Will the Supreme Court finally address the private nondelegation doctrine?
The Supreme Court is poised to tackle a key separation of powers issue this term: Can Congress delegate significant policymaking and enforcement power to private entities? Three circuit courts have reached divergent conclusions over the issue in cases challenging the Horseracing Integrity and Safety Act. After decades of confusion about the limits of private delegations, this split among the circuit courts presents a prime opportunity for the Supreme Court to provide clarity.
The Supreme Court has been engaged in a project to restore the Constitution’s separation of powers, and it recently surged forward. Last term, the Court limited judicial deference to executive branch agencies in Loper Bright v. Raimondo. And SEC v. Jarkesy guaranteed that many people facing crushing civil penalties in administrative adjudications can receive a jury trial in an Article III court—as the Seventh Amendment promises. But other separation of powers issues linger. Many saw a missed opportunity in 2019 when the Court declined to reinvigorate the nondelegation doctrine, one of the most vital parts of the Constitution’s structure, in Gundy v. United States. Even so, several Justices dissented in Gundy, and others have signaled their willingness to reassess the doctrine.
The Court can start this term by reviewing a key but often overlooked part of the Constitution’s nondelegation doctrine: delegations to private actors.
Much recent litigation and scholarly attention focuses on the public nondelegation doctrine’s limitations on inter-branch delegations. Yet the constitutional constraints on congressional delegations to private parties spring from the same principle: We the People have limited the federal government’s powers by enumerating those powers in the Constitution. The powers are then divided among three branches—legislative, executive, and judicial—and can be wielded only by certain governmental actors within those branches. No one else may exercise these powers, including private parties. As John Locke recognized, “When any one, or more, shall take upon them to make laws, whom the people have not appointed so to do, they make laws without authority, which the people are not therefore bound to obey.”
Three cases before the Court this term from the Fifth, Sixth, and Eighth Circuits concern Congress’s delegation of lawmaking and enforcement power under the Horseracing Integrity and Safety Act. Congress passed HISA in 2020 to federalize regulation of the thoroughbred horseracing industry. But rather than empower a federal agency, Congress instead conferred on a private entity—the Horseracing Integrity and Safety Authority—the power to both write and enforce the rules. The Authority operates as a private corporation with nine board members not appointed or removable by any government officer. It is responsible for crafting the rules governing the horseracing industry, which the Federal Trade Commission must approve if they are “consistent with” HISA’s statutory scheme—exercising no policy judgment of its own. And once the FTC approves those rules, the statute then delegates broad enforcement powers to the Authority—the same private entity that wrote the rules.
Trouble began right out of the starting gate for HISA. Shortly after Congress enacted the statute, a group of horsemen sued, alleging that the Act violated the private nondelegation doctrine. The Fifth Circuit agreed and held that the statute’s rulemaking provision was unconstitutional under Supreme Court precedent from over 80 years ago—Carter v. Carter Coal (1936) and Sunshine Anthracite Coal Co. v. Adkins (1940). These precedents established what is known as the private nondelegation doctrine.
Since the Supreme Court handed down those cases, lower courts have struggled to implement the doctrine coherently. Boiled down, courts have mostly deferred to Congress, permitting delegations outside the government if a federal agency retains enough “supervision” over the private entity. Yet, even under that amorphous standard, the Fifth Circuit held that HISA had unconstitutionally delegated power to the Authority because the statute let a private party establish rules that would take binding effect before the FTC could substantively approve or change them based on its policy discretion. The Act thus did not provide enough government oversight even under the lax version of the doctrine that has taken root.
In response to the Fifth Circuit’s decision, Congress hastily adopted an amendment to the statute. That amendment gave the FTC more oversight of the Authority’s rulemaking power, allowing it to “abrogate, add to, and modify” the Authority’s rules after they become part of the federal law. But Congress did not touch the Act’s requirement that the FTC approve the Authority’s rules if they are “consistent” with HISA’s statutory scheme. This means the Authority still may issue regulations with the force of law before the FTC substantively reviews them. Nor did Congress amend the statute’s broad delegation of enforcement power to the Authority.
Post-amendment, litigation over HISA persisted in the Fifth, Sixth, and Eighth Circuits. The Sixth Circuit held that Congress’s amendment allowing the FTC to “abrogate, add to, or modify” the Authority’s rules bestowed on the FTC sufficient oversight of the Authority’s rulemaking power, and also that the agency could use that rulemaking power to fix any delegation problem with the statute, including the Act’s direct delegation of enforcement power to the Authority. For example, in the Sixth Circuit’s view, the FTC could issue preemptive rules to require the Authority to “preclear” any rulemaking or enforcement procedure with the agency, which would result in sufficient supervision.
The Fifth Circuit, however, disagreed. It recognized that its prior opinion only tackled whether HISA’s rulemaking scheme violated the private nondelegation doctrine, but did not confront the Act’s enforcement provisions. And while the Fifth Circuit agreed with the Sixth Circuit that Congress had solved the rulemaking delegation problem, it disagreed that the amendment fixed the problem of the statute’s delegation of enforcement power to a private entity. HISA’s text empowers the Authority to, for example, investigate horsemen for rule violations, issue subpoenas to aid in those investigations, and sue horsemen in federal court. Because these powers directly emanate from the face of the statutory text, the Fifth Circuit concluded that Congress’s amendment did not authorize the FTC to “rewrite the statute” to make it constitutional.
Shortly after the Fifth Circuit’s decision, the Eighth Circuit, with Judge Gruender dissenting, aligned with the Sixth Circuit to uphold HISA as constitutional. Like the Sixth Circuit, the court held that by giving the FTC new power to “abrogate, add to, and modify” the Authority’s rules, Congress gave the agency carte blanche to curb the Authority’s statutory powers through rulemaking. The court found this change granted the FTC sufficient oversight of the Authority to satisfy the private nondelegation doctrine.
Predicting whether the Supreme Court will grant certiorari to hear an issue is a dicey proposition. But with a clear circuit split over the constitutionality of a federal statute, the chances are better than usual that the Supreme Court will take at least one of these cases and finally confront the private nondelegation doctrine. Several Justices have also noted at various times that the Court should clarify whether the Constitution allows a private entity to wield government power. And the Supreme Court typically takes cases when a federal appeals court declares an act of Congress unconstitutional.
Clarity about the private nondelegation doctrine is vital. Unlike executive agencies, which (at least theoretically) remain subject to presidential oversight and constitutional constraints, private entities function outside the Constitution’s traditional checks and balances. These constraints safeguard individual liberty and ensure democratic accountability. As James Madison explained in Federalist No. 51, the Constitution’s structural protections against the accumulation of power depend on maintaining clear lines between those who legitimately exercise power over the people and those who don’t. Private delegation fundamentally undermines this constitutional structure by creating extra-constitutional power centers outside traditional democratic bounds.
And once the Constitution’s structure crumbles, it spawns other problems for individual liberty. Private delegations often trigger serious due process violations because the federal government’s power is wielded by biased parties, who can establish rules and enforce the law to their advantage. HISA is a prime example. The statute empowers a private organization partly made up of those in the horseracing industry to, among other things, conduct law-enforcement raids on others in the industry. This type of self-dealing is what lead the Supreme Court in Carter v. Carter Coal to describe delegations of power to private entities as “delegation in its most obnoxious form.”
The Constitution’s separation of powers is designed to ensure we do not reach this point—it embodies a prophylactic delineation of federal power that presupposes exercise by accountable government actors to prevent due process problems.
The HISA litigation presents a good vehicle for the Court to continue restoring the Constitution’s separation of powers and uphold these ideals. And at the same time, the Court can provide much-needed clarity for Congress, agencies, and lower courts grappling with the proper boundaries of private participation in the regulation of people’s lives.
This op-ed originally appeared in The Federalist Society on December 12, 2024.
