62 A.D.2d 302 | N.Y. App. Div. | 1978
OPINION OF THE COURT
We are called upon to determine if certain rules, promulgated by the Chairman of the Public Service Commission (Chairman) governing personal investments of employees of the Public Service Commission (PSC) and the Public Service Department (PSD), as well as investments of members of their families, are beyond the authority of the Chairman as delegated by the provisions of section 9 of the Public Service Law and section 74 of the Public Officers Law.
There are eight rules. The first five rules prohibit petitioners, their spouses and/or unemancipated children from having any interest, direct or indirect, in Rule (1) companies subject to the jurisdiction of the PSC, Rule (2) utility companies in other States not subject to the jurisdiction of the PSC, Rule (3) companies which manufacture and/or supply major electric utility equipment, Rule (4) companies which sell utility fuels, and Rule (5) companies which manufacture and/or supply telephone terminal equipment or specialized communications
Section 9 of the Public Service . Law, generally, denies eligibility for employment or appointment to the PSC to any individual who holds any official relation to any person or corporation subject to the supervision of the commission, or who owns stocks or bonds of any such corporation. Additionally, subdivision 3 of section 74 of the Public Officers Law provides in paragraph g that "[a]n officer or employee of a state agency should abstain from making personal investments in enterprises which he has reason to believe may be directly involved in decisions to be made by him or which will otherwise create substantial conflict between his duty in the public interest and his private interest”, and in paragraph h that "[a]n officer or employee of a state agency * * * should endeavor to pursue a course of conduct which will not raise suspicion among the public that he is likely to be engaged in acts that are in violation of his trust.” Section 74 of the Executive Law authorizes the Attorney-General to establish an advisory committee on ethical standards and further authorizes that committee to advise and assist any other State agency in establishing rules and regulations relating to possible conflicts between private interests and public duties of State emloyees.
That these cited statutory provisions express a legitimate
While legislation may constitutionally confer discretion upon an administrative agency, it follows that a precise or specific formula need not be furnished in a field, as here, where flexibility in fashioning rules in furtherance of that legislation is desirable in light of the complexities extant in the area sought to be circumscribed (Matter of Levine v Whalen, supra, p 515). In many cases, as here, the Legislature may enact statutes in broad outline, leaving administrative details to the appropriate enforcing administrative official. Both section 9 of the Public Service Law and section 74 of the Public Officers Law are extremely broad and merely posit ethical positions to be assumed by officers and employees of State agencies that would best deter suspicion that their private interests are at war with their public duties. The details of defining those positions in relation to employees’ private investments were left to the PSC Chairman. Therefore, the extent of our review is clear. Are the rules promulgated by the Chairman legislative in nature so as to offend the constitutional requirement that the making of laws be the sole responsibility of the Legislature (NY Const, art III, § 1)? We hold that Rules 1 through 5 extend and expand the delegated authority of the generic statutes (Public Service Law, § 9; Public Officers Law, § 74) and are an unwarranted exercise of legislative power (Rapp v Carey, supra).
Rule 1 prohibits any employee of the PSC or PSD from holding any stocks or bonds in a company subject to the jurisdiction of the commission. If he had such holdings prior to the effective date of the rule (Nov. 20, 1974), he must divest himself of such investments. This directive expresses and furthers a legitimate State concern that employees of a regulatory State agency not be part owners of a supervised company. However, Rule 1 is footnoted to require that any employee in place as of the effective date of the rule and whose wife or minor children have such holdings must apply for an exemption in order that these dependents can continue their investments. There can be no exemption for the employee.
Accordingly, since we hold that the enactment of Rules 1 through 5 is an unwarranted exercise of legislative power (Rapp v Carey, supra), and, further, that the standards of review produced by subdivision (b) of Rule 7 are wholly subjective, we conclude that the entire regulatory scheme is unconstitutional.
Since the ultimate relief sought is a declaration of invalidity of promulgated rules, this proceeding should be converted to an action for declaratory judgment (Cantlin v State Liq. Auth., 16 NY2d 155; CPLR 103, subd [c]).
The judgments should be reversed, on the law, without
Greenblott, Sweeney, Staley, Jr., and Main, JJ., concur.
Judgments reversed, on the law, without costs, petitions reinstated, and judgment directed to be entered declaring that Rules 1 through 8 promulgated by the Chairman of the Public Service Commission, dated June 8, 1976, effective June 18, 1976, are unconstitutional.
Petitioners Nicholas (Rule 1), Grady (Rule 1), Teumim (Rules 1 and 2), Guttman (Rule 3) and Read (Rule 4) appealed denials for exemptions to the Chairman. Their appeals were denied.