New York State Administrative Procedures Act and Emergency Authority During COVID-19

Présentation


New York State law allows agencies and departments to adopt certain rules on an emergency basis, without following the strict requirement of the State Administrative Procedures Act. These emergency regulations can be a powerful tool for businesses and agencies alike, but are not immune to challenge.

In Depth


In light of the Coronavirus (COVID-19) pandemic, New York agencies and departments have issued various emergency measures, including amendments to health, insurance and tax regulations. While state agencies and departments usually cannot issue, suspend or modify rules without following the strict requirements of the State Administrative Procedures Act (SAPA), state law provides for adoption of certain rules on an “emergency basis. » SAPA § 202(6). This article describes the powers and limitations of that rulemaking authority—concerns that will come to the fore as regulated parties consider either advocating for emergency rules or challenging measures adopted pursuant to these emergency powers. What action a company takes in response to proposed or implemented emergency regulations will of course depend on whether the regulations favorably or negatively affect its business. Emergency regulations can be a powerful tool for agencies and companies alike, but even in the time of COVID-19, these regulations are not immune to challenge.

Emergency Powers

SAPA generally applies to “any department, board, bureau, commission, division, office, council, committee or officer of the state » or to any “public benefit corporation or public authority » that has at least one member who is appointed by the governor and is authorized by law to make regulatory rules. SAPA § 102(1). The statute delegates to these state executive departments and administrative agencies certain “rule making powers, » in turn allowing these entities to promulgate and enforce rules and regulations consistent their mandates from the state legislature. Issuance of a new rule is a multi-step process. The agency must draft the text of the proposed rule, prepare supporting materials (such as a statement discussing the impact of the proposed rule on regulated parties), submit the proposed rule for public comment, and draft a fulsome response to those comments that summarizes the issues raised and explains why various suggestions were either incorporated into the rule or not. Given these steps, it often takes an agency many months to issue a new rule.

SAPA recognizes, however, that certain emergency situations may require rapid action. Section 202(6) allows agencies to immediately adopt rules that are “necessary for the preservation of the public health, safety or general welfare. » Although “general welfare » is not defined in the statute, courts have interpreted it broadly. See, e.g., Korean Am. Nail Salon Ass’n of New York, Inc. v. Cuomo, 50 Misc. 3d 731, 735 (N.Y. Sup. Ct. Albany Co. 2015) (agency’s demonstration that nail salon workers were being deprived legally due wages satisfied requirement to show that emergency regulation was necessary for the preservation of public health, safety or general welfare).

SAPA’s emergency adoption power is not without limitation. Unless provided otherwise by statute, an agency’s emergency rules may not remain in effect for longer than 90 days after being filed with the secretary of state, unless within that time the agency submits a notice of proposed rulemaking and a notice of adoption in accordance with the Act. §§ 139, 140; §§ 157, 158. In other words, for an emergency regulation to become permanent, the agency still must comply with SAPA’s requirements to publish the proposed amendment in the state register and invite public comment.

Depending on a company’s interest, this timing limitation may pose either a risk or a strategic opening. Companies that benefit from continued use of an emergency regulation should diligently monitor the agency’s actions to ensure that the emergency regulation is finalized and adopted. On the other hand, a company negatively affected by an emergency regulation has grounds to challenge that regulation if the agency continues to enforce it beyond the 90-day period without completing the full SAPA process.

Justifying Immediate Action

While there need not be a declared state of emergency for an agency to use § 202(6), Governor Cuomo’s March 7, 2020, Executive Order declaring a state of emergency in response to the COVID-19 pandemic will surely be cited in support of any emergency rules implemented during this time. In fact, several agencies already have adopted emergency measures under § 202(6) in response to the pandemic. For example:

  • The Public Service Commission entered an order, pursuant to SAPA § 202(6), to postpone electric and gas price increases. See Proceeding on Motion of the Comm’n As to the Rates, Charges, Rules & Regulations of Niagara Mohawk Power Corp. Dba Nat’l Grid for Elec. Serv., 2020 WL 1531010 (Mar. 25, 2020).
  • The Department of Financial Services amended insurance laws under § 202(6) in response to the COVID-19 pandemic. It recently issued an emergency measure stating that health insurers must cover telehealth provided by an in-network provider if the insurer’s policies and contracts would have covered the service if provided at an in-network provider’s office.

While courts are unlikely to question the emergency nature of the pandemic, the key to successfully implementing an emergency regulation is the agency’s ability to articulate the connection between the emergency measure and COVID-19’s impact. SAPA requires the agency to “fully describe[e] » the nature of the public health, safety or general welfare need being addressed by the emergency rule, and provide an explanation of why it would be contrary to the public interest to comply with the usual notice and comment period. SAPA § 202(6)(iv). This requirement is meant to ensure that emergency rules are promulgated only when there is an “immediate necessity, emergency, or undue delay. » Law Enf’t Officers Union Dist. Council 82, AFSCME, AFL-CIO by Engelhardt v. State, 643 N.Y.S.2d 301, 303 (N.Y. Sup. Ct. Albany Co. 1995). A desire to “preserve the status quo » or “a potential concern about a disruption is not sufficient to justify the use of SAPA’s administrative procedures for emergency rulemaking. » Staff v. Reardon, 2018 WL 4616294, at *5 (N.Y. Sup. Ct. N.Y. Co. Sep. 25, 2018).

The New York Supreme Court has vacated emergency rules where the agency failed to sufficiently justify the emergency nature of the rule, as “[t]he mere parroting of the phrase ‘the public health, safety, or general welfare’ with no specific facts, » will not be considered an adequate justification for an emergency regulation. Brodsky v. Zagata, 165 Misc. 2d 510, 515, 629 N.Y.S.2d 373, 377 (N.Y. Sup. Ct. Albany Co. 1995). For example, in Law Enforcement Officers Union District Council 82, AFSCME, AFL-CIO by Engelhardt v. State, the New York Supreme Court annulled an emergency rule implemented by the Department of Corrections that allowed double occupancy in prison cells. 643 N.Y.S.2d at 303-04. Although the court acknowledged that prison overcrowding is a “challenge, » there was no showing by the Department of Corrections that the challenge needed to be dealt with immediately and without the regular public notice and comment procedure mandated under SAPA.

Similarly, in New York State Association of Homes & Services for Aging Inc. v. Perales, the New York Appellate Division discussed an emergency regulation implemented by the Department of Social Services that reduced Medicaid rates for so-called “bed holds » to 85% of the regular rate. Although not an issue on appeal, the court noted with approval the lower court’s holding that the regulation was improperly adopted on an emergency basis because “a long simmering fiscal crisis within the State budget was not an emergency contemplated by State Administrative Procedure Act § 202(6). » 179 A.D.2d 296, 297 (N.Y. App. Div. 1992).

In contrast, in Korean Am. Nail Salon Ass’n of New York, Inc. v. Cuomo, the New York Supreme Court found that an emergency regulation was necessary to preserve the public health, safety and general welfare of nail salon workers. 50 Misc. 3d 731, 735 (N.Y. Sup. Ct. Albany Co. 2015). The New York Department of State had issued an emergency regulation requiring certain nail salons and other “appearance enhancement businesses » to purchase wage bonds as security for unpaid wages. The Court held that the emergency regulation was justified because urgent action was needed to protect workers in the nail salon industry from unsafe working conditions and unfair labor practices, and because it furthered the legislative intent behind a recent law signed by Governor Cuomo that established penalties for operating an appearance enhancement business without appropriate wage coverage.

Conclusions

While the COVID-19 pandemic and the governor’s emergency declaration offer support for emergency regulations that state agencies implement during the official emergency period, agencies still must be able to articulate the connection between the pandemic and their emergency action. COVID-19 will not justify all regulations, only those that are immediately necessary to address health, safety or the general welfare.

This justification requirement may become more difficult for agencies to meet as New York moves out of the “state of emergency » period and into the recovery aftermath, particularly as agencies and stakeholders rush to address the economic toll the pandemic has taken. Companies that believe an emergency regulation might be helpful in assisting their businesses to recover might consider lobbying agencies to modify, suspend or add to existing rules. Such companies should pay particular attention to the justification for immediate action—perhaps taking lessons from Korean American Nail Salon—to ensure that the regulation withstands scrutiny.

Conversely, a company adversely affected by an emergency regulation implemented pursuant to SAPA § 202(6) has several avenues of attack. The company should monitor the promulgation process to determine whether the agency properly justified its emergency action and whether it either stopped enforcing the emergency rule after 90 days or properly finalized the rule. If all else fails, the company should avail itself of the public comment period to make its concerns known.