In Matter of Saratoga Economic Development Corporation [Corporation] v State of New York Authorities Budget Office [NYABO], Corporation challenged NYABO's administrative determination requiring Corporation to comply with the Public Authorities Accountability Act of 2005.
In Matter of Smith v City of Norwich, 205 AD3d 140 the Appellate Division held that in the event an administrative determination is made where an evidentiary hearing is not required by law, court review is limited to whether the administrative determination had a rational basis and was not arbitrary and capricious.*
Further, in Matter of Froehlich v New York State Dept. of Corr. & Community Supervision, 179 AD3d 1408, the court said "So long as [the administrative determination] has a rational basis, [courts] will sustain the [administrative] determination, even if it would have also been rational for the administrative agency to have reached a different result."
In contrast, observed the Appellate Division, in the event an agency is engaged in pure statutory interpretation, a court "need not pay deference to the agency's interpretation and may instead undertake that analysis anew." Where, however, "the interpretation of a statute or its application involves knowledge and understanding of underlying operational practices or entails an evaluation of factual data and inferences to be drawn therefrom", the Appellate Division, citing Matter of Peyton v New York City Bd. of Stds. & Appeals, 36 NY3d 271, noted courts "regularly defer to the governmental agency charged with the responsibility for administration of the statute".
The Appellate Division then opined the courts defer to an agency's statutory interpretation "where the general statutory language and legislative history indicate that the Legislature intended to adopt a broad policy approach to the subject matter of the statute, delegating to the administrative agency comprehensive, interpretive and subordinate policy-making authority, interstitially to 'fill in the blanks' consistently with the over-all policy of the statute, either by administrative rule making or case-by-case decisions."
Finding that NYABO rationally concluded that Corporation is a local authority in that there is a "close relationship between Corporation and local governments" and Corporation "is the type of entity that the Legislature intended to subject to the provisions of the [Public Authorities Reform Act, Laws of 2009, Chapter 506]", the Appellate Division ruled that NYABO's determination was rational and therefore entitled to deference, rejecting Corporation's reliance on Matter of Farms First v Saratoga Economic Dev. Corp., 222 AD2d 861.**
Reversing the judgment of Supreme Court "on the law" and without costs, the Appellate Division dismissed Corporation's petition, and "... declared that [Corporation] is a local authority subject to the Public Authorities Law".
* In a footnote the Appellate Division explained that where no administrative hearing is held, "the agency may submit an employee's or official's affidavit to explain the information that was before the agency and the rationale for its decision, and courts may consider such an affidavit even though it was not submitted during the administrative process," citing Matter of Hammonds v New York State Educ. Dept., 206 AD3d 1334.
** The Appellate Division noted that in support of the proposition that it is not a local authority, Corporation cited Matter of Farms First, contending it was an independent entity formed by private businessmen to further their own interests, has never been furnished offices at County expense, has never had a County employee serve on its board and receives some of its funding from private individuals and corporations.
Click HERE to access the Appellate Division's decision posted on the Internet.