This posting was written by John W. Arden.
In adopting a health regulation limiting the sale of “sugary drinks” to containers no larger than 16 ounces, the New York Board of Health unconstitutionally overstepped its authority under the New York City Charter, according to the New York Supreme Court, New York County (New York Statewide Coalition of Hispanic Chambers of Commerce v. The New York City Department of Health and Mental Hygiene, March 11, 2013, Tingling, M.). Only the New York City Council has the authority to limit or ban a legal item under the guise of “controlling chronic disease,” as the Board attempted to do in this regulation.
In addition, the regulation was invalidated for being arbitrary and capricious because it covered some food establishments but not others, excluded some beverages that have higher concentrations of sugar and calories than those regulated, and did not limit refills.
A large number of seemingly disparate parties brought a challenge to the “Portion Cap” regulation—from the Korean-American Grocers Association and the National Restaurant Association to the Soft Drink and Brewery Workers Union and the American Beverage Association. They were granted an order enjoining and permanently restraining the Board of Health and other administrative agencies from implementing or enforcing §81.53 of the new York Health Code and declaring the regulation unconstitutional in violation of the separation of power doctrine.
Background. According to the New York City Charter, the Board of Health may supervise and regulate the food supply of the city when it affects public health, but only when the city is facing imminent danger due to disease, the court ruled. Such a danger was not demonstrated in this case.
Dating back to its inception in 1698, the Board of Health has had very broad powers under the New York City Charter. However, in reviewing the history of the Charter, the intention of the legislature was clear: “It is to protect the citizens of the city by providing regulations that prevent and protect against communicable, infectious, and pestilent diseases.”
The Board may supervise and regulate the food supply of the city when it affects public health, but the Charter’s history clearly illustrates that such steps may be taken only when the city is facing imminent danger due to disease.
Separation of powers. While the Board contended that it was protected by the state constitution from the impact of any separation of powers challenge, the court disagreed. “One of the fundamental tenets of democratic governance here in New York, as well as throughout the nation, is the separation of powers. No one person, agency, department or branch is above or beyond this.” Even if the court were to entertain the position that the state legislature meant to provide a broad delegation of power to the Board, such a delegation would not pass muster under the separation of powers doctrine, the court concluded.
The seminal case in the area—Boreali v. Axelrod, 71 N.Y.2d 1 (1987)—involved the New York Public Health Council’s adoption of an ordinance banning indoor smoking in certain establishments after the state legislature had failed to pass a similar smoking ban. The legislature had already passed a measure imposing smoking restrictions in a narrow class of public locations, but the Public Health Council argued that the legislature did not preempt the field with regulation. The Court of Appeals found that the Public Health Council had entered the domain of the legislature and exceed its administrative mandates and authority.
The court in the present case applied the four Boreali factors: (1) whether the challenged regulation was based on concerns not related to the stated purpose of the regulation, such as economic, political, or social concerns; (2) whether the regulation was created on a clean slate, thereby creating its own comprehensive set of rules without the benefit of legislative guidance; (3) whether the regulation intruded on ongoing legislative debate; and (4) whether the regulation required the exercise of expertise or technical competence on behalf of the body passing the legislation.
With regard to the first factor, the court found that the regulation was “laden with exceptions based on economic and political concerns.” These included retail food stores, food processing establishments, and congregations, clubs, or fraternal organizations. The rule failed the second factor because the Board of Health was not granted the sweeping and unbridled authority to define, create, authorize, mandate, or enforce the regulation at issue. The third factor—whether the regulation intruded on legislative debate—was satisfied by the City Council’s rejection of three resolutions specifically targeting sugar sweetened beverages and the state legislature’s failure to pass three bills on the subject. Under the fourth factor, the regulation was a simple rule that was proposed by the mayor’s office and adopted by the Board without any substantive changes. Thus, the court held that the Board of Health exceeded its authority under Boreali v. Axelrod.
Arbitrary and capricious rule. The regulation was further challenged under Article 78 of the New York Code of Civil Practice Laws and Rules. An administrative regulation is upheld under this Article only if it has a rational basis and is not unreasonable, arbitrary, and capricious. In this case, the court found the regulation “fraught with arbitrary and capricious consequences,” with loopholes effectively defeating its stated purpose.
“It is arbitrary and capricious because it applies to some but not all food establishments in the City, it excludes other beverages that have significantly higher concentrations of sugar sweeteners and/or calories on suspect grounds, and the loopholes inherent in the Rule, including but not limited to no limitations on refills, defeat and/or serve to gut the purpose of the Rule,” the court observed.