Oral Arguments Return in Fifth Circuit HISA Challenge

After a major legal challenge to the Horseracing Integrity and Safety Act was lost in another venue, a different group of opponents sought to even the score during oral arguments in a Louisiana federal appeals court.

On Oct. 3 attorneys for the National Horsemen’s Benevolent and Protective Association and associated state HBPAs, Gulf Coast Racing and the State of Texas were granted 30 minutes to argue why a federal district court in Texas erred by finding HISA constitutional. Lawyers for HISA and the Federal Trade Commission countered that the Constitution was not violated when Congress passed and amended the sweeping bill supplanting state-by-state regulators with a private national Authority overseen by the FTC.

Wednesday’s oral arguments marked the second time the case has come before the U. S. Fifth Circuit Court of Appeals in New Orleans, and the challengers may have reason to be optimistic. Reversing a ruling from a federal district court in Texas, a Fifth Circuit panel of three judges previously found HISA unconstitutional on grounds that the Authority, a private corporation authorized by Congress, was akin to a loose regulatory horse exercising government powers with no meaningful oversight by a government agency, in this case the FTC.

After that ruling Congress intervened in late 2022, amending the enabling legislation to grant the FTC greater control over the Authority’s actions. The Fifth Circuit remanded, or sent back the case for further hearing to Texas where Judge James Wesley Hendrix again found HISA’s statutory scheme constitutional.

The legal battle in New Orleans seeks to balance the scales of justice against a result favorable to HISA in the Sixth Circuit Court of Appeals. The Sixth Circuit, based in Cincinnati, ruled earlier this year HiSA is constitutional. If HISA opponents win the Fifth Circuit case, a classic constitutional confrontation would ensue, leaving the U. S. Supreme Court to break the tie.

Only one of the three judges who heard the first appeal to the Fifth Circuit is on the current panel, Kurt D. Engelhardt. Judges Carolyn Dineen King and Stuart Kyle Duncan filled out the remainder of the panel with Duncan leading the back-and-forth with the attorneys. BloodHorse covered the hearing via audio streaming.

in the West Courtroom of the Wisdom Courthouse in New Orleans, attorney Ilan Wurman led off arguments for Gulf Coast Racing, one of the appellants from the case in Texas. He was followed by Daniel Suhr for the HBPAs and William Francis Cole for the State of Texas. Joseph Forrest Busa spoke on behalf of the Federal Trade Commission, and Pratik A. Shah concluded appellees’ arguments for the constitutionality of HISA.

A common theme throughout the hour was whether the FTC has appropriate authority over the Horseracing and Integrity Authority not only as to rulemaking, which was addressed in the Fifth Circuit’s initial ruling, but also enforcement.

“We focused on the rulemaking authority,” Duncan said of the first ruling. “The FTC was subordinate at that time.”

That is when Congress amended HISA. But as to its enforcement power, “what do we do with that?” Duncan asked, repeating several times a question of whether the Authority has the power to seek an injunction, on its own, to shut down a race track for non-compliance with safety rules.

The FTC argued that it has the power to write a rule prohibiting the Authority from doing that, but attorney Busa posited that until someone with an “actual concrete interest” in the outcome of such a case challenges an enforcement action, there is nothing for the court of appeals to decide. “This is a facial challenge…and clearly the FTC is in charge on the face of the statute,” he said.

Suhr argued the entire scheme is unlawful. “The president has no control over who runs the Authority,” he said. Cole, arguing for Texas, said, the Congressional fix does not give the FTC power to make new rules. “Only to modify them,” he said.

The issues raised in both appeals may have broad constitutional implications, and the resulting decisions could have a reach affecting the legality of rulemaking by federal regulatory agencies that have nothing to do with the sport of racing horses.

Amicus Curiae, or “friend of the court,” briefs were filed by several think-tank groups outside the sport’s realm: the Reason Foundation, the Cato Institute, the Competitive Enterprise Institute, the Goldwater Institute, the Manhattan Institute for Policy Research and the Niskanen Center. Thoroughbred Industry Participants, the American Quarter Horse Association and the North American Association of Racetrack Veterinarians also filed amicus briefs.

Following today’s arguments, which were handled with professional decorum by both sides and the court, Duncan announced, “We will take this case under submission.”