MATTER SULLIVAN CO. HARNESS v. GLASSER, N.Y., Judgment, Law, casemine.com

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Attorney(S)

Louis J. Lefkowitz, Attorney-General ( Charles A. La Torella, Jr., Samuel A. Hirshowitz and Irving Galt of counsel), for appellants. Ralph L. Halpern and Frank G. Raichle for Genesee-Monroe Racing Association, Inc. and others, intervenors-appellants. Samuel Gottlieb, Alan C. Krieger and George Morton Levy for Roosevelt Raceway, intervenor-appellant. William D. Kiley for Mid-State Raceway, Inc., intervenor-appellant. J. Lee Rankin, Corporation Counsel ( R. Harcourt Dodds, James Nespole and Elliot P. Hoffman of counsel), for intervenor-respondent. John S. McBride for Sullivan County Harness Racing Association, Inc., respondent.

Judges

Adrian P. Burke

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Smart Summary

Factual and Procedural Background

This case arises from an Article 78 proceeding challenging the State Harness Racing Commission's authority to condition a racing license by prohibiting television broadcasts of harness racing events. The petitioner, Sullivan County Harness Racing Association (Monticello), applied for additional racing dates outside the standard season pursuant to a legislative amendment allowing such exceptions for special occasions. The Commission granted the license but later conditioned it to prohibit televising the races after Monticello contracted with the New York City Off-Track Betting Corporation (OTB) for live television broadcasts. Upon petitioners’ challenge, the Supreme Court annulled the Commission’s determination, and the Appellate Division affirmed without opinion. The Court of Appeals granted leave to appeal to resolve whether the Commission had the power to impose the television ban and whether its determination was supported by a reasonable basis.

Legal Issues Presented

Whether the State Harness Racing Commission possessed the statutory authority to condition Monticello’s racing license by prohibiting television broadcasts of its racing events.
Assuming such power existed, whether the Commission’s determination to impose the television ban was supported by a reasonable basis and therefore should be upheld on judicial review.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Lichter v. United States, 334 U.S. 742, 785	Standards required to prevent unlawful delegation of power to an administrative agency.	Used to support the principle that legislative delegation to the Commission was valid due to sufficient standards set by the Legislature.
Paterson v. University of State of N.Y., 14 N.Y.2d 432, 440	Standards for lawful delegation of power to administrative agencies.	Confirmed sufficiency of legislative standards empowering the Commission.
Matter of City of Utica v. Water Pollution Control Bd., 5 N.Y.2d 164, 169	Principles governing delegation of regulatory authority.	Supported the conclusion that the Commission’s broad regulatory power was lawful.
Matter of Calzadilla v. Dooley, 29 A.D.2d 152	Administrative law principles on delegation and agency authority.	Reinforced the validity of the Commission’s delegated authority.
F.C.C. v. RCA Communications, 346 U.S. 86, 90	Standards for administrative agency power and delegation.	Judicial precedent affirming sufficiency of broad legislative standards.
National Broadcasting Co. v. United States, 319 U.S. 190, 225	Administrative agency authority and delegation standards.	Used to validate the Commission’s power to regulate in the public interest.
New York Cent. Securities Corp. v. United States, 287 U.S. 12, 24-25	Principles of delegation and administrative authority.	Supported the Court’s analysis of valid delegation to the Commission.
Matter of Dougherty v. State Harness Racing Comm., 309 N.Y. 992	Judicial recognition of Commission’s regulatory authority.	Confirmed the Commission’s broad powers under the statute.
Rochester Tel. Corp. v. United States, 307 U.S. 125, 146	Judicial review standard: agency decisions must be upheld if rational basis exists.	Applied to hold that the Commission’s determination was not arbitrary or capricious.
Mississippi Val. Barge Co. v. United States, 292 U.S. 282, 286-287	Rational basis test for administrative decisions.	Supported deferential standard of review applied to the Commission’s decision.
Matter of Howard v. Wyman, 28 N.Y.2d 434, 438	Judicial deference to administrative agency determinations.	Used to affirm the Commission’s authority and reasonableness of its decision.
Matter of Mounting Finishing Co. v. McGoldrick, 294 N.Y. 104, 108	Standard of review for administrative agency findings.	Reinforced that courts should not overturn agency decisions absent arbitrariness.
Matter of Swalbach v. State Liq. Auth., 7 N.Y.2d 518, 526	Conclusive nature of agency determinations supported by record evidence.	Applied to uphold the Commission’s decision as supported by the record.
Matter of Fink v. Cole, 1 N.Y.2d 48, 53	Judicial review limits: agency decisions not to be overturned for mere disagreement.	Criticized the lower court for not applying this principle properly.
Matter of Evans v. Monaghan, 306 N.Y. 312, 323-326	Agency’s authority to reconsider prior determinations upon changed circumstances.	Confirmed the Commission’s lawful reconsideration of Monticello’s license condition.
Matter of Drew v. State Liq. Auth., 2 A.D.2d 75, affd. 2 N.Y.2d 624	Agency’s power to revisit decisions based on new information or changed circumstances.	Supported the Commission’s reconsideration of the license condition after the OTB contract.

Court's Reasoning and Analysis

The Court began by identifying the statutory framework granting the State Harness Racing Commission broad regulatory powers over the harness racing industry, including the authority to issue licenses conditioned on terms it finds necessary to serve the public interest and the best interests of racing generally. The enabling legislation provided explicit standards—such as serving the "public interest, convenience or necessity" and "best interests of racing generally"—which the Court found sufficiently specific to avoid unlawful delegation of legislative power.

The Court then addressed the Commission’s reconsideration of Monticello’s license condition following the new Monticello-OTB contract for televising races, concluding that such reconsideration was permissible upon changed circumstances or new information.

On the merits, the Court applied the rational basis standard of judicial review, emphasizing that courts must uphold agency decisions supported by any rational basis and should not substitute their judgment for that of the agency. The Commission had articulated four reasons for conditioning the license with a television ban: (1) potential circumvention of geographic restrictions in the law; (2) unintended competition with other raceways; (3) threat to the State racing industry’s viability; and (4) violation of statutory bans on racing during certain holiday periods in populous counties via television.

Although the Special Term court had analyzed and rejected each of these reasons, the Court of Appeals found that the Commission’s determination was not arbitrary or capricious and was grounded in a rational basis. The Court further emphasized the Legislature’s intent to confer broad discretion upon the Commission to regulate harness racing comprehensively, including the authority to impose conditions deemed necessary to protect the industry’s long-term viability.

The Court noted that neither its decision nor the Commission’s ruling precludes future televising of harness racing if the Commission finds it will not harm the industry, underscoring the conditional and regulatory nature of the Commission’s power.

Accordingly, the Court reversed the Appellate Division’s order and the Supreme Court’s judgment annulling the Commission’s determination, thereby confirming the Commission’s authority and the reasonableness of its decision.

Holding and Implications

The Court held that the State Harness Racing Commission possessed the statutory authority to condition Monticello’s license by prohibiting televising of its races and that the Commission’s determination to impose this condition was supported by a rational basis and thus should be upheld.

The direct effect of this decision is the reversal of the lower courts’ annulment of the Commission’s determination, thereby confirming the validity and enforceability of the television ban condition on Monticello’s license. The decision affirms the broad regulatory discretion granted to the Commission by the Legislature to protect the harness racing industry’s interests. The Court explicitly noted that this ruling does not foreclose future televising of harness racing events if the Commission later finds such broadcasts will not harm the industry, indicating the Commission’s continuing regulatory role and discretion. No new legal precedent altering administrative law principles was established beyond this application.

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In the Matter of SULLIVAN COUNTY HARNESS RACING ASSOCIATION, INC., Respondent, and NEW YORK CITY OFF-TRACK BETTING CORPORATION, Inter v. nor-Respondent,

BURKE, J.

In this article 78 proceeding, the issue is whether the State Harness Racing Commission (hereafter Commission) had the requisite power to condition petitioner's racing dates with the prohibition that the petitioner not conduct its racing programs in conjunction with television.

The Appellate Division, Third Department, unanimously affirmed without opinion a judgment of the Supreme Court. Sullivan County, nullifying the Commission's determination which conditioned the special license granted to petitioner with the proviso that there be no televising of its racing events. On January 5, 1972, at the opening of the January session of court, we granted leave to appeal.

The operative facts are as follows. By an amendment to section 38 of the Pari-Mutuel Revenue Law (L. 1940, ch. 254, as amd.) the Legislature altered the period during which harness racing could be conducted in New York (L. 1971, ch. 1095). The amendment provided: "In counties having a population of two hundred fifty thousand or less, the state harness racing commission may, however, permit the holding of one or more harness horse race meetings and the conduct of harness races at such meetings on a day or days not during such period if the commission is satisfied that a special occasion makes the holding of such meetings and the conduct of such races on such day or days proper or necessary; but in no event shall such meetings or races be held or conducted on the twenty-fifth day of December." The section already provided that "Such power and right, however, shall not include the right to conduct pari-mutuel betting at such harness horse race meetings except pursuant to license granted by the state harness racing commission pursuant to this act." Pursuant to this change in permissible racing dates, on August 18, 1971, petitioner Sullivan County Harness Racing Association (hereafter Monticello) applied for the following dates: December 15, 1971 through January 8, 1972. On September 8, 1971, the Commission granted the request, finding that the special winter carnival in the community in which Monticello is located was a special occasion which warranted the approval of the application.

Thereafter, on October 6, 1971, petitioner Monticello and the New York City Off-Track Betting Corporation (hereafter OTB), after protracted negotiations, entered into a contract by which OTB agreed to televise one live race each night from December 15, 1971 to January 8, 1972. The parties further agreed that OTB would have television rights to the end of the winter meet of January, 1974. Simultaneously, OTB and Monticello entered into a second agreement which provided for the interfacing of bets from off-track betting with those placed at Monticello into a single pari-mutuel pool.

Upon the Monticello-OTB contract becoming public, Yonkers and Roosevelt Raceways petitioned the Commission to review its decision of September 8, 1971 which had granted Monticello's request for the additional racing dates. A full hearing was held before the Commission on October 14, 1971, and on November 18, 1971, the Commission rendered its decision conditioning Monticello's license so that it not conduct its racing programs in conjunction with any television broadcasts. Petitioners herein (OTB and Monticello) thereafter commenced this proceeding in Supreme Court, Sullivan County, to challenge the Commission's determination. Special Term granted judgment annulling the determination and the Appellate Division, Third Department, unanimously affirmed without opinion. Special Term concluded that the condition that the Commission sought to impose was beyond its powers, reaching this conclusion after an analysis of the reasons proffered by the Commission for its determination.

Upon a request by OTB for a declaratory ruling, the Federal Communications Commission ruled that live coverage of the final race run at a track would not violate established Federal policy. (FCC Release No. 71-1251 [Dec. 17, 1971].)

On appeal, appellants (the Commission and the race tracks) raise two questions. First, they argue that the Commission had the power to condition licenses forbidding televising of the races in the furtherance of the "best interests of racing generally". Second, assuming that the requisite power existed, appellants contend that the determination of the Commission rested upon a "reasonable basis" and should not be judicially disturbed.

In our view, the Commission had the power to so condition Monticello's license and upon reviewing the record, it cannot be said that the determination was so arbitrary or capricious as to warrant annulment. The record reveals that the Legislature lawfully delegated its power, that sufficient standards were delineated in the enabling legislation and that the Commission's determination rested upon a rational basis. Therefore, the order of the Appellate Division and judgment of the Special Term is reversed and the petition dismissed.

We reach this conclusion since the Legislature conferred upon the Commission broad regulatory powers over the harness racing industry. For example, pursuant to section 40 of the Pari-Mutuel Revenue Law, the Commission is empowered to issue licenses if "the public interest, convenience or necessity will be served thereby and a proper case for the issuance of such license is shown consistent with the purposes of this act and the best interests of racing generally". The act also provides that the license may be issued " upon any other condition that the state harness racing commission shall determine to be necessary or desirable to insure that the public interest, convenience or necessity is served" (§ 40, subd. 2; emphasis supplied). Furthermore, under its general powers (§ 36) "The commission may adopt rules and regulations not inconsistent with this act to carry into effect its purposes and provisions and to prevent circumvention or evasion thereof." These legislative provisions delegate to the Commission broad power to condition licenses with requirements that the Commission deem to be in the best interests of the harness racing industry.

The Commission acted pursuant to this broad delegation of power. It is a well-established principle of administrative law that to prevent an unlawful delegation of power, it is incumbent upon the legislative authority to set forth standards to indicate to the agency the limits of its power, the specificity of the standards being relative to the nature of the program. ( Lichter v. United States, 334 U.S. 742, 785; Paterson v. University of State of N.Y., 14 N.Y.2d 432, 440; Matter of City of Utica v. Water Pollution Control Bd., 5 N.Y.2d 164, 169; Matter of Calzadilla v. Dooley, 29 A.D.2d 152; 1 Am.Jur.2d, Administrative Law, § 113.) In the instant enabling legislation, the Commission is to issue licenses only when it is satisfied that the "public interest, convenience or necessity" will be served and the issuance of the license will be in the "best interests of racing generally". These standards have been previously judicially determined to suffice. ( F.C.C. v. RCA Communications, 346 U.S. 86, 90; National Broadcasting Co., v. United States, 319 U.S. 190, 225; New York Cent. Securities Corp. v. United States, 287 U.S. 12, 24-25; Matter of Dougherty v. State Harness Racing Comm., 309 N.Y. 992; Matter of Calzadilla v. Dooley, 29 A.D.2d 152, supra; 1 Am.Jur.2d, Administrative Law, § 120, supra.) The Legislature in our view properly delegated to the Commission very broad power to regulate the harness racing industry.

Prior to considering the appellants' second contention, we digress to briefly consider whether the Commission lawfully reconsidered Monticello's application for the additional racing days. The authorities are in agreement that upon a change in circumstances (here the Monticello-OTB contract after the issuing of the license constituted such a change) or new information, an agency may reconsider and alter a prior determination. ( Matter of Evans v. Monaghan, 306 N.Y. 312, 323-326; Matter of Drew v. State Liq. Auth., 2 A.D.2d 75, affd. 2 N.Y.2d 624; 2 Davis, Administrative Law, §§ 18.08, 18.09; 1 N.Y. Jur., Administrative Law, §§ 157-158.) It follows then that it was perfectly permissible for the Commission to reconsider the Monticello application.

Having previously concluded that the Commission possessed the requisite power to condition Monticello's license, we turn now to the question of whether the Commission had a reasonable basis to condition the license with the prohibition on television. Cases are legion which illustrate the principle that our review ends when a rational basis is found for the agency determination — "`The judicial function is exhausted when there is to be found a rational basis for the conclusions approved by the administrative body.'" ( Rochester Tel. Corp. v. United States, 307 U.S. 125, 146; Mississippi Val. Barge Co. v. United States, 292 U.S. 282, 286-287; Matter of Howard v. Wyman, 28 N.Y.2d 434, 438; Matter of Mounting Finishing Co. v. McGoldrick, 294 N.Y. 104, 108.) Stated differently, if the acts of the administrative agency find support in the record, its determination is conclusive ( Matter of Swalbach v. State Liq. Auth., 7 N.Y.2d 518, 526) and the test of judicial review is to determine whether the agency acted arbitrarily or capriciously ( Matter of Fink v. Cole, 1 N.Y.2d 48, 53). Of course, in reviewing administrative determinations, a court may not overturn an agency's decision merely because it would have reached a contrary conclusion (1 N.Y. Jur., Administrative Law, § 197, pp. 643-648, supra). It was this canon of administrative law that Special Term did not follow in nullifying the Commission's determination.

In its decision the Commission detailed at least four reasons why Monticello's license should be conditioned with the television ban. The Commission was of the opinion that in view of the Monticello-OTB contract, Monticello would be racing in an area not designated in its certificate of incorporation, circumventing the 25-mile restriction contained in the law and thereby violating the spirit and intent (if not the letter) of the law. Secondly, the Commission felt that Monticello and OTB would be directly competing with Yonkers and Roosevelt in a manner not envisioned by the OTB legislation. Thirdly, the Commission had strong feelings that the agreement presented a harmful threat to the State racing industry in general. Fourthly, the Commission indicated that through television, Monticello would be violating the ban on racing during the Christmas-New Year holiday season in counties with over 250,000 population. Whether one agrees with the soundness of the reasons offered by the Commission, it cannot be said that its determination lacked a rational basis, which is the governing standard when reviewing agency determinations ( supra). Yet Special Term went through a point-by-point analysis of the Commission's decision, each time reaching a different conclusion. In this manner, Special Term erred in holding that the Commission exceeded its authority and declaring its action to be without effect.

In reviewing the statutory provisions relating to racing, harness horse racing, pari-mutuel revenue and off-track betting, Special Term overlooked the broad discretion which the Legislature intended to confer upon the Commission in regulating harness racing in New York. While concededly there is no specific provision which prohibits a harness race track from contracting to televise its races (there were previous telecasts without the Commission's intervention), such a narrow interpretation of the delegation of power which is cast in the terms of "best interests of racing generally" and "public interest, convenience or necessity" would be unreasonable. By using such all-encompassing terms, the Legislature obviously intended to confer upon the Commission broad regulatory power over harness racing tracks so as to ensure the continued viability of the harness racing industry. We just add this note: Neither our decision today nor the Commission's determination precludes televising of harness horse racing in the future upon a finding by the Commission that such televising will not be deleterious to the industry.

In sum, we conclude that the Commission had the requisite power to condition the issuance of the license to Monticello with the proviso that there be no television and in so conditioning the license, there was a rational basis for the determination.

Accordingly, the order of the Appellate Division and the judgment of Special Term should be reversed and the determination of the Commission should be confirmed.

Chief Judge FULD and Judges SCILEPPI, BERGAN and GIBSON concur with Judge BURKE; Judges BREITEL and JASEN dissent and vote to affirm on the opinion at Special Term.

Order reversed, without costs, and the determination of the Commission confirmed.

MATTER SULLIVAN CO. HARNESS v. GLASSER