Appeals Court Finds HISA Unconstitutional; Earliest Ruling Could Go Into Effect Is Jan. 10, 2023 - Horse Racing News | Paulick Report
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Appeals Court Finds HISA Unconstitutional; Earliest Ruling Could Go Into Effect Is Jan. 10, 2023

The U.S. Court of Appeals for the Fifth Circuit ruled Friday that the Horseracing Integrity and Safety Act is “facially unconstitutional,” reversing an earlier ruling from the U.S. District Court for the Northern District of Texas.

“While HISA is disappointed by the Fifth Circuit's decision, we remain confident in HISA's constitutionality and will be seeking further review of this case,” said Charles Scheeler, chair of the HISA Board of Directors.” If today's ruling were to stand, it would not go into effect until Jan. 10, 2023, at the earliest. We are focused on continuing our critical work to protect the safety and integrity of Thoroughbred racing, including the launch of HISA's Anti-Doping and Medication Control Program on Jan. 1, 2023.”

The appeals court opinion, written by Circuit Judge Stuart Kyle Duncan, gave a brief summary of the challenge against HISA:

“HISA was challenged by various horsemen's associations, who were later joined by Texas and the state's racing commission. The plaintiffs argued HISA is facially unconstitutional because it delegates government power to a private entity without sufficient agency supervision. The district court acknowledged that the plaintiffs' “concerns are legitimate,” that HISA has “unique features,” and that its structure “pushes the boundaries of public-private collaboration.” Nonetheless, the court rejected the private non-delegation challenge, concluding HISA “stays within current constitutional limitations as defined by the Supreme Court and the Fifth Circuit.””

Duncan's opinion differs from that of the district court on the grounds that HISA does give government power to a private entity without sufficient government agency supervision.

“A cardinal constitutional principle is that federal power can be wielded only by the federal government. Private entities may do so only if they are subordinate to an agency. […] But the Authority is not subordinate to the FTC. The reverse is true. The Authority, rather than the FTC, has been given final say over HISA's programs.

“While acknowledging the Authority's “sweeping” power, the district court thought it was balanced by the FTC's “equally” sweeping oversight. Not so. HISA restricts FTC review of the Authority's proposed rules. If those rules are “consistent” with HISA's broad principles, the FTC must approve them. And even if it finds inconsistency, the FTC can only suggest changes. What's more, the FTC concedes it cannot review the Authority's policy choices. When the public has disagreed with those policies, the FTC has disclaimed any review and instead told the public to “engag[e] with the Authority.” An agency does not have meaningful oversight if it does not write the rules, cannot change them, and cannot second-guess their substance. As the district court correctly put it: “Only an Act of Congress could permanently amend any Authority rule or divest it of its powers. The FTC may never command the Authority to change its rules or divest it of its powers.” Horsemen's Benevolent & Protective Ass'n v. Black [Black], No. 5:21-CV-071, 2022 WL 982464, at *69 (N.D. Tex. Mar. 31, 2022). The end result is that Congress has given a private entity the last word over what rules govern our nation's Thoroughbred horseracing industry.

“The Constitution forbids that. For good reason, the Constitution vests federal power only in the three branches of the federal  government. Congress defies this basic safeguard by vesting government power in a private entity not accountable to the people. That is what it has done in HISA. The Authority's power outstrips any private delegation the Supreme Court or our court has allowed. We must therefore declare HISA facially unconstitutional.”

The appeals court has remanded the case to the district court for further proceedings. According to Andrew Cohen, a legal analyst and horseman, HISA has a couple options: to either ask the full court of appeals to hear the case, an en banc hearing, or to take the issue to the Supreme Court. In either case HISA would likely need to seek a stay of the mandate.

According to uscourts.gov, federal courts of appeals routinely handle more than 50,000 cases each year. Ten percent or fewer of those decisions are appealed to the Supreme Court, which in turn hears oral arguments in fewer than 100 cases annually. Thus, the vast majority of courts of appeals decisions are final, and they are binding on lower courts within the same circuit.

“I would not be surprised if the full Court of Appeals panel takes the case,” said Cohen. “It's not uncommon, especially when dealing with the constitutionality of a federal statute.”

The Fifth Circuit Court of Appeals order is on the lawsuit filed by the National Horsemen's Benevolent and Protective Association and affiliates in Arizona, Arkansas, Indiana, Illinois, Louisiana, Nebraska, Oklahoma, Oregon, Pennsylvania, and Washington and HBPA affiliates at Mountaineer Park and Tampa Bay Downs. A separate case is scheduled to be heard by the Sixth Circuit Court of Appeals in Cincinnati on Dec. 7.

The Association of Racing Commissioners International announced that it will hold an emergency meeting of US Racing regulatory agencies on Friday afternoon in light of the appeals court's decision.

The National HBPA issued the following statement: “It is the duty of the National Horsemen's Benevolent and Protective Association to protect horsemen across the country and that is not a responsibility I take lightly,” said Eric Hamelback, CEO of the NHBPA. “From HISA's onset, we have thoroughly and fairly examined the HISA corporation's impact on our industry and its constitutionality. We operated in good faith and did our due diligence to appropriately weigh the pros and cons. We have been saying for years this law and the defined Authority itself are unconstitutional and we are pleased the court has unanimously sided with our position, an outcome many in our industry thought was impossible.

“Today's unanimous ruling clearly states the entity constructed under HISA is an unconstitutional body and should not hold governing power over our industry, a position we have long supported. On behalf of the NHBPA, I can assure you that we will be following this development closely and support the power reverting back into the hands of the State Racing Commissions. I will keep our members updated as we continue exploring the ruling further as more details come to the surface. We are very appreciative of the Fifth Circuit Court of Appeals for the thorough analysis and opinion. We also thank the many industry stakeholders who supported us in our effort to ensure that horsemen are not subject to an unconstitutional law.”

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