Lucinda Finley Q&A: HISA, Chevron, The Fifth Circuit Wait

Horse racing's federal governing body has been in the crosshairs of a couple recent U.S. Supreme Court actions, both directly and indirectly.

In one major ruling, the conservative-leaning Supreme Court struck down a legal precedent called the Chevron doctrine, which since 1984 had given federal agencies the legal latitude to determine how best to interpret and implement Congressionally-passed legislation.

The Chevron doctrine has been used by the U.S. government to defend a whole host of federal laws over the decades, including environmental regulations, consumer and workplace protections, and those governing the financial markets. It held that a federal agency's interpretation of a law should be honored in cases questioning the law's meaning, provided that interpretation is reasonable. In such cases moving forward, the decision puts greater legal deference into the hands of judges.

The Supreme Court also declined to hear a challenge to the Horseracing Integrity and Safety Act (HISA) filed by Oklahoma, Louisiana and West Virginia after the Sixth Court Circuit's Court of Appeals had found HISA constitutional. All the while, the industry awaits rulings on HISA's constitutionality by the Fifth and Eighth Circuit Appeals Courts.

To discuss the possible implications for HISA from the Supreme Court's Chevron ruling, as well as the latest developments in the circuit courts, the TDN spoke with constitutional law expert Lucinda Finley.

Finley is the Frank Raichle Professor of Trial and Appellate Advocacy, and director of Appellate Advocacy at the University of Buffalo Law School. The following has been lightly edited for brevity and clarity.

TDN: Does the Supreme Court's decision overruling the Chevron doctrine have any bearing on the legal arguments used so far by HISA's opponents to question the law's constitutionality?

LF: No. None at all.

The Chevron doctrine is a rule about how courts should interpret, should decide, whether a particular rule issued by an agency is justified by the statute that creates the agency.

The constitutional challenges to HISA are not about the particular rules–how many strikes with the whip or how long of a withdrawal period for a medication–adopted by the [Federal Trade Commission] FTC. Rather, the constitutional challenges to HISA are about much more fundamental structural issues, such as whether the statute gives too much authority to a private entity compared to a governmental entity. Or whether the statute is too coercive of states, forces them to collect fees as opposed to encouraging them to collect fees.

All of those constitutional issues that have been raised in the Sixth Circuit, the Fifth Circuit, the Eighth Circuit, are not about the particular content of any rule, and the Chevron doctrine is only about the particular content of particular rules that agencies adopt.

TDN: So, why should anyone involved in horse racing care about the Supreme Court's decision to overrule the Chevron doctrine?

LF: Once the constitutionality of HISA is settled–assuming it's settled that it's constitutional–the next frontier of legal challenge might be brought by people who don't like the content of a particular rule. 'I think 10 strikes of the whip is okay and protective for the safety of a horse, but six is too strict,' for example. That's when you get to the level of detail of challenging regulations.

The overruling of Chevron means that courts won't defer to the expertise of the agency and their scientific advisors. Courts could now say, 'I'm a judge who knows nothing about horses and nothing about whips, but I think I can make my own decision about whether the six-strikes rule is too strict or too lenient.'

So, in other words, it will be not just be for HISA and horse racing, but for any federal regulations–environmental laws, food and drug safety, you name it–that the overruling of Chevron will, I think, encourage any groups affected by a rule, but who don't like the particular rule, maybe think it's too strict, to challenge it.

I think it may give greater leeway to judges without any expertise about the area to feel emboldened to substitute their own judgment about the rules for the expertise of the agency.

TDN: In other words, this might be a way for critics of HISA to pick apart the law rule-by-rule–at least, those rules that perhaps aren't clearly written, or which, some may argue, don't strictly align with the law's written intent?

LF: It could be. But hopefully, I think the [HISA] horseman's advisory group–I mean, at least those horsemen in the states that have been accepting of the rules of HISA–are finding that when they make suggestions about the need to moderate or change a rule, that the Authority and the FTC have been very receptive to that.

Pick any controversy, like environmental contamination from human drugs that your stable employees may be using, which is a hot issue right now. If you're a group of horsemen who questioned the approach of the current rules, what are your choices? You can go hire a lawyer and engage in years of expensive litigation. Or, you can work with your horseman's advisory group to approach the HISA Authority, which has so far seemed to be open-minded to making adjustments.

So, in the long run, the overruling of Chevron may not have a huge practical effect for the particular rules adopted by the FTC as suggested by the HISA Authority because horsemen's groups may realize that it is more effective, low cost and efficient for them to work through the horseman's advisory body and to continue to work with the Authority.

TDN: So, in terms of its regulatory framework, it could play to HISA's favor here to remain flexible?

LF: The FTC or any other agency when it decides to adopt a suggested rule has to go through a legally prescribed procedure of putting out a notice of the change, a period of publishing it in the federal register, and a period of comment before taking the comments into consideration.

Before a rule is officially promulgated by the FTC, HISA can listen to the horseman's advisory group and say, 'well, before we get this locked into law at the FTC level, we are listening and being receptive to the horsemen affected by our rules, who are telling us how this is working in practice.'

I would hope that people who may not like a particular rule would realize that that process is better than immediately running off to court.

TDN: Are you able to speculate as to which parts of HISA's rules are perhaps most vulnerable to legal attack?

LF: I really, really can't speculate. I just don't want to speculate.

TDN: When might such legal efforts begin?

LF: My assumption is that the states opposed to HISA are much more focused on trying to get the whole structure of HISA thrown out completely, and to get complete control back to the states–they're not going to focus on challenging particular rules.

In challenging a particular rule, it almost seems like you're conceding that HISA has authority over you. Right now, their strategy and goal is to get rid of HISA and to get rid of HISA's authority over racing in their state. So, I don't think the opponents of HISA are immediately going to change their attack by challenging particular rules instead of trying to challenge the entire idea of federal authority over their state racing rules.

TDN: Speaking of which, what can be read into the U.S. Supreme Court's denial to review the Sixth Circuit decision?

LF: As I've always said in the Q&As with you, as long as there was no conflict between rulings of different federal circuit courts about whether HISA is constitutional or not, I always thought it was very unlikely that the U.S. Supreme Court would review the decisions. So, I think their recent rejection of the appeal from the Sixth Circuit reflects that.

Right now, the only federal appellate court that has ruled on constitutionality of HISA after it was amended by Congress is the Sixth Circuit. And the Supreme Court, once the final briefs were in, very quickly rejected taking the case.

But if the Fifth or the Eighth Circuit were to rule differently than the Sixth Circuit, now you have what's called a conflict in the circuit courts where you have two different appellate courts coming to different conclusions about whether a federal statute is or is not constitutional.

If that happens, if either the Fifth Circuit or the Eighth Circuit should disagree with the Sixth Circuit, then I think it is extremely likely that the U.S. Supreme Court would accept an appeal from one of those other cases. You can't have a situation where a federal statute is considered in some parts of the country and not okay in other parts of the country. You need a uniform decision that affects the whole country.

It takes us right back to what I've always been saying to you–we're waiting for the Fifth Circuit. They're taking so long to resolve that case. Who knows why it's taking much longer than usual for resolving a case after it's been fully briefed and argued.

TDN: Can you read anything into that?

LF: Too speculative. But it suggests there's a disagreement amongst the three judges who heard the case, and there may be some exchanging of drafts trying to internally convince each other. There may be somebody writing a concurrence or dissent, but you can't really read anything into it.

TDN: Getting back to Chevron, are there any other important angles of note that we haven't discussed?

LF: Chevron has been a guiding principle for how courts have dealt with challenges of the particular rules that agencies issue, but the Supreme Court didn't substitute it with any concrete approach for courts to follow. There's going to be several years of uncertainty now for any federal regulations about how judges who get a case where somebody's challenging a particular rule are supposed to decide whether the rule is authorized by the statute or not.

So, in that regard, HISA's rules are facing the same uncertain legal landscape that any other agency's rules are. This overruling of Chevron doesn't have particular implications for HISA's rules; it just creates uncertainty about how any federal agency's health and safety regulations will be evaluated by courts.