In 2020, Congress displaced more than two centuries of self- and state regulation of horseracing when it passed a law creating a private nonprofit—the Horseracing Integrity and Safety Authority—to regulate doping, medication, and other safety issues in the industry. Though the Authority is nominally subject to the supervision of the Federal Trade Commission (FTC), it has broad power to select its officers, write rules for the industry, and subpoena, investigate, and fine trainers, breeders, owners, jockeys, racetrack operators, veterinarians, and others.

Horses racing

Horseracing enthusiasts Bill Walmsley and Jon Moss objected to this federal takeover of horseracing regulation and Congress’s grant of government powers to a private body. They sued the Authority and the FTC, arguing that Congress unconstitutionally delegated government powers to the Authority. As they pointed out, courts have long held that Congress may not grant sovereign powers to private actors—mini-executives unconstrained by the Constitution—to regulate Americans’ lives.

Although the Fifth Circuit properly held in a similar case that the Authority’s enforcement authority violates the private nondelegation doctrine, the district court and the Eighth Circuit ruled in favor of the Authority and the government.

Now, Walmsley is seeking a review from the Supreme Court and asking the Court to resolve the circuit split. And Cato has filed an amicus brief in support of Walmsley’s petition.

Our brief makes three points. First, the law creating the Authority violates Article II of the Constitution, which vests all executive power in the president. The law gives the Authority executive powers, yet it gives the president absolutely no role in the selection or removal of Authority officers.

Second, our brief notes an ironic interaction between this case and the Supreme Court’s 1935 decision in Humphrey’s Executor v. United States. In that decision, the Supreme Court dubiously held that the FTC is merely a “legislative or … judicial aid.” If the court declines to overrule Humphrey’s Executor and it is still good law, Congress has impermissibly subordinated a private regulatory body exercising executive power to a mere “legislative or … judicial aid”—the FTC. That’s because the horseracing safety statute provides the Authority officials at least two layers of removal protection, which the court condemned in Free Enterprise Fund v. PCAOB (2010).

Lastly, Congress has historically delegated only ministerial regulatory tasks to private actors. The delegation of executive and legislative powers to a private body like the Authority is unprecedented and lacks any meaningful analog from the Founding era.

The law creating the Authority prevents accountability to the elected President. A headless fourth branch of government—the FTC—supervising a headless fifth—a private nonprofit with executive power—is a scheme totally foreign to our constitutional design. The Supreme Court should grant the petition, resolve the circuit split, and reverse the Eighth Circuit.