Challenge to HISA Fails in Kentucky-Based Federal Court

In a 33-page opinion and order, Judge Joseph Hood on June 3 dismissed a legal challenge to the Horseracing Integrity and Safety Act brought by the States of Oklahoma, West Virginia, their respective racing commissions, and others.

Hood, Senior U.S. District Judge for the Eastern District of Kentucky based in Lexington, ordered the case dismissed with prejudice, writing that the order is final and appealable.

The case centered on various arguments by the plaintiffs contending that federal legislation called HISA is an unconstitutional delegation of power to a private organization, the Horseracing Integrity and Safety Authority, also known as HISA. The legislation grants the Federal Trade Commission rule-making authority to standardize medication and track safety regulations that are now in place on a state-by-state basis in 38 racing jurisdictions.

"Plaintiff's primary issue with the legislation," Hood wrote, "is that the FTC's rules will be based on proposed standards offered by the Authority, which Plaintiffs claim the FTC is required to adopt, making the FTC subordinate to the Authority."

Defendants that include HISA moved to dismiss the case and for summary judgment, arguing that the court lacked subject matter jurisdiction, which is jurisdiction over this type of case; and that the complaint failed to state a claim upon which relief could be granted as a matter of law.

After finding the plaintiffs had standing to bring the case and that the case is ripe for decision because HISA's July 1 onset is just around the corner, Hood determined the court has subject matter jurisdiction, meaning it has not only the power, but the duty to render a decision.

Hood then turned to the merits of the case and found, assuming all facts in the complaint filed by the plaintiffs are true, that plaintiff's claim for relief against HISA cannot be granted.

Lawful Congressional Delegation of Power

Hood found that the enabling legislation contains an "intelligible principle" that guides the FTC's rule-making authority sufficiently that the law is not an unconstitutional delegation of power to the federal agency by Congress.

The judge next found that that the legislation allows the FTC sufficient "authority and surveillance" over the Authority to insure that it functions as a private entity that is subordinate to the FTC, and not the other way around, in the rule-making process. For the same reason, Hood wrote, the argument against the Authority's alleged self-interest must fail.

Authority's Enforcement Powers Lawful

In addition to plaintiffs' arguments about rule-making, they objected to the Authority's legal right to enforce those rules, arguing it is unconstitutional for the Authority to be authorized to investigate parties accused of violating regulations, bring civil actions against them, and adjudicate doping and medication infractions.

Hood wrote that such actions are permissible so long as they take place under the umbrella of uniform procedures approved by the FTC, noting also that penalties and sanctions cannot be imposed without providing due process rights and an impartial tribunal to make decisions which are subject to review by an administrative law judge, whose decision in turn may be reviewed again by the FTC and by the judiciary.

Anti-Commandeering Doctrine Not Violated

Does HISA cross a line forbidden by the Constitution that forbids Congress from requiring states to fund the Authority's operations and conscript them to carry out its operations? There is firm precedent against crossing that line laid down by the U.S. Supreme Court, which has ruled "that Congress may not pass legislation which requires a state to regulate or enforce a federal statute."

Hood answered in the negative. Although the legislation says states "may" remit fees to HISA for its operations, they are not required to do so. Only private entities are required to pay fees, Hood wrote, and any participation by the states in helping make that happen is voluntary.

The judge also wrote that a passage in the legislation requiring cooperation and information-sharing by HISA and federal and state law enforcement authorities only requires HISA to cooperate with the states, not the obverse.

The Oklahoma Horse Racing Commission told BloodHorse Friday evening that they are "disappointed with today's rulings but are most thankful that a ruling has finally been rendered so the case can move forward in the appeal process."

Multiple Setbacks for HISA Opponents

The decision was the second setback for opponents of HISA in the federal courts in about two months. Claims brought in the Eastern District of Texas by the National Horsemen's Benevolent and Protective Association and joined by affiliated HBPAs to stop the Horseracing Integrity and Safety Act from going forward were dismissed on March 31 by U.S. District Judge James Wesley Hendrix. An appeal of the decision to the Fifth Circuit Court of Appeals is being pursued.

Any appeal of Hood's decision would be routed to the Sixth Circuit Court of Appeals.

National Thoroughbred Racing Association president and CEO Tom Rooney said, "We are pleased at the Kentucky court's thoughtful decision, which is consistent with the recent ruling of the Texas court. This ruling further validates the long-standing efforts to create uniform safety and integrity standards of consistency and fairness from state to state to protect horses, jockeys, trainers, customers, and all involved in the sport of horse racing. We look forward to implementation of the law on July 1."