Sasha Volokh | 11.19.2024 11:33 AM

There's been a lot of recent legal action involving the Horseracing Integrity and Safety Authority. The Fifth Circuit found HISA unconstitutional in 2022; Congress changed the statute within about six weeks; in a parallel case, the Sixth Circuit found that the statutory change had fixed the problem; the Fifth Circuit found that the statutory change partially fixed the problem but still struck down HISA's enforcement (but not regulatory) power. Meanwhile, in yet another parallel challenge, the Eighth Circuit upheld HISA.

Because none of the parties in the latest Fifth Circuit iteration got exactly what they wanted, basically everyone is petitioning for cert—and what with the circuit split and the fact that the Fifth Circuit partly struck down a federal statute—a cert grant is very likely. But there's still some dispute about whether the cert grant should be limited to the "private nondelegation doctrine" question or also include an Appointments Clause question. I favor the latter approach, so I just filed a brief yesterday making this argument on behalf of the Reason Foundation (which owns the reason.com website that hosts this blog) and the Goldwater Institute. (My position on this supports that of the Gulf Coast Racing plaintiffs, represented by Ilan Wurman of University of Minnesota Law School, and Reeves Jordan, Greg Sapire, and Carlos Soltero of Maynard Nexsen PC.)

(For previous posts of mine on the topic, see here, here, here, and here. Also see my Notre Dame Law Review article, The Myth of the Federal Private Nondelegation Doctrine, which discusses these issues in depth.)

I reproduce the brief below, or you can read the nicely formatted version here.

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Summary of Argument

1. This case is obviously certworthy. The Horseracing Integrity and Safety Authority is an unaccountable agency that exercises significant federal rulemaking, investigation, and enforcement authority, even though its members haven't been politically appointed and even though it doesn't have meaningful oversight by any other agency. There is a circuit split on the private nondelegation issue. A circuit court has struck down part of a federal statute. Parties from both sides, including the federal government, agree that a grant of certiorari is warranted.

However, this Court shouldn't merely grant certiorari on the private nondelegation issue. It should also grant certiorari on the Appointments Clause issue, because these two issues are closely related, and the Fifth Circuit reached the incorrect result on each of these issues.

2. The Fifth Circuit was wrong that the Authority's enforcement power violates the "private nondelegation doctrine." There is no such doctrine. The idea that delegations of power to private parties are judged by a stricter standard than delegations to public parties has no support in any holdings of this Court. Any decisions that seem to the contrary have either been misinterpreted or were in fact based on other doctrines, like the Due Process Clause. And the lack of such a doctrine makes sense, because the nondelegation doctrine, which is rooted in Article I, sensibly asks whether Congress has given up too much power, not who the recipient of such power is.

If the Authority is considered a private organization, the delegation to the Authority should be judged by the same "intelligible principle" standard as a delegation to a public agency—and the delegation here clearly passes that test.

3. However, the Fifth Circuit reached the partially right result, though for the wrong reason. Contrary to the Fifth Circuit's holding, exercises of power by the Authority, whether rulemaking or enforcement power, violate the Appointments Clause, because the members of the Authority are Officers of the United States but weren't appointed as Officers should be under Article II.

That the Authority members are nominally private is unimportant for Officer status. The statutory labeling of the Authority as private, and the fact that the Authority is organized as a private organization under state law, are constitutionally irrelevant, and in any event Appointments Clause doctrine doesn't demand that an Officer formally be a public employee.

4. Even if public status were relevant to the Appointments Clause—and even if the Fifth Circuit were correct to assume that "state actor" status under the State Action Doctrine is relevant here—the Fifth Circuit still erred in holding that the Authority isn't a state actor. On the contrary, this is an easy case for state action, because rulemaking, investigation, and enforcement of federal law are traditionally exclusive public functions. Therefore, an alternative way of deciding the case would be to hold that the Authority is public because it is a state actor, which would uncontroversially activate both the Appointments Clause and the traditional (public) nondelegation doctrine.

5. The difference between the "private nondelegation doctrine" and the Appointments Clause isn't just of academic interest.

First, the doctrines are motivated by different theories. The nondelegation doctrine is giver-focused, asking whether Congress has given up too much power; the public-private question fits poorly with this concern. By contrast, the Appointments Clause is recipient-focused, asking, from a democratic accountability perspective, whether the recipient of major power has been validly authorized by the proper political process. The problem here fits more naturally with the Appointments Clause issue.

Second, the doctrines won't always produce the same results. A private nondelegation doctrine requires tough judgment calls about whether an organization is public or private, so the results will depend on the vagaries of public-private doctrines. And when the doctrine finds private status, it would apparently invalidate all delegations of "government power" that aren't subordinate to a public agency. Horsemen's I, 53 F.4th at 878. By contrast, the Appointments Clause asks whether someone (public or private) is "exercising significant authority pursuant to the laws of the United States." Thus, an Appointments Clause approach will turn on how much power the agent exercises, ignoring trivial cases and requiring political accountability for significant ones. This is a sensible approach—otherwise, countless private delegations could be indiscriminately invalidated, from qui tam suits to private prison contracting to incorporation of private actuarial standards into healthcare regulation. Whether these are valid should depend on an inquiry into "significant authority."

6. Therefore, this Court should grant certiorari on the Appointments Clause question.

This Court could reach the right result by only considering the Appointments Clause issue, because the correct resolution of that issue (that the Authority wields power unconstitutionally) would correctly resolve the entire case. But because parties from both sides, including the federal government, are asking the Court to consider the private nondelegation issue, and because that issue is obviously certworthy, amici ask that the private nondelegation and Appointments Clause issues be considered as linked and decided together.

The Sixth Circuit case (Oklahoma v. United States, No. 23-402) didn't consider the Appointments Clause at all, so it would not be a good vehicle for a grant of certiorari. By contrast, the Eighth Circuit case (Walmsley v. FTC, No. 24-420) did consider the Appointments Clause, essentially incorporating the Fifth Circuit's analysis (though the Appointments Clause issue was not part of the Questions Presented in the petition in that case). Therefore, this Court should grant certiorari—making sure that the grant includes the Appointments Clause question—in this case or in the Eighth Circuit case (or in both cases together).

Argument

I. This case is obviously certworthy, but the grant of certiorari should include the Appointments Clause question.

This case is certworthy for several reasons. First, there is a circuit split on whether the Horseracing Integrity and Safety Authority violates the "private nondelegation doctrine." Second, the Fifth Circuit struck down part of a federal statute. Third, all parties, including the federal government, agree that this Court should grant certiorari. And fourth, this case raises important questions of federal law. The parties' petitions already adequately address this issue.

But this case actually raises two important questions of federal law. The first question is whether any so-called "private nondelegation doctrine" even exists. The Fifth Circuit held that there is such a doctrine, and accordingly partially struck down the delegation of power to the Authority (the delegation of enforcement power, not the delegation of rulemaking power). But, as this brief argues in Part II infra, no such doctrine exists. This Court has never recognized such a doctrine; on the contrary, this Court has repeatedly upheld delegations to private parties. The cases commonly thought to establish such a doctrine have been misinterpreted, and arise straightforwardly under other doctrines. Nor would it be a good idea for this Court to now invent such a doctrine.

The second question is whether the members of the Authority comply with the Appointments Clause. As this brief argues in Part III infra, they don't. The Horseracing Integrity and Safety Authority is an unaccountable agency that exercises........

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