The U.S. Fifth Circuit Court of Appeals has ruled that a core function of the Horseracing Integrity and Safety Authority is unconstitutional, in a narrow ruling that will nonetheless keep HISA’s legal status in limbo for months to come. The ruling, issued on Friday night by a three-judge panel of the Fifth Circuit, held that HISA’s enforcement powers “violate the private nondelegation doctrine” attributed by many courts to the constitution by giving HISA broad powers to enforce its rules without initial guidance from the Federal Trade Commission, its overseer. HISA is expected to appeal the decision to the Supreme Court, which two weeks ago denied a petition to hear a similar case arising out of the Sixth Circuit that, contrary to Friday night’s ruling from the Fifth Circuit, upheld the constitutionality of HISA. “We are disappointed with the court’s decision, particularly in light of the Sixth Circuit’s strong endorsement of HISA’s constitutionality,” said Lisa Lazarus, the chief executive of HISA, on Saturday morning. “While the judicial review process continues, it is critical for all racing participants to know HISA is still the law of the land, its rules are still fully in effect, and [the rules] will remain so for the foreseeable future.” :: Bet the races with a $200 First Deposit Match + FREE All Access PPs! Join DRF Bets. The decision was the second time that the U.S. Fifth Circuit held HISA to be unconstitutional, though the Friday night ruling was far narrower in scope than its previous decision in late 2022. In the ruling, the Fifth Circuit said that an amendment added to HISA’s enabling legislation at the end of 2022 eliminated a previous objection to the non-delegation doctrine by widening the FTC’s rule-making authority. The decision to declare the enforcement powers unconstitutional was made in response to a new argument made by challengers to HISA when the case was re-appealed to the Fifth Circuit last year. The case was initially brought by the National Horsemen’s Benevolent and Protective Association, along with 12 of its state affiliates, plus several racing companies and the state of Texas. Funding for the suit was provided by private groups hostile to government regulation. It was filed in a district court in Texas within the Fifth Circuit’s jurisdiction because of the Fifth Circuit’s reputation as a bulwark against federal power. Eric Hamelback, the chief executive of the National HBPA, said that the ruling was a victory in the organization’s “fight to protect horsemen across the country and their constitutional rights.” “HISA has done nothing but impose exorbitant costs and headaches on horsemen and women with little to no benefit for the health of horses,” Hamelback said, in a statement. “It is time to recognize the reality that HISA is fundamentally broken and cannot be fixed.” The National HBPA and its affiliates, along with many individual horsemen, have expressed dissatisfaction with HISA and its enforcement arm, HIWU, since the authority began enforcing safety rules in the summer of 2022 and implemented a national drug-testing and adjudication program in May of 2023. Still, HISA is heavily supported by many other racing constituencies, which have stuck by the authority despite its growing pains. HISA, which was set up in its enabling legislation as a private company, replaced a system in which state racing commissions devised and enforced a hodgepodge of racing rules in each of their jurisdictions. Horsemen were far more influential in the rule-making process at the state level, and by and large, HISA’s rules are stricter on veterinary oversight and medication usage than the state regulations they replaced. Horsemen also face much more stringent penalties for violations involving banned drugs under HISA’s rules. The constitutional challenges mounted by the legal team supporting the National HBPA and the other parties to the suit argued that the government cannot delegate rule-making and enforcement powers to a private company. While the Sixth Circuit ruled that FTC’s expanded oversight powers satisfied that claim, the Fifth Circuit disagreed, saying that HISA had too much power to initiate and pursue investigations and subsequently adjudicate and issue penalties for violations. “The inescapable conclusion is that the Authority does not ‘function subordinately’ to the FTC when enforcing HISA,” the ruling said. “That is not permitted under the private nondelegation doctrine. A private entity that can investigate potential violations, issue subpoenas, conduct searches, levy fines, and seek injunctions – all without the say-so of the agency – does not operate under that agency’s ‘authority and surveillance.’” :: Bet with the Best! Get FREE All-Access PPs and Weekly Cashback when you wager on DRF Bets. The problem, the ruling said, was that the FTC had limited powers to oversee those enforcement functions while they were occurring. “It is no answer to say that the FTC can come in at the tail end of this adversarial process and review the sanction,” the Fifth Circuit said. “As far as enforcement goes, the horse was already out of the barn.” Daniel Suhr, the president of the Center for American Rights and the lead counsel to the HBPA, called the decision a “huge victory for horsemen.” “Our constitution protects our freedom by ensuring regulatory power is exercised through transparent and accountable government agencies,” Suhr said. “The constitution does not allow HISA to run a private police department that enforces federal law.” While the Supreme Court’s decision two weeks ago denying an appeal of the Sixth Circuit decision would appear to augur well for HISA’s supporters, the Supreme Court made several decisions during its last docket, which ended Monday, that weakened federal regulation, including a controversial decision to end the so-called “Chevron deference” and curtail the power of federal agencies to enforce rules without judicial review. At the same time, the Supreme Court, which has a 6-3 conservative majority, overturned several decisions arising out of the Fifth Circuit, which has gained a reputation as the most conservative judicial circuit in the U.S. “The judges in that circuit seem to have some kind of competition to see who can write the most precedent-twisting, common-sense-defying decision,” said Irv Gornstein, the executive director of Georgetown’s Supreme Court Institute, in an article this week in the New York Times reviewing the Supreme Court’s decisions this year. The Supreme Court will re-convene in October and begin setting its docket and case schedule at that time. Because the Fifth and Sixth Circuits have issued conflicting opinions on a case with nearly identical issues at their core, the court is expected to consider the decisions one way or another. While HISA’s rules are expected to remain in effect until the Supreme Court decides the issue, two states, Louisiana and West Virginia, remain outside of HISA’s jurisdiction due to an injunction issued by a lower court in the Fifth Circuit. Those states are likely to remain outside of HISA’s jurisdiction until the Supreme Court issues a decision.  :: Want to learn more about handicapping and wagering? Check out DRF's Handicapping 101 and Wagering 101 pages.