By Sue Finley
“Sometimes, government works.” With those words, the United States Court of Appeals for the Sixth Circuit has upheld the constitutionality of the Horse Racing Integrity and Safety Act (HISA), setting up a potential court battle in the U.S. Supreme Court.
In short, the Sixth Circuit has ruled that the language added to the bill at the end of 2022 to address concerns of unconstitutionality were sufficient to alleviate those concerns.
The plaintiffs in the Sixth Circuit case were comprised of the state of Louisiana; Oklahoma and its racing commission, plus West Virginia and its racing commission. Three Oklahoma tracks–Remington Park, Will Rogers Downs, and Fair Meadows–are also plaintiffs, as are the Oklahoma Quarter Horse Association, the U.S. Trotting Association, and Hanover Shoe Farms, a Pennsylvania Standardbred breeding entity. On the other side of the aisle were the United States of America, the HISA Authority, and six individuals acting in their official capacities for the Federal Trade Commission (FTC).
The key issues surrounded the FTC's rule-making power, and whether the Act gave them enough power to keep it from being subordinate to the the Horseracing Authority.
After the United States Court of Appeals for the Fifth Circuit ruled that HISA was unconstitutional because it “delegates unsupervised government power to a private entity,” and thus “violates the private non-delegation doctrine” back in November, lawmakers added language to the bill to address those concerns.
The three judges on the Sixth Circuit panel–Jeffrey Sutton, Richard Allen Griffin and R. Guy Col Jr.–delivered a unanimous opinion, written by Chief Judge Sutton.
“In response,” reads Friday's opinion from the Sixth Circuit, “Congress amended the Act to give the Federal Trade Commission discretion to `abrogate, add to, and modify' any rules that bind the industry. The Constitution anticipates, though it does not require, constructive exchanges between Congress and the federal courts. A productive dialogue occurred in this instance, and it ameliorated the concerns underlying the non-delegation challenge. As amended, the Horseracing Act gives the FTC the final say over implementation of the Act relative to the Horseracing Authority, allowing us to uphold the Act as constitutional in the face of this non-delegation challenge as well as the anti-commandeering challenge.”
The ruling continues, “After the Fifth Circuit issued its decision and after we heard oral argument in our case, Congress enacted, and the President signed into law, an amendment to the Act that increased the FTC's oversight role. The amendment eliminated the FTC's interim-rule authority and instead gave sweeping power to the FTC to create rules that `abrogate, add to, and modify the rules of the Authority.'”
The ruling cites prior cases which, “taken together, draw a line between impermissible delegation of unchecked lawmaking power to private entities and permissible participation by private entities in developing government standards and rules.”
In its ruling, the court said that the central question was whether or not the Authority was inferior to the FTC. “The Horseracing Authority is subordinate to the agency,” they write. “The Authority wields materially different power from the FTC, yields to FTC supervision, and lacks the final say over the content and enforcement of the law—all tried and true hallmarks of an inferior body.”
The opinion goes on to say why HISA is subordinate to the FTC in two specific instances:
- Rulemaking. As amended, the Horseracing Act gives the FTC supervision over the rules that govern the horseracing industry. At the outset, the Horseracing Authority drafts rules on racetrack safety and anti-doping matters, and the FTC must approve those proposals if they are consistent with the Act. But, critically, as the FTC “deems necessary or appropriate,” it “may abrogate, add to, and modify the rules.” The FTC's power to abrogate and change the Authority's rules creates “a clear hierarchy.”
- Enforcement. A similar conclusion applies to enforcement of the Act. The Horseracing Authority's enforcement duties are extensive, granted. The Authority implements the Act, investigates potential rule violations, and enforces the rules through internal adjudications and external civil lawsuits. Even so, the FTC's rulemaking and rule revision power gives it “pervasive” oversight and control of the Authority's enforcement activities, just as it does in the rulemaking context.
In its arguments before the court, the State of Oklahoma objected that the amendments to the language, “does not change one feature of the Act—that the FTC has power only to review proposed rules by the Authority for `consistency' with the Act, a standard of review that, it says, does not pick up policy disagreements.”
The judges disagreed. “Maybe so,” they write. “But even if that is the case, the FTC's later authority to modify any rules for any reason at all, including policy disagreements, ensures that the FTC retains ultimately authority over the implementation of the Horseracing Act.”
HISA issued a statement that said, “HISA is grateful to the Sixth Circuit for recognizing and affirming HISA's constitutionality. We remain focused on preparing for the launch of HISA's Anti-Doping and Medication Control (ADMC) Program on March 27 pending final approval by the FTC. Once launched, the combined ADMC and Racetrack Safety programs will, for the first time in racing's history, see national, uniform integrity and safety rules applied consistently to every Thoroughbred horse, racing participant and racetrack in the country.”
The National HBPA, one of the plaintiffs in the Fifth Circuit case, issued a statement as well. “Today, we stand firmly on our victory in the Fifth Circuit, however we are disappointed in the Sixth Circuit ruling. We have stated from the onset that there are multiple aspects of unconstitutionality plaguing HISA. The Fifth Circuit ruled on the arguments presented to them, and the Sixth Circuit ruled on the arguments they were presented. With that, we remain confident in our arguments and committed to our case. As seen now, the shifting legal uncertainty only upholds more confusion ahead for the industry and should lead everyone to agree we need a new bill to correct this uncertainty. We will keep fighting all the way to the Supreme Court if necessary to protect our industry and make sure our rules and regulations are built on a legal foundation.”
Statement from NTRA President and CEO Tom Rooney
“The decision today by the Sixth Circuit Court affirming the constitutionality of HISA is not only the right decision, but the critical step we needed to move forward in the sport of Thoroughbred Racing. Later this month, HISA will begin the implementation of the Anti-Doping and Medication Control Program and will be fully functional. Now is a time for unity within the industry. HISA is the law of the land, and we must all come together to support its initiatives so that HISA can continue its mission to improve the sport with uniform standards of safety and fairness across the country.”