HISA Supreme Court Showdown Could Have Major Implications for Everyday Americans

A contentious, years-long legal battle over the Horseracing Integrity and Safety Act (HISA) appears headed for a showdown in the highest court in the land. At the opposite ends of any future court ruling is one that could essentially impact just the future of horse racing, or one that could take a wrecking ball to various core pillars of modern life.

Industry players' stance on HISA can probably be boiled down into three main camps: those who are in ideological lock-step with the new federal body of governance; those who agree with the fundamental premise of federal industry oversight but have concerns with key aspects of the current program, especially when it comes to enforcement; and those who are completely opposed to what HISA represents.

Though industry opinions over HISA appear to have no hard and fast political demarcation, the latter camp has courted outside attention from a section of American society, typically from the far right, which believes the government has been far too liberal in the powers it has given federal agencies. They're buoyed by a Supreme Court sympathetic to their fears.

Whichever camp you're in, chances are you're already feeling reverberations from these various HISA lawsuits. While HISA declined to say exactly how much to date the industry has spent defending the law, background sources put the cost at over $5 million.

If the Supreme Court decides to take this case, however, the implications from the ruling could reverberate far outside the sport. “It certainly is going to be a big deal beyond just horse racing,” said Daniel Suhr, president of the Center for American Rights, which is spearheading the Fifth Circuit case on behalf of the HBPA.

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In fact, the case makes up one of a sweeping set of lawsuits working their way up the Circuit Courts designed to fundamentally rethink the way that government operates, with pointed implications for the nation's finance and commerce sectors, some systems of which have been in place for nearly a century or more.

As Christine Chabot, who teaches administrative and constitutional law at Marquette University Law School, describes this scenario, “it's open season on the administrative state.”

Fifth Circuit Case

At the heart of the Fifth Circuit's decision which catapulted the case up to the doors of the Supreme Court is the belief that because the HISA Authority has sweeping enforcement capabilities—from subpoenas to investigative powers to penalties—and because the Federal Trade Commission (FTC) only has authority to review the penalties on the backend (in other words, once they've already been meted out), that is insufficient to protect against the private non-delegation doctrine.

In a nutshell, the private non-delegation doctrine says “that Congress or agencies cannot delegate extensive governmental authority to a private actor without being able to do oversight,” said Todd Philips, assistant professor of law in the Robinson College of Business at Georgia State University. He also served as an attorney for the Federal Deposit Insurance Corporation, and the Administrative Conference of the United States.

The HISA Authority, of course, is an example of one of these private actors that perform extensive governmental functions. And the private non-delegation doctrine is one of the pillars of the administrative state targeted by groups led chiefly by powerful right-leaning organizations like the Heritage Foundation.

The Fifth Circuit case against HISA was originally led by the Liberty Justice Center, a nonprofit law firm that provides free legal services in constitutional cases. When Suhr splintered away from the Liberty Justice Center to start the Center for American Rights, he took the HBPA's case with him.

“When I left the Justice Center, I didn't take any other case with me. We were really trying to get a fresh start. The one exception was this case, and that was because we were going to trial something like two weeks after I changed jobs,” said Suhr, who explained he had no background in horse racing prior to his involvement in the case.

The Liberty Justice Center—which recorded revenues of roughly $2.3 million in 2022, according to Pro Publica—lists many current and prior cases targeting union powers, the administrative state, and public health and schooling, among others. The right-wing billionaire Charles Koch is among those who have supported the Liberty Justice Center, according to the Economic Policy Institute.

The only other cases listed on the Center for American Rights' website involve recent complaints filed with the Federal Communications Commission (FCC) and the Federal Election Commission (FEC) claiming biased news coverage by CBS and ABC detrimental to former president Donald Trump.

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The Center for American Rights—which is working pro bono for the HBPA—is only required to disclose its donors to the IRS. “We don't disclose our donors by specifics. I can say in general that we receive support from corporations, from individuals and from philanthropic foundations,” Suhr said.

For any industry stakeholders who might be interested, could Suhr disclose the identity of any of those donors? Maybe just the biggest?

“No,” Suhr replied. “Could we? Yes. Do we? No.”

If the Supreme Court does indeed take up the Fifth Circuit case, Suhr said he hoped the Supreme Court will use the case to, at the very least, significantly curtail the powers of private organizations like the HISA Authority and Financial Industry Regulatory Authority (FINRA), calling them “fundamentally incompatible in my view with the structure laid out” in the constitution.

“I'm deeply skeptical in any industry setting you can have a nonprofit organization write the rules, enforce the rules and adjudicate violations of the rules. That is an incredible concentration of power and I'm skeptical you can concentrate all that power in a federal agency,” Suhr said.

“The idea that you can concentrate all that power in a non-central, non-profit organization? Yeah, no way,” he added.

What, however, would Suhr say to industry stakeholders uncomfortable with the industry's future potentially shaped by an organization that hold beliefs to which they're strongly opposed?

“Plenty of people on the left who have a strong civil liberty bent would say, 'oh my goodness, the idea that a regulator can show up and search my property without a warrant, seize evidence without a warrant, order me to take a blood test or draw blood on my horse without a warrant, that makes every civil liberty bone in my body shake in fear,'” said Suhr.

“Regardless of how you think about the world politically,” he added, “there are serious constitutional problems with HISA that people recognize and experience in their own lives.”

In response to questions about HISA's warrantless authority, an agency spokesperson wrote that while HISA and HIWU have access to “places of business of Covered Persons that relate to the care, treatment, training, and racing of Covered Horses,” HISA and HIWU have not thus far accessed any private farms.

“If a Covered Horse has been selected for Out-of-Competition testing and is located on private property, HIWU will call the trainer for permission to enter the property. However, it can also be arranged for the Covered Horse to be moved to another location for testing, e.g., a racetrack, within six hours of notification,” the HISA spokesperson wrote. They added that HISA and HIWU “have no authority to demand a blood test from a Covered Person.”

Broader Concerns

The Fifth Circuit HISA case, said Chabot, forms one part of a broad, concerted attack on the government's involvement in key parts of everyday administrative life.

“These lawsuits are definitely designed to push back against regulation and make it harder to do the business of government that has been done for decades, if not since the founding fathers,” said Chabot.

Still, Chabot questions whether the private non-delegation doctrine will prove the one issue the Supreme Court wants to make its “big bold constitutional ruling on.” She sees a case to overturn “Humphrey's Executor”—which could see the president afforded the unilateral authority to fire anyone under the government's employee—as a “far bigger target for them.”

But if the Supreme Court does make a “big bold constitutional ruling” on the HISA case, a “very extreme” decision could see the government barred from relying on self-regulatory organizations (SROs)—another term for a private entity like the HISA Authority—to regulate industry, said Phillips. “As long as the Supreme Court takes the case, it could just fundamentally re-write the private non-delegation doctrine if it wanted to,” he said.

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Because Congress in its current dysfunctional state struggles to write and re-write laws quickly and efficiently, that could spell trouble for many governmental agencies like FINRA, which makes sure the broker-dealer industry operates fairly and honestly.

“We could end up in a regime where illicit activities go un-enforced because the SRO can't enforce them, and Congress hasn't given the government the authority to enforce them… Again, I'm very concerned,” said Phillips.

Industry Involvement

Among some of the key legal players in the fight over HISA, there appears to be something of an ideological divide.

Defending HISA is attorney Pratik Shah with the multinational law firm Akin Gump Strauss Hauer & Feld. While Shah's list of cases is varied, it includes multiple instances of defending key pillars of the federal administrative state. In his earlier legal days, he served as law clerk to liberal Supreme Court Justice Stephen Breyer.

Among the litigants is Texas Racing Commission executive director Amy Cook. With no prior experience in the racing industry, Cook in her position has been working with the Texas Attorney General's office “to successfully attack the constitutionality of the HISA law,” according to commission chairman Robert Pate.

According to Cook's Linkedin page, she does pro bono work for the Alliance Defending Freedom. While the organization says it is not involved in any of the suits against HISA, Cook represents an influential official with a far-right agenda who is trying to dismantle HISA. Designated a hate group by the Southern Poverty Law Center, Alliance Defending Freedom reportedly seeks “cultural renewal” through recovering “the robust Christendomic theology of the 3rd, 4th, and 5th centuries,” according to its supporters.

Designated a hate group by the Southern Poverty Law Center, Alliance Defending Freedom reportedly seeks “cultural renewal” through recovering “the robust Christendomic theology of the 3rd, 4th, and 5th centuries,” according to its supporters.

But as NHBPA CEO Eric Hamelback sees it, from within the industry this case “is not and never has been” about politics.

“There were Republicans and Democrats who sponsored and pushed HISA through Congress, and there are R's and D's among my Full Board members and other groups that have opposed HISA,” Hamelback wrote.

“This is a fight for and to protect basic American principles, like the people we vote for should be the people who make the law, or that the people who have power should be transparent and accountable with how they use that power, or how they use our mandatory fee dollars,” he added.

When asked about some of the broader implications from the case, Hamelback wrote that “we do not feel as if this is our concern, because our concern is for the horsemen. Certainly, we hear the noise about FINRA and the SEC in this case, and if some stockbroker wants to sue FINRA and the SEC after we win and argue why our precedent applies to them, fine—that's not our issue. This is and will remain our focus—that being, making sure that horsemen's rights are respected and our regulators act in a constitutional way,” Hamelback wrote.

As for the Center for American Rights' donor base, Hamelback wrote that Suhr is supported by “individuals who are inside and outside of the horse racing industry who care that this issue gets resolved.”

According to Suhr, similar scrutiny should also be placed on the HISA Authority using monies accrued from mandatory fee assessments to pay for legal representation.

“While people may or may not agree with everything my law firm or my former law firm does in other cases, we've represented the HBPA for free throughout because they are patriotic, philanthropic supporters of our work,” said Suhr. “On the other side, the Authority has taken millions of dollars in mandatory fees that are coerced from unwilling horsemen and spent it on high-priced DC lawyers to defend the law on the other side.”

When asked to respond to Suhr's comments, a HISA spokesperson wrote that the equine fatality rate has recently declined markedly over four consecutive quarters, and that the HISA Authority will continue to do “everything in its power” to protect the “safety and integrity” of Thoroughbred racing.

“As part of this commitment, legal expenses have been incurred in response to serial litigation, primarily driven by the HBPA. Rather than filing a single challenge, the HBPA chose to initiate legal actions in five separate federal courts, significantly increasing the costs,” the statement read. “However, we believe that these legal defense efforts are essential to uphold the Authority's mandate and protect the long-term future of the sport.”