HISA/FTC-Clarifying Language in Federal Spending Bill

A $1.7 trillion fiscal 2023 omnibus appropriations bill introduced in Congress overnight includes language meant to place the Horseracing Integrity and Safety Authority on sounder legal footing after a U.S. Fifth Circuit Court of Appeals ruling last month determined its enabling legislation was unconstitutional.

The HISA-clarifying language is but one small portion of the 4,155-page spending bill, which is meant to avert a government shutdown. It is not uncommon for amendments and acts to be attached to such large spending bills, with the Horseracing Integrity and Safety Act, which authorized the Authority, initially gaining passage when it was part of an omnibus legislative package passed in late 2020.

U.S. Congressmen Andy Barr (R-KY) and Paul Tonko (R-NY) and U.S. Senators Mitch McConnell (R-KY), Kirsten Gillibrand (D-NY), and Dianne Feinstein (D-CA) were among those legislators behind the enabling legislation's passage.

Earlier this month, Louisiana Attorney General Jeff Landry sent a letter to McConnell, joined by eight other state attorney generals, urging him not to support language related to HISA in end-of-year legislation. Some states or state organizations, mostly in the South, are involved in lawsuits against HISA.

The National Thoroughbred Racing Association, which lobbies on behalf of the equine industry and has supported HISA, issued a statement Dec. 20, with NTRA president and CEO Tom Rooney saying, "We appreciate Congress's continued support for the Horseracing Integrity and Safety Act."

Rooney is a former U.S. Congressman from Florida.

The language in the new bill is directed toward Section 1204e of the Act (15 U.S.C 3053(e)), amending Federal Trade Commission oversight of HISA.

"The Commission by rule in accordance with section 553 of title 5, United States Code, may abrogate, add to, and modify the rules of the Authority promulgated in accordance with this Act as the Commission finds necessary or appropriate to ensure the fair administration of the Authority, to conform the rules of the Authority to requirements of this Act and applicable rules approved by the Commission, or otherwise in furtherance of the purposes of this Act," it states.

HISA, a private organization, was created by Congress to establish and enforce a national uniform set of rules in Thoroughbred racing.

The authorization of the FTC to modify rules of the Authority appears to be a move to counter the basis for the U.S. Fifth Circuit Court of Appeals decision. 

"A cardinal constitutional principle is that federal power can be wielded only by the federal government. Private entities may do so only if they are subordinate to an agency," that three-judge panel of the court wrote in a 35-page opinion. "But the Authority is not subordinate to the FTC. The reverse is true. The Authority, rather than the FTC, has been given final say over HISA's programs."

Further challenges are still working their way through the courts, with a HISA-related ruling pending in the U.S. Sixth Circuit Court of Appeals over similar constitutional questions.

Given these legal uncertainties, HISA's Anti-Doping and Medication Control regulations will not go into effect as initially planned Jan. 1 after the FTC disapproved HISA's medication rules. Its Racetrack Safety Program remains in effect.

National Horsemen's Benevolent and Protective Association CEO Eric Hamelback and general counsel Peter Ecabert released the following statement regarding the pending legislation:

"By including in this spending bill a so-called 'fix' to HISA, Congressional leaders are admitting that the law they added into the 2020 spending bill was unconstitutional, as we told them it was and as the Fifth Circuit ruled. I am disheartened that, once again, legislation governing the horse racing industry was crafted in the dark of night with no public hearings and virtually no industry input. You cannot fix a fundamentally broken law with one sentence. This amendment does not address other substantive issues, nor does it address the funding disaster that remains in the flawed Act. It is clear from the issues raised in the various lawsuits contesting the legal validity of HISA that this one-sentence 'fix' does not alleviate the glaring constitutional infirmities this law has created. The constitutional defects still include a non-federal private entity granted the power to levy taxes in violation of Article I, Tenth Amendment violations for anti-commandeering of states powers, Fourth and Seventh Amendment violations for lack of due process, and violations of the Administrative Procedures Act.

"For all the reasons we state above, the Act itself remains unconstitutional by handing the regulation of an entire industry over to an unelected, unaccountable private corporation. This fight is not over, and the National HBPA will go all the way to the Supreme Court if we have to, in order to protect the interests of horsemen across the country," said Hamelback and Ecabert.

In a statement from his office, Tonko called horse racing a "key economic driver" in the Capital Region in his home state of New York. The congressman believes clarification of the law authorizing HISA will secure "a brighter future for the horseracing industry."

"Responding to these court rulings, I authored and secured inclusion of a critical provision in the FY23 omnibus funding legislation that will strengthen the Federal Trade Commission's oversight of the Horseracing Integrity and Safety Authority and ensure that HISA is able to get to work as intended to support fair play, clean sporting, and most of all, to protect our equine athletes," he added in the statement. "Opponents of our reforms should think twice before pursuing further efforts to delay or deny our progress. Congress has now spoken clearly about this subject twice, and the message is crystal clear: reform is coming."

Typical of bills working their way through Congress, changes are anticipated within the legislation, which could result in portions of the massive bill being amended or cut. The sprawling bill also funds veteran medical care and defense programs, adds supplemental aid for the war in Ukraine, and addresses funding federal agencies. 

The Senate is expected to take up the bill first before it potentially moves to the U.S. House of Representatives ahead of the Christmas weekend.