The constitutionality of the Horseracing Integrity and Safety Act is back on the front burner in the federal court system after the U. S. Sixth Circuit Court of Appeals heard oral arguments about the law for the second time.
Despite objections to the timing of the arguments lodged by the Federal Trade Commission, HISA's umbrella government agency, the Cincinnati-based court went forward Nov. 12. The Sixth Circuit first heard arguments about HISA in December 2022 before it declared the entire statutory scheme constitutional about three months later.
The decision created a split of authority from an opinion of the Fifth Circuit Court of Appeals in New Orleans, La., which found the statute facially unconstitutional, or unlawful as written after a first round of oral arguments. The Fifth Circuit decision resulted in Congress passing a fix to the law, which, in turn, led to a second round of oral arguments after which the Fifth Circuit held HISA's rule-making authority lawful but declared its enforcement powers unconstitutional.
The Eighth Circuit Court of Appeals, based in St. Louis, Mo., also was brought into the fray, denying a motion for preliminary injunction against HISA, essentially siding with the government on HISA's legality.
All three cases were accepted for review by the U.S. Supreme Court only to have the high court remand them back to the respective circuits for further consideration in light of the high court's own ruling in the case of Federal Communications Commission v. Consumers’ Research rendered just three days earlier.
The FCC case hinged on the legality of a legislative scheme where a private corporation was granted limited powers. By law, the FCC was authorized to collect fees from telecommunications carriers to accomplish legislative goals of making available to all the people of the United States reliable communications services at reasonable charges and requiring every carrier providing interstate telecommunications services to contribute to a bank of money known as the Universal Service Fund.
According to the Supreme Court ruling, the FCC appointed the Universal Service Administrative Company, a private, not-for-profit corporation, as the fund’s “permanent administrator" that manages the fund’s day-to-day operations and helps develop financial projections that determine the contribution factors.
The decision in the FCC case approved the role of the private corporation, raising questions about possible similarities in the HISA legislation allowing a private corporation operating under the umbrella of the Federal Trade Commission to collect fees, establish rules, and enforce them in the horse racing industry. Among the legal challenges to HISA is an argument that its power violates a constitutional doctrine of nondelegation of government power to private persons or entities. The holding in the FCC case states, "The universal-service contribution scheme does not violate the nondelegation doctrine."
Whether that ruling will be dispositive of the HISA cases remains to be seen.
Oral arguments in the Sixth and Eighth Circuits about the impact of the FCC ruling have yet to take place. Briefing schedules were slowed in both courts as a result of the recent 43-day government shutdown while the Sixth Circuit worked through it, at least in this case.
