In the Matter of The Council of the City of New York, Respondent,v.The Department of Homeless Services of the City of New York, et al., Appellants.BriefN.Y.October 8, 2013REPRODUCED ON RECYCLED PAPER New York County Clerk’s To be argued by Index No. 403154/11 RONALD E. STERNBERG COURT OF APPEALS STATE OF NEW YORK In the Matter of the Application of THE COUNCIL OF THE CITY OF NEW YORK, Petitioner-Respondent, For a Judgment Pursuant to CPLR Article 78 -against- THE DEPARTMENT OF HOMELESS SERVICES OF THE CITY OF NEW YORK and SETH DIAMOND, Commissioner for the Department of Homeless Services of the City of New York, Respondents-Appellants. APL-2013- 00140 APPELLANTS’ BRIEF MICHAEL A. CARDOZO, Corporation Counsel of the City of New York, Attorney for Respondents- Appellants, 100 Church Street, New York, New York 10007. (212) 788-1070 RSternbe@law.nyc.gov LEONARD KOERNER, STEVEN GOULDEN, RONALD E. STERNBERG, of Counsel. June 27, 2013 -i- TABLE OF CONTENTS Page PRELIMINARY STATEMENT ......................................... 1 QUESTION PRESENTED ............................................ 3 STATEMENT OF FACTS The Underlying State Regulation................. 3 State Administrative Directives 94 ADM-20................................... 5 96 ADM-20................................... 7 Eligibility Procedure No. 12-400................ 8 DECISION BELOW ............................................... 13 STATUTE INVOLVED ............................................. 15 ARGUMENT THE COURT BELOW ERRED IN CONCLUDING THAT THE ELIGIBILITY PROCEDURE, WHICH VESTS SIGNIFICANT DISCRETION IN DECISION MAKERS AND HAS NO LEGAL EFFECT BUT IS MERELY EXPLANATORY OF EXISTING STATE LAW, IS A RULE THAT MUST BE ISSUED PURSUANT TO CAPA............................... 16 (1) The Procedure is not a rule because it invests significant discretion in decision makers.................. 16 (2) The Procedure is not a rule because it has no legal effect but is merely explanatory of existing State law...................................... 30 CONCLUSION.................................................... 37 -ii- TABLE OF AUTHORITIES Pages Cases: 242-44 E. 77th Street, LLC v. Greater New York Mutual Insurance Company, 31 AD3d 100 (1st Dept. 2006)............................ 26n.13 439 East 88 Owners Corporation, Matter of v. Tax Commission, 307 AD2d 203 (1st Dept. 2003)............................... 17 Allstate Insurance Company, Matter of v. Libow, 106 AD2d 110 (2d Dept. 1984), aff’d on opinion below, 65 NY2d 807 (1985).............. 27, 30 Bailey v. AGR Realty Co., 260 AD2d 322 (1st Dept. 1999)............................... 26 Callahan v. Carey, 307 AD2d 150 (1st Dept. 2003)................................ 4 Callahan v. Carey, index number 42582/79 (Sup. Ct. NY Co.)................... 5n.3 Ciotoli, Matter of v. Goord, 256 AD2d 1192 (4th Dept. 1998).............................. 21 Cordero, Matter of v. Corbisiero, 80 NY2d 771 (1992).................................. 16, 17n.11 Cubas v. Martinez, 8 NY3d 611 (2007)............................... 30, 33, 34, 35 DeBonis v. Corbisiero, 178 AD2d 183 (1st Dept. 1991), leave to appeal denied, 80 NY2d 753 (1992).................. 36 DeJesus, Matter of v. Roberts, 296 AD2d 307 (1st Dept. 2002), leave to appeal denied, 99 NY2d 510 (2003).................. 21 -iii- Dry Harbor Nursing Home and Health Related Facility, Matter of v. Axelrod, 137 AD2d 962 (3d Dept.), leave to appeal denied, 73 NY2d 701 (1988).................. 18 Eldredge v. Koch, 98 AD2d 675 (1st Dept. 1983).............................. 5n.3 Homestead Funding Corporation, Matter of v. State of New York Banking Department, 95 AD3d 1410 (3d Dept. 2012)............................ 17, 35 Lue-Shing, Matter of v. Travis, 12 AD3d 802 (3d Dept. 2004), leave to appeal denied, 4 NY3d 703 (2005)............... 24, 25 Medical Society of the State of New York, Matter of v. Serio, 100 NY2d 854 (2003)..................................... 21, 25 National Association of Independent Insurers v. State of New York, 207 AD2d 191 (2d Dept. 1994), aff’d, 89 NY2d 950 (1997)................................... 35 New York City Transit Authority, Matter of v. New York State Department of Labor, 88 NY2d 225 (1996).................................. 18, 23, 25 People v Illardo, 48 NY2d 408 (1979])...................................... 26n.3 Roman Catholic Diocese of Albany, Matter of v. New York State Department of Health, 66 NY2d 948 (1985).......................................... 17 Schwartfigure v. Hartnett, 83 NY2d 296 (1994).......................................... 17 Senior Care Services, Inc., Matter of v. New York State Department of Health, 46 AD3d 962 (3d Dept. 2007)................................. 21 Singh, Matter of v. Taxi and Limousine Commission, 282 AD2d 368 (1st Dept. 2001)........................... 18n.11 -iv- Taylor, Matter of v. New York State Department of Correctional Services, 248 AD2d 799 (3d Dept. 1998)................................ 20 Trustees of Masonic Hall and Asylum Fund, Matter of v. Axelrod, 174 AD2d 199 (3d Dept. 1992)................................ 23 Statutes: L. 1997, ch. 436, § 122(a), (f)............................. 3n.2 State Administrative Procedure Act (SAPA) (56 McK. Con. Laws of NY)............................... passim § 102(2)(a)(i).......................................... 17n.10 § 102(2)(b)(iv)..................................... 17n.10, 37 Regulations: 18 NYCRR § 352.35................................................ passim § 352.38(b).................................................. 4 Other authorities: 2 Report of the New York City Charter Revision Commission, December 1986 – November 1988............................... 28 Administrative Directive, 96 ADM-20......................... i, 7 Administrative Directive, 94 ADM-20..................... i, 5, 31 http://www.merriam-webster.com/dictionary/standard........ 28n.14 NYC Administrative Procedure Act (CAPA) (NYC Charter ch. 45).................................... passim § 1041(5)............................................... passim NYC Department of Homeless Services Procedure No. 12-400.................................... passim COURT OF APPEALS STATE OF NEW YORK In the Matter of the Application of THE COUNCIL OF THE CITY OF NEW YORK, Petitioner-Respondent, For a Judgment Pursuant to CPLR Article 78 -against- THE DEPARTMENT OF HOMELESS SERVICES OF THE CITY OF NEW YORK and SETH DIAMOND, Commissioner for the Department of Homeless Services of the City of New York, Respondents-Appellants. APPELLANTS’ BRIEF PRELIMINARY STATEMENT By leave of this Court granted in an order entered June 11, 2013 (R. 353),1 respondents appeal from an order of the Appellate Division, First Department, entered February 14, 2013 (R. 355-56). For the reasons stated by the Supreme Court, the Appellate Division affirmed a final order of the Supreme Court, New York County (Gische, J.), entered March 16, 2012 (R. 9), that granted the petition for the reasons stated in a decision and order of the Supreme Court, entered February 22, 2012 (see, R. 10-28). The petition sought an order (1) declaring that Department of Homeless Services (“DHS”) Procedure No. 12-400, 1 Numbers in parentheses preceded by “R.” refer to pages of the reproduced Record on Appeal. entitled “Single Adults Eligibility Procedure” (“Eligibility Procedure” or “Procedure”), “is void because it was promulgated ... in violation of Chapter 45 of the New York City Charter, the City Administrative Procedure Act (“CAPA”);” and (2) “[e]njoining Respondents from adopting, implementing, or enforcing Procedure No. 12-400 in form or substance pending compliance with Chapter 45” (R. 57). DHS contends that the Courts below erred in granting the petition. The Procedure sets forth the standards by which DHS is to determine the eligibility of individual applicants for temporary housing assistance (“THA”). Contrary to the conclusion of the Courts below, it does not constitute a rule within the meaning and intent of CAPA because it invests significant discretion in agency decision makers. Utilizing the Procedure’s guidelines, DHS investigates and evaluates each application for THA. The agency bases individual eligibility determinations on the totality of each applicant’s circumstances, with an analysis of the applicant’s situation in accord with all relevant factors. As further demonstrated below, because the Procedure has no legal effect but is merely explanatory of existing State law, it falls within a stated exception to CAPA’s definition of a rule. The Procedure is no more than DHS’s restatement, interpretation, and explanation of State law and practice as -2- comprehensively embodied in a State regulation and State administrative directives. The order appealed from should be reversed, the petition should be denied, and the proceeding should be dismissed. QUESTION PRESENTED Whether the Courts below erred in concluding that the Eligibility Procedure, which vests significant discretion in agency decision makers and has no legal effect but is merely explanatory of existing State law, is a rule that must be issued pursuant to CAPA. STATEMENT OF FACTS The Underlying State Regulation (18 NYCRR § 352.35) In January, 1996, the New York State Department of Social Services (“DOS”)2 promulgated 18 NYCRR § 352.35 (“the Regulation”), that “governs the provision of temporary housing assistance to persons who are homeless” and “sets forth the requirements with which an individual ... who applies for temporary housing must comply in order to be eligible for [THA]” (R. 229 [§ 352.35(a)]; see, R. 229-31). One such requirement is -3- 2 The Department of Social Services was subsequently renamed the Department of Family Assistance and divided into two autonomous offices, the Office of Children and Family Services and the Office of Temporary and Disability Assistance (“OTDA”), with the latter assuming responsibility for, inter alia, the homeless housing and assistance program and the homelessness prevention program. See L. 1997, ch. 436, § 122(a), (f). that applicants “cooperate in and complete” an assessment of their housing needs (R. 230 [§ 352.35(c)(1)]), which includes the availability of housing and the need for THA (R. 229 [§ 352.35(b)(1)]). An applicant’s failure to comply with this and other requirements of the Regulation requires the denial of THA, unless such failure is due to the applicant’s “physical or mental impairment” (R. 230 [§ 352.35(c)]). Applicants for THA must cooperate in efforts “to determine available resources, and must apply for and use any benefits and resources that will reduce or eliminate the need for [THA]” (R. 231 [§ 352.35(f)]). THA must be denied if the applicant “has other housing available,” or if s/he “is required to, but is not applying income and/or using available resources to reduce or eliminate the need for [THA]” (id. [§ 352.35(g)]). Applicants found ineligible for shelter are entitled to an agency conference (18 NYCRR § 352.38[b]) and a State fair hearing to challenge denial of their application (R. 231 [§ 352.35(h)]). The First Department rejected a challenge to the Regulation. Callahan v. Carey, 307 AD2d 150 (1st Dept. 2003). Concluding that the Regulation was “duly promulgated and is -4- consistent with the consent decree” (307 AD2d at 155),3 the Court said (id., at 153): “[D]efendants, as the public authorities to whose discretion the supervision and operation of these essential programs have been committed, are empowered to adopt regulations which ‘are rationally related to the agency’s legitimate rulemaking objective of assuring that temporary housing resources are not squandered on those having no real need of them and to the related, equally legitimate objective of attempting to reduce prospective reliance upon temporary housing provided at public expense[.]’” State Administrative Directives 94 ADM-20 A year prior to the promulgation of 18 NYCRR § 352.35, DOS issued an Administrative Directive, 94 ADM-20, the purpose of which was “to advise social services districts [“districts”] ... of their responsibilities with respect to providing assistance to homeless persons” (R. 76; see, R. 75-121). While it describes the factors to be considered in determining whether applicants are entitled to such assistance, the Directive, emphasizing the discretionary nature of the decision making process, provides that eligibility determinations are to be made -5- 3 In 1981, the City entered into a consent decree wherein it agreed that, upon specified conditions being met, it would “provide shelter and board to each homeless man who applies for it” (R. 65). Callahan v. Carey, index number 42582/79 (Sup. Ct. NY Co.) (see, R. 64-73). The protections embodied in the consent decree were thereafter extended to homeless adult women. See Eldredge v. Koch, 98 AD2d 675 (1st Dept. 1983). based upon ht the totality of the [applicant’s] circumstances” (R. 98). The Directive further emphasizes that “individuals ... have primary responsibility for securing their own housing” (R. 78) and that there is “an obligation on the part of individuals ... to use available resources and to seek necessary assistance to avoid homelessness whenever possible” (R. 79). It provides (R. 78-79): “Social services districts are neither expected nor obligated to provide temporary housing assistance to persons otherwise capable of making their own housing arrangements. Physical or mental impairment that limits a person’s ability to secure housing may necessitate the provision of assistance in appropriate cases. Absent such considerations, however, the individual ... requesting assistance must demonstrate that reasonable efforts have been made to secure housing and that no other housing can be accessed even on a temporary basis.” The Directive further provides that its requirements “reflect a recognition that temporary housing resources are not unlimited and that each district is permitted to establish processes for the provision of temporary housing assistance that affords it needed flexibility in structuring its temporary housing programs” (R. 79). The Directive’s standards “make clear the obligations both of the district and of persons seeking temporary housing assistance” and thus “help to ensure -6- the most appropriate and effective use of this costly yet critical benefit” (id.). Regarding the responsibilities of all applicants for THA, the Directive provides, inter alia (R. 98): “Each district must provide temporary housing assistance only to persons who can establish that they are without housing at the time assistance is requested and have sought and cannot access any other housing even on a temporary basis.” In addition to requiring that applicants “must demonstrate by clear, convincing and credible evidence that they have actively sought and are unable to access any other temporary or permanent housing” (id.), the Directive mandates that they must “cooperate with the district’s eligibility verification efforts by providing all information and documentation relevant to determining the applicant’s eligibility” (id.). 96 ADM-20 Subsequent to the promulgation of 18 NYCRR § 352.35, DOS issued another Administrative Directive, 96 ADM-20, the purpose of which was to advise social service districts both of the enactment of the Regulation and “of procedures for reviewing and acting upon applications for THA by homeless ... individuals” (R. 125; see, R. 124-47). The Directive also “clearly defines the responsibilities of persons applying for and receiving THA, to ensure that THA is being provided only to -7- persons who have no other available housing or the means to secure other housing” (R. 125). In particular, the Directive requires a district to conduct an assessment “whenever an individual ... applies for or is receiving THA” (R. 126). An assessment is “an evaluation by the [district] of the individual’s ... housing and housing- related public assistance and care needs” (R. 127). Applicants for THA “must cooperate in the completion of an assessment” (id.). THA must be denied if an applicant’s failure to cooperate is not the result of “verified mental or physical incapacity” (R. 127-28). An applicant “must actively seek housing other than temporary housing” (R. 131), and any income available to the applicant must be budgeted by the district “to reduce the need for public assistance, including the need for THA” (R. 135). THA must be denied if a district determines that an applicant “is required, but is not applying available income and/or resources to [his/her] share of the cost of THA” (R. 136). The Eligibility Procedure DHS issued the Eligibility Procedure, effective November 14, 2011 (R. 320). During the previous nine months, DHS and OTDA (see, supra, at 3n.2) engaged in frequent discussions concerning almost every aspect of the Procedure (R. 319). By letter dated November 2, 2011, OTDA advised DHS that -8- it had “determined that [the Procedure] is not inconsistent with State law or regulation” (R. 165, 319).4 “[C]onsistent with the purposes of [18 NYCRR § 352.35],” and in order “to execute the City’s responsibilities as delineated in the Callahan Consent Decree,”5 DHS promulgated the Procedure for the purpose of “determin[ing] whether an applicant for THA is an eligible homeless person” (R. 149). Such eligibility is predicated on “whether the applicant has a viable housing option where s/he can live even on a temporary basis and/or whether s/he possesses sufficient financial resources to secure such housing” (id.). That, in turn, is determined by DHS in each case upon an investigation of “the totality of the applicant’s circumstances, with an analysis of each applicant’s situation in accordance with all relevant factors” (R. 150). The Procedure enumerates the factors to be considered by DHS “[d]epending on the applicant’s stated reasons for seeking shelter” (R. 152; see, R. 152-55). An applicant is “required to cooperate with DHS’s eligibility process by providing all information and documentation necessary to determine the applicant’s eligibility for THA” (R. 151). If necessary, DHS will assist the applicant 4 The Supreme Court noted that the State had “expressly represented” that it was not taking a position on the question of the applicability of CAPA (R. 13). -9- 5 See, supra, at 5n.3. in obtaining such information (id.). In general, the “failure to produce documentation constitutes a failure to cooperate” (id.) that will result in the denial of THA (R. 151-52). However, DHS staff may, on a case-by-case basis, determine that there is a “valid reason” (R. 151) why failing to produce documentation does not constitute a failure to cooperate, such as a “mental or physical impairment as assessed by a qualified mental health or medical professional” (R. 155). “An individual cannot elect to be homeless, for eligibility purposes, by not utilizing other resources to obtain housing” (R. 152). In this regard, “DHS shall investigate all residences where the individual has resided in the year prior to the date of the application for [THA]” (id.). DHS will determine whether any of the locations so identified “is an available housing option” (id.). DHS will also “conduct an investigation of each applicant’s financial resources to determine whether the applicant has financial resources sufficient to obtain other housing” (R. 154). When it implements the Procedure,6 DHS will initiate its “eligibility process” (R. 151) by requiring an applicant for 6 In its answer to the petition, filed pursuant to the order of the Supreme Court upon its denial of DHS’s motion to dismiss (R. 27), DHS set forth a comprehensive description of how the Procedure’s contemplated application and investigation processes (R. 155-56) will work in practice (see, R. 320-38). -10- THA initially to complete an application, which includes questions regarding prior living arrangements and how the applicant became homeless (R. 321-22). The applicant will then meet with an eligibility specialist who records information learned during an in-depth assessment of the applicant on an Eligibility Determination Questionnaire (“EDQ”) (R. 155, 323). The EDQ is an important investigative tool designed to elicit information about why the applicant is seeking shelter and whether the applicant has any available housing options or sufficient resources to obtain alternative housing (R. 323). In addition, the EDQ also identifies individuals who may have information relevant to the applicant’s need for shelter (id.).7 The EDQ thus provides a comprehensive picture of the unique circumstances of each applicant’s individual housing situation. This allows the eligibility specialist both to tailor the investigation to the specific applicant and to weigh -11- 7 The EDQ contains questions regarding, inter alia, immediate family members; income; benefits; rental assistance; employment status; criminal history; veteran status; domestic violence; and, medical and/or substance abuse/chemical dependency issues confronting the applicant. The EDQ also contains questions concerning the applicant’s housing during the preceding year, including the type of housing; length of stay; whether others occupied the residence and, if so, their relationship to the applicant; why the applicant left the residence; whether the applicant paid rent; whether s/he was on the lease; whether s/he received notice or had been evicted; the physical layout of the residence and the number of occupants; and, whether the applicant or others residing at the location had any medical, child welfare or domestic violence issues that would preclude the residence as an available housing option (R. 323-24). the variety of factors impacting the eligibility determination (R. 324).8 In reviewing previous locations where the applicant lived prior to seeking THA, the eligibility specialist will evaluate, based on the totality of the applicant’s circumstances, whether the applicant can return to any of them. The specialist obtains information from, among other sources, information on the EDQ; interviews of relevant third parties, such as landlords and tenants at the prior location; and, information and documentation submitted by the applicant in support of his/ her application (R. 330-31). In this regard, the Procedure also provides a non-exhaustive list of factors to be considered, as applicable, when determining whether a particular housing option remains available to the applicant, including tenancy rights, lease restrictions, eviction, domestic violence, overcrowding, unsafe housing conditions, and health and safety (R. 152-54). In accord with the requirements of the Eligibility Procedure (R. 156), the specialist submits his/her findings and recommendation to an eligibility supervisor for review. The supervisor may approve or disapprove the recommendation or may -12- 8 At the end of the application process, applicants are provided with a conditional shelter placement pending completion of the eligibility investigation and the issuance of an eligibility determination (R. 322). require the specialist to conduct additional investigation (R. 335-36). Also pursuant to the Procedure (R. 157-58), an ineligibility determination will be reviewed by a DHS attorney at an agency conference if requested by an applicant. The applicant may be accompanied by a representative and may submit additional documentation. Upon his/her review of all of the evidence, the attorney may affirm or reverse the determination or may refer the matter to agency staff for further investigation (R. 336-37). Whether or not an agency conference is requested, an applicant determined to be ineligible may challenge the decision at a State fair hearing (R. 158, 337).9 DECISIONS BELOW The Supreme Court concluded that the Procedure “was promulgated in violation of the public vetting process required by [CAPA]” (R. 12). Rejecting the argument that the Procedure “vests DHS with sufficient discretion to make decisions to fall outside the definition of a rule under CAPA” (R. 21), the Court said (R. 20-21): “A plain reading of the [Procedure] makes it clear that it mandates certain results under certain circumstances. Contrary to the -13- 9 There is no limitation on the number of times an applicant may re-apply for shelter, and applicants are entitled to an agency conference and State fair hearing upon denial of each application. Shelter reapplications may be made at any time, including the same day a prior application is denied (R. 337). City’s arguments, while DHS has certain discretion in weighing factors before making a finding of eligibility for temporary housing, that discretion is not unfettered. There are a considerable number of mandated outcomes which leave DHS with no discretion about whether to deny temporary housing. While in some cases there are exceptions to outcomes, the exceptions do not make [an] otherwise ... mandated outcome discretion- ary.... Because there are mandated outcomes in the Procedure, the court holds that it is a rule within the meaning of CAPA.” The Court also rejected the argument that the Procedure is not a rule inasmuch as it “has no legal effect because it ... implements the same legal obligations that are otherwise contained in existing law” (R. 22). The Procedure, the Court concluded, “is not simply a strict interpretation of the existing State Regulation or the State Administrative Directives, with a filling in of the interstices” (R. 23). Rather, the Procedure “imposes many new obligations on applicants, with a concomitant creation and denial of substantive rights” (R. 23-24). The Appellate Division affirmed “for the reasons stated” by the Supreme Court (R. 356). -14- STATUTE INVOLVED New York City Charter, Chapter 45 (City Administrative Procedure Act) § 1041(5) “Rule” means the whole or part of any statement or communication of general applicability that (i) implements or applies law or policy, or (ii) prescribes the procedural requirements of an agency including an amendment, suspension, or repeal of any such statement or communication. *** b. “Rule” shall not include any ... (ii) form, instruction, or statement or communication of general policy, which in itself has no legal effect but is merely explanatory[.] § 1043(a) Authority. Each agency is empowered to adopt rules necessary to carry out the powers and duties delegated to it by or pursuant to federal, state or local law. No agency shall adopt a rule except pursuant to this section. -15- ARGUMENT THE COURTS BELOW ERRED IN CONCLUDING THAT THE ELIGIBILITY PROCEDURE, WHICH VESTS SIGNIFICANT DISCRETION IN DECISION MAKERS AND HAS NO LEGAL EFFECT BUT IS MERELY EXPLANATORY OF EXISTING STATE LAW, IS A RULE THAT MUST BE ISSUED PURSUANT TO CAPA. Because there is no dispute that the Procedure was not promulgated pursuant to CAPA (see, R. 236), the “controlling question” (Matter of Cordero v. Corbisiero, 80 NY2d 771, 772 [1992]) is whether the Courts below correctly concluded that CAPA is applicable. The Courts erred both because the Procedure is not a rule within the meaning and intent of CAPA, and because it falls within a stated exception to the definition of a rule. The order appealed from, therefore, should be reversed. (1) The Procedure is not a rule because it invests significant discretion in decision makers. “[O]nly a fixed, general principle to be applied by an administrative agency without regard to other facts and circumstances relevant to the regulatory scheme of the statute it administers constitutes a rule or regulation.” Matter of Roman Catholic Diocese of Albany v. New York State Department of -16- Health, 66 NY2d 948, 951 (1985).10 Contrary to the determina- tions of the Courts below, the Procedure is not a rule because it is not such a “statement or communication of general applicability” (Charter § 1041[5]), i.e., “a rigid, numerical policy invariably applied across-the-board to all [applicants] without regard to individualized circumstances or mitigating factors.” Schwartfigure v. Hartnett, 83 NY2d 296, 301 (1994); see Matter of Homestead Funding Corporation v. State of New York Banking Department, 95 AD3d 1410, 1412 (3d Dept. 2012) (“Blanket requirements and fixed standards that are to be generally applied in the future, regardless of individual circumstances, are rules subject to [SAPA’s] rule-making procedures[.]”); Matter of 439 East 88 Owners Corporation v. Tax Commission, 307 AD2d 203, 203 (1st Dept. 2003)(A policy that “dictates a specific result in particular circumstances without regard to other circumstances relevant to the regulatory scheme” is a rule within the meaning of CAPA.).11 10 For the purposes of this litigation, both CAPA’s definition of “rule” (Charter § 1041[5]) and the relevant exclusion (id., § 1041[5][b][ii]) are essentially identical to cognate provisions of the State Administrative Procedure Act (“SAPA”) (see, SAPA [56A McK. Con. Laws of NY] §§ 102[2][a][i], 102[2][b][iv]). The Charter Revision Commission described CAPA as being “all inclusive of what is in the state act” (R. 225). Therefore, case law interpreting SAPA is determinative in interpreting CAPA. -17- 11 See also Cordero, 80 NY2d at 772-73 (policy that applied to every jockey meeting stated conditions established a “mandatory Rather, the Procedure establishes “guidelines ... for case-by-case analysis of the facts.” Matter of Dry Harbor Nursing Home and Health Related Facility v. Axelrod, 137 AD2d 962, 964 (3d Dept.), leave to appeal denied, 73 NY2d 701 (1988). It invests DHS with “significant discretion” and “allow[s] for flexibility” (Matter of New York City Transit Authority v. New York State Department of Labor, 88 NY2d 225, 229 [1996]) in the determination of an applicant’s eligibility for THA. Even upon a cursory reading of the Procedure it is evident that discretionary decision making is at the very core of DHS’s “eligibility process.” The Procedure is the tool by which DHS “determine[s] whether an applicant for THA is an eligible homeless person” (R. 149). That determination, in turn, is “based on an assessment of whether the applicant has a viable housing option where s/he can live even on a temporary basis and/or whether s/he possesses sufficient financial resources to secure such housing” (id.). Determinations as to whether a housing option is “viable” and whether financial resources are “sufficient” are, ultimately, the product of -18- procedure” that constituted a rule as defined by SAPA); Matter of Singh v. Taxi and Limousine Commission, 282 AD2d 368, 368 (1st Dept. 2001)(The Commission’s “change of policy, shortening the grace period for renewal of an operator’s license from six months to 30 days after the license expired,” was a rule requiring compliance with CAPA because it “materially affected the rights of all such licensees equally and without exception.”); discretionary decision making on the part of an eligibility specialist based on all of the circumstances. Critically, the Procedure provides that DHS “will base its eligibility determination on the totality of the applicant’s circumstances, with an analysis of each applicant’s situation in accordance with all relevant factors” (R. 150). “[D]epending on the applicant’s stated reasons for seeking shelter” (R. 152), DHS considers, inter alia, various available housing options (R. 152-54). Each step along the way in this regard is permeated with discretionary decision making. For example, an applicant’s “tenancy rights” makes him/her “ineligible, provided there is no imminent threat to health or safety” (R. 152), an assessment that necessarily must be made by DHS. Also, an applicant’s claim that “a viable housing option” is not available “because it is overcrowded or unsafe” must be investigated by DHS, which will take into account, inter alia, “the conditions, the physical layout and the other occupants of the viable housing option” (R. 153). A claim that a viable housing option is not available due to “an immediate and significant threat to health or safety” is similarly investigated and assessed by DHS (R. 154). “Field investigations” of potential viable housing options are conducted at DHS’s “discretion” (R. 156). -19- In all cases, DHS must also make case-by-case discretionary determinations as to “whether the applicant has financial resources sufficient to obtain other housing” (R. 154). In this regard, DHS both reviews financial records produced by an applicant (id.) and attempts to find “unreported assets through a review of ... available data sources” (R. 155). If an evaluator is “unsure of what determination should be made,” s/he “should consult with a supervisor” (R. 156). The findings of all investigations must be reviewed and approved by a DHS supervisor (id.). An applicant who is determined to be ineligible for THA is entitled to a DHS conference before a DHS official who was not directly involved in making the original determination (R. 156-58). Following the conference, DHS “shall uphold the prior determination, render a new and different decision, or meet the applicant’s need for temporary shelter while DHS investigates new information provided by the applicant during the conference” (R. 158). Finally, all applicants have the right to a “State Fair Hearing” (id.). In sum, DHS’s determination of an applicant’s entitlement to THA is predicated upon an “assessment of individualized circumstances.” Matter of Taylor v. New York State Department of Correctional Services, 248 AD2d 799, 800 (3d Dept. 1998)(An agency directive permitting the Department of -20- Correctional Services to prohibit an employee from carrying a weapon off duty was “clearly not a rule since its application depend[ed] upon respondent’s assessment of individualized circumstances which in this instance was petitioner's mental or emotional condition.”). Because the Procedure’s standards thus “encompass case-specific mitigating factors and vests the decisionmakers [sic] with significant discretion with which to independently exercise their professional judgment, the standards constitute not ‘rules’ but guidelines.” Matter of Medical Society of the State of New York v. Serio, 100 NY2d 854, 868 (2003); see Matter of Senior Care Services, Inc. v. New York State Department of Health, 46 AD3d 962, 964-65 (3d Dept. 2007); Matter of DeJesus v. Roberts, 296 AD2d 307, 310 (1st Dept. 2002), leave to appeal denied, 99 NY2d 510 (2003)(The criteria for deciding whether a City-owned building should be centrally managed or placed in an alternative management program are not subject to CAPA because the process “is broadly discretionary. Many of the determinative factors are subjective or imprecise.”); Matter of Ciotoli v. Goord, 256 AD2d 1192, 1193 (4th Dept. 1998)(Penalty guidelines issued by the Department of Correction were not rules because they were “discretionary and flexible and not a fixed, general principle” [internal quotation marks omitted].).12 -21- 12 As noted, DHS’s answer details what will be the real-world To be sure, as noted by the Supreme Court, the Procedure includes a number of fixed factors. An applicant’s failure to provide “all information and documents necessary to determine ... eligibility ... constitutes a failure to cooperate” (R. 151). THA “must” be denied if such failure “is not due to a verified mental or physical incapacity” (R. 152). However, while the Supreme Court deemed this to be a “mandated outcome” (R. 20), the fact is that the determination of incapacity is itself a case-by-case discretionary decision by a “qualified mental health or medical professional” (R. 155; see, R. 157 [“The role of the licensed social worker will be to assess the applicant and render a determination whether the applicant is able to cooperate in the investigation.”]). Also, “[a]n individual cannot elect to be homeless, for eligibility purposes, by not utilizing other resources to obtain housing” (R. 152). The Procedure further provides that an applicant’s “significant income or assets” must be used “to secure temporary housing while searching for a more permanent housing situation” (R. 154). Here, too, however, the determination is discretionary, since DHS personnel decide, -22- application of the Procedure, demonstrating DHS’s interpretation of the Procedure as requiring a case-by-case evaluation process and informed discretionary decision making at every stage of the process (see, R. 320-39; supra, at 10-13). following their investigation, “whether the applicant has financial resources sufficient to obtain other housing” (id.). Contrary to the conclusion of the Courts below, then, these aspects of the Procedure do not transform its discretionary guidelines into “per se rules or regulations.” Matter of Trustees of Masonic Hall and Asylum Fund v. Axelrod, 174 AD2d 199, 205 (3d Dept. 1992). A procedure or determination which relies in its outcome on the exercise of agency discretion is not, whatever intermediate steps it may require, a rule. The Procedure “encompass[es] both fixed and variable factors unique” to an applicant to be considered by DHS when determining eligibility “on a case-by-case analysis.” Id., 174 AD2d at 204; see New York City Transit Authority, 88 NY2d at 229-30. In this respect, the Procedure is comparable to the “penalty-assessment guidelines” considered by this Court in New York City Transit Authority, 88 NY2d 225, a decision that states the law applicable in this case. State Labor Department inspectors were required to determine penalties for Labor Law violations committed by employers using a set of guidelines which combined mandatory and discretionary elements. While the inspectors were instructed to assess the severity of a violation on the basis of three specified factors, “deriv[ing] a numerical value for each factor on a scale of 1 to 10” (at 229), they were also “to use their professional judgment to adjust the penalty -23- scale based on consideration of mitigating and contributing factors.” Id. Although the guidelines “cap[ped]” the maximum amount of daily penalties that could be assessed, they further provided that “penalties ‘may be assessed’ in any amount up to the statutory limits.” Id. Upon such facts, this Court noted that “although the guidelines specif[ied] numerical formulas for calculating the ultimate amount of the penalty,” they “d[id] not dictate the result” (at 229-30). Rather, this Court said, “the ultimate amount of the penalty is dependent on inspectors’ independent exercise of their professional judgment” (at 230). Concluding that the guidelines “vest[ed] inspectors with significant discretion, and allow[ed] for flexibility in the imposition of penalties, all with the view of imposing the appropriate sanction for the individual offense in the particular case” (at 229), this Court determined that the guidelines were not a rule that required compliance with SAPA. Similarly, in Matter of Lue-Shing v. Travis, 12 AD3d 802 (3d Dept. 2004), leave to appeal denied, 4 NY3d 703 (2005), the Court held that guidelines of the State Board of Parole used in making parole decisions were not subject to the rulemaking requirements of SAPA. The guidelines specified that applicants were to be assigned scores on the basis of two factors, which, when located on a “decision-making grid,” determined “the -24- suggested time range to be served by an offender.” The Court concluded that the guidelines were not rules because, notwithstanding the required calculations, Board decisions “require[d] flexibility and discretion” in assessing “‘[m]itigating or aggravating factors’” that could “‘result in decisions above or below the guidelines’” (at 803-04). Both New York Transit Authority and Lue-Shing make clear that an agency statement may contain some fixed requirements and not be a rule, so long as the outcome rests on the exercise of discretion. As fully reviewed above, the Procedure provides for a case-by-case determination of eligibility that at every critical juncture calls for the exercise of reasoned discretion on the part of DHS staff. Notwithstanding the existence of certain fixed factors, such discretion, in accord with New York City Transit Authority and Lue-Shing, places the Procedure outside the definition of a rule under CAPA. “Choosing to take an action based on individual circumstances is significantly different from implementing a standard or procedure that directs what action should be taken regardless of individual circumstances[.]” Medical Society, 100 NY2da t 869 (internal ellipses and quotation marks omitted). In its Appellate Division brief (at 16), petitioner very briefly, and mistakenly, argued for the first time that the Court “need not even consider CAPA’s general definition [of a -25- rule] to determine conclusively that the Procedure is a rule” because “the Procedure falls within one of the specific examples of rules enumerated in the Charter.” Charter, section 1041(5), provides the definition of a rule. Paragraph (5)(a) then sets forth a nonexclusive list of examples of particular types of rules, including “standards for the granting of loans or other benefits” (subparagraph 5[a][vii]). Contending that the Procedure comes within this example, petitioner concluded that “this case can be resolved that simply.” Petitioner misinterpreted the Charter. In the first instance, the Procedure does not come within the scope of the example relied upon by petitioner, as it does not grant a loan or other benefit. Under the principle of ejusdem generis,13 the general phrase “other benefit” is limited, by the specific term “loans” preceding it, to monetary benefits. See Bailey v. AGR Realty Co., 260 AD2d 322, 322 (1st Dept. 1999)(“Under the principle of ejusdem generis, the general phrase ‘facility of transportation’ is limited, by the specific term ‘vehicle’ preceding it, to actual instruments of -26- 13 “Under the principles of ejusdem generis, a rule of construction, the meaning of a word in a series of words is determined ‘by the company it keeps’ (People v Illardo, 48 NY2d 408, 416 [1979]). In accordance with that rule, ‘a series of specific words describing things or concepts of a particular sort are used to explain the meaning of a general one in the same series[.]’” 242-44 E. 77th Street, LLC v. Greater New York Mutual Insurance Company, 31 AD3d 100, 103-04 (1st Dept. 2006). transportation[.]”). As the Procedure relates only to an applicant’s eligibility for temporary housing, and not to monetary benefits of any sort, it does not deal with the granting of “benefits” as that term is utilized in Charter section 1041(5)(a)(vii). Even assuming that temporary housing is a “benefit” within the meaning of subparagraph 5(a)(vii), a plain reading of the language of the Charter belies petitioner’s argument that that provision alone, without reference to CAPA’s general definition of a rule, constitutes the Procedure a rule within the meaning of CAPA. While paragraph 5(a) gives some examples of what may constitute a rule, an example is, by its nature, illustrative only. Thus, a “statement or communication” must qualify as a rule under CAPA’s general definition in order to come within any of the examples listed in 5(a). Given the structure of the Charter provision, this intent is clear on its face. “The primary consideration of the court in the construction of statutory provisions is to ascertain and give effect to legislative intent. In effecting that objective, the courts are first bound to ascertain such intent from a literal reading of the words and language in the statute itself.” Matter of Allstate Insurance Company v. Libow, 106 AD2d 110, 114 (2d Dept. 1984)(citations omitted), aff’d on opinion below, 65 NY2d 807 (1985). -27- This is confirmed by the language of the subparagraph 5(a)(vii) itself, which speaks of “standards for the granting of loans and other benefits.” A “standard” is “something established by authority, custom, or general consent as a model or example,” and “something set up and established by authority as a rule for the measure of quantity, weight, extent, value, or quality.”14 It is, in other words, a matter of general and unvarying applicability, the very definition of a rule in section 1041(5) (see, supra, at 16-17). By its terms, then, subparagraph 5(a)(vii) refers back to the general definition of a rule under CAPA, thus excluding the Procedure, that, as demonstrated above, provides for individualized, discretionary decision making. Contrary to petitioner’s suggestion, the commentary on paragraph 5(a) contained in the Report of the Charter Review Commission, which drafted CAPA, does not require a different result. The entire paragraph, from which petitioner extracts only a sentence, makes clear that, as we have demonstrated, the examples in paragraph 5(a) are rules only if they fall within the general definition. The Commission said (2 Report of the New York City Charter Revision Commission, December 1986 – November 1988, at 86): -28- 14 http://www.merriam-webster.com/dictionary/standard “Paragraph a of subdivision 5 sets forth several examples of statements which are specifically included in the definition of a rule, without limiting the scope of the basic definition. Statements of the type listed in this paragraph, therefore, are to be treated as rules for purposes of CAPA, without need to resort to the language of the general definition. Since paragraph a is not a restriction on the breadth of the basic definition set forth in the opening statement of subdivision 5, any agency statement that would be a rule under the general definition is to be treated as such, whether or not it is similar in nature to any of the examples in paragraph a.” While “any statement or communication” within paragraph 5(a) is to be treated as a rule without resort to the “language” of the general definition, nothing in the Commission’s analysis suggests, as petitioner would have it, that the general definition is to be disregarded. Indeed, according to the Commission, the scope of the definition is not “limited” by the examples in paragraph 5(a). Moreover, as noted, a “statement or communication” that does not come within CAPA’s general definition of a rule cannot, using the Commission’s own word, be an “example” of a rule. The Commission’s statement thus reinforces our contention that the Procedure is not a rule because its provision for discretionary decision making removes it from CAPA’s definition of a rule. To the extent, if any, that, as petitioner contends, the Commission commentary suggests that the general definition -29- of a rule is to be disregarded in the case of the examples given in paragraph 5(a), the commentary is in conflict with the plain language of the section and should not be followed. “[W]here a statute is clear on its face and its words are possessed of a definite and precise meaning, resort to extrinsic matter, such as legislative history, is inappropriate[.]” Allstate Insurance Company, 106 AD2d at 114. Finally, the Procedure does not come within paragraph 5(a) for another reason. As we demonstrate in subpoint (2), infra, the Procedure is not a rule because it falls within one of CAPA’s explicit exceptions to the definition of a rule, that is, it has no legal effect but is merely explanatory of existing State law. See Charter § 1041(5)(b)(ii). (2) The Procedure is not a rule because it has no legal effect but is merely explanatory of existing State law. While “there is no clear bright line between a ‘rule’ or ‘regulation’ and an interpretative policy” (Cubas v. Martinez, 8 NY3d 611, 621 [2007]), the Courts below erred in concluding that the Eligibility Procedure does not fall within CAPA’s exclusion of agency action that is “merely explanatory.” Charter § 1041(5)(b)(ii). Notwithstanding some minor additions, the Procedure is no more than DHS’s restatement, interpretation, -30- and explanation of State law embodied in 18 NYCRR § 352.35 and the Administrative Directives that both preceded and followed the Regulation. State policy, embodied first in Administrative Directive 94 ADM-20, issued prior to the promulgation of section 352.35, provides that local social services districts are “neither expected nor obligated to provide temporary housing assistance unless it is clearly demonstrated that the person requesting assistance is faced with an immediate need for housing, has made reasonable efforts to secure housing and cannot access any other housing even on a temporary basis” (R. 97). The Directive further provides that THA applicants “must demonstrate by clear, convincing and credible evidence that they have actively sought and are unable to access any other temporary or permanent housing, including housing in which they have previously resided and temporary accommodations provided by friends or relatives” (R. 98). The Directive requires applicants to cooperate with a district’s “eligibility verification efforts by providing all information and documentation relevant to determining the applicant’s eligibility” (id.). The Directive further authorizes local districts “to establish processes for the provision of temporary housing assistance that affords [them] -31- needed flexibility in structuring [their] temporary housing programs” (R. 79). 18 NYCRR § 352.35 provides the broad outline, elaborated upon by DOS’s subsequent 1996 Directive, that “governs the provision of temporary housing assistance to persons who are homeless” (R. 229 [§ 352.35(a)]). The entirety of the process provided for in the Procedure, which “sets forth the standards by which DHS ... will determine whether individuals who apply for [THA] are eligible” (R. 149), either repeats or states in other words the requirements of the Regulation and Administrative Directives. Indeed, the Procedure makes a number of direct references to the Directives (see, R. 150, 151, 155, 157). Thus, pursuant to the Procedure, DHS must “conduct a through review of the applicant’s situation and available housing resources” (R. 150). The Regulation provides for an assessment to be conducted by local districts (R. 230 [§ 352.35(c)(1)]), defined as “the evaluation of an [applicant’s] housing and housing related public assistance and care needs” (R. 229 [§ 352.35(b)(1)]; see, R. 126). As do the Regulation (R. 230 [§ 352.35(c)]) and the Directives (R. 111, 127), the Procedure provides that “all applicants for THA are required to cooperate with DHS’ eligibility process” (R. 151). -32- Also pursuant to the Procedure, an applicant must “utiliz[e] other resources to obtain housing” (R. 152). This is drawn directly from the State requirement that an applicant “must actively seek housing other than temporary housing” (R. 230 [§ 352.35(c)(3)]; see, R. 231 [§ 352.35(g)(“A social service district must deny ... [THA] if it determines that the [applicant] ... has other housing available[.]”)]). The Procedure further directs DHS to “conduct an investigation of each applicant’s financial resources to determine whether the applicant has financial resources sufficient to obtain other housing” (R. 154). An applicant is “expected to use ... income and/or assets to secure temporary housing while searching for a more permanent housing situation” (id.). The State imposes identical obligations (see, R. 231 [§ 352.35(f)], 135-36). This Court’s reasoning in Cubas, 8 NY3d 611, is instructive. In that case, the State Department of Motor Vehicles (“DMV”) did not issue a driver’s license to an applicant who lacked a valid Social Security number unless the applicant could prove that s/he was not eligible for one. “[W]hile the requirement that each applicant must ‘provide proof that he/she is not eligible for a social security number’ [was] embodied in a formal regulation, the requirement that that ‘proof’ include DHS [Department of Homeland Security] documents -33- [was] reflected only in an internal DMV memorandum.” 8 NY3d at 620. The plaintiffs challenged this DHS documentation requirement on the ground, inter alia, that it had not been promulgated in accord with SAPA. This Court rejected the plaintiffs’ challenge, concluding that the imposition of this requirement fell within SAPA’s exclusion of “‘interpretive statements and statements of general policy which in themselves have no legal effect but are merely explanatory [SAPA § 102(2)(b)(iv)].’” 8 NY3d at 621. A preexisting regulation, this Court said, imposed the obligation on an applicant to prove that s/he was not eligible for a social security number. The challenged policy “merely specifies what proof is acceptable. The policy does not create or deny substantive rights of members of the public - i.e., it does not provide that some people are eligible and some ineligible for driver’s licenses - but sets forth the procedure for the agency to follow in deciding who meets a predetermined test for eligibility.” 8 NY3d at 621. As was true of the documentation requirement at issue in Cubas, the Eligibility Procedure does not impose any “new obligation[s].” Id. Although, as noted by the Supreme Court, the Procedure references “available housing options” not explicitly mentioned in the Regulation or Directives, this is not “a new aspect of -34- the policy.” Homestead Funding Corporation, 95 AD3d at 1413 (3d Dept. 2012). Rather, it is a direct application of the Directive’s requirement that applicants “must actively seek housing other than temporary housing” (R. 131). To the extent that it does not repeat the Regulation and Directives, the Procedure consists of “explanatory statements and technical instructions” for meeting the State requirements that “standing alone, are without legal effect.” National Association of Independent Insurers v. State of New York, 207 AD2d 191, 204 (2d Dept. 1994), aff’d on other grounds, 89 NY2d 950 (1997). Notably, in concluding that CAPA’s exclusion of agency action that is “merely explanatory” (Charter § 1041[5][b][ii]) “must be strictly limited to a statement or policy that strictly interprets an existing statute or just fills in ... the interstices,” the Supreme Court relied on the dissenting opinion in Cubas (R. 23). The Eligibility Procedure is a rule subject to CAPA, the Supreme Court determined, because it “is not simply a strict interpretation of the existing State Regulation or the State Administrative Directives, with a filling in of the interstices” (id.). The Cubas majority, however, rejected the dissent’s interpretation of the exclusion. As reviewed supra, the DMV policy challenged in Cubas fell within the SAPA exclusion, the majority said, because it did not “impose a new obligation” and -35- it did not “create or deny substantive rights.” As demonstrated, application of that test yields the conclusion that the Procedure falls squarely within CAPA’s exclusion of policy “which in itself has no legal effect but is merely explanatory.” See DeBonis v. Corbisiero, 178 AD2d 183, 184 (1st Dept. 1991), leave to appeal denied, 80 NY2d 753 (1992)(Agency memorandum “set[ting] forth general penalty guidelines” was not required to be promulgated in accordance with SAPA because the agency’s “authority to impose appropriate penalties [was] statutory in origin.”). As the Eligibility Procedure thus falls within an explicit CAPA exclusion, the Courts below erred in concluding that it “should have been promulgated as a rule” (R. 26). -36- -37- CONCLUSION THE ORDER APPEALED FROM SHOULD BE REVERSED, THE PETITION SHOULD BE DENIED, AND THE PROCEEDING SHOULD BE DISMISSED, WITH COSTS. Dated: New York, New York June 27, 2013 Respectfully submitted, MICHAEL A. CARDOZO, Corporation Counsel of the City of New York, Attorney for Respondents- Appellants. By: RONALD E. STERNBERG Assistant Corporation Counsel LEONARD KOERNER, STEVEN GOULDEN, RONALD E. STERNBERG, of Counsel.
