The U.S. Sixth Circuit Court of Appeals has ruled that the enabling legislation creating the Horseracing Integrity and Safety Authority satisfied constitutional doctrines preventing Congress from delegating regulatory power to private companies, a decision that may trigger a Supreme Court hearing.

The ruling, issued by a three-judge panel of the court, said that HISA, which was created by federal legislation late in 2020, was “subordinate” to a federal agency, the Federal Trade Commission, a requirement for the delegation of regulatory power.

“The Authority wields materially different power from the FTC, yields to FTC supervision, and lacks the final say over the content and enforcement of the law – all tried and true hallmarks of an inferior body,” the ruling stated.

The decision is a clear victory for HISA, which is preparing to roll out a nationwide drug-testing and enforcement program late in March, provided that the FTC approves a massive tranche of rules it submitted for review earlier in the year. The U.S. Sixth Circuit received the case after a lower court based in Kentucky also upheld the constitutionality of HISA.

However, the Sixth Circuit decision contradicts a ruling late last year by the U.S. Fifth Circuit, which ruled that HISA is “facially unconstitutional” due to the court’s determination that HISA was not subordinate to the FTC. As a result, the Supreme Court may be eager to hear the case, given the constitutional questions involved and the two contradictory rulings.

Late last year, supporters of HISA attempted to address the Fifth Circuit concerns by adding a single-paragraph amendment to the enabling legislation, attached to an omnibus spending bill. That package passed the House and Senate and was signed into law by President Joseph Biden.

The Sixth Circuit addressed that amendment in its own ruling, concluding that the “constructive dialogue between Congress and the federal courts … ameliorated” some of the concerns raised in the Fifth Circuit decision. Oral arguments in the Sixth Circuit case took place prior to the amendment being introduced and passed.

“The Constitution anticipates, though it does not require, constructive exchanges between Congress and the federal courts,” the ruling said. “A productive dialogue occurred in this instance, and … as amended, the Horseracing Act gives the FTC the final say over implementation of the Act relative to the Horseracing Authority, allowing us to uphold the Act as constitutional.”

Earlier this year, lawyers for HISA and the FTC had requested that the Fifth Circuit reconsider its own ruling in light of the amendment’s passage, but the Fifth Circuit declined to do so, sending the decision back to a lower court. That court has not yet issued a decision in the case.

In a statement released after the Sixth Circuit decision was released, HISA said it was “grateful” to the court “for recognizing and affirming HISA’s constitutionality.”

“We remain focused on preparing for the launch of HISA’s Anti-Doping and Medication Control (ADMC) Program on March 27 pending final approval by the FTC,” the statement said. “Once launched, the combined ADMC and Racetrack Safety programs will, for the first time in racing’s history, see national, uniform integrity and safety rules applied consistently to every Thoroughbred horse, racing participant and racetrack in the country.”

The Sixth Circuit challenge was initiated by racing commissions and attorneys general in Louisiana, Oklahoma, and West Virginia, along with several racetracks in Oklahoma and other racing-related organizations in the states. The Fifth Circuit challenge was brought by the National Horsemen’s Benevolent and Protective Association, along with a large number of its affiliates.

While HISA has a number of strong supporters among racing’s many constituencies, the authority has faced strong resistance from some horsemen’s groups and racing commissions, many of which contend that the industry cannot afford to fund the authority’s programs and that racing is better regulated on a state-by-state basis.

Eric Hamelback, the chief executive officer of the National HBPA, said after the Sixth Circuit ruling was released that the organization remains “committed to our case,” even though the HBPA was not a party to Friday’s decision.

“We will keep fighting all the way to the Supreme Court if necessary to protect our industry and make sure our rules and regulations are built on a legal foundation,” Hamelback said.