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NHBPA, Industry Statements on HISA Decision

After Thursday's dismissal by a federal judge of the National Horsemen's Benevolent and Protective Association (NHBPA)'s lawsuit questioning the constitutionality of the Horseracing Integrity and Safety Act (HISA), the NHBPA issued the following response:

“Aspects of this law will have a devastating effect on our industry and put many hardworking horsemen and horsewomen out of business,” said National HBPA CEO Eric Hamelback. “We've been saying for several years that this legislation was illegal. We are considering our options to appeal the decision and remain committed to doing due diligence to ensure a legal solution that protects the health and welfare of our equine and human athletes is adopted.”

The statement continued, “In his decision, Judge Hendrix acknowledged his court cannot “expand or constrict” the precedents, which makes the ruling ripe for appeal. Judge Hendrix wrote, 'The Horsemen are correct that HISA creates a novel structure that nationalizes regulation of the horseracing industry…Although the Horsemen make compelling arguments that HISA goes too far, only appellate courts may expand or constrict precedent. This Court cannot.'”

National HBPA and affiliates in Arizona, Arkansas, Indiana, Illinois, Louisiana, Nebraska, Oklahoma, Oregon, Pennsylvania, Washington, West Virginia and Tampa Bay are represented by the Liberty Justice Center, a national nonprofit law firm.

“We are encouraged that Judge Hendrix recognized the strength of our arguments and plan to push them vigorously on appeal,” said Daniel Suhr, managing attorney at the Liberty Justice Center. “Congress cannot cede its legal authority to regulate an entire industry to a private organization. This case remains important to protect the integrity of not only the horseracing industry but also our Constitution.”

The statement concluded, “HISA still faces a separate federal lawsuit challenging its constitutionality. That suit filed in Lexington, KY., was brought by the United States Trotting Association; the states of Oklahoma, West Virginia and Louisiana with support from six additional states; and other entities that include two racing commissions and the Oklahoma Quarter Horse Association. In the best interest of horse racing, horsemen and horsewomen, we must continue to exercise our due diligence and see this through. The National HBPA appreciates the process. We believe Judge Hendrix has done deliberative, supportive work and has provided a path to move forward with our challenge.

A number of state and industry officials also issued statements on the decision:

James L. Gagliano, President and COO of The Jockey Club:
The Jockey Club congratulates the Horseracing Integrity and Safety Authority and its counsel on the Federal Texas District Court's finding that the Horseracing Integrity and Safety Act of 2020 is indeed constitutional.

For those long supporting the passage and implementation of the Act, this is a result we have long anticipated. To HISA Chairman Charlie Scheeler, CEO Lisa Lazarus, and the entire HISA team and its counsel, we express our gratitude for your continued dedication to the cause of equine safety and integrity in our sport. We look forward to HISA beginning the first prong of its programs to enhance our sport on July 1.

Marty Irby, Executive Director of Animal Wellness Action:
We applaud the court for validating what we knew all along, the Horseracing Integrity and Safety Act is in sync with the U.S. Constitution and intent of the Commerce Clause–some of the most brilliant legal minds in Congress, the animal protection space, and Thoroughbred horse racing prepared and vetted a bullet-proof measure that's now the law of the land.

It's time for the Horseracing Integrity and Safety Authority to swiftly implement the new law as intended and secure a contract with the U.S. Anti-Doping Agency to oversee all testing and enforcement so the eradication of doping can begin. We congratulate the Authority on this tremendous victory leading up to the running of the 148th Kentucky Derby.

U.S. Senate Repulican Leader, Ky Senator Mitch McConnell:
Kentucky's signature horseracing industry is a key part of our heritage and supports 24,000 workers across the Commonwealth. Working closely with sport leaders, horse advocates, and fans, Congressman Barr and I led the Horseracing Integrity and Safety Act of 2020 to passage to promote safety and fairness across Thoroughbred racing, ensuring the sport's future viability. This legislation's advocates knew from the beginning that it was fully constitutional, and I am pleased the court agreed with our arguments, which I supported through an amicus brief. I congratulate the Horse Integrity and Safety Authority for their recent positive momentum, moving us all closer to a safer, better-regulated American Thoroughbred racing industry.

Ky Congressman Andy Barr:
The Horseracing Integrity and Safety Act was carefully and thoroughly drafted with an eye toward ensuring the Authority it created was constitutional in its structure and powers. Throughout the process Senator McConnell and I consulted with lawyers and relevant precedent to ensure the statute would survive any constitutional challenge. The fact that the Northern District of Texas has upheld HISA reinforces that due diligence. I look forward to seeing the Authority begin its programming this summer and the further advancement of the sport.

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Federal Judge Dismisses HBPA Constitutionality Suit vs. HISA

A federal judge on Thursday threw out a constitutionality lawsuit initiated one year ago by the National Horsemen's Benevolent and Protective Association (NHBPA) that was designed to keep the Horseracing Integrity and Safety Act (HISA) from going into effect on July 1, 2022.

“The Court recognizes that HISA's regulatory model pushes the boundaries of public/private Collaboration,” wrote United States District Court Judge James Wesley Hendrix in his Mar. 31 Northern District of Texas order. “The Court also acknowledges the dramatic change that HISA imposes nationwide on the Thoroughbred horseracing industry. But that change resulted from a decision of the people through Congress. And despite its novelty, the law as constructed stays within current constitutional limitations as defined by the Supreme Court and the Fifth Circuit.”

The NHBPA lawsuit is separate from a similar HISA complaint over alleged constitutional issues brought by racing commissions and attorneys general in a number of opposing states. That case, too, has a motion to dismiss pending.

It was unclear at deadline if an appeal would be in the works. Eric Hamelback, the NHBPA's chief executive, declined an opportunity to comment when contacted Thursday evening by TDN.

Jim Gagliano, the president and chief operating officer of The Jockey Club, which has backed the implementation of HISA, emailed a statement to TDN that read, in part, “For those long supporting the passage and implementation of the Act, this is a result we have long anticipated … We look forward to HISA beginning the first prong of its programs to enhance our sport on July 1.”

On Mar. 15, 2021, the NHBPA and 12 of its affiliates sued the Federal Trade Commission, its commissioners, the HISA Authority, and its nominating committee members, bringing claims under the private-nondelegation doctrine, public nondelegation doctrine, Appointments Clause, and the Due Process Clause, seeking to permanently enjoin the defendants from implementing HISA and to enjoin the Nominating Committee members from appointing the Authority's board of directors.

The plaintiffs also sought declaratory relief, nominal damages for violations of their constitutional rights, compensatory damages for any fees the Authority charges them, and attorneys' fees and costs.

The FTC and the Authority defendants separately moved to dismiss the complaint Apr. 30. The same day, the horsemen moved for summary judgment on their private-nondelegation and due-process claims only, abandoning the two other claims.

Hendrix wrote that to declare as unconstitutional any Act of Congress that is adopted by the Legislative Branch and signed into law by the Executive Brach is “one of the gravest powers courts exercise,” and that the NHBPA's claims failed to meet the standards for doing so.

The judge's 60-page order continued: “HISA creates a novel regulatory scheme that pairs the expertise of a private, self-regulatory nonprofit entity with the oversight of the FTC. Although modeled on the longstanding and long-upheld self-regulatory schemes found in the securities industry and elsewhere, the parties agree that HISA breaks new ground. And while the private plaintiffs favor nationwide regulation, they allege that HISA's unconventional structure facially violates the private-nondelegation doctrine under Article I and the Due Process Clause.

“Their concerns are legitimate. But precedent requires only that the private entity function subordinately to the FTC, guided by Congressional standards. And it does: Only the FTC can give proposed rules the force of law and, even then, the FTC can only do so when both it and the private entity adhere to Congress's instructions. Given the current state of the law and the private entity's subordination to the FTC, the plaintiffs' challenge must fail.”

Hendrix wrote that, “The Horsemen allege many abstract constitutional harms but present only two possible concrete injuries”–financial injury arising from the payment of fees and an increased regulatory burden.

“First, the Horsemen fail to show a concrete injury arising from the payment of fees,” Hendrix wrote. “They allege that they will suffer either a direct injury by paying the Authority's fees themselves or, in the case of a state commission remitting fees to the Authority, indirect injury resulting from state racing commission fees that inevitably must increase if the state commissions pay Authority fees …

“At this stage, the Horsemen have not shown how the state commissions will react to HISA, so the alleged direct injury–the Authority charging the Horsemen fees–is not certainly impending.

“Likewise, the Horsemen fail to show an indirect financial injury arising from state racing commissions passing on increased fees to the Horsemen. If the state racing commissions choose to remit fees to the Authority, they will continue to collect fees from the Horsemen but then pass the fees along to the Authority. So irrespective of the state commissions' choices, the Horsemen will be subject to fees under HISA whether they are payable to the state commissions or to the Authority.”

The judge continued: “But the Horsemen offer no evidence that HISA will cause existing state fees to increase. And because, under HISA, state racing commissions no longer dictate medication control and racetrack safety regulation, they would have no need to finance those regulatory responsibilities. Accordingly, state racing commission fees may decrease. Adding Authority fees to a decreased rate may not raise the Horsemen's total financial burden beyond what they currently pay. As of now, there is no evidence detailing the amount of fees the Authority will charge.

“In sum, it remains unclear whether the Horsemen will be required to pay fees to the Authority. Even if they are not, it is uncertain whether state racing commissions will increase the fees the Horsemen owe. Thus, any financial injury is 'speculative' at this stage.”

Hendrix wrote that “no one disputes that the Horsemen will be the 'object' of regulations adopted under HISA…” But, he added, beyond the presence of impending regulation, “The Horsemen must show an 'imminent,' concrete injury to challenge the statutory scheme under which they will be regulated.”

Hendrix wrote that “So far, the defendants in this case have done nothing to 'aggrieve' the Horsemen because the Horsemen are not yet subject to any Authority rules. And the proposition that [an] increased regulatory burden typically satisfies the injury-in-fact requirement does not necessarily apply to HISA because the Horsemen allege few facts about their current regulatory burdens.”

Hendrix acknowledged the NHBPA's argument that the HISA statute itself “renders the FTC a rubber stamp because the FTC has no pre-existing expertise in horseracing and only has 60 days to review proposed rules.”

But, the judge explained, this abnormality “is not fatal. While the Horsemen's concern is understandable–the parties agree that the FTC lacks pre-existing expertise in Thoroughbred horseracing–neither contention presents an adequate legal basis on a facial challenge to hold that FTC review will automatically prove meaningless.”

Hendrix also wrote that, “Congress has not given away its legislative power under Article I nor violated due process because the Authority does not possess unrestrained and unreviewable power to regulate.”

The judge continued: “The Horsemen also argue that the standing committees–which provide advice to the Board–are infected with self-interest, but their argument fails for similar reasons.

Four of the seven members of both committees must be independent and subject to the conflict-of-interest provisions. Only one of the remaining three members may own a covered horse, while the other two industry members must represent other 'equine constituencies. Both standing committees, however, are subject to the Board's oversight, which, in turn, is subject to FTC oversight.

“Therefore, no single Authority member wields 'coercive power” over others,” Hendrix concluded.

To sum up the dismissal, the judge wrote, “The Horsemen are correct that HISA creates a novel structure that nationalizes regulation of the horseracing industry. But they cannot escape the reality that HISA satisfies the current, low thresholds created by Supreme Court and Fifth Circuit precedent.

“Although the Horsemen make compelling arguments that HISA goes too far, only appellate courts may expand or constrict their precedent. This Court cannot. And under current frameworks, HISA stays within constitutional boundaries,” the order stated.

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Straight Talk About HISA: NHBPA, ARCI CEOs To Appear On Kentucky Racing Spotlight This Friday

The Horseracing Integrity and Safety Act (HISA), legislation scheduled to go into effect July 1, will be the subject of a special edition of Kentucky Racing Spotlight this Friday from 6-7 p.m. ET on Louisville's ESPN 680 AM.

Eric Hamelback and Ed Martin, the CEOs respectively of the National Horsemen's Benevolent & Protective Association (NHBPA) and the Association of Racing Commissioners International (ARCI), will be the featured guests discussing one of the most fundamental changes to the administrative structure of horse racing in history. Peter Ecabert, the National HBPA's general counsel, also will participate.

HISA general counsel John Roach and the HISA Authority's interim executive director Hank Zeitlin declined invitations to take part.

“We look forward to opportunities for discussion with you after Lisa Lazarus takes on her role as CEO next month,” Zeitlin responded in an email.

Roach and Zeitlin referenced pending litigation as the reason for not participating. The National HBPA and 12 of its state affiliates have a lawsuit pending in Federal District Court in Lubbock, Texas. Additionally, nine individual states, along with two state racing commissions and the Oklahoma Quarter Horse Association, filed a separate suit in Federal District Court in Lexington, Ky.

The National HBPA believes HISA is an unconstitutional delegation of legislative authority to a private non-governmental organization – the Authority. The Kentucky HBPA, the radio show's presenting sponsor, did not join the suit, though it was represented on the National HBPA's executive committee that voted unanimously to pursue a legal challenge.

HISA is now the acronym for both the legislative act and the regulatory Authority the law created.

The HISA legislation was passed by Congress in late 2020 and included as part of a year-end spending and Covid-19 relief bill. The law grants the Authority broad powers to create, regulate and enforce rules with respect to medication/drug, safety and integrity matters for thoroughbred racing in the United States. The Authority is under the jurisdiction of the Federal Trade Commission, which must approve any regulations it proposes. Currently, regulations have been submitted to the FTC and published for public comment, others await submission, while no regulations have been approved or disapproved.

“We are less than 5 1/2 months from HISA's legislatively mandated implementation,” said Kentucky Racing Spotlight co-host Jennie Rees, a veteran turf journalist who works as a communications consultant for both the National and Kentucky HBPA along with other entities in horse racing. “Our show by design is not political. HISA is clearly a polarizing issue, but we thought this close to such a paradigm shift in thoroughbred racing that it was important to get straight talk, facts and informed perspective about what it means for the industry – including racing's consumers, the horseplayers – without the rhetoric or heated emotions.

“We are disappointed that HISA thus far has declined to participate. The invitation remains. I dare say the majority of racing participants – including many supporting or opposing the law – have no idea what is and isn't in the legislation. We wanted to take one step toward changing that.”

The National HBPA represents close to 30,000 licensed owners and trainers throughout America, making it the largest thoroughbred horsemen's organization in the world. ARCI is the umbrella organization of the official regulatory and rule-making bodies for horse and greyhound racing throughout North America and parts of the Caribbean. The organization's members heretofore were the only independent entities recognized to license, enforce and adjudicate matters pertaining to racing.

Kentucky Racing Spotlight, co-hosted by Joe Clabes, airs weekly through March 4 on ESPN 680-AM/105.7 FM, the region's sports-talk leader. The program also will be streamed live at espnlouisville.com, on the ESPN 680 app and the TuneIn and iHeart apps. The replay will be available on espnlouisville.com under the podcasts tab. All shows also are archived at davisinnovation.com/kyracing.

Kentucky Racing Spotlight is also sponsored by Davis Innovation equine marketing, the Louisville Thoroughbred Society and NKYTribune.com.

Previous shows archived at
https://www.davisinnovation.com/kyracing

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NHBPA, State Horsemen’s Groups File Suit To Halt HISA

The National Horsemen's Benevolent and Protective Association, together with state affiliates in Arizona, Arkansas, Indiana, Illinois, Louisiana, Nebraska, Oklahoma, Oregon, Pennsylvania, Washington and West Virginia (Mountaineer) have filed a federal civil suit in an attempt to put the brakes on the Horseracing Integrity and Safety Act (HISA). The suit, filed in the U.S. District Court for the Northern District of Texas, names the Federal Trade Commission and several of its employees, as well as the people tasked with forming the Nominating Committee for the new federal authority.

The suit seeks to have HISA and a number of its elements declared unconstitutional, to enjoin defendants from taking any action to implement HISA, as well as nominal damages of $1 and compensatory damages of any fees charged to horsemen by the new authority.

The lawsuit is being handled by The Liberty Justice Center, a non-profit legal center “that represents clients at no charge and was founded to fight against political privilege,” according to its press release about the case.

The crux of the suit is that plaintiffs believe HISA delegates legislative authority to a private organization and private individuals in violation of the U.S. Constitution. Although the new federal authority established by HISA will be overseen by the Federal Trade Commission, the suit points out that the FTC has the authority to reject or request modification to rules made by the authority but isn't allowed to draft its own rules and is not involved in enforcement of those rules.

Additionally, the nominating committee is tasked with picking the members of the new authority's boards, rather than the FTC. The nominating committee is comprised of Dr. Jerry Black, Katrina Adams, Leonard Coleman, Jr., Dr. Nancy Cox, Joseph Dunford, Frank Keating, and Kenneth Schanzer. According to the suit, Black is a professor at the Texas Tech University School of Medicine; Adams is a past president of the United States Tennis Association; Coleman is a former president of the National League of Major League Baseball; Cox is dean of the College of Agriculture, Food, and Environment at the University of Kentucky; Dunford is a former chairman of the Joint Chiefs of Staff; Keating is a former Governor of Oklahoma; Schanzer is a former president of NBC Sports.

The suit claims that allowing the new authority's board to be appointed by a private group of individuals is unconstitutional because the U.S. Constitution requires the president, head of a department, or court of law to appoint officers in such circumstances. Not only that, the suit claims, “this private nominating committee was hand-picked by a small group of owners and trainers within the horseracing[sic] industry who supported passage of HISA, over the objections of thousands of owners and trainers, represented by plaintiffs, who will be regulated by HISA.”

The suit also points to what it calls a lack of “intelligible principle” for the FTC to guide the new authority.

“HISA gives the FTC no standards upon which to base its decision to approve or disapprove rules proposed by the Authority. Its guidance is completely circular and unintelligible: it is told to look to rules proposed by the Authority and approved by the FTC to determine whether to approve rules proposed by the Authority.”

Read the full lawsuit here.

The NHBPA said the inclusion of some state affiliate and exclusion of others was based on which were able to vote on the issue.

“This lawsuit is about protecting horsemen's interests nationwide and challenging an illegal law,” said Peter Ecabert, general counsel to NHBPA. “HBPA's Executive Committee voted unanimously to move forward with the lawsuit. Some affiliate organizations did not have votes in time to join the lawsuit. Accordingly, National together with the Affiliates who were able to quickly secure formal approval moved expeditiously as named plaintiffs to save horsemen from the irreparable harm that this illegal law will cause.”

“All Americans should be concerned when Congress gives power to regulate an entire industry to a private group of industry insiders,” said Brian Kelsey, senior attorney at the Liberty Justice Center. “This goes way beyond setting rules for the sport of horse racing. This is not the NBA or the NFL. The 'Authority' has the power to make laws, issue subpoenas and effectively tax owners with little real oversight. Placing that power in a private organization is illegal and must be stopped.”

The NHBPA released the following statements regarding the suit Monday:

Peter Ecabert, General Counsel, National HBPA: “The National HBPA has been very vocal in its opposition for HISA, including for the fundamental constitutional flaws the lawsuit addresses.

This is not some last-ditch, Hail Mary effort to prevent legislation we opposed from taking effect. This is about our core mission, 'Horsemen Helping Horsemen.' We must do our due diligence to make sure that such a complete restructuring of our industry is not only in its best interests but also is constitutional. Throughout the shameful process of this march to pass this legislation, there was a high degree of HISA's supporters simply telling owners and trainers to 'trust us' without addressing our legitimate concerns. The bill was passed without proper vetting and gives to a private authority broad government powers over our industry with little or no oversight. This legislation was ramrodded through without anyone knowing the costs of creating and maintaining this additional bureaucracy and who would pay for it.

“Not doing our due diligence now could very well have disastrous consequences in the near and long-term future for horse racing, including for owners, trainers and horseplayers. When a bad law is passed, you're stuck with it. You can't just run to your state racing commission and explain that real-life consequences hadn't been anticipated.”

Bill Walmsley, President of the Arkansas HBPA and former President of the National HBPA, former Arkansas Court of Appeals judge, former Arkansas State Senator and founding board member of the National Thoroughbred Racing Association: “There's a real concern among Thoroughbred horse owners that this could put us out of business. By passing HISA, Congress picked winners and losers and put well-connected owners in charge of horse racing across the country. There was no serious debate or discussion about the costs, let alone the legality of creating a private group to control horse racing.”

Chester Thomas, whose Allied Racing is one of the nation's top stables and who finished third in the 2020 Kentucky Derby with Mr. Big News: “HISA only got passed by sneaky, underhanded manipulation of the political system. The elites pushing this ill-advised bill knew that it could not get passed on its merits. By using typical 'pork barrel' 101 politics, they snuck it into the COVID relief bill — assuring its passage by not allowing senators who strongly disagreed with its blatant flaws the opportunity to debate the bill and basically daring them to vote against the stimulus package needed to help millions of Americans in this pandemic. Most Americans have no idea that this even occurred, and I can assure you that virtually no one knows what is in the bill or how it will impact them. This is a disservice to our American democratic process.”

Ron Moquett, trainer and co-owner of 2020 sprint champion and Breeders' Cup Sprint winner Whitmore and Arkansas HBPA board member: “We're going in blind with this legislation with a new bureaucracy created at an undetermined cost and undetermined who will have to foot the bill. There are just too many questions. My job is to take care of horses and the people who help me take care of horses. I don't see how this does any of that. I definitely agree there are some things we should do to better the industry. But this legislation takes you down a bunch of back, curvy roads where you don't know where you're going. Change for the sake of change does not solve problems and is likely to create new ones.”

Staton Flurry, co-owner of 2020 Kentucky Oaks (and Saturday's Grade 2 Azeri Stakes) winner Shedaresthedevil and Arkansas HBPA board member: “We don't need a federal agency — especially one created by a power grab — taking control of our industry and circumventing the regulatory authority long set in place through state racing commissions. We most certainly do not need a governing authority built on perception and more concerned with window dressing than the actual health and welfare of our horses. The fact is that great strides for the betterment of racing and the welfare of our horses have been made. It's vital that horsemen and veterinarians have due process and continue to be involved in the regulatory system's checks and balances. Does racing have issues? Yes. Is a federal overreach the way to fix them? No. My fear is that irreparable damage will be done to learn that the hard way.”

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