Fed racing authority is declared legal, but it’s complicated

The Horseracing Integrity and Safety Authority won an important victory Friday when the Sixth Circuit Court of Appeals in Cincinnati ruled it to be legal under the U.S. Constitution.

However, the decision was at odds with a Fifth Circuit ruling in New Orleans on Jan. 31 that said HISA was unconstitutional.

How these two rulings at the same level of the federal-court system will be resolved remains the big, unanswered question that may make or break HISA, which has been up and running since July 1.

Flashback: What the Fifth Circuit ruled in January.

“Sometimes government works,” presiding judge Jeffrey Sutton wrote in his opinion Friday that followed the unanimous ruling of him and fellow Sixth Circuit judges Richard Griffin and Guy Cole.

“HISA is grateful to the Sixth Circuit for recognizing and affirming HISA’s constitutionality,” a HISA spokesperson said in a written statement Friday. “We remain focused on preparing for the launch of HISA’s anti-doping and medication-control program on March 27 pending final approval of the Federal Trade Commission. Once launched, the combined (drug) and racetrack-safety programs will for the first time in racing’s history see national, uniform integrity and safety rules applied consistently to every Thoroughbred horse, racing participant and racetrack in the country.”

Eric Hamelback, the CEO of the National Horsemen’s Benevolent and Protective Association and a leading critic of HISA, said this was bad news that followed good news.

“We stand firmly on our victory in the Fifth Circuit,” Hamelback said. “However we are disappointed in the Sixth Circuit ruling. We have stated from the onset that there are multiple aspects of unconstitutionality plaguing HISA. The Fifth Circuit ruled on the arguments presented to them, and the Sixth Circuit ruled on the arguments they were presented. With that, we remain confident in our arguments and committed to our case. As seen now, the shifting legal uncertainty only upholds more confusion ahead for the industry and should lead everyone to agree we need a new bill to correct this uncertainty. We will keep fighting all the way to the Supreme Court if necessary to protect our industry and make sure our rules and regulations are built on a legal foundation.”

Tom Rooney, the president and CEO of the National Thoroughbred Racing Association, hailed Friday’s ruling as “not only the right decision but the critical step we needed to move forward in the sport of Thoroughbred racing. Later this month HISA will begin the implementation of the anti-doping and medication-control program and will be fully functional. Now is a time for unity within the industry. HISA is the law of the land, and we must all come together to support its initiatives so that HISA can continue its mission to improve the sport with uniform standards of safety and fairness across the country.”

The Sixth Circuit case was brought primarily by Oklahoma, where Friday’s ruling meant HISA will continue to do business. Louisiana was the lead plaintiff in the Fifth Circuit dispute. HISA stopped doing business there and in West Virginia because of the January ruling.

West Virginia also was listed among the plaintiffs in the Sixth Circuit, and Louisiana was among them in both cases.

Yes, it is complicated.

The two courts differed on whether HISA properly followed Article 1 of the Constitution, which effectively prevents private organizations like it from doing the federal government’s enforcement work. In essence, the disagreement centers on whether the FTC really is legally overseeing HISA or whether it is unconstitutionally the other way around.

Writing about a legal patch passed by Congress in December to give the FTC more power to “abrogate, add to and modify” HISA rules, Sutton said, “As amended, the horse-racing act gives the FTC the final say over implementation of the act relative to the horse-racing authority, allowing us to uphold the act as constitutional in the face of this non-delegation challenge as well as the anti-commandeering challenge.”

The Fifth Circuit said just the opposite nearly five weeks ago, declaring “HISA is facially unconstitutional under the private non-delegation doctrine.”

Even though Congress went back in last year and gave the FTC, a government agency, more power over HISA, Sutton said, “In reality, the amendment does not change that dispute in any material way.” However, he added later in his opinion that “over time, the FTC’s threshold consistency review will account for its own full-throated rulemaking power.”

Sutton went on to write that last year’s congressional fix to HISA “presents states with a choice, not a command. States may elect to collect fees from the industry and remit the money to the horse-racing authority, or states may refuse. That’s their call. If a state participates, it gains discretion over how the fees are collected. If a state refuses, the authority collects the fees itself, and the state ‘shall not impose or collect from any person a fee or tax relating to anti-doping and medication control or racetrack safety matters.’ This scheme fits comfortably within the conditional pre-emption framework.”

Although the Sixth Circuit ruling theoretically could lead to an appeal to the U.S. Supreme Court, the Fifth Circuit decision in January actually called on the two sides to go back to two district courts to hash it out.

In other words, while the legal fight is not over, it is not clear yet how it will move ahead.