thomas, J., concurring in the judgment).
Here, Congress has delegated “policy discretion”
and “the formulation of generally applicable rules of
private conduct” to a private corporation. The Fifth,
Sixth, and Eighth Circuits have upheld this delegation
because they concluded (wrongly) that the Authority
exercises its policy-making functions subject to the
“pervasive surveillance and authority” of the Federal
8
Trade Commission. Sunshine Anthracite Coal Co. v.
Adkins, 310 U.S. 381, 388 (1940).
In reaching this conclusion, however, these three
circuits have adopted different answers about
permissible policy-making by private organizations
than the Third, Fourth, Eleventh, and D.C. Circuits.
This Court should grant the second question
presented to resolve these differences among the lower
courts concerning legislative delegations to private
entities in three particular areas of legislative power
delegated to the Authority: fee-setting, rule-making,
and sub-regulatory guidance. And by granting this
question along with the executive delegation question,
the Court could address both the legislative and
executive aspects of the private non-delegation
doctrine in the same case, clarifying where the
principles are the same or different between the two
categories.
HISA delegates three specific legislative powers to
the Authority: the power to set fees, to write rules, and
to issue binding guidance. The Fifth Circuit, in
upholding its power to set fees, parted ways with the
Third, Fourth, Sixth, and Eleventh Circuits, all of
which specifically limited private delegates to the
ministerial act of collecting fees set by responsible
governmental policy-makers. In allowing the
Authority to impose binding rules with only rubberstamp review by the FTC, the Fifth Circuit went
beyond what the Sixth, Eleventh, and D.C. Circuits
have permitted, which is only the giving of advice and
recommendations on rules by private parties. Finally,
the Fifth Circuit upheld those parts of HISA giving the
Authority power to issue interpretive guidance, a
9
holding at odds with the Sixth Circuit’s decision in the
Universal Service Fee context.
A. The panel decision permits the private
delegate the policy discretion to set fees
levied on industry participants, which
splits from other circuit courts that limit
private delegates to only fee collection.
The courts below parted ways with the Third,
Fourth, and Sixth Circuits on the power of private
delegates to set fees on those they regulate. The
setting of taxes, including fees, is a classic exercise of
legislative power. Nat’l Cable Television Ass’n v.
United States, 415 U.S. 336, 340 (1974).3
Here, the Act gives the Authority final say over the
fees it charges. The Authority calculates its own initial
budget, which must be approved by 2/3rds of the
Authority Board. 15 U.S.C. § 3052(f)(1)(C)(iii)(I). In
subsequent years, the Authority calculates its own
budget, and any budget that goes up by more than five
percent over the previous year must be approved by
2/3rds
of
the
Authority
Board.
Id.
§ 3052(f)(1)(C)(iii)(II). The Act itself provides zero
oversight for the FTC in setting the Authority’s
budget.
Based on that budget, the Authority then divides
the revenue burden among the states based on the
number of horses running races in each state (“covered
starts.”). Id. § 3052(f)(1)(C). That results in the annual
3 Because these fees “do not bestow a benefit on the regulated
party, not shared by other members of society,” they are
appropriately labeled taxes, not fees. Skinner v. Mid-America
Pipeline Co., 490 U.S. 212, 223-24 (1989).
10
assessment, i.e., fee, levied upon the state racing
commission. Id. § 3052(f)(2). The racing commissions
may elect to decline to pay the assessment, in which
case the Authority assesses the fee directly onto the
horsemen and racetracks in the state. Id. § 3052(f)(3).
Multiple states decline to pay, such that the
assessment is levied directly on horsemen and tracks.4
When the fee burden increases, the Authority must
submit that fact to the FTC, and the FTC must publish
a notice in the Federal Register and accept public
comment on it, but again the FTC has zero power to
do anything substantive under the Act. Id.
§ 3052(f)(1)(C)(iv).
The district court rejected this concern, noting: “On
fees—the Authority ‘shall’ report to the FTC any
‘proposed increase’ in fees. The proposed increase
must then undergo a notice-and-comment period. FTC
rules govern how fees are determined and allocated.”
Black, App. 92a. The court skipped over the most
important part: the Authority still sets the actual fees.
Yes, the fees are reported to the FTC, and the FTC
must approve rules governing how fees are
determined and allocated, but the actual decision
setting the fee amount is made by the Authority with
zero FTC oversight. The FTC approves the rule that
splits the burden between horsemen and racetracks.
But the statute does not give the FTC any role in
determining the size of the burden itself: what each
horseman must pay each year for the privilege of being
compelled to associate with the Authority is decided
4 For instance, Arkansas, Illinois, and Indiana.
11
by the Authority alone.5 The Fifth Circuit did not
directly address this holding by the district court on
appeal, yet by affirming the legislative delegation
holding, adopted it.
That holding conflicts with the decisions of other
circuits in private non-delegation cases. Every other
circuit to have addressed this question has stated that
the private delegate may collect fees, but that the
responsible governmental policy-maker must set the
fees that are levied on the citizenry.
The Sixth Circuit, considering the Universal
Service Fee, found no violation of the private nondelegation doctrine where the private delegate
“undertake[s] ministerial functions, such as fee
collection.” Consumers’ Rsch. v. FCC, 67 F.4th 773,
795 (6th Cir. 2023). In making this finding, the
Consumers Research panel quoted from the earlier
5 Two weeks after the Horsemen first made this argument, the
FTC sua sponte adopted a rule claiming oversight of the
Authority’s budget, which is what leads to the fee that is set.
Procedures for Oversight of the Horseracing Integrity and Safety
Authority's Annual Budget, 88 Fed. Reg. 18034 (March 27, 2023).
However, that rule is contrary to the statute’s plain text. Indeed,
the FTC even admits in the rule preamble that the Authority’s
budget is not among the eleven enumerated items Congress has
empowered it to supervise. 88 Fed. Reg. at 18035 (citing 15 U.S.C.
§ 3053(a)). A rule that was adopted without notice-and-comment
during litigation, can be repealed without notice-and-comment,
and is clearly contrary to the text of the statute, cannot save the
statute. See Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 472
(2001). This is a facial challenge, and so this Court should limit
its consideration to the statute on its face. The FTC’s
manufactured rule just highlights how unconstitutional the
statute is.
12
Sixth Circuit decision upholding HISA. Oklahoma v.
United States, 62 F.4th 221, 229 (6th Cir. 2023).6
Similarly, the Third Circuit upheld allowing a
private delegate the “ministerial” function of
collecting assessments, while noting that “all budgets,
plans or projects approved by the Board become
effective only upon final approval by the Secretary.”
United States v. Frame, 885 F.2d 1119, 1128-29 (3d
Cir. 1989). See Goetz v. Glickman, 920 F. Supp. 1173,
1181 (D. Kan. 1996), aff’d, 149 F.3d 1131 (10th Cir.
1998) (considering an agricultural marketing program
similar to that in Frame: “Congress has set the
amount of the assessments and the Secretary
ultimately decides how the funds will be spent.”).
The Fourth Circuit turned aside a non-delegation
challenge where the private entity “has no power to
determine the premium payments owed by each coal
operator,” but only collects the premiums. Pittston Co.
v. United States, 368 F.3d 385, 395 (4th Cir. 2004).
The power to tax is the power to destroy, see
McCulloch v. Maryland, 17 U. S. 316, 427 (1819), and
so is the kind of legislative judgment that a
responsible elected public official, accountable to the
public, must make. Here, the power to tax has been
delegated to a private corporation, an authorization
that would not have been permitted by other circuits.
The Oklahoma Court did not find or even consider that the
Authority engages in fee setting or fee collection; it was only
synthesizing existing principles of law regarding private nondelegation from other cases.
6
13
B. Private delegates may advise and
recommend; the Fifth Circuit departs
from its colleagues by permitting the
Authority to write binding rules.
Private organizations may hold a privileged
position to advise or recommend rules to agencies;
Congress frequently orders agencies to make sure they
consult this or that stakeholder group while
developing rules. But to abide by the Constitution,
that is all they may do—recommend, advise, consult.
They may not actually write the rules and compel the
agency to adopt them. But that is what HISA does,
and what the Fifth Circuit permitted. In doing so, the
Fifth Circuit parted ways with the Sixth, Eleventh,
and D.C. Circuits, which have explicitly limited
private delegates to purely advisory roles.
Private organizations may “serve as advisors that
propose regulations.” Oklahoma, 62 F.4th at 229
(synthesizing other circuits’ private non-delegation
decisions). 7 They may “advise on or make policy
recommendations to the agency.” Consumers’ Rsch. v.
FCC, 67 F.4th 773, 795 (6th Cir. 2023); see Consumers’
Rsch. v. FCC, 88 F.4th 917, 926 (11th Cir. 2023)
(adopting this formula). Private organizations may
provide “outside party input into agency decisionmaking processes,” such as “fact-gathering” and
“advice giving.” U.S. Telecom Ass’n v. FCC, 359 F.3d
7 Rule-making is the exercise of a legislative power, even when
delegated. Mistretta v. United States, 488 U.S. 361, 386 n.14
(1989) (“[R]ulemaking power originates in the Legislative
Branch.”); id. at 362 (reporter’s summary of Justice Scalia’s
dissent:
“the
Commission’s rulemaking function
is
purely legislative”).
14
554, 566 (D.C. Cir. 2004). Accord Riverbend Farms,
Inc. v. Madigan, 958 F.2d 1479, 1488 (9th Cir. 1992)
(private organization may provide advice to the
secretary, who “retains ultimate authority to issue the
regulation”). They may “serve an advisory function.”
Frame, 885 F.2d at 1129. Congress can go so far as to
“formalize the role of private parties in proposing
regulations so long as that role is merely as an aid to
a government agency that retains the discretion to
approve, disapprove, or modify” the proposal. Ass’n of
Am. R.Rs. v. Dep’t of Transp., 721 F.3d 666, 671 (D.C.
Cir. 2013), vacated on other grounds, 575 U.S. 43
(2015) (internal quotations omitted).8
What a private delegate may not do is exercise “any
authority to make actual decisions or establish or
define standards.” Consumer’ Rsch., 67 F.4th at 796.
Yet that is precisely what HISA authorizes and the
Fifth Circuit upheld. Under the Act, the Authority
“shall establish a horseracing anti-doping and
medication control program” (15 U.S.C. § 3055(a)(1))
and the Authority “shall establish a racetrack safety
program” (id. § 3056(a)(1)). Under the Act, the
Authority “shall submit to the Commission. . . any
proposed rule, or proposed modification to a rule.” Id.
§ 3053(a). The Commission then shall approve the
proposed rule or modification in toto if it “finds that
the proposed rule or modification is consistent with
8See, e.g., 49 U.S.C § 40101 (“In establishing the database under
subsection (a), the Administrator shall consult and collaborate
with appropriate stakeholders, including labor organizations
(including those representing aviation workers, FAA aviation
safety engineers and FAA aviation safety inspectors) and
aviation industry stakeholders.”).
15
this chapter; and applicable rules approved by the
Commission.” Id. § 3053(c)(2). This consistency review
is no review at all; it is “arms-length,” “high-altitude,”
“open-ended,” and “next to nothing.” NHBPA I, App.
86a. And this is by design: “it is the Authority, not the
agency, that is tasked with weighing policies that go
into formulating rules.” Id. at 883.
Even after the amendment, the FTC’s review of
Authority rules remains limited to this bare bones
“consistency” review. See, e.g., F.T.C., Order
Approving the Anti-Doping And Medication Control
Rule Proposed By The Horseracing Integrity And
Safety Authority (March 27, 2023).9 The three HISA
decisions all uphold this consistency review because
after-the-fact, once an Authority-drafted rule is in
place, the FTC can “abrogate, modify, or add to” that
rule on its own initiative. NHBPA II, App. 11a;
Oklahoma, 62 F.4th at 230; Walmsley v. Fed. Trade
Comm’n, No. 23-2687, 2024 WL 4248221 *6 (8th Cir.
Sept. 20, 2024). And if the FTC does not like a rule
from the Authority, it can simply delay its effective
date ad infinitum until its own rulemaking is
completed. Id.
Such an arrangement exceeds what the courts
have otherwise countenanced. The exclusive,
guaranteed power to have one’s rules rubber-stamped
into federal law is far more than “advice giving” or a
“policy recommendation.” It is the power to “establish
or define standards” that the Commission must adopt
and can only later change. The D.C. Circuit approved
9
https://www.ftc.gov/system/files/ftc_gov/pdf/P222100Commissio
nOrderAntiDopingMedication.pdf.
16
a privileged position for a private party in rule
development if the agency “retains the discretion to
approve, disapprove, or modify” the proposal. Ass’n of
Am. R.Rs., 721 F.3d at 671 (internal quotations
omitted). See NHBPA I, App. 144a (“[T]he agency in
Adkins could ‘unilaterally change’ proposed rules.”).10
But the FTC may not disapprove or modify an
Authority proposal. It must either approve or disprove
the rule as a whole—after a consistency review—and
only later can it run a separate rule-making to
abrogate, modify, or add to that which it has been
forced to adopt. The HISA cases part ways with the
standard set by numerous other circuits by approving
a statute that practically empowers the private
delegate to write the rules governing an entire
industry.
In two other important respects, Adkins can easily be
distinguished from HISA on its facts. First, Adkins delegated the
power to suggest policy on a single item: the price of coal in a
given region. HISA, by contrast, delegates power to set policy for
all aspects of an entire industry nationwide. The Fifth Circuit’s
contrast in NHBPA I between HISA and its earlier decision in
Texas v. Rettig, 987 F.3d 518, 532 (5th Cir. 2021), could just as
easily be said of Adkins: “In Rettig, the private board contributed
to a small part of the regulatory scheme, merely acting as an aid
to HHS. Cf. Adkins, 310 U.S. at 388. By contrast, HISA entrusts
the entire regulatory scheme to the Authority, fettered only by
the FTC’s limited review.” App. 143a.
10
Second, the boards in Adkins could recommend prices, but the
proposals only became effective upon an affirmative act by the
responsible government agency to approve them. Adkins, 310
U.S. at 388 (prices must “be approved, disapproved, or modified
by the Commission” to enter into force). Here, by contrast, rules
are proposed by HISA and enter into force automatically after
only consistency review by the FTC.
17
C. The Fifth and Sixth Circuits are split on
whether
to
permit
sub-regulatory
guidance from private delegates.
Too often, the language in the Federal Register is
not the actual extent of “the rules.” Agencies often use
(and abuse) sub-regulatory guidance to rewrite the
rules, thus exercising legislative power.11 The
Authority commits the same sin here. It rewrites the
rules through sub-regulatory policy-making, just like
an agency would.
This is exactly what HISA authorizes. HISA allows
the Authority to submit “guidance” to the
Commission, 15 U.S.C. § 3054(g), and such guidance
“‘shall take effect’ upon submission.” NHBPA I, App.
114a, quoting id. Similarly, HISA charges the
Authority’s anti-doping agency to “develop and
recommend anti-doping and medication control rules,
protocols, policies, and guidelines for approval by the
Authority.” 15 U.S.C. § 3055(c)(4)(A). In other words,
HISA authorizes sub-rule “protocols, policies, and
guidelines” that are drafted by a private sub-delegate
(the anti-doping agency) and approved not by the FTC,
but by the Authority. And indeed, the Authority’s
rules provide for “technical documents” that give
“guidance” as a “supplement” to the FTC-approved
anti-doping rule. Authority R. §§ 3110(c), 3112.
The Fifth Circuit upheld HISA’s guidance
provisions, stating that “[t]he Authority admits such
11 See Marsh v. J. Alexander’s LLC, 905 F.3d 610, 637, 648 (9th
Cir. 2018) (en banc) (Ikuta, J., dissenting) (referring to “subregulatory guidance” as a “legislative act,” an exercise of
“legislative authority,” and a “legislative rule”).
18
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.” NHBPA II,
App. 13a n.6. First off, such guidance does have the
practical effect of the rule of law when it governs the
Authority’s own actions. Texas v. EEOC, 933 F.3d 433,
441 (5th Cir. 2019) (“Courts consistently hold that an
agency’s guidance documents binding it and its staff
to a legal position produce legal consequences or
determine rights and obligations.”). Second, a contrary
rule-making completed two years hence does no good
against guidance that, by supposed dictate of law,
“shall take effect” immediately. 15 U.S.C. § 3054(g)(3).
See Whitman v. Am. Trucking Ass’ns, 531 U.S. 457,
472 (2001). But third, of greatest concern to this Court,
the Fifth Circuit ratified HISA’s provisions allowing
the Authority to issue guidance, protocols, policies,
guidelines, and technical documents, in conflict with
the Sixth Circuit’s Consumers Research decision.
In the Universal Service Fee context, the Sixth
Circuit found that the delegation to the Universal
Service Administration Corporation does not violate
the non-delegation doctrine because USAC “may not
make policy, interpret unclear provisions of the
statute or rules, or interpret the intent of Congress.”
Consumers’ Rsch, 67 F.4th at 796 (quoting Consumers’
Rsch. v. FCC, 63 F.4th 441, 451-52 (5th Cir. 2023),
vacated for en banc, 72 F.4th 107) (itself quoting 47
C.F.R. § 54.702(b)). “[I]f a private entity . . . retains full
discretion over any regulations, Carter Coal and
Schechter tell us the answer: that it is an
unconstitutional exercise of federal power.”
Oklahoma, 62 F.4th at 229.
19
Yet that is precisely what HISA permits: subregulatory guidance that makes policy and interprets
unclear provisions of the statute and of the rules.
Imagine two horsemen. One goes to the Federal
Register and reads that toe-grabs (cleats for
racehorses) are universally banned in all races. 5th
Cir. ROA.3479. See Horseracing Integrity and Safety
Authority’s Racetrack Safety Rules, 87 Fed. Reg. 435,
444 (July 1, 2022). That is the rule written by the
Authority and approved by the FTC as “consistent”
with the Act. The other horseman goes to the
Authority’s website and sees that the Authority has
bound its staff via guidance not to enforce the toe-grab
rule (Announcement, July 29, 2022, 5th Cir.
ROA.3680), and so runs a horse with toe grabs and
wins. Has the Authority not exercised final discretion
over the regulation and made policy? The Fifth
Circuit’s ratification of that power conflicts with the
Sixth Circuit’s holding disproving such a power for a
private delegate.
*
*
*
In sum, if the Court grants the question presented
by the Authority and FTC concerning the delegation
of executive powers, it should grant a second question
presented to clarify the confusion among the circuits
on private delegates’ exercise of legislative powers as
well, which is the particular need identified previously
by Justice Alito. Texas, 142 S. Ct. at 1308-09
(statement respecting the denial of certiorari).
20
II.
This case is the optimal vehicle for the
Court to consider the Horseracing Act.
This case has several unique features which make
it the optimal case to resolve these questions.
First, unlike the other cases, the Horsemen have
won below—twice. The Horsemen filed their case first,
won their arguments at the Fifth Circuit, and this
prompted Congress to change the law—no mean feat.
The Horsemen then returned to the district court, filed
an amended complaint that squarely addressed the
new, rewritten statute,12 and then won a second time
in front of the Fifth Circuit. As the Solicitor General
points out, it is this Court’s practice to review
decisions that strike down acts of Congress, No. 24429, Pet. 13, not those that uphold them. See id. at 14
(“The petitions filed by the Authority and the
government in this case provide better vehicles for
resolving the question presented than do the petitions
in Oklahoma and Walmsley.”).
Second, this case is brought on behalf of the
National Horsemen’s Benevolent and Protective
Association, the largest and most prominent national
trade association for thoroughbred racing owners and
trainers, with 30,000 members nationwide. This Court
has an appropriate preference for cases where a
national trade association as the voice for an industry
confronts a new regulatory scheme governing that
industry. See, e.g., Rutledge v. Pharm. Care Mgmt.
12 Technically, the operative complaint in the Sixth Circuit still
addresses the old, pre-amended statute. Case No. 5:21-cv-00104
(E.D.Ky.), Docket No. 53, “Amended Complaint,” filed July 15,
2021.
21
Ass’n, 592 U.S. 80, 85 (2020). This case also includes
the State of Texas and its racing commission, which
have significant federalism concerns with the
Authority’s regulation displacing their own; the
Walmsley case lacks the perspective of a state party.
Third, this case has the most developed record
below. Walmsley arises on a preliminary injunction,
while Oklahoma arises from a motion to dismiss. Only
the Horsemen’s case comes to this Court on a final
decision by the U.S. District Court following a bench
trial with an evidentiary record. App. 47a.13
Fourth, this case has the complete range of
arguments preserved and presented for this Court’s
review. The Sixth Circuit made clear in its opinion
that “[f]rom the start, Oklahoma litigated this claim
as one turning on ‘governmental oversight’ of and
‘accountability’ for the Horseracing Authority’s
activities, not as a categorical Article II inquiry or as
a question of historical meaning.” Oklahoma, 62 F.4th
at 233. The Horsemen, by contrast, have from the
beginning of this case pressed the categorical
separation-of-powers argument (based on the Fourth
Circuit’s categorical approach in Pittston Co.) and
historical meaning (based on published research by
Professors Jennifer Mascott and Aditya Bamzai14).
13 Contra the suggestion by the Walmsley Petitioners, No. 24-420
Pet. 28, this case does not “include[] a contested jurisdictional
issue”; the Authority stated that subsequent filings obviated its
jurisdictional concern, No. 24-433 Pet. 31 n.13, which in all
events the Fifth Circuit did not find serious enough to even
address.
14 Jennifer L. Mascott, Private Delegation Outside of Executive
Supervision, 45 Harv. J.L. & Pub. Pol’y 837, 925 (2022); Aditya
22
Further, the Sixth Circuit noted that it was not
considering the Authority’s power to bring civil
lawsuits to enforce its rules, Oklahoma, 62 F.4th at
233, while the Fifth Circuit included that
authorization in its analysis of the Authority’s
exercise of core executive powers. NHBPA II, App. 18a
n.19, 21a, 24a-25a. 27a.
Orthogonally, the Horsemen are also aware that
this Court has pending for its consideration Federal
Communications Commission v. Consumers Research,
No. 24-354, wherein an en banc decision of the Fifth
Circuit declared unconstitutional the Universal
Service Fee scheme. Included in the Solicitor
General’s certiorari petition is a question concerning
the FCC’s delegation to a private corporation of
responsibilities regarding fees, which is a legislative
power. No. 24-354, Pet. 19-22. The Horsemen believe
their case is a better vehicle for resolving this Court’s
interest in legislative delegation. The Fifth Circuit
in Consumers Research said the “FCC ‘may have’
unlawfully ‘subdelegat[ed]’ legislative power to the
Administrator, a private corporation.” No. 24-354, Pet.
19 (quoting App. 19a). Here, there is no doubt of such
a delegation—the Authority clearly exercises the
power to write the rules subject only to the FTC’s
consistency review in the first instance. The only
question is whether that delegation is constitutional.
Moreover, although fee-setting is important, this case
includes both fee-setting and the more traditional
Bamzai, Tenure of Office and the Treasury, 87 Geo. Wash. L. Rev.
1299, 1346 (2019).
23
legislative power to write the standards of conduct
governing private individuals.
In sum, only this case features the leading national
trade association for thoroughbred horsemen, the
people most directly regulated by HISA. Only this case
has the full panoply of arguments preserved for this
Court’s consideration. Only in this case did the court
below declare HISA unconstitutional. This case is the
correct vehicle for this Court’s consideration of this
pressing issue.
CONCLUSION
The Court should grant this Petition, the petition
of Texas, and the petitions of the Authority and FTC,
for a comprehensive vehicle to clarify and apply the
private non-delegation doctrine in both its Article I
and Article II contexts.
.
24
Respectfully submitted,
DANIEL R. SUHR
Counsel of Record
Center for
American Rights
747 N. LaSalle St. #210
Chicago, IL 60654
414.588.1658
dsuhr@
americanrights.org
CHRISTOPHER E. MILLS
Spero Law LLC
557 East Bay St. #22251
Charleston, SC 29413
FERNANDO BUSTOS
Bustos Law Firm, P.C.
5504 – 114th St.
Lubbock, TX 79424
PETER ECABERT
National HBPA
836 Euclid Ave. #207
Lexington, KY 40502
Counsel for the Horsemen
OCTOBER 22, 2024
APPENDIX
APPENDIX
Appendix A Opinion in the United States Court of
Appeals for the Fifth Circuit
(July 5, 2024) .............................. App. 1a
Appendix B Opinion in the United States District
Court for the Northern District of
Texas,
Lubbock
Division
(May 4, 2023) ............................ App. 45a
Appendix C Order of the United States Court of
Appeals for the Fifth Circuit denying
rehearing
en
banc
(September 9, 2024) ............... App. 104a
Appendix D Opinion in the United States Court of
Appeals for the Fifth Circuit
(November 18, 2022) .............. App. 107a
Appendix E Relevant portions of the U.S.
Constitution ............................ App. 147a
Appendix F Horseracing Integrity and Safety Act
................................................. App. 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)
2a
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
3a
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
4a
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,
5a
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).
1
6a
§ 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.”).
2
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).
3
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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
8a
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?
9a
(B) Do the Authority’s enforcement powers separately violate the private nondelegation doctrine?
(C) Does HISA violate due process by permitting
self-interested industry participants to regulate their
competitors?
(D) Are the Authority’s directors subject to the Appointments Clause?
(E) Does HISA violate the Tenth Amendment’s 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).
4
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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).
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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
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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).
5
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.
6
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.
1.
Before addressing the merits of this claim, we must
address the Authority’s argument that it is premature.
Arguing both in terms of standing and ripeness, the Authority contends that it has not yet tried to enforce HISA
against the Horsemen and that any challenge to the Authority’s enforcement power can be raised if and when it
does. We disagree for several reasons.
First, the Authority misunderstands the Horsemen’s
claim. They do not challenge some particular enforcement action undertaken by the Authority—claiming, for
instance, that the Authority issued an overbroad subpoena for medical records or lacked probable cause to
search a racetrack. Instead, the Horsemen argue that
HISA, on its face, vests the Authority with enforcement
power that is effectively unreviewable by the agency.
When a regulated entity raises “a purely legal challenge”
like this one, “it is unnecessary to wait for the Regulation
to be applied in order to determine its legality.” Contender Farms, L.L.P. v. U.S. Dep’t of Agric., 779 F.3d
258, 267 (5th Cir. 2015) (cleaned up) (citations 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.
2.
The Horsemen’s (as well as Texas’s) basic contention
is that HISA grants the Authority enforcement power
that is effectively unreviewable by the FTC. That claim
turns on the same standard as the challenge to the Authority’s rulemaking addressed in Horsemen’s I: the delegation is constitutional if, when enforcing HISA, the
Authority “‘functions subordinately’ to an agency with
‘authority and surveillance’ over it.” 53 F.4th at 881
(quoting Rettig, 987 F.3d at 532). In other words, the Authority may constitutionally enforce HISA only if it acts
“as an aid” to the FTC, which “retains the discretion to
approve, disapprove, or modify” the private 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).
7
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).
8
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
9
See, e.g., Bowsher v. Synar, 478 U.S. 714, 733 (1986) (“Interpreting a law enacted by Congress to implement the legislative mandate is the very essence of ‘execution’ of the law.”); Morrison v. Olson, 487 U.S. 654, 696 (1988) (reasoning “the power to initiate an
investigation” is executive power that must be subject to the Attorney General’s “unreviewable discretion”); Buckley v. Valeo, 424
U.S. 1, 138, 140 (1976) (per curiam) (concluding the “discretionary
power to seek judicial relief” and “conduct[] civil litigation in the
courts of the United States for vindicating public rights” are exercises of Article II executive power); Seila L. LLC v. CFPB, 591 U.S.
197, 225 (2020) (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).
10
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).
11
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
of
the
Authority.”
§ 3054(e)(1)(E)(i). The bottom line, though, is that a private entity, not the agency, is in charge of enforcing
HISA.
Consider also what HISA does not say. It does not
empower the FTC to decide whether to investigate a covered entity, whether to subpoena its records, whether to
search its premises, whether to charge it with a violation,
or whether to sanction or sue it. Nor does the 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).
3.
One might counter, though, that the FTC at least partially supervises the Authority because it can review
sanctions at the back end, after ALJ review. See
§§ 3055(c)(4)(B), 3058(b)(3)–(c)(3). That is true, and it is
the Authority’s best argument for why its enforcement
power is subordinate to the FTC.
The argument nonetheless fails. Suppose the Authority sanctions a horse owner for a doping violation, but the
sanction is later reversed by the FTC. Does 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
12
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[.]”).
4.
The Authority next argues that the FTC could use its
new rulemaking authority to rein in the Authority’s enforcement actions or even require the Authority to preclear lawsuits with the agency. See § 3053(e) (empowering FTC to “abrogate, add to, and modify” the Authority’s rules). This argument persuaded the Sixth Circuit
that at least a facial challenge to the Authority’s enforcement powers should fail. See Oklahoma, 62 F.4th at 231
(through § 3053(e) rulemaking, “the FTC could subordinate every aspect of the Authority’s enforcement,” which
“suffices to defeat a facial challenge”). And we have already found that the FTC’s rulemaking power has some
purchase in turning back a facial challenge to the Authority’s rulemaking power: as explained, the agency
could ensure via rulemaking that no 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”).
13
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)).
14
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).
15
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”).
16
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.
5.
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.”).
17
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.
18
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.
19
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.
20
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.
21
The directors are appointed by the Authority itself. See
§ 3052(d)(3) (Board members are selected by the Authority’s nominating committee).
22
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
23
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).
24
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.”).
25
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
26
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
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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,
v.
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 bringing Tenth
Amendment claims, they must still demonstrate injury
that is traceable to the defendant’s conduct and redressable by the Court. But the private plaintiffs have no
traceable, redressable injury to assert because HISA allows Texas to either elect to collect fees of covered persons or, if not, the Authority will. HISA allows states to
49a
“elect[]” to assess and collect fees on covered persons. 15
U.S.C. § 3052(f)(2)(A). But if the state does not make
such an election, then the Authority steps in to do so.
§ 3052(f)(3). In this way, covered persons like the Gulf
Coast plaintiffs will be regulated and subject to assessments even if they were to succeed on the anti-commandeering claim. Although the private plaintiffs clearly
prefer to be regulated by Texas instead of the Authority,
the preference alone is insufficient to establish a redressable injury.
For all these reasons, the Court rejects the plaintiffs’
arguments and conclude that Congress cured the unconstitutional aspects of HISA’s original approach. Given
the parties’ desire for an expeditious resolution, the
Court’s opinion is sufficient to permit appellate review
but does not exhaust every possible vein of analysis. 1
1. Findings of Fact
Following remand from the Fifth Circuit, the plaintiffs filed multiple motions for a preliminary injunction.
Dkt. Nos. 116; 124; 139. Given the plaintiffs’ requests for
expedited treatment and temporary emergency relief,
the Court consolidated the hearing on the plaintiffs’ motions for preliminary injunction with the trial on the merits. Dkt. No. 135; See also Fed. R. Civ. P. 65(a)(2). The
Court finds the following facts.
A. Congress enacts HISA with broad bipartisan
support.
As explained infra in Parts 1.I through 1.L, the Court is operating on an expedited timeframe. After resolving multiple emergency motions, the Court consolidated these cases on April 11—
roughly three weeks ago. Trial was held last week on April 26. Although the ADMC rule’s effective date was delayed until May 22
(Dkt. No. 180), the plaintiffs request resolution “as soon as possible.” Dkt. No. 181 at 8.
1
50a
American horseracing has existed for centuries, and
throughout it “has been regulated by the States, local
communities, and private organizations.” Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black, 53 F.4th
869, 873 (5th Cir. 2022). Although popular even in the colonial era, the growth of American horseracing in the
1850s was met with “a growing interest in the formation
of a national governing board to regulate racing.” Joan
S. Howland, Let’s Not “Spit the Bit” in Defense of “The
Law of the Horse”: The Historical and Legal Development of American Thoroughbred Racing, 14 MARQ.
SPORTS. L. REV. 473, 483 (2004). But it would take more
than 170 years for the first national horseracing legislation to be signed into law. Nat’l Horsemen’s, 53 F.4th at
873.
After an increase in doping scandals and racetrack
fatalities, Congress passed HISA with broad bipartisan
support. Pub. L. No. 116-260, §§ 1201-12, 134 Stat. 1182,
3252-75 (2020) (codified at 15 U.S.C. §§ 3051–60). On December 27, 2020, HISA was signed into law. Id. For the
first time in the long history of American horseracing,
HISA established a framework for national regulation of
certain aspects of the industry. 15 U.S.C. §§ 3051–60.
Specifically, HISA aims to establish nationwide rules
over racetrack safety and anti-doping and medication
control (ADMC). Nat’l Horsemen’s, 53 F.4th at 873.
HISA applies to all covered horses (thoroughbreds
(§ 3051(4)), covered persons (all trainers, owners, breeders, jockeys, racetracks, and veterinarians, among others (§ 3051(6)), and covered horseraces (those horseraces
with a substantial effect on interstate commerce
(§ 3051(5)). In other words, “[t]he Act’s reach is broad,”
and HISA creates a truly nationwide, comprehensive
51a
regulatory scheme for racetrack safety and ADMC.
Nat’l Horsemen’s, 53 F.4th at 873.
B. A private entity, the Authority, is incorporated
in aid of HISA.
The Authority was incorporated as a nonprofit on
September 8, 2020. GPX 6 at 1; No. 5:23-CV-077, Dkt.
No. 47 at 5. HISA “recognize[d]” the Authority, a “private, independent, self-regulatory, nonprofit corporation
... for purposes of developing and implementing a
horseracing anti-doping and medication control program
and a racetrack safety program for covered horses, covered persons, and covered horseraces.” 15 U.S.C.
§ 3052(a). HISA prescribes the makeup of the Authority’s board of directors, including the number of total directors (nine), independent directors (five), and industry-member directors (four). § 3052(b)(1). The initial directors are chosen by a nominating committee, “comprised of seven independent members ... set forth in the
governing corporate documents of the Authority.”
§ 3052(d). HISA also directs the Authority to establish
racetrack-safety and ADMC standing committees.
§ 3052(c).
C. HISA creates a rulemaking procedure that attempts to allow the Authority to aid the FTC in
regulating thoroughbred horseracing.
HISA creates a regulatory framework that allows the
Authority to operate in aid of the FTC: The Authority
first drafts proposed rules, which are then submitted for
FTC approval. § 3053(a). Once a rule is received by the
FTC, it goes through notice and comment. § 3053(a)–(b).
HISA also requires FTC approval before a proposed rule
can take effect. § 3053(b)(2). The FTC is given sixty days
to “approve or disapprove the proposed rule or modification,” and the FTC “shall approve” a proposed rule if it
52a
is consistent with the statute and applicable rules.
§ 3053(c).
D. With oversight by the FTC, the Authority is
tasked with enforcement.
The Authority is empowered to enforce the rules it
aids the FTC in creating by investigating violations, imposing civil sanctions, and suing to enforce sanctions or
obtain injunctive relief. §§ 3058(a), 3057(d), 3054(h)–(j).
The Authority’s investigatory powers are subject to “uniform procedures” reviewed and approved by the FTC.
§ 3054(c). All civil sanctions imposed by the Authority
are subject to two layers of FTC oversight. First, all civil
sanctions are subject to de novo review by an Administrative Law Judge appointed by the FTC. § 3058(b). And
the FTC can review de novo the ALJ’s final decision.
§ 3058(c).
E. The Authority is funded by private parties.
At its initial stage, the Authority is funded by loans.
See § 3052(f)(1). After that initial stage, the majority of
the Authority’s funding will derive from fees collected
from covered persons or state racing commissions.
§ 3052(f)(1)–(4). Any “proposed increase” in fees for covered persons must be reported to the FTC for review and
submitted for notice and comment. § 3052(f)(1)(c)(iv).
F. Multiple parties challenge HISA’s constitutionality.
53a
This case involves many parties, consisting of the
lead-case plaintiffs, 2 the member-case plaintiffs, 3 the intervenor-plaintiffs, 4 the FTC defendants, 5 and the Authority defendants. 6 Both plaintiff groups sued FTC-related defendants and Authority-related defendants.
The plaintiffs in the lead case are National Horsemen’s Benevolent and Protective Association, Arizona Horsemen’s Benevolent
and Protective Association, Arkansas Horsemen’s Benevolent and
Protective Association, Indiana Horsemen’s Benevolent and Protective Association, Illinois Horsemen’s Benevolent and Protective Association, Louisiana Horsemen’s Benevolent and Protective Association, Mountaineer Park Horsemen’s Benevolent and Protective
Association, Nebraska Horsemen’s Benevolent and Protective Association, Oklahoma Horsemen’s Benevolent and Protective Association, Oregon Horsemen’s Benevolent and Protective Association,
Pennsylvania Horsemen’s Benevolent and Protective Association,
Tampa Bay Horsemen’s Benevolent and Protective Association, and
Washington Horsemen’s Benevolent and Protective Association
(hereinafter the Horsemen plaintiffs). Dkt. No. 149 at 2–10.
2
The plaintiffs in the member case are Gulf Coast Racing LLC,
LRP Group Ltd., Valle de Los Tesoros Ltd., Global Gaming LSP,
LLC, and the Texas Horsemen’s Partnership LLP (hereinafter the
Gulf Coast plaintiffs). Dkt. No. 142 at 7–8.
3
The intervenor-plaintiffs are the State of Texas and the Texas
Racing Commission. Dkt. No. 155.
4
The Authority defendants are Jerry Black, the Horseracing
Integrity and Safety Authority, Lisa Lazarus, Steve Beshear,
Adolpho Birch, Leonard Coleman, Ellen McClain, Charles Scheeler,
Joseph DeFrancis, Susan Stover, Bill Thomason, D.G. Van Clief,
Katrina Adams, Nancy Cox, Joseph Dunford, Frank Keating, and
Kenneth Schanzner. Dkt. Nos. 142; 149.
5
The FTC defendants are the Federal Trade Commission, Lina
Khan, in her official capacity as Chair of the Federal Trade Commission, Rebecca Kelly Slaughter, Alvaro Bedoya, Noah Phillips,
and Christine Wilson, all in their official capacities as Commissioners of the Federal Trade Commission. Dkt. Nos. 142; 149.
6
54a
G. The Fifth Circuit holds HISA unconstitutional.
In March 2021, the National Horsemen’s Benevolent
and Protective Association and twelve of its affiliates
(the Horsemen plaintiffs) filed suit against the FTC, its
commissioners, the Authority, and the Authority’s Nominating Committee members, challenging HISA’s constitutionality on several grounds. Dkt. No. 1 at 19–26. In
due time, the FTC defendants and the Authority defendants separately filed motions to dismiss (Dkt. Nos. 34;
36), and the Horsemen filed a partial motion for summary judgment, seeking declaratory and injunctive relief on their private-nondelegation and due-process
claims (Dkt. No. 37). After considering the briefing of the
parties and various amici, and after oral argument, the
Court concluded, based on what it viewed as binding
precedent, that HISA did not result in a constitutional
violation. Nat’l Horsemen’s Benevolent & Protective
Ass’n v. Black, 596 F. Supp. 3d 691, 725 (N.D. Tex. 2022),
rev’d and remanded, 53 F.4th 869 (5th Cir. 2022). Thus,
the Court denied the partial motion for summary judgment (Dkt. No. 37) and noted that the plaintiffs had abandoned their remaining claims (Nat’l Horsemen’s Benevolent & Protective Ass’n, 596 F. Supp. 3d at 728). The
Court dismissed the plaintiffs’ complaint (Dkt. No. 23)
with prejudice.
On appeal, the Fifth Circuit reversed in a thorough
opinion, holding that the FTC-Authority regulatory
scheme was unconstitutional because it gave the FTC too
little control over a private entity with regulatory authority. Nat’l Horsemen’s, 53 F. 4th at 872. The court explained that “[a] cardinal constitutional principle is that
federal power can be wielded only by the federal government.” Id. As a result, “a private entity may wield
55a
government power only if it ‘functions subordinately’ to
an agency with ‘authority and surveillance’ over it.” Id.
at 881. To explain the concept “more precisely,” the court
noted that it is within constitutional bounds for Congress
to “formalize the role of private parties in proposing regulations so long as that role is merely ‘as an aid’ to a government agency that retains the discretion to ‘approve[ ],
disapprove[ ], or modif[y]’ them.” Id. (quoting Ass’n of
Am. R.R.s v. Dep’t of Transp. [Amtrak I], 721 F.3d 666,
671 (D.C. Cir. 2013)). But “[i]f the private entity does not
function subordinately to the supervising agency, the
delegation of power is unconstitutional.” Id.
Applying these principles, the court held that the Authority was not subordinate to the FTC. Id. at 872–73.
“An agency does not have meaningful oversight if it does
not write the rules, cannot change them, and cannot second-guess their substance.” Id. at 872. It was the Authority, not the FTC, that had “the last word over what rules
govern our nation’s thoroughbred horseracing industry,”
which rendered HISA unconstitutional. Id.
Three aspects of HISA and the FTC-Authority relationship led the panel to this conclusion. First, the court
noted the Authority’s “sweeping rulemaking power” and
observed that “HISA’s generous grant of authority to
the Authority to craft entire industry ‘programs’
strongly suggests it is the Authority, not the FTC,” that
is in control. Id. at 882–83. Moreover, the court explained
that the FTC’s ability to adopt interim final rules did not
meaningfully alter the scope of the Authority’s power because such rulemaking is narrow and reserved for emergencies. Id. at 883.
Second, the court relied on the FTC’s limited power
to review proposed rules, which prevented the FTC from
reviewing the Authority’s policy choices. Id. at 884. The
56a
FTC’s review of proposed rules for consistency with
HISA was “too limited to ensure the Authority ‘functions
subordinately’ to the agency.” Id. “[S]uch arms-length
review hardly subjects the Authority’s rules to ‘independent’ oversight.” Id. at 885. Perhaps more importantly, the court explained that, whatever the FTC’s
consistency review would entail, it excludes review of the
Authority’s policy choices. Id. Similarly, the FTC could
not force the Authority to modify those choices; it could
only make recommendations to the Authority. Id. at 886.
“The Act’s division of labor is clear: the Authority writes
the rules; the agency may suggest certain changes, but
the Authority can take them or leave them.” Id.
Finally, the Fifth Circuit noted that HISA’s FTC-Authority relationship was materially different from the
Maloney Act’s SEC–FINRA model, which has consistently withstood non-delegation challenges. Id. at 887.
Although FINRA, like the Authority, “is a private entity
empowered to draft and propose regulations” to a federal agency, there was “a key distinction” between the
two. Id. “Unlike HISA, the Maloney Act empowers the
SEC to ‘abrogate, add to, and delete from’ FINRA rules
‘as the [SEC] deems necessary or appropriate[.]’ ” Id.
(quoting 15 U.S.C. § 78s(c) and citing Aslin v. Fin. Indus. Regulatory Auth., Inc., 704 F.3d 475, 476 (7th Cir.
2013) (observing that the SEC “may abrogate, add to,
and delete from all FINRA rules as it deems necessary”)). The SEC’s rulemaking power, the court explained, “meaningfully distinguishes the SEC-FINRA
relationship from the FTC-Authority relationship.” Id.
The court recognized that while “FINRA plays an important role in formulating securities industry rules, its
role is ultimately ‘in aid of’ the SEC, which has the final
word on the substance of the rules.” Id. The Authority,
57a
in contrast, has the final word on formulating and proposing rules because of “the limits built into the FTC’s
oversight.” Id. Thus, the Fifth Circuit held that “the
FTC’s power to recommend modifications is not equivalent to the power to require modifications.” Id. at 888.
These reasons—combined with the Fifth Circuit’s
view that precedent did not require affirmance—led the
Court to hold that the Authority was not subordinate to
the FTC and, thus, the FTC-Authority structure violated
the Constitution’s guarantee against private nondelegation. Id. at 890.
H. Congress amends HISA.
Roughly six weeks after the Fifth Circuit’s decision,
Congress enacted, and the President signed into law, an
amendment to HISA. As amended, § 3053(e) now provides the FTC with authority to “abrogate, add to, and
modify the rules of the Authority promulgated in accordance with this chapter as the Commission finds necessary or appropriate to ensure the fair administration of
the Authority, to conform the rules of the Authority to
requirements of this chapter and applicable rules approved by the Commission, or otherwise in furtherance
of the purposes of this chapter.” 15 U.S.C. § 3053(e). The
defendants sought rehearing in the Fifth Circuit in light
of the amendment, but the panel remanded the case to
this Court for further proceedings. Nat’l Horsemen’s,
No. 22-10387, Dkt. Nos. 223–24 (5th Cir. Jan. 31, 2023)
(denying rehearing and issuing mandate).
I. The plaintiffs allege several post-remand
emergencies.
Following remand, the plaintiffs in National Horsemen’s filed a Motion for a Preliminary Injunction (Dkt.
No. 116), asking the Court to enjoin the Authority from
implementing and enforcing HISA while the parties
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dispute whether Congress’s recent modification to HISA
makes the statute constitutional. Id. at 6. The plaintiffs
proposed that the Court order an expedited briefing
schedule on the motion so the Court could issue its order
by March 27, 2023—the date an anti-doping rule was
scheduled to (and eventually did) go into effect. Dkt. No.
117. After considering the parties’ respective positions,
the Court declined to order expedited briefing and instead set a regular briefing schedule. Dkt. No. 121.
On March 27, 2023—the very day that the anti-doping rule was approved and went into effect—the plaintiffs filed their Motion for an Emergency Preliminary Injunction Against the Medication Rule. Dkt. No. 124. The
emergency motion focused specifically on the anti-doping rule, alleging that it violated the Administrative Procedure Act. Id. The Court ordered expedited briefing for
the emergency motion only. Dkt. No. 127. In its order,
the Court found that the anti-doping rule issued without
the notice required under the APA and delayed the
Rule’s effective date until May 1, 2023. Dkt. No. 134.
Five days later, the plaintiffs in Gulf Coast—a case
originally pending in the Amarillo Division—moved for a
temporary restraining order and preliminary injunction,
seeking to enjoin the defendants from enforcing HISA
while the Court resolved the pending dispositive motions. No. 2:22-CV-146-Z, Dkt. No. 50. This case was
transferred to the Lubbock Division of this Court because of the substantial overlap of the claims in Gulf
Coast and National Horsemen’s, the similarity of the
parties, and the likelihood that the evidence involved and
objective of the plaintiffs in both cases would be nearly
identical. Gulf Coast, No. 5:23-CV-077-H, Dkt. No. 53 at
4. After the transfer, the Court denied the motion for
temporary restraining order but reserved its ruling on
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the motion for preliminary injunction. Gulf Coast, No.
5:23-CV-077-H, Dkt. No. 59.
J. The plaintiffs bring numerous constitutional
claims.
The Court found that Gulf Coast and National
Horsemen’s involved “a common question of law or fact”
and consolidated the two cases pursuant to Federal Rule
of Civil Procedure 42(a)(2). Dkt. No. 135 at 1.
i. Gulf Cost Racing
The Gulf Coast plaintiffs’ operative complaint makes
the following constitutional claims: (1) the Authority’s
leadership-appointment process violates Article II’s Appointments Clause, (2) the Authority leadership-removal
process violates Article II’s Vesting Clause, (3) the Authority’s rulemaking constitutes “a naked delegation” of
legislative power, (4) the rulemaking authority that is
delegated to the Authority violates the nondelegation
doctrine because Congress has not supplied an intelligible principle, (5) the delegation of power to the Authority
violates the private-nondelegation doctrine, (6) the Authority’s power to seek civil penalties from covered persons violates the Seventh Amendment right to a jury
trial, (7) the Authority’s ability to adjudicate private
rights violates Article III, (8) HISA’s elect-or-preempt
provision violates the Tenth Amendment’s guarantee
that the federal government cannot command States to
enforce federal law, and (9) HISA Rule 8400, which requires covered persons to consent to inspection as a condition of registration, violates the Fourth Amendment.
Dkt. No. 142.
At the April 18, 2023 pretrial conference, the parties
discussed with the Court the possibility that the claims
might be narrowed in advance of trial. Dkt. No. 163 at
16–17. During the conference, the Gulf Coast plaintiffs
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indicated they were abandoning an argument related to
the breed-expansion authority, which they called a subclaim of the private-nondelegation challenge. Id. at 13.
The next day, the Gulf Coast plaintiffs filed an advisory
that they would be willing to abandon “Claims 3-4 (public
nondelegation), Claim 6 (Seventh Amendment), Claim 7
(Article III), and Claim 9 (Fourth Amendment),” provided the defendants would not hold that abandonment
against them in another case or in an enforcement proceeding. Dkt. No. 161. The defendants filed a notice advising that they agreed to these conditions (Dkt. Nos.
164; 165), so the Gulf Coast plaintiffs have abandoned
their third, fourth, sixth, seventh, and ninth claims.
Thus, the Gulf Coast plaintiffs’ remaining claims are:
• An Article I, Section 2, Clause 2 Appointments
Clause challenge (Claim 1)
• An Article II, Section 1 removal challenge (Claim
2)
• A private-nondelegation challenge (Claim 5), 7 and
• An anti-commandeering challenge under the
Tenth Amendment (Claim 8).
ii. National Horsemen’s
The Horsemen plaintiffs’ Original Complaint (Dkt.
No. 1) and First Amended Complaint (Dkt. No. 23)—
which was the operative complaint when the Court previously heard the defendants’ motions to dismiss and the
plaintiffs’ partial motion for summary judgment—included an intelligible-principle claim and an
The plaintiffs do not identify the constitutional source of this
claim. Dkt. No. 142 at 45–49. The Fifth Circuit noted that “[c]ourts
and commentators differ over the locus of the constitutional violation” (Nat’l Horsemen’s, 53 F.4th at 881 n.23), but the parties do not
dispute that such a violation is cognizable under the Constitution, so
the Court does not reach this question.
7
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Appointments Clause claim, but those were recognized
as abandoned in the Court’s memorandum opinion and
order (Dkt No. 92 at 60 (“The plaintiffs abandoned their
Appointments Clause claim (Claim II) and public nondelegation claim (Claim III), so they are dismissed.”)).
The Horsemen plaintiffs’ live complaint (Dkt. No.
149) asserts that HISA violates the Constitution in three
claims, none of which are abandoned:
• Delegation of legislative powers to a private entity in violation of Article I, Section 1,
• Delegation of executive powers to a private entity
in violation of Article II, Section 1, and
• A violation of the Fifth Amendment’s Due Process
Clause—alleging that self-interested industry
participants are given regulatory power over
their competitors.
iii. The intervenor-plaintiffs
The claims in the intervenor-plaintiffs’ operative
complaint mirror those in the Horsemen plaintiffs’ complaint. The intervenor-plaintiffs assert that HISA violates the constitution in two claims:
• Delegation of legislative and executive powers to
a private entity under Article I, Section I and Article II, Section II, and
• Violation of the Due Process Clause because selfinterested industry participants regulate their
competitors.
K. Multiple motions are currently pending.
Pending before the Court is the Horsemen plaintiffs’
Motion for a Preliminary Injunction (Dkt. No. 116). Also
before the Court is the Gulf Coast plaintiffs’ Motion for
Summary Judgment (Dkt. No. 136) and Motion for a Preliminary Injunction (Dkt. No. 139); the Authority Defendants’ Motion to Dismiss (Dkt. No. 137); and the FTC
62a
Defendants’ Motion for Summary Judgment (Dkt. No.
138).
The Horsemen plaintiffs’ Motion for Preliminary Injunction (Dkt. No. 116) asserts that HISA is facially unconstitutional on three bases: First, the Horsemen argue
that “the Authority is not subordinate when exercising
legislative powers.” Id. at 8. They argue that the Authority is delegated with rulemaking authority, more so (according to the plaintiffs) than other permissible private
delegations. Id. at 8–9. They also argue that, postamendment, HISA still requires the FTC to approve
rules that are consistent with the statute. Id. at 9–12. The
Horsemen argue that the FTC must be able to approve,
disapprove, or modify a rule at the time the Authority
proposes it. Id. at 11. And they argue that the FTC is
subordinate to the Authority because the FTC cannot initiate rulemaking. Id. at 12–13. They say the FTC cannot
issue interim final rules. Id. at 13. And they argue that
the Authority has behaved inconsistently with the Act
and the Rules by, for instance, extending effective dates
of Rules without FTC permission. Id. at 13–14. They also
argue that the Authority exercises taxing-and-spending
powers by issuing assessments. Id. at 15–16.
Excluding the abandoned claims, the Gulf Coast
plaintiffs’ Motion for Summary Judgment and Motion for
a Preliminary Injunction argue that HISA violates Article II’s Appointments Clause because the Authority’s directors are “Officers of the United States” under Lucia
v. SEC, 138 S. Ct. 2044 (2018). No. 5:23-CV-077, Dkt. No.
36 at 28. They also argue that HISA violates Article II’s
Vesting Clause because the President cannot remove the
Authority’s directors. Id. at 34. They then argue that
HISA violates the nondelegation doctrine because the
Authority exercises legislative power in violation of the
63a
nondelegation doctrine (regardless of whether the Authority is a private or public entity). Id. at 37. The plaintiffs next argue that even if the Authority is a private entity, it violates the nondelegation doctrine. Id. at 45. Finally, the plaintiffs argue that HISA violates the anticommandeering doctrine. No. 5:23-CV-077, Dkt. No. 36
at 57.
In addition to responding to the plaintiffs’ arguments, the FTC defendants argue in their Motion to Dismiss (Dkt. No. 137) that the plaintiffs do not have standing to assert an anti-commandeering claim because they
cannot enforce the rights of a state and Texas is not
joined in that claim. No. 5:23-CV-077, Dkt. No. 46 at 27–
30. In their motion for summary judgment, the Authority
defendants argue that the plaintiffs’ fail to prove their
claims. Dkt. No. 137.
L. The Court received evidence and heard argument at trial.
On April 26, the Court held a trial on the merits consolidated with the hearings of the plaintiffs’ motions for
preliminary injunction. Dkt. No. 178. The plaintiffs admitted a number of exhibits, as well as witness testimony
by declaration. Dkt. No. 179. The Horsemen admitted 57
exhibits, including matters of public record (e.g., HPX
14—HISA Racetrack Safety, 87 Fed. Reg. 435 (2022));
Authority guidance (e.g., HPX 26—Guidance of the
Horseracing Integrity and Safety Authority (November
29, 2022)); and biographies of Authority board members
(e.g., HPX 53-I—Biography of Jerry Black). The Horsemen also presented three witnesses by declaration, who
testified regarding the economic and practical effects of
HISA (HPXs 58; 59; 61). The Gulf Coast plaintiffs admitted exhibits in the public record, as well as the meeting
minutes of the Authority’s board of directors (GPXs 41–
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53) and the Authority’s balance sheet (GPX 40). The Gulf
Coast plaintiffs also presented three witnesses by declaration—all agents of the plaintiff entities—who testified
regarding the effect of HISA on their businesses or association members. GPXs 29–32.
The FTC presented no evidence. The Authority presented seven witnesses, who are agents of the Authority,
veterinarians, and horse trainers. DXs 1–8. Lisa Lazarus, the CEO of the Authority, testified regarding the
benefits of HISA and the Authority on the horseracing
industry. DXs 1–2. The Authority’s CFO, Jim Gates, disputed the economic impact estimated by the Gulf Coast
plaintiffs. DX 3. Sara Langsam (DX 4), Susan Stover (DX
7), and Mary Scollay (DX 8) are veterinarians who testified regarding the benefits, in their view, of the Authority’s anti-doping and medication control (ADMC) program. And Mark Casse (DX 5) and Graham Motion (DX
6), horse trainers, testified about the positives of uniform
regulation. After the parties closed, the Court heard oral
argument and took its ruling under advisement
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