Court ruling on HISA to have limited impact, for now

The recent decision by a three-judge panel of the Fifth Circuit Court of Appeals that the Horseracing Integrity and Safety Act (HISA) violates the United States Constitution sent shockwaves through the Thoroughbred industry and could ultimately cause new upheaval across the racing nation.

In the short term, though, not much will change for most horsemen.

“Business as usual,” is how Maryland Racing Commission chairman Michael Algeo put it.

That’s because of the structure of the U. S. court system, which is geographically based. The Fifth Circuit covers the districts in Louisiana, Mississippi, and Texas; its decisions are binding in those states unless overturned by the Supreme Court. But they aren’t binding on any other circuits.

“That’s the first thing: it doesn’t really have a direct, significant impact immediately on Maryland,” Algeo explained. “So it’s going to carry on as usual.”

That, most likely, will be the case in most of the country, attorney Alan Foreman said. Foreman is the chairman and CEO of the Thoroughbred Horsemen’s Associations, an umbrella horsemen’s group which has affiliates in Maryland, Pennsylvania, Illinois, New York, Delaware, New Jersey, and Florida.

“I haven’t heard from any state” outside of the Fifth Circuit that they’re considering treating that ruling as applicable to their states and permitting them to treat HISA as a dead letter, Foreman said.

There is, though, he said, a circumstance in which that could change. Were a second circuit to issue a similar ruling, and the Supreme Court to decline to consider the cases, that might be the death knell for the law in its current form.

“If the Supreme Court refuses to take the case, then you’re left with those [appeals court] decisions,” he explained. “And I suspect that if I were to ask the Maryland Attorney General, or other racing jurisdictions asked their attorney generals, what they believe, they’ll probably conclude based on those precedents that HISA’s unconstitutional, and probably instruct their states not to cooperate with HISA.”

The Fifth Circuit ruled that HISA’s regulatory scheme violated the Constitution by, in essence, vesting quintessentially federal regulatory powers in a private entity with insufficient governmental oversight. That violates what is known as the non-delegation doctrine.

As it happens, a very similar case is scheduled for oral argument December 7 before a three-judge panel in the Sixth Circuit, which covers Kentucky, Tennessee, Michigan, and Ohio. That case, tabbed as Oklahoma, et. al. v. United States of America, et. al., makes the same point as the Fifth Circuit case.

“Oklahoma already has government oversight in place through the Oklahoma Horse Racing Commission, which does what the federal government seeks to take over and give to a private corporation completely unaccountable to Oklahoma voters,” Oklahoma attorney general Mike Hunter said at the time the lawsuit was filed.

That case was dismissed at the district court level, and Oklahoma has appealed to the Sixth Circuit court of appeals.

What now?

The Fifth Circuit ruling is not set to take effect until January 10. In the interim, the Horseracing Integrity and Safety Authority created by the Act could seek a stay of the ruling pending additional litigation, or it could seek an en banc hearing, at which all of the Fifth Circuit judges, and not just a three-judge panel, would hear and rule on the case.

If the en banc court hears the case, its ruling would be the final appellate ruling from the circuit. If it declines to hear the case, then the panel’s ruling is the final word from the circuit. Either way the Authority could choose to appeal to the Supreme Court.

The Supreme Court might hear the case, or it might decide to wait on the Sixth Circuit. If that court makes a decision similar to the Fifth, the Supreme Court might decline to hear the case, since there is no disagreement among the courts. If it makes a decision contrary to the Fifth’s, then the Supreme Court likely would get involved to resolve the controversy. Either way, a Supreme Court hearing might be a dicey proposition for HISA.

“A lot of people are not surprised [that the Fifth Circuit ruled as it did],” Foreman said. “A lot of this is resulting from a more conservative Supreme Court and a more conservative judiciary and what has been the decades-long desire of the conservative movement in this country to rein in the ‘administrative state.’”

Another possibility would be for the Authority and its advocates to push for a legislative fix clarifying that the Federal Trade Commission has the final say in matters pertaining to HISA, but that’s by no means a slam dunk, either. Time is short, for one thing, and the lame duck Congress has a wide-ranging agenda already. What’s more, opponents of the entire scheme appear to be more energized now than they were prior to the law’s 2020 passage, and a number of members of Congress would prefer to see HISA sink than take steps to shore it up.

All of which leaves the Horseracing Integrity and Safety Act at a pivotal point. The “racetrack safety” component of the program went into effect July 1, not without its challenges, and the medication control and anti-doping elements of the program are slated to come online January 1. That’s just 10 days before the Fifth Circuit’s ruling is scheduled to take effect, throwing more uncertainty into the mix.

“This is a very confusing time and, quite frankly, not a good time for the industry,” Foreman said of all the uncertainty. “This kind of instability and confusion are not good for our business.”