Court of Appeals' decision addresses the concept of the separation of powers and the legislature's delegating rule making authority to a state department or agency

Court of Appeals' decision addresses the concept of the separation of powers and the legislature's delegating rule making authority to a state department or agency

LeadingAge N.Y., Inc. v Shah, 2018 NY Slip Op 06965, Court of Appeals

The Court of Appeals' ruling in LeadingAge, et. al., [Proceeding No. 1.] and Coalition of New York State Public Health Plans, et al., Proceeding No. 2.] explores the concept of separation of powers in the context of the State legislature's delegation of certain rule making powers to the New York State Department of Health, an executive administrative agency [EAA].

The Court of Appeals observed that:

1. An EAA rule or regulation grounded in the statutory mandate must not usurp the Legislature's role;

2. An EAA rule or regulation [a] must be promulgated in consideration of, among other things, findings resulting from research and public comment, [b] have defined thresholds and exclusions, if any, and [c] decisions involving the application of rules and regulations by an EAA must be rational; and

3. An EAA may not promulgate rules or regulations reflecting ideas and policies that are inconsistent with effecting "legislative intent" as set out in the statute.

The Court of Appeals noted that the concept of the separation of powers is "the bedrock of the system of government adopted by this State in establishing three coordinate and coequal branches of government, each charged with performing particular functions." The concept also requires that the Legislature make the critical policy decisions, while the executive branch may be delegated with responsibility to implement those policies.*

The court explained that an EAA, as a creature of the Legislature, acts pursuant to specific grants of authority conferred by their creator. In effect, a legislative body may enact a general statute that reflects legislative policy and, or, intent and then grant authority to an EAA to promulgate and enforce rules and regulations that "expand upon the statutory text by filling in details consistent with that enabling legislation," i.e., promulgating rules and regulations reflecting the legislative body's intent. In the event an EAA promulgates a rule or regulations beyond the power granted to it by the legislature, the EAA is said to have acted "ultra vires"** and usurped the legislature's role thereby violating the doctrine of separation of powers.

In other words, the separation of powers doctrine requires that the legislature make the primary policy decisions while the EAA, in the exercise of its technical expertise, may be vested with considerable discretion to flesh out a policy broadly outlined by legislators in order to implement the legislature's "primary policy decisions."

The Court of Appeals then indicted that to attain this result in promulgating rules and regulations, an EAA may rely on a general but comprehensive grant of regulatory authority to determine the best methods to attain the objectives articulated by the legislature and "because it is not always possible to draw a clear line between the functions of the legislative and executive branches," common sense must prevail when determining whether an EAA has acted within its grant of authority delegated to it by the legislature.

If the court finds that the EAA has been empowered to regulate the matter in question and has not usurped any of the legislative body's prerogative, judicial review of the separation of powers inquiry is at a judicial end as it is not the court's role to question the efficacy or wisdom of the means chosen by the EAA to accomplish the ends identified by the legislature as it is the court's role to determine whether the agency acted within the scope of the authority delegated to it even if believes there are alternative and better means of effecting the legislative body's intent.

Should the court finds that the EAA meets this initial test, i.e., it has acted within the scope of the powers delegated to it by the legislature, it still may be necessary for the court to adjudicate another issue: are the rules, regulations and procedures adopted by the EAA to effect the legislative intent arbitrary and capricious?

* In Schechter Poultry Corp. v. United States, 295 U.S. 495, the United States Supreme Court held that Congress violated the "nondelegation doctrine" by granting certain rule-making powers to a non-governmental entity under color of Article 8 of the Commerce Clause of the Constitution of the United States which vests in Congress the "power to regulate commerce...."

** Acting beyond one's or an entity's legal power or authority.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_06965.htm

State Comptroller DiNapoli Releases School Audits

State Comptroller DiNapoli Releases School Audits

Source: Office of the State Comptroller

The following audits and reports were issued by New York State Comptroller Thomas P. DiNapoli during the week ending October 19, 2018

Click on text highlighted in color to access the full report

Brighter Choice Charter School for Boys – Payroll (Albany County)
School officials effectively designed and implemented procedures to ensure that compensation payments were accurate and properly authorized. Officials established and adhered to an effective payroll process that decreases the risk that errors or irregularities in processing and paying payroll could occur.

Central Islip Union Free School District – Claims Audit Process (Suffolk County)
The district's claims auditor approved $114,333 of claims without documentation to support that the prices charged were accurate. Without adequate documentation such as quotes, bids or contracts, the auditor has no assurance that the district is being billed correctly.

Fort Ann Central School District – Fund Balance Management (Washington County)
District officials need to improve budgeting practices to more effectively manage the general fund balance. The district has accumulated unrestricted fund balance of more than $1.8 million as of June 30, 2017, or 15.25 percent of the 2017-18 budgeted appropriations, exceeding the statutory limit.

Northeast Central School District – Payroll (Dutchess County)
District officials ensured the accuracy of compensation and benefits provided to employees. Auditors found the salaries and wages paid and benefits provided to employees agreed with collective bargaining agreement stipulations and board-approved contracts.

Romulus Central School District – Financial Condition Management and State Transportation Aid (Seneca County)
The board-adopted budgets for the 2014-15 through 2016-17 fiscal years overestimated appropriations by an average of nine percent and generated almost $3.7 million in surpluses during the period. To reduce the unrestricted fund balance to within the statutory limit, officials transferred more than $3.5 million to the capital building reserve and $200,000 to the capital bus reserve over this same period. As a result, reserve fund transactions were not transparent to the public, because each year the funding transfers were not included in the adopted budgets but instead transferred at year-end.

If substantial evidence supports the administrative tribunal's decision, a reviewing court may not substitute its judgment for that of the tribunal

If substantial evidence supports the administrative tribunal's decision, a reviewing court may not substitute its judgment for that of the tribunal
Haug v State Univ. of N.Y. at Potsdam, 2018 NY Slip Op 06964,

In deciding Haug v State University of New York at Potsday [Potsdam], a case involving student discipline, the Court of Appeals commented on some issues relevant to the  standard of proof required to support an administrative tribunal's decision.

The Appellate Division had concluded that Potsdam's determination was not supported by substantial evidence and vacated its decision. The Court of Appeals disagreed,*explaining:

1. Upon judicial review, the Appellate Division "must accord deference to the findings of the administrative decision-maker" noting that "neither the Appellate Division nor the Court of Appeals has power to upset the determination of an administrative tribunal on a question of fact;" and

2. Courts have no right to review the facts generally as to weight of evidence beyond seeing to it that there is substantial evidence.

The substantial evidence standard is a minimal standard said the court, requiring only that a given inference be reasonable and plausible, "not necessarily the most probable." In other words, said the Court of Appeals, "[r]ationality is what is reviewed under the substantial evidence rule" and substantial evidence is "such relevant proof as a reasonable mind may accept as adequate to support a conclusion or ultimate fact."

Further, the court opined, "[w]here substantial evidence exists, the reviewing court may not substitute its judgment for that of the agency, even if the court would have decided the matter differently" and if substantial evidence supports the administrative decision being challenged, that determination must be sustained "irrespective of whether a similar quantum of evidence is available to support other varying conclusions."

In addition, the Court of Appeals noted that hearsay is admissible as competent evidence in an administrative proceeding, "and if sufficiently relevant and probative may constitute substantial evidence even if contradicted by live testimony on credibility grounds."

Ultimately, said the court, it was the province of Potsdam to resolve any conflicts in the evidence and make credibility determinations and ruled that the Appellate Division had improperly engaged in a re-weighing of the evidence when it substituted its own factual findings for those made by Potsdam. It then reversed the Appellate Division's order and remitted the matter it "for consideration of issues raised but not determined on the appeal."

* Judge Fahey dissented, stating that he would have sustained the majority opinion of the Appellate Division.

The decision is posted on the Internet at:

http://www.nycourts.gov/reporter/3dseries/2018/2018_06964.htm