HISA Authority, FTC, Want ‘En Banc’ Hearing to Reconsider Fifth Circuit Unconstitutional Opinion

Forty-five days after the United States Court of Appeals for the Fifth Circuit declared that the Horseracing and Safety Integrity Act (HISA) is unconstitutional because its enforcement provisions violate the private non-delegation doctrine, both the HISA Authority and the Federal Trade Commission (FTC) petitioned for a rarely granted “en banc” procedure that asks for a rehearing before all 17 of that court’s judges instead of just the panel of three that issued the July 5 opinion.

The HISA Authority’s Aug. 19 filing asked for the rehearing based on three main points: 1) The panel’s decision “explicitly creates a circuit split” with the Sixth Circuit federal appeals court, which in 2023 opined that HISA is constitutional; 2) The panel’s “facial constitutional ruling is wrong” and was based on hypothetical actions that the HISA Authority has never invoked upon any covered person, and 3) The Fifth Circuit’s unconstitutionality decision “would dismantle a federal regulatory regime that two Congresses and [presidential] administrations have embraced.”

The 3 1/2-year-old underlying lawsuit that led to the Fifth Circuit’s opinion was spearheaded by the National Horsemen’s Benevolent and Protective Association (NHBPA) and 12 of its affiliates.

On Tuesday, Eric Hamelback, the chief executive officer of the NHBPA, told TDN that he didn’t believe the en banc petition would prove fruitful for the defendants.

“This extends the stand-down by a short additional period, nothing more,” Hamelback wrote in an email. “We remain confident in the panel’s unanimous opinion and its comprehensive reasoning.”

The HBPA plaintiffs have years of judicial precedent on their side to back up the unlikelihood that the Fifth Circuit will grant the en banc hearing.

That means the petition could end up being just a legal formality to exhaust every procedural option at the appeals court level before the HISA Authority and the FTC ask the U.S. Supreme Court to resolve the division of opinions between the Fifth and Sixth circuits.

A United States Court of Appeals (USCA) explanatory page about how en banc requests work stated that the granting of that type of rehearing is “rare” at the federal level.

“The Federal Circuit grants few petitions for rehearing each year,” the USCA explanation stated. “These petitions for rehearing are rarely successful because they typically fail to articulate sufficient grounds upon which to grant them.”

The Fifth Circuit’s most recently published annual report gives statistics about its recent history of handling en banc hearing requests.

In each of the last six years (2018-23) the Fifth Circuit has heard between 5,700 and 7,400 appeals each year. The number of en banc rehearings it granted during that time frame ranged between four and 10 per year.

In the most recent court year (July 1, 2022-June 30, 2023), the Fifth Circuit started the judicial calendar with 35 en banc requests pending from the previous year. It then took in 203 new en banc petitions over the course of the judicial year. At the end of the term, only nine rehearings before the full panel of judges were granted.

In a separate case initiated by different plaintiffs, on Mar. 3, 2023, the U.S. Sixth Circuit Court of Appeals in Cincinnati ruled that a change of language in the HISA law at the end of 2022 was sufficient to alleviate any concerns over constitutionality.

Back in April 2023, when the states of Oklahoma, West Virginia and Louisiana petitioned the Sixth Circuit for an en banc rehearing after that panel upheld HISA’s constitutionality, none of the 28 judges on that circuit even requested a vote on the suggestion for a rehearing. Those plaintiffs then petitioned the U.S. Supreme Court to take the case, but that request, too, got shot down.

But it’s important to note that at the time the Supreme Court opted not to take up the Sixth Circuit petition (June 24, 2024), the Fifth Circuit had yet to issue its unconstitutionality ruling.

So if the HISA Authority and the FTC fail in their bid to get the en banc rehearing, the Supreme Court might be more inclined to hear the case considering there is now a conflict between two federal appeals courts on the issue of HISA.

When the Fifth Circuit issued its July 5, 2024, opinion, it disagreed with the district court on only the enforcement aspect of HISA.

“We agree with nearly all of the district court’s well-crafted opinion,” the Fifth Circuit opinion stated. “Specifically, we agree that the FTC’s new rulemaking oversight means the agency is no longer bound by the Authority’s policy choices. In other words, the [2022 Congressional] amendment solved the non-delegation problem with the Authority’s rulemaking power…

“We disagree with the district court in one important respect, however,” the Fifth Circuit opinion continued. “HISA’s enforcement provisions violate the private non-delegation doctrine. The statute empowers the Authority to investigate, issue subpoenas, conduct searches, levy fines, and seek injunctions–all without the FTC’s say-so. That is forbidden by the Constitution. We therefore DECLARE that HISA’s enforcement provisions are facially unconstitutional on that ground. In doing so, we part ways with our esteemed colleagues on the Sixth Circuit.”

The HISA Authority’s en banc petition on Monday framed its argument like this:

“This proceeding involves a question of exceptional importance for at least three reasons. First, as the panel acknowledged, its conclusion that HISA’s enforcement provisions violate the private-non-delegation doctrine conflicts directly with the considered decision of a unanimous Sixth Circuit.

“Second, the panel’s facial constitutional ruling–resting entirely on ‘[s]uppos[itions]’ and ‘hypothetical[s]–conflicts with recent Supreme Court precedents…

“Third, in Plaintiffs’ own words, this proceeding concerns the constitutionality of a federal law raising ‘important matters of law and policy,’ with significance extending ‘beyond just the immediate parties.’”

The HISA Authority’s en banc petition continued: “All agree on the high stakes.”

The Authority’s petition further stated that the Fifth Circuit’s unconstitutionality opinion “endangers horses, jockeys, and the industry that cherishes them.”

It also underscored that “HISA’s implementation over the last two-plus years–governing over 100,000 industry participants (horses and people)–has already yielded ‘significant improvement’” while alleging that “the panel decision threatens to reverse that progress and disrupt over two years of reforms to which virtually the entire industry has now adjusted.”

The Authority’s en banc petition stated that the record on this facial challenge “lacks any evidence of specific enforcement activity against Plaintiffs’ members” and alleged that the Fifth Circuit “relied heavily on HISA provisions that have never been invoked against anyone.”

According to the petition, “The Authority has not, for example, filed a single ‘suit to enjoin violations’ or issued a single ‘subpoena.’”