HISA Enforcement Unconstitutional Under Private Nondelegation: Back-End FTC Review and Rulemaking Cannot Cure a Statute’s Unsupervised Private Executive Power

Case: Natl Horsemen's Benevolent v. Black (5th Cir. June 11, 2026) (on remand)  |  Court: United States Court of Appeals for the Fifth Circuit

I. Introduction

This Fifth Circuit opinion (reissuing its prior reasoning after a Supreme Court vacatur-and-remand) addresses renewed constitutional challenges to the Horseracing Integrity and Safety Act of 2020 (“HISA”), a statute that created a nationwide regime for thoroughbred horseracing safety and anti-doping rules. HISA “recognize[s]” a private corporation—the Horseracing Integrity and Safety Authority (“Authority”)—to develop and implement rules under Federal Trade Commission (“FTC”) “oversight.”

The principal parties include the National Horsemen’s Benevolent and Protective Association and many state affiliates, several racing entities, the State of Texas and the Texas Racing Commission (as intervenor plaintiffs), and a later-added plaintiff, Gulf Coast Racing LLC. Defendants include the Authority and federal officials, including the FTC.

The litigation centers on whether Congress may (1) confer nationwide rulemaking authority on a private regulator subject to FTC review and (2) confer enforcement powers—investigations, subpoenas, searches, sanctions, and injunction suits—on that private regulator. The Fifth Circuit had previously held HISA’s original rulemaking structure unconstitutional in Nat'l Horsemen's Benevolent & Protective Ass'n v. Black (Horsemen's I), 53 F.4th 869 (5th Cir. 2022), prompting Congress to amend HISA to expand FTC authority to “abrogate, add to, and modify” Authority rules.

After the Fifth Circuit’s later decision in National Horsemen's Benevolent & Protective Association v. Black (Horsemen's II), 107 F.4th 415 (5th Cir. 2024) (vacated), the Supreme Court remanded for reconsideration in light of FCC v. Consumers' Research, 606 U.S. [656] (2025). The Fifth Circuit concludes Consumers' Research does not alter its analysis and reissues its prior holding.

Key issues:

  • Whether Congress’s amendment cured the private nondelegation defect in the Authority’s rulemaking.
  • Whether HISA’s enforcement provisions separately violate the private nondelegation doctrine.
  • Whether HISA violates due process by permitting self-interested industry actors to regulate competitors.
  • Whether the Authority’s directors trigger the Appointments Clause under Lebron v. Nat'l R.R. Passenger Corp., 513 U.S. 374 (1995).
  • Whether a plaintiff has standing to assert Tenth Amendment anti-commandeering claims.

II. Summary of the Opinion

The Fifth Circuit largely affirms the district court:

  • Rulemaking: The 2023 amendment giving the FTC power to “abrogate, add to, and modify” Authority rules cures the private nondelegation flaw identified in Horsemen's I.
  • Due Process: HISA’s conflicts-of-interest provisions defeat a facial due-process challenge, and plaintiffs failed to prove disqualifying self-dealing as applied.
  • Appointments Clause: Under Lebron v. Nat'l R.R. Passenger Corp., the Authority is not a government entity for Appointments Clause purposes; thus its directors are not subject to Article II appointment requirements.
  • Tenth Amendment: Gulf Coast lacks standing to bring an anti-commandeering challenge.

The Fifth Circuit reverses in one critical respect:

  • Enforcement: HISA’s enforcement provisions facially violate the private nondelegation doctrine because the Authority (and its private contractor) can investigate, subpoena, search, sanction, and sue for injunctions without meaningful FTC “authority and surveillance.” Back-end FTC review of sanctions is too late, and FTC rulemaking cannot rewrite Congress’s statutory allocation of enforcement power.

The court expressly parts ways with the Sixth Circuit, which rejected similar nondelegation challenges in Oklahoma v. United States (Oklahoma I), 62 F.4th 221 (6th Cir. 2023), and Oklahoma v. United States (Oklahoma II), 163 F.4th 294 (6th Cir. 2025).

III. Analysis

A. Precedents Cited (and How They Shape the Decision)

1. The private nondelegation lineage: from “private regulation” to “subordination”

The Fifth Circuit situates its private nondelegation approach in the Supreme Court’s classic decisions: A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935), Carter v. Carter Coal Co., 298 U.S. 238 (1936), Currin v. Wallace, 306 U.S. 1 (1939), and Sunshine Anthracite Coal Co. v. Adkins, 310 U.S. 381 (1940).

The court’s working test—restated throughout—derives from its own circuit formulation and sister-circuit articulation: a private entity may wield federal power only if it “functions subordinately” to an agency with “authority and surveillance” over it. The opinion draws the “aid to an agency” framing from Ass'n of Am. R.Rs. v. U.S. Dep't of Transp. (Amtrak I), 721 F.3d 666 (D.C. Cir. 2013), vacated and remanded on other grounds by Dep't of Transp. v. Ass'n of Am. R.Rs. (Amtrak II), 575 U.S. 43 (2015).

These cases matter because they supply the Fifth Circuit’s central constitutional demand: the government must retain the power to approve, disapprove, or modify the private actor’s output in time for that retention to be meaningful. The opinion treats that demand as the constitutional dividing line between permissible “assistance” and impermissible “private governance.”

2. FCC v. Consumers' Research as a reaffirmation—not a retrenchment—of private nondelegation

The Supreme Court’s remand required the Fifth Circuit to measure its analysis against FCC v. Consumers' Research. The Fifth Circuit reads Consumers' Research as reaffirming, not weakening, the “subordination” requirement: “As long as an agency . . . retains decision-making power, it may enlist private parties to give it recommendations.”

The Fifth Circuit emphasizes the factual/structural features that made the delegation permissible in Consumers' Research: the Administrator was “just doing arithmetic,” performed no policymaking, acted under FCC directives, was subject to de novo review, and—most importantly—its work had no legal or practical effect “without [the FCC’s] say-so.”

That “no effect without agency say-so” concept becomes the Fifth Circuit’s main comparative lever: the Authority’s enforcement actions (investigations, subpoenas, searches, charging, and injunction suits) can occur without FTC permission and can impose immediate burdens. Thus, Consumers' Research is deployed as a contrast that supports invalidation rather than undermines it.

3. Distinguishing rulemaking from enforcement through separation-of-powers cases

To classify the Authority’s enforcement authorities as “quintessentially executive,” the court cites a line of Supreme Court separation-of-powers decisions: Bowsher v. Synar, 478 U.S. 714 (1986); Morrison v. Olson, 487 U.S. 654 (1988); Buckley v. Valeo, 424 U.S. 1 (1976) (per curiam); Seila L. LLC v. Consumer Fin. Prot. Bureau, 591 U.S. 197 (2020); Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S. 477 (2010); Collins v. Yellen, 594 U.S. 220 (2021); and Fourth Amendment-adjacent characterizations of search authority in United States v. Grubbs, 547 U.S. 90 (2006), and California v. Acevedo, 500 U.S. 565 (1991) (Stevens, J., dissenting).

These cases are not cited to import their doctrinal tests wholesale. Instead, they establish the baseline constitutional intuition that investigation, subpoena, search, prosecution/charging, sanctioning, and suing to enjoin violations are executive functions that cannot be vested in private hands without adequate governmental supervision. Notably, Buckley v. Valeo is used to stress that “conduct[ing] civil litigation” and seeking “judicial relief” to vindicate public rights is executive power.

4. Conflicting circuit approaches: Oklahoma I and Oklahoma II (Sixth Circuit)

The Fifth Circuit’s enforcement holding is explicitly in tension with the Sixth Circuit’s decisions: Oklahoma v. United States (Oklahoma I) and Oklahoma v. United States (Oklahoma II). The Sixth Circuit viewed FTC de novo review of sanctions, plus the FTC’s expanded rulemaking authority, as sufficient to defeat a facial challenge.

The Fifth Circuit’s disagreement is conceptual and textual:

  • Conceptual: “Back-end” review does not transform “front-end” private enforcement into subordinate assistance; enforcement already happened.
  • Textual: The FTC cannot, by rule, rewrite Congress’s “scope of powers and responsibilities” allocation in § 3054(a)(1) and related provisions.

5. FINRA/Maloney Act analogies and limits

The Authority’s best defense is the long-accepted model of private self-regulatory organizations under federal oversight, especially FINRA under the Maloney Act. The Fifth Circuit acknowledges HISA’s modeling on that scheme and credits Congress’s amendment (mirroring Maloney Act language) as curing the rulemaking defect.

But the enforcement comparison fails because, in the Fifth Circuit’s view, the SEC possesses “formidable” tools the FTC lacks: the SEC can investigate, subpoena, seek injunctions, revoke an SRO’s status, remove board members, and otherwise directly enforce. By contrast, HISA vests core enforcement steps in the Authority/HIWU, and uniquely grants the Authority power to sue for injunctions under § 3054(j) without FTC involvement.

6. Due process: Carter v. Carter Coal Co. as a conflict-of-interest touchstone

Plaintiffs’ due process claim relied on language from Carter v. Carter Coal Co. condemning regulation by private persons whose interests “may be” adverse. The Fifth Circuit, affirming the district court, treats HISA’s conflict-of-interest provisions (§ 3052(e)) as a structural answer to that concern, and finds the record insufficient to show unconstitutional self-dealing as applied.

7. Appointments Clause: Lebron v. Nat'l R.R. Passenger Corp. as the governing “public or private” test

Gulf Coast’s Appointments Clause theory required treating the Authority as governmental for constitutional purposes. The Fifth Circuit relies on Lebron v. Nat'l R.R. Passenger Corp. and later applications (cited in the opinion) to hold the Authority remains private because: it was incorporated under Delaware law, not created “by special law,” its directors are not government-appointed, and the federal government lacks the kind of permanent control central to Lebron.

The Fifth Circuit rejects efforts to bypass Lebron by importing “Officer of the United States” analysis from Buckley v. Valeo and Lucia v. SEC, 585 U.S. 237 (2018), reasoning that those cases concern officials already within governmental entities, whereas Lebron directly answers when an entity counts as the government.

8. Standing/ripeness and the facial-challenge framework

Several cited cases structure justiciability and facial review: Contender Farms, L.L.P. v. U.S. Dep't of Agric., 779 F.3d 258 (5th Cir. 2015); Susan B. Anthony List v. Driehaus, 573 U.S. 149 (2014); United States v. Salerno, 481 U.S. 739 (1987); Hersh v. U.S. ex rel. Mukasey, 553 F.3d 743 (5th Cir. 2008); and the “bet the farm” principle in Free Enter. Fund v. Pub. Co. Acct. Oversight Bd..

These precedents matter because the Fifth Circuit allows a facial enforcement-structure challenge without requiring plaintiffs to await a specific enforcement action, and because it insists that hypothetical “timing gaps” (raised against the rulemaking fix) are better addressed as as-applied challenges rather than facial invalidation.

B. Legal Reasoning

1. Rulemaking delegation cured by FTC’s “abrogate, add to, and modify” power

The court’s rulemaking holding is straightforward: the constitutional problem in Horsemen's I was not that a private body proposed rules, but that the FTC’s prior “consistency review” could not second-guess the Authority’s policy choices—making the private actor effectively superior.

Congress’s amendment in 15 U.S.C. § 3053(e) changes that hierarchy. Because the FTC can now “abrogate, add to, and modify” Authority rules, it has the final word on content, converting the Authority into a subordinate rule proposer. The court also rejects facial “timing gap” arguments (rules might briefly go into effect before FTC intervention) as speculative and remediable through agency safeguards or as-applied litigation.

2. Enforcement delegation unconstitutional because enforcement is “in charge” of private actors

The opinion’s central innovation is its sharp separation between:

  • Rulemaking: potentially curable through robust pre-effect governmental control over final content; versus
  • Enforcement: unconstitutional where core executive steps are undertaken by private entities without front-end government authorization or meaningful supervision.

Parsing HISA’s text, the Fifth Circuit emphasizes what the FTC cannot do: it does not decide whether to investigate, subpoena, search, charge, or sue; it cannot countermand those decisions; and HISA does not require FTC approval before those steps occur. The court treats that statutory silence not as a gap to be filled, but as an affirmative allocation of power to private actors.

3. Why back-end FTC review is insufficient

The Authority’s strongest argument is that sanctions can be reviewed—first by an ALJ and then by the FTC de novo. The Fifth Circuit deems that oversight “too late” to establish subordination because:

  • Enforcement includes intrusive steps before sanctions (investigations, subpoenas, searches, charging, adjudication), which occur without FTC involvement.
  • Sanctions may take effect absent a stay; and settlements may end cases without any meaningful FTC engagement—yet enforcement plainly occurred.
  • Critically, HISA authorizes the Authority to seek injunctions in federal court under § 3054(j) without FTC participation at any stage, which the court treats as a core executive function under Buckley v. Valeo.

4. Why FTC rulemaking cannot “fix” enforcement: agencies cannot rewrite Congress’s enforcement scheme

The Fifth Circuit rejects the argument (accepted by the Sixth Circuit) that the FTC can use § 3053(e) rulemaking to subordinate enforcement—e.g., by requiring preclearance for suits or imposing procedural constraints. The court reasons that such rules would effectively amend Congress’s “reticulated” enforcement design, which assigns enforcement “each within the scope of their powers and responsibilities under this chapter.”

To support this “no agency rewrite” principle, the court cites statutory-structure and administrative-law limits, including: Biden v. Nebraska, 600 U.S. 477 (2023) (modification authority does not authorize “basic and fundamental changes”), MCI Telecomms. Corp. v. Am. Tel. & Tel. Co., 512 U.S. 218 (1994), Util. Air Regul. Grp. v. EPA, 573 U.S. 302 (2014), and 5 U.S.C. § 706(2)(C).

The opinion also uses internal statutory comparison: where Congress wanted the Authority only to recommend enforcement, it said so (as to § 3059). That express limitation is absent elsewhere, signaling Congress’s deliberate decision to vest broader enforcement power in the private Authority/HIWU.

5. Why FCC v. Consumers' Research does not change the analysis

The Fifth Circuit’s remand-specific reasoning is crisp: Consumers' Research reaffirms the same “subordination” standard and upheld a delegation because the private Administrator’s work had no effect without agency approval. Under HISA, the Authority/HIWU can take enforcement steps—searches, subpoenas, charges, suits—without FTC “say-so.” Thus, in the Fifth Circuit’s view, Consumers' Research underscores the constitutional deficiency rather than cures it.

C. Impact

The decision’s practical and doctrinal significance lies in three points:

  • A new, enforcement-focused articulation of private nondelegation: The Fifth Circuit draws a hard line against private entities exercising core executive enforcement functions absent meaningful, front-end governmental control. This is not merely a “private actor proposes, agency approves” problem; it is a “private actor enforces” problem.
  • Limits on “rulemaking as a constitutional cure”: Even when Congress expands agency rulemaking power, the Fifth Circuit holds that agencies cannot, by regulation, reallocate enforcement authority that Congress vested in private hands. That principle may extend beyond HISA to other hybrid regimes where agencies attempt to supervise private enforcement through general rulemaking rather than statutory redesign.
  • Deepening circuit conflict and heightened Supreme Court interest: The Fifth Circuit’s express split with Oklahoma I and Oklahoma II increases the likelihood of further Supreme Court review, especially given recent attention to structural constitutional limits in Consumers' Research and related separation-of-powers disputes.

For regulated parties, the immediate implication is that within the Fifth Circuit, HISA’s enforcement model (as written) cannot stand. For Congress and federal regulators, the opinion signals that any durable national horseracing regime must place enforcement decisions—investigation initiation, compulsory process, search authority, charging, and injunction litigation—under direct federal control or under a private actor tightly controlled in a manner that prevents enforcement actions from having effect without agency approval.

IV. Complex Concepts Simplified

  • Private nondelegation doctrine: Congress cannot hand federal power to private parties unless the private party is genuinely supervised and subordinate to a government agency. The government must remain “in control” in the ways that matter.
  • “Functions subordinately” / “authority and surveillance”: It is not enough that an agency can review something eventually. The agency must have the real ability to approve, disapprove, or change the private actor’s actions in a way that prevents the private actor from being the true decision-maker.
  • Rulemaking vs. enforcement: Rulemaking is creating rules (legislative-like power). Enforcement is investigating, compelling documents, searching, charging, punishing, and suing (executive power). The court treats enforcement as especially sensitive because it involves coercion against private parties.
  • Facial challenge: A claim that a statute is unconstitutional in all its applications; under United States v. Salerno, the burden is high. The court accepts a facial challenge to HISA’s enforcement scheme because the statutory structure itself places coercive tools in private hands without adequate federal supervision.
  • De novo review: “From the beginning”—an agency (or tribunal) can reconsider without deference to the earlier decision. Here, the court says de novo review of sanctions does not cure the lack of supervision over earlier investigative and prosecutorial steps.
  • Appointments Clause: Applies to officers of the United States in the federal government. Under Lebron v. Nat'l R.R. Passenger Corp., a nominally private corporation can be treated as governmental only when the government created it by law and retains permanent control (especially director appointment).
  • Anti-commandeering: Congress cannot force states to administer or enforce federal programs. Even if such a claim might exist, a plaintiff must show a concrete injury to have standing; dislike of “new federal regulation” alone is not enough.

V. Conclusion

The Fifth Circuit’s defining contribution is its holding that HISA’s enforcement provisions are facially unconstitutional under the private nondelegation doctrine because they place core executive enforcement powers in private hands without meaningful FTC “authority and surveillance.” In the court’s view, FCC v. Consumers' Research confirms that private participation is constitutional only when the agency retains real-time, pre-effect control—something HISA provides for rulemaking (after Congress’s amendment) but not for enforcement.

The opinion therefore sketches a workable constitutional boundary for hybrid public-private regulatory schemes: private entities may propose and assist (even substantially), but they may not be the primary enforcers wielding coercive executive tools unless the government retains genuine, front-end control over those actions. With a clear circuit split over the sufficiency of back-end review and agency rulemaking as “supervision,” the decision is positioned to shape—either directly or through further review—the constitutional architecture of privatized enforcement across federal regulatory programs.