Nat'l Horsemen's Benevolent & Protective Ass'n v. Black

Decision Date18 November 2022
Docket Number22-10387
Citation53 F.4th 869
Parties NATIONAL HORSEMEN'S BENEVOLENT AND PROTECTIVE ASSOCIATION; Arizona Horsemen's Benevolent and Protective Association; Arkansas Horsemen's Benevolent and Protective Association ; Indiana Horsemen's Benevolent and Protective Association; Illinois Horsemen's Benevolent and Protective Association; Louisiana Horsemen's Benevolent and Protective Association; Mountaineer Park Horsemen's Benevolent and Protective Association; Nebraska Horsemen's Benevolent and Protective Association; Oklahoma Horsemen's Benevolent and Protective Association; Oregon Horsemen's Benevolent and Protective Association ; Pennsylvania Horsemen's Benevolent and Protective Association; Washington Horsemen's Benevolent and Protective Association ; Tampa Bay Horsemen's Benevolent and Protective Association, Plaintiffs—Appellants, State of Texas; Texas Racing Commission, Intervenor Plaintiffs—Appellants, v. Jerry BLACK; Katrina Adams ; Leonard Coleman; MD Nancy Cox; Joseph Dunford ; Frank Keating ; Kenneth Schanzer; Horseracing Integrity and Safety Authority, Incorporated; Federal Trade Commission; Commissioner Kelly Slaughter; Commissioner Rohit Chopra; Commissioner Noah Phillips; Commissioner Christine Wilson, Defendants—Appellees.
CourtU.S. Court of Appeals — Fifth Circuit

Daniel Robert Suhr, Jeffrey Jennings, Reilly Stephens Liberty Justice Center, Chicago, IL, Fernando Manuel Bustos, Bustos Law Firm, P.C., Lubbock, TX, Brian Kelsey, Kelsey Firm, P.L.L.C., Germantown, TN, for Plaintiff-Appellant National Horsemen's Benevolent and Protective Association.

Daniel Robert Suhr, Jeffrey Jennings, Reilly Stephens Liberty Justice Center, Chicago, IL, Fernando Manuel Bustos, Bustos Law Firm, P.C., Lubbock, TX, for Plaintiffs-Appellants Arizona Horsemen's Benevolent and Protective Association, Arkansas Horsemen's Benevolent and Protective Association, Indiana Horsemen's Benevolent and Protective Association, Illinois Horsemen's Benevolent and Protective Association, Louisiana Horsemen's Benevolent and Protective Association, Mountaineer Park Horsemen's Benevolent and Protective Association, Nebraska Horsemen's Benevolent and Protective Association, Oklahoma Horsemen's Benevolent and Protective Association, Oregon Horsemen's Benevolent and Protective Association, Pennsylvania Horsemen's Benevolent and Protective Association, Washington Horsemen's Benevolent and Protective Association, Tampa Bay Horsemen's Benevolent and Protective Association.

Lanora Christine Pettit, Cody Tyler Rutowski, Office of the Attorney General of Texas, Office of the Solicitor General, Austin, TX, for Intervenor Plaintiffs-Appellants.

Pratik A. Shah, Lide E. Paterno, Akin Gump Strauss Hauer & Feld, L.L.P., Washington, DC, John Roach, Attorney, Ransdell Roach & Royse, P.L.L.C., Lexington, KY, for Defendants-Appellees Jerry Black, Horseracing Integrity and Safety Authority, Incorporated, Katrina Adams, Leonard Coleman, MD Nancy Cox, Joseph Dunford, Frank Keating, Kenneth Schanzer.

Joseph Forrest Busa, Mark Bernard Stern, Esq., U.S. Department of Justice, Civil Division, Appellate Section, Washington, DC, for Defendants-Appellees Federal Trade Commission, Commissioner Kelly Slaughter, Commissioner Rohit Chopra, Commissioner Noah Phillips, Commissioner Christine Wilson.

Peter J. Sacopulos, Sacopulos Johnson & Sacopulos, Terre Haute, IN, for Amicus Curiae North American Association of Racetrack Veterinarians.

Autum Flores, Underwood Law Firm, P.C., Amarillo, TX, for Amicus Curiae American Quarter Horse Association.

Eric Grant, Hicks Thomas, L.L.P., Sacramento, CA, Paul Emmanuel Salamanca, Lexington, KY, for Amici Curiae Senator Mitch McConnell, Representative Paul Tonko, Representative Andy Barr.

Gregory George Garre, Blake E. Stafford, Latham & Watkins, L.L.P., Washington, DC, for Amicus Curiae Thirty Thoroughbred Industry Participants.

Before King, Duncan, and Engelhardt, Circuit Judges.

Stuart Kyle Duncan, Circuit Judge:

We consider challenges to the Horseracing Integrity and Safety Act ("HISA" or the "Act").1 Enacted in 2020, HISA is a federal law that nationalizes governance of the thoroughbred horseracing industry. To formulate detailed rules on an array of topics, HISA empowers a private entity called the Horseracing Integrity and Safety Authority (the "Authority"), which operates under Federal Trade Commission oversight. Soon after passage, HISA was challenged by various horsemen's associations, who were later joined by Texas and the state's racing commission. The plaintiffs argued HISA is facially unconstitutional because it delegates government power to a private entity without sufficient agency supervision. The district court acknowledged that the plaintiffs' "concerns are legitimate," that HISA has "unique features," and that its structure "pushes the boundaries of public-private collaboration." Nonetheless, the court rejected the private non-delegation challenge, concluding HISA "stays within current constitutional limitations as defined by the Supreme Court and the Fifth Circuit."

We cannot agree. While we admire the district court's meticulous opinion, we conclude that HISA is facially unconstitutional. A cardinal constitutional principle is that federal power can be wielded only by the federal government. Private entities may do so only if they are subordinate to an agency. See generally A.L.A. Schechter Poultry Corp. v. United States [Schechter Poultry ], 295 U.S. 495, 537, 55 S.Ct. 837, 79 L.Ed. 1570 (1935) ; Carter v. Carter Coal Co. , 298 U.S. 238, 311, 56 S.Ct. 855, 80 L.Ed. 1160 (1936) ; Currin v. Wallace , 306 U.S. 1, 15–16, 59 S.Ct. 379, 83 L.Ed. 441 (1939) ; Sunshine Anthracite Coal Co. v. Adkins [Adkins ], 310 U.S. 381, 399, 60 S.Ct. 907, 84 L.Ed. 1263 (1940). But the Authority is not subordinate to the FTC. The reverse is true. The Authority, rather than the FTC, has been given final say over HISA's programs.

While acknowledging the Authority's "sweeping" power, the district court thought it was balanced by the FTC's "equally" sweeping oversight. Not so. HISA restricts FTC review of the Authority's proposed rules. If those rules are "consistent" with HISA's broad principles, the FTC must approve them. And even if it finds inconsistency, the FTC can only suggest changes. What's more, the FTC concedes it cannot review the Authority's policy choices. When the public has disagreed with those policies, the FTC has disclaimed any review and instead told the public to "engag[e] with the Authority."2 An agency does not have meaningful oversight if it does not write the rules, cannot change them, and cannot second-guess their substance. As the district court correctly put it: "Only an Act of Congress could permanently amend any Authority rule or divest it of its powers. The FTC may never command the Authority to change its rules or divest it of its powers." Horsemen's Benevolent & Protective Ass'n v. Black [Black ], No. 5:21-CV-071, 596 F.Supp.3d 691, ––––, at *69 (N.D. Tex. Mar. 31, 2022). The end result is that Congress has given a private entity the last word over what rules govern our nation's thoroughbred horseracing industry.

The Constitution forbids that. For good reason, the Constitution vests federal power only in the three branches of the federal government. Congress defies this basic safeguard by vesting government power in a private entity not accountable to the people. That is what it has done in HISA. The Authority's power outstrips any private delegation the Supreme Court or our court has allowed. We must therefore declare HISA facially unconstitutional. In doing so, we do not question Congress's judgment about problems in the horseracing industry. That political call falls outside our lane. Nor do we forget that "[t]he judicial power to declare a law unconstitutional should never be lightly invoked." Sveen v. Melin , ––– U.S. ––––, 138 S. Ct. 1815, 1831, 201 L.Ed.2d 180 (2018) (Gorsuch, J., dissenting). We only apply, as our duty demands, the settled constitutional principle that forbids private entities from exercising unchecked government power.

The district court's judgment is reversed and the case is remanded for further proceedings consistent with this opinion.

I. BACKGROUND
A. Facts

American horseracing is older than the founding. "Despite the disapproval of the Puritan hierarchy, by the mid 1600s, horse racing had become a popular and largely unregulated recreation throughout the colonies." Joan S. Howland, Let's Not "Spit The Bit" In Defense Of "The Law Of The Horse": The Historical and Legal Development of American Thoroughbred Racing , 14 MARQ. SPORTS L. REV. 473, 483 (2004).3 For nearly all our subsequent history, horseracing has been regulated by the States, local communities, and private organizations. See id. at 491–92.4 That changed in 2020. Alarmed by a spate of doping scandals and racetrack fatalities, Congress enacted HISA. See 15 U.S.C. § 3051 – 60.5 It passed with wide bipartisan support on December 21, 2020, and was signed by President Trump six days later.

1. HISA Framework. HISA creates a framework for enacting nationwide rules governing racetrack safety, anti-doping, and medication control. See § 3054(a). The Act's reach is broad. It applies to all "covered" horses, persons, and horseraces. See §§ 3055(a)(1), 3056(a)(1), 3057(a)(1). "Covered horses" means "any Thoroughbred," but other breeds may be brought under the Act's purview by a State racing commission or breed governing organization. § 3051(4) ; see also § 3045(l ). "Covered horseraces" are those with "a substantial relation to interstate commerce." § 3051(5). "Covered persons" includes "all trainers, owners, breeders, jockeys, racetracks, [and] veterinarians"; licensees of State racing commissions and their "agents, assigns, and employees"; and "other horse support personnel who are engaged in the care, training, or racing of covered horses." § 3051(6).

2. The Authority. To "develop[ ] and implement[ ]" the rules it envisions,...

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