In 2020, Congress enacted the Horse Integrity and Safety Act (HISA) to provide the horseracing industry with standard rules regarding racetrack safety and medication control. Furthermore, HISA empowers the Horseracing Integrity and Safety Authority (Horseracing Authority)—a private entity—with rulemaking authority. Roughly a year later, the National Horsemen’s Benevolent and Protective Association (NHBPA), among other organizations, sued the Federal Trade Commission (FTC) on several constitutional grounds, including violating the private non-delegation doctrine. Though the district court noted the HISA regulatory scheme “pushes the boundaries of public-private collaboration,” the court ultimately found no violation of the doctrine.

On appeal, the Fifth Circuit reversed and remanded the case holding that HISA unconstitutionally delegated rulemaking authority to the Horseracing Authority. To reach this decision, the court had to determine which entity was truly sitting in the saddle. First, the Horseracing Authority had sweeping rulemaking power because HISA delegated the task of creating racetrack safety programs to the Horseracing Authority. 

Second, the FTC had limited oversight over the Horseracing Authority. Most importantly, the FTC could not review the Horseracing Authority’s policy decisions. Under HISA, the FTC had two obligations upon receiving proposed rules from the Horseracing Authority—publish the proposed rule to the Federal Register and determine whether the rule was “consistent” with HISA. Ultimately, the court determined that the review process did not rise to the “pervasive surveillance and authority” that agencies must exercise over private entities.

Third, the court analyzed three cases to support its holding: (1) Sorrell v. SEC, (2) Texas v. Rettig, and (3) Association of American Railroads v. United States Department of Transportation (Amtrak I). The court distinguished this case from Sorrell by emphasizing that HISA failed to give the FTC the power to amend the proposed rules. See Sorrell v. S.E.C., 679 F.2d 1323, 1326 (9th Cir. 1982). Furthermore, the court concluded that Rettig did not foreclose the HISA challenge because, once again, the FTC did not have the power to modify or rescind any proposed rules. See Texas v. Rettig, 987 F.3d 518, 532 (5th Cir. 2021). Finally, the court noted that Amtrak I stands for the proposition that a statute violates the non-delegation doctrine when it gives an agency unilateral rulemaking authority. See Ass’n of Am. R.R. v. U.S. Dep’t of Transp. (Amtrak I), 721 F.3d 666, 671 (D.C. Cir. 2013). For these reasons, the Fifth Circuit held that HISA violated the private non-delegation doctrine because the Horseracing Authority—not the FTC—was the entity holding the reins on the horseracing industry.

Though the court announced this decision in November 2022, implications from this holding have already arisen. Nearly a month after this decision, President Biden enacted a year-end spending bill that included language correcting the constitutional defects within HISA. Consequently, the Horseracing Authority filed a motion asking the court to vacate the judgment. The NHBPA quickly filed an objection in response to the motion. Both parties will be chomping at the bit as they await a final ruling on the constitutionality of HISA.

Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black, 53 F.4th 869 (5th Cir. 2022).