Part of HISA Ruled Unconstitutional in Fifth Circuit Split Decision

[Wandering Eyes]

A judgment Friday by the United States Court of Appeals for the Fifth Circuit declared that part of the Horseracing and Safety Integrity Act (HISA) is unconstitutional.

Even though the three-judge panel agreed with “nearly all” of a lower court's ruling that other contested aspects of HISA's constitutionality were fixed by a Congressional amendment to the law in 2022, that one unconstitutional part of the case has to do with the HISA Authority's broad powers to investigate and operate.

The gravity of that unconstitutionality opinion could be enough to send the case to the U.S. Supreme Court to try and clear up what are now conflicting opinions between the Fifth Circuit's ruling July 5 and one that the Sixth Circuit Court of Appeals issued in 2023.

The HBPA, claiming victory via press release on Friday evening, referred to the Fifth Circuit's unconstitutionality opinion as a “fatal problem” for HISA.

By contrast, Lisa Lazarus, the chief executive officer of the HISA Authority, said that “we are disappointed with the court's decision.”

“Particularly,” Lazarus continued, “in light of the Sixth Circuit's strong endorsement of HISA's constitutionality. While the judicial review process continues, it is critical for all racing participants to know HISA is still the law of the land. Its rules are still fully in effect and will remain so for the foreseeable future. We continue to focus on our mission of protecting the safety and integrity of Thoroughbred racing.”

The court explained its rationale in the opinion:

“We agree with nearly all of the district court's well-crafted opinion. Specifically, we agree that the Federal Trade Commission (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, 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,” the opinion stated.

“We disagree with the district court in one important respect, however: HISA's enforcement provisions violate the private nondelegation doctrine. The statute empowers the Authority to investigate, issue subpoenas, conduct searches, levy fines, and seek injunctions-all without the FTC's say-so. That is forbidden by the Constitution. We therefore DECLARE that HISA's enforcement provisions are facially unconstitutional on that ground. In doing so, we part ways with our esteemed colleagues on the Sixth Circuit.”

The NHBPA's press release stated, in part:

“The Court reasoned that Congress unlawfully gave executive governmental power to regulate the horseracing industry over to a private corporation…. It called HISA a 'radical delegation' of governmental enforcement powers to a private corporation. The Court ruled that the FTC was given 'scant oversight' of the Authority, which could execute many governmental functions on its own…

“In March of last year, the Sixth Circuit Court of Appeals ruled that the [Congressional] tweak solved the problem of giving legislative powers to the Authority,” the NHBPA release continued. “[Friday], the Fifth Circuit agreed with that ruling but found another fatal problem: even after the tweak, HISA still gives unlawful executive powers to the Authority. HISA still violates the Constitution.”

This story will be updated.

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