Reported / Citable
Background
The Horseracing Integrity and Safety Act of 2020 (HISA) created a private, nonprofit corporation—the Horseracing Integrity and Safety Authority—to develop and enforce nationwide rules governing doping, medication control, and racetrack safety in thoroughbred horseracing, subject to oversight by the Federal Trade Commission. In its first review of the statute, the Fifth Circuit held in Horsemen’s I (2022) that HISA’s delegation of rulemaking power to the Authority was facially unconstitutional under the private nondelegation doctrine, because the FTC could perform only a narrow “consistency review” of proposed rules and could not second-guess the Authority’s policy choices. Congress responded by amending HISA to allow the FTC to “abrogate, add to, and modify” Authority rules, borrowing language from the Maloney Act framework governing the SEC’s oversight of self-regulatory organizations like FINRA.
On remand, the district court held the amendment cured the constitutional defect, following the Sixth Circuit’s analysis in Oklahoma v. United States. The district court also rejected a separate nondelegation challenge to the Authority’s enforcement powers, dismissed Appointments Clause claims brought by new plaintiff Gulf Coast Racing, and found Gulf Coast lacked standing to press a Tenth Amendment anti-commandeering theory. Plaintiffs—including multiple state horsemen’s associations, Texas, and Gulf Coast Racing—appealed. The Fifth Circuit issued a decision affirming in part and reversing in part (Horsemen’s II), but the Supreme Court vacated that decision and remanded for reconsideration in light of FCC v. Consumers’ Research, 606 U.S. 656 (2025).
After supplemental briefing, the Fifth Circuit concluded that Consumers’ Research did not alter its prior analysis. The panel reissued its earlier decision with a new section explaining why, and the constitutional fate of HISA’s enforcement machinery came to a head.
The Court’s Holding
The Fifth Circuit affirmed the district court on four of the five contested issues. First, the court agreed that Congress’s amendment granting the FTC power to abrogate, add to, and modify Authority rules cured the rulemaking nondelegation defect identified in Horsemen’s I. Because the FTC now has ultimate authority over rule content—including the ability to override the Authority’s policy choices—the Authority’s rulemaking functions subordinately to a government agency, satisfying the private nondelegation doctrine. Second, the court upheld the rejection of the due process challenge, finding the Horsemen failed to show that Authority directors hold financial interests in regulating their competitors. Third, the court held that under Lebron v. National Railroad Passenger Corp., 513 U.S. 374 (1995), the Authority is a private entity whose directors are not subject to the Appointments Clause. Fourth, the court affirmed dismissal of Gulf Coast’s Tenth Amendment claim for lack of standing.
The court diverged sharply from the district court—and from the Sixth Circuit—on the Authority’s enforcement powers. HISA empowers the Authority (and its contractor HIWU) to investigate potential violations, issue subpoenas, conduct searches of racetracks, impose civil sanctions, and file civil actions seeking injunctions, all without prior FTC approval. The FTC can review civil sanctions after the fact, but it has no authority to preapprove, supervise, or halt individual enforcement decisions. The court held this arrangement violates the private nondelegation doctrine because executive power—investigating, searching, sanctioning, and suing—may not be wielded by a private entity that does not function subordinately to a government agency with genuine authority and surveillance over those actions. Accordingly, the court declared HISA’s enforcement provisions facially unconstitutional.
The court explicitly acknowledged the circuit split its ruling creates with the Sixth Circuit, which sustained HISA’s enforcement structure in both Oklahoma I (2023) and Oklahoma II (2025). The Fifth Circuit’s judgment is affirmed in part and reversed in part, with a declaration of facial unconstitutionality directed at the enforcement provisions.
Key Takeaways
- Congress’s 2023 HISA amendment—giving the FTC power to abrogate, add to, and modify Authority rules—cured the rulemaking nondelegation defect and is constitutionally valid under the Fifth Circuit’s analysis.
- The Authority’s enforcement powers (investigations, subpoenas, searches, sanctions, and civil litigation) violate the private nondelegation doctrine because they are wielded without meaningful FTC oversight or approval, making the Authority not subordinate to any government agency when it enforces the law.
- The private nondelegation doctrine applies equally to delegations of executive power as to delegations of legislative/rulemaking power; a private entity may not exercise either absent genuine government superintendence.
- The Authority does not qualify as a governmental entity under Lebron, so its directors are not “officers of the United States” subject to Appointments Clause requirements.
- The ruling deepens a direct circuit split with the Sixth Circuit, which upheld HISA’s enforcement provisions in two decisions, increasing the likelihood of further Supreme Court review.
Why It Matters
This decision has immediate practical significance for the thoroughbred horseracing industry. By declaring HISA’s enforcement provisions facially unconstitutional, the Fifth Circuit removes the statutory mechanism through which the Authority—and its subcontractor HIWU—investigate doping violations, issue subpoenas, sanction participants, and seek injunctions across the more than 3,000 enforcement actions the Authority has already brought. The ruling leaves the rulemaking framework intact but strips the regime of its enforcement teeth in the Fifth Circuit’s jurisdiction, creating a gap that Congress or the FTC would need to address.
More broadly, the opinion signals that the private nondelegation doctrine has real bite when applied to executive functions, not just rulemaking. As Congress and regulators increasingly rely on private self-regulatory organizations to implement federal programs—from financial markets (FINRA) to horseracing—this decision establishes that such arrangements must include meaningful government control over enforcement actions, not merely over the rules those actions enforce. The entrenched circuit split with the Sixth Circuit makes Supreme Court intervention likely, and the outcome will shape the constitutionality of self-regulatory models across multiple industries.