NY Statewide Coalition of Hispanic Chambers of Commerce v NYC Dep’t of Health (2014) H&FLR 2014-45

New York Statewide Coalition of Hispanic Chambers of Commerce and Ors v New York City Department of Health and Mental Hygiene and Ors (2014) H&FLR 2014-45

New York Court of Appeals

26 June 2014

Coram: Lippman CJ, Pigott, Graffeo, Smith, Abdus-Salaam and Read JJ

Appearing for the Appellant: Mr Richard Dearing (of New York City Law Department – Appeals Division)
Appearing for the Respondent: Mr Richard P. Bress (of Latham & Watkins LLP)
Numerous parties appeared as amici curiae.

Catchwords: New York – sugary drinks – containers – limitation – separation of powers – tests – arbitrary.

Facts: In 2012 the appellant Board adopted an amendment to the New York City Health Code (§81.53) which prohibited the sale of sugary drinks in containers of greater than 16 fluid ounces. The rule included a specific definition of ‘sugary drink’ and did not apply to supermarkets or convenience stores.

The respondent Coalition sought a declaration that the amendment was invalid. This declaration was initially made by the Supreme Court of New York County: NY Statewide Coalition of Hispanic Chambers of Commerce v NYC Dep’t of Health, 2013 NY Slip Op 30609(U). An appeal by the Board was dismissed: NY Statewide Coalition of Hispanic Chambers of Commerce v NYC Dep’t of Health, 110 AD.3d 1 (1st Dept, 2013). The Board appealed.

Held: Per Pigott, Graffeo and Smith JJ, dismissing the appeal –

1. The Board’s authority is limited to enacting regulations for carrying out the powers and duties delegated to it by Federal, State or local law. It does not have legislative power.

Grossman v Baumgartner, 17 NY.2d 345 (1966); Shulman v NYC Health & Hospitals Corp, 38 NY.2d 234 (1975); People v Blanchard, 288 NY 145 (1942), considered.

2. The New York City Charter sets up a separation of powers. There is no bright-line test for assessing whether a regulatory agency has trespassed into the legislative arena. However, four factors may, when viewed in combination, indicate that an agency has breached the separation of power. The factors are –

(a) Has the agency balanced the competing interests of public health and economic cost in order to reach its own view of sound public policy? In considering this factor, it should be noted that undertaking such a cost-benefit analysis is part of reasonable regulation, and that an agency which enacted rules without considering whether the benefits outweigh the costs would be acting unreasonably*. However, it will be relevant to consider whether the legislature has given any guidelines as to how the costs and benefits are to be weighed. Judgments involving difficult and complex choices among broad policy goals are a matter for the legislature.

(b) Has the agency created a comprehnsive set of rules without the benefit of public guidance? In the present case it was relevant that the legislature had not established health policy goals with regard to sugary beverages which the rule could relate to.

(c) Does the challenged rule govern an area where a legislative body has repeatedly tried to reach agreement in the face of significant public debate?

(d) Did the development of the rule require expertise in a specialised area.

Boreali v Axelrod, 71 NY.2d 1 (1987), followed.

Per Abdus-Salaam J, concurring in the result –

3. The Board engaged in improper law making by setting broadly applicable policy affecting a large part of the New York population, enacting a rule which involved a value judgment as to voluntary behaviour, addressing a field the legislature has considered but not acted upon, and by adopting a rule which did not respond to a health problem with a clear cause**.

4. Semble, the law does not establish a rigid decisional framework to be applied in future when considering the actions of administrative agencies.

Boreali v Axelrod, 71 NY.2d 1 (1987), not followed.

Per Read J and Lippman CJ, dissenting –

5. The Board’s history establishes that has the delegated authority of the New York State Legislature to regulate public health in New York City. The Boards regulations have the force and effect of State law. As such, it is irrelevant that New York City Council has not chosen to regulate sugary drinks.

6. Any analysis of separation of powers issues should be flexible and case specific and consider the relevant agency’s decision in light of the legislative delegation it invokes. Considerations of delegation of State legislative power may not be apposite in considering delegations of local government power.

Boreali v Axelrod, 71 NY.2d 1 (1987), distinguished.

7. Where a regulation is not tainted by ultra vires or deparation of powers problems, the proper standard for review is whether the rule is so lacking in justification that it is essentially arbitrary*.

Bernstein v Toia, 43 NY.2d 437 (1977) and General Electric Capital Corp. v NY State Division of Tax Appeals, Tax Appeals Tribunal, 2 NY.3d 249 (2004), considered.

Judgment

The Court’s judgment is available here.

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* Cf Associated Provincial Picture Houses Ltd. v Wednesbury Corporation [1948] 1 KB 223.
** Cf Pelman v McDonald’s Corporation (2003) H&FLR 2014-33 and S.E.F. v Archer-Daniels-Midland Co (2014) H&FLR 2014-8.