RESURGENCE: SAFETY IN HORSERACING AND THE PRIVATE NONDELEGATION DOCTRINE
Author: Caleb Neal, Associate Editor
I. Introduction
On June 2, 2023, Churchill Downs, home of the Kentucky Derby, was temporarily shut down after 12 racehorses died over the span of a few weeks.[i] The entity responsible for this suspension was created just ten days before: The Horseracing Integrity and Safety Authority (“the Horseracing Authority”).[ii] The Horseracing Authority was created by Congress’s 2020 Horseracing Integrity and Safety Act (“HISA”), which responded to growing calls for standardized oversight in horseracing.[iii] The Horseracing Authority itself is not a governmental entity but a private corporation that HISA entrusts with statutory enforcement.[iv] In December 2022, Congress amended HISA so that the Horseracing Authority’s rulemaking would be under the Federal Trade Commission’s (“FTC”) oversight.[v] HISA quickly met challenges, facing opposition based most notably on the private nondelegation doctrine.[vi]
II. What is Private Nondelegation?
The private nondelegation doctrine states that if a private entity is given authority to help enforce a statute, it must be subordinate to a federal actor to be constitutional.[vii] Seemingly, congressional delegation of law enforcement to a private entity would automatically be deemed unconstitutional. This, however, is not the case.[viii]
Traditionally, two cases seem to prohibit congressional delegation to private entities: Carter v. Carter Coal, and A.L.A. Schechter Poultry Corp. v. United States.[ix] These cases do not stand for the idea that private delegation is unconstitutional.[x] Instead, they are best read to establish that when Congress gives up too much power to anyone, private or public, this is a violation of the nondelegation doctrine.[xi] To further this point, the Supreme Court has validated delegations to private entities under Article I of the Constitution at least four times.[xii] Private delegations are therefore required to comply with a similar test that is applied to public delegations and must pass a test similar to the intelligible principles examination—requiring Congress to provide principles and standards for an agency to adhere to in enforcing law.[xiii]
III. The Fifth Circuit Applies the Private Nondelegation Doctrine to HISA and Causes a Circuit Split
The Fifth Circuit Court of Appeals, the Sixth Circuit Court of Appeals, and the Eighth Circuit Court of Appeals have all heard challenges to HISA based on the private nondelegation doctrine.[xiv] The Fifth Circuit states the private nondelegation test as follows: “a private entity may wield government power only if it functions subordinately” to an agency with “authority and surveillance” over it.[xv] This parallels the Sixth and Eighth Circuit’s tests when each of them reviewed HISA under private nondelegation challenges.[xvi] Though the Fifth Circuit applied the same test for private delegations, it found HISA to be facially unconstitutional despite the Sixth and Eighth Circuit finding the delegation permissible.[xvii]
The Sixth Circuit accepted that the Horseracing Authority’s enforcement duties were extensive, but concluded the FTC had “pervasive oversight and control” over the Horseracing Authority.[xviii] This meant the Horseracing Authority merely operated as an aid to the FTC.[xix] Since the FTC has full decision-making power over the Horseracing Authority’s adjudications, the Horseracing Authority’s enforcement structure did not violate the private nondelegation doctrine.[xx] The Eighth Circuit reached a similar conclusion.[xxi]
In its analysis, the Sixth Circuit observed that HISA and the Horseracing Authority were similar to the relationship between self-regulatory organizations and the Securities Exchange Commission (“SEC”).[xxii] The Fifth Circuit, however, failed to recognize this similarity.[xxiii] The Fifth Circuit cited multiple differences between the two, giving considerable weight to how SEC has the sole power to bring civil suits, as well as its ability to derecognize the Financial Industry Regulatory Authority—the private entity entrusted with some enforcement—if the SEC thought it were necessary.[xxiv] In contrast, the Fifth Circuit noted that the Horseracing Authority was in charge of bringing civil suits, not the FTC.[xxv] It also took issue with HISA not empowering the FTC to subpoena records, bring charges, sanctions, or search any premises.[xxvi] Finally, HISA does not allow the FTC to override the Horseracing Authority’s investigator or charging decision.[xxvii]
IV. Horseracing Safety and a Resurgence of Nondelegation
These differing opinions lead to the question: So, what? This circuit split is important for two reasons. First, whether one is for or against HISA and the Horseracing Authority, no one can deny the impact the Horseracing Authority has had on the industry.[xxviii] During the second quarter of 2024, the Horseracing Authority’s testing unit administered 20,063 tests across 14 states.[xxix] While it remains to be seen what the Horseracing Authority will do to the industry, it cannot be denied it will have a major effect.[xxx] Whether HISA and the Horseracing Authority survive through these challenges will have a major effect on what the future of the industry will look like.
Second, looking beyond this case itself, if the Supreme Court chooses to grant cert and cure the split, it could mean sweeping changes for both private and public nondelegation doctrine jurisprudence.[xxxi] If the Court chooses to, it could use this as an opportunity to revive the nondelegation doctrine, giving it more teeth than it has had over the last century.[xxxii] While the Horseracing Authority has upset the status quo in one of America’s oldest sports traditions, the Supreme Court could upset one of the oldest judicial traditions if they choose to reinvigorate the nondelegation doctrine through this circuit split.
[i] Sara Amundson & Kitty Block, In historic move, Churchill Downs suspends racing after 12 horses die at the track, HUMANE SOCIETY LEGISLATIVE FUNDING (Nov. 19 2024, 12:56 PM), https://www.humanesociety.org/blog/historic-move-churchill-downs-suspends-racing-after-12-horses-die-track; HISA Anti-Doping and Medication Control Program to Relaunch May 22, 2023, Under Enforcement of HIWU, HORSERACING INTEGRITY AND WELFARE UNIT (May 19, 2023), https://www.hiwu.org/news/hisa-anti-doping-and-medication-control-program-to-relaunch-may-22-2023-under-enforcement-of-hiwu.
[ii] Amundson & Block, supra note i.
[iii] Lucy McAfee, The Rise and Fall of the Horseracing Integrity and Safety Act: How Congress Could Save the “Sport of Kings,” 25 VAND. J. ENT. & TECH. L. 783, 788-89 (2023).
[iv] 15 U.S.C. § 3052(a); McAfee, supra note iii, at 789.
[v] Amy Howe, Justices allow federal anti-doping horse racing law to stay in effect for now, SCOTUSBLOG (Oct 28, 2024, 12:11 PM), https://www.scotusblog.com/2024/10/justices-allow-federal-anti-doping-horse-racing-law-to-stay-in-effect-for-now/.
[vi] Kalen Youtsey, Note, Hold Your Horses: The Horseracing Integrity and Safety Act of 2020 is in Its Own Race to Beat Constitutional Invalidity, 41 OKLA. CITY U.L. REV. 383, 391 (2023) (“It is a constitutional prohibition that articulates that Congress ‘cannot delegate regulatory authority to a private entity.’”).
[vii] Walmsley v. FTC, 117 F.4th 1032, 1038 (8th Cir. 2024) (“As long as the Commission has the final say over the rules, there is no impermissible private delegation.”); Oklahoma v. United States, 62 F.4th 221, 229 (6th Cir. 2023).
[viii] Alexander Volokh, Article, The Myth of the Federal Private Nondelegation Doctrine, 99 NOTRE DAME L. REV. 203, 229-30 (2023) (discussing the idea that the nondelegation doctrine does not forbid delegation to private entities).
[ix] Id.; A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935); Carter v. Carter Coal Co., 298 U.S. 238 (1936).
[x] Volokh, supra note viii, at 233-236.
[xi] Id.
[xii] Id. at 230.
[xiii] Id. at 235 (explaining that the cases stand for the proposition that delegations must be accompanied by an “intelligible principle”, whether public or private).
[xiv] See Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black, 107 F.4th 415, 423 (5th Cir. 2024); Oklahoma v. United States, 62 F.4th 221, 229 (6th Cir. 2023); Walmsley v. FTC, 117 F.4th 1032, 1038 (8th Cir. 2024).
[xv] Black 107 F.4th at 423.
[xvi] Walmsley 117 F.4th at 1038; Oklahoma 62 F.4th at 229.
[xvii] Black, 107 F.4th at 429-30; Walmsley, 117 F.4th at 1039-40; Oklahoma, 62 F.4th at 229-30.
[xviii] Oklahoma, 62 F.4th at 231.
[xix] Id.
[xx] Id.
[xxi] Walmsley, 117 F.4th at 1039.
[xxii] Oklahoma v. United States, 62 F.4th 221, 229 (6th Cir. 2023).
[xxiii] Nat’l Horsemen’s Benevolent & Protective Ass’n v. Black, 107 F.4th 415, 433-35 (5th Cir. 2024).
[xxiv] Id.
[xxv] Id.
[xxvi] Id.
[xxvii] Id.
[xxviii] HISA, Racing Fatalities Per 1000 Starts, 2024 Q2 Metrics Report (July 26, 2024), https://hisaus.org/news/2024-q2-metrics-report (showing a drop of racing fatalities per 1000 starts since in the inception of Anti-Doping and Medication Control program, in Q3 of 2023 the deaths per 1000 starts was 1.18, while in Q2 of 2024 it was .076).
[xxix] Quarterly Testing Statistics, Q2 2024 Testing Statistics, HORSERACING INREGRITY & WELFARE UNIT (April 1-June 30, 2024), https://www.hiwu.org/about/reports-and-statistics/hiwu-2024-q2-statistics (showing total samples collected, along with other metrics of the Horseracing Integrity & Welfare Unit testing).
[xxx] Kitty Block & Sara Amundson, In a win for animals, US Supreme Court leaves Horseracing Integrity and Safety Act intact, THE HUMANE SOC’Y OF THE U.S. (Nov. 25, 2024, 11:00 AM), https://www.humanesociety.org/blog/us-supreme-court-upholds-horseracing-integrity-safety-act (“There was a 38% decline in horse deaths in the first quarter this year compared to the same period last year.”).
[xxxi] See Gundy v. United States, 588 U.S. 128 (2019); Noah R. Feldman & Kathleen M. Sullivan, Constitutional Law 393 (University Casebook Series, 21st ed. 2022) (“The dissent by Justice Gorsuch, joined by Chief Justice Roberts and Justice Thomas . . . challenged the hoary intelligible principle doctrine.”); Johnathan Hall, Note, The Gorsuch Test: Gundy v. United States, Limiting the Administrative State, and the Future of Nondelegation, 70 DUKE L. J. 175, 179 (2020).
[xxxii] See Hall, supra note xxxi, at 178 (“[I]t seems possible . . . there will be five votes to strike down broad delegations of power.”).