Affirming a trial court judge’s ruling, a unanimous panel of the New York appellate division agreed with industry groups that the “giant soda” ban passed by the New York City Board of Health “overstepped the boundaries of its lawfully delegated authority.” The ban – which was originally set to take effect on March 13 – will remain on hold.

Last fall, the nine-person Board of Health passed a controversial proposal introduced by Mayor Michael Bloomberg that banned the sale of 16-ounce or larger beverages “sweetened with sugar or another caloric sweetener that contain more than 25 calories per 8 fluid ounces.” Exempt from the ban are drinks sold in grocery and convenience stores and drinks that contain alcohol, fruit, juice or 51% milk.

Industry and interest groups, including the American Beverage Association and the National Restaurant Association, challenged the law, and just days before it was set to take effect, Judge Milton A. Tingling granted an injunction, ruling that the Board “impermissibly trespassed on legislative jurisdiction.”

The four-judge appellate panel agreed.

Relying on a 1989 decision, Boreali v. Axelrod, the court analyzed the line between administrative rulemaking and legislative policymaking using four factors. First, the Board failed to act “solely with a view toward public health considerations” when it passed the law. Noting the multiple exemptions as well as comments made by the Commissioner that the ban would help ameliorate obesity-related health care expenditures in the state, the court said consideration of such non-health factors demonstrated the Board made a policy decision.

“Since a basic premise of the ban is that New Yorkers consume excessive quantities of sugary drinks, the Board’s decision to regulate only [certain] drinks requires that any health concerns be weighed against consumer preferences for such drinks,” the court wrote. “Instead of offering information and letting the consumer decide, the Board’s decision effectively relies upon the behavioral economics concept that consumers are pushed into better behavior when certain choices are made less convenient.”

Secondly, the Board did not fill a gap in an existing regulatory scheme but “wrote on a clean slate,” the court explained. “Soda consumption cannot be classified as a health hazard per se, [so] the Board of Health’s action in curtailing its consumption was not the kind of interstitial rule making intended by the legislature.”

The Board triggered the third factor by passing a law on an issue that both the city and state legislatures have remained unsure of how best to approach: the issue of excessive sugary beverage consumption. Finally, the panel determined that the law did not require any special expertise or technical competence on the part of the Board. The rule was “drafted, written and proposed” by the Mayor’s Office and enacted with minimal changes.

Under all four factors of Boreali, “the Board of Health overstepped the boundaries of its lawfully delegated authority” when it promulgated the ban and “therefore violated the state principle of separation of powers,” the court concluded.

To read the decision in In re New York Statewide Coalition of Hispanic Chambers of Commerce v. The New York City Department of Health and Mental Hygiene, click here.

Why it matters: Despite the second resounding courtroom loss, Mayor Bloomberg called the appellate court’s decision “a temporary setback,” adding that “we plan to appeal this decision as we continue to fight against the obesity epidemic.” How the law will fare before the state’s highest court remains to be seen.