HISA Appeals Injunction, But Judge Says No to Reversing Earlier Order

In the aftermath of a federal judge's ruling earlier this week that will keep the Horseracing Integrity and Safety Act (HISA) rules from going into effect in Louisiana and West Virginia while a lawsuit challenging those regulations is pending, the HISA Authority responded Friday with a series of legal actions that attempt to both reverse and clarify that injunction order.

The most significant of the July 29 filings from the HISA Authority defendants was a notice that they are appealing Judge Terry Doughty's July 26 decision to grant a preliminary injunction to the plaintiffs, who are led by the states of Louisiana and West Virginia, plus the Jockeys' Guild. This new appeal will be heard by the United States Court of Appeals for the Fifth Circuit.

At the same time, HISA asked Doughty for an emergency stay that would stave off the injunction he ordered just 72 hours earlier.

“The Court's order constitutes judicial overreach,” the HISA defendants argued, questioning how Doughty arrived at his decision to enforce an injunction.

“Although the Court purported to conduct a standing analysis, it did not analyze standing or ripeness as to each individual challenged rule,” the HISA filing stated.

HISA continued: “The Court thus invalidated the Federal Trade Commission (FTC)'s racetrack safety, enforcement, and assessment methodology rules in their entirety without ever assessing how any particular rule injured (or imminently risks injuring) Plaintiffs. The Court's resulting advisory opinion is also deeply flawed on the merits.”

Acting swiftly, Doughty responded to the defendants' 38-page filing within two hours on Friday morning. He required barely more than a single page to firmly assert “no” to HISA's request to put the regulations back into effect in Louisiana and West Virginia until the Fifth Circuit ruled on the new appeal.

“[T]his Court, for the reason more fully set out in the [preliminary injunction ruling], believes that the likelihood of Authority Defendants' success on the merits is low,” Doughty wrote in his July 29 denial. “This Court further finds Authority Defendants will not suffer irreparable harm if a stay is not entered. This Court further finds that other parties will be harmed if the stay is granted.”

Doughty then added a terse warning apparently aimed at letting the Authority know he believes there are flaws in its rulemaking process, which is at the heart of the overall lawsuit.

“Further, HISA has not yet adopted rules addressing the horseracing anti-doping and medication program,” Doughty wrote. “HISA has time to address any constitutional authority issues and procedural issues under the Administrative Procedures Act (APA) in re-drafting and re-noticing rules related to a Racetrack Safety Program.”

The HISA defendants are alleged in the June 29 suit to have violated the Fourth, Seventh and Tenth Amendments to the U.S. Constitution, plus the APA, which governs the process by which federal agencies develop and issue regulations.

The third court action undertaken by the HISA defendants Friday was a request for a clarification of Doughty's July 26 order, specifically the section that stated, “The geographic scope of the injunction shall be limited to the states of Louisiana and West Virginia, and as to all Plaintiffs in this proceeding,”

That clarification request was a direct response to a claim articulated by the Jockeys' Guild in a Wednesday press release that interpreted the judge's words to mean that the injunction “applies to all of the members of the Jockeys' Guild, regardless of the U.S. jurisdiction in which the jockey is riding.”

The HISA defendants stated that's not the proper interpretation.

“Plaintiffs have asserted that the Order extends to all of Plaintiffs' members nationwide,” the HISA filing argued. “But the members of the [Guild] are plainly not Plaintiffs in this case. And Plaintiffs' reading would wreak havoc on the sport. For example, many jockeys are not Guild members, such that different rules would apply to jockeys riding in the same race.”

The HISA Authority wants the judge to explicitly state that the injunction “applies to the implementation of the challenged rules as to Plaintiffs only and not as to [Guild] members nationwide.”

Technically, as listed on the original June 29 lawsuit, the state and organizational plaintiffs are the states of Louisiana and West Virginia, the racing commissions in both states, the Louisiana Horsemen's Benevolent and Protective Association, the Louisiana Thoroughbred Breeders Association, and the Jockeys' Guild. The only individual plaintiffs are five Louisiana-based “covered persons” under HISA rules, and only one, Gerard Melancon, is an active jockey.

The defendants consist of the HISA Authority, the FTC, and board members and overseers of both entities.

Notably, the FTC and its individually named defendants were not listed alongside the names of the HISA defendants who moved for the appeal, the stay, and the clarification in the July 29 filings.

The post HISA Appeals Injunction, But Judge Says No to Reversing Earlier Order appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

New Lawsuit Aims to Halt HISA On Eve of Implementation

The states of Louisiana and West Virginia are at the forefront of a new federal lawsuit filed late Wednesday that seeks to block the Horseracing Integrity and Safety Act (HISA) from going into effect when the clock strikes midnight on Friday.

The defendants, who consist of the HISA Authority, the Federal Trade Commission (FTC), and board members and overseers of both entities, have allegedly violated the Fourth, Seventh and Tenth Amendments to the United States Constitution, plus the Administrative Procedure Act (APA), which governs the process by which federal agencies develop and issue regulations, according to a series of June 29 filings in U.S. District Court (Western District of Louisiana).

“The regulatory power that Congress purported to delegate to HISA is breathtaking in scope, covering virtually all aspects of horseracing,” the complaint states. “HISA claims power to adopt rules governing doping, medication control, and racetrack safety. It claims power to investigate violations of its rules by issuing and enforcing subpoenas. After investigating alleged violations, it claims to then be able to act as judge in its own cases and adjudicate alleged violations of its rules.

“If that's not enough, HISA claims power to bring civil actions in federal court in response to known or anticipated violations of its regulations. And for those it deems guilty of disobeying its commands, HISA claims disciplinary power to issue sanctions up to and including lifetime bans from horseracing, disgorgement of purses, and monetary fines and penalties.

“Since the scope of HISA's purported regulatory authority extends to virtually all activities related to horseracing, it's not surprising that HISA likewise claims authority to regulate nearly all persons associated with the horseracing industry. Specifically, HISA claims power to regulate trainers, owners, breeders, jockeys, racetracks, veterinarians [and] others licensed by a state racing commission, and agents of any of those persons.

“Despite purporting to exercise this breathtakingly broad federal regulatory power over all activities and persons related to horseracing, HISA is unaccountable to any political actor. No federal official can remove the members of HISA's Board of Directors. The Act thus delegates to a private body the full coercive power of the federal government while simultaneously insulating it completely from political accountability,” the complaint states.

The plaintiffs want “expedited consideration” from a federal judge to keep the first phase of HISA's “substantively and procedurally deficient rules” from going into effect July 1.

“Congress's efforts to federalize horseracing regulations through a private entity like HISA suffer from a host of constitutional problems,” the complaint states.

“Just this week, four U.S. Senators wrote to [HISA executives] to question whether the FTC is providing adequate oversight of HISA, whether Congress should extend HISA's statutory deadlines, and why HISA decided to delay implementation of some rules but not others,” the complaint states.

HISA has already gotten two lawsuits dismissed that alleged unconstitutionality, although an appeal is underway in one case and expected in the other. On Mar. 31, a federal judge in Texas threw out a complaint initiated one year ago by the National Horsemen's Benevolent and Protective Association (NHBPA). On June 3, a federal judge in Kentucky tossed a similar suit in which Louisiana and West Virginia were also plaintiffs, ruling that HISA's enforcement powers were indeed lawful.

This time around, the plaintiffs are the state of Louisiana, its racing commission, the Louisiana HBPA, the Louisiana Thoroughbred Breeders Association, the Jockeys' Guild, the state of West Virginia, its racing commission, and five individuals regulated as “covered persons” under the HISA Act.

Lisa Lazarus, the HISA chief executive whose name tops the list of individual defendants, did not respond to a Thursday morning query for comment prior to the breaking-news deadline for this story.

The plaintiffs want a federal court to provide declaratory judgments that assert 1) the FTC exceeded its statutory authority by approving each of the HISA rules; 2) the HISA rules are arbitrary and capricious under the APA; 3) HISA's enforcement rule violates the Fourth and Seventh Amendments, and 4) the HISA rules are procedurally invalid under the APA because the FTC failed to promulgate them through proper notice-and-comment rulemaking procedures.

The suit also asks for declaratory judgment and a permanent injunction finding the HISA rules invalid and setting them aside, plus a temporary restraining order and an injunction prohibiting HISA or the FTC from taking any actions based on the HISA rules currently in place.

HISA's funding is a key issue that comes under question in the lawsuit.

“A private, politically unaccountable entity with breathtaking regulatory power over an entire industry requires significant funding to carry out its work,” the complaint states. “HISA, however, is not funded by Congress. Instead, Congress forced the responsibility of funding HISA onto the States. The Act forces States to choose either to fund HISA with money from the State treasury (or racing commission) or-if a State refuses–HISA intends to assess fees to the racetracks, which will undoubtedly be passed on to participants in that State's racing industry…

“As things stand today, the FTC has finally approved only three sets of regulations from this private, unfunded, politically unaccountable entity known as HISA. Those three sets of final rules cover 1) racetrack safety, 2) HISA enforcement proceedings, and 3) HISA's methods for assessing and collecting funds. All three sets of final rules will wreak havoc on the racing industry within a matter of days. And all three sets must be preliminarily and permanently enjoined because they suffer from fatal flaws under the APA Act or contradict constitutional guarantees,” the complaint states.

The suit alleges that when a first batch of HISA rules got approved in March and April, the FTC provided only a 14-day public comment period, far shorter than the typical 30 or 60 days. The complaint purports that this is an “unlawful pattern,” and that the FTC “ignored commentators who identified that HISA's rules for assessing fees are contrary to law because HISA bases assessments on purse size and racing starts but the Act limits the assessment methodology solely to race starts, with no mention of purse size.”

With specific respect to Louisiana, the suit states that “it is unclear how HISA will collect monies from racetracks and covered persons because Louisiana law makes clear that the Louisiana State Racing Commission must ensure pari-mutuel wagering revenue is distributed in a particular manner-namely, that 'fifty percent of [specific proceeds] shall be distributed by such track licensee as purses' and the remaining fifty percent 'shall be distributed by such track licensee as purses.'”

The complaint states that its “most pressing” concerns have to do with an expected spate of scratches come Friday if  “covered persons” aren't properly registered with HISA.

“At recent meetings, Defendant Lazarus claimed that HISA will attempt to scratch horses associated with covered persons who refuse to register with HISA or otherwise seek to disqualify horses post-race associated with unregistered personnel,” the complaint states.

“If HISA is allowed to enforce this punitive system, it will strip jockeys, owners, trainers, and all individuals involved in the horseracing industry of their economic interests in race purses-which are not set by HISA-and call the integrity of the entire industry into question.”

As far as the Jockeys' Guild is concerned, the “one-size-fits-none crop rule” is a chief beef.

“This is a major change from Louisiana's incoming rule, for instance, which will likewise limit the use of the crop to six overhand strokes but permits the use of underhand strikes at different junctures in a race, which is critical to the integrity of the race and participant safety,” the complaint states.

“Indeed, the FTC and HISA chose not to consider problems with state-specific concerns that were raised during the comment period and instead arbitrarily issued a rule without addressing comments criticizing that rule,” the complaint states. “The FTC's failure to meaningfully respond to these comments on the crop rule makes the rule arbitrary and capricious.”

The Fourth Amendment allegedly comes into play because a HISA rule “subjects covered persons, including the Individual Plaintiffs, to searches and seizures by HISA without prior approval by a judge or magistrate. This constitutes a per se violation of the Fourth Amendment,” the complaint states.

The Seventh Amendment allegations refer to HISA's ability to seek civil penalties from covered persons. “HISA enforcement actions under these rules that successfully obtain civil penalties will deprive aggrieved parties of their property rights and economic interests without providing aggrieved parties the right to a jury trial. The Enforcement Rule thus violates the Seventh Amendment's guarantee of a jury trial,” the complaint states.

The Tenth Amendment, which stipulates that the federal government only has powers that are specifically delegated in the Constitution, isn't directly addressed in the complaint. But the plaintiffs allege a violation of it in their separate request for a restraining order and injunction.

Later Thursday, Doug Daniels DVM, National HPBA President and Chairman of the Board, said, “We agree integrity, safety and uniformity in horse racing are of great importance, but we also believe getting each of these addressed in a lawful and proper manner is of paramount importance. Horsemen and horsewomen from coast to coast as well as United States Senators Grassley, Manchin, Ernst and Kennedy are asking for this implementation to be delayed and thus far it has gone on deaf ears.

“Now it has become necessary to request this court decide if HISA is ready for its roll-out. The participants are clearly saying the answer is 'no'–the implementation and the regulations are not ready as they stand today. We applaud Louisiana Attorney General Jeff Landry and the other plaintiffs who are demanding answers for everyone in the industry.”

The post New Lawsuit Aims to Halt HISA On Eve of Implementation appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

West Virginia in Limbo Over HISA

The West Virginia Racing Commission (WVRC) on Tuesday opted to take no action either way on whether to collect and remit fees on behalf of the new Authority created by the federal Horseracing Integrity and Safety Act (HISA).

States are facing a May 1 deadline to declare “in or out” middleman status pertaining to the safety portion of the HISA program that will go into effect July 1. This first phase-in of oversight does not include HISA's drug testing and medication control programs, which aren't expected to be up and running until 2023.

“I'm not going to make a decision to say yes to that today,” said WVRC chairman Ken Lowe Jr., adding that he wants feedback from the state attorney general and/or the governor's office on how to proceed on the matter.

Over the course of the past year, Lowe has repeatedly spoken out against HISA, portraying it as a federal statute crafted by elitists within the racing industry whose interests aren't aligned with the realities of small-circuit racing in West Virginia.

But since the input that Lowe wants from West Virginia's state officials is unlikely to materialize in the next four days, the HISA Authority will likely treat the WVRC's in-limbo response to the May 1 opt-in deadline as a “no.”

According to WVRC executive director Joe Moore, “The one real issue here by not agreeing to it, what [the HISA Authority] will do is now pass [responsibility and costs] to each of our tracks, Charles Town and Mountaineer.”

Last week California and Minnesota became the first two state racing commissions to agree to work with HISA by paying their pro-rated portions of costs. They also have to figure out how to use state employees (like stewards) to enforce federal-level safety rules (like whip-use guidelines).

Racing commissions in New Jersey, Maryland and Texas have already said no to HISA, with several citing as a reason that they don't have the statutory ability to make budgetary and spending changes that involve federal or private entities.

West Virginia is also a plaintiff in an active federal lawsuit joined by several other states aiming to get HISA voided for alleged constitutional violations before the Authority even goes into effect.

That case is currently facing a motion to dismiss; it is separate from the federal lawsuit spearheaded by the National Horsemen's Benevolent and Protective Association (HBPA) that got thrown out of court several weeks ago.

Charles Town HBPA president Jim Miller told commissioners that HISA was “a great overreach” that amounted to an “abomination.”

But Miller was also cognizant that by not signing off on acting as an intermediary, the WVRC will be essentially passing on the Authority's costs to the horsemen on a per-start basis.

“If [the commission or the tracks] don't pay HISA, we lose our right through the Interstate Horse Racing Act to simulcast, which, of course, is a big issue for us as well,” Miller said.

“We're looking at what revenues we trade one way to go the other way,” Miller continued. “This will be a big burden for both the tracks and a huge burden on horsemen. We definitely cannot afford it at a time when, hay, oats, feed, veterinary; all those costs have gone up dramatically in the past couple months.”

Moore also articulated a concern that opting into the safety part of the Authority's program would bind the WVRC to also go along with the medication and doping controls, too.

“We can't even tell anyone how much this is going to cost,” commissioner J.B. Akers added, alluding to the drug and medication control assessments that would follow.

Akers also questioned “the so-called equitable nature of this assessment,” which he said seemed to be calculated too high for a relatively small state like West Virginia.

Added Moore: “This is a mess whether you agree to do their work for them [via] this voluntary agreement or not. Because whether or not our stewards are carrying out their functions, if here's a violation under their code, the recourse of appeal is not to our stewards at Charles Town or Mountaineer Park. It automatically goes to a HISA-appointed Authority.”

With regard to the costs borne by the horsemen and the tracks, Moore said there could be a possible state legislative solution in the pipeline, but that it would be at least two years before it could be implemented.

Tracks and horsemen having to pay directly “could be avoided in future years should we all agree on some additional revenue stream to the racing commission passed through legislation,” Moore explained.

“We could work together on figuring out a revenue stream that gave the racing commission an amount of money to absorb that assessment that would then come back from the racetracks and the horsemen [in a way that] wouldn't be as sudden and impactful as maybe just a direct assessment,” Moore said.

The post West Virginia in Limbo Over HISA appeared first on TDN | Thoroughbred Daily News | Horse Racing News, Results and Video | Thoroughbred Breeding and Auctions.

Source of original post

Second Civil Suit From Oklahoma, West Virginia Racing Authorities Questions Constitutionality Of HISA

The Horseracing Safety and Integrity Act (HISA) is facing a second legal challenge after Oklahoma Attorney General Mike Hunter announced this week he is filing a federal lawsuit calling into question the act's constitutionality. The suit, filed in U.S. District Court for the Eastern Division of Kentucky, includes a number of plaintiffs, including the states of Oklahoma and West Virginia and their racing commissions, the U.S. Trotting Association and Pennsylvania-based Hanover Shoe Farm, as well as the Oklahoma Quarter Horse Association and a number of track ownership entities in Oklahoma. Defendants include the United States, the Federal Trade Commission, and a number of individuals working for the FTC and the HISA nominating committee.

This suit, much like one filed in March by the National Horsemen's Benevolent and Protective Association and a number of its state affiliates, questions the ability of HISA to delegate regulation to a private group while not making it accountable to a government organization. The suit questions the new authority's relationship to the FTC, which critics say can only approve or deny new rules, but has no substantive input on their construction.

The Oklahoma suit also objects to the funding mechanism that has been laid out for the new authority.

After creating this vast new federal regulatory structure and delegating it to a private corporation, Congress disclaimed any responsibility for funding the Authority itself,” reads an excerpt from the suit. “Instead, it forced the funding responsibility onto the states, imposing on them the choice of either funding the Authority with state funds or, if a state refuses, collecting fees directly from racing industry participants in that state while punishing the state by banning it from collecting similar taxes or fees itself.”

The suit seeks a declaration that HISA is unconstitutional and wants the court to stop its implementation. The suit also seeks “nominal damages.”

Read the complaint here.

The Jockey Club, which was a major player in pushing HISA forward, has previously said it believes the act is on solid ground in terms of its constitutionality.

The post Second Civil Suit From Oklahoma, West Virginia Racing Authorities Questions Constitutionality Of HISA appeared first on Horse Racing News | Paulick Report.

Source of original post

Verified by MonsterInsights