Petitioner-plaintiffs commenced the instant hybrid action for a declaratory judgment and article 78 proceeding challenging a determination of Anita M. Gabalski, the Director of the Glens Falls District Office of the Department of Health, which found that [*2]the Dippikill Wilderness Retreat was a temporary residence subject to the permit requirements of the State Sanitary Code, 10 NYCRR subpart 7-1.

The complaint-petition alleges that the determination was arbitrary and capricious and made in excess of jurisdiction on the grounds that the Dippikill Wilderness Retreat comes within two exceptions to the applicability of the permit requirements which exempt "a temporary residence used as a school or college dormitory, or a fraternity or sorority house that is affiliated with an academic institution approved under the Education Law" and "a temporary residence which the commissioner, based upon consideration of the nature, duration and continuity of its occupancy, the degree of occupant control over the use and nature of the property's facilities, the purpose of the property's occupancy and the extent to which the property may be subject to the regulation of other agencies, reasonably determines not to be within the intent of regulation under this Subpart." (10 NYCRR § 7-1.2 [a] [6] and [7]). The complaint-petition further alleges that a prior determination that there was no jurisdiction should be binding on the Department, that no explanation for the significant change in position was provided and that the change in position deprived plaintiff-petitioners of due process of law. The memoranda of law submitted by plaintiff-petitioners argue that the prior determination of no jurisdiction constituted a declaratory ruling which is binding on the defendant-respondent pursuant to State Administrative Procedure Act (SAPA) § 204.

Plaintiff-petitioners did not raise the issue of the effect of SAPA § 204 at any time during the administrative process. "[T]he doctrine of exhaustion of administrative remedies requires that judicial review of administrative action be limited to a consideration of the issues actually raised before the administrative [*3]agency making the determination ( see, Matter of Clowry v Town of Pawling, 202 AD2d 663, 664; Aldrich v Pattison, 107 AD2d 258, 267-268; Matter of Celestial Food Corp. of Coram v New York State Liq. Auth., 99 AD2d 25, 26-27)" (Matter of Roggemann v Bane, 223 AD2d 854, 856 [3d Dept 1996]; see also Matter of Erdheim v Travis, 7 AD3d 876, 877 [3d Dept 2004]). As such, the issue has not been preserved for judicial review. In any event, SAPA § 204 (1) specifically and expressly states that the statute does not prevent an administrative agency from prospectively changing a declaratory ruling. To follow the rule propounded by plaintiff-petitioners would prevent administrative agencies from ever correcting errors or adapting to changing circumstances, a clearly absurd result. Accordingly, such claims shall be dismissed.

It is also noted that plaintiff-petitioners do not challenge any of the provisions of the Public Health Law or the State Sanitary Code on their face. Rather, they challenge the method of application of the statutes and regulations by the defendant-respondent. As such the instant action does not state a cause of action for a declaratory judgment, but rather should have been brought only as an article 78 proceeding (see Matter of Kovarsky v Housing & Dev. Admin. of City of NY, 31 NY2d 184, 191 [1972]; Matter of Consolidated Edison Co. of NY v State Bd. of Real Prop. Servs., 255 AD2d 8, 11 [3d Dept 1999]). Accordingly that portion of the complaint-petition which seeks a [*4]declaratory judgment shall also be dismissed.

The complaint-petition also alleges that the plaintiff-petitioners have been deprived of due process as a result of losing the benefit of the 1996 determination that no permit was required. However, due process rights only apply when an active license or permit is sought to be revoked (see Matter of Daxor Corp. v State of NY Dept. of Health, 90 NY2d 89, 98 [1997]). There aren't any due process considerations where a license or permit holder is seeking a renewal (see Matter of Eastern Transfer of NY v Cahill, 268 AD2d 131, 136 [3d Dept 2000]). Petitioner's asserted rights do not even rise to such level. As such, the claim that they have been deprived of due process is entirely without merit and shall be dismissed.

In the instant article 78 proceeding the standard of judicial review is limited to "whether the record as a whole provides a rational basis for the underlying determination, which will not be disturbed absent a showing that it is wholly arbitrary or without any rational basis' (Cove v Sise, 71 NY2d 910, 912; see, Matter of Curtiss v Angello, 269 AD2d 675)." (Matter of Woodward v Governor's Off. of Empl. Relations, 279 AD2d 725, 726-727 [3d Dept 2001]). However,[*5]

" (a) reviewing court, in dealing with a determination * * * which an administrative agency alone is authorized to make, must judge the propriety of such action solely by the grounds invoked by the agency. If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis' (Securities Comm. v Chenery Corp., 332 U.S. 194, 196; cited with approval Matter of Barry v O'Connell, 303 NY 46, 50-51). Review is limited to a consideration of the statement of the factual basis for the determination and whether, in light of the agency's own standards, the findings, supported by substantial evidence, sustained the conclusions. A court cannot surmise or speculate as to how or why an agency reached a particular conclusion. Failure of the agency to set forth an adequate statement of the factual basis for the determination forecloses the possibility of fair judicial review and deprives the petitioner of his statutory right to such review (Matter of Simpson v Wolansky, 38 NY2d 391, 396; Matter of Barry v O'Connell, supra )." (Matter of Montauk Improvement v Proccacino, 41 NY2d 913, 913-914 [1977]; see also Matter of Scherbyn v Wayne-Finger Lakes Bd. of Coop. Educ. Servs., 77 NY2d 753, 758 [1991]; Matter of Police Benevolent Assn of NY State Troopers v Vacco, 253 AD2d 920, 921 [3d Dept 1998]).

The Dippikill Wilderness Retreat has been owned and operated by the Student Association of the State University of New York at Albany, its predecessor and affiliated bodies, since 1956. In 1969 it was determined that the retreat constituted a temporary residence requiring a permit. This status continued until 1996, when apparently as a result of stricter controls on water supplies imposed upon temporary residences, the then director of the retreat (called Camp Dippikill at that time) wrote to the District Sanitarian [*6]for the Glens Falls District Office requesting a review of whether the Department of Health had jurisdictional authority over the facility. By letter dated March 29, 1996, the District Sanitarian determined there was no jurisdiction based upon representations that the camp's " mission' [was] to provide for the continued educational experience ... outside the physical boundaries of the Albany campus' to the members thereof" and that it was administratively positioned under a department with responsibility for all student domiciles.

By letter dated March 25, 2005, a Principal Sanitarian from the Glens Falls District Office wrote to the Director of the retreat stating that based upon further investigation it was determined that the facility was not used exclusively for educational purposes nor was it used only by students and faculty. It stated that the facility was also used by friends of students and faculty and that it was primarily used for recreational purposes. Correspondence was exchanged on this issue, with the Director of the Glens Falls District Office requesting further documentation with respect to the use of the facility by letter dated June 29, 2005. There is no indication that plaintiff-petitioners ever responded to such request.

Thereafter, by letter dated May 4, 2006, the Director of the Glens Falls District Office stated that she had reviewed the file and the most recent correspondence and discussed the matter with Central Office staff. The letter stated that it was determined that "the Dippikill Wilderness Retreat is jurisdictional to the New York State Department of Health" and required a permit. No factual basis or reasoning was set forth in the[*7] letter.Plaintiff-petitioners, through their attorney, requested reconsideration of the determination of May 4, 2006 or in the alternative an explanation or findings as to the change in position by the Department. By letter dated June 1, 2006, the Director of the Glens Falls District Office responded stating only that the determination was made in consultation with the central office, that the points raised by plaintiff-petitioners' attorney were considered and that the prior "non-jurisdictional" determination was incorrect. Again, no factual basis or reasons supporting the determination were set forth.

The failure of the Director of the District Office to set forth the factual basis and reasoning behind her determination renders meaningful judicial review impossible (see Matter of Bierenbaum v Goord, 13 AD3d 945, 946 [3d Dept 2004]). While the 2005 letter from a Principal Sanitarian did state some grounds for finding jurisdiction and changing the Department's prior position, the Court would be engaging in pure speculation to assume that the determination of the Director of the District Office was based upon those same grounds. Therefore, the issues must be remanded to the respondent for further proceedings, including at a minimum, a determination which sets forth the facts and reasoning supporting the outcome.

Accordingly it is hereby,

ORDERED, that those portions of the complaint-petition which are based upon SAPA § 204, which allege a violation of due process and which seek a declaratory judgment are hereby dismissed, and it is further [*8]

ORDERED, that the petition is hereby granted to the extent that the letter determinations dated May 4 and June 1, 2006 are hereby vacated and annulled and the issues remanded to respondent for further proceedings consistent herewith.

This shall constitute the decision, order and judgment of the Court. All papers are returned to the attorneys for the plaintiff-petitioners, who are directed to enter this Decision/Order/Judgment without notice and to serve all attorneys of record with a copy of this Decision/Order/Judgment with notice of entry.

Dated: Troy, New York

March 15, 2007

S/____________________________________

George B. Ceresia, Jr.

Supreme Court Justice