Supreme Court remanded three Horseracing Integrity and Safety Act lawsuits back to appeals courts five months ago, with the Sixth Circuit Court of Appeals hearing oral arguments Wednesday in a case challenging HISA’s delegation of regulatory authority to a private corporation.
The three-judge panel in Cincinnati previously upheld the dismissal of the lawsuit in March 2023, ruling that Congressional amendments made in 2022 rendered the HISA Act constitutional.
The case, brought by Oklahoma, West Virginia and Louisiana against the HISA Authority and Federal Trade Commission officials, returned to the Sixth Circuit following the Supreme Court’s June 30 directive to reconsider previous decisions in light of a newer ruling on the non-delegation doctrine.
Chief U.S. Circuit Judge Jeffrey Sutton noted during Wednesday’s proceedings that this has been a “challenging case at every iteration.”
The non-delegation doctrine, which prohibits Congress from delegating legislative power to federal agencies without an “intelligible principle,” stands at the center of all three remanded HISA cases.
Attorney Lochlan Shelfer, representing the states, focused on what he called the “starkest example” of constitutional overreach: “the Authority’s exclusive power to bring enforcement actions in federal court, over which the FTC has zero oversight.”
“What the Act does is it flips that on its head, and it deprives the federal government of the power to enforce federal law and puts that entirely in the hands of the private Authority,” Shelfer argued.
HISA Authority attorney Pratik Shah countered by emphasizing the 2022 legislative amendments, stating: “After the amendment, we know Congress has given the FTC all the power it could hope to subordinate the Authority in every which way to Sunday.”
Judge Sutton frequently interrupted attorneys to simplify the complex legal arguments, questioning the definition of “private” in this context and drawing parallels between the HISA Authority’s role and how states routinely employ private lawyers.
“It happens all the time that governments rely on private entities to do things,” Sutton observed. “I’m trying to figure out just what is so bad about this when there’s a process for appointing [the HISA board].”
The panel includes Judges Richard Griffin and Guy Cole Jr., though Sutton was the only judge who posed questions during Wednesday’s session.
While the Fifth, Sixth and Eighth Circuit appeals courts have all agreed that HISA’s rulemaking structure is constitutional, only the Fifth Circuit has ruled that its enforcement provisions violate the Constitution.
The Fifth Circuit case, led by the National Horsemen’s Benevolent and Protective Association, and the Eighth Circuit case, spearheaded by horsemen’s representatives from Arkansas and Iowa, have not yet reached oral arguments.
The Supreme Court specifically directed the appeals courts to consider the precedent established in Federal Communications Commission vs. Consumers’ Research, where justices rejected arguments that a telecommunications subsidy program violated the non-delegation doctrine or improperly delegated authority to a private company.
Once the appeals courts issue updated decisions, losing parties may petition the Supreme Court again, potentially extending the timeline for resolving these constitutional challenges by another year or two. Some of these lawsuits date back to 2021.
