(Daily Racing Form) – A national horsemen’s organization and a number of its state affiliates have filed a lawsuit challenging the regulatory power of a horse-racing oversight board created by federal legislation late in 2020.
The lawsuit, filed on Monday in the U.S. District Court for the Northern District of Texas, alleges that the creation of the oversight board violates the “nondelegation doctrine” of the U.S. Constitution by granting power to a private company that can only be delegated to a government entity. It further alleges that the legislation grants the board’s supporters the power to control its appointments, in violation of the Constitution’s “appointments clause.”
The lawsuit, filed by the National Horsemen’s Benevolent and Protective Association and 11 of its local affiliates, is the first serious legal challenge to be mounted against the oversight board, which is being called the Horseracing Integrity and Safety Authority (HISA). The legislation creating the board passed late last year as part of an omnibus spending package, with the support of a wide-ranging group of powerful racing constituents, including a rival group to the National HBPA, the National Thoroughbred Horsemen’s Association.
The legislation created a private, non-profit company that will be overseen by the Federal Trade Commission (FTC). It has the power to raise funds for its operations by authorizing assessments on racing participants, and the legislation empowers the authority to draft and promulgate rules pertaining to medication and drug use, testing, and safety measures at racetracks.
Prior to the bill being passed, supporters of the legislation announced seven appointees to the authority’s nominating committee, which will be in charge of making appointments to the authority’s board. The seven members of the nominating committee are all listed as defendants in the lawsuit, along with the acting commissioners on the FTC.
The affiliates who are listed as plaintiffs include HBPA organizations in Arizona, Arkansas, Indiana, Illinois, Louisiana, Nebraska, Oklahoma, Oregon, Pennsylvania, and Washington, along with an affiliate at Mountaineer Park in West Virginia. Notably, HBPA affiliates in Kentucky and Florida are not listed among the plaintiffs.
Peter Ecabert, the general counsel for the National HBPA, said that the board of directors of the national organization had voted “unanimously” to file the lawsuit, but that some affiliate organizations had yet to put a vote to their boards prior to the lawsuit being filed.
“Accordingly, National [HBPA] together with the affiliates who were able to quickly secure formal approval moved expeditiously as named plaintiffs to save horsemen from the irreparable harm that this illegal law will cause,” Ecabert said, in a written response.
Supporters of the legislation, which included The Jockey Club, have stated in the past that they hired experts in constitutional law to review the bill, in anticipation that opponents of the legislation would attempt to mount constitutional challenges if the bill were passed. On Monday, in response to the suit, The Jockey Club issued a statement reiterating that the organization believed the bill had been rigorously vetted.
“We are confident that the law is constitutionally sound and legal, as it is patterned precisely after other long-standing law,” said the statement. Jockey Club attorneys who have examined the legislation have contended that the bill was modeled after legislation establishing the Financial Industry Regulatory Authority and the Securities and Exchange Commission.
“It’s a shame that the National HBPA has chosen this expensive and time-consuming path, but it is consistent with their well-known pattern of conduct that has served to block or water down needed reforms that the vast majority of the equine industry and animal welfare organizations support.”
In its suit, the National HBPA specifically alleges that the role provided for the FTC by the legislation does not constitute an active role for the government in the operation of the authority, in violation of constitutional clause prohibiting the delegation of regulatory authorities to private companies.
“The FTC role in this process is purely ministerial,” the lawsuit states. “It does not develop or implement federal regulatory authority but, instead, publishes the authority’s regulations for notice and comment rulemaking. . . . [The legislation] gives the FTC no standards upon which to base its decision to approve or disapprove rules proposed by the Authority. Its guidance is completely circular and unintelligible; it is told to look to rules proposed by the Authority and approved by the FTC to determine whether to approve rules proposed by the Authority.”
The lawsuit also takes issue with the role of the nominating committee in selecting the board members of HISA, contending that the “appointments clause” bars private companies from appointing “officers of the United States.”
The legislation established a July 1, 2022, effective date for the operations of the authority. An initial draft of the legislation that eventually passed established Jan. 1, 2022, for the effective date, but that was amended in the lead-up to the December vote in recognition of the amount of work that would be necessary to get the authority up and running.