Bennett Liebman: New Fifth Circuit Ruling 'Uphill Fight' for HISA - Thoroughbred Daily News

Bennett Liebman: New Fifth Circuit Ruling ‘Uphill Fight’ for HISA – Thoroughbred Daily News

In National Horsemen’s Benevolent and Protective Association v. Black, Liberty Justice Center is representing Thoroughbred horse owners and trainers in a federal lawsuit to stop the new HISA law that illegally gives a private entity government powers.

The following article written by Dan Ross appeared on thoroughbreddailynews.com on May 19, 2022.

With just over a month before the racetrack safety component of the Horseracing Integrity and Safety Act (HISA) is set to go into effect, two separate lawsuits cast looming shadows over the program’s legal and operational future.

One of the suits challenging HISA’s constitutionality was filed by the National Horsemen’s Benevolent and Protective Association (NHBPA).

In March, United States District Court Judge James Wesley Hendrix dismissed the suit finding that while HISA pushes boundaries of public-private collaboration, the law as constructed stays within the current constitutional limitation. The NHBPA subsequently filed an appeal with the Fifth Circuit Court of Appeals.

The other federal lawsuit was filed by the state of Oklahoma in the United States District Court, Eastern Division of Kentucky. That case has yet to be adjudicated.

To get the skinny on the status of the two cases, along with the implications from the ruling in the HBPA case, TDN spoke with Bennett Liebman, government lawyer in residence at the Government Law Center of Albany Law School. He previously served as the deputy secretary for gaming and racing for Governor Andrew Cuomo and was a member of the state’s Racing and Wagering Board.

The biggest takeaway from the conversation? Liebman said that a ruling from earlier in the week in the Fifth Circuit Court of Appeals concerning the Securities and Exchange Commission (SEC) has essentially thrown HISA a curveball.

In short, the Fifth Circuit judges ruled that Congress’ delegation of legislative power to the SEC was unconstitutional as it failed to “provide an intelligible principle by which the SEC would exercise the delegated power.”

Substitute the SEC with the Federal Trade Commission (FTC)–the government body given ultimate oversight over HISA–and the ruling has connotations for the HBPA case as it awaits adjudication before the Fifth Circuit, said Liebman.

TDN: Where do the two lawsuits currently stand?
BL: The national HBPA case has been appealed to the 5th Circuit. The other case, the Oklahoma case, is still before the district court in Kentucky.

TDN: You mentioned there’s a new ruling in the 5th Circuit that you say could prove very problematic for HISA. What is that case and why could it prove problematic?
BL: The Fifth Circuit in a decision in the case of Jarkesy versus the Security and Exchange Commission found that Congress unconstitutionally delegated legislative power to the SEC by failing to provide an intelligible principle under which the SEC could utilize its power. These powers have traditionally been regarded as constitutional.
Now, the delegation to HISA–what appears to be a non-government agency–is really broader than the delegation to the SEC. So, at least as far as the Fifth Circuit, which is generally considered to be the most conservative of the federal circuits, HISA’s constitutionality is going to face a very, very difficult battle.
By this, I mean their delegation standard would be very, very difficult for the supporters of HISA to maintain. HISA’s going to have an uphill fight in the Fifth circuit.

TDN: For people like me and some of our readers scratching our heads about the intelligible principle, could you just outline what the intelligible principle is, why it’s important?
BL: Since 1928, the United States Supreme Court has said that while only Congress can make a law, Congress can also delegate its powers to the president and to administrative agencies. So long as there is an intelligible principle under which the president or the administrative authorities act, the delegation is valid. This standard has not been considered to be an onerous requirement. Since the Depression era, the Supreme Court has not struck down a statute for failure to state an intelligible principle.
Normally, in the horse racing world a delegation “in the best interest of horse racing” suffices at a governmental level to be an intelligible principle. But this [new ruling] is a very in-depth look at limiting delegations of authority [by Congress]. And it could, especially as it pertains to the HBPA case, prove problematic for HISA.

TDN: Essentially what you’re saying is this ruling could act as a precedent as and when the Fifth Circuit adjudicates the HBPA’s appeal?
BL: Yes, definitely. This is a very broad ruling basically limiting delegation by Congress to agencies, as well as to non-governmental agencies that are affiliated with [government] agencies, as HISA is with the FTC.
It really could prove troublesome for HISA. Other circuits might not agree. But at least at the Fifth Circuit level, this has now become a very difficult case for the supporters of HISA’s constitutionality.

TDN: Could this prove the death knell for HISA? Or are there changes they can make to adjust, and sort of fix, its operating framework?
BL: They could try to make adjustments. Even if the [courts] do find HISA unconstitutional, they might be able to get a stay. They might try to find some way to move it to the Supreme Court as quickly as possible. It’s obviously not the death knell, but it’s truly troublesome.

TDN: In regards the HBPA’s appeal, what are some of the potential outcomes?
BL: They could affirm the trial court’s decision. They could find it totally unconstitutional. They could find parts of it unconstitutional and sever those parts from the rest of the law. Look, the [Fifth Circuit] decision yesterday really is truly potentially very damaging to HISA. I don’t think I can understate it.

TDN: Could either the SEC case or the HBPA case eventually go before the Supreme Court?
BL: They certainly could, and if they did, we might have a better understanding of the Supreme Court’s view of the delegation of powers to administrative agencies and agencies like HISA.
The fact is, there’s now a majority of Supreme Court justices that have come out against the intelligible principle test under which almost all delegations have been found constitutional for the last 85 years. And so, you know, you don’t know what could come out of a Supreme Court review of HISA.

TDN: But again, are there fixes that can be made to HISA’s structural framework?
BL: My thought was that even if the Supreme Court or a court of appeals found aspects of HISA unconstitutional, then it might be able to be fixed by certain legislative actions.
Right now, the FTC does not have power to promulgate its own rules on drugs and safety. You could give them [that] power. You could give the FTC power over the terms and ethics of the members of HISA. You could add more non-affiliated, independent members to the authority.
The other problem, of course, is we don’t have a rational congressional system that could make these fixes that would keep HISA running. So, as always in the law, we just don’t know what’s going to happen next.

TDN: Does this ruling from yesterday or the prior decision in the HBPA’s case have any impact on the Oklahoma case?
BL: The Kentucky court looking at the Oklahoma case could certainly cite the lower court decision in the HBPA case and use that as a precedent for upholding HISA. I don’t think they would go into the Fifth Circuit’s decision on the Securities and Exchange Commission.

TDN: Has a date been set for the appeal hearing by the 5th Circuit?
BL: Not that I can determine. I’m restricted to a very limited review of documents that have been submitted. I mean, the parties to the case would know what’s going on.

TDN: Prior to the SEC ruling this week, which of the two cases, the Oklahoma case or the HBPA case, did you think was more likely to go before the Supreme Court?
BL: It had looked as if the Oklahoma case was perhaps the more significant case. Look at all the parties involved in that case, including all the amicus curiae briefs submitted by everybody, from the sponsors of the legislation, the Jockey Club, prominent owners, prominent breeders, against on the other side a ton of states and the United States Trotting Association. I had thought that there would be more significant legal interest in the Oklahoma case.
I think I pointed out in the speech I gave to the ARCI that the name of the case was Oklahoma against the United States, but that there were actually more parties in that case than there are characters in the musical, Oklahoma.

TDN: But now you’re saying all bets are off thanks to yesterday’s ruling?
BL: Yes. I mean, as far as I can see this is really a major decision by the Fifth Circuit on the limits of how Congress goes about apportioning power to administrative agencies.

TDN: As you had said earlier, the current makeup of the Supreme Court is such that there…
BL: There is a majority that have at various points rejected–and that doesn’t include justice [Amy Coney] Barrett–the reliance on the intelligible principle standard. But will they go as far as the Fifth Circuit? Who knows?

TDN: If they did, this could all take years to play out though, right? What happens to HISA in the meantime?
BL: Oh God, who knows? It’s law; it’s not something you should bet on.

Read the full article on thoroughbreddailynews.com.

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