Matter of Gill v New York State Racing & Wagering Bd.
Annotate this CaseDecided on February 9, 2006
Supreme Court, New York County
In the Matter of the Application of MICHAEL GILL and MARK SHUMAN, Petitioner, For a Judgment Pursuant to Article 78 of the Civil Practice Law and Rules
against
The NEW YORK STATE RACING AND WAGERING BOARD, Respondent.
118095/04
Bonstrom & Murphy, New York, New York (Karen Murphy and Kim P. Bonstrom of counsel) for petitioners . Eliot Spitzer, Attorney General of the State of New York, New York, New York (Lisa Ghartey of counsel) for respondent.
Ronald A. Zweibel, J.
Petitioners Michael Gill and Mark Shuman bring this combined CPLR Article 78 and declaratory judgment action seeking a ruling (1) declaring 9 NYCRR § 4043.7 invalid and enjoining its implementation and enforcement, and (ii) annulling and setting aside the August 25, 2004 Findings and Order of respondent New York Racing and Wagering Board ("the Board"), disqualifying petitioners' horses and declaring their purses forfeited.
Specifically, relief is sought, pursuant to CPLR 7803(3), 7806 and 3001, on the grounds that the Board's determination to promulgate § 4043.7 and, thereafter, to enforce that Rule against petitioners, was in violation of lawful procedure, affected by error of law, arbitrary and capricious and an abuse of discretion. The Board opposes the petition and cross-moves, pursuant to CPLR 3211 and 7804, to dismiss the Verified Petition on the grounds that petitioners failed to exhaust their administrative remedies, the petition is time-barred, and/or the petition is pre-mature because the August 25, 2004 decision purportedly was only a notification of post-race drug positives and, as such, was a "non-final" order. Petitioners opposed dismissal of the petition on procedural grounds, arguing that the Board's claims are meritless and is a ploy by the Board to avoid judicial scrutiny of its "legislative" initiatives. The Court denied the cross-[*2]motion to dismiss and directed the Board to file a response, which it did. The Court took oral argument from the parties as well as additional submissions.
The Court has reviewed all the affirmations/affidavits, exhibits and Memoranda of Law submitted by all the parties as well as the oral arguments of the parties and the following is this Court's decision.
Background
The Board's statutory powers include the power to promulgate rules and regulations in order to prevent "the administration of drugs or stimulants or other improper acts for the purpose of affecting the speed" of the horses that are about to participate in races (Racing Law §301[2][b]; see also L. 1940, ch. 254, s36 as amd., L. 1973, ch. 346, s3 [original and amended statutory authorizations to promulgate rules and regulations]). The rules and regulations promulgated by the Board are contained in title 9, Subtitle T, Chapter B, Parts 4100, et seq. of the Official Compilation of the Codes, Rules and Regulations of the State of New York ("9NYCRR").
In 1982, the Board adopted a series of rules- codified at 9 NYCRR Part 4043- to regulate the administration of drugs to Thoroughbred racehorses prior to their participation in pari-mutuel races. Certain provisions in the Board's Rules restrict the administration of drugs to a racehorse prior to the start of a program containing a race in which the horse is to compete. Those sections establish a schedule which provides that certain drugs may be used at any time up to race time (9NYCRR § 4043.2[a]); that certain drugs may be administered by injection until 24 hours before the start of a racing program (9 NYCRR § 4043.2[b]); that certain drugs may be administered by any means until 48 hours before the start of a racing program (9 NYCRR § 4043.2[c]); that certain drugs may be administered by any means until 72 hours before the start of a racing program (9 NYCRR § 4043.2[d]); and that no other drugs may be administered by any means within one week of the start of a racing program (9 NYCRR § 4043.2[e]). The purpose of the Board's Rules was to provide a "flexible set of standards for trainers and veterinarians in administering drugs to a racehorse before the horse runs in a race. To that end, they establish a schedule which informs the horse's trainer how long before race time a particular drug may be given to a competing horse" (Equine Practitioners Association, Inc. v. New York State Racing and Wagering Board, 105 AD2d 215, 217 [1st Dept. 1984], affd. and modified 66 NY2d 786 [1985]).
Since 1971, the Board has had a contractual relationship with Cornell University. Pursuant to that relationship, Associate Professor of Toxicology Dr. George A. Maylin, who holds doctorates in veterinary medicine and pharmacology and is considered a leading expert on issue of equine drugs and pharmacology, became Director of the New York State Racing and Wagering Board Drug Testing and Research Program. In the course of his duties, and in light of the Board Investigators' reports, commencing in 2000, Dr. Maylin became aware that "fluphenazine", a potent long-acting phenothiazine tranquilizer, was becoming a commonly abused drug in both thoroughbred and harness racing, with an alleged calming effect in appropriate doses. Phenothiazine tranquilizers are forbidden in horse racing because of its ability to affect the outcome or performance of a horse in a race.
Dr. Maylin studied "fluphenazine" abuse in horses in New York State. He developed a test to detect "fluphenazine" in equine blood samples. Dr. Maylin attempted to validate the test [*3]by comparison to published high performance liquid chromatography techniques and liquid chromatography mass spectometry methods ("LC/MS"), of which the latter provides absolute identification. His test, although not a confirmatory test, proved to be a highly selective screening test with minimal cross-reactivity with other drugs. Dr. Maylin then conducted drug administration trials and determined that clinical doses of "fluphenazine" could be detected in horses for 21 days or more. Based on this, it became clear that "fluphenazine" was an enforcement problem. Board drug rules all rest on time of administration, with a general prohibition of any drugs administered within one week of the race (see 9(E) NYCRR 4043.2(f); 4043.2(a-e); Equine Practitioners Assoc., Inc. v. N.Y.S. Racing and Wagering Bd., 66 NY2d 786 [1985], aff'g as modified 105 AD2d 215, 217 [1st Dept. 1984]).
In December of 2002, because no other racing jurisdiction had the ability to test for the drug, Dr. Maylin conducted a population survey to determine the extent of "fluphenazine" use in racing in New York in order to gauge the seriousness of the problem, and to document a basis for any needed rule changes. His test, which provided a "high confidence level" but not "confirmation" that "fluphenazine" was detected, with occasional confirmation using LC/MS and HPLC, indicated an incidence of 168 apparent "fluphenazine" uses.
Meanwhile, the Board was determining the necessity for another category of equine drug rule with respect to the drug "EPO": one that would disqualify and unplace the horse regardless of time of administration, but not serve as a basis to punish the trainer. The Board decided to deal with what they viewed as the "fluphenazine" problem at the same time and in the same manner they were using to deal with "EPO".
On October 21, 2003, allegedly accompanied by widespread dissemination of its press release and numerous ensuing news articles in the industry press, the Board voted to proceed with an emergence rule to address "fluphenazine" abuse. Notice of the emergency "fluphenazine" rules was recorded and reported in Board meeting minutes and agenda items, and in the State Registry, and in the form of other horses allegedly being detected, disqualified and unplaced because of "fluphenazine" post-race positives. On October 30, 2003, the Board filed a notice of emergency adoption (the "Notice"), adding §4043.7 (the "Emergency Rule"), to Part 4043 of the Board's Rules. The Board's Notice contains, inter alia, the following statements:
Finding of necessity for emergency rule: Preservation
of public safety and general welfare.
Specific reasons underlying the finding of necessity:
These rule amendments will provide an effective
mechanism to deter the use in the racing horse of the
potent tranquilizers reserpine and fluphenazine. Both
drugs are being abused in an effort to gain an improper advantage in pari-mutuel racing; however the existing time-based structure of the equine drug rule
does not provide effectively for the sanction of
abusers and deterrence....The continued abuse of these
drugs and substances, which have no legitimate use in
pari-mutuel racing, undermines the public's confidence [*4] in the integrity of racing with the resultant loss of willing revenues to the State, municipalities, breeders
and the industry. In addition, the continued undeterred use of these drugs and substances poses a threat to the safety of both the equine and human racing participants.
An emergency rulemaking is necessary because the Board
has determined that emergency adoption is necessary for
the preservation of the general welfare and public safety and that standard rulemaking procedures would be contrary to the public interest.
* * *
This notice is intended to serve only as a notice of emergency adoption. This agency intends to adopt this emergency rule as a permanent rule and will publish a
notice of proposed rule making in the State Register at
some future date. The emergency rule will expire....
Text of the emergency rule and any required statementsand analyses may be obtained from: Robert A. Feuerstein, Counsel, Racing and Wagering Board, One Watervliet Ave. Ext., Suite 2, Albany, NY 12206-1668, (518)453-8400,
e-mail: info@racing.state.ny.us.
* * *
Alternate Approaches: There are no other significant alternatives to this rule, which was drafted to
accomplish the stated benefits with the least
negative impact upon the pari-mutuel racing industry.
No action would fail to address the existing problems
associated with continued abuse of the drugs and
substances that are the subject of these rules.
* * *
Economic and Technological Feasibility: ...The drugs reserpine and fluphenazine are tranquilizers for
which alternatives exists. Horsemen may comply with
the prohibitions of the rule by use of alternative drugs
at an equal or lesser cost.
* * * [*5]
Small Business and Local Government Participation: The Board provided notice of the concepts and general requirements of these rules to various segments of theregulated racing industry. Among those segments were representative horsemen's associations. These
associations (one per track) include most if not all of the small business industry participants (owners and trainers) as members.
* * *
Job Impact Statement
A job impact statement is not submitted with this
notice because the New York State Racing & Wagering Board has determined that these rules will not have a substantial adverse impact on jobs and employment
opportunities. The area of potential impact is that
which will result from the exclusion of a horse from
Pari-Mutuel competition until such time as the horse
tests negative for the drug or substance that resulted
in the ineligibility to participate. For the drugs
reserpine and fluphenazine, it is estimated that the
period of exclusion following the reported result of a
positive test would be very short. Based upon the
facts that these drugs may not be lawfully
administered to the horse within one week before the
start of the racing program and the typical ten-day
period between the collection of a sample and report
of a positive test, there should be a relatively short
period of exclusion provided the horse is subject to a prompt retest. Although reserpine and fluphenazine
are detectible beyond the one-week period, this
situation differs little from the existing
situations involving other drugs. Based upon
experience, there will be relatively few positive
tests and no substantial adverse impact on jobs for
industry participants such as trainers and grooms....
By operation of State Administrative Procedure Act ("SAPA") §202(6), the Board's "Emergency Rule" automatically would expire after 90 days. Within the original 90-day period, however, the Board-pursuant to § 202(6)(b)-re-adopted the Rule-again, on an emergency basis. The Board thereafter continued to re-adopt the "Emergency Rule"- all on an "emergency" basis - a total of 5 times: on January 30, April 30, August 2 and November 1, 2004. According to the Board, the "fluphenazine" emergency rule was published in the State Register on November 19, 2003; February 18, 2004; and May 19, 2004; as well as on August 18, 2004; November 17, 2004 [*6]and February 6, 2005.
On August 26, 2004, Mark Shuman received the following communication from Board Investigator Louis Gonzalez:
Re: Post Race Positive of the horses [KALOOKAN
LADY], August 9, 2004 Race 5, And [Clay's
Rocket] August 8, 2004 Race 2. Both
positives for the drug Fluphenazine.
Sir[,] a notification of positive blood test has
been received by this office for the above horses
racing on the above dates.
* * *
[Y]ou or your owners are required to return, purse
monies for both of these races if you or they have
received them already. These should be returned to
NYRA.
Per the claiming rule, trainer Scott Lake has
decided to return [KALOOKAN LADY] to you. Please make arrangements with Scott Lake to effect return
of the horse.
Last, please make arrangements to have both horse
work and be retested for drug clearance before
starting them again....
In compliance with the above directive but, while expressly reserving their rights to challenge the Board's ruling), the purse monies were returned to the New York Racing Association ("NYRA") and KALOOKAN LADY was returned to petitioners.
On September 18, 2004, Board Investigator Gonzalez issued a second "notification" concerning the Board's application of § 4043.7 to petitioners:
[O]n 8/27/04, "[KALOOKAN LADY]" was re-tested and the
blood sample was also found to contain "fluphenazine"
by Cornell University Laboratory. As you are aware,
this horse may not race again until a clean sample is
obtained.
Section 4043.7, by its terms, does not permit imposition of penalty upon the trainer, personally, "based solely upon the finding by the laboratory that the drug reserpine or the drug fluphenazine was present" in a sample. Section 4043.4 ("Trainer's responsibility"), however, does provide that
[a] trainer shall be responsible at all times for the
condition of all horses trained by him. No trainer [*7]
shall start or permit a horse in his custody, care or
control to be started if he knows, or he might have
known or have cause to believe, that the horse has
received any drug or other restricted substance that
could result in a positive test.
As of the date of the Petition, the Board was continuing its investigation of the fluphenazine drug "positives" from the August 8 and 9, 2004 races- including propounding interrogatories to, and demanding production of veterinarian records from, petitioners-thus raising the possibility that the Board will seek further sanction against petitioners, personally, from violating the board's "Emergency Rule."
Petitioners brought the instant combined CPLR Article 78 and Declaratory Judgment action seeking, inter alia, a finding and determination that a certain "emergency rule" (9 NYCRR § 4043.7) was promulgated by the Board in violation of the New York State Constitution and the SAPA. Specifically, petitioners argue that the Board's "Emergency Rule" relating to the medication fluphenazine should be annulled, its implementation or enforcement enjoined, and the Board's August 26, 2004 ruling vacated, because the Board violated or otherwise failed to comply with the emergency rule provisions of the SAPA § 202 by impermissibly re-adopting the rule a total of five times- all on a supposedly "emergency" basis. According to petitioners, the support for each re-adoption was based on "provably false representations regarding the supposed necessity for "emergency" enactment and the Board promulgated the rule without publishing or disseminating the rule in a manner likely to provide notice to those directly affected by it. Petitioner Gill also challenges the Board's August 25, 2004 decision to invoke the "emergency rule" as a violation of his Due Process rights to notice and hearing, and as an unconstitutional regulatory "taking."
On May 2, 2005, while this case was pending, the emergency rule was published in the State Registry as a Proposed Rule Making. No public comment was received. On May 11, 2005, Notice of Adoption was filed and 9(E) NYCRR 4043.7 became effective as a permanent rule.
Petitioners Michael Gill and Mark Shuman move for a judgment enjoining the respondent The New York State Racing and Wagering Board ("the Board") from enforcing an emergency "fluphenazine" medications rule against petitioners, on the grounds that the Board failed to promulgate that rule in conformity with the provisions of the State Administrative Procedure Act ("SAPA). The Board opposes petitioners' application.
Discussion
The question before this Court is "Whether a State agency may exempt itself from the commands of NY Const. Art. IV, § 8 and SAPA § 202, by promulgating an "emergency rule" and re-adopting that rule on a seriatim, supposed "emergency" basis? According to petitioner, the answer is "no." Petitioners argue that § 202(6)[e] permits seriatim re-adoption of emergency rules only if three preconditions are met: (1) the agency must find, prior to the expiration of an emergency rule, that re-adoption on an emergency basis is "necessary for the preservation of the public health, safety or general welfare;" (2) the emergency re-adoption must be accompanied by a notice of proposed, permanent rulemaking; and (3) a second or subsequent emergency re-adoption must be accompanied by an assessment of public comments (See SAPA § 202(6)[e]). [*8]Petitioner argues that the Board failed to meet any of these requirements.
The Board, in its Verified Answer and "response," which were served on August 1, 2005- seven months after the commencement of the proceeding, argues that SAPA § 202(6), in pertinent part, states:
Notice of emergency adoption. (a) Notwithstanding
any other provision of law, if an agency finds
that the immediate adoption of a rule is necessary
for the preservation of the public health, safety or general welfare and that compliance with the requirements of subdivision one of this section
would be contrary to the public interest, the
agency may dispense with all or part of such
requirements and adopt the rule on an emergency
basis.
SAPA § 202(6)(d)(iv) further provides that a notice of emergency adoption shall:
contain the findings required by paragraph (a)
and (c) of this subdivision and include a statement
fully describing the specific reasons for such findings
and the facts and circumstances on which such findings
are based. Such statement shall include, at a minimum, a description of the nature and if applicable, location of the public health, safety or general welfare need requiring adoption of the rule on an emergency basis; a description of the cause, consequences, and expected duration of such need; an explanation of why compliancewith the requirements of subdivision one of this section would be contrary to the public interest; and an
explanation of why current circumstance necessitates
that the public and interested parties be given less
than the minimum period for notice and comment provided
for in subdivision one of this section.
Pursuant to subdivision 1 of section 101 of the Racing, Pari-Mutuel Wagering and Breeding Law, the Board exercises "general jurisdiction over all horse racing activities and all pari-mutuel betting activities, both on-track and off-track, in the state and over the corporations, associations, and persons engaged therein." The Board's statutory powers specifically include the power to prescribe rules and regulations in order to prevent "the use of improper devices, the administration of drugs or stimulants or other improper acts for the purpose of affecting the speed" of the horses that are about to participate in races (Racing, Pari-Mutuel Wagering and Breeding Law § 301[2][b]). Additionally, "[a]n administrative agency, as a creature of the Legislature, is clothed with those powers expressly conferred by its authorizing statute, as well as those required by necessary implication (see Finger Lakes Racing Assn. v. New York Satte Racing & Wagering Bd., 45 NY2d 471, 480 [1978]; Equine Practitioners Association, Inc. v. [*9]New York State Racing and Wagering Bd., 105 AD2d, at 219).
The Legislature has recognized the State's interest in assuring the integrity of racing carried on under its auspices (see Barry v. Barchi, 443 U.S. 55, 64 [1979]; Equine Practitioners Association, Inc. v. New York State Racing and Wagering Bd., 105 AD2d, at 219). It must be noted that horse racing is the only sport in this State in which wagering is allowed (see Equine Practitioners Association, Inc. v. New York State Racing and Wagering Bd., 105 AD2d, at 219). Thus, the Board is empowered "to prescribe rules and regulations for the effective control" of horse racing (Equine Practitioners Association, Inc. v. New York State Racing and Wagering Bd., 105 AD2d, at 219, quoting from Matter of Bokman v. New York State Racing & Wagering Bd., 77 AD2d 459, 461 [4th Dept. 1980]).
Petitioners claim that the Board improperly effected the emergency "fluphenazine" rule because they did not follow the procedures set forth in the SAPA for the enactment of emergency legislation. SAPA section 202(6)(d)(iv) requires, at a minimum an agency seeking an emergency rule adoption to fully articulate in writing the circumstances which give rise to the adoption on an emergency basis so as to limit this method for rule making to genuine emergencies (see Matter of Law Enforcement Officers Union, District Council 82, AFSCME, AFL_CIO v. State of New York, 168 Misc 2d 781, 784 [Sup. Ct. Albany Co. 1995]). By enacting SAPA 202.6, the legislature was trying to stop the practice of using emergency rule making to avoid the notice and comment period otherwise required by the SAPA (see Matter of Law Enforcement Officers Union, District Council 82, AFSCME, AFL_CIO v. State of New York, 168 Misc 2d, at 784). As stated in the Sponsor's Memorandum, "[u]nder this legislation, an agency would have to disclose the specific reason as to the need to adopt the emergency rule and why it was necessary to forgo the required notice and comment period that is required by the SAPA" (Bill Jacket, L.1990, ch. 850, Sponsor's Memorandum,Assemblyman Sanders, Assembly Bill 10271-A, at 3).
At the onset, this Court notes that the Board was authorized, if it followed the steps detailed in the SAPA, to enact an emergency "fluphenazine" rule. There was sufficient evidence that the drug "fluphenazine" was apparently being used on horses who were racing and the Board's expert stated that it served no legitimate purpose. Thus, this Court cannot say that the rule was not rationally based and reasonably related to the promotion of the public welfare as related to the drug's effect upon a horse's performance in a race. However, although the proposed emergency legislation said there was an emergency, the record is devoid of any facts upon which to base a finding of immediate necessity, emergency or undue delay (see Matter of Law Enforcement Officers Union, District Council 82, AFSCME, AFL_CIO v. State of New York, 168 Misc 2d, at 784). The record does not explain why the rule had to be dealt with prior to the public notice and comment allowed by the SAPA. Moreover, the Notice of Adoption did not explain in any detail why compliance with the normal rule making procedure would be contrary to the public interest or why the current circumstances necessitated the use of emergency rule making procedure. The Board apparently knew there was a problem in 2000 with "fluphenazine" abuse. They waited until 2003 to propose even an emergency rule prohibiting its use in horse racing. When the Board finally made the rule permanent in May of 2005, they proposed the rule on May 2, 2005 in the State Registry as a Proposed Rule Making, no public comment was received. In less then two weeks, on May 11, 2005, the Board was able to file a Notice of [*10]Adoption and 9(E) NYCRR 4043.7 was able to become effective as a permanent rule. Thus, the expediency with which the Board was able to make the rule permanent belies the need for the five Emergency Rulemakings.
While administering "fluphenazine" to horses may well result in one horse obtaining a performance benefit over another and should be prohibited and presents a challenge for the Board, there is a complete absence of showing that it must be dealt with prior to the period of public notice and comment.
The Court specifically has two problems with the way the Board utilized the emergency rule process. One, the Board attempted to circumvent the SAPA and do indirectly what it could not do directly. It is clear that SAPA did not want emergency rules to last ad infinitum. The Board had 90 days to make the emergency rule permanent. It was allowed to renew the rule once if it took more then 90 days to make the rule permanent. The Board took no steps to make the rule permanent. Rather, they let the rule lapse as if the emergency disappeared for 24 hours and then magically reappeared 24 hours later and reenacted the same rule as a new emergency regulation. Thus, it was not illegal for horses to race with "fluphenazine" in their systems during the time the old rule lapsed and before the new rule was enacted. The Board argues that in this way they followed strictly the SAPA. The Court disagrees as it appears that the Board was attempting "to have its cake and eat it too" (People v. Tarsia, 50 NY2d 1, 9 [1980]).
The Board's papers are conspicuously silent as to why they felt the need to proceed with five emergency rule-makings rather than just making the emergency rule permanent. However, at oral argument, it became clear to this Court that the Board did not have absolute faith in the manner in which they were testing for "fluphenazine" in the racing horses. "High confidence" in a result was sufficient for an emergency regulation but not for a permanent one. The Court does not understand how a test is reliable enough for emergency rule-making but not for permanent rule-making. The Court can only suppose that the test has now been perfected and that is why, apart from this proceeding, that the Board has finally enacted a permanent "fluphenazine" rule. However, reliance on a test that was not sufficient for a permanent rule appears to be arbitrary and capricious and without rational basis. Because the testing problem was not resolved and recognizing a problem with the use of "fluphenazine", the Board attempted to circumvent the provisions of the SAPA.
Further the Notice of Adoption did not explain in any detail why compliance with normal rule making procedure would be contrary to the public interest or why the current circumstances necessitated the use of five separate emergency rule making procedures. The bottom line is that while the Board called this an "emergency", they did not treat it as one.
Horse racing is a closely regulated business (see Barry v. Barchi, 443 U.S., at 64; Matter of Sullivan County Harness Racing Assn. v. Glasser, 30 NY2d 269 [1972]; Equine Practitioners Association, Inc. v. New York State Racing and Wagering Bd., 105 AD2d, at 221). The Board must follow the procedures laid out in the SAPA for the passage of emergency legislation and cannot seek to circumvent them for their own purposes. If the test for "fluphenazine" was not perfected enough for a permanent rule prohibiting its use before a race, then it was not perfected enough for an emergency rule. The Board's attempts to circumvent the SAPA by manipulating the emergency rule provisions is a violation of the SAPA and accordingly, the emergency "fluphenazine" rule was arbitrary, capricious and an abuse of discretion. There is no basis upon [*11]which the broad provisions of the Emergency legislation issued by the Board can be sustained. Since the Emergency legislation is inoperative, the Board's holding in petitioner's case cannot be upheld.
However, in May of 2005, the Board finally enacted a permanent "fluphenazine" rule. Implicit in the permanent rule is the Board's belief that they have now perfected the test to detect "fluphenazine." An "administrative regulation is to be upheld if there is any evidence in the record before the agency that could support i.e., constitute a rational basis for- the action under review" (Matter of Brodsky v. Zagata, 222 AD2d 48, 51 [3rd Dept. 1996], aff'g 167 Misc 2d 175 [Sup. Ct Albany Co. 199 ]). Here, there is no question that based on its expertise, the Board could rationally determine that "fluphenazine" is dangerous and serves no purpose except to gain an advantage in racing.
The Court declares that the permanent rule is within the Board's statutory authority to promulgate and is rationally based and constitutional. In this way, the Board has resolved the problems caused by the emergency "fluphenazine" rule as to any future race. Clearly, the implementation of the permanent rule in May of 2005, which superseded the emergency regulation, render any future controversy over the validity of the original emergency regulation moot.
The problem this Court has with the instant petition is that petitioners apparently did not bother to follow the proper procedure for review by exhausting their administrative remedies. It is hornbook law that a CPLR Article 78 proceeding may not be brought to challenge an agency determination which is not final (see Watergate II Apartments v. Buffalo Sewer Auth., 46 NY2d 52, 57 [1978]; Frumoff v. Wing, 239 AD2d 216, 217 [1st Dept. 1997]; CPLR 7801[1]). According to the Court of Appeals, this doctrine "reliev[es] the court of the burden of deciding questions entrusted to an agency," and "prevents premature judicial interference with the administrators' efforts to develop...a co-ordinated, consistent and legally enforceable scheme of regulation" (Watergate II Apartments v. Buffalo Sewer Auth., 46 NY2d, at 57). Accordingly, litigants who fail to exhaust the administrative process prior to commencement of a proceeding may not obtain Article 78 relief (Slater v. Gallman, 38 NY2d 1,3 [1975]; Young Men's Christian Assn. v. Rochester Pure Waters Dist., 37 NY2d 371, 375 [1975]). However, where exhaustion of administrative remedies would be futile or would cause irreparable harm, a failure to exhaust may be excused (Watergate II Apartments v. Buffalo Sewer Auth., 46 NY2d, 57). Because this Court has determined that the Board's enactment of the Emergency "fluphenazine" rule five successive times violated the SAPA's procedures for enactment of such a rule and belied any real claim of emergency, thus making the Emergency rule wholly inapplicable here, petitioners failure to exhaust may be excused.
As to whether to annul and set aside the Boards Findings and Order in this matter, the Court notes that court may not interfere unless there is no rational basis for the exercise of discretion or the action complained of is arbitrary and capricious (see Matter of Pell V. Board of Education, 34 NY2d 222, 230-31 [1974]). "The arbitrary or capricious test chiefly relates to whether a particular action should have been taken or is justified... and whether the administrative action is without foundation in fact.' ...Arbitrary action is without sound basis in reason and is generally taken without regard to the facts" (see Matter of Pell V. Board of Education, 34 NY2d, at 231). "Rationality is what is reviewed under ... the arbitrary and [*12]capricious standard" (see Matter of Pell V. Board of Education, 34 NY2d, at 231).
Generally, in reviewing the finding of an administrative agency, the construction placed on the statute and implementing regulations by an agency is entitled to great weight and is to be upheld if reasonable (Matter of Johnson v. Jay, 48 NY2d 689)" (Matter of Barklee Realty Co. v. New York State Div. of Hous. & Community Renewal (159 AD2d 416 [1st Dept.], lv. denied 76 NY2d 709 [1990]).
While respondents state that it was not their intent to violate the SAPA in enacting the Emergency "fluphenazine" rule five successive times, they did so. The idea behind the emergency rule is a sense of immediacy that is missing here, namely that the agency cannot wait for the notice and public comment period to make a rule permanent and they needs a rule right now while they deal with making the emergency rule-making permanent. Here, there is no evidence that they Board took any steps until this proceeding was brought to make the emergency rule-making permanent. The original rule-making was in 2003. The rule was made permanent in 2005. There is no rational basis for allowing the emergency rule to lapse in the interim and then to reenact it except to avoid the requirements for enacting a permanent rule under the SAPA. The emergency, as noted above, did not stop for the period of time that the rule lapsed. Given the apparent ease with which the emergency rule was made permanent, the Court cannot help but question the rationality of the need for five successive emergency rules.
Additionally, if this Court's understanding of respondent's oral argument is correct, the reason that the rule was not made permanent was because of questions surrounding the reliability of the test used. There is no rational basis for the Board's apparent determination that the test for "fluphenazine" was reliable enough for an emergency rule but not for a permanent rule, and assuming arguendo, that the Court's understanding was correct, any such distinction is arbitrary and capricious. Accordingly, because the August 2004 Findings and Order of the Board, disqualifying petitioners' horses and declaring their purses forfeited, is based on an emergency rule that is hereby vacated, voided and annulled on the grounds that it fails to conform with SAPA section 206, the August 2004 Findings and Order of the Board is annulled and set aside to the extent that the matter is remitted to respondents for a new Findings and Order in accordance with the instant decision.
Accordingly, the petition is granted to the extent that 9 NYCRR § 4043.7, as it was in effect at the relevant time period was invalid and the Board is enjoined from its implementation and enforcement, the August 2004 Findings and Order of respondent New York Racing and Wagering Board ("the Board"), disqualifying petitioners' horses and declaring their purses forfeited is annulled and set aside and the matter is remitted to respondent for further proceedings in light of this Court's decision.
This constitutes the decision, order and judgment of this Court.
ENTER:
Hon. Ronald A. Zweibel, J.S.C.
Dated: February 9, 2006
[*13]
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