U.S. Fifth Circuit Court of Appeals panel hears oral arguments in HISA constitutionality case

Opposing sides in a case involving the constitutionality of the legislation that established the Horseracing Integrity and Safety Authority on Wednesday provided oral arguments to the U.S. Fifth Circuit Court of Appeals.

The three-judge panel of the U.S. Fifth Circuit, which last year ruled that the enabling legislation violated the non-delegation doctrine of the Constitution, allowed one hour of oral arguments and is expected to issue a ruling in the case by the end of the year. A ruling that upholds HISA’s constitutionality would align with a ruling issued by the Sixth Circuit Court of Appeals, while a ruling against the legislation would likely lead to a petition for the Supreme Court to hear the case.

The Fifth Circuit was hearing the case for a second time because it remanded its earlier ruling to a lower court for a second review. However, after remanding the case, Congress passed an amendment to the original enabling legislation giving the Federal Trade Commission broader powers over HISA. The lower court cited that amendment when issuing a ruling earlier this year that upheld HISA’s constitutionality, in contradiction to the higher court’s decision, which led to another appeal to the Fifth Circuit.

The plaintiffs in the case include horsemen’s groups, the state of Texas, and a company that owns racetracks in Oklahoma and Texas.

During the oral arguments, attorneys for HISA and the FTC repeatedly invoked the amendment and the Sixth Circuit decision to make the case that the court’s earlier concerns over the non-delegation doctrine had been remedied by an act of Congress. The non-delegation doctrine holds that Congress cannot delegate powers of government to private organizations without certain guardrails and standards.

Joseph Busa, an attorney representing the FTC, told the court that the amendment was added explicitly because of the Fifth Circuit’s earlier decision that held that HISA, “rather than the FTC, has been given final say over HISA’s programs.”

“The one defect this court identified was the lack of general rule-making power,” Busa said. “Congress swiftly supplied it” to the FTC.

Pratik Shah, an attorney representing HISA, said that arguments from the plaintiffs contesting the FTC’s actual role in approving HISA’s rules fell flat, because, Shah said, it’s enough that Congress gave them that power.

“It’s not how the agency exercises its discretion,” Shah said. “It’s whether Congress gave them the tools to do that.”

Ilan Wurman, an attorney representing Gulf Coast Racing, the racetrack owner, told the judges that the statute created an “all-encompassing regulator” that did not have to answer to the government, reviving the arguments that the plaintiffs used prior to the amendment being passed.

That argument of deficient governmental power also was brought up by William Cole, representing the state of Texas, who said that even with the amendment, HISA’s own rule-making power “continues to be sweeping.”

“The amendment doesn’t change the authority’s power to create entire industry programs out of whole cloth,” Cole said. He added that the amendment is “a modest power. It’s not a broad power that allows it to create any rule for any purpose.”

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