Petition for Writ of Certiorari — Gulf Coast Racing, L.L.C., et al., Petitioners v. Horseracing Integrity and Safety Authority, Inc., et al.

Supreme Court briefOct 28, 2024

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No. 24-____________

In the Supreme Court of the United States

__________

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

PETITIONERS

HORSERACING INTEGRITY AND SAFETY AUTHORITY, 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

__________

ILAN WURMAN

UNIV. OF MINNESOTA

LAW SCHOOL

229 S. 19th Ave.

Minneapolis, MN 55455

S. REEVES JORDAN

MAYNARD NEXSEN PC

1901 Sixth Ave. N.

Suite 1700

Birmingham, AL 35203

GREGORY P. SAPIRE

Counsel of Record

CARLOS R. SOLTERO

MAYNARD NEXSEN PC

2500 Bee Caves Road

Building 1, Suite 150

Austin, TX 78746

(512) 969-6540

gsapire@maynardnexsen.com

QUESTIONS PRESENTED

1. Whether Congress can empower a purportedly

private nonprofit entity to regulate an entire industry

nationwide through rulemaking, adjudication, and enforcement powers, and therefore to exercise significant

authority pursuant to the laws of the United States,

without proper appointments under the Appointments

Clause of the U.S. Constitution.

2. In the alternative, whether statutorily empowering a private nonprofit corporation to regulate an entire industry nationwide through rulemaking, adjudication, and enforcement violates the private nondelegation doctrine.

PARTIES TO THE PROCEEDINGS

1. Petitioners (Plaintiffs-Appellants below) are

Gulf Coast Racing L.L.C.; LRP Group, Limited; Valle

de Los Tesoros, Limited; Global Gaming LSP, L.L.C.;

and Texas Horsemen’s Partnership, L.L.P.

2. The State of Texas and the Texas Racing Commission were Intervenors in a case consolidated with

the Petitioners’ case below and have filed their own petition for certiorari.

3. 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, and Tampa Bay Horsemen’s

Benevolent and Protective Association were PlaintiffsAppellants below in a case consolidated with the Petitioners’ case. They have filed their own petition for certiorari.

4. Respondents (Defendants-Appellees below) are

the Horseracing Integrity and Safety Authority, Inc.,

Charles Scheeler, Steve Beshear, Adolpho Birch, Leonard Coleman, Joseph De Francis, Susan Stover, Bill

iii

Thomason, D.G. Van Clief, Nancy Cox, Katrina Adams, Jerry Black, Joseph Dunford, Frank Keating,

Kenneth Schanzer, Ellen McClain, and Lisa Lazarus.

They have filed their own petition for certiorari.

5. Respondents (Defendants-Appellees below) are

the Federal Trade Commission, Chair Lina Khan,

Commissioner Rebecca Kelly Slaughter, Commissioner Alvaro Bedoya, Commissioner Melissa Holyoak,

and Commissioner Andrew N. Ferguson. They have

filed their own petition for certiorari.

RULE 29.6 DISCLOSURE

Pursuant to Rule 29.6, Petitioners Gulf Coast Racing L.L.C., LRP Group, Limited, Valle de Los Tesoros,

Limited, Global Gaming LSP, L.L.C., and Texas

Horsemen’s Partnership, L.L.P. (collectively, the “Gulf

Coast Racing Plaintiffs”) disclose the following:

1. Gulf Coast Racing L.L.C. has no parent corporation, and no publicly held company has a 10% or

greater ownership interest in it.

2. LRP Group, Limited has no parent corporation,

and no publicly held company has a 10% or greater

ownership interest in it.

3. Valle de Los Tesoros, Limited has no parent corporation, and no publicly held company has a 10% or

greater ownership interest in it.

4. Global Gaming LSP, L.L.C. is 51% owned by Racing Partners of Texas, LLC, and 49% owned by Global

Gaming Solutions, LLC. No publicly held company has

a 10% or greater ownership interest in it.

5. Texas Horsemen’s Partnership, L.L.P. has no

parent corporation, and no publicly held company has

a 10% or greater ownership interest in it.

RELATED PROCEEDINGS

Gulf Coast Racing, LLC v. Horseracing Integrity &

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

Court for the Northern District of Texas. Case transferred and consolidated April 11, 2023.

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

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

the Northern District of Texas. Judgment entered May

4, 2023.

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

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

Fifth Circuit. Judgment entered November 18, 2022.

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

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

Fifth Circuit. Judgment entered July 5, 2024.

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

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

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

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

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

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

October 15, 2024.

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

& Protective Ass’n, No. 24-429, U.S. Supreme Court.

Petition for writ of certiorari filed October 16, 2024.

State of Texas and Tex. Racing Comm’n v. Black,

No. 24-465, U.S. Supreme Court. Petition for writ of

certiorari filed October 22, 2024.

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

Horseracing Integrity & Safety Auth., Inc., No. ____,

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

October 22, 2024.

vii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED ................................

PARTIES TO THE PROCEEDINGS ..................

RULE 29.6 DISCLOSURE ..................................

RELATED PROCEEDINGS................................

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

INTRODUCTION ................................................

OPINIONS BELOW ............................................

JURISDICTION ..................................................

PERTINENT CONSTITUTIONAL AND

STATUTORY PROVISIONS ...............................

STATEMENT.......................................................

REASONS FOR GRANTING THE PETITION ..

ARGUMENT ........................................................

II.

The Authority exercises significant authority pursuant to the laws of the United

States and is subject to the Appointments

Clause ........................................................

The Court should harmonize the Appointments Clause with three other doctrines that have confused the courts ........

A. Government-created corporations.......

B. Private nondelegation .........................

C. Self-regulatory organizations ..............

viii

TABLE OF CONTENTS—Continued

Page

III. A circuit split exists which this Court

should resolve and all the parties to this

case agree certiorari is warranted............

CONCLUSION ....................................................

APPENDIX

Appendix A: Court of Appeals Opinion

(July 5, 2024) ....................................................

Appendix B: District Court Memorandum

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

45a

Appendix C: Court of Appeals Order Denying

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

Appendix D: Horseracing Integrity and Safety

Act, 15 U.S.C. §§ 3051 et seq. ........................... 107a

TABLE OF AUTHORITIES

Cases

Page(s)

Alpine Sec. Corp. v. Fin. Indus. Regul.

Auth.,

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

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

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

and remanded, 575 U.S. 43 (2015) ...........

Bank of U.S. v. Planters’ Bank of Ga.,

22 U.S. 904 (1824) .....................................

Boerschig v. Trans-Pecos Pipeline, L.L.C.,

872 F.3d 701 (5th Cir. 2017) .....................

Buckley v. Valeo,

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

Carter v. Carter Coal Co.,

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

Chiglades Farm, Ltd. v. Butz,

485 F.2d 1125 (5th Cir. 1973) ...................

Collins v. Yellen,

141 S. Ct. 1761 (2021) ............................... 25, 26

Cummings v. Missouri,

71 U.S. 277 (1866) ..................................... 1, 20

Cusack Co. v. City of Chicago,

242 U.S. 526 (1917) ...................................

Department of Transportation v. Ass’n

of American Railroads,

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

Edmond v. United States,

520 U.S. 651 (1997) ...................................

TABLE OF AUTHORITIES—Continued

Page(s)

Eubank v. City of Richmond,

226 U.S. 137 (1912) ...................................

First Jersey Secs., Inc. v. Bergen,

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

Free Enterprise Fund v. PCAOB,

561 U.S. 477 (2010) ................................... 17-19

Freytag v. Comm’r,

501 U.S. 868 (1991) ................................... 15, 16

Kerpen v. Metro. Wash. Airports Auth.,

907 F.3d 152 (4th Cir. 2018) .....................

Lebron v. Nat’l R.R. Passenger Corp.,

513 U.S. 374 (1995) ...................................

13, 14, 20-23, 26, 27

1, 4,

Lucia v. Sec. & Exch. Comm’n,

585 U.S. 237 (2018) ................................... 1, 13,

15-17, 19, 26

Nat’l Horsemen’s Benevolent & Protective

Ass’n v. Black,

53 F.4th 869 (5th Cir. 2022) .....................

Nat’l Horsemen’s Benevolent & Protective

Ass’n v. Black,

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

12, 13, 21-23, 27

6, 7,

Nat’l Horsemen’s Benevolent & Protective

Ass’n v. Black,

672 F. Supp. 3d 220 (N.D. Tex. 2023) ...... 6, 12

Oklahoma v. United States,

62 F.4th 221 (2023) ...................................

32, 33

11,

TABLE OF AUTHORITIES—Continued

Page(s)

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

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

Seila Law v. CFPB,

140 S. Ct. 2183 (2020) ...............................

Sorrell v. SEC,

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

Todd & Co. v. SEC,

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

Walmsley v. Fed. Trade Comm’n,

No. 23-2687, 2024 WL 4248221

(8th Cir. Sept. 20, 2024) ............................ 32-33

Washington ex rel. Seattle Title Tr. Co. v.

Roberge,

278 U.S. 116 (1928) ...................................

Constitution

U.S. Const. art. I, § 1 .................................... 7, 24

U.S. Const. art. I, § 8, cl. 18 .........................

U.S. Const. art. II .........................................

U.S. Const. art. II, § 1...................................

U.S. Const. art. II, § 1, cl. 1 ..........................

U.S. Const. art. II, § 2, cl. 1 ..........................

U.S. Const. art. II, § 2, cl. 2 ..........................

11-14, 16, 19, 21, 22, 24, 26-33

1-7,

U.S. Const. art. III ........................................ 12, 24

U.S. Const. art. III, § 1 .................................

xii

TABLE OF AUTHORITIES—Continued

Page(s)

U.S. Const. amend. I.....................................4, 21,

22, 26, 27

U.S. Const. amend. IV ..................................

U.S. Const. amend. V ...................................

U.S. Const. amend. VII.................................

U.S. Const. amend. X ...................................

Statutes and Regulations

15 U.S.C. § 78o.............................................. 6, 31

15 U.S.C. § 78s .............................................. 6, 31

15 U.S.C. § 7217(b)(2) ...................................

15 U.S.C. § 7217(b)(3) ...................................

15 U.S.C. § 7217(b)(5) ...................................

28 U.S.C. § 1254(l) ........................................

Act of Apr. 10, 1816, § 8, 3 Stat. 269............

Consolidated Appropriations Act, 2023,

Pub. L. No. 117-328, div. O, tit. VII, § 701,

136 Stat. 4459, 5231-32 (2022) .................

Horseracing Integrity and Safety Act, 15

U.S.C. §§ 3051 et seq. ................................1, 2, 4,

5, 8-12, 14-16, 19, 20, 27, 31, 32

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

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

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

§ 3052(a) ....................................................8, 15,

xiii

TABLE OF AUTHORITIES—Continued

Page(s)

§ 3052(b) ....................................................

§ 3052(b)(1) ................................................

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

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

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

§ 3053(c)(2)(B) ...........................................

§ 3053(e) ....................................................

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

§ 3054(c).....................................................9, 16,

§ 3054(d) ....................................................

§ 3054(e) ....................................................

§ 3054(f) .....................................................

§ 3054(h) ....................................................9, 16,

§ 3054(j) ..................................................... 18, 19

§ 3054(j)(1) ................................................. 9, 15

§ 3055(a)(1) ................................................ 8, 15

§ 3056(a)(1) ................................................

§ 3057(a)(1) ................................................9, 15,

§ 3057(c).....................................................9, 15,

§ 3057(c)(1) ................................................

§ 3057(c)(2)(A)-(F) .....................................

xiv

TABLE OF AUTHORITIES—Continued

Page(s)

§ 3057(d) .................................................... 9, 15

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

§ 3058.........................................................

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

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

Court Filings

App., Horseracing Integrity & Safety Auth.,

Inc. v. Nat’l Horsemen’s Benevolent &

Protective Ass’n, No. 24A287 (U.S. Sept.

19, 2024) ....................................................

Pet., Fed. Trade Comm’n v. Nat’l Horsemen’s Benevolent & Protective Ass’n, No.

24-429 (U.S. Oct. 16, 2024) .......................

Pet., Horseracing Integrity & Safety Auth.,

Inc., v. Nat’l Horsemen’s Benevolent &

Protective Ass’n, No. 24-433 (U.S. Oct. 15,

2024) .......................................................... 3, 14

Pet., Nat’l Horsemen’s Benevolent & Protective Ass’n v. Horseracing Integrity &

Safety Auth., Inc., No. ___ (U.S. Oct. 22,

2024) ..........................................................

Pet., State of Texas and Tex. Racing

Comm’n v. Black, No. 24-465 (U.S. Oct.

22, 2024) ....................................................

TABLE OF AUTHORITIES—Continued

Page(s)

Reply, Horseracing Integrity & Safety

Auth., Inc., v. Nat’l Horsemen’s Benevolent & Protective Ass’n, No. 24A287 (U.S.

Oct. 2, 2024) ..............................................

Other Authorities

1 William Blackstone, COMMENTARIES ON

THE LAWS OF ENGLAND (Oxford: Clarendon Press 1765) .........................................

87 Fed. Reg. 435 (Jan. 5, 2022) ....................

87 Fed. Reg. 4023 (Jan. 26, 2022) ................9, 17,

87 Fed. Reg. 9349 (Feb. 18, 2022) ................

87 Fed. Reg. 29,862 (May 17, 2022) .............

88 Fed. Reg. 5070 (Jan. 26, 2023) ................

Giles Jacob, A NEW LAW-DICTIONARY (10th

ed., London: W. Strahan & W. Woodfall

1782) ..........................................................

Officers of the United States Within the

Meaning of the Appointments Clause, 31

Op. O.L.C. 73 (2007) ................................. 13, 24

Noah Webster, AN AMERICAN DICTIONARY

OF THE ENGLISH LANGUAGE (New York, S.

Converse 1828) ..........................................

INTRODUCTION

In 2020, Congress established a new regulatory

agency: the Horseracing Integrity and Safety Authority (the “Authority”), with power to make regulations,

conduct adjudications, and engage in enforcement actions for the horseracing industry nationwide. See

Horseracing Integrity and Safety Act (“HISA”), 15

U.S.C. §§ 3051 et seq. Instead of applying the usual

constitutional rules applicable to such an agency, including those relating to the appointment and removal

of officers, Congress circumvented these constitutional

requirements by claiming that the Authority, which

had incorporated itself under Delaware law weeks before Congress’s enactment, was a private nonprofit

corporation to which the Constitution does not apply.

This Court has made clear that the Constitution

cannot be so easily evaded. “The Constitution deals

with substance, not shadows.” Cummings v. Missouri,

71 U.S. 277, 325 (1866); Lebron v. Nat’l R.R. Passenger

Corp., 513 U.S. 374, 397 (1995) (“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.”). To confirm

that principle here, the Court need simply apply established law to this novel attempt at circumvention: the

Authority exercises significant authority pursuant to

the laws of the United States and its officers therefore

must be appointed under the Appointments Clause.

Lucia v. Sec. & Exch. Comm’n, 585 U.S. 237 (2018).

This is the rare case in which all the parties agree

that certiorari is warranted. But they disagree on the

questions presented. The Fifth Circuit below upheld

the Authority’s rulemaking authority but enjoined its

enforcement activities. It did so not on the grounds of

the Appointments Clause, but rather on the grounds

of the private nondelegation doctrine. The Authority

and Federal Trade Commission (“FTC”) petition for

certiorari on the narrow question the court below decided against them: whether the Authority’s enforcement functions facially violate the private nondelegation doctrine. The State of Texas and the National

Horsemen petition on the private nondelegation doctrine but argue HISA is unconstitutional in its entirety, including its delegation of rulemaking authority. The Gulf Coast Racing Plaintiffs, in contrast, petition for certiorari because, properly understood, this

case is even more fundamentally about the Appointments Clause. HISA must be enjoined in its entirety—

its rulemaking and its adjudicatory and enforcement

functions—because the Authority’s Directors exercise

ongoing and significant authority pursuant to the laws

of the United States, but have not been constitutionally appointed.

The Fifth Circuit concluded (as did, preliminarily,

the Eighth Circuit) that the Appointments Clause does

not apply because the Authority is a private entity.

That is wrong. Everyone is private until they are appointed to exercise significant authority pursuant to

statute. It is irrelevant that the Authority was incorporated under Delaware law. What makes an officer is

the office; and what makes the office is the statute creating its duties. The Authority exercises ongoing authority pursuant to HISA, and so its Directors are officers of the United States.

The Gulf Coast Racing Plaintiffs’ petition is the

only petition among the numerous challenges to HISA

now before this Court urging that the Appointments

Clause resolves this constitutional question, while preserving an alternative argument under the private

nondelegation doctrine. It is therefore the ideal petition to grant. Although petitioners in the Sixth and

Eighth Circuit cases suggest there is a potential jurisdictional defect in this case, that is incorrect. The Authority is the only party to question the finality of the

District Court’s judgment below, and it has withdrawn

its objection. 1 The Authority supports certiorari in this

case, not in the Sixth or Eighth Circuit cases, making

this case the only one in which all the parties agree on

the need for certiorari.

The Gulf Coast Racing Plaintiffs’ petition also is

the only one that affords this Court an opportunity to

1 The Fifth Circuit clerk asked the parties to brief

the issue of the finality of the District Court’s order, but the

matter was so trivial that the Fifth Circuit opinion does not

even address the question. As the Authority now concedes,

at a minimum the Gulf Coast Racing Plaintiffs’ reply in the

Fifth Circuit, which “confirm[ed] that they had in fact abandoned remaining claims before entry of judgment,” has “obviated that issue,” which “is why the Fifth Circuit did not

address it and why nobody in this case raises it any longer.”

Pet. at 31 n.13, Horseracing Integrity & Safety Auth., Inc.

v. Nat’l Horsemen’s Benevolent & Protective Ass’n, No. 24433 (U.S. Oct. 15, 2024) (“Authority Pet.”).

Based on the Authority’s reply in support of its

emergency stay application, see No. 24A287 (U.S. Oct. 2,

2024), Petitioners expect the Authority to argue that they

do not have standing to assert the Appointments Clause

challenge. But that is a fabricated objection. The Authority

objected below only to Petitioners’ standing to assert an

anti-commandeering claim under the Tenth Amendment.

See C.A. Doc. 114 at 55 (Aug. 4, 2023). Petitioners do not

pursue that claim in this Court.

clarify the intersection of the Appointments Clause

and three other lines of doctrine that confused the

courts below and others throughout the country.

First, the Fifth Circuit concluded (as did, preliminarily, the Eighth Circuit) that Lebron, supra, precluded an Appointments Clause challenge because the

Authority is not a government-created corporation.

But Lebron and its progeny deal with a different issue:

government-created corporations like the Smithsonian

that do not exercise government power but that are

nevertheless the government for other constitutional

purposes like the First Amendment. Indeed, one of the

criteria for determining whether government-created

corporations are the government for constitutional

purposes is whether their officers are appointed by the

government. That led the Fifth Circuit into a circular,

question-begging analysis: whether the Authority’s officers were appointed by the government and therefore

part of the government. That cannot be right. The

question at issue is whether they must be appointed by

the government in the first place.

Second, several courts, including the Fifth Circuit,

applied the private nondelegation doctrine to the question of HISA’s constitutionality. The Sixth Circuit held

HISA constitutional in its entirety because, it held, the

Authority was sufficiently supervised by the FTC. The

Fifth Circuit also held that the Authority’s rulemaking

authority was constitutional for that reason but enjoined the Authority’s enforcement authorities for being insufficiently supervised by the FTC.

The Authority will emphasize the “incompatibility”

of the Appointments Clause and the private nondelegation doctrine as a reason against granting this petition. The doctrines are “mutually exclusive,” they

write in their petition. The private nondelegation doctrine, however, is neither incompatible with the Appointments Clause, nor necessarily applicable here. It

is inapplicable because the Authority exercises significant authority pursuant to the laws of the United

States. Just as any private person such as William

Barr or Janet Yellen becomes a government officer requiring constitutional appointments when he or she

assumes statutory duties, the Authority’s officials also

become government officers requiring constitutional

appointments when they assume such duties. In such

circumstances, the private nondelegation doctrine

does not apply because by definition the individuals

are government officers (albeit not yet properly appointed). Nor is the private nondelegation doctrine incompatible with the Appointments Clause because it

applies to exercises of government power where the

Appointments Clause does not first apply. For example, it applies to episodic exercises of government

power by non-officers, such as when a railroad uses

eminent domain.

Third, the Authority and the FTC argue that Congress modelled HISA after the Maloney Act, and the

Authority after the Financial Industry Regulatory Authority (“FINRA”), a so-called “self-regulatory organization” (“SRO”) supervised by the Securities and Exchange Commission (“SEC”). A handful of circuit

courts in the mid-twentieth century, with cursory

analysis, upheld this model against nondelegation

challenges. Sorrell v. SEC, 679 F.2d 1323, 1325-26 (9th

Cir. 1982); First Jersey Secs., Inc. v. Bergen, 605 F.2d

690, 697 (3d Cir. 1979); Todd & Co. v. SEC, 557 F.2d

1008, 1012-13 (3d Cir. 1977); R.H. Johnson & Co. v.

SEC, 198 F.2d 690, 695 (2d Cir. 1952).

But that model, even assuming its constitutionality, is inapplicable here. Unlike the Authority, FINRA

does not have a monopoly on government power over

the industry it regulates. The relevant statute authorizes financial-services industry members to be part of

any self-regulatory organization, and they all vote and

participate in the governance of such organizations. 15

U.S.C. §§ 78o, 78s. The Authority, however, has a comprehensive, nationwide, statutorily granted regulatory

monopoly on horseracing, and the regulated industry

members have no say whatsoever in its governance.

The Authority, in other words, is not a self-regulatory

organization but rather an other-regulatory organization. That means it is just a government agency—to

which the Appointments Clause and other constitutional strictures apply.

The Gulf Coast Racing Plaintiffs’ petition presents

the full range of issues necessary to resolve the relevant constitutional questions. It is the only petition

that would allow this Court to harmonize these lines

of cases and to confirm that Congress cannot evade the

Appointments Clause by establishing a new regulatory

agency in the guise of a preexisting, private nonprofit

corporation.

OPINIONS BELOW

The opinion of the court of appeals is reported at

107 F.4th 415 (5th Cir. 2024) and reproduced at App.,

infra, 1a-44a. The opinion of the district court is reported at 672 F. Supp. 3d 220 (N.D. Tex. 2023) and reproduced at App., infra, 45a-103a. The unreported order of the court of appeals denying en banc review is

reproduced at App., infra, 104a-106a.

JURISDICTION

The court of appeals entered judgment on July 5,

2024. App., infra, 1a-44a. The court of appeals denied

the Authority’s and the FTC’s petitions for rehearing

en banc on September 9, 2024. App., infra, 104a-106a.

The Gulf Coast Racing Plaintiffs invoke the Court’s jurisdiction under 28 U.S.C. § 1254(1).

PERTINENT CONSTITUTIONAL AND

STATUTORY PROVISIONS

Article II, Section 2, Clause 2 of the U.S. Constitution provides, in relevant part, that the President:

. . . shall nominate, and by and with the Advice

and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls,

Judges of the supreme Court, and all other Officers of the United States, whose Appointments

are not herein otherwise provided for, and

which shall be established by Law: but 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.

Article I, Section 1 provides:

All legislative Powers herein granted shall be

vested in a Congress of the United States, which

shall consist of a Senate and House of Representatives.

Article II, Section 1, Clause 1 provides, in relevant

part:

The executive Power shall be vested in a President of the United States of America.

The relevant statutory provisions are found in the

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

§§ 3051-60, which is reproduced at App., infra, 107a150a.

STATEMENT

1. HISA purports to bestow powers upon a “private,

independent, self-regulatory, nonprofit corporation, to

be known as the ‘Horseracing Integrity and Safety Authority.’” 15 U.S.C. § 3052(a). This “Authority” was incorporated in Delaware on September 8, 2020,

ROA.4223, weeks before HISA passed in the House of

Representatives on September 29, 2020. On September 30, 2020, the Authority filed its bylaws. ROA.422951. Those bylaws provide, as does HISA itself, for a

Board of Directors and a Nominating Committee that

appoints the Directors. 15 U.S.C. § 3052(b) (Board); id.

§ 3052(d) (Nominating Committee); ROA.4233-40. The

bylaws themselves name the initial members of the

Nominating Committee. ROA.4239-40. They also provide that the Directors can only be removed by other

Directors. ROA.4236 (“Directors shall be removable,

for cause, by the affirmative vote of all Directors then

in office.”).

2. HISA empowers the Authority to “develop[] and

implement[] 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); see also id. § 3055(a)(1). A

“covered horserace” is “any horserace involving covered horses that has a substantial relation to interstate commerce.” Id. § 3051(5). “[C]overed persons”

means “all trainers, owners, breeders, jockeys, racetracks, veterinarians,” or other persons “engaged in

the care, training, or racing of covered horses.” Id.

§ 3051(6). “[C]overed horse” is any “Thoroughbred

horse,” but the statute provides for the expansion of

the Authority’s jurisdiction to other breeds. Id.

§ 3051(4).

HISA authorizes the Board to make rules for accessing documents, issuing subpoenas, and engaging

in investigations. Id. § 3054(c). It grants the Authority

“subpoena and investigatory authority with respect to

civil violations committed under its jurisdiction.” Id.

§ 3054(h). It grants the Authority power to “commence

a civil action against a covered person or racetrack”

that has violated the Act and to commence such actions “to enjoin . . . acts or practices” that violate the

Act. Id. § 3054(j)(1). HISA provides that the Authority

“shall issue” or “shall establish” rules regarding

“safety, performance, and anti-doping and medication

control rule violations,” id. § 3057(a)(1), (c)(1), adjudicatory processes, id. § 3057(c), and “civil sanctions” for

violations, id. § 3057(d).

The Authority has promulgated a registration rule,

requiring all covered persons to register with the Authority and consent to searches and seizures, Rule

9000, 87 Fed. Reg. 29,862, 29,866-67 (May 17, 2022); a

legislative rule relating to racetrack safety, Rule 2000

et seq., 87 Fed. Reg. 435, 445-59 (Jan. 5, 2022); rules

on civil sanctions, enforcement, and adjudicatory processes, Rule 8000 et seq., 87 Fed. Reg. 4023, 4028-31

(Jan. 26, 2022); a rule on fee assessments, Rule 8500

et seq., 87 Fed. Reg. 9349, 9352-53 (Feb. 18, 2022); and

a legislative rule on anti-doping and medication control, Rule 1010 et seq., 88 Fed. Reg. 5070, 5084-5201

(Jan. 26, 2023).

3. HISA provides for limited oversight by the Federal Trade Commission. Under HISA, the Authority’s

rules do not become effective without FTC approval,

but the FTC “shall”—that is, it must—approve the

rules if they are “consistent with” the Act and with “applicable rules approved by the Commission.” 15 U.S.C.

§ 3053(c)(2)(B). The FTC-promulgated rules are procedural, detailing the Authority’s rulemaking process.

Id. § 3053(a) (“The Authority shall submit to the Commission, in accordance with such rules as the Commission may prescribe . . . .”).

When Congress first enacted HISA, it was clear

that the FTC could consider neither the policy merits

of the Authority’s rules, nor public comments on them.

For example, when considering the Enforcement Rule,

the FTC specifically refused to address the rule’s policy

merits. ROA.4433 (“Under the Act, the Commission reviews the Authority’s proposals for their consistency

with the Act and the Commission’s [procedural] rule,

not for general policy.”).

4. On March 15, 2021, the National Horsemen

Plaintiffs filed a lawsuit in the Lubbock Division of the

Northern District of Texas in which Texas and its Racing Commission intervened. All parties filed dispositive cross-motions on private nondelegation and due

process claims. On April 25, 2022, Judge Hendrix entered final judgment against the National Horsemen

Plaintiffs and the Texas intervenors. On November 18,

2022, a panel of the Fifth Circuit reversed the District

Court and held HISA invalid under the private nondelegation doctrine in part because, unlike the SEC in

the Maloney Act context, the FTC did not have the

power to abrogate, modify, or add to the Authority’s

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

v. Black, 53 F.4th 869 (5th Cir. 2022).

In December 2022, HISA was amended in response

to the Fifth Circuit’s decision. The amendment

granted the FTC power to “abrogate, add to, and modify” the Authority’s rules “as the Commission finds

necessary or appropriate to ensure the fair administration of the Authority, to conform the rules of the Authority to requirements of this Act and applicable rules

approved by the Commission, or otherwise in furtherance of the purposes of this Act.” Consolidated Appropriations Act, 2023, Pub. L. No. 117-328, div. O, tit.

VII, § 701, 136 Stat. 4459, 5231-32 (2022); 15 U.S.C.

§ 3053(e) (as amended).

On January 31, 2023, the Fifth Circuit panel remanded the case to the District Court and provided

that any further appeal shall be to the same panel. On

March 3, 2023, the U.S. Court of Appeals for the Sixth

Circuit upheld HISA on private nondelegation grounds

in light of Congress’s amendment. Oklahoma v. United

States, 62 F.4th 221 (2023).

5. While these proceedings, centered on private

nondelegation challenges, were ongoing, the Gulf

Coast Racing Plaintiffs filed a separate lawsuit in the

Amarillo Division of the Northern District of Texas on

July 29, 2022, where they made additional claims.

They argued—and continue to argue—that HISA violates the Constitution because it contradicts the Appointments Clause and the vesting of the removal

power in the President. They argued in the alternative

that HISA violates the private nondelegation doctrine.

On April 6, 2023, Judge Kacsmaryk transferred the

Gulf Coast Racing Plaintiffs’ case to the Lubbock Division. On April 11, Judge Hendrix consolidated the case

with the National Horsemen’s case. Prior to trial, the

Gulf Coast Racing Plaintiffs voluntarily abandoned

several claims involving Article III and the Seventh

Amendment. ROA.2719 (“[T]he Gulf Coast [Racing]

plaintiffs have abandoned their third, fourth, sixth,

seventh, and ninth claims.”); ROA.2761 (Gulf Coast

Racing Plaintiffs “voluntarily withdrew Counts 3, 4, 6,

7, and 9”). On April 26, Judge Hendrix held a bench

trial on the remaining claims of all the parties. On May

4, 2023, Judge Hendrix issued a final order and judgment upholding HISA and dismissing all claims. App.,

infra, 45a-103a. On May 17, 2023, the Gulf Coast Racing Plaintiffs filed their notice of appeal.

6. The Fifth Circuit issued its decision in this case

on July 5, 2024. App., infra, 1a-44a. 2 The Fifth Circuit

agreed with the Sixth Circuit that, because of Congress’s amendment, the National Horsemen’s argument that the Authority’s rulemaking powers violated

the private nondelegation doctrine must be rejected.

Id. at 9a-14a. Unlike the Sixth Circuit, however, the

Fifth Circuit concluded that the Authority’s enforcement functions must be enjoined under the private

nondelegation doctrine because those functions were

insufficiently supervised by the FTC. Id. at 14a-33a.

The Fifth Circuit then rejected the Gulf Coast Racing Plaintiffs’ separate Appointments Clause challenge. The Fifth Circuit reasoned that “[t]he Supreme

2 The clerk of the Fifth Circuit asked the parties to brief

the finality of the District Court’s order. C.A. Doc. 58 (May

30, 2023). As the Authority now concedes, because the Gulf

Coast Racing Plaintiffs abandoned any additional claims

before trial, the District Court’s judgment was final. Authority Pet. at 31 n.13. The Fifth Circuit did not address the

issue and all the parties now agree the Fifth Circuit had,

and this Court now has, jurisdiction.

Court and circuit courts have . . . used Lebron’s analysis to discern whether corporations are part of the government for constitutional purposes.” Id. at 38a. It

then concluded that “the Authority is not a federal instrumentality for purposes of the Appointments

Clause” because it was not “created by the federal government” nor created to further “governmental objectives,” and because the federal government does not

control the operation of the Authority through the appointment of its Directors. Id. at 39a-40a.

The Fifth Circuit recognized that the Gulf Coast

Racing Plaintiffs argued that Lebron’s analysis is not

“the only way” to determine whether a particular entity is governmental, and that the more appropriate

test in these circumstances was Lucia’s significant-authority test. Yet the Fifth Circuit asked, “How can we,

as an inferior court, simply bypass Lebron? We cannot.” Id. at 40a.

The Fifth Circuit disagreed that the test for determining who are officers of the United States applied

because, in Lucia and previous cases under the Appointments Clause, the individuals in question were

“already part of the government.” Id. at 41a (emphasis

deleted). The panel recognized that a 2007 Office of Legal Counsel memorandum maintained that the Appointments Clause “applies to someone with significant and continuing government authority, whether

he is a private or a government employee.” Id. at 41a

n.26 (quoting Officers of the United States Within the

Meaning of the Appointments Clause, 31 Op. O.L.C. 73,

121-22 (2007)). But, the Fifth Circuit stated, “If the

opinion was suggesting its analysis as an alternative

to Lebron . . . , that is a suggestion only the Supreme

Court could act upon.” Id. (emphasis added).

7. On August 19, 2024, the Authority and the FTC

filed a petition for en banc rehearing, which was denied on September 9. App., infra, 104a-106a. On September 16, the Authority filed a petition to stay the

mandate, which the Fifth Circuit denied the next day.

After filing an emergency application in this Court, the

Authority filed a petition for certiorari on October 15,

2024. On October 16, the Solicitor General filed a petition for certiorari on behalf of the FTC. On October 22,

2024, the State of Texas and the National Horsemen

followed with their own certiorari petitions. The Gulf

Coast Racing Plaintiffs now also petition for certiorari.

REASONS FOR GRANTING THE PETITION

1. The Court should grant this petition because

HISA represents a novel attempt at circumventing the

Appointments Clause. The Authority’s Directors exercise ongoing and significant authority pursuant to the

laws of the United States, and their duties are established by law. They are officers of the United States

notwithstanding the statute’s labeling them “private”

actors.

2. The Court should grant this petition because this

case involves the intersection of a series of doctrines

that have confused courts across the country. The

Fifth and Eighth Circuits concluded that this Court’s

analysis in Lebron precludes an Appointments Clause

challenge, even though that case involved a government-created corporation that did not exercise government power, while the Authority exercises regulatory

authority. Courts have also analyzed HISA under the

private nondelegation doctrine, even though by definition any person exercising ongoing duties of significance pursuant to a statute is an officer. Finally, several courts have held that the Authority is similar to

FINRA, a self-regulatory organization, but the Authority is fundamentally different from FINRA because it

is not a self-regulatory organization. This petition is

the only one that affords the Court the opportunity to

harmonize the relevant doctrines.

3. The Court should also grant this petition because

all the parties to this case agree that certiorari is warranted, and there is now a circuit split between the

Sixth and Eighth Circuits and the Fifth Circuit on the

question of HISA’s constitutionality.

ARGUMENT

I. The Authority exercises significant authority

pursuant to the laws of the United States and

is subject to the Appointments Clause.

Two criteria characterize an officer of the United

States: the individual occupies “a ‘continuing’ position

established by law” and exercises “significant authority pursuant to the laws of the United States,” that is,

“‘significant discretion’ when carrying out . . . ‘important functions.’” Lucia, 585 U.S. at 244-47 (quoting

Freytag v. Comm’r, 501 U.S. 868, 878 (1991)). The Authority and its Directors meet those criteria, and those

Directors are therefore officers of the United States.

1. The Directors occupy a “continuing position established by law.” HISA establishes that “[t]he Authority shall be governed by a board of directors.” 15

U.S.C. § 3052(b)(1). The Authority itself, as directed by

the Board, engages in numerous statutory duties, including “developing and implementing” and “establish[ing]” a horseracing anti-doping and medication

control program and a racetrack safety program with

punishments for violations. Id. §§ 3052(a), 3055(a)(1),

3056(a)(1), 3057(a)(1), (c), (d). The Act bestows “powers

and responsibilities under this chapter” upon the “Authority.” Id. § 3054(a). It authorizes the Board to make

rules for accessing documents, issuing subpoenas, and

engaging in investigations. Id. § 3054(c). It grants the

Directors “subpoena and investigatory authority with

respect to civil violations committed under its jurisdiction.” Id. § 3054(h). It grants the Authority power to

“commence a civil action against a covered person or

racetrack” that has violated the Act. Id. § 3054(j)(1).

In the courts below, the Authority argued that the

Directors’ offices are not established by law, but rather

by the Authority’s own incorporation documents. But

if Defendants were correct that the Authority can escape the Appointments Clause by self-incorporating

before HISA was enacted, then every government

agency could escape the clause that same way. Congress, in coordination with industry members, could

encourage a group of “private” individuals to create the

“environmental protection authority” as a nonprofit organization that drafts environmental regulations with

which members of the coal industry must comply. That

cannot be right. The relevant question is whether the

duties are established by law because it is the duties

that create the “office.” Noah Webster, AN AMERICAN

DICTIONARY OF THE ENGLISH LANGUAGE 236 (New

York, S. Converse 1828) (defining officer as “[a] person

commissioned or authorized to perform any public

duty”); Giles Jacob, A NEW LAW-DICTIONARY [653]

(10th ed., London: W. Strahan & W. Woodfall 1782)

(“[E]very man is a public officer who hath any duty

concerning the public.”).

2. The Directors also exercise significant authority.

As in Lucia and Freytag, the Board can “take testimony,” “receive evidence,” and “examine witnesses at

hearings”; it can “conduct trials” (hearings), and specifically “administer oaths, rule on motions, and generally regulate the course of a hearing, as well as the

conduct of parties and counsel”; and it can “rule on the

admissibility of evidence” and “thus critically shape

the administrative record (as they also do when issuing document subpoenas).” Lucia, 585 U.S. at 248

(cleaned up); see 15 U.S.C. §§ 3057(c)(2)(A)-(F),

3058(a)-(b); Rule 8340(a), (c)-(i), 87 Fed. Reg. at 402930. The Directors’ adjudicatory powers are the same as

the ALJ’s powers in Lucia. The fact that another adjudicator—an FTC ALJ—can later review the Directors’

work does not make them any less officers, just as SEC

review did not make the SEC ALJ any less an officer.

Indeed, the SEC had more power of review in Lucia

because it could always take a case away from an ALJ

altogether and hear it in the first instance. Lucia, 585

U.S. at 241 (“By law, the Commission may itself preside over such a proceeding.”). Under HISA, the FTC

has no mechanism whatsoever to do so. The Authority

always gets to adjudicate. 15 U.S.C. § 3058.

The Authority is also identical in many respects to

the Public Company Accounting and Oversight Board

(“PCAOB”) from Free Enterprise Fund v. PCAOB, 561

U.S. 477 (2010). This Court held that the PCAOB exercised “significant executive power,” id. at 514, and

that its members were officers, id. at 486, despite Congress having declared it a private entity. Just as

“[e]very accounting firm” had to “register with the

Board, pay it an annual fee, and comply with its rules

and oversight,” id. at 485, so too here every covered

person and racetrack must register with the Board,

pay it an annual fee, and comply with its rules and

oversight. 15 U.S.C. §§ 3054(d) (registration and compliance requirement); 3052(f)(3) (funding). Just as the

PCAOB “is charged with enforcing the Sarbanes-Oxley

Act, the securities laws, the Commission’s rules, its

own rules, and professional accounting standards,”

561 U.S. at 485, the Authority is charged with enforcing HISA, the Commission’s rules, and its own rules.

E.g., 15 U.S.C. § 3054(e)-(f), (h)-(j).

Just as the PCAOB “may regulate every detail of

an accounting firm’s practice,” 561 U.S. at 485, the Authority here regulates essentially every detail of

horseracing—right down to the shoes that racehorses

may wear. And just as the PCAOB “promulgates auditing and ethics standards, performs routine inspections of all accounting firms, demands documents and

testimony, and initiates formal investigations and disciplinary proceedings,” id., the Authority “promulgates [racetrack safety and medication control] standards, performs routine inspections of all [racetracks

and covered persons], demands documents and testimony, and initiates formal investigations and disciplinary proceedings.” 15 U.S.C. §§ 3054(c), (h),

3057(a)(1), (c).

And just as the PCAOB “can issue severe sanctions

in its disciplinary proceedings, up to and including the

permanent revocation of a firm’s registration, a permanent ban on a person’s associating with any registered firm, and money penalties of . . . $750,000 for a

natural person,” 561 U.S. at 485, here the Authority

“can issue severe sanctions in its disciplinary proceedings, up to and including [lifetime bans on horseracing], and money penalties” at the Authority’s own discretion (which it has currently set at $50,000-$100,000

per violation). 15 U.S.C. § 3057(d)(3)(A); Rule

8200(b)(2), 87 Fed. Reg. at 4028. And in this respect

the Authority has even more power than does the

PCAOB: the Authority can commence public prosecutions in district court, 15 U.S.C. § 3054(j), a core executive power. 1 William Blackstone, COMMENTARIES ON

THE LAWS OF ENGLAND 257-59 (Oxford: Clarendon

Press 1765).

3. Crucially, subordination does not matter to this

analysis. Under the Appointments Clause, subordination determines whether an officer is a principal or inferior officer—not whether an individual is an officer

at all. Edmond v. United States, 520 U.S. 651, 663

(1997). Thus, in Lucia, the Supreme Court held that

the SEC ALJ was an officer even though the ALJ’s decisions had to be approved by the SEC, and the SEC

could reverse the ALJ, or could even take a case away

from the ALJ.

Even more telling, the review structure in the Sarbanes-Oxley Act, at issue in Free Enterprise Fund, is

identical to the review structure of HISA. No rule of

the PCAOB can “become effective without prior approval of the Commission [SEC].” 15 U.S.C.

§ 7217(b)(2). The SEC “shall approve a proposed rule,

if it finds that the rule is consistent with the requirements of this Act.” Id. § 7217(b)(3) (emphasis added).

And the SEC can “abrogat[e], delet[e], or add[]” to the

rules of the PCAOB. Id. § 7217(b)(5). Yet the PCAOB

members are still officers.

4. The threshold question that should have resolved this case below was whether Congress can circumvent the rule of Lucia and similar cases by empowering a preexisting, private corporation. In this case

that entity incorporated itself mere weeks before Con-

gress enacted HISA, in obvious collusion with legislators or anticipation of legislative action. 3 But that does

not matter for the principle. As noted above, it is the

duties that make the office. Therefore, even if the Authority previously had engaged in private activity (it

did not), its Directors would now be officers to the extent they executed statutory duties.

As this Court has said, “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.” Lebron, 513

U.S. at 397. And yet that is exactly what Congress did

here. The Court should take this case to confirm that

“[t]he Constitution deals with substance, not shadows.” Cummings, 71 U.S. at 325.

II. The Court should harmonize the Appointments Clause with three other doctrines that

have confused the courts.

The Court should grant certiorari for the additional

reason that this case presents unique questions at the

intersection of various constitutional doctrines that

Indeed, HISA provides, “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” a nationwide

regulatory program. 15 U.S.C. § 3052(a) (emphasis added).

If the Authority had already existed, it would already have

been known as that. In the Authority’s own documents,

moreover, the Authority has stated that it was “created” or

“established” by HISA. See, e.g., ROA.4711 (“The 2020

Horseracing Integrity and Safety Act (‘HISA’) created the

Authority as the independent governing structure charged

with proposing and enforcing health-and-safety standards.”).

have confused courts throughout the country. These

are the doctrines that have developed around government-created corporations, delegation of authority to

private individuals, and delegation of authority to selfregulatory organizations.

This case presents the ideal opportunity for this

Court to harmonize the doctrines. As the Fifth Circuit

stated, if the Gulf Coast Racing Plaintiffs are suggesting that the Appointments Clause analysis is “an alternative to Lebron . . . , that is a suggestion only the

Supreme Court could act upon.” App., infra, 41a n.26.

As for the interrelation of the Appointments Clause

and the private nondelegation doctrine, the Fifth Circuit stated, “Challenges based on private nondelegation, on the one hand, and the Appointments Clause,

on the other, appear mutually exclusive.” Id. at 36a.

This petition affords this Court an opportunity to explain how these doctrines work together.

A. Government-created corporations

1. In Lebron, this Court held that the First Amendment applied to Amtrak even though Amtrak was just

a train service. “[I]t is not for Congress to make the

final determination of Amtrak’s status as a Government entity for purposes of determining the constitutional rights of citizens affected by its actions,” this

Court held. “If Amtrak is, by its very nature, what the

Constitution regards as the Government, congressional pronouncement that it is not such can no more

relieve it of its First Amendment restrictions than a

similar pronouncement could exempt the Federal Bureau of Investigation from the Fourth Amendment.”

513 U.S. at 392. “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.” Id. at 397.

Yet in the proceedings below, the Fifth Circuit perversely deployed Lebron in a manner that promotes

evading the “most solemn obligations imposed in the

Constitution by simply resorting to the corporate

form.” The Fifth Circuit reached its conclusion by applying Lebron’s three-part test for determining

whether Amtrak was part of the government.

First, the Fifth Circuit held that the Authority, unlike Amtrak, was not created by statute. App., infra,

39a. On this reasoning, the First Amendment would

not have applied to Amtrak if only Amtrak had incorporated itself under state law a few weeks in advance

and Congress then merely co-opted the organization.

That obviously cannot be right. The question—as always with the Appointments Clause—is whether the

duties of the corporation or entity were created or imposed by statute.

Second, the Fifth Circuit held that the Authority

“was not created to further ‘governmental objectives,’

but instead as a private association to address doping,

medication, and safety issues in the thoroughbred racing industry.” App., infra, 39a (quoting Lebron, 513

U.S. at 399). It contrasted 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. (quoting Lebron, 513 U.S. at 383). That also cannot be right: creating a national regulatory program is a governmental

objective, even more so than simply ensuring the survival of passenger rail.

Third, and most significantly, the Fifth Circuit held

that unlike in Lebron, here “the government has no

role in appointing the Authority’s Board” and therefore

does not control the operations of the Authority. App.,

infra, 39a. But that is the whole question in this case.

The Fifth Circuit’s analysis was question begging: it

erroneously held that the Authority was not the government and therefore did not require constitutional

appointments because its Directors were not appointed by the government.

This third factor explains why the Lebron test cannot apply to the Authority: the Authority exercises significant authority pursuant to the laws of the United

States. That is, it exercises government power, pursuant to statute, on a continuing basis. Lebron and its

progeny deal with a different question: whether certain entities that do not exercise any governmental

power—or at least not significant authority pursuant

to the laws—such as Amtrak, the Smithsonian, the

Bank of the United States, or Reagan National Airport, are nevertheless part of the “government” for certain constitutional purposes. 4 See, e.g., Kerpen v.

Metro. Wash. Airports Auth., 907 F.3d 152, 158-60 (4th

Cir. 2018) (applying Lebron analysis to the question of

whether Reagan and Dulles airports are governmental

entities). These entities all conduct activities in which

4 The Fifth Circuit said that Amtrak exercised govern-

mental power, but that is incorrect. Amtrak had no governmental power when Lebron was decided. The Passenger

Rail Investment and Improvement Act, which granted

Amtrak some regulatory authority and was at issue in this

Court’s decision in Department of Transportation v. Ass’n of

American Railroads, 575 U.S. 43 (2015), was not enacted

until 2008.

private market actors engage, viz. operating a train

service, a museum, a bank, or an airport.

The distinction between such activities and exclusively governmental ones is important. The Secretary

of the Smithsonian, for example, may not need to be

removable by the President because the Smithsonian

has and exercises no “executive power.” But that

hardly means the Smithsonian can discriminate on the

basis of race or viewpoint when regulating admission

to the museum.

2. That raises another question: why does the Authority—like the EPA, and the SEC, and the FTC, and

the DOD, to name a few agencies—exercise significant

authority pursuant to the laws, but the Smithsonian

does not? The answer is that the agencies exercise exclusively governmental powers, whereas the Smithsonian exercises merely private functions. Private citizens can operate and organize banks, museums,

trains, and perhaps even airports. But can private citizens impose legislative rules with force and effect of

law on other, non-consenting citizens? Can private citizens conduct searches and seizures on otherwise nonconsenting citizens? Can they hale other private citizens in front of their own “courts,” or in front of Article

III courts, to enforce laws against the public? Obviously not. Those are acts of legislative, executive, or

judicial power, which the Constitution assigns only to

Congress, the President, the courts, or the officers of

the United States under the President’s supervision.

See 31 Op. O.L.C. at 73-74 (making this point); see also

U.S. Const. art. I, § 1; art. II, § 1; art. III, § 1; art. II,

§ 2, cl. 1; art. II, § 2, cl. 2; art. I, § 8, cl. 18.

The structural separation of powers does not, however, apply when the government acts as a mere market or private actor. As Chief Justice Marshall explained: “[W]hen a government becomes a partner in

any trading company, it d[i]vests itself, so far as concerns the transactions of that company, of its sovereign

character, and takes that of a private citizen.” Bank of

U.S. v. Planters’ Bank of Ga., 22 U.S. 904, 907 (1824).

“The government of the Union held shares in the old

Bank of the United States; but the privileges of the

government were not imparted by that circumstance

to the Bank,” Marshall continued. Id. at 908. “The government, by becoming a corporator, lays down its sovereignty, so far as respects the transactions of the corporation, and exercises no power or privilege which is

not derived from the charter.” Id. That explains why it

was constitutional that “[o]f the twenty-five directors

who led the Bank, the President could appoint and remove only five.” Seila Law v. CFPB, 140 S. Ct. 2183,

2231 (2020) (Kagan, J., dissenting in part) (citing Act

of Apr. 10, 1816, § 8, 3 Stat. 269). The Bank did not

exercise sovereign powers and so the Constitution’s

structural requirements for appointments and removals did not apply.

In Collins v. Yellen, by contrast, this Court concluded that the Federal Housing Finance Agency was

not a private actor because a statute gave it powers

that “differ critically from those of most conservators

and receivers,” including, for example, the power to “issue subpoenas,” as well as to put a private company

into receivership in the first place. Collins v. Yellen,

141 S. Ct. 1761, 1785-86 (2021). The Court therefore

made clear that because FHFA “exercises executive

power,” it is subject to the Constitution’s provisions for

removal, id. at 1786, and logically therefore for appointments. The Constitution’s structural provisions

for the separation of powers may not apply to private

functions, but they do apply to government functions.

This distinction between sovereign and non-sovereign functions is also supported by Buckley v. Valeo,

424 U.S. 1 (1976) (per curiam), where this Court held

that the commissioners of the Federal Election Commission were officers and, because they were improperly appointed, could not exercise a variety of governmental functions that the Federal Election Campaign

Act had delegated to them. The Court explained that

the Commission’s powers fell into “three categories”:

those relating to “information receipt, dissemination,

and investigation”; those related to fleshing out the

statute through rulemaking; and those “necessary to

ensure compliance with the statute and rules[,] informal procedures, administrative determinations and

hearings, and civil suits.” 424 U.S. at 137. The Court

held that the commissioners could exercise the first set

of powers without proper appointments because those

were merely in aid of Congress’s investigative powers.

But the second and third set of powers were “executive

power,” and “[s]uch functions may be discharged only

by persons who are ‘Officers of the United States’

within the language of that section.” Id. at 140.

To summarize, the tests of Lucia and Lebron work

together. They represent two different and complementary ways to determine governmental status. Lucia maintains that if one exercises significant authority pursuant to the laws of the United States, then one

is an officer to whom the Appointments Clause and the

rest of the Constitution, including the First Amend-

ment, apply. Lebron then maintains that even if an entity does not exercise significant authority pursuant to

the laws such that its officials must be appointed according to the Appointments Clause, that entity and

those officials might still be the government for certain

constitutional purposes such as the First Amendment

if certain conditions are met—namely, if the government created the corporation, established its objectives, and controls its operations through the selection

of its officials.

The Court should grant certiorari to harmonize

these cases and to confirm that Congress cannot evade

the Appointments Clause by establishing a new regulatory agency in the guise of a preexisting, private nonprofit corporation. It should make clear that the Lebron line of cases, which this Court developed to prevent

Congress from evading constitutional requirements

through the corporate form, should not be used to allow Congress to do just that.

B. Private nondelegation

Both the Fifth Circuit below and the Sixth and

Eighth Circuits addressed the constitutionality of

HISA under the private nondelegation doctrine, which

is how the various parties in those lawsuits (with the

exception of the Gulf Coast Racing Plaintiffs here)

more narrowly framed the issue. The FTC and Authority labored in the courts below to argue that the Gulf

Coast Racing Plaintiffs’ Appointments Clause challenge is somehow inconsistent with the private nondelegation challenges. The Fifth Circuit seemed to buy

the argument. App., infra, 36a (“Challenges based on

private nondelegation, on the one hand, and the Appointments Clause, on the other, appear mutually exclusive.”). This Court should grant certiorari to explain

how the private nondelegation doctrine interacts with

the Appointments Clause.

To be sure, the doctrines at first glance appear in

tension. The central test for satisfying the private nondelegation doctrine—subordination to a government

officer—is the test for an inferior officer under the Appointments Clause. In other words, subordination may

satisfy the private nondelegation test, but that cannot

determine whether the private nondelegation doctrine

or the Appointments Clause applies in the first place.

The answer to this puzzle is straightforward. There

is no conflict or incompatibility between the two doctrines. They apply in different circumstances. If one

exercises significant authority pursuant to the laws of

the United States, then there is no need to address the

private nondelegation doctrine because that individual

is already, by definition, an officer who must be constitutionally appointed. The private nondelegation doctrine only applies where someone exercises government power, but for whatever reason does not meet the

test to be an officer. Normally that occurs when the individual exercises government power only episodically.

One classic example would be the delegation of eminent domain power to private corporations such as

railroads. Those railroads are not government agencies in any ordinary sense of the term. They have no

duties established by law. They exercise no government power on an ongoing basis. But the power to condemn private property for public use is a sovereign,

government function that alters the legal rights and

duties of others. When these railroad corporations exercise that power, their officers may not need appointments under the Appointments Clause, but surely

their episodic exercise of sovereign power must be supervised at some level by those who are properly appointed government officers. See, e.g., Boerschig v.

Trans-Pecos Pipeline, L.L.C., 872 F.3d 701, 708 (5th

Cir. 2017) (denying that a delegation of eminent domain power violates the private nondelegation doctrine because, in that case, there was judicial review of

the determination of public use).

The private nondelegation doctrine also serves another purpose: it prevents the government from giving

some market actors power over their competitors. In

more modern regulatory schemes, there are several examples where a private entity’s exercise of government

power may have been too episodic or insignificant to

require application of the Appointments Clause, but

the Due Process Clause would prevent the delegation

of any amount of governmental power to a market actor to exercise over its competitors. That explains most

of the private nondelegation cases. See, e.g., Carter v.

Carter Coal Co., 298 U.S. 238, 311 (1936) (invalidating

price-fixing delegation “to private persons whose interests may be and often are adverse to the interests of

others in the same business”); Chiglades Farm, Ltd. v.

Butz, 485 F.2d 1125, 1134 (5th Cir. 1973) (addressing

“a group of self-interested producers” denying competitor allowance to grow celery); Ass’n of Am. R.R.s v.

U.S. Dep’t of Transp., 721 F.3d 666, 670 (D.C. Cir.

2013), vacated and remanded, 575 U.S. 43 (2015) (addressing whether “empowering Amtrak to regulate its

competitors violates the Fifth Amendment’s Due Process Clause”).

Indeed, this understanding of the cases makes

sense of the doctrine’s origins: the private nondelegation doctrine grew out of police power cases in which

states had given some neighbors power over other

neighbors. Eubank v. City of Richmond, 226 U.S. 137,

143-44 (1912) (holding that a municipal government

delegating to property owners the right to impose new

and additional restrictions on street, if two-thirds

agree, without any standards governing the decision,

and no obvious relation to health or welfare, was not a

reasonable exercise of the police power); Cusack Co. v.

City of Chicago, 242 U.S. 526, 530 (1917) (allowing a

majority of residents in neighborhood to waive a general prohibition on billboards upheld as reasonable exercise of the police power because the residents would

be giving more rights to the business than would otherwise exist); Washington ex rel. Seattle Title Tr. Co. v.

Roberge, 278 U.S. 116, 121 (1928) (a general prohibition on houses for the poor and aged that could be

waived only by two-thirds of nearby residents invalidated as unreasonable exercise of police power because

such homes not a threat to health or safety).

In sum, there is no incompatibility between the

doctrines. If one exercises significant authority pursuant to the laws of the United States, that person is an

officer. If not, any episodic exercise of government

power may nevertheless require government supervision. The Court should grant certiorari to clarify this

important relationship between the two doctrines. 5

5 Petitioners have also preserved their alternative

argument that if the Appointments Clause does not apply,

then the private nondelegation doctrine should invalidate

the Authority’s powers. That is another reason why the

Gulf Coast Racing Plaintiffs’ petition is ideal for granting

certiorari: it presents all the relevant constitutional avenues to resolve this case. The Court should also grant the

C. Self-regulatory organizations

The Court also should grant certiorari to clarify

how self-regulatory organizations such as FINRA fit in

the constitutional structure. In one respect, these organizations appear like government agencies, exercising ongoing regulatory authority over certain members of an industry. That has led D.C. Circuit Judge

Justin Walker to conclude that they likely violate the

Appointments Clause. Alpine Sec. Corp. v. Fin. Indus.

Regul. Auth., No. 23-5129 (D.C. Cir. July 5, 2023)

(Walker, Circuit Judge, concurring).

In another respect, however, these organizations

are plausibly private because they do not have a monopoly on government power. The SROs in the securities industry, like FINRA, are technically voluntary.

The statute merely requires the industry members belong to one of the SROs. Thus, although FINRA is currently the only SRO in the securities industry, there is

a right of exit. See 15 U.S.C. §§ 78o, 78s. And those who

belong to an SRO participate in its governance by

electing their directors in annual shareholder meetings. FINRA’s bylaws provide for an annual meeting of

members at which the board of directors is elected. See

ROA.4059-60 (providing for election of board by members); ROA.4069-70 (providing for annual meeting of

members).

The Sixth and Eighth Circuits upheld HISA on the

ground that it was similar to the structure that the

Maloney Act creates between FINRA and the SEC.

The Fifth Circuit agreed with the Sixth Circuit as to

petition from the State of Texas, which intervened in the

companion case below and also asserted the private nondelegation argument.

the Authority’s rulemaking functions. But all three circuits missed the relevant distinction: the Authority is

not a self-regulatory organization at all because participation is not voluntary. The Authority is, by law,

the one and only federal regulatory authority for the

horseracing industry. And its Directors were appointed in the bylaws, and future Directors are appointed by the current Directors. There is no self-governance by the persons and entities subject to HISA.

This Court need not resolve the question of

FINRA’s constitutionality. At a minimum, the two distinctions that make FINRA a plausibly self-regulatory

organization simply do not apply to the Authority. The

Authority has a monopoly on the use of coercive regulations, adjudications, and enforcement actions in the

horseracing industry and those subject to its powers

have no say in who runs it. The Authority, in other

words, is just a plain old administrative agency. It

must therefore comply with the Appointments Clause.

III. A circuit split exists which this Court

should resolve and all the parties to this case

agree certiorari is warranted.

Two final reasons militate in favor of granting certiorari. First, unlike in the other cases involving HISA

pending before this Court, this is the only case in

which all the parties agree that certiorari is warranted.

Second, there is now a circuit split on the question

of HISA’s constitutionality. The Sixth and Eighth Circuits upheld the constitutionality of HISA in its entirety under the private nondelegation doctrine. Oklahoma, 62 F.4th 221; Walmsley v. Fed. Trade Comm’n,

No. 23-2687, 2024 WL 4248221 (8th Cir. Sept. 20,

2024). The Sixth Circuit’s opinion also illustrates why

the present case is an ideal vehicle for certiorari. In

rejecting Oklahoma’s private nondelegation challenge,

the court noted 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.” 62 F.4th

at 233. “We thus will decide the case as it comes to us,”

saving other potential issues for another day. Id.

This petition presents all of the relevant issues: not

only the private nondelegation doctrine, but also the

Appointments Clause.

CONCLUSION

The Court should grant this petition for a writ of

certiorari on the questions presented herein.

Respectfully submitted.

ILAN WURMAN

UNIV. OF MINNESOTA

LAW SCHOOL

229 S. 19th Ave.

Minneapolis, MN 55455

S. REEVES JORDAN

MAYNARD NEXSEN PC

1901 Sixth Ave. N.

Suite 1700

Birmingham, AL 35203

OCTOBER 2024

GREGORY P. SAPIRE

Counsel of Record

CARLOS R. SOLTERO

MAYNARD NEXSEN PC

2500 Bee Caves Road

Building 1, Suite 150

Austin, TX 78746

(512) 969-6540

gsapire@maynardnexsen.com

APPENDIX

APPENDIX TABLE OF CONTENTS

Page

Appendix A: Court of Appeals Opinion

(July 5, 2024) ....................................................

Appendix B: District Court Memorandum

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

45a

Appendix C: Court of Appeals Order Denying

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

Appendix D: Horseracing Integrity and Safety

Act, 15 U.S.C. §§ 3051 et seq............................ 107a

APPENDIX A

United States Court of Appeals

for the Fifth Circuit

United States Court of Appeals

Fifth Circuit

FILED

July 5, 2024

Lyle W. Cayce

Clerk

No. 23-10520

NATIONAL HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION; ARIZONA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION; ARKANSAS

HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION; INDIANA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION; ILLINOIS HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION; LOUISIANA

HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION; MOUNTAINEER PARK HORSEMEN’S BENEVOLENT

AND PROTECTIVE ASSOCIATION; NEBRASKA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION;

OKLAHOMA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION; OREGON HORSEMEN’S BENEVOLENT

AND PROTECTIVE ASSOCIATION; PENNSYLVANIA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION;

WASHINGTON HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION; TAMPA BAY HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION; GULF COAST

RACING, L.L.C.; LRP GROUP, LIMITED; VALLE DE LOS

(1a)

TESOROS, LIMITED; GLOBAL GAMING LSP, L.L.C.;

TEXAS HORSEMEN’S PARTNERSHIP, L.L.P.,

Plaintiffs—Appellants,

STATE OF TEXAS; TEXAS RACING COMMISSION,

Intervenor Plaintiffs—Appellants,

versus

JERRY BLACK; KATRINA ADAMS; LEONARD COLEMAN;

MD NANCY COX; JOSEPH DUNFORD; FRANK KEATING;

KENNETH SCHANZER; HORSERACING INTEGRITY AND

SAFETY AUTHORITY, INCORPORATED; FEDERAL TRADE

COMMISSION; COMMISSIONER NOAH PHILLIPS; COMMISSIONER CHRISTINE WILSON; LISA LAZARUS; STEVE

BESHEAR; ADOLPHO BIRCH; ELLEN MCCLAIN;

CHARLES SCHEELER; JOSEPH DEFRANCIS; SUSAN

STOVER; BILL THOMASON; LINA KHAN, Chair; REBECCA SLAUGHTER, Commissioner; ALVARO BEDOYA,

Commissioner; D. G. VAN CLIEF,

Defendants—Appellees.

Appeal from the United States District Court

for the Northern District of Texas

USDC Nos. 5:21-CV-71, 5:23-CV-77

Before KING, DUNCAN, and ENGELHARDT, Circuit

Judges.

STUART KYLE DUNCAN, Circuit Judge:

We again consider constitutional challenges to the

Horseracing Integrity and Safety Act of 2020 (“HISA”).

In HISA, Congress empowered a private corporation—

the Horseracing Integrity and Safety Authority (“Authority”)—to create and enforce nationwide rules for

thoroughbred horseracing. Last time, we held HISA facially unconstitutional under the private nondelegation

doctrine because the Authority’s rulemaking was not

subordinate to the Federal Trade Commission (“FTC”).

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

Black (Horsemen’s I), 53 F.4th 869 (5th Cir. 2022). At the

time, we did not consider a separate nondelegation challenge to the Authority’s enforcement power. Congress

responded to our decision by amending HISA, giving the

FTC power to abrogate, add to, or modify the Authority’s rules.

On remand, the district court held the amendment

cured HISA’s constitutional deficiencies because the

FTC now has general rulemaking power over the Authority’s activities. It also rejected claims raised by a new

plaintiff, Gulf Coast Racing LLC (“Gulf Coast”), that

HISA violates the Constitution’s Appointments Clause

because the Authority wields significant governmental

authority. The plaintiffs all appealed, arguing HISA is

still constitutionally deficient under the private nondelegation doctrine, the Due Process Clause, the Appointments Clause, and the Tenth Amendment.

We agree with nearly all of the district court’s wellcrafted opinion. Specifically, we agree that the FTC’s

new rulemaking oversight means the agency is no longer

bound by the Authority’s policy choices. In other words,

the amendment solved the nondelegation problem with

the Authority’s rulemaking power. We also agree that

HISA does not violate the Due Process Clause by putting

financially interested private individuals in charge of

competitors. Further, we agree that, under current Supreme Court precedent, see Lebron v. Nat’l R.R. Passenger Corp., 513 U.S. 374 (1995), the Authority does not

qualify as a government entity subject to the

Appointments Clause. Finally, we agree that plaintiff

Gulf Coast lacks standing to bring its Tenth Amendment

challenge.

We disagree with the district court in one important

respect, however: HISA’s enforcement provisions violate

the private nondelegation doctrine. The statute empowers the Authority to investigate, issue subpoenas, conduct searches, levy fines, and seek injunctions—all without the FTC’s say-so. That is forbidden by the Constitution. We therefore DECLARE that HISA’s enforcement

provisions are facially unconstitutional on that ground.

In doing so, we part ways with our esteemed colleagues

on the Sixth Circuit. See Oklahoma v. United States, 62

F.4th 221 (6th Cir. 2023) (rejecting nondelegation challenge to HISA’s enforcement provisions).

Accordingly, the district court’s judgment is AFFIRMED in part and REVERSED in part.

I. BACKGROUND

A. HISA Framework

In 2020, HISA created a framework for enacting and

enforcing nationwide rules governing doping, medication

control, and racetrack safety in the thoroughbred

horseracing industry. See 15 U.S.C. § 3054(a). See generally Horsemen’s I, 53 F.4th at 873–75. To “develop[] and

implement[]” these rules, HISA empowers a “private, independent, self-regulatory, nonprofit corporation, to be

known as the ‘Horseracing Integrity and Safety Authority,’” subject to the “oversight” of the FTC. §§ 3052(a),

3053.

Under HISA, the Authority writes all the rules—that

is, rules fleshing out the substantive areas covered by

HISA, as well as rules governing investigation,

adjudication, and sanctions. 1 The Authority submits proposed rules to the FTC, which publishes them for public

comment. § 3053(b)(1), (c)(1). Rules take effect only after

FTC approval, which must occur within 60 days of publication. The FTC “shall approve” a proposed rule if it

finds the rule “consistent” with the Act and with “applicable rules approved by the [FTC].” § 3053(c)(2). Originally, this “consistency review” did not allow the FTC to

reject a proposed rule based on its disagreement with the

Authority’s policy choices. Horsemen’s I, 53 F.4th at

884–87. In Horsemen’s I, we held that this arrangement

violated the private nondelegation doctrine by making a

private entity superior to a government agency. Ibid. In

response, Congress amended HISA to give the FTC

power to “abrogate, add to, and modify” the Authority’s

rules. § 3053(e).

The Authority also has the power to enforce HISA. It

does so by (1) exercising “subpoena and investigatory authority,” § 3054(h); (2) imposing civil sanctions,

§§ 3054(i), 3057; and (3) filing civil actions seeking injunctions or enforcement of sanctions, § 3054(j). The actual

work of enforcing HISA involves a further delegation to

other entities, however. For instance, HISA directs the

Authority to contract enforcement of doping and medication rules to a private non-profit, the U.S. Anti-Doping

Agency (“USADA”), or other comparable entity.

See § 3057(a)(1), (c)(1) (power to establish substantive rules

governing medication controls); § 3056(a)(1) (power to establish

racetrack safety rules); §§ 3054(c), 3057(c) (power to “develop uniform procedures and rules” governing investigations and adjudications that afford due process); § 3057(d) (power to establish civil

sanctions); §§ 3054(c), 3054(c), (h) (investigatory and subpoena powers).

§ 3054(e)(1)(A), (B). 2 USADA then acts as “the independent ... enforcement organization” for those rules, “implement[s]” HISA’s anti-doping programs, and exercises

related powers “including independent investigations,

charging and adjudication of potential medication control rule violations, and the enforcement of any civil sanctions for such violations.” § 3054(e)(1)(E)(i), (iii), (iv);

§ 3055(c)(4)(B). 3 USADA’s decisions on such matters

“shall be the final decision or civil sanction of the Authority,” subject to de novo review by an administrative law

judge (“ALJ”) and the FTC. § 3055(c)(4)(B); § 3058.

B. Procedural History

Horsemen’s I concluded that HISA’s delegation of

rulemaking power was facially unconstitutional. HISA

delegated rulemaking power to a private organization

(the Authority) whose policy choices could not be secondguessed by the agency (FTC). The Authority’s rulemaking powers were therefore not subordinate to the FTC,

meaning HISA facially violated the private nondelegation doctrine. Horsemen’s I, 53 F.4th at 872. We did not

consider the plaintiffs’ distinct nondelegation challenges

to the Authority’s investigative and enforcement powers

nor their due process claims. Id. at 890 n.37. Finally, as

noted, Congress responded to Horsemen’s I by

See

Frequently

Asked

Questions,

USADA,

https://www.USADA.org/resources/faq (last visited June 13, 2024)

(“USADA is an independent, non-profit organization. It is not a

branch or office of the federal government.”).

Similarly, the Authority may contract out enforcement of the

racetrack safety program to “State racing commissions” or “other

State regulatory agencies.” § 3054(e)(2), (3); see also § 3056 (discussing racetrack safety program).

empowering the FTC to “abrogate, add to, and modify”

the Authority’s rules. § 3053(e).

On remand, the National Horsemen’s Association

(“Horsemen”) and Texas continued to press their private

nondelegation claims, arguing Congress’s amendment

did not actually subordinate Authority rulemaking to the

FTC. They also continued to press their nondelegation

challenge to the Authority’s enforcement powers (as well

as their due process claims). In addition, a new plaintiff,

Gulf Coast Racing (“Gulf Coast”), raised separate challenges to HISA in a different division of the same district. See Nat’l Horsemen’s Benevolent & Protective

Ass’n v. Black (Black), 672 F. Supp. 3d 220, 224 (N.D.

Tex. 2023). Gulf Coast claimed (1) HISA’s directors qualify as “officers of the United States” and are therefore

subject to Article II’s appointment and removal requirements; and (2) HISA commandeers Texas in violation of

the Tenth Amendment. Gulf Coast’s suit was consolidated with the remanded Horsemen’s I case. Id. at 230–

31. Following a one-day bench trial, the district court rejected all the plaintiffs’ claims.

As to private nondelegation, the district court followed the Sixth Circuit’s decision in Oklahoma, 62 F.4th

221. That court reasoned that Congress’s amendment

empowering the FTC to “abrogate, add to, and modify”

proposed rules “cured the constitutional issues identified

by [Horsemen’s I]” by making the Authority’s rulemaking power “subordinate” to the FTC. Black, 672 F. Supp.

3d at 241, 243 (citing Oklahoma, 62 F.4th at 230, 232). As

to the separate challenge to the Authority’s enforcement

powers, the district court largely relied on its previous

order rejecting the claim because those powers “comport

with due process.” See id. at 248. The court also relied on

the fact that the FTC could review civil sanctions and

control enforcement through rulemaking. Id. at 248–49;

see also Oklahoma, 62 F.4th at 231. Finally, the court rejected the due process claims because the Horsemen

failed to show the Authority’s directors have financial interests in regulating competitors. Black, 672 F. Supp. 3d

at 252.

As to Gulf Coast’s claims, the district court concluded

that our Horsemen’s I decision required it to reject

them. Specifically, the court reasoned that Horsemen’s I

necessarily decided the Authority was a private entity,

and so its directors were not subject to the Appointments

Clause. Id. at 234–37. Alternatively, the court reasoned

that the Authority is private because “it is not government created, and its directors are not government appointed.” Id. at 234 (citing Lebron, 513 U.S. 374). Finally,

the court rejected the Tenth Amendment commandeering argument for lack of standing. Id. at 250.

Accordingly, the district court entered final judgment dismissing all claims. The Horsemen, Texas, and

Gulf Coast timely appealed.

II. STANDARD OF REVIEW

We review the district court’s legal conclusions following a bench trial de novo. Deloach Marine Servs.,

L.L.C. v. Marquette Transp. Co., 974 F.3d 601, 606 (5th

Cir. 2020). To prevail on their facial challenge, the plaintiffs “must show that no set of circumstances exists under which [HISA] would be valid.” Horsemen’s I, 53

F.4th at 878 (cleaned up) (citations omitted).

III. DISCUSSION

The various plaintiffs raise these issues on appeal:

(A) Did Congress’s amendment to HISA cure the private nondelegation problem with the Authority’s rulemaking powers?

(B) Do the Authority’s enforcement powers separately violate the private nondelegation doctrine?

self-interested industry participants to regulate their

competitors?

(D) Are the Authority’s directors subject to the Appointments Clause?

(E) Does HISA violate the Tenth Amendment’s anticommandeering rule by forcing States to administer a

federal program?

We consider each issue in turn.

A. Private Nondelegation Challenge to Authority’s

Rulemaking.

We previously discussed the origins of the private

nondelegation doctrine in Horsemen’s I. See id. at 880–

81. In essence, the doctrine teaches that “a private entity

may wield government power only if it ‘functions subordinately’ to an agency with ‘authority and surveillance’

over it.” Id. at 881 & n.21 (citing Texas v. Rettig, 987 F.3d

518, 532 (5th Cir. 2021)); Pittston Co. v. United States,

368 F.3d 385, 394 (4th Cir. 2004); United States v. Frame,

885 F.2d 1119, 1128 (3d Cir. 1989)). 4 Or, as our sister circuit has explained: “Congress may formalize the role of

private parties in proposing regulations so long as that

role is merely as an aid to a government agency that retains the discretion to approve, disapprove, or modify

them.” Ass’n of Am. R.R.s v. U.S. Dep’t of Transp.

(Amtrak I), 721 F.3d 666, 671 (D.C. Cir. 2013) (cleaned

up) (quoting Adkins, 310 U.S. at 388), vacated and

See also generally A.L.A. Schechter Poultry Corp. v. United

States, 295 U.S. 495, 537 (1935); Carter v. Carter Coal Co., 298 U.S.

238, 311 (1936); Currin v. Wallace, 306 U.S. 1, 15–16 (1939); Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381, 399 (1940).

10a

remanded on other grounds, U.S. Dep’t of Transp. v.

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

In Horsemen’s I, we ruled the Authority’s rulemaking power was an unconstitutional private delegation.

Our analysis focused on the fact that the Authority’s proposed rules were subject only to the FTC’s limited “consistency review,” which did not permit the agency to second-guess the Authority’s policy choices. See Horsemen’s I, 53 F.4th at 882–87. In response, Congress

amended HISA to provide that:

[the FTC], by rule in accordance with section 553

of title 5, may abrogate, add to, and modify the

rules of the Authority promulgated in accordance

with this chapter as the Commission finds necessary or appropriate to ensure the fair administration of the Authority, to conform the rules of the

Authority to requirements of this chapter and applicable rules approved by the Commission, or

otherwise in furtherance of the purposes of this

chapter.

15 U.S.C. § 3053(e). This new provision was borrowed

from the Maloney Act, which allocates authority between

the SEC and private, self-regulatory organizations (such

as the Financial Industry Regulatory Authority

(“FINRA”)). See Oklahoma, 62 F.4th at 231–32. Although HISA was originally modeled on the Maloney Act,

it lacked this provision until the recent amendment. See

Consolidated Appropriations Act, 2023, Pub. L. 117-328,

div. O, tit. VII, § 701, 136 Stat. 4459, 5231–32. As noted,

the district court followed the Sixth Circuit in ruling that

the amendment cured the nondelegation problem with

the Authority’s rulemaking power. See Black, 672 F.

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

11a

We agree with the district court and the Sixth Circuit

that the amendment cured the nondelegation defect

identified in Horsemen’s I. That defect lay in the

agency’s being at the mercy of the Authority’s policy

choices. See Horsemen’s I, 53 F.4th at 872 (“[T]he FTC

concedes it cannot review the Authority’s policy

choices.”). For instance, when the Authority issued rules

on the kinds of horseshoes permitted during races, the

FTC told objecting commenters it lacked the power to

question the Authority’s views. See id. at 885 (discussing

Order Approving the Enforcement Rule Proposed by the

Horseracing Integrity and Safety Authority, 26, FED.

TRADE COMM’N (Mar. 25, 2022)). The amendment has

corrected that imbalance. Now, the FTC may “abrogate,

add to, and modify” the Authority’s rules. § 3053(e). So,

unlike before, if the FTC now disagrees with the policies

reflected in the Authority’s rules, it may change them.

See Oklahoma, 62 F.4th at 230 (noting recent rule explaining that FTC’s “new ‘rulemaking power’ allows it to

‘exercise its own policy choices’” (quoting Order Ratifying Previous Commission Orders 3, FED. TRADE

COMM’N (Jan. 3, 2023))). As the Sixth Circuit correctly

observed, “§ 3053(e)’s amended text gives the FTC ultimate discretion over the content of the rules,” which

“makes the FTC the primary rule-maker, and leaves the

Authority as the secondary, the inferior, the subordinate

one.” Ibid. (citing Adkins, 310 U.S. at 388).

Appellants’ arguments to the contrary do not persuade us.

First, the Horsemen argue the Authority remains superior because it continues to write the rules in the first

place and the agency must approve them if they hurdle

the low bar of consistency review. We disagree. The

problem was never that the private entity proposed the

12a

rules; the problem was that the agency lacked power to

second-guess them once they were proposed. See Horsemen’s I, 53 F.4th at 884 (“The FTC’s oversight is too limited to ensure the Authority functions subordinately to

the agency.” (cleaned up) (quoting Adkins, 310 U.S. at

399)). Now the FTC has been given that power: it can

“abrogate” or “modify” Authority rules it disagrees with.

§ 3053(e). And that new power gives consistency review

new bite. Previously, consistency review “exclude[d] ...

the Authority’s policy choices in formulating rules.” Id.

at 885. Now it implicitly includes review of those choices.

The FTC must approve only those rules “consistent with

... applicable rules approved by the [FTC],” and, thanks

to the amendment, it is the FTC that has final word over

what those rules are. § 3053(c)(2); see also Oklahoma, 62

F.4th at 231 (explaining that “the FTC’s later authority

to modify any rules for any reason at all, including policy

disagreements, ensures that the FTC retains ultimate[]

authority over the implementation of the Horseracing

Act”). 5

Next, the Horsemen argue the FTC’s new review

power creates a timing problem. Because the FTC may

Texas contends § 3053(e) does not solve the nondelegation

problem because it gives the FTC only limited rulemaking authority—i.e., “to ensure the fair administration of the Authority.” Because the FTC lacks plenary rulemaking authority, Texas argues,

the Authority still effectively calls the shots. We disagree. Section

3053(e) empowers the FTC to engage in rulemaking, not only for

specified purposes, but also “otherwise in furtherance of the purposes of [HISA].” This language, borrowed from the Maloney Act,

gives the agency “broad authority to oversee and to regulate the

rules adopted by the [Authority] ..., including the power to mandate

the adoption of any rules it deems necessary.” Shearson/Am. Express, Inc. v McMahon, 482 U.S. 220, 233–34 (1987).

13a

alter only rules “promulgated” by the Authority, §

3053(e), regulated entities may end up being subject to

the Authority’s rules until the FTC can intervene and fix

them. We disagree. The FTC has 60 days to approve or

disapprove a proposed rule. § 3053(c)(1). If the FTC is

concerned about a proposed rule going into effect, then

it can intervene and create safeguards to prevent that

from happening. See § 3053(a) (requiring Authority to

submit proposed rules to FTC “in accordance with such

rules as the [FTC] may prescribe”). For instance, the

agency could adopt a rule postponing the effective date

of a newly enacted rule. See Oklahoma, 62 F.4th at 232

(suggesting this). Or the agency could engage in emergency rulemaking to delay the effective date of a rule. In

any event, these are hypothetical problems that, if they

arise, can be addressed in as-applied challenges. See

Hersh v. United States ex rel. Mukasey, 553 F.3d 743,

762 (5th Cir. 2008) (holding that “as-applied challenges

are preferred”). This is a facial challenge, however, and

we cannot say that a potential timing gap in FTC’s

§ 3053(e) review makes HISA unconstitutional in all its

applications. See United States v. Salerno, 481 U.S. 739,

745 (1987) (holding that a facial challenger “must establish that no set of circumstances exists under which the

Act would be valid”). 6

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

The Horsemen also argue that the Authority can circumvent

the FTC by issuing unreviewable guidance documents, such as dear

colleague letters. We disagree. The Authority admits such guidance

would not have the force of law and, even if it did, the FTC has authority to review guidance documents, § 3054(g)(2), and to promulgate a rule overruling guidance it disagrees with.

14a

like FINRA. They argue that, notwithstanding § 3053(e),

the FTC still has less sway over the Authority than the

SEC does over FINRA. We again disagree. We previously pointed out that the “key distinction” between the

FTC and the SEC was the FTC’s lack of general rulemaking power. See Horsemen’s I, 53 F.4th at 887–88.

“The SEC itself,” we explained, “can make changes to

FINRA rules, but the FTC can only recommend changes

to the Authority’s rules.” Id. at 888 (citation omitted).

But Congress has now amended HISA to give the FTC

the same general rulemaking authority that the SEC has

with respect to FINRA. See Oklahoma, 62 F.4th at 225

(reaching this conclusion).

In sum, we agree with the district court and the Sixth

Circuit that, in light of Congress’s amendment to HISA

in § 3053(e), the Authority’s rulemaking power is subordinate to the FTC’s. Because the FTC has ultimate say

on what the rules are, the Authority’s power to propose

horseracing rules does not violate the private nondelegation doctrine.

B. Private Nondelegation Challenge to Authority’s

Enforcement.

Appellants next argue that, apart from its rulemaking powers, the Authority’s enforcement powers violate

the private nondelegation doctrine. Recall that the Authority enforces HISA by levying sanctions, which are

ultimately subject to FTC review, and by bringing lawsuits. The Authority also has power to investigate potential violations, although the actual investigatory work is

contracted to other private organizations, such as

USADA in the case of doping rules, or to state racing

commissions in the case of racetrack safety rules. See supra I.A. Our Horsemen’s I decision did not address this

challenge to the Authority’s enforcement powers, see 53

15a

F.4th at 890 n.37, and on remand the district court

treated it as a due process claim and rejected it. See

Black, 672 F. Supp. 3d at 248–49. Appellants now bring

the claim to us, arguing that the Authority’s enforcement

power is not subordinate to FTC oversight.

Before addressing the merits of this claim, we must

address the Authority’s argument that it is premature.

Arguing both in terms of standing and ripeness, the Authority contends that it has not yet tried to enforce HISA

against the Horsemen and that any challenge to the Authority’s enforcement power can be raised if and when it

does. We disagree for several reasons.

First, the Authority misunderstands the Horsemen’s

claim. They do not challenge some particular enforcement action undertaken by the Authority—claiming, for

instance, that the Authority issued an overbroad subpoena for medical records or lacked probable cause to

search a racetrack. Instead, the Horsemen argue that

HISA, on its face, vests the Authority with enforcement

power that is effectively unreviewable by the agency.

When a regulated entity raises “a purely legal challenge”

like this one, “it is unnecessary to wait for the Regulation

to be applied in order to determine its legality.” Contender Farms, L.L.P. v. U.S. Dep’t of Agric., 779 F.3d

258, 267 (5th Cir. 2015) (cleaned up) (citations omitted);

see also Nat’l Env’t Development Ass’n’s Clean Air Project v. EPA, 752 F.3d 999, 1008 (D.C. Cir. 2014) (“Petitioner’s challenge in this case presents a purely legal

question ... It is unnecessary to wait for the [statute] to

be applied in order to determine its legality.”); Susan B.

Anthony List v. Driehaus, 573 U.S. 149, 163 (2014)

(“Nothing in this Court’s decisions requires a plaintiff

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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

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number has now grown to over 1,500. 7 So, at a minimum,

the Horsemen have shown a credible threat that the Authority will bring enforcement actions against their

members in the future. See Driehaus, 573 U.S. at 164.

In sum, the Horsemen have standing to challenge the

Authority’s enforcement powers and that challenge is

ripe. We proceed to the merits.

The Horsemen’s (as well as Texas’s) basic contention

is that HISA grants the Authority enforcement power

that is effectively unreviewable by the FTC. That claim

turns on the same standard as the challenge to the Authority’s rulemaking addressed in Horsemen’s I: the delegation is constitutional if, when enforcing HISA, the

Authority “‘functions subordinately’ to an agency with

‘authority and surveillance’ over it.” 53 F.4th at 881

(quoting Rettig, 987 F.3d at 532). In other words, the Authority may constitutionally enforce HISA only if it acts

“as an aid” to the FTC, which “retains the discretion to

approve, disapprove, or modify” the private entity’s enforcement actions. Ibid. (cleaned up) (quoting Amtrak I,

721 F.3d at 671). 8

See generally Rulings, HORSERACING INTEGRITY & SAFETY

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

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

As explained in Horsemen’s I, the D.C. Circuit’s Amtrak I decision was vacated only because the Supreme Court found Amtrak

was a governmental, as opposed to private, entity. 53 F.4th at 881

n.22 (citing Amtrak II, 575 U.S. at 46, 50–55). The D.C. Circuit’s

private nondelegation analysis, however, remains sound and has

been approved by our court. See ibid. (explaining that Amtrak I “expressed the [private nondelegation doctrine] more precisely” than

prior formulations).

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While the constitutional standard is the same, the nature of the delegated authority is different this time

around. Horsemen’s I addressed delegation of legislative

authority—the power to make rules. See Myers v.

United States, 272 U.S. 52, 186 (1926) (“The essence of

the legislative authority is to ... prescribe rules for the

regulation of the society[.]”). Logically, we focused on

which actor—government agency or private entity?—

had final say over the content of those rules. See Horsemen’s I, 53 F.4th at 884–87 (analyzing FTC’s lack of authority over the Authority’s policy choices). Today, by

contrast, we address delegation of executive authority.

The power to launch an investigation, to search for evidence, to sanction, to sue—these are all quintessentially

executive functions. 9 And they have been considered so

See, e.g., Bowsher v. Synar, 478 U.S. 714, 733 (1986) (“Interpreting a law enacted by Congress to implement the legislative mandate is the very essence of ‘execution’ of the law.”); Morrison v. Olson, 487 U.S. 654, 696 (1988) (reasoning “the power to initiate an

investigation” is executive power that must be subject to the Attorney General’s “unreviewable discretion”); Buckley v. Valeo, 424

U.S. 1, 138, 140 (1976) (per curiam) (concluding the “discretionary

power to seek judicial relief” and “conduct[] civil litigation in the

courts of the United States for vindicating public rights” are exercises of Article II executive power); Seila L. LLC v. CFPB, 591 U.S.

197, 225 (2020) (holding the CFPB director unconstitutionally exercised “executive power” to “set enforcement priorities, initiate prosecutions, and determine what penalties to impose on private parties”); id. at 219 (holding the “power to seek daunting monetary penalties against private parties ... [is] a quintessentially executive

power”); Free Enter. Fund, 561 U.S. at 504 (holding the “power to

start, stop, or alter individual Board investigations” is part of the

executive power); Collins v. Yellen, 594 U.S. ---, 141 S. Ct. 1761, 1786

(2021) (holding the power “to issue subpoenas” is an “executive

power”); id. at 1806 (Sotomayor, J., concurring in part and dissenting in part) (noting “the power to impose fines” is an “executive

19a

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

power, the private nondelegation doctrine forbids unaccountable delegations of executive power. See, e.g.,

Amtrak II, 575 U.S. at 62 (Alito, J., concurring) (“Private

entities are not vested with ‘legislative powers.’ Art. I,

§ 1. Nor are they vested with the ‘executive Power,’ Art.

II, § 1, cl. 1, which belongs to the President.”). Accordingly, we must determine whether HISA delegates

power”); id. at 1805 (Sotomayor, J. concurring in part and dissenting in part) (arguing the FTC had significant executive power because it had “wide powers of investigation” and “broad authority to

issue complaints and cease-and-desist orders” (quoting Humphrey’s Ex’r v. United States, 295 U.S. 602, 620–21 (1935))); United

States v. Grubbs, 547 U.S. 90, 98 (2006) (describing a search as an

“exercise of executive power”); California v. Acevedo, 500 U.S. 565,

586 (1991) (Stevens, J., dissenting) (“The Fourth Amendment is a

restraint on Executive power.”).

See generally Dina Mishra, An Executive-Power Non-Delegation Doctrine for the Private Administration of Federal Law, 68

VAND. L. REV. 1509, 1545 (2015) (discussing “[c]ertain types of tasks

that seem quintessentially executive,” including “the tasks of law

enforcement—that is, of forcing compliance with the law”); id. at

1546 (“Ratification-era history further supports the understanding

that law enforcement consists of forcing compliance or imposing

sanctions on law violators” (citing THE FEDERALIST No. 21, at 134–

35 (Alexander Hamilton) (Clinton Rossiter ed. 1961))); Aditya Bamzai & Saikrishna B. Prakash, The Executive Power of Removal, 136

HARV. L. REV. 1756, 1764 (2023) (“Law execution was the executive

power’s principal component.”); Saikrishna Prakash, The Essential

Meaning of Executive Power, 2003 U. ILL. L. REV. 701, 737 (2003)

(“Executive officers investigate, apprehend, and prosecute potential

lawbreakers. As the wielder of the executive power, the president is

the chief of these law enforcement executives.”); Ilan Wurman, In

Search of Prerogative, 70 DUKE L.J. 93, 146–47 (2020) (arguing that

law enforcement and prosecution powers have been considered core

executive functions since the Founding).

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enforcement power to private entities and, if so, whether

that power is subordinate to the FTC.

HISA divides enforcement authority among the

FTC, the Authority, and USADA, “each within the scope

of their powers and responsibilities under this chapter.”

§ 3054(a). Recall that USADA is the private non-profit to

whom the Authority must delegate anti-doping and medication enforcement. See § 3054(e)(1)(A). 11 So, the answer

to the question before us turns on what “powers and responsibilities” each of these three entities has under

HISA. Although HISA somewhat confusingly disperses

the relevant provisions throughout the Act, we can discern the following division of labor.

First, the Authority has responsibility for (1) investigating potential violations, including by issuing subpoenas (§ 3054(h)); (2) levying sanctions (§§ 3054(j)(1), 3057,

3058(a)); and (3) bringing suit against violators for injunctive relief or to enforce sanctions (§ 3054(j)(1)–(2)).

Second, actual enforcement of doping and medication

rules is done by USADA, which “implements” those

rules “on behalf of the Authority.” § 3054(e)(1)(E)(i). In

this regard, USADA’s responsibilities include “independent investigations, charging and adjudication of potential medication control rule violations, and the enforcement of any civil sanctions for such violations.”

§ 3055(c)(4)(B); see also § 3054(e)(1)(E)(iv). Third, the

FTC may ask an ALJ to review any sanction de novo,

The Authority also “may enter into agreements” with State

racing commissions to enforce the racetrack safety program. See

§ 3054(e)(2)(A)(i), (3); § 3056(c). The Authority remains in charge,

however, and dictates the “scope of work, performance metrics, reporting obligations, budgets, and any other matter [it] considers appropriate.” § 3054(e)(2)(B).

21a

§ 3058(b)(1), and the FTC may itself review the ALJ’s

decision de novo, either on its own motion or upon petition by an aggrieved party. § 3058(c).

The Act’s plain terms permit only one conclusion:

HISA is enforced by a private entity, the Authority. The

Authority decides whether to investigate a covered entity for violating HISA’s rules. The Authority decides

whether to subpoena the entity’s records or search its

premises. The Authority decides whether to sanction it.

And the Authority decides whether to sue the entity for

an injunction or to enforce a sanction it has imposed. To

be sure, the Authority does not perform these functions

itself. Rather, HISA requires the Authority to contract

with another private entity, USADA, which undertakes

enforcement

“on

behalf

the

Authority.”

§ 3054(e)(1)(E)(i). The bottom line, though, is that a private entity, not the agency, is in charge of enforcing

HISA.

Consider also what HISA does not say. It does not

empower the FTC to decide whether to investigate a covered entity, whether to subpoena its records, whether to

search its premises, whether to charge it with a violation,

or whether to sanction or sue it. Nor does the Act empower the FTC to countermand any of the Authority’s

investigatory or charging decisions (or, more precisely,

USADA’s decisions). Nor does it require the Authority

or USADA to seek the FTC’s approval before investigating, searching, charging, sanctioning, or suing. All these

actions are enforcement actions, and, by the plain terms

of the Act, they can be done by the private entities without the FTC’s involvement.

The inescapable conclusion is that the Authority does

not “function subordinately” to the FTC when enforcing

HISA. Horsemen’s I, 53 F.4th at 881. That is not

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permitted under the private nondelegation doctrine. A

private entity that can investigate potential violations, issue subpoenas, conduct searches, levy fines, and seek injunctions—all without the say-so of the agency—does

not operate under that agency’s “authority and surveillance.” Ibid. Put another way, with respect to enforcement, HISA’s plain terms show that the Authority does

not merely act “as an aid” to the FTC because the FTC

does not “retain[] the discretion to approve, disapprove,

or modify” the Authority’s enforcement actions. Ibid.

(cleaned up) (quoting Amtrak I, 721 F.3d at 671).

One might counter, though, that the FTC at least partially supervises the Authority because it can review

sanctions at the back end, after ALJ review. See

§§ 3055(c)(4)(B), 3058(b)(3)–(c)(3). That is true, and it is

the Authority’s best argument for why its enforcement

power is subordinate to the FTC.

The argument nonetheless fails. Suppose the Authority sanctions a horse owner for a doping violation, but the

sanction is later reversed by the FTC. Does that make

the Authority’s enforcement power subordinate to the

agency? No, it does not. Consider everything the Authority was permitted to do up to that point: launch an investigation into the owner, subpoena his records, search his

facilities, charge him with a violation, adjudicate it, and

fine him. 12 Each and every one of those actions is

Not only does HISA facially permit that, but it has already

happened. For example, in one currently active and undecided FTC

appeal, it is uncontested that three private Authority investigators

showed up at the appellant’s residence and served her with a notice

of an alleged doping violation (there is no personal service requirement under the statute). The investigators then “subjected [the appellant] to a coercive interrogation in a small room” and searched

23a

“enforcement” of HISA. Each can occur under HISA

without any supervision by the FTC. Moreover, penalties imposed by the Authority are not automatically

stayed pending appeal. See 16 C.F.R. § 1.148(a). So, any

penalty goes into effect as soon as the Authority makes

its decision, unless the ALJ or FTC exercises its discretion to implement a stay pending appeal. See § 3058(d).

It is no answer to say that the FTC can come in at the

tail-end of this adversarial process and review the sanction. As far as enforcement goes, the horse was already

out of the barn. (You knew that was coming.) Besides,

what if the sanctioned owner, instead of fighting the process, opts to settle for a lower fine? In that case, according to the Authority’s logic, no one has enforced HISA.

That is obviously not true. To the contrary, the settlement scenario—which will likely happen often—only

“her barn and ... her mother’s car” for banned substances. Statement of Contested Facts and Specification of Additional Evidence,

In re Lynch, 9423 F.T.C. 1, 3–4 (Mar. 1, 2024). She was then fined

$55,000 and banned from racing for 48 months. Id. at 5–6. Authority

investigators have also searched defendants’ property and extracted fines under HISA’s strict liability regime for possession of

banned substances. For example, one veterinarian forgot to clean

out his trailer and still had two buckets of a newly banned substance

two weeks after the effective date. Private Authority investigators

searched his trailer, found the buckets, fined him $5,000, and

banned him from practice for 14 months. The ALJ affirmed on appeal. All this despite the fact that the Authority and the ALJ conceded that the appellant purchased the substance long before it was

banned, forgot it was in his trailer, and did not even attempt to use

it on a horse. In re Perez, 9420 F.T.C. 1, 5–6 (Mar. 18, 2024); see also

In re Poole, 9417 F.T.C. 1, 5–6, 10 (Nov. 13, 2023) (affirming an

$18,000 fine and banning him from practice for 22 months for a similar inadvertent possession of a newly banned substance).

24a

underscores that it is the private entity that acts as

HISA’s enforcer in any meaningful sense.

Consider a hypothetical. Suppose a city structures its

speeding laws to let a group of private car enthusiasts

monitor speeds with their own radar guns, pull speeders

over, and ticket them. Fines are reviewed by the police

department and, ultimately, the mayor. Who enforces the

speeding laws? Anyone would say the private group. After all, consider how many cases we decide concerning

whether the police have wrongly stopped someone or

used excessive force during the stop. See, e.g., Terrell v.

Town of Woodworth, No. 23-30510, 2024 WL 667690 (5th

Cir. Feb. 19, 2024) (per curiam). All would agree that the

police were “enforcing” the law when they stopped the

person. The same goes for the private entity in the hypothetical.

The Authority’s argument, moreover, does not work

even on its own terms. In addition to levying fines, HISA

empowers the Authority to sue people and racetracks to

enjoin past, present, or impending violations. See

§ 3054(j)(1) (providing “the Authority may commence a

civil action against a covered person or racetrack that

has engaged, is engaged, or is about to engage, in acts or

practices constituting a violation of this chapter ... to enjoin such acts or practices”); § 3054(j)(2) (allowing issuance of “a permanent or temporary injunction or restraining order ... without bond”). HISA gives the FTC

no role in this process, either before or after the fact. So,

even assuming the Authority is correct (and it is not) that

the agency’s after-the-fact supervision of sanctions

makes the Authority subordinate, the Authority is demonstrably not subordinate when it comes to suing violators for injunctions. That is plainly an unsupervised

delegation of executive power that the Constitution does

25a

not tolerate. See Buckley, 424 U.S. at 138 (“A lawsuit is

the ultimate remedy for a breach of the law, and it is to

the President ... that the Constitution entrusts [this] responsibility[.]”).

The Authority next argues that the FTC could use its

new rulemaking authority to rein in the Authority’s enforcement actions or even require the Authority to preclear lawsuits with the agency. See § 3053(e) (empowering FTC to “abrogate, add to, and modify” the Authority’s rules). This argument persuaded the Sixth Circuit

that at least a facial challenge to the Authority’s enforcement powers should fail. See Oklahoma, 62 F.4th at 231

(through § 3053(e) rulemaking, “the FTC could subordinate every aspect of the Authority’s enforcement,” which

“suffices to defeat a facial challenge”). And we have already found that the FTC’s rulemaking power has some

purchase in turning back a facial challenge to the Authority’s rulemaking power: as explained, the agency

could ensure via rulemaking that no Authority rule could

go into effect until the agency had time to review it. See

supra III.A. With great respect to our colleagues on the

Sixth Circuit, however, we are not convinced that this

rulemaking argument can save the Authority’s enforcement powers.

The Authority’s rulemaking argument would let the

agency rewrite the statute. In HISA, Congress set out a

definite enforcement scheme, dividing responsibilities

among the FTC, the Authority, and USADA. See

§§ 3054(e)(2), 3054(c)(1), 3054(e). HISA is quite clear

about this: it provides that those three entities “implement and enforce” the Act, “each within the scope of

their powers and responsibilities under this chapter.”

§ 3054(a)(1) (emphasis added). A mere agency cannot

26a

alter that statutory division of labor. See, e.g., Gulf Fishermen’s Ass’n v. Nat’l Marine Fisheries Serv., 968 F.3d

454, 460 (5th Cir. 2020) (“We will not defer to ‘an agency

interpretation that is inconsistent with the design and

structure of the statute as a whole.’” (quoting Util. Air.

Regul. Grp. v. EPA, 573 U.S. 302, 321 (2014))); 5 U.S.C.

§ 706(2)(C) (authorizing courts to set aside agency action

“in excess of statutory jurisdiction, authority, or limitations”). 13 As the Supreme Court recently reiterated, even

“statutory permission to ‘modify’ does not authorize

‘basic and fundamental changes in the scheme’ designed

by Congress.” Biden v. Nebraska, 600 U.S. ---, 143 S. Ct.

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

Tel. & Tel. Co., 512 U.S. 218, 225 (1994)). Yet that is just

See also Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 473

(2001) (holding that agency rulemaking “has no bearing upon”

whether a statutory delegation is constitutional); Hartford Underwriters Ins. v. Union Planters Bank, N.A., 530 U.S. 1, 6–7 (2000)

(“Where a statute names the parties granted the right to invoke its

provisions, such parties only may act.” (cleaned up) (citation omitted)); Bayou Lawn & Landscape Servs. v. Sec’y of Lab., 713 F.3d

1080, 1084–85 (11th Cir. 2013) (holding it “axiomatic that an

agency’s power to promulgate legislative regulations is limited to

the authority delegate[d] to it by Congress” and that courts cannot

“locate ... power in one agency where it had been specifically and

expressly delegated by Congress to a different agency”); Union

Pac. R.R. v. Surface Transp. Bd., 863 F.3d 816, 823 (8th Cir. 2017)

(finding express delegation to the Federal Railroad Administration

precluded implied authority claimed by the private Board); Perot v.

FEC, 97 F.3d 553, 559 (D.C. Cir. 1996) (per curiam) (“We agree with

the general proposition that when Congress has specifically vested

an agency with the authority to administer a statute, it may not shift

that responsibility to a private actor[.]”); EPA v. EME Homer City

Generation, L.P., 572 U.S. 489, 509 (2014) (relying on the statute’s

“plain text and structure [to] establish a clear chronology of federal

and State responsibilities”).

27a

what the Authority says the FTC could do through rulemaking.

Take the Authority’s power to seek injunctions.

HISA empowers the Authority to file suit to enjoin violations, while saying nothing about FTC involvement in

the process. See § 3054(j)(1). Yet the Authority suggests

the FTC could, by rule, require the Authority to preclear

any such action with the agency. We disagree. That

would let the agency amend the enforcement scheme delineated by statute. 14 The same goes for investigatory

and subpoena power: HISA unqualifiedly gives that

power to the Authority, see § 3054(h), and then requires

the Authority to delegate it to USADA, see

§§ 3054(e)(1)(E)(iv), 3055(c)(4) (the Authority “shall”

contract with USADA to “conduct and oversee” anti-doping and medication enforcement “including independent

investigations”). And the same goes for charging and adjudicating violations and levying sanctions. See ibid. (the

Authority “shall” contract with USADA to “conduct and

oversee ... charging and adjudication of potential medication control rule violations, and the enforcement of any

civil sanctions for such violations”); § 3054(j) (recognizing Authority’s power to impose “civil sanctions”). Congress enacted this reticulated scheme. The agency cannot amend it by promulgating a rule.

Furthermore, when Congress wanted to put the FTC

in charge of enforcement, it knew how. Section 3059, for

Nor could the Authority claim that the statute is merely silent

about FTC pre-approval and that gap could be filled by rulemaking.

Our circuit has repeatedly rejected this “nothing-equals-something

argument” for conjuring agency authority out of thin air. Gulf Fishermen’s, 968 F.3d at 460–61 (citing Texas v. United States, 809 F.3d

134, 186 (5th Cir. 2015), aff’d by equally divided court, 579 U.S. 547

(2016) (per curiam)).

28a

instance, is a separate part of HISA targeting certain

“unfair or deceptive” practices in selling horses. 15 With

respect to that section, the Authority can only “recommend” that the FTC “commence an enforcement action.” 16 § 3054(c)(1)(B). In other words, only here did

Congress limit the Authority’s enforcement discretion to

“recommending” agency enforcement. Cf. § 3054(j)(1)

(providing “the Authority may commence a civil action”

seeking an injunction). Yet the Authority contends that

the agency could, by rulemaking, make every enforcement action subject to similar FTC approval. That would

rewrite the enforcement scheme Congress enacted. See

Russello v. United States, 464 U.S. 16, 23 (1983) (“Where

Congress includes particular language in one section of

a statute but omits it in another section of the same Act,

it is generally presumed that Congress acts intentionally

and purposely in the disparate inclusion or exclusion.”

(cleaned up) (citation omitted)).

Additionally, the Sixth Circuit believed the FTC

could supervise the Authority through a slightly different kind of rulemaking—that is, by issuing rules governing how the Authority enforces HISA. See Oklahoma, 62

F.4th at 231. For instance, the agency could issue rules

against “overbroad subpoenas or onerous searches” or

“provid[ing] a suspect with a full adversary proceeding

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

15 U.S.C. § 45(c) to fail to disclose to a buyer that a horse was administered “a bisphosphonate” before its fourth birthday or any

other prohibited substance).

See § 3054(c)(1)(B) (providing the “Authority ... with respect

to an unfair or deceptive act or practice described in section 3059 of

this title, may recommend that the Commission commence an enforcement action”).

29a

and with free counsel.” Ibid. Unhappily, we again disagree with our sister circuit.

The Horsemen are not complaining about how the

Authority exercises its enforcement power. They are

complaining about where the enforcement power is

lodged: on its face, HISA empowers private entities to

enforce it and permits agency oversight only after the

enforcement process is over and done with (and then only

with respect to fines, not injunctions). If the Horsemen

were objecting only to overbroad subpoenas, unwarranted searches, or lack of free counsel, perhaps those

complaints could be addressed through rulemaking or

as-applied challenges. But their complaint is different.

They contend that HISA facially delegates unsupervised

enforcement power to private actors. They are right. 17

In sum, HISA’s clear delineation of enforcement

power between the FTC, the Authority, and USADA

cannot be altered through rulemaking.

Finally, the Authority defends its enforcement role

by analogizing it to the role of self-regulatory

Moreover, consider the revealing premise of this line of argument. Suppose the FTC issued a rule saying, “The Authority can

search racetracks only if it has probable cause.” Well and good, but

that rule still presupposes the Authority is the one doing the search.

Merely because the Authority would have to obey the Fourth

Amendment does not change the fact that a private entity is searching your racetrack without agency say-so. And it is no answer to say

that the agency could issue a rule saying, “The Authority can search

racetracks only if the FTC approves the search.” That rule, as explained, would amend the statute’s division of authority. See

§ 3054(h) (“The Authority shall have subpoena and investigatory authority with respect to civil violations committed under its jurisdiction.”).

30a

organizations (“SROs”)—specifically, FINRA—which

assist the SEC in enforcing securities laws. The Authority seeks support in circuit cases concluding that

FINRA’s enforcement role presents no private nondelegation problem. See, e.g., Oklahoma, 62 F.4th at 229, 232

(gathering cases). 18 For their part, the Horsemen argue

that, for enforcement purposes, the FTC-Authority relationship is meaningfully different from the SEC-FINRA

relationship. As we have before noted, HISA was modeled on the Maloney Act, which created FINRA. See

Horsemen’s I, 53 F.4th at 887; supra III.A. Moreover,

we concluded in Horsemen’s I that HISA lacked a key

feature of the Maloney Act empowering the SEC to “abrogate, add to, and delete” rules proposed by FINRA.

Horsemen’s I, 53 F.4th at 887. As discussed, Congress

added a similar provision to HISA, which remedied the

nondelegation problem with the Authority’s rulemaking

powers. Supra III.A.

We agree with the Horsemen that, for enforcement

purposes, HISA gives the Authority an enforcement role

The Sixth Circuit relied on several cases upholding the constitutionality of FINRA to hold that “[i]n case after case, the courts

have upheld [the Maloney Act’s] arrangement, reasoning that the

SEC’s ultimate control over the rules and their enforcement makes

the SROs permissible aides and advisors.” Oklahoma, 62 F.4th at

229. We do not read those cases quite so broadly. They relied largely

on the grounds that the SEC ultimately approves any proposed

rules and has its own generalized rulemaking power. See, e.g., R. H.

Johnson & Co. v. SEC, 198 F.2d 690, 696 (2d Cir. 1952) (considering

only whether the SEC abused its discretion); Todd & Co. v. SEC,

557 F.2d 1008, 1012 (3d Cir. 1977) (considering only a nondelegation

challenge to the SEC’s legislative rulemaking authority); First Jersey Sec., Inc. v. Bergen, 605 F.2d 690, 697 (3d Cir. 1979) (same); Sorrell v. SEC, 679 F.2d 1323, 1325–26 (9th Cir. 1982) (same). But none

addressed a nondelegation challenge to executive power.

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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

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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.

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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.

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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

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industry.”). But, as the court pointed out, even assuming

that to be true, it says nothing about the members’ financial interests. Black, 672 F. Supp. 3d at 252. On appeal,

the Horsemen fail to show any error by the district court

here.

D. Appointments Clause Challenge

A separate plaintiff, Gulf Coast, challenges the Authority’s structure under the Appointments Clause of

Article II. 21 Recall that Gulf Coast raised this distinct

challenge in a suit later consolidated with the Horsemen’s. See id. at 230. Gulf Coast argues that, for constitutional purposes, the Authority is governmental, not

private, and so is subject to the Appointments Clause.

This means the Authority’s directors, if they are principal officers, must be appointed by the President with

Senate confirmation or, if they are inferior officers, by

the President, courts, or department heads according to

law. See Free Enter. Fund, 561 U.S. at 487–88; Cochran

v. SEC, 20 F.4th 194, 198 (5th Cir. 2021) (en banc). The

Authority’s directors are not appointed in any of these

ways, 22 and so, if Gulf Coast is right, their appointment

would violate Article II.

The Appointments Clause reads “[The President] shall nominate, and by and with the Advice and Consent of the Senate, shall

appoint ... all other Officers of the United States, whose Appointments are not herein otherwise provided for” but provides “the Congress may by Law vest the Appointment of such inferior Officers,

as they think proper, in the President alone, in the Courts of Law,

or in the Heads of Departments.” U.S. CONST. art. II, § 2, cl. 2.

The directors are appointed by the Authority itself. See

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

36a

The Authority and the FTC first respond that we previously decided this question in Horsemen’s I. By applying the private nondelegation doctrine to the Authority,

they argue we necessarily determined the Authority is

not governmental for constitutional purposes. The district court took this view as well. See Black, 672 F. Supp.

3d at 234. That is understandable. Challenges based on

private nondelegation, on the one hand, and the Appointments Clause, on the other, appear mutually exclusive.

For constitutional purposes, an entity is either governmental or not. See, e.g., Lebron, 513 U.S. at 378–79;

Amtrak II, 575 U.S. at 50–51. That is why the Horsemen

themselves call Gulf Coast’s claim “fundamentally incompatible” with their private nondelegation challenge.

Texas seems to agree, noting that Gulf Coast’s Appointments Clause theory would apply only if “the Court disagree[s]” with its assumption that the Authority is private.

That said, however, we cannot agree that we decided

this question in Horsemen’s I. The Appointments Clause

question was never posed. Party presentation is a fundamental constraint on appellate decision-making. See

United States v. Sineneng-Smith, 590 U.S. 371, 375–76

(2020) (“Courts ... wait for cases to come to them, and

when cases arise, courts normally decide only questions

presented by the parties.” (cleaned up) (citation omitted)). The fact is that in Horsemen’s I, all parties proceeded on the assumption that the Authority is private

for constitutional purposes. See Horsemen’s I, 53 F.4th

at 875 n.11 (“The Horsemen also claimed HISA was unconstitutional under the ... Appointments Clause. The

district court did not rule on those claims and so they are

not before us.”). No one suggested that the Authority

might qualify as a government entity or that its directors

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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

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objectives.” Id. at 386. 23 The specific question before the

Court was whether “Amtrak, though nominally a private

corporation, must be regarded as a Government entity

for First Amendment purposes.” Id. at 383. The answer

was yes. That was so, the Court held, because “the Government create[d] [the Amtrak] corporation by special

law, for the furtherance of governmental objectives, and

retain[ed] for itself permanent authority to appoint a majority of the directors of that corporation.” Id. at 399. The

Supreme Court and circuit courts have since used Lebron’s analysis to discern whether corporations are part

of the government for constitutional purposes. 24

See also id. at 386–91 (discussing corporations such as the first

and second Banks of the United States, the Panama Railroad Company, the United States Grain Corporation, the Reconstruction Finance Corporation, the Federal Deposit Insurance Corporation, the

Communications Satellite Corporation, the Corporation for Public

Broadcasting, and the Legal Services Corporation).

See Nebraska, 143 S. Ct. at 2366–67 (applying Lebron to conclude that the Missouri Higher Education Loan Authority is “an instrumentality of Missouri”); Free Enter. Fund, 561 U.S. at 486 (citing Lebron when referencing parties’ agreement that the Public

Company Accounting Oversight Board (“PCAOB”) “is ‘part of the

Government’ for constitutional purposes”); Amtrak II, 575 U.S. at

54–55 (explaining Lebron “provides necessary instruction” and

“teaches that, for purposes of Amtrak’s status as a federal actor or

instrumentality under the Constitution, the practical reality of federal control and supervision prevails over Congress’ disclaimer of

Amtrak’s governmental status”); Kerpen v. Metro. Wash. Airports

Auth., 907 F.3d 152, 158–59 (4th Cir. 2018) (applying Lebron to conclude that the Metropolitan Washington Airports Authority

(“MWAA”) is not “a federal entity” because “MWAA was not created by the federal government” and “is not controlled by the federal government”); Montilla v. Fed. Nat’l Mortg. Ass’n, 999 F.3d

751, 759–61 (1st Cir. 2021) (applying Lebron to conclude that Fannie

Mae and Freddie Mac are not government actors).

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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”—

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is a “Government-created, Government-appointed entity,” whose five members are “appointed ... by the

[SEC]”).

Instead of engaging with Lebron, Gulf Coast argues

that Lebron’s analysis is not “the only way” to tell

whether a corporation is a government instrumentality.

That takes too narrow a view of precedent, however. Lebron canvassed “the long history of corporations created

and participated in by the United States” and set out a

detailed analysis to determine whether a particular corporation—despite its designation as “private”—counts

as a government instrument for constitutional purposes.

See 513 U.S. at 386, 386–91. That is precisely the question we must answer with respect to the Authority. How

can we, as an inferior court, simply bypass Lebron? We

cannot.

Gulf Coast tries to offer us a way around Lebron, but

it is a dead end. Gulf Coast argues that Lebron addressed

only government-created corporations “that in no way

exercised government power.” But Lebron did not limit

itself in that way—to the contrary, it relied on cases

where Congress turned to private corporations to “accomplish purely governmental purposes.” 513 U.S. at 395

(quoting Cherry Cotton Mills, Inc. v. United States, 327

U.S. 536, 539 (1946)). 25 Furthermore, the corporation actually addressed in Lebron—Amtrak—itself exercised

regulatory power, as the Supreme Court, the D.C. Circuit, and our court have all recognized. See Amtrak II,

See also Inland Waterways Corp. v. Young, 309 U.S. 517, 524

n.4 (1940) (“The corporations, of course, perform ‘governmental’

functions.” (citation omitted)); id. at 522 (“The banking system

which Congress thus established embodied a blend of governmental

and private purposes.”).

41a

575 U.S. at 51 (“Amtrak ... cannot constitutionally be

granted the regulatory power[.]” (citation and quotation

omitted)); Amtrak I, 721 F.3d at 671 (“No case prefigures the unprecedented regulatory powers delegated to

Amtrak.”); Horsemen’s I, 53 F.4th at 889 (discussing how

Congress gave “regulatory power to the ‘economically

self-interested Amtrak’” (citation omitted)).

Gulf Coast also argues that, to determine whether directors of a private entity are “Officers of the United

States,” we should focus on their duration in office and

the nature of the entity’s power. We disagree. The two

principal cases Gulf Coast relies on for this argument addressed whether individuals already part of the government should be considered “Officers.” So, Buckley examined whether Federal Election Commission appointees

wielded “significant authority pursuant to the laws of the

United States.” 424 U.S. at 126. And Lucia v. SEC applied this same test to SEC ALJs. 585 U.S. 237, 244–45

(2018). Gulf Coast urges us to extend Buckley and Lucia

well beyond their facts to analyze whether persons in a

private entity are “Officers.” Even if we were inclined to

take that step, however, Lebron would remain an insuperable hurdle. As explained, Lebron addressed when a

private entity qualifies as part of the government for constitutional purposes. That is precisely the question before us. Post-Lebron, no case has applied Buckley to private actors. Instead, the Supreme Court has repeatedly

applied Lebron for three decades. See supra note 23. We

are not at liberty to displace the Supreme Court’s governing framework. 26

That principle also answers Gulf Coast’s reliance on a 2007

Office of Legal Counsel (“OLC”) opinion. The opinion argued that

the Appointments Clause applies to someone with significant and

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Finally, Gulf Coast argues that if Lebron is the test,

then the federal government can simply vest all executive power in a private corporation and avoid the Appointments Clause. This argument ignores the role of the

private nondelegation doctrine. The government cannot

delegate core governmental powers to unsupervised private parties. Pittston, 368 F.3d at 394. A private entity

can only act “subordinately to an agency with authority

and surveillance over it.” Horsemen’s I, 53 F.4th at 881

(quotations omitted). The private nondelegation doctrine

thus corrals any attempts to evade Lebron by giving unaccountable governmental power to a pre-existing private entity.

In sum, Lebron is the governing test to determine

whether an entity is private or public and, under that

test, the Authority is a private entity not subject to Article II’s Appointments Clause.

E. Anti-Commandeering Challenge

Finally, we turn to Gulf Coast’s argument that HISA

unconstitutionally commandeers state officials. The Constitution forbids Congress from “command[ing] the

States’ officers, or those of their political subdivisions, to

administer or enforce a federal regulatory program.”

Printz v. United States, 521 U.S. 898, 935 (1997); see also

New York v. United States, 505 U.S. 144, 165, 188 (1992).

Gulf Coast argues HISA violates that principle by

continuing government authority, whether he is a private or a government employee. Officers of the United States Within the Meaning of the Appointments Clause, 31 Op. O.L.C. 73, 121–22 (2007). If

the opinion was suggesting its analysis as an alternative to Lebron

(a decision, it should be noted, the opinion cited, see id. at 121), that

is a suggestion only the Supreme Court could act upon, not a circuit

court bound by Lebron.

43a

coercing state racing commissions to remit fees to fund

the Authority’s operations. If state officials refuse, the

Authority collects fees directly from covered persons—

but, in that event, HISA prohibits the state from imposing taxes or fees to finance the state’s own horseracing

programs. See § 3052(f). This scheme, argues Gulf Coast,

“puts a gun to the head of Texas” by coercing state officials to administer a federal program rather than a state

program.

The problem with this claim, as the district court

pointed out, is that Gulf Coast lacks standing to raise it.

Specifically, Gulf Coast’s alleged injury—that it prefers

Texas’s racetrack safety rules to HISA’s—is “no injury

at all.” Black, 672 F. Supp. 3d at 250. As the district court

correctly reasoned, “[a] party cannot establish constitutional injury by suggesting that he may be subject to

rules he does not prefer.” Ibid.; see also, e.g., Consumers’

Rsch. v. Consumer Prod. Safety Comm’n, 91 F.4th 342,

350 (5th Cir. 2024) (holding that “merely being subject to

... regulations, in the abstract, does not create an injury”).

On appeal, Gulf Coast fails to explain how the district

court erred. It merely argues that the coercive pressure

the funding scheme allegedly places on Texas will lead it

to implement HISA’s rules rather than the current

Texas regulations, which makes Gulf Coast subject to “a

new set of unwanted (federal) regulations.” Again,

though, this does not explain why Gulf Coast experiences

an injury sufficient to assert an anti-commandeering

challenge to HISA.

IV. CONCLUSION

In sum, we affirm the district court’s judgment that

(1) Congress’s recent amendment to HISA cured the private nondelegation flaw in the Authority’s rulemaking

44a

power; (2) HISA does not violate due process; (3) the Authority’s directors are not subject to the Appointments

Clause under Lebron; and (4) Gulf Coast lacks standing

to challenge HISA on anti-commandeering grounds.

We reverse the district court’s judgment in one respect. Insofar as HISA is enforced by private entities

that are not subordinate to the FTC, we DECLARE that

HISA violates the private nondelegation doctrine.

Accordingly, the district court’s judgment is AFFIRMED in part and REVERSED in part.

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APPENDIX B

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

LUBBOCK DIVISION

NATIONAL

HORSEMEN’S

BENEVOLENT

AND PROTECTIVE ASSOCIATION, et al.,

Plaintiffs,

THE STATE OF TEXAS

and THE TEXAS RACING

COMMISSION,

No. 5:21-CV-071-H

Intervenor-Plaintiffs,

JERRY BLACK, et al.,

Defendants

MEMORANDUM OPINION AND ORDER

In hopes of standardizing horseracing regulation, the

Horseracing Integrity and Safety Act of 2020 (HISA)

empowered a private entity to draft nationwide regulations subject to the Federal Trade Commission’s review

and approval. In response, the plaintiffs claimed that

HISA was unconstitutional because it did not give the

FTC meaningful oversight—violating the private-

46a

nondelegation doctrine. Although this Court recognized

that the plaintiffs’ concerns were legitimate, it construed

binding precedent as permitting Congress’s approach in

its March 2022 order. The Fifth Circuit disagreed, explaining that precedent could not justify HISA and that

it was unconstitutional because the FTC lacked discretion to approve, disapprove, or modify the proposed regulations. Answering the Fifth Circuit’s call, Congress

amended HISA to empower the FTC to “abrogate, add

to, and modify” the entity’s regulations. Nevertheless,

the plaintiffs continue to allege constitutional violations.

But because Congress remedied the offending provisions

and brought the law within the Fifth Circuit’s stated requirements, the plaintiffs’ claims fail.

Specifically, after remand, the original plaintiffs continue to claim that HISA violates the private-nondelegation doctrine under Article I and the Due Process Clause.

Dkt. No. 116. Texas and the Texas Racing Commission,

as intervenor-plaintiffs, raise the same arguments. Dkt.

No. 155 at 22–25. Additionally, also after remand, another court transferred a related case to this Court. Gulf

Coast Racing LLC v. Horseracing Integrity & Safety

Authority, No. 2:22-CV-146-Z (N.D. Tex.), Dkt. No. 53.

Those plaintiffs make the same private-nondelegation

claim, but only as an alternative to their primary claim

that HISA violates Article II’s Appointments Clause and

Article I’s Vesting Clause. Dkt. No. 136. In their view,

the private entity at issue—the Horseracing Integrity

and Safety Authority—is, in reality, a public entity subject to the same requirements applicable to all public officers. No. 5:23-CV-077, Dkt. No. 36 at 33. They also allege, albeit briefly, that HISA violates the Tenth Amendment’s anti-commandeering principles by requiring

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

47a

In light of Congress’s amendment to HISA and the

undisputed evidence following a bench trial, each of

these arguments falls short. First, the plaintiffs’ privatenondelegation argument reveals too much and is barred

by precedent. Previously, the plaintiffs argued that

“HISA violates the private nondelegation doctrine because the FTC cannot modify the Authority’s rules.”

Dkt. No. 38 at 26. Now that Congress expressly authorizes the FTC to modify the Authority’s rules, the plaintiffs retreat and admit their true view: that there is nothing Congress could do to bring the HISA–Authority arrangement within constitutional bounds. Dkt. No. 182 at

31–33, 37–38. But this argument ignores the long history

of the executive branch leveraging—with court approval—expertise from private industry so long as the

industry remains subordinate to a supervisory federal

agency. E.g., Sunshine Anthracite Coal Co. v. Adkins,

310 U.S. 381, 388 (1940) (allowing private parties to participate in price setting because the private entities

“function[ed] subordinately to the Commission” and because the Commission retained “pervasive surveillance

and authority” over the activities of the private parties);

see also Lebron v. Nat’l R.R. Passenger Corp., 513 U.S.

374, 386–90 (1995) (detailing the “long history of corporations created and participated in by the United States

for the achievement of governmental objectives” beginning in the 18th Century). The Court understands the

plaintiffs’ concerns with these arrangements, especially

given how long horseracing has been regulated at the local level. But because Congress brought HISA within the

Constitution’s limits as defined by the Fifth Circuit, the

Court concludes that HISA does not violate the private

non-delegation doctrine.

48a

Second, the plaintiffs’ facial and as-applied Fifth

Amendment Due Process argument fails for the same

reasons this Court explained in its first order rejecting

it. The Court finds that the Authority is not a self-interested industry competitor creating a constitutional violation. As a facial matter, HISA explicitly protects against

self-interest through structural safeguards while preserving industry representation in the Authority. And

the as-applied challenge fails because there is no evidence of actual, unconstitutional self-dealing that has

harmed industry competitors.

Third, the plaintiffs’ appointment and removal arguments fail for a simple reason—the challenged entity at

issue (the Authority) is not a public, governmental actor

subject to these constitutional limitations. The Fifth Circuit held as much in its panel opinion, so the plaintiffs’

assertion otherwise at this point is both contrary to the

law of the case and foreclosed by precedent. Moreover,

even assuming that the Fifth Circuit left this issue open,

precedent makes clear that the Authority is private because it was not created by the government, and it retains for itself permanent authority to appoint its directors.

Finally, the plaintiffs lack standing to raise their

Tenth Amendment argument that HISA unconstitutionally commandeers the states. Although private plaintiffs

are not automatically barred from 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.

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

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