Columbus, OH – The United States Court of Appeals for the Fifth Circuit announced Friday (Nov. 18) that they have overturned the previous ruling of the district court and declared that the Horseracing Integrity and Safety Act is facially unconstitutional.

In the decision on the appeal from the United States District Court for the Northern District of Texas, Circuit Judge Stuart Kyle Duncan wrote, “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. 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. 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.’

“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.”

Judge Duncan concluded, “The district court’s judgment is reversed and the case is remanded for further proceedings consistent with this opinion.”

The appeal was held before Circuit Judges Carolyn Dineen Kind, Kurt D. Engelhardt and Duncan from the United States Court of Appeals for the Fifth Circuit in New Orleans, LA.

Plaintiffs – Appellants in the case were, the 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.  They were joined by Intervenor Plaintiffs – Appellants the State of Texas and Texas Racing Commission.

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; and Commissioner Christine Wilson, were the Defendants—Appellees in the case.

To read the complete order from the United States Court of Appeals for the Fifth Circuit, click here.