(CNN) -- New York restaurants can continue selling large sugary drinks after an appeals court sided Tuesday with a lower court ruling that found the city's restrictions on such beverages to be "arbitrary and capricious."
The Supreme Court's Appellate Division found that the city's Board of Health "failed to act within the bounds of its lawfully delegated authority" when it moved to ban sugary drinks of more than 16 ounces in New York City restaurants, movie theaters, and other food service establishments.
The court declared the regulation to be a violation of the principle of separation of powers doctrine.
The doctrine establishes the boundaries between the legislature and an administrative agency. Since legislative power rests in the legislature, according to the appellate decision, the board members cannot engage in broad-based public policy determinations and "cannot exercise sweeping power to create whatever rule they deem necessary."
The 11-member Board of Health is empowered to modify the health code only with "respect to all matters to which the power and authority of New York City Department of Mental Health and Hygiene extend," the appellate court said. This includes Article 81 of the health code, which sets forth rules regulating "food service establishments."
Mayor Michael Bloomberg firmly disagreed.
"Today's decision is a temporary setback, and we plan to appeal this decision as we continue the fight against the obesity epidemic," he said.
On the other hand, the American Beverage Association welcomed the ruling.
"We are pleased that the lower court's decision was upheld," said Christopher Gindlesperger, senior director of public affairs at the American Beverage Association. "With this ruling behind us, we look forward to collaborating with city leaders on solutions that will have a meaningful and lasting impact on the people of New York City."