Case: 23-10520 Document: 80 Page: 1 Date Filed: 07/12/2023

No. 23-10520
___________________________________________________________________

IN THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT
___________________________________________________________________

NATIONAL HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION;

ARIZONA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION;
ARKANSAS HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION;
INDIANA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION;
ILLINOIS HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION;
LOUISIANA HORSEMEN’S BENEVOLENT AND PROTECTIVE ASSOCIATION;
MOUNTAINEER PARK HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; NEBRASKA HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; OKLAHOMA HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; OREGON HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; PENNSYLVANIA HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; WASHINGTON HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; TAMPA BAY HORSEMEN’S BENEVOLENT AND PROTECTIVE
ASSOCIATION; GULF COAST RACING, L.L.C.; LRP GROUP, LIMITED; VALLE
DE LOS TESOROS, LIMITED; GLOBAL GAMING LSP, L.L.C.; TEXAS
HORSEMEN’S PARTNERSHIP, L.L.P.,

Plaintiffs—Appellants

STATE OF TEXAS; TEXAS RACING COMMISSION

Intervenor Plaintiffs—Appellants

v.

JERRY BLACK; KATRINA ADAMS; LEONARD COLEMAN; MD NANCY COX;

JOSEPH DUNFORD; FRANK KEATING; KENNETH SCHANZER; HORSERACING
INTEGRITY AND SAFETY AUTHORITY, INCORPORATED; FEDERAL TRADE
COMMISSION; COMMISSIONER NOAH PHILLIPS; COMMISSIONER CHRISTINE
WILSON; LISA LAZARUS; STEVE BESHEAR; ADOLPHO BIRCH; ELLEN
MCCLAIN; CHARLES SCHEELER; JOSEPH DEFRANCIS; SUSAN STOVER; BILL
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THOMASON; LINA KHAN, CHAIR; REBECCA SLAUGHTER, COMMISSIONER;

ALVARO BEDOYA, COMMISSIONER; D. G. VAN CLIEF,
Defendants—Appellees
___________________________________________________________________
Appeal from the United States District Court
For the Northern District of Texas, Lubbock Division
No. 45:21-cv-71
___________________________________________________________________

BRIEF FOR AMICI CURIAE REASON FOUNDATION,

CATO INSTITUTE, COMPETITIVE ENTERPRISE INSTITUTE,
GOLDWATER INSTITUTE, MANHATTAN INSTITUTE FOR
POLICY RESEARCH, AND NISKANEN CENTER
IN SUPPORT OF APPELLANTS
___________________________________________________________________

Professor Alexander Volokh Raffi Melkonian

Emory Law School WRIGHT, CLOSE & BARGER LLP
1301 Clifton Rd. NE One Riverway, Ste. 2200
Atlanta, Georgia 30322 Houston, Texas 77056
404-712-5225 713-572-4321
713-572-4320 (fax)

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SUPPLEMENTAL CERTIFICATE OF INTERESTED PERSONS

Pursuant to Fifth Circuit Rule 29.2, I supplement the certificate of

interested persons provided in the briefs of appellants and appellees by

naming the following persons who have an interest in the outcome of this

litigation:

Amici Curiae:

Reason Foundation

Cato Institute

Competitive Enterprise Institute

Goldwater Institute

Manhattan Institute for Policy Research

Niskanen Center

Counsel for Amici:

Raffi Melkonian
WRIGHT, CLOSE & BARGER LLP
One Riverway, Suite 2200
Houston, Texas 77056

Professor Alexander Volokh

EMORY LAW SCHOOL
1301 Clifton Rd. NE
Atlanta, Georgia 30322

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TABLE OF CONTENTS

SUPPLEMENTAL CERTIFICATE OF INTERESTED PERSONS .......iii

TABLE OF CONTENTS .......................................................................... iv

INDEX OF AUTHORITIES ..................................................................... vi

INTERESTS OF AMICI CURIAE ............................................................ 1

SUMMARY OF ARGUMENT ................................................................... 4

ARGUMENT ............................................................................................. 7

I. Whether the Appointments Clause applies is governed by a

simple test. ....................................................................................... 7

II. Whether the members of the Authority are nominally

“private” is irrelevant. ...................................................................... 8

III. Seeking to apply a rigid public-private distinction here is

misleading. ..................................................................................... 12

A. The Authority is most sensibly characterized as public. ..... 13

B. There are many different public-private distinctions in

constitutional law. ................................................................. 14

C. Constitutional accountability does not depend on the

public-private distinction. ..................................................... 16

IV. If “state actor” status is a relevant factor here, it is plainly

satisfied. ......................................................................................... 17

A. The Lebron test is only one possible way to be a state

actor. ...................................................................................... 18

B. The Authority exercises traditionally exclusive public

functions. ............................................................................... 22

V. The recent statutory amendment does not change this result. .... 25

CONCLUSION ........................................................................................ 26
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CERTIFICATE OF SERVICE................................................................. 28

CERTIFICATE OF COMPLIANCE ........................................................ 29

ECF CERTIFICATION ........................................................................... 30

CERTIFICATE OF CONFERENCE ....................................................... 31

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INDEX OF AUTHORITIES

Cases

Adickes v. S.H. Kress & Co.,

398 U.S. 144 (1970) .............................................................................. 21

Am. Mfrs. Mut. Ins. Co. v. Sullivan,

526 U.S. 40 (1999) .......................................................................... 22, 24

Ass’n of Am. R.R.s v. DOT,

721 F.3d 666 (D.C. Cir. 2013), rev’d on other grounds, 575 U.S.
43 (2015) ......................................................................................... 14, 15

Auffmordt v. Hedden,
137 U.S. 310 (1890) ................................................................................ 9

Blum v. Yaretsky,
457 U.S. 991 (1982) .............................................................................. 23

Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass’n,

531 U.S. 288 (2001) ........................................................................ 19, 21

Buckley v. Valeo,
424 U.S. 1 (1976) .............................................................................. 7, 12

Burton v. Wilmington Parking Auth.,

365 U.S. 715 (1961) .............................................................................. 22

Clinton v. Jones,
520 U.S. 681 (1997) ................................................................................ 9

Collins v. Yellen,
141 S. Ct. 1761 (2021) .......................................................................... 24

Desiderio v. Nat’l Ass’n of Sec. Dealers, Inc.,

191 F.3d 198 (2d Cir. 1999) ................................................................. 22

Edmonson v. Leesville Concrete Co.,

500 U.S. 614 (1991) .............................................................................. 18

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Flagg Bros., Inc. v. Brooks,

436 U.S. 149 (1978) ........................................................................ 18, 24

Free Enterprise Fund v. Public Co. Accounting Oversight Board,

561 U.S. 477 (2010) .......................................................................... 9, 22

Jackson v. Metro. Edison Co.,

419 U.S. 345 (1974) ........................................................................ 23, 24

Kerpen v. Metro. Wash. Airports Auth.,

907 F.3d 152 (4th Cir. 2018) .......................................................... 21, 22

Lebron v. National Railroad Passenger Corp.,

513 U.S. 374 (1995) .................................................................. 17, 18, 19

Lugar v. Edmonson Oil Co., Inc.,

457 U.S. 922 (1982) .............................................................................. 21

Marsh v. Alabama,
326 U.S. 501 (1946) ........................................................................ 22, 23

NHBPA v. Black,
53 F.4th 869 (5th Cir. 2022) .......................................................... 14, 25

NHBPA v. Black,
2023 WL 3293298 (N.D. Tex. May 4, 2023)................................. passim

Nixon v. Condon,
286 U.S. 73 (1932) ................................................................................ 23

Oklahoma v. United States,

62 F.4th 221 (6th Cir. 2023) ................................................................ 25

Rendell-Baker v. Kohn,
457 U.S. 830 (1982) .............................................................................. 23

Rosborough v. Mgmt. & Training Corp.,

350 F.3d 459 (5th Cir. 2003) .......................................................... 20, 24

Sandin v. Conner,
515 U.S. 472 (1995) .............................................................................. 20

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Terry v. Adams,
345 U.S. 461 (1953) .............................................................................. 23

United States v. Arthrex, Inc.,

141 S. Ct. 1970 (2021) ...................................................................... 9, 12

United States v. Germaine,

99 U.S. 508 (1879) .................................................................................. 7

United States v. Hartwell,

73 U.S. (6 Wall.) 385 (1867) ................................................................... 7

United States v. Maurice,

26 F. Cas. 1211 (C.C.D. Va. 1823) ....................................................... 11

Statutes

15 U.S.C. §§ 3054, 3057............................................................................. 7

U.S. Const. art. II ...................................................................................... 8

Rules

FIFTH CIR. R. 29(a)(4)(E)............................................................................ 1

Other Authorities

Officers of the United States Within the Meaning of the

Appointments Clause,
31 Op. O.L.C. 73 (2007) ................................................................. 10, 12

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INTERESTS OF AMICI CURIAE1

Reason Foundation (“Reason”) is a national, nonpartisan, and

nonprofit public policy think tank, founded in 1978. Reason’s mission is

to advance a free society by applying and promoting libertarian principles

and policies—including free markets, individual liberty, and the rule of

law. Reason supports dynamic market-based public policies that allow

and encourage individuals and voluntary institutions to flourish. Reason

advances its mission by publishing Reason Magazine, online

commentary, and policy research reports. To further Reason’s

commitment to “Free Minds and Free Markets,” Reason selectively

participates as amicus curiae in cases raising significant constitutional

issues.

Cato Institute (“Cato”) is a nonpartisan public policy research

foundation founded in 1977 and dedicated to advancing the principles of

individual liberty, free markets, and limited government. Cato’s Robert

A. Levy Center for Constitutional Studies was established in 1989 to

1 Counsel certifies that (1) no counsel for a party authored this brief in whole or in
part; (2) no party or party’s counsel contributed money that was intended to fund
the preparation or submission of this brief; and (3) no person or entity—other than
amici curiae—contributed money intended to fund the preparation or submission
of this brief. See FIFTH CIR. R. 29(a)(4)(E). All counsel consent to the filing of this
brief.

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promote the principles of limited constitutional government that are the

foundation of liberty. Toward those ends, Cato publishes books and

studies, conducts conferences, produces the annual Cato Supreme Court

Review, and files amicus briefs.

Competitive Enterprise Institute (“CEI”) is a nonprofit 501(c)(3)

organization incorporated and headquartered in Washington, D.C.,

dedicated to promoting the principles of free markets and limited

government. Since its founding in 1984, CEI has focused on raising public

understanding of the problems of overregulation. It has done so through

policy analysis, commentary, and litigation.

Goldwater Institute (“GI”) is a nonpartisan public policy and

research foundation devoted to advancing the principles of limited

government, individual freedom, and constitutional protections through

litigation, research, and advocacy. Through its Scharf-Norton Center for

Constitutional Litigation, GI litigates and files amicus briefs when its or

its clients’ objectives are implicated. Among GI’s priorities is the

protection of individual rights against the often unaccountable

regulatory agencies which contradict the separation of powers and

exercise authority in undemocratic ways.

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Manhattan Institute for Policy Research (“MI”) is a nonpartisan

public policy research foundation whose mission is to develop and

disseminate new ideas that foster greater economic choice and individual

responsibility. To that end, MI has sponsored scholarship and filed briefs

supporting economic freedom and property rights.

Niskanen Center (“Niskanen”) is a nonprofit, nonpartisan 501(c)(3)

public policy think tank and advocacy organization dedicated to

strengthening liberal democratic governance and promoting widespread

prosperity and opportunity. Niskanen supports a vision of market

liberalism that is rooted in an effective public sector, a competitive

private sector, and that is committed to upholding the principles of a

pluralistic and open society that encourages engagement, cooperation,

discussion, and learning. Niskanen has a strong interest in protecting

constitutional separation of powers and improving public trust in

democratic institutions and processes.

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SUMMARY OF ARGUMENT

1. Whether a particular person is an Officer, and thus subject to the

Appointments Clause, is governed by a simple test: whether, as a

“continuing and permanent” matter, that person “exercis[es] significant

authority pursuant to the laws of the United States.” The members of the

Horseracing Integrity and Safety Authority are plainly Officers by that

standard.

2. Whether the members of the Authority are nominally private is

unimportant for Officer status. The statutory labeling of the Authority as

private, and the fact that the Authority is organized as a private

organization under state law, are constitutionally irrelevant, and in any

event Appointments Clause doctrine does not demand that an Officer

formally be a public employee.

3. The District Court’s use of a rigid public-private distinction here

was misguided. First, the fact that the members of the Authority wield

quintessentially governmental powers—rulemaking, investigation, and

enforcement—means that they should be considered public for

Appointments Clause purposes, regardless of whether they are classified

as private under the statute or under state law.

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Second, to the extent some public-private distinction is relevant

here, that distinction can apply differently for different doctrines, so it is

a mistake to use public-private distinctions from the Appointments

Clause, the Nondelegation Doctrine, and the State Action Doctrine

interchangeably. Thus, the previous panel’s assumption that the

Authority was private for Nondelegation Doctrine purposes does not

foreclose this Appointments Clause challenge, even if one believes that

the Appointments Clause does not apply to private entities.

And third, regardless of the public-private distinction, notions of

political accountability demand that the Authority be subject to

Appointments Clause constraints.

4. Even if the District Court were correct to assume that the State

Action Doctrine is relevant here, it was wrong to determine that the

Authority is not a state actor. On the contrary, this is an easy case for

state action, because rulemaking, investigation, and enforcement of

federal law are traditionally exclusive public functions.

5. The December 2022 statutory amendment does not change any

of the foregoing, because it leaves all of the Authority’s powers intact. In

the limited context of rulemaking, it is now true that the FTC may alter

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any rule promulgated by the Authority. But unless and until the FTC

conducts a rulemaking to do so, the Authority’s rules remain binding. At

most, this limited FTC oversight is possibly relevant to whether the

Authority members are principal or inferior Officers.

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ARGUMENT

I. Whether the Appointments Clause applies is governed by a

simple test.

In Buckley v. Valeo, 424 U.S. 1, 126 (1976), the Supreme Court held

that Officers of the United States are those who “exercis[e] significant

authority pursuant to the laws of the United States.” Other cases

establish that, to be an Officer, one must exercise such authority as a

“continuing and permanent” (rather than “occasional and intermittent”)

matter. See United States v. Hartwell, 73 U.S. (6 Wall.) 385, 393 (1867);

United States v. Germaine, 99 U.S. 508, 512 (1879). Officer status is

significant, because only Officers are subject to the requirements of the

Appointments Clause—in this case, the requirements of presidential

nomination and Senate confirmation.

By this standard, the members of the Horseracing Integrity and

Safety Authority (“Authority”) are plainly Officers. The Authority has

rulemaking, investigatory, and enforcement power—core governmental

powers that are not available to ordinary citizens. 15 U.S.C. §§ 3054,

3057. The Authority’s rules have not only binding force but also

preemptive effect over state law. Id. § 3054(b). And the Authority is a

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continually existing organization, whose members may exercise their

powers full-time.

It is simply inconceivable that a standing organization with such

substantial powers is not “exercising significant authority pursuant to

the laws of the United States.” If the members of the Authority were

federal employees, this result would not be remotely controversial; it

would be clear that the Authority should be treated like a traditional

federal regulatory agency. If the members of the Authority are principal

Officers, they must go through the process of presidential nomination and

Senate confirmation before they can exercise their governmental powers;

but the same is true even if they are inferior Officers, since Congress has

not vested their appointment “in the President alone, in the courts of law,

or in the heads of departments.” U.S. Const. art. II, § 2.

II. Whether the members of the Authority are nominally

“private” is irrelevant.

The above factors—whether, as a “continuing and permanent”

matter, one “exercis[es] significant authority pursuant to the laws of the

United States”—do not depend on whether one is formally a federal

government employee. It is true that, by statute, the Authority is labeled

a “private, independent, self-regulatory, nonprofit corporation,”

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§ 3052(a), and the Authority itself is incorporated under Delaware law,

but Congress may not evade a core doctrine of political accountability by

statutory labeling, or by choosing to assign significant continuing

governmental powers to actors outside the formal federal governmental

structure. The Authority is a federal regulatory agency—and should be

treated as one—because of its powers, despite its nontraditional labeling.

Because the Authority engages in rulemaking and law

enforcement, it is wielding executive power, and such power “acquires its

legitimacy and accountability to the public through a clear and effective

chain of command down from the President, on whom all the people vote.”

United States v. Arthrex, Inc., 141 S. Ct. 1970, 1979 (2021) (quoting Free

Enterprise Fund v. Public Co. Accounting Oversight Board, 561 U.S. 477,

496–97 (2010) (quoting Clinton v. Jones, 520 U.S. 681, 712–13 (1997)

(Breyer, J., dissenting))) (internal quotation marks omitted).

If actors formally outside the federal government could not count as

Officers—and could thus be granted governmental powers exempt from

Appointments Clause requirements—some classic cases could have been

radically simplified. Consider, for instance, Auffmordt v. Hedden, 137

U.S. 310 (1890), where an importer challenged the appointment of an

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expert merchant appraiser on the grounds that the appraiser should have

been appointed as an Officer. The Supreme Court ruled that the

appraiser was not an Officer and was thus exempt from Appointments

Clause constraints, but it did not simply rely on the fact that he was not

a federal employee. Rather, the Court focused on factors like the tenure,

duration, compensation, and duties of the office, and particularly

whether the appraiser’s duties were “occasional and temporary” or

“continuing and permanent.” Id. at 327-38. None of that discussion would

have been necessary if the Appointments Clause simply didn’t apply to

parties outside the federal governmental structure.

The Office of Legal Counsel, after canvassing caselaw and

voluminous historical evidence, has also taken the same view. “[I]t is not

within Congress’s power to exempt federal instrumentalities from . . . the

Appointments Clause; . . . Congress may not, for example, resort to the

corporate form as an artifice to evade the solemn obligations of the

doctrine of separation of powers.” Officers of the United States Within the

Meaning of the Appointments Clause, 31 Op. O.L.C. 73, at *2 (2007)

(citations and internal quotation marks omitted). A key element in

whether one is an Officer is whether one exercises “delegated sovereign

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authority,” which “one could define . . . as power lawfully conferred by the

Government to bind third parties, or the Government itself, for the public

benefit. . . . [S]uch authority primarily involves the authority to

administer, execute, or interpret the law,” id. at *11, and generally

includes “functions in which no mere private party would be authorized

to engage,” id. at *14.

“A person’s status as an independent contractor,” the OLC

continued, “does not per se provide an exemption from the Appointments

Clause,” id. at *18, though most contractors turn out to be exempt

because they usually merely provide goods and services rather than

wielding power, and “in most cases . . . their actions . . . have no legal

effect on third parties or the Government absent subsequent sanction,”

id. at *19. Appointments Clause constraints, OLC stressed, do apply “in

those rare cases where a mere contractor [does] exercise delegated

sovereign authority (and [does] so on a continuing basis).” Id. at *20. For

instance, in United States v. Maurice, Chief Justice Marshall, riding

circuit, held that James Maurice, an “agent of fortifications” and

apparently a mere contractor, was in fact an officer, and thus invalidly

appointed, because of his “important duties.” 26 F. Cas. 1211, 1214–16

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(C.C.D. Va. 1823) (No. 15,747) (Marshall, Cir. Justice); see also 31 Op.

O.L.C. 73, at *20 (citing Maurice).

Likewise, whether someone is paid by the government is not

relevant to whether they are an Officer. Id. at *36–*38.

It is true that Supreme Court cases occasionally characterize

Officers as being “appointees,” Buckley, 424 U.S. at 126, or imply that

they are “functionaries,” id. at 126 n.162; a recent opinion contrasted

Officers with “‘lesser functionaries’ such as employees or contractors,”

Arthrex, 141 S. Ct. at 1980. These words do not clearly exclude all private

parties, even ones who exercise significant federal authority as a

continuing matter. But even if they did, it is significant that the public-

private question was not at issue in those cases. The vast majority of

cases concern the Officer status of traditional governmental employees,

and so statements assuming that Officers formally work for the

government should be interpreted with that context in mind; anything

those cases might say about private Officers is dictum.

III. Seeking to apply a rigid public-private distinction here is

misleading.

Trying to rigidly characterize the Authority here as “public” or

“private” is misleading, for three reasons. First, in light of the Authority’s

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governmental powers, the Authority is most sensibly characterized as

public. Second, there is no unitary public-private distinction for all areas

of law; different doctrines have their own purposes and their own

definitions, and so the District Court was wrong to treat them all as

interchangeable. And third, principles of constitutional accountability

demand that the Authority be subjected to Appointments Clause

constraints, regardless of whether it is characterized as private.

A. The Authority is most sensibly characterized as public.

To even use the term “private” in the context of the Authority is

inappropriate. Once we (rightly) ignore the statutory labeling of the

Authority as “private,” why would we even consider characterizing it as

private for constitutional purposes? After all, private parties do not

generally have rulemaking, investigatory, and enforcement power under

federal law. If there is to be any public-private distinction in

Appointments Clause doctrine, any person or entity that wields such

classically governmental powers should properly be considered “public”—

regardless of whether they formally work for or are officially located in

the government, and regardless of whether they’re part of an association

labeled private or organized under private law. And if, in addition, that

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power is federal, significant, and “continuing and permanent,” such an

actor should also necessarily be considered an Officer for Appointments

Clause purposes.

B. There are many different public-private distinctions in

constitutional law.

The District Court assumed that the Nondelegation Doctrine, the

State Action Doctrine, and the Appointments Clause all used the same

concept of “private.” Thus, it concluded, the earlier panel’s assumption

that the Authority is private for Nondelegation Doctrine purposes,

NHBPA v. Black, 53 F.4th 869, 872–75, 880–90 (5th Cir. 2022), means

that it must also be private for Appointments Clause purposes, NHBPA

v. Black, 2023 WL 3293298, at *10-13 (N.D. Tex. May 4, 2023). And in

the alternative, the District Court decided, the fact that the Authority is

not a “state actor” for purposes of the State Action Doctrine also implies

that the Authority is private for purposes of the Appointments Clause.

Id. at *13–*15.

But this is wrong on multiple levels. For instance, the D.C. Circuit

has held (discussing Amtrak) that an entity can be private for purposes

of the Nondelegation Doctrine even if it is a state actor under the State

Action Doctrine. See Ass’n of Am. R.R.s v. DOT, z, 676–77 (D.C. Cir.

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2013), rev’d on other grounds, 575 U.S. 43 (2015). “Just because . . .

Amtrak [is] a government agency for purposes of the First Amendment

[and other rights provisions] does not dictate the same result with respect

to all other constitutional provisions.” Id. at 676.

Similarly, even if the District Court were right that private actors

are excluded from the Appointments Clause, an entity that is “private”

for Nondelegation Doctrine purposes need not thereby be “private” for

Appointments Clause purposes. Therefore, the earlier panel’s

assumption that the Authority is private for Nondelegation Doctrine

purposes, even if it is taken to be an actual holding and part of the law of

the case (as the District Court assumed, NHBPA, 2023 WL 3293298, at

*10–*13), does not foreclose appellants’ current Appointments Clause

argument.

Moreover, as discussed in Part IV below, the District Court was

quite wrong to decide that the Authority is not a state actor: on the

contrary, the Authority fits easily under the State Action Doctrine

because it exercises traditionally exclusive public functions. As discussed

above, “not a state actor” under the State Action Doctrine is not

necessarily the same as “private” under the Appointments Clause, so the

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District Court’s ruling to the contrary is not dispositive for Appointments

Clause purposes. Still, the fact that the Authority performs traditionally

exclusive public functions further strengthens the case that the

Authority’s members must be Officers subject to the Appointments

Clause.

C. Constitutional accountability does not depend on the

public-private distinction.

But ultimately, whether the authority is characterized as public or

private is not very important. One could argue that private persons

exercising significant federal governmental power are nonetheless

Officers; or one could instead argue, as above, that such persons should

be classified as public and should be considered Officers for that reason;

and one might make such an argument with or without reference to the

State Action Doctrine. But none of this playing with characterization

should have any doctrinal relevance for purposes of the Appointments

Clause. As a constitutional matter, those who, on a continuing basis,

engage in rulemaking, investigation, and enforcement of federal law

must be held politically accountable, regardless of Congress’s attempts to

avoid such accountability by creative use of coercive nonprofits. The

virtue of Buckley’s “exercising significant authority pursuant to the laws

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of the United States” test is that it applies to everyone, avoiding

potentially tricky public-private questions entirely.

IV. If “state actor” status is a relevant factor here, it is plainly

satisfied.

The District Court assumed that the State Action Doctrine and the

Appointments Clause used the same public-private distinction: if an

entity is not a state actor, it is thereby private and thus not subject to

Appointments Clause requirements. As explained above, this is not

necessarily so. But even if the District Court was correct in this

assumption, it was mistaken in its conclusion that the Authority is not a

state actor, for the following two reasons.

First, the District Court wrongly assumed that the test the

Supreme Court stated in Lebron v. National Railroad Passenger Corp.,

513 U.S. 374 (1995), was the only way that an entity could become a state

actor. State action doctrine contains many different paths by which a

person or entity can be a state actor, and the Lebron path is only one of

them.

Second, the relevant state action test here is the “traditionally

exclusive public function” test. Under that test, the Authority is the

quintessential example of a state actor, because its powers—

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investigation, enforcement, and regulation—are traditionally exclusive

public functions.

It is true that the State Action Doctrine can sometimes be hard to

apply. See NHBPA, 2023 WL 3293298, at *13 (“Even the Supreme Court

has admitted that the cases deciding when private action might be

deemed that of the state have not been a model of consistency.” (quoting

Lebron, 513 U.S. at 378 (quoting Edmonson v. Leesville Concrete Co., 500

U.S. 614, 632 (1991) (O’Connor, J., dissenting)) (internal quotation marks

omitted))). But the Doctrine turns out to be quite easy to apply in this

case, and it clearly cuts in favor of state action.

A. The Lebron test is only one possible way to be a state

actor.

The State Action Doctrine, which implements the basic principle

that “most rights secured by the Constitution are protected only against

infringement by governments,” is fundamental in constitutional law.

Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 156 (1978). “If [constitutional

rights are] not to be displaced . . . , [the] ambit [of the State Action

Doctrine] cannot be a simple line between [government] and people

operating outside formally governmental organizations, and the deed of

an ostensibly private organization or individual is to be treated

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sometimes as if [the government] had caused it to be performed.”

Brentwood Acad. v. Tenn. Secondary Sch. Athletic Ass’n, 531 U.S. 288,

295 (2001).

What are these “sometimes” when an individual’s action counts as

that of the government? The caselaw has distinguished a variety of

different contexts. For instance, as the Supreme Court held in Lebron,

513 U.S. at 394–400, corporations (like Amtrak) count as “part of the

government” if they are created by special law to further governmental

objectives and are mostly directed by government appointees.

The District Court recognized that these sorts of special

corporations are state actors, and that the Authority does not fall within

this category. NHBPA, 2023 WL 3293298, at *14. But it wrongly

suggested that the Lebron path is the only path to state action. Id. at *13

(“This case law teaches that to be considered a government entity for

constitutional purposes, a corporation must be created by the

government.”); id. at *14 (“Courts continue to emphasize the requirement

that a corporation is only ‘part of the government’ if it is created by

special law.” (emphasis added)).

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A moment’s reflection suggests that the District Court’s suggestion

is implausible. If the Authority weren’t a state actor, it wouldn’t be bound

by the First Amendment, the Due Process Clause, or most other

constitutional rights. That would mean that the Authority would be able

to adopt an anti-doping rule that discriminated against Democrats or

racetrack safety regulations that applied differently to Christians than

to Jews. Surely that cannot be the case for rules that have binding force

on the regulated community. If private corporations incorporated under

state law couldn’t be state actors, then private prison firms would be free

to impose “atypical and significant hardship” on inmates without the

sorts of protective procedures that the Due Process Clause requires in

public prisons. Sandin v. Conner, 515 U.S. 472, 484 (1995). But such a

suggestion is virtually self-refuting: private prisons and public prisons

are subject to identical substantive constitutional standards, even

though private prison firms are private corporations. The reason, as this

Circuit has rightly recognized, is that private prison firms are state

actors. See Rosborough v. Mgmt. & Training Corp., 350 F.3d 459, 460–61

(5th Cir. 2003).

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And indeed, the District Court’s suggestion—that the Lebron path

to state action is exclusive—does turn out to be doctrinally incorrect.

There are actually several ways for private parties, including

associations or corporations, to become state actors.

The Lebron path may well be appropriate for certain types of

entities. For instance, the Metropolitan Washington Airports Authority

manages specific properties (D.C.-area airports) and lacks federal

regulatory power; a test designed for a quasi-commercial entity that

provides passenger rail service seems like a good fit for such an entity.

See, e.g., Kerpen v. Metro. Wash. Airports Auth., 907 F.3d 152, 158–60

(4th Cir. 2018).

But a private party’s acts can also be state action if the government

is entwined in its management or control. See Brentwood Acad., 531 U.S.

at 296–303. Or if the private party jointly participates with government

actors in some coercive activity. See Lugar v. Edmonson Oil Co., Inc., 457

U.S. 922, 941–42 (1982). Or if the private party performs an act under

the coercive pressure or significant encouragement of the government.

See, e.g., Adickes v. S.H. Kress & Co., 398 U.S. 144, 170–71 (1970). Or if

the government “insinuate[s] itself into a position of interdependence”

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with the private party. See Burton v. Wilmington Parking Auth., 365 U.S.

715, 725 (1961). Or—this one is very important—if the private party

performs a traditionally exclusive public function. See, e.g., Marsh v.

Alabama, 326 U.S. 501 (1946). Indeed, some of the cases cited by the

District Court recognize the variety of subdoctrines that can support a

finding of state action. See, e.g., NHBPA, 2023 WL 3293298, at *14 (citing

Desiderio v. Nat’l Ass’n of Sec. Dealers, Inc., 191 F.3d 198, 206 (2d Cir.

1999) (citing a variety of state-action cases)); id. at *15 (citing Kerpen,

907 F.3d at 159 (same)).

And these various tests are tests of inclusion, not of exclusion: all it

takes to be a state actor is to satisfy any one of these tests. Thus, some

cases, like Free Enterprise Fund, 561 U.S. at 485–86, have indeed used

Lebron to find state action, but of course this doesn’t mean that state

action is absent when Lebron doesn’t apply. That the Authority doesn’t

fit under the Lebron test is thus unimportant: it can still qualify as a

state actor under any of the other tests.

B. The Authority exercises traditionally exclusive public

functions.

And the relevant test is clear here: it’s the “traditionally exclusive

public function” test. See Am. Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S.

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40, 55 (1999). The Supreme Court has found state action in several cases

where a private party has exercised “powers traditionally exclusively

reserved to the [government].” Jackson v. Metro. Edison Co., 419 U.S.

345, 352 (1974). For instance, political parties (even though they are

formally private associations) are engaged in state action when they

determine their candidates in party primaries, because, “if heed is to be

given to the realities of political life, [parties] are now agencies of the

state.” Nixon v. Condon, 286 U.S. 73, 84 (1932); see also Terry v. Adams,

345 U.S. 461, 468–70 (1953). As another example, a corporation engages

in state action when it runs a municipality and performs the full range

of municipal functions. See Marsh v. Alabama, 326 U.S. 501, 505–07

(1946).

The Supreme Court has been careful about expanding this

category, especially when there is a strong tradition of certain services

being provided by the private sector. Thus, schooling is not a traditionally

exclusive public function, see Rendell-Baker v. Kohn, 457 U.S. 830, 842

(1982); neither is nursing care, see Blum v. Yaretsky, 457 U.S. 991, 1012–

13 (1982); neither is the provision of electricity, see Metro. Edison, 419

U.S. at 352–53; neither is the settlement of debtor-creditor disputes, see

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Flagg Bros., 436 U.S. at 159–63; and neither is the provision of workers’

compensation benefits, see Sullivan, 526 U.S. at 55–57.

But it is clear that certain functions do satisfy this test. In

Metropolitan Edison, the Supreme Court suggested that powers

“traditionally associated with sovereignty, such as eminent domain,”

would qualify, 419 U.S. at 353, which is why the Circuit Courts (including

this one) have surely been correct to hold that private prison firms are

state actors, see, e.g., Rosborough, 350 F.3d at 460–61. Similarly, in

Collins v. Yellen, 141 S. Ct. 1761 (2021), the Supreme Court rejected a

claim that the Fair Housing Finance Agency was a private party when it

acted as a conservator or receiver, stressing the range of governmental

powers that the FHFA exercised. Id. at 1785–86.

Here, likewise, the powers the Authority wields—investigation,

enforcement, and rulemaking—are quintessentially governmental. It is

virtually self-evident that this is state action. Thus, even if we assume

that only state actors are subject to the Appointments Clause, this factor

is plainly satisfied here.

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V. The recent statutory amendment does not change this

result.

In November 2022, the previous panel held that the delegation of

power to the Authority violated the Nondelegation Doctrine. NHBPA v.

Black, 53 F.4th 869, 880–90 (5th Cir. 2022). In December 2022, in

response to that ruling, Congress amended the Horseracing Integrity and

Safety Act to provide that the FTC, by notice-and-comment rulemaking

under § 553 of the APA, “may abrogate, add to, and modify” the

Authority’s rules. 15 U.S.C. § 3053(e). The Sixth Circuit later held that

this statutory amendment, by beefing up FTC oversight of the Authority,

cured the nondelegation problem. Oklahoma v. United States, 62 F.4th

221, 225 (6th Cir. 2023).

But regardless of the effect of the amendment on Nondelegation

Doctrine analysis, the amendment makes no difference to the foregoing

Appointments Clause discussion. The amendment has no effect on any of

the Authority’s non-rulemaking powers (i.e., its investigatory and

enforcement powers). And even in the context of rulemaking, all the

Authority’s rulemaking powers are left intact. All that has changed is

that, if the FTC disagrees with any rule promulgated by the Authority, it

can later conduct a new rulemaking to “abrogate, add to, [or] modify” that

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rule. Unless and until that happens, the Authority’s rule is unchanged

and applies in full force.

The Authority members thus still “exercis[e] significant authority

pursuant to the laws of the United States.” At most, the FTC’s new

oversight authority might affect what kind of Officers the Authority

members are—principal or inferior. But it does not affect whether they

are Officers.

CONCLUSION

The structure of the Authority violates the separation of powers

because the members of the Authority, although Officers, are not

appointed with presidential nomination and Senate confirmation, as the

Appointments Clause requires.

The Appointments Clause does not depend on any public-private

distinction; rather, all that matters is whether, as a “continuing and

permanent” matter, a person “exercis[es] significant authority pursuant

to the laws of the United States.” The members of the Authority are

plainly Officers by that standard. Even if a public-private distinction

were relevant here, the extent of the Authority’s power should be enough

to categorize it as “public,” regardless of how the Authority is labeled

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under the statute or under state law. And, to the extent this is relevant,

the Authority is also a state actor because rulemaking, investigation, and

enforcement of federal law are traditionally exclusive public functions.

Finally, there is nothing in the December 2022 statutory

amendment that alters any of this reasoning: Congress did not change

any of the Authority’s powers, only giving the FTC the power to conduct

a later rulemaking in case it wants to change any of the Authority’s rules.

Respectfully Submitted,

/s/ Raffi Melkonian

Raffi Melkonian
WRIGHT, CLOSE & BARGER, LLP
One Riverway, Suite 2200
Houston, Texas 77056
713-572-4321
713-572-4320 (fax)
[email protected]

Counsel for Amici Curiae

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CERTIFICATE OF SERVICE

This is to certify that on July 12, 2023, a true and correct copy of
the foregoing document was filed with the clerk of the court for the United
States Court of Appeals for the Fifth Circuit, using the electronic case
filing system of the court. The electronic case filing system sent a “Notice
of Electronic Filing” to the attorneys of record who have consented in
writing to accept this Notice as service of this document by electronic
means.

/s/ Raffi Melkonian

Raffi Melkonian

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 Case: 23-10520 Document: 80 Page: 37 Date Filed: 07/12/2023

CERTIFICATE OF COMPLIANCE

1. This brief complies with the type-volume limitation of Fed. R. App.

P. 32(a)(7)(B) because this brief contains 4,422 words, excluding the
parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App.

P. 32(a)(5) and the type style requirements of Fed. R. App. 32(a)(6)
because this brief has been prepared in proportionally spaced
typeface using Microsoft Word 2007 in Century Schoolbook
(Scalable) 14 pt. for text and Century Schoolbook (Scalable) 12pt for
footnotes.

/s/ Raffi Melkonian

Raffi Melkonian

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ECF CERTIFICATION

I hereby certify (i) the required privacy redactions have been made
pursuant to 5th Cir. R. 25.2.13; (ii) the electronic submission is an exact
copy of any paper document submitted pursuant to 5th Cir. R. 25.2.1; (iii)
the document has been scanned for viruses and is free of viruses; and (iv)
the paper document will be maintained for three years after the mandate
or order closing the case issues, pursuant to 5th Cir. R. 25.2.9.

/s/ Raffi Melkonian

Raffi Melkonian

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CERTIFICATE OF CONFERENCE

I hereby certify that I have conferred with counsel for all parties in
this litigation, and they consent to the filing of this brief.

/s/ Raffi Melkonian

Raffi Melkonian

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