Petition for Writ of Certiorari — Horseracing Integrity and Safety Authority, Incorporated, et al., Petitioners v. National Horsemen's Benevolent and Protective Association, et al.

APPENDIX

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI

TABLE OF CONTENTS

Opinion of the U.S. Court of Appeals for the

Fifth Circuit (June 11, 2026)..................................... 1a

Memorandum Opinion and Order of the U.S.

District Court for the Northern District of Texas

(May 4, 2023) ........................................................... 54a

Order of the U.S. Supreme Court on Application

for Stay (Oct. 28, 2024) .......................................... 118a

Judgment of the U.S. Supreme Court on

Petition for Writ of Certiorari (June 30, 2025)..... 120a

Order of the U.S. Court of Appeals for the Fifth

Circuit on Unopposed Motion for Stay of

Mandate (July 14, 2026)........................................ 122a

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

§ 3051 ................................................................ 125a

§ 3052 ................................................................ 129a

§ 3053 ................................................................ 139a

§ 3054 ................................................................ 142a

§ 3055 ................................................................ 154a

§ 3056 ................................................................ 164a

§ 3057 ................................................................ 169a

§ 3058 ................................................................ 176a

§ 3059 ................................................................ 181a

§ 3060 ................................................................ 181a

1a

United States Court of Appeals

for the Fifth Circuit

No. 23-10520

NATIONAL HORSEMEN’S BENEVOLENT AND PROTECTIVE

ASSOCIATION; ARIZONA HORSEMEN’S BENEVOLENT AND

PROTECTIVE ASSOCIATION; ARKANSAS HORSEMEN’S

BENEVOLENT AND PROTECTIVE ASSOCIATION; INDIANA

HORSEMEN’S

BENEVOLENT

AND

PROTECTIVE

ASSOCIATION; ILLINOIS HORSEMEN’S BENEVOLENT AND

PROTECTIVE ASSOCIATION; LOUISIANA HORSEMEN’S

BENEVOLENT

AND

PROTECTIVE

ASSOCIATION;

MOUNTAINEER PARK HORSEMEN’S BENEVOLENT AND

PROTECTIVE ASSOCIATION; NEBRASKA HORSEMEN’S

BENEVOLENT

AND

PROTECTIVE

ASSOCIATION;

OKLAHOMA HORSEMEN’S BENEVOLENT AND PROTECTIVE

ASSOCIATION; OREGON HORSEMEN’S BENEVOLENT AND

PROTECTIVE ASSOCIATION; PENNSYLVANIA HORSEMEN’S

BENEVOLENT

AND

PROTECTIVE

ASSOCIATION;

WASHINGTON

HORSEMEN’S

BENEVOLENT

AND

PROTECTIVE ASSOCIATION; TAMPA BAY HORSEMEN’S

BENEVOLENT AND PROTECTIVE ASSOCIATION; GULF

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

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

TEXAS HORSEMEN’S PARTNERSHIP, L.L.P.,

Plaintiffs-Appellants,

STATE OF TEXAS; TEXAS RACING COMMISSION,

Intervenor Plaintiffs-Appellants,

versus

2a

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

ON REMAND FROM THE

SUPREME COURT OF THE UNITED STATES

Before KING, DUNCAN, and ENGELHARDT, Circuit

Judges.

STUART KYLE DUNCAN, Circuit Judge:

Last year, the Supreme Court vacated our

decision in National Horsemen’s Benevolent &

Protective Association v. Black (Horsemen’s II), 107

F.4th 415 (5th Cir. 2024), and remanded “for further

consideration in light of FCC v. Consumers’ Research,

606 U.S. [656] (2025).” Horseracing Integrity & Safety

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

Ass’n, 145 S. Ct. 2837 (2025) (mem.). The parties have

filed supplemental briefs helpfully addressing this

question.

3a

We conclude Consumers’ Research does not affect

our prior decision, which we reissue below.1 In a new

section, infra Part III(B)(6), we explain why

Consumers’ Research does not change our analysis of

the private nondelegation question presented in this

case.

INTRODUCTION

We again consider constitutional challenges to

the Horseracing Integrity and Safety Act of 2020

(“HISA” or the “Act”). In HISA, Congress empowered

a private corporation—the Horseracing Integrity and

Safety Authority (“Authority”)—to create and enforce

nationwide rules for thoroughbred horseracing. In our

first foray into HISA, we held the Act 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

1 We add a handful of footnotes to clarify a few matters and

also to discuss sister-circuit decisions issued after Horsemen’s II.

See infra nn. 7, 12, 17, 19, 22, 23.

4a

(“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.

Just as we concluded in our now-vacated

Horsemen’s II opinion, we agree with nearly all of the

district court’s well-crafted 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.

After the Supreme Court’s remand, we still

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,

5a

we part ways with our esteemed colleagues on the

Sixth Circuit.

See Oklahoma v. United States

(Oklahoma I), 62 F.4th 221 (6th Cir. 2023); Oklahoma

v. United States (Oklahoma II), 163 F.4th 294 (6th Cir.

2025) (both rejecting nondelegation challenge to

HISA’s enforcement provisions).

Accordingly, the district court’s judgment is

AFFIRMED in part and REVERSED in part.

I.

A.

BACKGROUND

HISA Framework

In 2020, HISA created a framework for enacting

and enforcing nationwide rules governing doping,

medication control, and racetrack safety in the

thoroughbred horseracing industry. See 15 U.S.C.

§ 3054(a). See generally Horsemen’s I, 53 F.4th at 87375. 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. 2 The

Authority submits proposed rules to the FTC, which

2 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), (h) (investigatory and

subpoena powers).

6a

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. § 3053(c)(1). The

FTC “shall approve” a proposed rule if it finds the rule

“consistent” with the Act and with “applicable rules

approved by the [FTC].” § 3053(c)(2). Originally, this

“consistency review” did not allow the FTC to reject a

proposed rule based on its disagreement with the

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

884-87.

In Horsemen’s I, we held that this

arrangement violated the private nondelegation

doctrine by making a private entity superior to a

government agency. Ibid. In response, Congress

amended HISA to give the FTC power to “abrogate,

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

The Authority also has the power to enforce HISA.

It does so by (1) exercising “subpoena and

investigatory authority,” § 3054(h); (2) imposing civil

sanctions, §§ 3054(i), 3057; and (3) filing civil actions

seeking injunctions or enforcement of sanctions,

§ 3054(j). The actual work of enforcing HISA involves

a further delegation to other entities, however. For

instance, HISA directs the Authority to contract

enforcement of doping and medication rules to a

private non-profit, the U.S. Anti-Doping Agency

(“USADA”),

or

other

comparable

entity.

§ 3054(e)(1)(A), (B).

The Authority’s proposed

partnership with USADA ultimately did not pan out.

Instead, the Authority partnered with Drug Free

Sport International, which operates as the

Horseracing Integrity and Welfare Unit (“HIWU”).

HIWU then acts as “the independent . . .

enforcement

organization”

for

those

rules,

“implement[s]” HISA’s anti-doping programs, and

7a

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 HIWU’s

decisions on such matters “shall be the final decision

or civil sanction of the Authority,” subject to de novo

review by an administrative law judge (“ALJ”) and the

FTC. § 3055(c)(4)(B); § 3058.

B.

Procedural History

Horsemen’s I concluded that HISA’s delegation of

rulemaking power was facially unconstitutional. HISA

delegated rulemaking power to a private organization

(the Authority) whose policy choices could not be

second-guessed by the agency (FTC). The Authority’s

rulemaking powers were therefore not subordinate to

the FTC, meaning HISA facially violated the private

nondelegation doctrine. Horsemen’s I, 53 F.4th at 872.

We did not consider the plaintiffs’ distinct

nondelegation challenges to the Authority’s

investigative and enforcement powers nor their due

process claims. Id. at 890 n.37. Finally, as noted,

Congress responded to Horsemen’s I by empowering

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

Authority’s rules. § 3053(e).

On remand, the National Horsemen’s Association

(“Horsemen”) and Texas continued to press their

private nondelegation claims, arguing Congress’s

3 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).

8a

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 LLC (“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 II), 672 F. Supp. 3d 220, 224-25 (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 I, 62

F.4th 221. The district 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 II, 672 F. Supp. 3d at 241, 243-44 (citing

Oklahoma I, 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 (quoting Nat’l

Horsemen’s Benevolent & Protective Ass’n v. Black

(Black I), 596 F. Supp. 3d 691, 725 (N.D. Tex. 2022)).

The court also relied on the fact that the FTC could

review civil sanctions and control enforcement

9a

through rulemaking. Id. at 248-49 (citing Black I, 596

F. Supp. 3d at 725–26); see also Oklahoma I, 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 II, 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 anti-commandeering

argument for lack of standing. Id. at 249-50.

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., L.L.C., 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).

10a

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?

(C) Does HISA violate due process by permitting

self-interested industry participants to regulate their

competitors?

(D) Are the Authority’s directors subject to the

Appointments Clause?

(E) Does HISA violate the Tenth Amendment’s

anti-commandeering rule by forcing States to

administer a federal program?

We consider each issue in turn.

A.

Private Nondelegation Challenge to

Authority’s Rulemaking

We previously discussed the origins of the private

nondelegation doctrine in Horsemen’s I. See id. at 88081. In essence, the doctrine teaches that “a private

entity may wield government power only if it

‘functions subordinately’ to an agency with ‘authority

and surveillance’ over it.” Id. at 881 & n.21 (citing

Texas v. Rettig, 987 F.3d 518, 532 (5th Cir. 2021));

Pittston Co. v. United States, 368 F.3d 385, 394 (4th

Cir. 2004); United States v. Frame, 885 F.2d 1119,

11a

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.Rs. 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

remanded on other grounds, Dep’t of Transp. v. Ass’n

of Am. R.Rs. (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

4 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).

12a

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 Securities and Exchange Commission

(“SEC”) and private, self-regulatory organizations

(such as the Financial Industry Regulatory Authority

(“FINRA”)). See Oklahoma I, 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,

Pub. L. No. 117-328, div. O, tit. VII, § 701, 136 Stat.

4459, 5231–32 (2023). 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 II, 672 F.

Supp. 3d at 241-45 (citing Oklahoma I, 62 F.4th at 230,

232).

We agree with the district court and the Sixth

Circuit that the amendment cured the nondelegation

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

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

policy choices. See Horsemen’s I, 53 F.4th at 872

(“[T]he FTC concedes it cannot review the Authority’s

policy choices.”). For instance, when the Authority

issued rules on the kinds of horseshoes permitted

during races, the FTC told objecting commenters it

lacked the power to question the Authority’s views.

See id. at 885 & n.29 (discussing FED. TRADE COMM’N,

ORDER APPROVING THE ENFORCEMENT RULE PROPOSED

BY THE HORSERACING INTEGRITY AND SAFETY

AUTHORITY

26

(Mar.

25,

2022),

https://www.ftc.gov/system/files/ftc_gov/pdf/P222100

HISAOrderRacetrackSafety.pdf

13a

[https://perma.cc/G3VQ-JPJR]). 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 I, 62 F.4th at 230

(noting recent rule explaining that FTC’s “new

‘rulemaking power’ allows it to ‘exercise its own policy

choices’” (quoting FED. TRADE COMM’N, ORDER

RATIFYING PREVIOUS COMMISSION ORDERS AS TO

HORSERACING INTEGRITY AND SAFETY AUTHORITY’S

RULES

3

(Jan.

3,

2023),

https://www.ftc.gov/system/files/ftc_gov/pdf/HISA%20

Order%20re%20Ratification%20of%20Previous%20O

rders%20-%20Final%20not%20signed.pdf

[https://perma.cc/44BK-37A9])). 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 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)

14a

(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.”

Horsemen’s I, 53 F.4th 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 I, 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 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

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

problem because it gives the FTC only limited rulemaking

authority—i.e., “to ensure the fair administration of the

Authority.” Because the FTC lacks plenary rulemaking authority,

Texas argues, the Authority still effectively calls the shots. We

disagree. Section 3053(e) empowers the FTC to engage in

rulemaking, not only for specified purposes, but also “otherwise

in furtherance of the purposes of [HISA].” This language,

borrowed from the Maloney Act, 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).

15a

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 the 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 I, 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. U.S. 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 like FINRA.

They argue that,

notwithstanding § 3053(e), the FTC still has less sway

6 The Horsemen also argue that the Authority can

circumvent the FTC by issuing unreviewable guidance

documents, such as dear colleague letters. We disagree. The

Authority admits such guidance 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.

16a

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 I, 62 F.4th at 225, 229

(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 HIWU in the case of

doping rules, or to state racing commissions in the case

of racetrack safety rules. See supra Part I(A). Our

Horsemen’s I decision did not address this challenge to

17a

the Authority’s enforcement powers, see 53 F.4th at

890 n.37, and on remand the district court treated it

as a due process claim and rejected it, see Black II, 672

F. Supp. 3d at 248-49. Appellants now bring the claim

to us, arguing that the Authority’s enforcement power

is not subordinate to FTC oversight.

1.

Before addressing the merits of this claim, we

must address the Authority’s argument that it is

premature. Arguing both in terms of standing and

ripeness, the Authority contends that it has not yet

tried to enforce HISA against the Horsemen and that

any challenge to the Authority’s enforcement power

can be raised if and when it does. We disagree for

several reasons.

First, the Authority misunderstands the

Horsemen’s claim. They do not challenge some

particular enforcement action undertaken by the

Authority—claiming, for instance, that the Authority

issued an overbroad subpoena for medical records or

lacked probable cause to search a racetrack. Instead,

the Horsemen argue that HISA, on its face, vests the

Authority with enforcement power that is effectively

unreviewable by the agency. When a regulated entity

raises “a purely legal challenge” like this one, “it is

unnecessary to wait for the Regulation to be applied in

order to determine its legality.” Contender Farms,

L.L.P. v. U.S. Dep’t of Agric., 779 F.3d 258, 267 (5th

Cir. 2015) (cleaned up); see also Nat’l Env’t Dev. 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

18a

legality.”); Susan B. Anthony List v. Driehaus, 573 U.S.

149, 163 (2014) (“Nothing in this Court’s decisions

requires a plaintiff who wishes to challenge the

constitutionality of a law to confess that he will in fact

violate that law.”).

Second, the Horsemen have a cognizable injury

for standing purposes. Pursuant to HISA, they have

already had to agree “to be subject to and comply with

the [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. Pub. Co. Acct.

Oversight Bd., 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

19a

register with the Authority. More generally, the

Horsemen represent some 30,000 members and, when

the parties filed their briefs, the Authority’s website

already listed hundreds of enforcement actions—and

that number has now grown to over 3,000.7 So, at a

minimum, the Horsemen have shown a credible threat

that the Authority will bring enforcement actions

against their members in the future. See Driehaus,

573 U.S. at 164.

In sum, the Horsemen have standing to challenge

the Authority’s enforcement powers and that

challenge is ripe. We proceed to the merits.

2.

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

contention is that HISA grants the Authority

enforcement power that is effectively unreviewable by

the FTC. That claim turns on the same standard as

the challenge to the Authority’s rulemaking addressed

in Horsemen’s I: the delegation is constitutional if,

when enforcing HISA, the Authority “‘functions

subordinately’ to an agency with ‘authority and

surveillance’ over it.” 53 F.4th at 881 (quoting Rettig,

987 F.3d at 532). In other words, the Authority may

constitutionally enforce HISA only if it acts “as an aid”

to the FTC, which “retains the discretion to approve,

disapprove, or modify” the private entity’s

7 See generally Rulings, HORSERACING INTEGRITY & SAFETY

AUTH.,

https://portal.hisausapps.org/public-rulings

[https://perma.cc/24TV-7NV3] (last visited June 3, 2026) (listing

3,307 enforcement rulings)

20a

enforcement actions. Ibid. (cleaned up) (quoting

Amtrak I, 721 F.3d at 671).8

While the constitutional standard is the same,

the nature of the delegated authority is different this

time around. Horsemen’s I addressed delegation of

legislative authority—the power to make rules. See

Myers v. United States, 272 U.S. 52, 186 (1926)

(MCREYNOLDS, J., dissenting) (“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

8 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 id. at 881

(explaining that Amtrak I “expressed the [private nondelegation

doctrine] more precisely” than prior formulations).

9 See, e.g., Bowsher v. Synar, 478 U.S. 714, 733 (1986)

(“Interpreting a law enacted by Congress to implement the

legislative mandate is the very essence of ‘execution’ of the law.”);

Morrison v. Olson, 487 U.S. 654, 696 (1988) (reasoning “the power

to initiate an investigation” is executive power that must be

subject to the Attorney General’s “unreviewable discretion”);

Buckley v. Valeo, 424 U.S. 1, 138, 140 (1976) (per curiam)

(concluding the “discretionary power to seek judicial relief” and

“conduct[] civil litigation in the courts of the United States for

21a

been considered so from our Nation’s founding.10 As

much as legislative power, the private nondelegation

vindicating public rights” are exercises of Article II executive

power); Seila L. LLC v. Consumer Fin. Prot. Bureau, 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. 220, 254 (2021) (holding the power “to issue subpoenas”

is an “executive power”); id. at 289 (SOTOMAYOR, J., concurring in

part and dissenting in part) (noting “the power to impose fines”

is an “executive power”); id. at 287 (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.”).

10 See generally Dina Mishra, An Executive-Power NonDelegation 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 Bangalore

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

(“Executive officers investigate, apprehend, and prosecute

22a

doctrine forbids unaccountable delegations of

executive power. See, e.g., Amtrak II, 575 U.S. at 62

(ALITO, J., concurring) (“Private entities are not vested

with ‘legislative Powers.’ Art. I, § 1. Nor are they

vested with the ‘executive Power,’ Art. II, § 1, cl. 1,

which belongs to the President.”). Accordingly, we

must determine whether HISA delegates enforcement

power to private entities and, if so, whether that power

is subordinate to the FTC.

HISA divides enforcement authority among the

FTC, the Authority, and HIWU, “each within the scope

of their powers and responsibilities under this

chapter.” § 3054(a). Recall that HIWU is the private

non-profit to whom the Authority must delegate antidoping and medication enforcement.

See

11

§ 3054(e)(1)(B).

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

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).

11 The Authority also “may enter into agreements” with

State racing commissions to enforce the racetrack safety program.

See § 3054(e)(2)(A)(i), (3); § 3056(c). The Authority remains in

charge, however, and dictates the “scope of work, performance

metrics, reporting obligations, budgets, and any other matter [it]

considers appropriate.” § 3054(e)(2)(B).

23a

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

HIWU, which “implement[s]” those rules “on behalf of

the Authority.” § 3054(e)(1)(E)(i). In this regard,

HIWU’s

responsibilities

include

“independent

investigations, charging and adjudication of potential

medication control rule violations, and the

enforcement of any civil sanctions for such violations.”

§ 3055(c)(4)(B); see also § 3054(e)(1)(E)(iv). Third, the

FTC may ask an ALJ to review any sanction de novo,

§ 3058(b)(1), and the FTC may itself review the ALJ’s

decision de novo, either on its own motion or upon

petition by an aggrieved party, § 3058(c).

The Act’s plain terms permit only one conclusion:

HISA is enforced by a private entity, the Authority.

The Authority decides whether to investigate a

covered entity for violating HISA’s rules.

The

Authority decides whether to subpoena the entity’s

records or search its premises. The Authority decides

whether to sanction it. And the Authority decides

whether to sue the entity for an injunction or to

enforce a sanction it has imposed. To be sure, the

Authority does not perform these functions itself.

Rather, HISA requires the Authority to contract with

another private entity, HIWU, which undertakes

enforcement “on behalf of the Authority.”

§ 3054(e)(1)(E)(i). The bottom line, though, is that a

private entity, not the agency, is in charge of enforcing

HISA.

Consider also what HISA does not say. It does

not empower the FTC to decide whether to investigate

24a

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, HIWU’s decisions). Nor does it require

the Authority or HIWU to seek the FTC’s approval

before investigating, searching, charging, sanctioning,

or suing. All these actions are enforcement actions,

and, by the plain terms of the Act, they can be done by

the private entities without the FTC’s involvement.

The inescapable conclusion is that the Authority

does not “function subordinately” to the FTC when

enforcing HISA. Horsemen’s I, 53 F.4th at 881. That

is not permitted under the private nondelegation

doctrine.

A private entity that can investigate

potential violations, issue subpoenas, conduct

searches, levy fines, and seek injunctions—all without

the say-so of the agency—does not operate under that

agency’s “authority and surveillance.” Ibid. Put

another way, with respect to enforcement, HISA’s

plain terms show that the Authority does not merely

act “as an aid” to the FTC because the FTC does not

“retain[] the discretion to approve, disapprove, or

modify” the Authority’s enforcement actions. Ibid.

(cleaned up) (quoting Amtrak I, 721 F.3d at 671).

3.

One might counter, though, that the FTC at least

partially supervises the Authority because it can

review sanctions at the back end, after ALJ review.

See §§ 3055(c)(4)(B), 3058(b)(3)-(c)(3). That is true,

and it is the Authority’s best argument for why its

enforcement power is subordinate to the FTC.

25a

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

12 Not

only does HISA facially permit that, but it has

already happened. For example, in one FTC appeal, it is

uncontested that three private Authority investigators showed

up at the appellant’s residence and served her with a notice of an

alleged doping violation (there is no personal service requirement

under the statute). The investigators then “subjected [the

appellant] to a coercive interrogation in a small room” and

searched “her barn and . . . her mother’s car” for banned

substances. Statement of Contested Facts and Specification of

Additional Evidence, In re Lynch, 2024 WL 1111724 (F.T.C.), at

*2, Dkt. No. 9423. She was then fined $55,000 and banned from

racing for 48 months. Id. at *3. She later settled with the

Authority, and the case was dismissed. Order of Withdrawal

from Review by the Administrative Law Judge, In re Lynch, 2024

WL 4298917 (F.T.C.), Dkt. No. 9423. 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. The appellant petitioned the FTC to

review the decision. That petition was denied. Decision of the

Commission on Application for Review Under 15 U.S.C. § 3058,

In re Perez, 2024 WL 3824065 (F.T.C.), Dkt. No. 9420; see also

26a

and every one of those actions is “enforcement” of

HISA. Each can occur under HISA without any

supervision by the FTC. Moreover, penalties imposed

by the Authority are not automatically stayed pending

appeal. See 16 C.F.R. § 1.148(a) (2022). 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? See, e.g., In re Lynch, 2024 WL 4298917 (F.T.C.),

Dkt. No. 9423 (dismissing case due to settlement). In

that case, according to the Authority’s logic, no one has

enforced HISA. That is obviously not true. To the

contrary, the settlement scenario—which will likely

happen often—only underscores that it is the private

entity that acts as HISA’s enforcer in any meaningful

sense.

Consider a hypothetical.

Suppose a city

structures its speeding laws to let a group of private

car enthusiasts monitor speeds with their own radar

guns, pull speeders over, and ticket them. Fines are

reviewed by the police department and, ultimately, the

mayor. Who enforces the speeding laws? Anyone

Administrative Law Judge Decision on Application for Review, In

re Poole, 2023 WL 8435860 (F.T.C.), Dkt. No. 9417 (affirming an

$18,000 fine and banning him from practice for 22 months for a

similar inadvertent possession of a newly banned substance).

27a

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 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[.]”).

28a

4.

The Authority next argues that the FTC could use

its new rulemaking authority to rein in the Authority’s

enforcement actions or even require the Authority to

preclear lawsuits with the agency. See § 3053(e)

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

the Authority’s rules). This argument persuaded the

Sixth Circuit that at least a facial challenge to the

Authority’s enforcement powers should fail. See

Oklahoma I, 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 Part 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

HIWU. See § 3054(c)(1), (e). HISA is quite clear about

this: it provides that those three entities “implement

and enforce” the Act, “each within the scope of their

powers and responsibilities under this chapter.”

§ 3054(a)(1) (emphasis added). A mere agency cannot

alter that statutory division of labor. See, e.g., Gulf

Fishermens Ass’n v. Nat’l Marine Fisheries Serv., 968

F.3d 454, 460 (5th Cir. 2020) (“We will not defer to ‘an

29a

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. 477, 494 (2023)

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

512 U.S. 218, 225 (1994)). Yet that is just what the

Authority says the FTC could do through rulemaking.

13 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. Co. 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));

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. Co. 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” (quotation omitted)).

30a

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 HIWU, see §§ 3054(e)(1)(E)(iv),

3055(c)(4)(B) (the Authority “shall” contract with

HIWU 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 HIWU 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 the 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

14 Nor could the Authority claim that the statute is merely

silent about FTC pre-approval and that gap could be filled by

rulemaking. Our circuit has repeatedly rejected this “nothingequals-something argument” for conjuring agency authority out

of thin air. Gulf Fishermens, 968 F.3d at 460-61 (citing Texas v.

United States, 809 F.3d 134, 186 (5th Cir. 2015), aff’d by an

equally divided court, 579 U.S. 547 (2016) (per curiam)).

31a

3059, for instance, is a separate part of HISA targeting

certain “unfair or deceptive” practices in selling

horses.15 With respect to that section, the Authority

can only “recommend” that the FTC “commence an

enforcement action.”16 § 3054(c)(1)(B). In other words,

only here did Congress limit the Authority’s

enforcement discretion to “recommending” agency

enforcement. Cf. § 3054(j)(1) (providing “the Authority

may commence a civil action” seeking an injunction).

Yet the Authority contends that the agency could, by

rulemaking, make 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)).17

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

under 15 U.S.C. § 45(a) to fail to disclose to a buyer that a horse

was administered “a bisphosphonate” before its fourth birthday

or any other prohibited substance).

16 See § 3054(c)(1)(B) (providing the “Authority . . . with

respect to an unfair or deceptive act or practice described in

section 3059 of this title, may recommend that the Commission

commence an enforcement action”).

17 Following our original Horsemen’s II decision, a split

panel of the Eighth Circuit disagreed with us on this point. See

Walmsley v. Fed. Trade Comm’n, 117 F.4th 1032, 1039-40 (8th

Cir. 2024). In partial dissent, Judge Gruender agreed with our

view. See id. at 1041-44 (GRUENDER, J., concurring in part and

dissenting in part). The Supreme Court subsequently vacated

the Eighth Circuit’s judgment and remanded for further

consideration in light of Consumers’ Research. See 145 S. Ct.

32a

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 I, 62 F.4th at 231. For instance, the agency

could issue rules against “overbroad subpoenas or

onerous searches” or “provid[ing] a suspect with a full

adversary proceeding and with free counsel.” Ibid.

Unhappily, we again disagree with our sister circuit.

The Horsemen are not complaining about how the

Authority exercises its enforcement power. T hey 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. See Salerno, 481 U.S.

at 745 (recognizing challengers shoulder a “heavy

burden” to demonstrate facial invalidity when they

“establish that no set of circumstances exists under

which the Act would be valid”).18

2870 (2025) (mem.). The Eighth Circuit has not yet issued a

decision on remand.

18 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

33a

In sum, HISA’s clear delineation of enforcement

power between the FTC, the Authority, and HIWU

cannot be altered through rulemaking.

5.

Finally, the Authority defends its enforcement

role by analogizing it to the role of self-regulatory

organizations (“SROs”)—specifically, FINRA—which

assist the SEC in enforcing securities laws. The

Authority seeks support in circuit cases concluding

that FINRA’s enforcement role presents no private

nondelegation problem. See, e.g., Oklahoma I, 62

F.4th at 229, 232 (gathering cases).19 For their part,

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.”).

19 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 I, 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.

34a

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 Part 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 Part III(A).

We agree with the Horsemen that, for

enforcement purposes, HISA gives the Authority an

enforcement role meaningfully different from FINRA’s.

Unlike the SEC–FINRA relationship, HISA does not

give the FTC potent oversight power over the

Authority’s enforcement such as the power to enforce

HISA itself, deregister the Authority as the enforcing

entity, or remove its directors.

To begin with, Congress empowered the SEC to

enforce FINRA’s rules if needed. The SEC can “in its

discretion, make such investigations as it deems

necessary to determine whether any person has

violated, is violating, or is about to violate” the

Maloney Act. 15 U.S.C. § 78u(a)(1). The SEC can also,

on its own accord, seek criminal sanctions, injunctive

relief, or disgorgement. § 78u(c), (d), (d)(4). The FTC

cannot. See § 3054(c)(1)(A)(iii) (granting the Authority

SEC, 679 F.2d 1323, 1325-26 (9th Cir. 1982) (same). But none

addressed a nondelegation challenge to executive power.

35a

investigatory power); § 3054(e) (granting the

Authority and HIWU enforcement responsibility).

The SEC has power to issue subpoenas, see §§ 77s(c),

78u(c), while HISA gives the Authority that power,

§ 3054(h), (c)(1)(A)(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, §§ 78u1(a)(1), 78u(d)(1), while HISA gives that power

exclusively to the Authority, § 3054(j)(1). Giving a

private entity the sole power to sue in federal court to

enforce a statute cuts to the core of executive power.

See Buckley, 424 U.S. at 138 (“A lawsuit is the

ultimate remedy for a breach of the law, and it is to

the President . . . that the Constitution entrusts [this]

responsibility[.]”).20

20 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

36a

Finally, the SEC “retains formidable oversight

power to supervise, investigate, and discipline [FINRA]

for any possible wrongdoing or regulatory missteps.”

In re NYSE Specialists Sec. Litig., 503 F.3d 89, 101 (2d

Cir. 2007). The FTC does not. This “formidable” power

is manifest in the SEC’s ability to derecognize

FINRA’s regulatory role entirely, § 78s(a)(3), (h)(1);

remove FINRA board members for cause, § 78s(h)(4);

remove any individual FINRA member, § 78s(h)(2);

and bar any person from associating with FINRA,

§ 78o-3(g)(2). HISA, on the other hand, “recognize[s]

for purposes of developing and implementing” the Act

only “[t]he private, independent, self-regulatory,

nonprofit corporation, to be known as the ‘Horseracing

Integrity and Safety Authority.’” § 3052(a). And only

the Authority’s Board can remove members: directors

by a two-thirds vote and committee members for any

reason.21

6.

We now consider whether the Supreme Court’s

recent Consumers’ Research decision impacts our

private nondelegation analysis in this case.

Consumers’ Research addressed challenges to a

federal law tasking the Federal Communications

Commission (“FCC”) with providing affordable

communications services throughout the United

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

powers.

21 In saying all this, we express no opinion on whether the

SEC-FINRA relationship poses any constitutional issues under

the private nondelegation doctrine (or any other doctrine). Such

questions are not posed by this case.

37a

States. The law required telecom carriers to pay

quarterly into a Universal Service Fund (“USF”),

which would be distributed to underserved

populations. A “contribution factor,” devised by the

FCC, would set each carrier’s USF share. See

Consumers’ Rsch., 606 U.S. at 664, 666-67, 668; 47

U.S.C. §§ 151, 254.

Much of Consumers’ Research addressed whether

the law improperly delegated legislative power to the

FCC (i.e., a “public” nondelegation challenge). See 606

U.S. at 672-91. The Supreme Court held it did not. In

brief, the Court explained that Congress had placed

sufficiently “intelligible” guardrails around the FCC’s

exercise of its assigned powers. See id. at 680-91; see

generally J.W. Hampton, Jr., & Co. v. United States,

276 U.S. 394, 409 (1928) (asking whether Congress

enacted “intelligible principle[s]” to guide an agency’s

exercise of delegated authority).

The part of Consumers’ Research relevant here

concerned a separate challenge to the FCC’s

appointment of a private organization—the Universal

Service

Administrative

Company

(the

“Administrator”)—to manage the USF. Consumers’

Rsch., 606 U.S. at 669. Among other tasks, the

Administrator produced the financial projections the

FCC used to determine carriers’ quarterly USF

contribution. Id. at 669-70. The Administrator’s role

was challenged as the delegation of legislative power

to a private organization. Id. at 692. The Court

rejected this challenge. Id. at 692-95.

Drawing on its earlier precedents, the Court

reaffirmed the basic idea that a federal agency can

delegate power to a private organization only if it

38a

functions “subordinately” to the agency. Ibid. (first

citing Carter Coal, 298 U.S. 238; and then citing

Adkins, 310 U.S. 381). The Court summarized the

doctrine this way: “As long as an agency . . . retains

decision-making power, it may enlist private parties to

give it recommendations.” Id. at 692.

Applying that standard, the Court held the

Administrator’s role was permissible.

The

Administrator was “broadly subordinate to the [FCC]”

because (1) the FCC appointed the Administrator’s

board and approved its budget; (2) the Administrator

engaged in “no policy-making” but was “just doing

arithmetic”; (3) the Administrator had to carry out all

tasks consistent with FCC directives; and (4) the FCC

could review the Administrator’s actions de novo. Id.

at 693. Critically, the FCC always had “a chance to

review—and, if needed, to revise” the Administrator’s

projections before approving them. Id. at 694; see also

id. at 695 (observing the Administrator’s projections

could not “go into effect without [the FCC’s] say-so”).

In sum, the FCC “alone” had decision-making

authority, while the Administrator played only an

“advisory role.” Id. at 693. Accordingly, the Court

concluded the FCC’s “transfer of accounting functions

to the Administrator” was proper because “[i]n every

way that matters to the constitutional inquiry, the

[FCC], not the Administrator, is in control.” Id. at 695.

For the following reasons, we conclude the

private nondelegation analysis in Consumers’

Research does not change the outcome in this case.

a.

To begin with, Consumers’ Research articulated

the same private nondelegation doctrine we applied

39a

before (and now reapply). An agency, the Court

explained, may “rely on advice and assistance from

private actors,” provided they remain “broadly

subordinate” to the agency’s “authority and

surveillance.” Id. at 692. That doctrinal formulation

is identical to our own: “[A] private entity may wield

government power only if it functions subordinately to

an agency with authority and surveillance over it.”

Horsemen’s II, 107 F.4th at 423 (internal citations

omitted). Indeed, the Court drew on the same

precedents we did. Compare Consumers’ Rsch., 606

U.S. at 692 (discussing Schechter Poultry, 295 U.S. 495;

Carter Coal, 298 U.S. 238; Adkins, 310 U.S. 381), with

Horsemen’s II, 107 F.4th at 423 n.4 (citing same cases);

see also Horsemen’s I, 53 F.4th at 880-81 (same).

So, Consumers’ Research did not alter the

doctrine, whose touchstone remains the same it has

always

been—namely,

whether

the

private

organization is “subordinate” to a superintending

agency.

b.

Nor does the Court’s application of the doctrine to

the USF Administrator change our conclusion in this

case about the Authority’s enforcement powers. As we

held before and now reaffirm, in exercising those

powers, the Authority does not function subordinately

to the FTC.

To see why, just compare the private actors in the

two cases. In Consumers’ Research, the Administrator

played merely an “advisory role,” leaving the FCC

“alone” with “decision-making authority.” Id. at 693.

The Administrator only recommended how to

calculate the contribution factor—but its advice could

40a

not go into effect until the FCC reviewed it, revised it

if necessary, and gave the final “say-so.” Id. at 693-95.

This arrangement meant “the [FCC], not the

Administrator, [wa]s in control.” Id. at 695.

The Authority wields power of an entirely

different color. HISA gives the Authority (and its

secondary private partner) power to investigate,

subpoena, sue, and sanction covered entities. See

Horsemen’s II, 107 F.4th at 429. The FTC is given no

statutory authority to approve, review, or

countermand any of the Authority’s investigatory,

prosectuory, or adjudicatory decisions. Ibid. All of

that enforcement, according to HISA’s “plain terms,”

“can be done by the private entities without the FTC’s

involvement.” Ibid.; see generally supra Parts I(A),

III(B)(2).

True, the FTC has some back-end review over the

Authority’s enforcement actions. See supra Part

III(B)(3) (discussing §§ 3055(c)(4)(B), 3058(b)(3)-(c)(3)).

So, one might ask: isn’t that like the “de novo review”

exercised over the Administrator by the FCC? See

Consumers’ Rsch., 606 U.S. at 693. No, it is not. As

the Supreme Court explained, nothing the USF

Administrator does respecting the contribution factor

has any “legal (or, indeed, practical) effect” until the

agency “decides [it] should.” Id. at 694. Contrast that

with the Authority, which is empowered to launch

numerous

intrusive

enforcement

actions—

investigations,

subpoenas,

searches,

charges,

adjudications—all without any agency oversight.22

22 This is where we continue to differ with the Sixth Circuit.

On remand, see Oklahoma v. United States, 145 S. Ct. 2836 (2025)

41a

All that is to say: Consumers’ Research only

reinforces our previous conclusion. By exercising a

raft of unsupervised enforcement actions that go far

beyond the USF Administrator’s “recommendations,”

it is evident that “the [Authority], not the [FTC], is in

control.” Id. at 695.23

***

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

(mem.), our sister circuit reaffirmed its holding that the

Authority’s enforcement powers are subordinate to the FTC. See

Oklahoma II, 163 F.4th 294. Specifically, Oklahoma II relied on

the agency’s de novo review of Authority sanctions. Id. at 311.

But we have already explained why that review comes far too late

to constitute genuine oversight of the Authority’s wide-ranging

enforcement powers—such as investigations and subpoenas. See

supra Part III(B)(3). In addition, we have previously explained

why the FTC’s § 3053(e) rulemaking authority cannot amend the

statutory allocation of power between the agency and the

Authority, see supra Part III(B)(4), another point on which we

part ways with our Sixth Circuit colleagues. Cf. Oklahoma II,

163 F.4th at 312 (concluding FTC could constrain the Authority’s

investigatory powers by rule).

23 Although the point is not strongly contested by the

parties on remand, we note that Consumers’ Research also does

not change our previous holding concerning the Authority’s

rulemaking. See supra Part III(A). Texas points out that, unlike

in Consumers’ Research, the FTC neither appoints the

Authority’s Board nor approves its budget. True, but that feature

is outweighed by the far more critical point that the HISA

amendments give the agency final say-so over the content of any

rule before it ever takes effect. See supra Part III(A); see also

Walmsley, 117 F.4th at 1039; Oklahoma II, 163 F.4th at 308

(agreeing with us on this point).

42a

Authority with quintessential executive functions and

gives the FTC scant oversight until enforcement has

already occurred. Such back-end 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 SECFINRA relationship because the FTC lacks any tools

to ensure that the law is properly enforced. HISA’s

enforcement provisions thus facially violate the

private nondelegation doctrine.

C.

Due Process Challenge

We turn next to the Horsemen’s challenge based

on the Fifth Amendment’s Due Process Clause. They

argue that HISA, both facially and as-applied,

deprives them of due process by permitting

economically self-interested actors to regulate their

competitors. See Carter Coal, 298 U.S. at 311

(government violates due process by allowing

regulation by “private persons whose interests may be

and often are adverse to the interests of others in the

same business”). Specifically, the Horsemen contend

that Carter Coal does not require proof of economic

self-interest, only that the private person “may be”

adverse to those he regulates. They then argue that

several members of the Board and standing

committees violate the conflict of interest provisions

due to their professions and prior financial interests.

Finally, the Horsemen contend that the statute fails to

properly protect against self-interested actors because

it does not cover financial interests other than

interests in a covered horse, as opposed to a racetrack

or other facility.

43a

The district court correctly rejected these claims.

As to the Horsemen’s facial challenge, the court

concluded it was defeated by HISA’s conflict-ofinterest provisions. See Black II, 672 F. Supp. 3d at

252. Those provisions prohibit a range of individuals

from serving as Board or independent committee

members, 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 II, 672 F.

Supp. 3d at 252 (“HISA affords sufficient protection

through its conflicts-of-interest provisions, and the

plaintiffs have not met their burden to show

unconstitutional self-dealing by directors, committee

members, or others associated with the Authority.”).

At most, the court observed that the biographical

information may show the members do not qualify as

“independent members.”

Ibid.; § 3052(b)(1)(A)

(“[I]ndependent members [must be] selected from

outside the equine industry.”). But, as the court

pointed out, even assuming that to be true, it says

nothing about the members’ financial interests. Black

II, 672 F. Supp. 3d at 252. On appeal, the Horsemen

fail to show any error by the district court here.

44a

D.

Appointments Clause Challenge

A separate plaintiff, Gulf Coast, challenges the

Authority’s structure under the Appointments Clause

of Article II. 24 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,25 and

so, if Gulf Coast is right, their appointment would

violate Article II.

The Authority and the FTC first respond that we

previously decided this question in Horsemen’s I. By

applying the private nondelegation doctrine to the

Authority, they argue we necessarily determined the

Authority is not governmental for constitutional

24 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.

25 The directors are appointed by the Authority itself. See

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

nominating committee).

45a

purposes. The district court took this view as well. See

Black II, 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. S ee United States v.

Sineneng-Smith, 590 U.S. 371, 376 (2020) (“Courts . . .

wait for cases to come to them, and when cases arise,

courts normally decide only questions presented by

the parties.” (cleaned up)). The fact is that in

Horsemen’s I, all parties proceeded on the assumption

that the Authority is private for constitutional

purposes. See Horsemen’s I, 53 F.4th at 875 n.11 (“The

Horsemen also claimed HISA was unconstitutional

under the . . . Appointments Clause. The district court

did not rule on those claims and so they are not before

us.”). No one suggested that the Authority might

qualify as a government entity or that its directors

were subject to the Appointments Clause. So, because

we did not settle the question previously, we can

address it now. See Companion Prop. & Cas. Ins. Co.

46a

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)); Alpha/Omega Ins. Servs., Inc. v. Prudential Ins.

Co. 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].”); HORSERACING INTEGRITY &

SAFETY AUTH., INC., DEL. SEC’Y OF STATE, CERTIFICATE

OF INCORPORATION 1 (2020) (“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

47a

achievement of governmental objectives.” Id. at 386.26

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. 27 Applying

26 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).

27 See Nebraska, 600 U.S. at 490-93 (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’[s] 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.

48a

Lebron, we conclude that the Authority is not a federal

instrumentality for purposes of the Appointments

Clause.

First, the Authority was not created by the

federal government “by special law,” ibid., but was

incorporated under Delaware law shortly before

HISA’s passage. Contrast this with Amtrak, which

“Congress established” by enacting the Rail Passenger

Service Act of 1970. Id. at 383-84; see also Nat’l R.R.

Passenger Corp. v. Atchison, Topeka & Santa Fe Ry.

Co., 470 U.S. 451, 454 (1985) (observing “Congress

established the National Railroad Passenger

Corporation, a private, for-profit corporation that has

come to be known as Amtrak”).

Second, the Authority was not created to further

“governmental objectives,” Lebron, 513 U.S. at 399,

but instead as a private association to address doping,

medication, and safety issues in the thoroughbred

racing industry. Again, contrast this with Amtrak,

which Congress created “to avert the threatened

extinction of passenger trains in the United States”

and for other goals Congress itself “establish[ed].” Id.

at 383-84.

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.” Id. at 399. To the

contrary, the government has no role in appointing the

Authority’s Board. Once again, contrast this with

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).

49a

Amtrak—where a majority of its directors was

appointed by the President. Id. at 397-98; see also

Amtrak II, 575 U.S. at 51 (observing that seven of nine

Amtrak board members “are appointed by the

President and confirmed by the Senate”); cf. Free Enter.

Fund, 561 U.S. at 484, 484-85 (noting the PCAOB—

despite being statutorily deemed “private”—is a

“Government-created, Government-appointed entity,”

whose five members are “appointed . . . by the [SEC]”).

Instead of engaging with Lebron, Gulf Coast

argues that Lebron’s analysis is not “the only way” to

tell whether a corporation is a government

instrumentality. That takes too narrow a view of

precedent, however. Lebron canvassed “the long

history of corporations created and participated in by

the United States” and set out a detailed analysis to

determine whether a particular corporation—despite

its designation as “private”—counts as a government

instrument for constitutional purposes. See 513 U.S.

at 386, 386-91. That is precisely the question we must

answer with respect to the Authority. How can we, as

an inferior court, simply bypass Lebron? We cannot.

Gulf Coast tries to offer us a way around Lebron,

but it is a dead end. Gulf Coast argues that Lebron

addressed only government-created corporations “that

in no way exercised government power.” But Lebron

did not limit itself in that way—to the contrary, it

relied on cases where Congress turned to private

corporations to “accomplish purely governmental

purposes.” Id. at 395 (quoting Cherry Cotton Mills, Inc.

v. United States, 327 U.S. 536, 539 (1946)). 28

28 See also Inland Waterways Corp. v. Young, 309 U.S. 517,

524

n.4

(1940)

(“The

corporations,

of

course,

perform

50a

Furthermore, the corporation actually addressed in

Lebron—Amtrak—itself exercised regulatory power,

as the Supreme Court, the D.C. Circuit, and our court

have all recognized. See Amtrak II, 575 U.S. at 50

(“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

‘governmental’ functions.” (citation omitted)); id. at 522 (“The

banking system which Congress thus established embodied a

blend of governmental and private purposes.”).

51a

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 27. We are not at

liberty to displace the Supreme Court’s governing

framework.29

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 preexisting private entity.

In sum, Lebron is the governing test to determine

whether an entity is private or public and, under that

29 That principle also answers Gulf Coast’s reliance on a

2007 Office of Legal Counsel (“OLC”) opinion. The opinion

argued that the Appointments Clause applies to someone with

significant and continuing government authority, whether he is

a private or a government employee. Officers of the United States

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

73, 121-22 (2007). If the opinion was suggesting its analysis as

an alternative to Lebron (a decision, it should be noted, the

opinion cited, see id. at 121), that is a suggestion only the

Supreme Court could act upon, not a circuit court bound by

Lebron.

52a

test, the Authority is a private entity not subject to

Article II’s Appointments Clause.

E.

Anti-Commandeering Challenge

Finally, we turn to Gulf Coast’s argument that

HISA unconstitutionally commandeers state officials.

The Constitution forbids Congress from “command[ing]

the States’ officers, or those of their political

subdivisions, to administer or enforce a federal

regulatory program.” Printz v. United States, 521 U.S.

898, 935 (1997); see also New York v. United States,

505 U.S. 144, 165, 188 (1992). Gulf Coast argues HISA

violates that principle by coercing state racing

commissions to remit fees to fund the Authority’s

operations. If state officials refuse, the Authority

collects fees directly from covered persons—but, in

that event, HISA prohibits the state from imposing

taxes or fees to finance the state’s own horseracing

programs. See § 3052(f). This scheme, argues Gulf

Coast, “puts a gun to the head of Texas” by coercing

state officials to administer a federal program rather

than a state program.

The problem with this claim, as the district court

pointed out, is that Gulf Coast lacks standing to raise

it. Specifically, Gulf Coast’s alleged injury—that it

prefers Texas’s racetrack safety rules to HISA’s—is

“no injury at all.” Black II, 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 that 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”).

53a

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 anticommandeering challenge to HISA.

IV.

Conclusion

In sum, we affirm the district court’s judgment

that (1) Congress’s recent amendment to HISA cured

the private nondelegation flaw in the Authority’s

rulemaking power; (2) HISA does not violate due

process; (3) the Authority’s directors are not subject to

the Appointments Clause under Lebron; and (4) Gulf

Coast lacks standing to challenge HISA on anticommandeering 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.

54a

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

LUBBOCK DIVISION

NATIONAL HORSEMEN’S

BENEVOLENT AND

PROTECTIVE

ASSOCIATION, et al.,

Plaintiffs,

THE STATE OF TEXAS

and THE TEXAS RACING

COMMISSION,

No. 5:21-CV-071-H

Intervenor-Plaintiffs,

v.

JERRY BLACK, et al.,

Defendants.

MEMORANDUM OPINION AND ORDER

In hopes of standardizing horseracing regulation,

the Horseracing Integrity and Safety Act of 2020

(HISA) empowered a private entity to draft

nationwide regulations subject to the Federal Trade

Commission’s review and approval. In response, the

plaintiffs claimed that HISA was unconstitutional

because it did not give the FTC meaningful

oversight—violating

the

private-nondelegation

doctrine. Although this Court recognized that the

plaintiffs’ concerns were legitimate, it construed

binding precedent as permitting Congress’s approach

55a

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 privatenondelegation doctrine under Article I and the Due

Process Clause. Dkt. No. 116. Texas and the Texas

Racing Commission, as intervenor-plaintiffs, raise the

same arguments. Dkt. No. 155 at 22-25. Additionally,

also after remand, another court transferred a related

case to this Court. Gulf Coast Racing LLC v.

Horseracing Integrity & Safety Authority, No. 2:22-CV146-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.

56a

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’

private-nondelegation argument reveals too much and

is barred by precedent. Previously, the plaintiffs

argued that “HISA violates the private nondelegation

doctrine because the FTC cannot modify the

Authority’s rules.” Dkt. No. 38 at 26. Now that

Congress expressly authorizes the FTC to modify the

Authority’s rules, the plaintiffs retreat and admit

their true view: that there is nothing Congress could

do to bring the HISA–Authority arrangement within

constitutional bounds. Dkt. No. 182 at 31-33, 37-38.

But this argument ignores the long history of the

executive branch leveraging—with court approval—

expertise from private industry so long as the industry

remains subordinate to a supervisory federal agency.

E.g., Sunshine Anthracite Coal Co. v. Adkins, 310 U.S.

381, 388, 399 (1940) (allowing private parties to

participate in price setting because the private entities

“function[ed] subordinately to the Commission” and

because the Commission retained “pervasive

surveillance and authority” over the activities of the

private parties); see also Lebron v. Nat’l R.R.

Passenger Corp., 513 U.S. 374, 386-90 (1995)

(detailing the “long history of corporations created and

participated in by the United States for the

achievement of governmental objectives” beginning in

the 18th Century). The Court understands the

plaintiffs’ concerns with these arrangements,

especially given how long horseracing has been

regulated at the local level. But because Congress

brought HISA within the Constitution’s limits as

defined by the Fifth Circuit, the Court concludes that

57a

HISA does not violate the private non-delegation

doctrine.

Second, the plaintiffs’ facial and as-applied Fifth

Amendment Due Process argument fails for the same

reasons this Court explained in its first order rejecting

it. The Court finds that the Authority is not a selfinterested

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

58a

plaintiffs have no traceable, redressable injury to

assert because HISA allows Texas to either elect to

collect fees of covered persons or, if not, the Authority

will. HISA allows states to “elect[]” to assess and

collect fees on covered persons.

15 U.S.C.

§ 3052(f)(2)(A). But if the state does not 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 anticommandeering 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

1 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.

59a

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

bipartisan support.

with

broad

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

60a

(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 regulatory scheme for

racetrack safety and ADMC. Nat’l Horsemen’s, 53

F.4th at 873.

B.

A private entity, the Authority, is

incorporated in aid of HISA.

The Authority was incorporated as a nonprofit on

September 8, 2020. GPX 6 at 1; No. 5:23-CV-077, Dkt.

No. 47 at 5. HISA “recognize[d]” the Authority, a

“private, independent, self-regulatory, nonprofit

corporation . . . for purposes of developing and

implementing a horseracing anti-doping and

medication control program and a racetrack safety

program for covered horses, covered persons, and

covered horseraces.” 15 U.S.C. § 3052(a). HISA

prescribes the makeup of the Authority’s board of

directors, including the number of total directors

(nine), independent directors (five), and industrymember directors (four). § 3052(b)(1). The initial

directors are chosen by a nominating committee,

“comprised of seven independent members . . . set forth

in the governing corporate documents of the

Authority.” § 3052(d). HISA also directs the Authority

to establish racetrack-safety and ADMC standing

committees. § 3052(c).

61a

C.

HISA creates a rulemaking procedure

that attempts to allow the Authority to

aid the FTC in regulating thoroughbred

horseracing.

HISA creates a regulatory framework that allows

the Authority to operate in aid of the FTC: The

Authority first drafts proposed rules, which are then

submitted for FTC approval. § 3053(a). Once a rule is

received by the FTC, it goes through notice and

comment. § 3053(a)-(b). HISA also requires FTC

approval before a proposed rule can take effect.

§ 3053(b)(2). The FTC is given sixty days to “approve

or disapprove the proposed rule or modification,” and

the FTC “shall approve” a proposed rule if it is

consistent with the statute and applicable rules.

§ 3053(c).

D.

With oversight by the FTC, the

Authority is tasked with enforcement.

The Authority is empowered to enforce the rules

it aids the FTC in creating by investigating violations,

imposing civil sanctions, and suing to enforce

sanctions or obtain injunctive relief. §§ 3058(a),

3057(d), 3054(h)-(j). The Authority’s investigatory

powers are subject to “uniform procedures” reviewed

and approved by the FTC. § 3054(c). All civil

sanctions imposed by the Authority are subject to two

layers of FTC oversight. First, all civil sanctions are

subject to de novo review by an Administrative Law

Judge appointed by the FTC. § 3058(b). And the FTC

can review de novo the ALJ’s final decision. § 3058(c).

62a

E.

The Authority is funded by private

parties.

At its initial stage, the Authority is funded by

loans. See § 3052(f)(1). After that initial stage, the

majority of the Authority’s funding will derive from

fees collected from covered persons or state racing

commissions. § 3052(f)(1)-(4). Any “proposed increase”

in fees for covered persons must be reported to the

FTC for review and submitted for notice and comment.

§ 3052(f)(1)(c)(iv).

F.

Multiple parties

constitutionality.

challenge

HISA’s

This case involves many parties, consisting of the

lead-case plaintiffs,2 the member-case plaintiffs,3 the

2 The plaintiffs in the lead case are National Horsemen’s

Benevolent and Protective Association, Arizona Horsemen’s

Benevolent and Protective Association, Arkansas Horsemen’s

Benevolent and Protective Association, Indiana Horsemen’s

Benevolent and Protective Association, Illinois Horsemen’s

Benevolent and Protective Association, Louisiana Horsemen’s

Benevolent and Protective Association, Mountaineer Park

Horsemen’s Benevolent and Protective Association, Nebraska

Horsemen’s Benevolent and Protective Association, Oklahoma

Horsemen’s Benevolent and Protective Association, Oregon

Horsemen’s

Benevolent

and

Protective

Association,

Pennsylvania Horsemen’s Benevolent and Protective Association,

Tampa Bay Horsemen’s Benevolent and Protective Association,

and Washington Horsemen’s Benevolent and Protective

Association (hereinafter the Horsemen plaintiffs). Dkt. No. 149

at 2-10.

3 The plaintiffs in the member case are Gulf Coast Racing

LLC, LRP Group Ltd., Valle de Los Tesoros Ltd., Global Gaming

LSP, LLC, and the Texas Horsemen’s Partnership LLP

(hereinafter the Gulf Coast plaintiffs). Dkt. No. 142 at 7-8.

63a

intervenor-plaintiffs, 4 the FTC defendants, 5 and the

Authority defendants. 6 Both plaintiff groups sued

FTC-related defendants and Authority-related

defendants.

G.

The

Fifth

Circuit

unconstitutional.

holds

HISA

In March 2021, the National Horsemen’s

Benevolent and Protective Association and twelve of

its affiliates (the Horsemen plaintiffs) filed suit

against the FTC, its commissioners, the Authority,

and the Authority’s Nominating Committee members,

challenging HISA’s constitutionality on several

grounds. Dkt. No. 1 at 19-26. In due time, the FTC

defendants and the Authority defendants separately

filed motions to dismiss (Dkt. Nos. 34; 36), and the

Horsemen filed a partial motion for summary

judgment, seeking declaratory and injunctive relief on

their private-nondelegation and due-process claims

(Dkt. No. 37). After considering the briefing of the

4 The intervenor-plaintiffs are the State of Texas and the

Texas Racing Commission. Dkt. No. 155.

5 The

Authority defendants are Jerry Black, the

Horseracing Integrity and Safety Authority, Lisa Lazarus, Steve

Beshear, Adolpho Birch, Leonard Coleman, Ellen McClain,

Charles Scheeler, Joseph DeFrancis, Susan Stover, Bill

Thomason, D.G. Van Clief, Katrina Adams, Nancy Cox, Joseph

Dunford, Frank Keating, and Kenneth Schanzner. Dkt. Nos. 142;

149.

6 The FTC defendants are the Federal Trade Commission,

Lina Khan, in her official capacity as Chair of the Federal Trade

Commission, Rebecca Kelly Slaughter, Alvaro Bedoya, Noah

Phillips, and Christine Wilson, all in their official capacities as

Commissioners of the Federal Trade Commission. Dkt. Nos. 142;

149.

64a

parties and various amici, and after oral argument,

the Court concluded, based on what it viewed as

binding precedent, that HISA did not result in a

constitutional violation. Nat’l Horsemen’s Benevolent

& Protective Ass’n v. Black, 596 F. Supp. 3d 691, 725

(N.D. Tex. 2022), rev’d and remanded, 53 F.4th 869

(5th Cir. 2022). Thus, the Court denied the partial

motion for summary judgment (Dkt. No. 37) and noted

that the plaintiffs had abandoned their remaining

claims (Nat’l Horsemen’s Benevolent & Protective Ass’n,

596 F. Supp. 3d at 728). The Court dismissed the

plaintiffs’ complaint (Dkt. No. 23) with prejudice.

On appeal, the Fifth Circuit reversed in a

thorough opinion, holding that the FTC-Authority

regulatory scheme was unconstitutional because it

gave the FTC too little control over a private entity

with regulatory authority. Nat’l Horsemen’s, 53 F. 4th

at 872.

The court explained that “[a] cardinal

constitutional principle is that federal power can be

wielded only by the federal government.” Id. As a

result, “a private entity may wield government power

only if it ‘functions subordinately’ to an agency with

‘authority and surveillance’ over it.” Id. at 881. To

explain the concept “more precisely,” the court noted

that it is within constitutional bounds for Congress to

“formalize the role of private parties in proposing

regulations so long as that role is merely ‘as an aid’ to

a government agency that retains the discretion to

‘approve[], disapprove[], or modif[y]’ them.”

Id.

(quoting Ass’n of Am. R.R.s v. Dep’t of Transp. [Amtrak

I], 721 F.3d 666, 671 (D.C. Cir. 2013)). But “[i]f the

private entity does not function subordinately to the

supervising agency, the delegation of power is

unconstitutional.” Id.

65a

Applying these principles, the court held that the

Authority was not subordinate to the FTC. Id. at 87273. “An agency does not have meaningful oversight if

it does not write the rules, cannot change them, and

cannot second-guess their substance.” Id. at 872. It

was the Authority, not the FTC, that had “the last

word over what rules govern our nation’s

thoroughbred horseracing industry,” which rendered

HISA unconstitutional. Id.

Three aspects of HISA and the FTC-Authority

relationship led the panel to this conclusion. First, the

court noted the Authority’s “sweeping rulemaking

power” and observed that “HISA’s generous grant of

authority to the Authority to craft entire industry

‘programs’ strongly suggests it is the Authority, not

the FTC,” that is in control. Id. at 882-83. Moreover,

the court explained that the FTC’s ability to adopt

interim final rules did not meaningfully alter the scope

of the Authority’s power because such rulemaking is

narrow and reserved for emergencies. Id. at 883.

Second, the court relied on the FTC’s limited

power to review proposed rules, which prevented the

FTC from reviewing the Authority’s policy choices. Id.

at 884. The FTC’s review of proposed rules for

consistency with HISA was “too limited to ensure the

Authority ‘functions subordinately’ to the agency.” Id.

“[S]uch arms-length review hardly subjects the

Authority’s rules to ‘independent’ oversight.” Id. at

885. Perhaps more importantly, the court explained

that, whatever the FTC’s consistency review would

entail, it excludes review of the Authority’s policy

choices. Id. Similarly, the FTC could not force the

Authority to modify those choices; it could only make

recommendations to the Authority. Id. at 886. “The

66a

Act’s division of labor is clear: the Authority writes

the rules; the agency may suggest certain changes, but

the Authority can take them or leave them.” Id.

Finally, the Fifth Circuit noted that HISA’s FTCAuthority relationship was materially different from

the Maloney Act’s SEC-FINRA model, which has

consistently withstood non-delegation challenges. Id.

at 887. Although FINRA, like the Authority, “is a

private entity empowered to draft and propose

regulations” to a federal agency, there was “a key

distinction” between the two. Id. “Unlike HISA, the

Maloney Act empowers the SEC to ‘abrogate, add to,

and delete from’ FINRA rules ‘as the [SEC] deems

necessary or appropriate[.]’” Id. (quoting 15 U.S.C.

§ 78s(c) and citing Aslin v. Fin. Indus. Regulatory

Auth., Inc., 704 F.3d 475, 476 (7th Cir. 2013)

(observing that the SEC “may abrogate, add to, and

delete from all FINRA rules as it deems necessary”)).

The SEC’s rulemaking power, the court explained,

“meaningfully

distinguishes

the

SEC-FINRA

relationship from the FTC-Authority relationship.” Id.

The court recognized that while “FINRA plays an

important role in formulating securities industry rules,

its role is ultimately ‘in aid of’ the SEC, which has the

final word on the substance of the rules.” Id. The

Authority, in contrast, has the final word on

formulating and proposing rules because of “the limits

built into the FTC’s oversight.” Id. Thus, the Fifth

Circuit held that “the FTC’s power to recommend

modifications is not equivalent to the power to require

modifications.” Id. at 888.

These reasons—combined with the Fifth Circuit’s

view that precedent did not require affirmance—led

the Court to hold that the Authority was not

67a

subordinate to the FTC and, thus, the FTC-Authority

structure violated the Constitution’s guarantee

against private nondelegation. Id. at 890.

H.

Congress amends HISA.

Roughly six weeks after the Fifth Circuit’s

decision, Congress enacted, and the President signed

into law, an amendment to HISA. As amended,

§ 3053(e) now provides the FTC with authority to

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

Authority promulgated in accordance with this

chapter as the Commission finds necessary or

appropriate to ensure the fair administration of the

Authority, to conform the rules of the Authority to

requirements of this chapter and applicable rules

approved by the Commission, or otherwise in

furtherance of the purposes of this chapter.” 15 U.S.C.

§ 3053(e). The defendants sought rehearing in the

Fifth Circuit in light of the amendment, but the panel

remanded the case to this Court for further

proceedings. Nat’l Horsemen’s, No. 22-10387, Dkt.

Nos. 223-24 (5th Cir. Jan. 31, 2023) (denying

rehearing and issuing mandate).

I.

The plaintiffs allege

remand emergencies.

several

post-

Following remand, the plaintiffs in National

Horsemen’s filed a Motion for a Preliminary Injunction

(Dkt. No. 116), asking the Court to enjoin the

Authority from implementing and enforcing HISA

while the parties dispute whether Congress’s recent

modification to HISA makes the statute constitutional.

Id. at 6. The plaintiffs proposed that the Court order

an expedited briefing schedule on the motion so the

Court could issue its order by March 27, 2023—the

68a

date an anti-doping rule was scheduled to (and

eventually did) go into effect. Dkt. No. 117. After

considering the parties’ respective positions, the Court

declined to order expedited briefing and instead set a

regular briefing schedule. Dkt. No. 121.

On March 27, 2023—the very day that the antidoping rule was approved and went into effect—the

plaintiffs filed their Motion for an Emergency

Preliminary Injunction Against the Medication Rule.

Dkt. No. 124.

The emergency motion focused

specifically on the anti-doping rule, alleging that it

violated the Administrative Procedure Act. Id. The

Court ordered expedited briefing for the emergency

motion only. Dkt. No. 127. In its order, the Court

found that the anti-doping rule issued without the

notice required under the APA and delayed the Rule’s

effective date until May 1, 2023. Dkt. No. 134.

Five days later, the plaintiffs in Gulf Coast—a

case originally pending in the Amarillo Division—

moved for a temporary restraining order and

preliminary injunction, seeking to enjoin the

defendants from enforcing HISA while the Court

resolved the pending dispositive motions. No. 2:22CV-146-Z, Dkt. No. 50. This case was transferred to

the Lubbock Division of this Court because of the

substantial overlap of the claims in Gulf Coast and

National Horsemen’s, the similarity of the parties, and

the likelihood that the evidence involved and objective

of the plaintiffs in both cases would be nearly identical.

Gulf Coast, No. 5:23-CV-077-H, Dkt. No. 53 at 4. After

the transfer, the Court denied the motion for

temporary restraining order but reserved its ruling on

the motion for preliminary injunction. Gulf Coast, No.

5:23-CV-077-H, Dkt. No. 59.

69a

J.

The

plaintiffs

bring

constitutional claims.

numerous

The Court found that Gulf Coast and National

Horsemen’s involved “a common question of law or fact”

and consolidated the two cases pursuant to Federal

Rule of Civil Procedure 42(a)(2). Dkt. No. 135 at 1.

i.

Gulf Cost Racing

The Gulf Coast plaintiffs’ operative complaint

makes the following constitutional claims: (1) the

Authority’s leadership-appointment process violates

Article II’s Appointments Clause, (2) the Authority

leadership-removal process violates Article II’s

Vesting Clause, (3) the Authority’s rulemaking

constitutes “a naked delegation” of legislative power,

(4) the rulemaking authority that is delegated to the

Authority violates the nondelegation doctrine because

Congress has not supplied an intelligible principle, (5)

the delegation of power to the Authority violates the

private-nondelegation doctrine, (6) the Authority’s

power to seek civil penalties from covered persons

violates the Seventh Amendment right to a jury trial,

(7) the Authority’s ability to adjudicate private rights

violates Article III, (8) HISA’s elect-or-preempt

provision violates the Tenth Amendment’s guarantee

that the federal government cannot command States

to enforce federal law, and (9) HISA Rule 8400, which

requires covered persons to consent to inspection as a

condition of registration, violates the Fourth

Amendment. Dkt. No. 142.

At the April 18, 2023 pretrial conference, the

parties discussed with the Court the possibility that

the claims might be narrowed in advance of trial. Dkt.

No. 163 at 16-17. During the conference, the Gulf

70a

Coast plaintiffs indicated they were abandoning an

argument related to the breed-expansion authority,

which they called a subclaim of the privatenondelegation challenge. Id. at 13. The next day, the

Gulf Coast plaintiffs filed an advisory that they would

be willing to abandon “Claims 3-4 (public

nondelegation), Claim 6 (Seventh Amendment), Claim

7 (Article III), and Claim 9 (Fourth Amendment),”

provided the defendants would not hold that

abandonment against them in another case or in an

enforcement proceeding.

Dkt. No. 161.

The

defendants filed a notice advising that they agreed to

these conditions (Dkt. Nos. 164; 165), so the Gulf Coast

plaintiffs have abandoned their third, fourth, sixth,

seventh, and ninth claims.

Thus, the Gulf Coast plaintiffs’ remaining claims

are:

•

An Article I, Section 2, Clause 2

Appointments Clause challenge (Claim 1)

•

An Article II, Section 1 removal challenge

(Claim 2)

•

A private-nondelegation challenge (Claim

5),7 and

•

An anti-commandeering challenge under the

Tenth Amendment (Claim 8).

7 The plaintiffs do not identify the constitutional source of

this claim. Dkt. No. 142 at 45-49. The Fifth Circuit noted that

“[c]ourts and commentators differ over the locus of the

constitutional violation” (Nat’l Horsemen’s, 53 F.4th at 881 n.23),

but the parties do not dispute that such a violation is cognizable

under the Constitution, so the Court does not reach this question.

71a

ii.

National Horsemen’s

The Horsemen plaintiffs’ Original Complaint

(Dkt. No. 1) and First Amended Complaint (Dkt. No.

23)—which was the operative complaint when the

Court previously heard the defendants’ motions to

dismiss and the plaintiffs’ partial motion for summary

judgment—included an intelligible-principle claim

and an Appointments Clause claim, but those were

recognized as abandoned in the Court’s memorandum

opinion and order (Dkt No. 92 at 60 (“The plaintiffs

abandoned their Appointments Clause claim (Claim II)

and public nondelegation claim (Claim III), so they are

dismissed.”)).

The Horsemen plaintiffs’ live complaint (Dkt. No.

149) asserts that HISA violates the Constitution in

three claims, none of which are abandoned:

•

Delegation of legislative powers to a private

entity in violation of Article I, Section 1,

•

Delegation of executive powers to a private

entity in violation of Article II, Section 1,

and

•

A violation of the Fifth Amendment’s Due

Process

Clause—alleging

that

selfinterested industry participants are given

regulatory power over their competitors.

iii. The intervenor-plaintiffs

The claims in the intervenor-plaintiffs’ operative

complaint mirror those in the Horsemen plaintiffs’

complaint. The intervenor-plaintiffs assert that HISA

violates the constitution in two claims:

72a

•

Delegation of legislative and executive

powers to a private entity under Article I,

Section I and Article II, Section II, and

•

Violation of the Due Process Clause because

self-interested

industry

participants

regulate their competitors.

K. Multiple motions are currently pending.

Pending before the Court is the Horsemen

plaintiffs’ Motion for a Preliminary Injunction (Dkt.

No. 116). Also before the Court is the Gulf Coast

plaintiffs’ Motion for Summary Judgment (Dkt. No.

136) and Motion for a Preliminary Injunction (Dkt. No.

139); the Authority Defendants’ Motion to Dismiss

(Dkt. No. 137); and the FTC Defendants’ Motion for

Summary Judgment (Dkt. No. 138).

The Horsemen plaintiffs’ Motion for Preliminary

Injunction (Dkt. No. 116) asserts that HISA is facially

unconstitutional on three bases: First, the Horsemen

argue that “the Authority is not subordinate when

exercising legislative powers.” Id. at 8. They argue

that the Authority is delegated with rulemaking

authority, more so (according to the plaintiffs) than

other permissible private delegations. Id. at 8-9. They

also argue that, post-amendment, HISA still requires

the FTC to approve rules that are consistent with the

statute. Id. at 9-12. The Horsemen argue that the

FTC must be able to approve, disapprove, or modify a

rule at the time the Authority proposes it. Id. at 11.

And they argue that the FTC is subordinate to the

Authority because the FTC cannot initiate rulemaking.

Id. at 12-13. They say the FTC cannot issue interim

final rules. Id. at 13. And they argue that the

Authority has behaved inconsistently with the Act and

73a

the Rules by, for instance, extending effective dates of

Rules without FTC permission. Id. at 13-14. They

also argue that the Authority exercises taxing-andspending powers by issuing assessments. Id. at 15-16.

Excluding the abandoned claims, the Gulf Coast

plaintiffs’ Motion for Summary Judgment and Motion

for a Preliminary Injunction argue that HISA violates

Article II’s Appointments Clause because the

Authority’s directors are “Officers of the United States”

under Lucia v. SEC, 138 S. Ct. 2044 (2018). No. 5:23CV-077, Dkt. No. 36 at 28. They also argue that HISA

violates Article II’s Vesting Clause because the

President cannot remove the Authority’s directors. Id.

at 34. They then argue that HISA violates the

nondelegation doctrine because the Authority

exercises legislative power in violation of the

nondelegation doctrine (regardless of whether the

Authority is a private or public entity). Id. at 37. The

plaintiffs next argue that even if the Authority is a

private entity, it violates the nondelegation doctrine.

Id. at 45. Finally, the plaintiffs argue that HISA

violates the anti-commandeering doctrine. No. 5:23CV-077, Dkt. No. 36 at 57.

In addition to responding to the plaintiffs’

arguments, the FTC defendants argue in their Motion

to Dismiss (Dkt. No. 137) that the plaintiffs do not

have standing to assert an anti-commandeering claim

because they cannot enforce the rights of a state and

Texas is not joined in that claim. No. 5:23-CV-077,

Dkt. No. 46 at 27-30. In their motion for summary

judgment, the Authority defendants argue that the

plaintiffs’ fail to prove their claims. Dkt. No. 137.

74a

L.

The Court received evidence and heard

argument at trial.

On April 26, the Court held a trial on the merits

consolidated with the hearings of the plaintiffs’

motions for preliminary injunction. Dkt. No. 178. The

plaintiffs admitted a number of exhibits, as well as

witness testimony by declaration. Dkt. No. 179. The

Horsemen admitted 57 exhibits, including matters of

public record (e.g., HPX 14—HISA Racetrack Safety,

87 Fed. Reg. 435 (2022)); Authority guidance (e.g.,

HPX 26—Guidance of the Horseracing Integrity and

Safety Authority (November 29, 2022)); and

biographies of Authority board members (e.g., HPX

53-I—Biography of Jerry Black). The Horsemen also

presented three witnesses by declaration, who

testified regarding the economic and practical effects

of HISA (HPXs 58; 59; 61). The Gulf Coast plaintiffs

admitted exhibits in the public record, as well as the

meeting minutes of the Authority’s board of directors

(GPXs 41-53) and the Authority’s balance sheet (GPX

40). The Gulf Coast plaintiffs also presented three

witnesses by declaration—all agents of the plaintiff

entities—who testified regarding the effect of HISA on

their businesses or association members. GPXs 29-32.

The FTC presented no evidence. The Authority

presented seven witnesses, who are agents of the

Authority, veterinarians, and horse trainers. DXs 1-8.

Lisa Lazarus, the CEO of the Authority, testified

regarding the benefits of HISA and the Authority on

the horseracing industry. DXs 1-2. The Authority’s

CFO, Jim Gates, disputed the economic impact

estimated by the Gulf Coast plaintiffs. DX 3. Sara

Langsam (DX 4), Susan Stover (DX 7), and Mary

Scollay (DX 8) are veterinarians who testified

75a

regarding the benefits, in their view, of the Authority’s

anti-doping and medication control (ADMC) program.

And Mark Casse (DX 5) and Graham Motion (DX 6),

horse trainers, testified about the positives of uniform

regulation. After the parties closed, the Court heard

oral argument and took its ruling under advisement.

2.

Standard of Review

When challenging the facial constitutionality of a

statute, a plaintiff must show “that no set of

circumstances exists under which the [statute] would

be valid.” United States v. McGinnis, 956 F.3d 747,

752 (5th Cir. 2020) (alteration in original) (quoting

United States v. Salerno, 481 U.S. 739, 745 (1987)). As

a result, “[a] facial challenge to a legislative Act is, of

course, the most difficult challenge to mount

successfully.” Salerno, 481 U.S. at 745. “Facial

challenges to the constitutionality of statutes should

be granted sparingly and only as a last resort.”

McGinnis, 956 F.3d at 752-53 (citations omitted).

In addition to clearing this high bar, a plaintiff

must also overcome the constitutional-doubt canon:

“[W]here a statute is susceptible of two constructions,

by one of which grave and doubtful constitutional

questions arise and by the other of which such

questions are avoided, our duty is to adopt the latter.”

United States ex rel. Attorney General v. Delaware &

Hudson Co, 213 U.S. 366, 408 (1909); see also ANTONIN

SCALIA & BRYAN A. GARNER, READING LAW: THE

INTERPRETATION OF LEGAL TEXTS 247 (2012) (“A

statute should be interpreted in a way that avoids

placing its constitutionality in doubt.”). The canon is

not without limits, but “[i]t is the Court’s settled policy,

however, to avoid an interpretation of a federal statute

76a

that engenders constitutional issues if a reasonable

alternative interpretation poses no constitutional

question.” Gomez v. United States, 490 U.S. 858, 858

(1989). In light of this standard of review and the

Court’s findings of fact, the Court reaches the

following conclusions of law detailed in Parts 3-7.

3.

The plaintiffs’ Article II claims fail because

the Authority is a private entity.

The Gulf Coast plaintiffs allege two violations of

Article II of the Constitution. First, they claim that

HISA violates Article II’s Appointments Clause by

creating public officers—the Authority’s directors—

who were not appointed by the President with the

advice and consent of the Senate. No. 5:23-CV-077,

Dkt. No. 36 at 21. Second, they claim that HISA

violates Article II’s Vesting Clause because neither the

President nor the FTC on his behalf may remove the

Authority’s directors, which Gulf Coast believes are

executive officials. Id. at 34. The Gulf Coast plaintiffs

concede that their arguments fail if the Authority is a

private entity. No. 5:23-CV-077, Dkt. No. 61 at 9.

More broadly, the plaintiffs recognize that their

Article II arguments and private-nondelegation

arguments are mutually exclusive. Dkt. No. 182 at 75.

For two reasons, the Court finds that the

Authority is a private entity. First, in light of the Fifth

Circuit’s opinion, it is both the law of the case and

foreclosed by binding precedent. Second, even if that

were not the case, the Authority is a private entity

under Lebron and other relevant precedent because it

is not government created, and its directors are not

government appointed. This matters because private

entities are not subject to the constitutional

77a

requirements governing appointment and removal of

officers, and governmental entities are not subject to

private-nondelegation claims. Like the rest of Article

II, “the Appointments Clause says nothing” about

private entities. Fin. Oversight & Mgmt. Bd. For P.R.

v. Aurelius Inv., LLC, 140 S. Ct. 1649, 1658 (2020).

Despite the Gulf Coast plaintiffs’ admission that

finding the Authority to be private forecloses their

arguments, they fail to squarely address the issue.

Instead, they merely state that the Authority is

different than other self-regulatory organizations

(SROs) because it is not a voluntary association. No

5:23-CV-077, Dkt. No. 61 at 14. But this argument

ignores both the Fifth Circuit’s opinion in this case and

Lebron’s application here, which weighs heavily in

favor of the defendants’ argument that the Authority

is private.

A.

The Fifth Circuit’s holding in this case

rests necessarily on finding that the

Authority is a private entity.

On appeal, the Fifth Circuit held that the

Authority was a private entity that was improperly

delegated government authority. Nat’l Horsemen’s, 53

F.4th at 872. The Court explained that “HISA

empowers a private entity called [the Authority]” to

operate “under [FTC] oversight.” Id. The Court

further explained that “[t]he end result is that

Congress has given a private entity the last word over

what rules govern our nation’s thoroughbred

horseracing industry.” Id. This was a constitutional

issue, the Court concluded, because “Congress defies

[the nondelegation doctrine] by vesting government

power in a private entity not accountable to the

78a

people . . . [C]ourts have distilled the principle that a

private entity may wield government power only if it

‘functions subordinately’ to an agency with ‘authority

and surveillance’ over it.” Id. at 873, 881. This holding

is necessarily predicated on the Authority being a

private entity. Moreover, there is the simple fact that

the Fifth Circuit called the Authority a private entity

throughout its opinion. Id. at 872, 873, 881, 887 (the

terms “private entity” and “private entities” appear a

combined 31 times in the Fifth Circuit opinion).8

Of course, “[n]ot all text within a judicial decision

serves as precedent.” BRYAN A. GARNER ET AL., THE

LAW OF JUDICIAL PRECEDENT 44 (2016) (collecting

cases). Only an appellate court’s holding—those parts

of the decision consisting of the “court’s determination

of a matter of law pivotal to its decision”—are given

the weight of binding precedent (and therefore,

likewise become the law of that particular case). Id.

(quoting Francis Bacon, “The Lord Keeper’s Speech in

the Exchequer” (1617), in 2 THE WORKS OF FRANCIS

BACON 477, 478 (Basil Montagu ed., 1887)). While

“commentators and judges don’t uniformly define

8 Like the Fifth Circuit, other courts to consider challenges

to the FTC-Authority structure have called the Authority a

private entity. Oklahoma v. United States, 62 F.4th 221 passim

(6th Cir. 2023) (calling the Authority “a private entity beyond

public control” and referring to private entities more than 40

times); Oklahoma v. United States, No. 5:21-CV-104-JMH, 2022

WL 1913419, at *11 (E.D. Ky.) (“Plaintiffs make several

alternative arguments in case the Court finds the Authority to be

a public entity, including that its structure violates the

Appointments Clause, its officers are not properly removable

under Article II and the separation of powers, and it violates the

public nondelegation doctrine. However, as repeatedly stated

herein, . . . the Authority is a private entity.”).

79a

what counts as a holding,” all agree that those

propositions that are logically necessary to the

outcome of the case are counted within the holding. Id.

at 45; see also United States v. Johnson, 256 F.3d 895,

914-15 (9th Cir. 2001) (en banc) (discussing whether a

holding is limited to that which is “necessary in some

strict logical sense” or the broader “necessarily

decided”); Int’l Truck & Engine Corp. v. Bray, 372 F.3d

717, 721 (5th Cir. 2004) (defining a holding as a

statement “necessary to the result or constitut[ing] an

explication of the governing rules of law”).

Additionally, in the Fifth Circuit, “[t]he law of the

case doctrine states that absent manifest error, or an

intervening change in the law, an appellate court’s

decision of a legal issue, whether explicitly or by

necessary implication, establishes the law of the case

and must be followed in all subsequent proceedings in

the same case.” Carnival Leisure Indus., Ltd. v. Aubin,

53 F.3d 716, 718-19 (5th Cir. 1995). Although the

doctrine “does not include determination of all

questions which were within the issues of the case and

which, therefore, might have been decided,” the

doctrine “does mean that the duty of a lower court to

follow what has been decided at an earlier stage of the

case comprehends things decided by necessary

implication as well as those decided explicitly.” Terrell

v. Household Goods Carriers’ Bureau, 494 F.2d 16, 19

(5th Cir. 1974) (cleaned up). Thus, an issue of law or

fact decided on appeal may not be reexamined either

by the district court on remand or by the appellate

court on a subsequent appeal. Todd Shipyards Corp.

v. Auto Transp., 763 F.2d 745, 750 (5th Cir. 1985).

For example, in Cooper Tire & Rubber Co. v.

Farese, the Fifth Circuit explained that a prior panel

80a

“held that the effective date of the separation

agreement was ambiguous as a matter of law.” 248 F.

App’x 555, 560-61 (5th Cir. 2007). In doing so, “the

prior panel necessarily had to consider whether the

contract’s apparent ambiguities could or should be

resolved by applying the discretionary canons of

construction.” Id. As a result, the court explained that

the contract’s ambiguity became “the law of the case,

and the question of whether the effective date of the

separation agreement can be determined on summary

judgment is now closed.” Id.

Here, the Fifth Circuit’s decision is necessarily

predicated on a finding that the Authority is a private

entity. The Fifth Circuit held that HISA violates the

private-nondelegation doctrine because the statute

delegates legislative and executive powers to a private

entity. Nat’l Horsemen’s, 53 F.4th at 873 (applying

“the settled constitutional principle that forbids

private

entities

from

exercising

unchecked

government power”). The Fifth Circuit recognized

that “HISA empowers a ‘private, independent, selfregulatory, nonprofit corporation”—the Authority. Id.

And the Fifth Circuit expressly disclaimed the idea

that it was addressing the public-nondelegation

doctrine. Id. at 883. The animating concern of the

Fifth Circuit’s opinion—the “obnoxious” delegation of

governmental authority to unaccountable private

actors—is meaningless if the entity to whom power is

delegated is considered a public body. Thus, the Fifth

Circuit has already held—either expressly or, at the

very least, by necessary implication—the Authority is

a private entity, and the recent Congressional

amendment does nothing to disturb that holding.

Bound by both precedent and the law of the case, the

81a

Court must deny the Gulf Coast plaintiffs’ Article II

claims.

The plaintiffs insist that the Court is not bound

by the Fifth Circuit’s private-entity holding. At trial,

counsel for the Gulf Coast plaintiffs argued that the

Authority’s private-entity status was an uncontested

assumption of the Fifth Circuit. Dkt. No. 182 at 70-72.

When asked, counsel indicated that Lebron was his

best case on this point, citing the following language:

“[W]e think that Atchison’s assumption of Amtrak’s

nongovernmental status (a point uncontested by the

parties in that case . . .) does not bind us here.” Id. at

68.

But the plaintiffs misread Lebron, which held

that Amtrak is a public entity for purposes of the First

Amendment. Lebron, 513 U.S. at 399. In Lebron,

Amtrak argued that another case, Atchison, foreclosed

the question of Amtrak’s status as a private entity. Id.

at 393-94. The Supreme Court identified two reasons

it was not bound by Atchison, and neither was that

Atchison rested on an uncontested assumption that

Amtrak was a private entity. First, in Atchison,

Amtrak’s governmental status was irrelevant because

in any event no contractual obligation was imposed.

Nat’l R.R. Passenger Corp. v. Atchison Topeka & S.F.

RR. Co., 470 U.S. 451, 471 (1985) (stating that “neither

the Act nor the Basic Agreements created a contract

between railroads and the United States”); Lebron,

513 U.S. at 393 (explaining that “[t]he Court said it did

not have to consider th[e] question” of whether Amtrak

was a governmental entity). Therefore, with no

contractual obligation, the Atchison court “ha[d] no

need to consider whether an allegation of a

governmental breach of its own contract warrants

82a

application of the more rigorous standard of review

that the railroads urge[d] [it] to apply,” much less

whether Amtrak was a governmental entity in the

first place. Atchison, 470 U.S. at 470. Second, Lebron

concluded that even if Amtrak were a governmental

entity, there was an independent basis for the court’s

decision. See Lebron, 513 U.S. at 394. (concluding that

“even if Amtrak is a Government entity,” the statute

claiming otherwise “suffices to disable that agency

from incurring contractual obligations on behalf of the

United States”—resolving the challenge).

Thus,

Lebron did not say that Atchison did not bind it

because Amtrak’s governmental status in that case

was an uncontested assumption; rather, Atchison

simply did not need to resolve that issue—either

expressly or by implication.

Moreover, the Fifth Circuit’s affirmative grant of

relief in this case makes clear that it did not decide the

case based on an uncontested assumption. Writing for

the court, Judge Duncan emphasized that “Congress

defies [the nondelegation doctrine] by vesting

government power in a private entity.”

Nat’l

Horsemen’s, 53 F.4th at 872-73. The Fifth Circuit

identified private-entity status as an element—a

necessary condition—of a private- nondelegation claim.

See id. Thus, unlike where Lebron distinguished

Atchison—which denied relief—here the opinion in

question granted relief and, therefore, necessarily

decided certain issues, including the Authority’s

status as a private entity. And not only was that

decision made in this same case, invoking the law-ofthe-case doctrine, it was made by a superior court that

precedentially binds the Court.

83a

Finally, while the Supreme Court may be able to

consider the reach of its own precedent based on

whether a case had “the benefit of full briefing or

argument on the issue,” McCutcheon v. Fed. Elec.

Comm’n, 572 U.S. 185, 202-03 (2014), the district court

is in a different position. It is accepted that “[a]n

inferior court cannot decide adversely to a decision of

[a superior court] and send the case up to that court

again upon the ground that in the former decision of

the court . . . certain points were not sufficiently

argued.” Basil Jones, Stare Decisis, in 26 THE

AMERICAN AND ENGLISH ENCYCLOPEDIA OF LAW 158,

170 (David S. Garland & Lucius P. McGehee eds., 2d

ed. 1904).

Thus, the Court is bound by the Fifth Circuit’s

holding that the Authority is a private entity, and that

holding forecloses the Gulf Coast plaintiffs’

appointments and removal arguments. But even if the

Fifth Circuit had never addressed the issue, the Court

independently finds that the Authority is a private

entity.

B.

Even if the Fifth Circuit’s opinion only

assumed the Authority’s status as a

private entity, the Court finds that the

Authority is not a government actor.

The Court now addresses the question that it

previously assumed without deciding: whether the

Authority is a private entity. Nat’l Horsemen’s

Benevolent and Protective Ass’n, 596 F. Supp. 3d at 699.

Before the Fifth Circuit’s remand, the Court assumed

the Authority’s private-entity status, “respecting the

contours of the claims before it” but noting the

Authority’s “unique genesis.” Id. at 699 n.7. The

84a

Court now finds that the Authority is a private entity

because it is neither government-created nor

government-appointed.

“[A]ctions of private entities can sometimes be

regarded as governmental action for constitutional

purposes.” Lebron, 513 U.S. at 378 (collecting cases);

see also Free Enter. Fund v. Pub. Co. Accounting Bd.,

561 U.S. 477, 485-86 (2010) (citing to Lebron for

purposes of determining whether another nonprofit

corporation was “‘part of the government’ for

constitutional purposes”). Even the Supreme Court

has admitted that the “cases deciding when private

action might be deemed that of the state have not been

a model of consistency.” Lebron, 513 U.S. at 378

(quoting Edmonson v. Leesville Concrete Co., 500 U.S.

614, 632 (1972) (O’Connor, J., dissenting)). But one

proposition that is clear is that corporations become

more than a private entity when created or “selected

by Government to accomplish purely governmental

purposes.” Id. at 395 (quoting Cherry Cotton Mills v.

United States, 327 U.S. 536, 539 (1946)).

Lebron explained that to determine whether the

Authority is a private entity for constitutional

purposes, the Court need only look to other

“corporations created and participated in by the

United States for the achievement of governmental

objectives.” Id. at 386. The first such corporation was

the Bank of the United States, created in 1791. Id.

And the federal government has had close ties with

specially created private corporations throughout our

nation’s history, chartering or buying outright banks,

railroad companies, and grain corporations. Id. at

387-88; e.g., Lebron, 513 U.S. 374 (1995) (Amtrak);

McGinn, Smith & Co., Inc. v. FINRA, 786 F. Supp. 2d

85a

139, 147 (D.D.C. 2011) (FINRA); McCulloch v.

Maryland, 4 Wheat. 316 (1819) (second Bank of the

United States); Osborn v. Bank of United States, 9

Wheat. 738 (1824) (same).

This case law teaches that to be considered a

government entity for constitutional purposes, a

corporation must be created by the government.

Lebron, 513 U.S. at 394. In Lebron, for example, the

Supreme Court determined that Amtrak is a

government entity “for the purpose of individual rights

guaranteed against the Government by the

Constitution.” Id. The Supreme Court found it

significant that “Amtrak was created by a special

statute, explicitly for the furtherance of federal

governmental goals.” Id. at 397. The Supreme Court

also noted that six of the board’s nine directors were

named by the President himself and that the

government’s influence over Amtrak was not

temporary. Instead, Amtrak was “established and

organized under federal law for the very purpose of

pursuing federal governmental objectives, under the

direction and control of federal governmental

appointees.” Id. at 398.

Courts continue to emphasize the requirement

that a corporation is only “part of the government” if it

is created by special law. “A corporation is part of the

government for constitutional purposes when (1) the

government creates the corporation by special law, (2)

for the furtherance of governmental objectives, and (3)

retains for itself permanent authority to appoint a

majority of the directors of that corporation.” Herron

v. Fannie Mae, 861 F.3d 160, 167 (D.C. Cir. 2017)

(cleaned up). And in response to a challenge to

Congress’s restrictions on removal of Fair Housing

86a

Finance Agency officers, the Supreme Court rejected

an argument that an agency can be considered a

private entity when “its authority stems from a special

statute.” Collins v. Yellen, 141 S. Ct. 1761, 1785 (2021).

Unlike Amtrak and the FHFA, the Authority is a

private entity. First, the Authority is a private

corporation incorporated under Delaware law. It was

not created by the government through special law.

No. 5:23-CV-077, Dkt. No. 47 at 5-10. Moreover, the

government has no say over the appointment of the

Authority’s directors—that’s the point of the Gulf

Coast plaintiffs’ appointments argument. See also 15

U.S.C. § 3052(c)-(d) (establishing that appointment of

the Authority’s directors is to be controlled by the

corporate bylaws and the initial nominating

committee).

Like FINRA, the Authority is a private entity.

Nat’l Horsemen’s, 53 F.4th at 887. Courts have

determined that FINRA, like its predecessor NASD, is

a private entity. Desiderio v. Nat’l Ass’n of Sec.

Dealers, Inc., 191 F.3d 198, 206 (2d Cir. 1999) (“The

NASD is a private actor . . . It is a private corporation

that receives no federal or state funding. Its creation

was not mandated by statute, nor does the government

appoint its members or serve on any NASD board or

committee.”); First Jersey Sec., Inc. v. Bergen, 605 F.2d

690, 699 n.5 (3d Cir. 1979) (“NASD is not a state

agency.”); see also United States v. Solomon, 509 F.2d

863, 867 (2d Cir. 1975) (holding that the New York

Stock Exchange is not an agency). To be sure, FINRA

and the Authority were created in anticipation of

aiding a federal agency, but that alone is insufficient

to render it part of the government. Nat’l Horsemen’s

Benevolent & Protective Ass’n, 596 F. Supp. 3d at 696

87a

(“Had the Authority been created by Congress, it may

have

been

subject

to

certain

Article

II

requirements . . . . But because Congress ‘recognized’

it . . . . the Authority avoids some of the strictures of

governmental entities, just as other private, selfregulatory organizations that operate nationwide do.”).

Ultimately, because the Authority “is a private

corporation” that “receives no federal or state funding,”

whose “creation was not mandated by statute,” and

whose directors, executives, and employees are not

“government appoint[ed],” the Authority is a private

entity. See Desiderio, 191 F.3d at 206.

Nor does Cherry Cotton Mills change the fact that

the Authority is a private entity under relevant

precedent. The plaintiffs neither cite nor rely on

Cherry Cotton Mills, but because Lebron quotes its

reference to corporations “selected by Government,”

the Court notes here why that case is distinguishable.

327 U.S. at 539. In Cherry Cotton Mills, the Supreme

Court held that a debt owed to the Reconstruction

Finance Corporation was a debt owed to the federal

government, which allowed the debt to be set off

against a tax refund. Id. But Cherry Cotton Mills does

not control this case because the RFC was clearly

government-created and government-controlled. The

RFC was created by special law. 47 Stat. 5 (“That

there be, and is hereby, created a body corporate with

the name ‘Reconstruction Finance Corporation.’”). Its

directors were appointed by the President by and with

the advice and consent of the Senate. Cherry Cotton

Mills, 327 U.S. at 539. “[A]ll of its money c[ame] from

the Government; its profits if any [went] to the

Government; its losses the Government must bear.”

Id. Thus, Cherry Cotton Mills is inapposite, and its

88a

statement that corporations “selected by” government

are equivalent to corporations “created by”

government is dicta. See id.

At trial, counsel for the Gulf Coast plaintiffs

indicated that the Lebron standard was inapplicable

in cases involving the power to appoint and remove

federal officials. Dkt. No. 182 at 83. Instead, the

plaintiffs argue that Lucia sets forth the standard for

determining whether the Authority is subject to the

Appointments Clause. E.g., No. 5:23-CV-077, Dkt. No.

51 at 10 (citing Lucia for the proposition that “[t]he

Authority’s Directors . . . are officers subject to the

Appointments Clause”). But Lucia does not resolve an

Appointments Clause question where the challenged

entity is private. The Supreme Court in Lucia noted

that Freytag, a case involving special trial judges of

the United States Tax Court, “necessarily decide[d]

th[e] case.” 138 S. Ct. at 2052. Thus, both Lucia and

the case on which it relied resolved Appointments

Clause challenges involving individuals who were

clearly federal employees. There was never any

possibility that the parties at issue were private

employees from outside the government. And in any

event, “[t]he sole question” in Lucia was “whether the

Commission’s ALJs are ‘Officers of the United States’

or simply employees of the Federal Government.” Id.

at 2051. Thus, Lucia does not answer the question

presented by the parties.

Gulf Coast’s argument is further undermined by

the fact that other courts apply Lebron—not Lucia—

in

cases

involving

private-nondelegation

or

Appointments Clause challenges. For instance, the

Fourth Circuit rejected an Appointments Clause

challenge to the Metropolitan Washington Airports

89a

Authority, an interstate compact, after finding that it

was not a public entity under the Lebron standard.

Kerpen v. Metro. Wash. Airports Auth., 907 F.3d 152,

159 (4th Cir. 2018) (“MWAA does not satisfy either

prong [of the Lebron test]. In the first place, MWAA

was not created by the federal government . . . . MWAA

is not controlled by the federal government . . . .

[b]ecause the[] [federal] appointees are a distinct

minority of the Board.”); Free Enter. Fund, 561 U.S. at

485-86 (relying on Lebron in stating that the Public

Company Accounting Oversight Board is “part of the

government” for constitutional purposes in an

Appointments Clause challenge) (citing Lebron, 513

U.S. at 397).

Finally, while Lucia would be applicable if the

Court found that the Authority were part of the

government, the plaintiffs provide no argument or

authority explaining why a private entity should be

considered part of the government for purposes of the

Appointments Clause. To the contrary, the current

state of jurisprudential affairs indicates that the

Authority’s directors are not “Officers of the United

States” within the Constitution’s original public

meaning. “[T]he phrase ‘of the United States’ limit[s]

the Appointments Clause to ‘federal’ officers.” Fin.

Oversight & Mgmt. Bd. for P.R., 140 S. Ct. at 1666

(Thomas, J., concurring in the judgment). “‘Officers of

the United States’ was probably not a term of art that

the Constitution used to signify some special type of

official. Based on how the Founders used it and

similar terms, the phrase ‘of the United States’ was

merely a synonym for ‘federal.’” Lucia, 138 S. Ct. at

2056 (Thomas, J., with whom Gorsuch, J. joins,

concurring); see also Jennifer Mascott, Who are

90a

“Officers of the United States”?, 70 STAN. L. REV. 443,

531 (2018) (explaining that the First Congress

provided that “individuals involved with [the]

operation” of the national bank, such as the “bank

directors,” “were not appointed in accordance with

Article II’s requirements”; and that “the probable

explanation is that Congress saw the bank as a publicprivate nongovernmental entity”). True, neither the

Fifth Circuit nor the Supreme Court has explained in

detail the meaning of “Officers of the United States,”

but the currently available precedent suggests that

the Authority’s directors and committee members do

not meet that definition. Thus, Lebron—rather than

Lucia—supplies the appropriate standard, and the

plaintiffs fail to prove their Article II appointments

and removal claims.

4.

As amended, HISA does not create an

unconstitutional

delegation

of

governmental power to a private entity.

A.

The Constitution requires a private

entity wielding government power to

function subordinately to a federal

agency’s authority and surveillance.

A pair of 80-year-old cases—Carter Coal (1936)

and Adkins (1940)—lay the foundation for our modern

nondelegation doctrine: “a private entity may wield

government power only if it functions subordinately to

an agency with authority and surveillance over it.”

Nat’l Horsemen’s, 53 F.4th at 881 (internal marks

omitted). In Carter Coal, the Supreme Court called

private nondelegation “legislative delegation in its

most obnoxious form” and held that it was “so clearly

arbitrary, and so clearly a denial of rights safeguarded

91a

by the due process clause of the Fifth Amendment,

that it is unnecessary to do more than refer to

decisions of this court which foreclose the question.”

Carter v. Carter Coal, 298 U.S. 238, 311 (1936). A few

years later, however, the Supreme Court clarified in

Adkins that an agency can rely on a private entity as

long as the private entity “function[s] subordinately to

the” agency, which has “authority and surveillance”

over the private entity. Adkins, 310 U.S. at 399.

From these twin holdings spring our modern

nondelegation jurisprudence, cemented in recent cases

like the Amtrak line of cases, 9 Texas v. Rettig, 10

National Horsemen’s, and Oklahoma v. United States.

In Texas v. Rettig, the Fifth Circuit held that an

agency may subdelegate an accounting task to a

private entity where the agency “reviewed and

accepted,” “ha[d] the ultimate authority to approve,”

and “superintended . . . in every respect” the privateentity determination. 987 F.3d at 533. Before the

Supreme Court held that Amtrak was a public entity

in Amtrak II, the D.C. Circuit concluded that Amtrak

9 In Amtrak I, the D.C. Circuit struck down Section 207 of

the Passenger Rail Investment and Improvement Act (PRIIA)

because it unlawfully delegated “regulatory power to a private

entity.” 721 F.3d 666, 668 (D.C. Cir. 2013), rev’d on other ground

by Dep’t of Transp. v. Ass’n of Am. R.R. (Amtrak II), 575 U.S. 43

(2015).

While not disturbing the D.C. Circuit’s privatenondelegation analysis, the Supreme Court vacated Amtrak I,

holding that Amtrak was a governmental—not private—entity.

Amtrak II, 575 U.S. at 55. On remand, the D.C. Circuit held that

Section 207 of PRIIA violated the Due Process Clause because it

gave Amtrak, a self-interested entity with a statutorily required

profit-seeking motive, regulatory power over its competitors.

Amtrak III, 821 F.3d 19, 27-34 (D.C. Cir. 2016).

10 987 F.3d 518, 533 (5th Cir. 2021).

92a

was a private entity that was delegated too much

power. Amtrak I, 721 F.3d at 672, rev’d on other

grounds by Amtrak II, 575 U.S. 43. Amtrak was

impermissibly delegated government authority

because, unlike the agency in Adkins, the Federal

Railroad Administration did not have the authority to

“unilaterally change regulations proposed to it.”

Amtrak I, 721 F.3d at 671.

In National Horsemen’s, the Fifth Circuit

surveyed this jurisprudence, noting that the privatenondelegation doctrine is rooted in “the government’s

promised accountability to the people.” 53 F.4th at

880. The Fifth Circuit also reconciled this general

principle with Carter Coal and Adkins, which together

allow a private entity to “wield government power” so

long as the private entity “‘functions subordinately’ to

an agency with ‘authority and surveillance’ over it.” Id.

at 881. Thus, the court explained it is within

constitutional bounds for Congress to “formalize the

role of private parties in proposing regulations so long

as that role is merely ‘as an aid’ to a government

agency that retains the discretion to ‘approve[],

disapprove[], or modif[y]’ them.” Id. at 881 (quoting

Amtrak I, 721 F.3d at 671).

B.

As

amended,

HISA

functions

subordinately to the FTC and addresses

the Fifth Circuit’s concerns.

The Court finds that the congressional

amendment to § 3053(e) cured the constitutional

issues identified by the Fifth Circuit. First, the Fifth

Circuit identified that HISA improperly granted the

Authority “sweeping rulemaking power,” but the

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

93a

“rules of the Authority” closed the necessary gap in the

relative rulemaking power between the FTC and the

Authority. 15 U.S.C. § 3052(e). Second, the Fifth

Circuit noted that the FTC’s review of Authority

rulemaking was limited to so-called consistency

review, which gave the Authority the final word on

policy. But because the FTC now has the right to

make its own policy choices, the amendment remedied

that concern. Finally, the Fifth Circuit noted that the

FTC had less control over the Authority than the SEC

does over FINRA. The congressional amendment

cured these issues as well.

i.

Although the Authority retains its

generous grant of authority to

craft and propose rules, the

amended

statute

significantly

broadens the FTC’s rulemaking

power.

The parties disagree on the correct reading of

§ 3053(e) as amended. The amended statute says that

the FTC can “abrogate, add to, and modify” Authority

rules. Does this mean, as the plaintiffs assert, that the

FTC can abrogate, add to, and modify only the content

of existing rules? See Dkt. No. 145 at 6 (claiming that

“Congress granted only the power to modify, add to, or

abrogate existing rules, not to issue new rules”). The

defendants, in contrast, believe the amendment allows

the FTC to “modify, add to, or abrogate” the entire

body of Authority rules, meaning the FTC can

promulgate new rules, as well as modify or abrogate

existing rules. E.g., Dkt. No. 128-1 at 18-19; Dkt. No.

129 at 10. Based on a plain reading of the statute and

the canon of constitutional avoidance—and confirmed

by the only other court to interpret this amended

94a

subsection—the Court concludes that the FTC has the

power to “abrogate, add to, or modify” the body of

Authority rules, rather than a single, proposed rule.

In other words, the FTC can create new substantive

rules, so it is the FTC that now has “sweeping

rulemaking authority.” See Nat’l Horsemen’s, 53 F.4th

at 882. If in practice, the FTC is derelict in performing

its oversight, as-applied challenges may be brought.

But this facial challenge must fail.

A plain reading of the statute confirms that the

FTC can “abrogate, add to, or modify” the entire body

of the Authority rules.

Congress’s amendment

included a single, yet significant, change: Section

3053(e), which previously gave the FTC the ability

solely to issue interim final rules, was amended to

read:

The Commission, 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). As a result, the FTC now has the

power to “add to . . . the rules of the Authority.” Id.

When the FTC promulgates a new rule, it “add[s] to”

the rules of the Authority. Thus, a plain, fair reading

95a

of this section confirms that the FTC can initiate

rulemaking.

Even if the statute’s language were not clear,

three additional reasons support this plain reading:

the surplusage canon, the canon of avoidance, and the

Sixth Circuit’s persuasive opinion.

First, the

surplusage canon confirms that the FTC can initiate

rulemaking.

Under the plaintiffs’ reading, only

existing rules can be “abrogate[d], add[ed] to, [or]

modif[ied].” But if this were the case, why did

Congress include both “modify” and “add to” in the

statute?

If the FTC adds language to a rule

promulgated under HISA, clearly it has modified the

rule. See MODIFY, WEBSTER’S THIRD INT’L DICTIONARY

UNABRIDGED (2002) (defining Modify as to “make a

basic or important change in: alter”). Thus, the

plaintiffs’ proposed reading of the statute—

prohibiting the FTC from initiating rulemaking—

would render “add to” a nullity. And it is a “cardinal

principle of statutory construction” that the Court

ought to give effect to every word of a statute.

Williams v. Taylor, 529 U.S. 362, 404 (2000); see also

Wash. Market Co. v. Hoffman, 101 U.S. 112, 115-16

(1879) (“As early as in Bacon’s Abridgement, sect. 2, it

was said that ‘a statute ought, upon the whole, to be

so construed that if it can be prevented, no clause,

sentence, or word shall be superfluous, void, or

insignificant.’”).

Second, the canon of constitutional avoidance

favors the defendants’ reading of the statute. “[W]hen

deciding which of two plausible statutory

constructions to adopt, a court must consider the

necessary consequences of its choice. If one of them

would raise a multitude of constitutional problems,

96a

the other should prevail . . . .” Clark v. Martinez, 543

U.S. 371, 380-81 (2005) (Scalia, J.). Here, the Court

agrees with the defendants’ reading of § 3053(e), which

demonstrates HISA’s constitutionality. 11 The Fifth

Circuit previously noted that the Authority was not

subordinate to the FTC because it was the Authority

who wrote the rules. Nat’l Horsemen’s, 53 F.4th at 883.

And the Fifth Circuit explained that the FTC’s

authority to issue temporary rules “on a break-glassin-case-of-an-emergency basis” was not enough to

subordinate the Authority to the FTC. Id. That being

the case, the Court finds that the

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