Judge Hears Arguments on HISA’s Constitutionality

February 16, 2022

(Blood-Horse)—Oral arguments took place Feb. 16 in a federal case filed by the National Horsemen’s Benevolent and Protective Association and several state affiliates seeking nullification of the Horseracing Integrity and Safety Act.

The HBPA organizations argue that the HISA, passed by Congress and signed into law in December 2020, violates the non-delegation doctrine of the U.S. Constitution in that it gives governmental authority to a private, unaccountable organization overseen by a federal agency with no expertise in horse racing. According to the HBPAs, the act authorizes the Horseracing Integrity and Safety Authority, also known as HISA, to make federal laws and tax the industry to pay for its operations.

All this, say the plaintiffs, is in violation of Article I of the U.S. Constitution which states that all legislative powers granted by the Constitution are vested in congress.

The complaint, filed in March 2021 and amended the following month, is opposed by a multitude of defendants, including HISA and the Federal Trade Commission, on a variety of grounds shown in court records, including:

  • The claims are not justiciable because no rules have been promulgated, and no regulations can possibly affect horsemen until after the effective date of the legislation, July 1, 2022, and plaintiffs lack standing to bring the case;
  • Plaintiffs have misconstrued HISA and precedent set by prior court decisions in asserting their claim that congressional delegation of authority is unconstitutional;
  • The claim that HISA violates due process considerations by empowering industry actors to regulate their competitors involves “multiple layers of conjectural, improbable, and unexplained acts of bad faith, for which (plaintiffs) offer no evidence.”

At Wednesday’s oral argument, the horsemen’s groups asked Judge James Wesley Hendrix of the United States District Court for the Northern District of Texas to rule that the entire act is unconstitutional and that enforcement of it immediately cease. Defendants argued that the complaint as amended doesn’t state a claim upon which relief can be granted and should be dismissed.

It is Hendrix’s task to sort out the arguments and make a ruling. Regardless of which side is favored by his decision, an appeal to the United States Court of Appeals for the Fifth Circuit could follow.

A ruling could come any time after Wednesday’s oral argument. Hendrix mentioned in a recent filing in connection with a late attempt by the state of Texas to intervene in the litigation a need to resolve the case in a timely manner.

Daniel Suhr, managing attorney at the Liberty Justice Center, said on behalf of the HBPAs, “Today we argued that congress cannot cede its legal authority to regulate an entire industry, horse racing in this instance, to a private organization. We are confident in our arguments and encouraged by the court’s questions in the hearing.”

HISA leadership issued a statement Wednesday afternoon, stating, “We are confident in HISA’s constitutionality; it has been signed into law and racing will proceed accordingly. With the support of a broad range of industry stakeholders and other experts, HISA has already made significant progress, and we look forward to establishing and implementing a uniform set of rules and guidelines as dictated by the Horseracing Integrity and Safety Act.”

Passage of the enabling legislation by congress transferred regulatory authority over the racing industry to HISA and the FTC effective this July. Nationwide enforcement of new, uniform regulations would be granted to a third party, initially intended to be the United States Anti-Doping Agency. However, USADA and HISA announced in December 2021 that talks to carry out the mission had broken down. A substitute enforcement agency could be named.

The act requires that HISA exist under the umbrella of the FTC. According to Bennett Liebman of the Albany Law School, medication and doping rules must go through a roughly six-month approval process with the FTC before they can be implemented. That process is incomplete, and the new regulatory scheme may not be in place for months, assuming it survives legal challenges. Two standing committees would provide oversight—a Racetrack Safety Standing Committee and an Anti-Doping and Medication Control Standing Committee.

According to court records, the state of Texas and its racing commission recently asked to intervene in the lawsuit, long after issues were framed and briefed. Texas sought to argue that the creation of HISA violates the 10th Amendment to the U.S. Constitution, which reserves power to states not granted to the federal government. That same issue is being litigated in federal court in the Eastern District of Kentucky.

Defendants objected to the eleventh-hour move by Texas. Hendrix said Feb. 14 he would allow the intervention only if attorneys for Texas don’t participate in Wednesday’s oral argument, don’t pursue the 10th Amendment claim until all other pending claims in his court are resolved, and don’t attempt to relitigate those claims. Besides that, Hendrix wrote, Texas might better protect its interests if it intervenes in the Kentucky case where a 10th Amendment issue is already being litigated. The judge gave Texas until Feb. 18 to give notice if it still wants to proceed with intervention in his court.

State affiliates joining the National HBPA in filing the HISA case are located in Arizona, Arkansas, Indiana, Illinois, Louisiana, Nebraska, Oklahoma, Oregon, Pennsylvania, Washington, and West Virginia. The National HBPA is represented by attorneys at the Liberty Justice Center, a public interest law firm. The American Quarter Horse Association and North American Association of Racetrack Veterinarians filed Amicus Curiae (friend of the court) briefs supporting plaintiffs.

Brennan Holden Meier of the Dallas law firm Akin Gump Strauss Hauer & Feld is the lead attorney for HISA. Alexander V. Sverdlov of the U. S. Department of Justice is lead counsel for the FTC. Sen. Mitch McConnell (Ky.) and Reps. Paul Tonko (N.Y.) and Andy Barr (Ky.) engaged in amicus briefing in support of HISA. The Jockey Club, majority owner of BloodHorse, has advocated for HISA.