Arbitrary and capricious standard (APA §706)
Arbitrary and Capricious Standard
What is the Arbitrary and Capricious Standard?
The Administrative Procedure Act (APA) governs how federal administrative agencies propose and establish regulations and how courts review agency actions.
Section 706(2)(A) of the APA instructs courts to set aside agency actions, findings, and conclusions found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”
This standard is the primary basis for judicial review of agency decisions, especially informal rulemakings or adjudications.
It requires courts to ensure that agencies have:
Examined relevant data and considered important aspects of the problem.
Articulated a rational connection between the facts found and the choice made.
Avoided clear errors of judgment or actions without a reasonable explanation.
It is a deferential standard, meaning courts generally do not substitute their judgment for the agency’s but ensure the agency’s decision is reasoned and justified.
Key U.S. Supreme Court Cases on the Arbitrary and Capricious Standard
1. Motor Vehicle Manufacturers Association v. State Farm Mutual Automobile Insurance Co. (1983)
Facts: The National Highway Traffic Safety Administration (NHTSA) rescinded a passive restraint (airbag) requirement without sufficient explanation.
Issue: Whether rescission was arbitrary and capricious.
Holding: The Supreme Court ruled the agency’s action was arbitrary and capricious because it failed to consider important aspects (like safety benefits) and didn’t provide a reasoned explanation.
Significance: This landmark case clarified the “hard look” doctrine, requiring agencies to engage in reasoned decision-making and to explain changes from prior policies.
2. FCC v. Fox Television Stations, Inc. (2009)
Facts: The Federal Communications Commission (FCC) changed its enforcement policy regarding fleeting expletives.
Issue: Whether FCC’s policy change was arbitrary and capricious.
Holding: The Court found the FCC’s action was not arbitrary but emphasized agencies must provide adequate notice of policy changes.
Significance: Emphasized the importance of notice and explanation when an agency changes course, strengthening procedural fairness in agency policymaking.
3. Baltimore Gas & Electric Co. v. Natural Resources Defense Council, Inc. (1983)
Facts: The Nuclear Regulatory Commission (NRC) changed safety rules for nuclear plants.
Issue: Whether NRC’s change was arbitrary and capricious.
Holding: The Court upheld the agency’s action, noting it made a reasoned decision after considering the evidence.
Significance: Affirmed that agencies have discretion to change policies but must provide reasoned justification and consider relevant factors.
4. Citizens to Preserve Overton Park v. Volpe (1971)
Facts: The Secretary of Transportation approved highway construction through a public park.
Issue: Whether the Secretary’s decision was arbitrary and capricious.
Holding: The Court remanded because the Secretary failed to consider alternatives and give reasons.
Significance: Established that courts must ensure agencies engage in reasoned decision-making and consider statutory requirements.
5. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (1984)
Facts: EPA interpreted ambiguous provisions of the Clean Air Act.
Issue: How much deference courts owe agency interpretations.
Holding: Established the famous Chevron deference, where courts defer to reasonable agency interpretations.
Significance: Though primarily about statutory interpretation, Chevron reinforces that courts give agencies broad discretion under the arbitrary and capricious standard.
6. Fox Television Stations, Inc. v. FCC (2012)
Facts: Follow-up to the 2009 case regarding FCC’s indecency policy.
Issue: Whether FCC provided adequate notice and explanation for enforcement policies.
Holding: The Court ruled FCC’s policy was arbitrary and capricious due to inadequate notice to broadcasters.
Significance: Reinforced that agencies must give clear guidance before enforcing new policies, protecting regulated parties from unfair surprises.
7. Massachusetts v. EPA (2007)
Facts: EPA declined to regulate greenhouse gases from vehicles.
Issue: Whether EPA’s refusal was arbitrary and capricious.
Holding: The Court held EPA’s refusal to act was arbitrary and capricious because it ignored scientific evidence and statutory mandates.
Significance: Demonstrated that inaction or refusal to regulate can be reviewed under the arbitrary and capricious standard.
8. Allentown Mack Sales & Service, Inc. v. NLRB (1993)
Facts: The National Labor Relations Board (NLRB) changed its interpretation of a labor law provision.
Issue: Whether the change was arbitrary and capricious.
Holding: The Court upheld the change, recognizing agencies’ authority to change interpretations if reasoned.
Significance: Reaffirmed that policy changes are permissible with a reasoned explanation.
Summary: Applying the Arbitrary and Capricious Standard
Reasoned Explanation: Agencies must provide clear, rational explanations for their decisions.
Consideration of Relevant Factors: Agencies cannot ignore important aspects of a problem.
Change in Policy: Agencies must justify changes in policy with adequate reasons.
Deference with Limits: Courts defer to agency expertise but will invalidate actions lacking reason or evidence.
Review of Inaction: Courts may also review agency refusals to act under this standard.
Why It Matters
The arbitrary and capricious standard serves as a balance between:
Allowing agencies flexibility and expertise to govern complex issues.
Ensuring agencies remain accountable and their decisions are not irrational or unexplained.
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