New York Law Review

Tag: SAPA

  • Alca Industries, Inc. v. Delaney, 92 N.Y.2d 775 (1999): Bid Withdrawal Criteria Are Not Always Rules Subject to SAPA

    Alca Industries, Inc. v. Delaney, 92 N.Y.2d 775 (1999)

    Bid withdrawal criteria included in a specific contract bid advertisement by the Office of General Services (OGS) do not constitute a “rule” of general applicability under the State Administrative Procedure Act (SAPA) and therefore do not require formal promulgation under SAPA.

    Summary

    Alca Industries challenged the Office of General Services’ (OGS) decision to retain its bid security after Alca sought to withdraw its bid due to a mistake. Alca argued that the bid withdrawal criteria used by OGS were “rules” under the State Administrative Procedure Act (SAPA) and were unenforceable because they hadn’t been formally promulgated. The Court of Appeals reversed the lower courts’ rulings, holding that the bid withdrawal criteria, as applied to a specific contract, did not constitute a “rule” under SAPA because they lacked general applicability. The court emphasized the distinction between ad hoc decision-making and establishing a general course of conduct for the future, finding that OGS acted within its discretionary capacity, not in a quasi-legislative, rule-making capacity.

    Facts

    Alca Industries submitted a bid, along with a bid bond for $11,800, for an oil separator project advertised by the Office of General Services (OGS). After the bids were opened, Alca realized it had failed to include an allowance for “washwater treatment equipment,” a required component in the project manual. Alca immediately requested to withdraw its bid and have its bid security returned. OGS denied the request, citing bid withdrawal criteria that required the mistake to have occurred “in the absence of negligence in the preparation of the bid,” which OGS found was not met.

    Procedural History

    Alca petitioned to overturn OGS’s determination in Supreme Court, arguing the bid withdrawal criteria were unenforceable rules under the State Administrative Procedure Act (SAPA). The Supreme Court agreed with Alca. The Appellate Division affirmed the Supreme Court’s decision. The Court of Appeals granted leave to appeal and reversed the Appellate Division’s order, remitting the matter to the Supreme Court for consideration of remaining contentions.

    Issue(s)

    1. Whether the bid withdrawal criteria used by OGS in a specific contract bid advertisement constitute a “rule” of general applicability subject to the promulgation requirements of the State Administrative Procedure Act (SAPA).

    Holding

    1. No, because the bid withdrawal criteria applied only to the specific contract at issue and did not establish a general standard of conduct applicable to all OGS contract bidding.

    Court’s Reasoning

    The Court of Appeals distinguished between ad hoc decision-making and rulemaking, defining rulemaking as establishing “any kind of legislative or quasi-legislative norm or prescription which establishes a pattern or course of conduct for the future.” Citing People v. Cull, 10 NY2d 123, 126. The court noted that SAPA defines a rule as an agency statement “of general applicability.” The court reasoned that OGS was acting in its discretionary capacity when it included the withdrawal criteria in its bid advertisement for the oil separator project, not in its quasi-legislative rule-making capacity. The court emphasized that the bid withdrawal criteria only covered the bidding for this particular contract, and there was no evidence that these criteria were required for all contract bidding. The court distinguished this case from Matter of J.D. Posillico, Inc. v Department of Transp., 160 AD2d 1113, where the Department of Transportation applied fixed standards for all contract bidding. Here, Alca’s rights and remedies were determined by bidding conditions it assented to when it submitted its bid. The court also emphasized that including bid withdrawal standards falls within OGS’s statutory authority to “best promote the public interest” by awarding contracts to the “lowest responsible and reliable bidder.” Finally, the court found that Alca had notice of the conditions contained within the bid invitation, addressing concerns about lack of public rules. The court noted, “Here, Alca could conform its bid to OGS expectations and standards, and it knew precisely what circumstances would result in forfeiture of its bid deposit.”

  • Matter of Cordero v. Corbisiero, 80 N.Y.2d 771 (1992): Agency Policies of General Applicability Require Formal Promulgation

    Matter of Cordero v. Corbisiero, 80 N.Y.2d 771 (1992)

    An agency’s policy of general applicability that prescribes a procedure or practice requirement must be formally promulgated as a rule under the State Administrative Procedure Act (SAPA) § 202.

    Summary

    This case concerns whether the New York State Racing and Wagering Board’s “Saratoga policy,” requiring suspensions for infractions at the Saratoga racetrack to be served during the following year’s Saratoga meet, constitutes a “rule” under the State Administrative Procedure Act (SAPA). The Court of Appeals held that the Saratoga policy did fit the definition of a rule because it was a policy of general applicability that prescribed a procedure or practice requirement of the agency, and the policy was not formally promulgated by the Board pursuant to the rule-making procedures set forth in SAPA § 202. Thus, it could not be applied in this case.

    Facts

    A jockey, Cordero, committed an infraction at the Saratoga racetrack. Following an unsuccessful administrative appeal to the New York State Racing and Wagering Board, a suspension was imposed. The Board’s “Saratoga policy” dictated that such suspensions be served during the subsequent Saratoga meet.

    Procedural History

    The Appellate Division’s judgment was modified by the Court of Appeals, annulling the portion of the Board’s determination that mandated the penalty be served during Saratoga racing days. The matter was remitted to the Board for further proceedings.

    Issue(s)

    Whether the Racing Board’s “Saratoga policy”—requiring that a suspension imposed for an infraction committed at the Saratoga racetrack be served at the Saratoga meet the following year—constitutes a “rule” as defined by State Administrative Procedure Act § 102 (2) (a) (i), thus requiring formal promulgation under SAPA § 202.

    Holding

    Yes, because the Saratoga policy is an agency’s stated policy of general applicability which prescribes a procedure or practice requirement of the agency.

    Court’s Reasoning

    The court reasoned that the Saratoga policy applied “to every jockey * * * who elect[s] to race at Saratoga, commit[s] an infraction there, and unsuccessfully appeal[s] to the Board.” This, the court held, fits the definition of a rule as “a fixed, general principle applied without regard to the facts and circumstances of the individual case.”

    The Board argued that the Saratoga policy did not fit the definition of a rule because it only affected the implementation of a penalty, not the jockey’s conduct. The court rejected this argument, clarifying that the policy “establishes a mandatory procedure that pertains only to when and where a Saratoga suspension must be served in the event of an appeal.”

    Thus, the court concluded that the Saratoga policy fits the definition of a rule under State Administrative Procedure Act § 102 (2) (a) (i), which requires formal promulgation of such rules under SAPA § 202. The court did not address the petitioner’s alternative argument that the Board arbitrarily and capriciously applied its Saratoga policy in this case.