Opinion
July 20, 1970
Appeal from a judgment of the Supreme Court at Special Term, entered July 14, 1969 in Albany County in a proceeding under article 78 of the CPLR which determined that the failure of the Commissioner of the Department of Agriculture and Markets to adopt regulations in accordance with the provisions of section 214-b Agric. Mkts. of the Agriculture and Markets Law, that would provide for the marketing of economy grade frankfurters and bologna, is arbitrary and capricious by omission, and which ordered temporary stay orders continued pending promulgation of such regulations. Respondent is engaged in the business of processing, packing and distributing meat products. A substantial part of its business was the manufacturing and marketing of frankfurters and bologna meat products under a certain formula which products were labeled "economy grade". By reason of its activities in the meat product business, respondent became subject to the provisions of article 5-B of the Agriculture and Markets Law entitled "Inspection and Sale of Meat" which was enacted by chapter 324 of the Laws of 1962, and became effective on March 1, 1963. Section 96-s of article 5-B authorized the "commissioner * * * to enact, amend and repeal rules and regulations necessary to carry out and give full force and effect to the provisions of this article". Section 96-s further provided as follows: "Such rules and regulations shall conform insofar as appropriate to meat inspection regulations of the United States department of agriculture." Pursuant to section 96-s the commissioner promulgated regulations for the inspection and labeling of meat and meat by-products (1 NYCRR 285.1-311.3). Section 301.7 of the regulations established the substances and quantities thereof which may be added to meat food products including frankfurters and bologna. Respondent's manufacturing and marketing of frankfurters and bologna, pursuant to the formula resulting in products labeled "economy grade", did not comply with the standards established by section 301.7 of the regulations. Pursuant to an application made on behalf of respondent and other meat packers, a permit was issued pursuant to sections 214-d Agric. Mkts. and 214-e Agric. Mkts. of the Agriculture and Markets Law authorizing them for a period of one year to manufacture and market an "economy grade" frankfurter and bologna under the conditions and formula set forth in the permit, and also authorized the labeling of these products as "economy grade", thus permitting these packers to avoid the requirement of subdivision (b) of section 300.8 of the regulations which required the word "imitation" to precede the word frankfurter or bologna on the label of these products which did not meet the standards set forth in the regulations. Pursuant to subsequent applications, similar permits were issued on March 31, 1967 for a period of one year, and on April 8, 1968 for a period expiring on December 31, 1968. On December 5, 1968 a letter from the Department of Agriculture and Markets was directed to respondent advising that the permit expired on December 31, 1968, and that the use of the labeling material for and the distribution of "economy grade" frankfurters and bologna would not be permitted after December 31, 1968. Thereafter, counsel for the New York State Meat Packers Association interceded on behalf of respondent with the department by reason of certain alleged difficulties and hardships which respondent would suffer by reason of the termination of the permit on December 31, 1968. As a result the department, by letter dated January 6, 1969, permitted the distribution by respondent of frankfurters and bologna which did not comply with the standards set forth in the regulation under the "economy grade" label rather than under the required "imitation" label until January 17, 1969. Upon the expiration of the last permit, respondent initiated this article 78 proceeding, contending that the rules and regulations of the commissioner, by permitting only two labels for frankfurters and bologna, forced it either to change a formula it had employed for 35 years in order to comply with higher standards or to label its products as "imitation", thereby placing it at a competitive disadvantage with producers of cheaper quality frankfurters and bologna which, nevertheless, qualify for an "imitation" label. The commissioner's determination to impose these alternatives on respondent by limiting the labels under which it could market its products was, respondent contends, arbitrary and capricious. Special Term concluded that the commissioner's failure to adopt rules and regulations authorizing a greater number of labels under which respondent and presumably other producers could market their products "was arbitrary and capricious by omission". The rationale for the court's decision was apparently the desire to accommodate the consuming public by facilitating great product differentiation. Consequently, the court issued orders staying the expiration of the temporary permits under which respondent had been marketing its products until such time as the commissioner held further hearings and issued new rules and regulations concerning the labeling of meat products. Appellants contend, inter alia, that an article 78 proceeding was not the proper procedure to employ in the instant case. An article 78 proceeding is an inappropriate vehicle to review the legislative acts of an administrative agency, such as those in question. ( Matter of Lakeland Water Dist. v. Onondaga County Water Auth., 24 N.Y.2d 400.) Dismissal, however, may be avoided by treating this proceeding as a declaratory judgment action, which may be utilized to review the quasi-legislative acts of an administrative agency. ( Matter of Lakeland Water Dist. v. Onondaga County Water Auth., supra.) Appellants further contend that Special Term's determination that the commissioner acted arbitrarily and capriciously in failing to authorize a greater variety of labels under which respondent might market its products was erroneous. The language of section 96-s Agric. Mkts. of the Agriculture and Markets Law makes it clear that the Legislature intended to limit the commissioner's discretion by requiring him to conform his rules and regulations to those found in the comparable Federal rules and regulations. The Federal act alluded to (U.S. Code, tit. 21, §§ 601-691) delegates to the United States Secretary of Agriculture the authority to adopt rules and regulations regarding the inspection, labeling and sale of meat and meat products. The regulation adopted by the secretary with reference to labeling and the requirement of "imitation" brands is identical to New York's ( 9 C.F.R. § 317.8). Had the commissioner authorized a label permitting frankfurters and bologna which failed to comply with the requirements of 1 NYCRR 301.7 to be marketed with other than an "imitation" label, he would have violated the explicit mandate of section 96-s Agric. Mkts. of the Agriculture and Markets Law requiring his regulations to be at least as rigid as those adopted by the United States Secretary of Agriculture. Furthermore, if the commissioner had promulgated regulations more liberal than those adopted by the Secretary of Agriculture, the result would have been a preemption of the State Meat Inspection Program by the Federal government with the resulting loss of Federal funds. (U.S. Code, tit. 21, § 661.) Under these circumstances, it is apparent that the commissioner was not acting arbitrarily or capriciously, but was instead adhering to the strict mandate of the statute in exercising his authority to issue rules and regulations governing the labeling of meat products. Since the labels permitted were confined to those approved by the Secretary of Agriculture, and since there were no proposals before the commissioner for any new or amended regulations, no public hearings were required. (Agriculture and Markets Law, § 214-b.) The judgment of the Special Term must be reversed, and the stays continued therein vacated. Judgment reversed, on the law, judgment granted in favor of appellants, and stays contained in the order to show cause vacated, without costs. Motion to dismiss appeal on the ground that appeal does not lie as of right denied as academic, with costs. Reynolds, Staley, Jr., Greenblott and Cooke, JJ., concur in memorandum by Staley, Jr., J.; Herlihy, P.J., concurs in a separate memorandum in which Reynolds, Greenblott and Cooke, JJ., concur. Herlihy, P.J. (concurring).
It is apparent that the judgment appealed from must be reversed and the petition dismissed upon the merits and, accordingly, it is not necessary to consider the other contentions raised by the appellants herein. Section 96-s of article 5-B of the Agriculture and Markets Law as enacted in 1962 and in effect at the time the regulation being questioned by the petitioner was adopted authorized the adoption of rules and regulations and mandated that as far as was "appropriate" they conform to federal regulations. The Commissioner's regulation conforms to an appropriate federal regulation ( 9 C.F.R. § 317.8). Section 214-b Agric. Mkts. of the Agriculture and Markets Law specifically excepted public hearings as to the adoption of federal regulations and would not reasonably require one in the present situation. The petitioner has had ample time to conform to the present regulation. In accordance with the foregoing, the judgment must be reversed and the petition dismissed, and I do not reach any other of the grounds urged by appellants for such result.