23 N.Y.3d 681 (2014)

An administrative agency exceeds its regulatory authority when it engages in policymaking by resolving difficult social problems and choosing between competing ends, a power reserved for the legislative branch.

Summary

The New York City Board of Health adopted a rule (the “Portion Cap Rule”) that restricted the size of sugary drinks sold by food service establishments. Several organizations challenged the rule, arguing that the Board exceeded its regulatory authority. The New York Court of Appeals held that the Board exceeded its authority by engaging in policymaking, which is reserved for the City Council. The court emphasized that the Board’s decision involved balancing competing concerns of public health and economic costs without legislative guidance, thus overstepping its regulatory bounds by making choices among competing policy goals.

Facts

In June 2012, the New York City Department of Health and Mental Hygiene proposed an amendment to the City Health Code, seeking to restrict the size of cups and containers for sugary beverages sold by food service establishments. The proposed “Portion Cap Rule” would prohibit food service establishments from selling sugary drinks in containers larger than 16 fluid ounces. A “sugary drink” was defined as a non-alcoholic beverage sweetened with sugar or caloric sweeteners, containing more than 25 calories per 8 fluid ounces, and not containing more than 50 percent milk. The rule did not apply to establishments regulated by the New York State Department of Agriculture and Markets, such as supermarkets and convenience stores.

Procedural History

In October 2012, several organizations filed a hybrid CPLR article 78 proceeding and declaratory judgment action challenging the Portion Cap Rule. The Supreme Court, New York County, granted the petition, invalidated the rule, and permanently enjoined its enforcement, finding that the Board had exceeded its regulatory authority and that the rule was arbitrary and capricious. The Appellate Division unanimously affirmed, holding that the Board overstepped its authority under the principles set forth in Boreali v. Axelrod. The Court of Appeals granted leave to appeal and affirmed the Appellate Division’s order.

Issue(s)

Whether the New York City Board of Health exceeded the scope of its regulatory authority by adopting the Portion Cap Rule, thereby infringing upon the legislative jurisdiction of the City Council.

Holding

Yes, because by adopting the Portion Cap Rule, the New York City Board of Health engaged in policymaking by choosing among competing policy goals without legislative delegation or guidance, thus exceeding its regulatory authority and infringing upon the legislative jurisdiction of the City Council.

Court’s Reasoning

The Court of Appeals held that the New York City Charter designates the City Council as the sole legislative body, and the Board of Health’s authority is regulatory, not legislative. The court applied the framework established in Boreali v. Axelrod to determine whether the Board had improperly engaged in policymaking. The court noted several factors indicating the Board had overstepped its authority: (1) the Board weighed competing concerns of public health and economic costs, attempting to strike a compromise, which is a uniquely legislative function; (2) the Board created a comprehensive set of rules without legislative guidance; and (3) the state legislature and City Council had previously considered and rejected similar measures. The court emphasized that while regulations necessarily involve an analysis of societal costs and benefits, the Board’s actions here went beyond mere rulemaking. Instead, the Board made difficult and complex choices between broad policy goals, such as valuing health considerations relative to economic ends and choosing between different methods of influencing citizens’ decision-making, such as indirect methods like limiting container size versus direct methods like outright bans. By choosing between public policy ends in these ways, the Board of Health engaged in law-making beyond its regulatory authority. The court clarified that its decision should not be interpreted to prohibit an agency from attempting to balance costs and benefits but rather highlighted that the agency had not been given any legislative guidelines at all for determining how the competing concerns of public health and economic cost are to be weighed.