Recent legal action involving the Horseracing Integrity and Safety Authority has been significant. In 2022, the Fifth Circuit found HISA unconstitutional; Congress made changes to the statute within six weeks; the Sixth Circuit determined that the statutory change resolved the issue; and the Fifth Circuit ruled that while the statutory change partially fixed the problem, it still struck down HISA’s enforcement power (but not regulatory power). Meanwhile, the Eighth Circuit upheld HISA in a separate challenge.
Due to the lack of complete satisfaction for any party in the latest Fifth Circuit case, there are ongoing petitions for certiorari. Given the circuit split and the partial striking down of a federal statute by the Fifth Circuit, a cert grant is highly probable. However, there is debate on whether the cert grant should focus solely on the “private nondelegation doctrine” issue or also include an Appointments Clause question. I advocate for the latter approach and have recently filed a brief on behalf of the Reason Foundation and the Goldwater Institute in support of this position.
To read more on this topic, refer to my previous posts here, here, here, and here. Also, see my Notre Dame Law Review article, The Myth of the Federal Private Nondelegation Doctrine, for an in-depth discussion on these issues.
You can view the brief below, or access the formatted version here.
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Summary of Argument
1. This case warrants certiorari. The Horseracing Integrity and Safety Authority holds significant federal authority without proper political appointments or oversight. With a circuit split on the private nondelegation issue and a federal statute partially struck down, parties on both sides agree on the need for certiorari.
However, certiorari should not only be granted for the private nondelegation issue but also for the Appointments Clause issue, as both are interconnected and the Fifth Circuit erred in its rulings on these matters.
2. The Fifth Circuit’s ruling that the Authority’s enforcement power violates the “private nondelegation doctrine” is unfounded. Such a doctrine does not exist, and delegations to private parties should be evaluated under the same standard as delegations to public agencies, which the Authority passes.
3. Despite the Fifth Circuit’s incorrect decision on the nondelegation issue, it was partially correct in finding that the Authority’s actions violate the Appointments Clause due to improper appointment of its members as Officers of the United States.
4. The distinction between the “private nondelegation doctrine” and the Appointments Clause is crucial. The former focuses on congressional power delegation, while the latter emphasizes democratic accountability in appointing individuals with significant authority.
5. The Appointments Clause approach is more practical and effective in ensuring accountability for significant power delegations, as opposed to the private nondelegation doctrine, which could lead to widespread invalidations of private delegations.
The determination of validity should be based on an examination of “significant authority.” Therefore, the Court should grant certiorari on the Appointments Clause issue. While the correct resolution of the Appointments Clause issue would resolve the entire case, both parties and the federal government are urging the Court to also consider the private nondelegation issue, which is certworthy. It is requested that both the private nondelegation and Appointments Clause issues be considered together.
The Sixth Circuit case did not address the Appointments Clause, making it an unsuitable vehicle for certiorari. In contrast, the Eighth Circuit case did address the Appointments Clause, aligning with the Fifth Circuit’s analysis. Therefore, the Court should grant certiorari on the Appointments Clause question in either this case or the Eighth Circuit case, or both cases together.
The case is certworthy due to a circuit split on the private nondelegation doctrine, a federal statute being partially struck down by the Fifth Circuit, agreement among all parties for certiorari, and significant federal law questions being raised. However, the case presents two important federal law questions: the existence of a private nondelegation doctrine and compliance with the Appointments Clause. The Fifth Circuit’s errors in both areas highlight the close relationship between the private nondelegation doctrine and the Appointments Clause in this case.
The Fifth Circuit’s ruling on the private nondelegation doctrine does not have support in this Court’s precedents, as there is no stricter private nondelegation doctrine than the ordinary nondelegation doctrine. The issue with the Authority’s powers lies in the Appointments Clause, not the nondelegation doctrine. This Court has upheld delegations to private parties in the past, and the true problem in this case is the violation of the Appointments Clause. The cases of Louis, Iron Mountain, & Southern Railway Co. v. Taylor, Currin v. Wallace, and United States v. Rock Royal Co-operative, Inc. all demonstrate the consistent application of the nondelegation doctrine by the Supreme Court. In these cases, the Court upheld delegations of power to various entities, including private parties, by focusing on the extent of the power delegated rather than the identity of the recipient. The Court has also emphasized that the nondelegation doctrine is rooted in Article I of the Constitution, specifically the Vesting Clause, and is concerned with whether Congress has given away too much power.
The Court’s approach to the nondelegation doctrine has encompassed delegations to executive officials, agencies, the judiciary, Indian tribes, and private parties. While there may be constitutional issues with certain rulemaking powers, such as those related to the Appointments Clause, the focus remains on the extent of the delegation rather than the nature of the recipient. The cases cited in support of private delegation, such as Butte City Water and St. Louis Railway, have been consistently cited in subsequent cases as examples of constitutional delegations.
The Fifth Circuit’s reliance on cases like Schechter Poultry and Carter Coal in a recent decision was misplaced, as those cases dealt with different issues. Schechter Poultry involved the President’s power to adopt codes of fair competition, not delegation to private parties, while Carter Coal focused on due process concerns related to wage and price regulation by self-interested groups. These cases do not support a distinction between private and public delegations under the nondelegation doctrine.
In conclusion, the consistent application of the nondelegation doctrine by the Supreme Court emphasizes the need for constraints on delegated powers rather than a focus on the identity of the recipient. The Court’s analysis has encompassed delegations to various entities and has upheld delegations based on the extent of the power granted by Congress. The status of the members of the Authority as part of the federal government’s structure is not relevant. The Fifth Circuit correctly pointed out that constitutional restrictions cannot be evaded simply by labeling someone as part of the government. This is evidenced by cases like Auffmordt v. Hedden, where the focus was on factors such as tenure, duration, compensation, and duties of the office, rather than formal employment status.
The Office of Legal Counsel also agrees that the Appointments Clause applies to those who exercise delegated sovereign authority, regardless of their formal status as government employees. The distinction between public and private actors is not a determining factor in whether someone is considered an Officer under the Appointments Clause.
Even if the State Action Doctrine is considered, the Authority can be seen as a state actor based on its performance of traditionally exclusive public functions like investigation, enforcement, and regulation. This highlights that there are multiple paths to being considered a state actor, and the Lebron test is not the sole criterion for determining state actor status. “The scope of the State Action Doctrine is not a clear line between government and non-governmental entities, and there are instances where the actions of a private organization or individual are treated as if they were performed by the government.” (Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass’n, 531 U.S. 288, 295 (2001).
The determination of when an individual’s actions can be considered those of the government has been defined in various contexts. For example, as established in Lebron, corporations like Amtrak are considered “part of the government” if they are created by special law to further governmental objectives and are primarily directed by government appointees.
However, the Fifth Circuit’s assertion that Lebron is the only path to establish state action is incorrect. There are multiple ways for private parties to be considered state actors. A private party can be deemed a state actor if the government is involved in its management or control, if it participates with government actors in coercive activities, if it acts under government pressure, or if it performs a traditionally exclusive public function.
In the case of the Authority, which has the power to make regulations with legal force, it must be considered a state actor to be bound by constitutional rights. Private corporations operating under state law must also adhere to constitutional standards, as recognized by the Circuit Courts. Therefore, the Authority’s status as a state actor cannot be avoided by labeling it as a private entity.
The Fifth Circuit’s argument that the Authority is not a governmental entity and therefore exempt from certain constitutional restrictions is inconsistent with the concept of state action. Private parties can be considered state actors if they perform traditionally exclusive public functions, as established by the Supreme Court in previous cases.
In conclusion, the State Action Doctrine is not limited to a single path, and private parties can be deemed state actors if they meet any of the established criteria for state action.” As previously mentioned, the Circuit Courts have correctly determined that private prison firms are considered state actors, as seen in cases such as Rosborough, 350 F.3d at 460-61. Similarly, in Collins v. Yellen, 594 U.S. 220 (2021), the Supreme Court rejected the argument that the Fair Housing Finance Agency was a private entity when acting as a conservator or receiver, emphasizing the governmental powers it exercised. Here, the Authority’s powers of investigation, enforcement, and rulemaking are clearly governmental in nature, establishing it as a state actor. Therefore, even if only state actors are subject to the Appointments Clause, this requirement is met in this case.
The Fifth Circuit’s error in applying the private nondelegation doctrine does not negate its error in interpreting the Appointments Clause. The court’s argument that the private nondelegation doctrine addresses concerns about the Authority’s accountability is flawed. The Fifth Circuit failed to require a sufficient level of oversight for the Authority, allowing its regulations to take effect without proper scrutiny. Additionally, by exempting the Authority from Appointments Clause requirements, the court removed essential accountability measures. The two doctrines should be considered separately as they serve distinct purposes. The Appointments Clause ensures accountability for those exercising significant authority under federal law, regardless of their status, while the nondelegation doctrine aims to prevent Congress from delegating too much power. The Fifth Circuit’s approach would effectively invalidate any exercise of power by non-subordinate private parties, which is impractical in today’s mixed public-private landscape. Instead, the analysis should focus on the extent of federal power wielded by an entity, whether public or private.
Given the significance of the Appointments Clause issue in this case, the Supreme Court should grant certiorari to address this question. While resolving the Appointments Clause issue alone would lead to the correct outcome, both parties and the federal government have raised the private nondelegation issue as well, making it a relevant consideration. It is important to consider both issues together for a comprehensive decision. The Sixth Circuit case did not address the Appointments Clause, making it unsuitable for certiorari, unlike the Eighth Circuit case, which did analyze the Appointments Clause in a manner similar to the Fifth Circuit. Therefore, it is imperative that this Court grant certiorari in this case, ensuring that the Appointments Clause question is included. Additionally, the Court should consider granting certiorari in the Eighth Circuit case, or even in both cases simultaneously.
Conclusion
Based on the foregoing arguments, it is clear that the Court should grant certiorari, with a specific focus on addressing the Appointments Clause question.
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