Eighth Circuit Upholds Lower Court's Order Denying Horsemen's Request for HISA Injunction

The United States Court of Appeals for the Eighth Circuit on Friday affirmed a ruling out of a lower federal court in Arkansas that had denied a preliminary injunction sought by horsemen in Arkansas and Iowa to halt the Horseracing Integrity and Safety Act (HISA) and its Anti-Doping and Medication Control (ADMC) program.

Chief Judge Steven Colloton took the lead in authoring the opinion for the three-judge panel, writing that the plaintiffs/appellants have “not established a fair chance of success on the merits, so the district court did not abuse its discretion in denying the motion for a preliminary injunction. The order of the district court is affirmed.”

The plaintiffs/appellants in the case are led by Bill Walmsley, the president of the Arkansas Horsemen's Benevolent and Protective Association (HBPA), and Jon Moss, the executive director of the Iowa HBPA.

The defendants/appellees are executives with the HISA Authority and the Federal Trade Commission (FTC).

The Eighth Circuit opinion only concerns the denial of the preliminary injunction to keep HISA from being enforced, and the plaintiffs are free to pursue other aspects of their underlying lawsuit over HISA's constitutionality in the lower court.

The three-judge panel in the Eighth Circuit established in their opinion that they were well aware that two other federal appeals courts, the Fifth and Sixth Circuits, currently conflict in their opinions over whether HISA is constitutional, a matter that seems increasingly likely to be taken up by the U.S. Supreme Court.

The Fifth Circuit panel opined July 5, 2024, that even though HISA's rulemaking structure is constitutional, HISA's enforcement provisions are unconstitutional. A Sixth Circuit Court of Appeals panel opined in a different case Mar. 3, 2023, that Congressional changes to the law in 2022 made all of HISA completely constitutional.

“We agree with the Sixth and Fifth Circuits that the Act's rulemaking structure does not violate the private nondelegation doctrine,” Colloton wrote.

“As others have recognized, Congress modeled the Act as amended on a regulatory scheme in the securities industry that has been widely approved as constitutional,” Colloton wrote. “We join the other two circuits in concluding that the Authority is subordinate to the [FTC] such that the rulemaking structure of the Act does not violate the private nondelegation doctrine.”

The horsemen appellants also challenged the Authority's enforcement powers, contending that HISA unconstitutionally delegates executive power to the Authority, a private entity.

“The Fifth Circuit declared the enforcement provisions of the statute unconstitutional because it thought the [FTC's] power to modify and add to the rules of the Authority does not 'authorize basic and fundamental changes in the scheme designed by Congress,'” Colloton wrote.

But, he added, “Like the Sixth Circuit, we are satisfied that the statute's enforcement provisions are not unconstitutional on their face and in all of their applications.”

The appellants further argued that HISA violates the public nondelegation doctrine.

“Congress may not delegate the legislative power of Article I to a federal agency,” Colloton wrote. But, he added, “those who act under general provisions of a law may 'fill up the details.' When Congress sets forth 'an intelligible principle to guide the delegee's use of discretion,' there is no unconstitutional delegation.”

Colloton continued: “Congress specified twelve elements that must be included in a horse racing safety program. Congress set forth several elements of rule violations and of a disciplinary process for the industry. These provisions meaningfully guide the [FTC's] exercise of discretion. The Supreme Court has upheld delegations made with comparable or lesser

guidance.”

The appellants also asserted that HISA violates the Appointments Clause of the Constitution because the members of the Authority's board of directors are allegedly officers of the United States who must be appointed by the President, a court of law, or the head of a department.

“We agree with the Fifth Circuit that the Act does not conflict with the Appointments Clause,” Colloton wrote. “The requirements of the Clause apply only to officers of the United States [but] the Authority, however, is a 'private, independent, self-regulatory, nonprofit corporation.'

“A private corporation must be regarded as a governmental entity for constitutional purposes only in limited circumstances [and that] standard is not satisfied here,” Colloton wrote. “The Act did not create the Authority; the Authority incorporated under Delaware law before the Act's passage. None of the board members are public officials, and the government plays no role in selecting or retaining them. The members of the Board are thus not officers of the United States, so their appointments are not governed by the Appointments Clause.”

One judge on the panel, Raymond Gruender, concurred in part and dissented in part with the overall decision to affirm the lower court's denial of the injunction. As part of his explanation, he wrote:

“In a case such as this, where Congress has avoided the limitations of the Appointments Clause by vesting in a private entity the wholesale power to regulate doping, medication, and safety issues in the horse racing industry nationwide, it is imperative that the private nondelegation doctrine carry force to prevent broad delegation of governmental powers to unsupervised private parties.

“The court's opinion fails to reckon with the plain language of HISA, which grants to the Authority a broad enforcement power that is not subordinate to the FTC. Like the Fifth Circuit, I conclude that HISA's enforcement provisions facially violate the private nondelegation doctrine. I respectfully dissent from [that part] of the court's opinion,” Gruender wrote.

After publication of this article, TDN received the following emailed statement from a HISA Authority spokesperson: “The Eighth Circuit Court of Appeals joins the Sixth Circuit Court of Appeals in upholding HISA's constitutionality. As evidenced by the approximately 49% year-over-year reduction in racing-related equine fatalities, HISA's uniform standards are having a material, positive impact on the health and well-being of horses.”