parent nodes: administrative common law | administrative law | agency choice of procedure | agency decisions of fact | agency ex parte contact | Chevron v NRDC | Constitution | informal APA proceeding | judicial review | nondelegation | rational basis | scope of administrative review
arbitrariness review
administrative law; agency decision of fact
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning of applicability of the terms of an agency action. The reviewing court shall—
(1) compel agency action unlawfully withheld or unreasonably delayed; and
(2) hold unlawful and set aside agency action, findings, and conclusions found to be—
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law;
(E) unsupported by substantial evidence in a case subject to sections 556 and 557 of this title or otherwise reviewed on the record of an agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error.
APA § 706
An informal APA proceedings may be overturned by an Article III court on review if "arbitrary or capricious." § 706(2)(A). Note also that SEC v Chenery requires that agency decisions will be tested by the rationale that the agency itself gives, and on nothing else.
Intuitively, the "arbitrary and capricious" standard appears to demand only minimal rationality, such as the way the rational basis standard is supposed to work (in theory) in equal protection review. However, there are both legal and practical reasons to require something more than minimal rationality. Practically, the shift to notice-and-comment rulemaking as a principled procedure to make policy put pressure on the idea of minimal review. An increasing perception also existed that agencies were captured by interest groups. And the judiciary caught up with the New Deal and saw regulatory statutes as conferring new property rights in the same way as common-law property and contract rights.
Legally, the "mood" of the APA was to strengthen judicial review of agency action. Compare the substantial evidence test for formal APA proceedings. Since agencies often created no "record" for courts to review, the miminal-rationality standard would mean that almost all agency decisions would win. Perhaps § 706(2)(F), which calls for de novo review in limited cases, meant that the court should apply de novo review when no record existed. The Court may have also been concerned about judicial activism in the wake of the Lochner era of economic substantive due process.
*'Hard look" doctrine:*
The "hard look doctrine" is intended as an intensification of the arbitrariness review. Note that like decisions under the Chevron v NRDC doctrine, hard look decisions are politically influenced. The political influence is in part due to the conflict between a political and a technocratic conception of administrative action; a political conception would lead courts to defer to the agencies. As a result, there is an inherent tension between the "hard look" doctrine and the Chevron v NRDC doctrine.
The conventional view of Overton Park is that the Court was trying to force the DOT, who was biased towards building highways, to not ignore competing environmental interests that were expressed by Congress in the statute. Peter Strauss, on the other hand, argues that the legislation was the outcome of complex interest group compromise, so that the Court gave undue weight to one particular group (the environmentalists)
A "hard look" at agency procedures, as Bazelon argued, can be "democracy-forcing:" that is, it can improve public participation and create politically useful information about policy decisions. (Note that Bazelon advocated procedural hard look only; Leventhal advocated both procedural and substantive hard look review, arguing that judges should look deeply into the record in order to make Bazelon's approach meaningful.) There are, however, two problems with the Bazelon-Leventhal argument. First, as Scalia would argue, there is no legal justification for such searching procedural review. Cf. [Vermont Yankee Power Co v NRDC] (courts cannot impose additional procedural requirements on agencies beyond organic statute or the APA). Additionally, too-stringent review may lead to procedural "ossification;" notice-and-comment now takes much longer than before to work, and (as Breyer argues) agencies will tend to choose either overly cautious or overbroad regulations in order to protect themselves from judicial review. Sunstein: the hard look doctrine may have "killed rulemaking."
*Overton Park and later cases*
"Arbitrary and capricious" is a catch-all that applies to anything an agency does during informal agency action. It applies to fact-finding and legal determinations. "Th(e) inquiry into the facts is to be searching and careful," but "the ultimate standard of review is a narrow one." [Citizens to Preserve Overton Park v Volpe].
In [Citizens to Preserve Overton Park v Volpe], the Court laid out the following synthesis of hard look doctrine:
Steps for reviewing informal agency adjudication (“hard look” review)—
Decide whether the agency acted within the scope of its authority/discretion (using Chevron v NRDC).If the agency has acted within the scope of its statutory authority, consider
(A) whether the policy decision was based on a consideration of the relevant factors
- The scope of review applies to the record available to the agency at the time it made the decision.
- Courts ask whether a statute allows an agency to consider only the interests of the statute, or whether the agency is allowed to consider the values of other statutes. See [PBGC v LTV Corp] (overturning PBGC agency decision, which was authorized by ERISA to act where "appropriate and consistent under this title," that took account of the interests expressed in other statutes, such as labor and bankruptcy law). Note that if courts generally presume that an agency may not look beyond its own statute for "relevant factors," greater executive power may be desirable to promote uniformity.
- At the same time, courts will generally allow "relevant factors" that only indirectly influence the purposes of the statute the agency uses. See [NCAMP v Thomas] (upholding EPA decision to allow fruit with higher pesticide level, on the ground that a zero-tolerance level for pesticides in fruit would damage the economies of less-developed countries, which would then hurt cooperative efforts with those countries that aid "the effective enforcement of food safety laws")
and (B) whether there has been a clear error of judgment- The agency must articulate a connection between the facts it found and the action it takes.
- Courts will look at the legislative history and broader purpose of the act the agency applies. See [Community Nutrition Institute v Bergland] (vacating decision by school-lunch administrator, who applied law that banned junk food in free school lunches, to allow the competing sale of vitamin-fortified junk food, citing the "overwhelming weight of the evidence presented" and the Congressional reaction to the agency's decision)
- Reliance on a previous regulation may make retroactive application of a new regulation "arbitrary or capricious." [Microcomputer Tech Institute v Riley].
Determine whether the agency’s action follow the necessary procedural requirements.If a court finds an agency decision arbitrary or capricious for lack of a record, the court may remand either to a district court or to the agency itself to develop a record. [Citizens to Preserve Overton Park v Volpe]. This is intended to prevent the use of affidavits for judicial review of agency action, which would in practice lead to post hoc rationalizations violating [SEC v Chenery Corp].
The grant of this arbitrary and capricious judicial review presupposes that courts are entitled to force agencies to create whatever record is necessary for the court to conduct its review (see remand in this case).
-There is no need to order remand if it would be a waste of time [Syracuse Peace Council v FCC] (rejecting need for FCC, who had not explained its abandonment of the fairness doctrine, to re-consider its decision given that its reasoning was "obvious and compelling")
*State Farm: review of changing agency decisions*
The Court (basically) reaffirmed the holding of Overton Park that the agency "must examine the relevant data and articulate a satisfactory explanation for action including a “rational connection between the facts found and the choice made.” The Court recognized that an agency’s view of what is in the public interest may change, either with or without a change in circumstances; however, the Court held that an agency changing its course must supply a reasoned analysis.
State Farm explicitly endorsed both procedural and substantive hard look review. State Farm may also reject the technocratic version of hard look doctrine: political justifications are OK if relevant statutory provision exists; a deliberative but political model supported, like that in [Massachusetts v EPA]
According to the new State Farm test, an agency rule change is arbitrary and capricious if— - The agency has relied on factors that Congress had not intended it to consider.
- Agencies should try to avoid over-regulation in response to availability bias [ADA v Martin] (Coffey concurring) (complaining that OSHA had set HIV/Hepatitis B safety standards in response to one well-known case of infection)
- Private autonomy/market ordering will be fine in terms of arbitrariness review, but it might run into problems with the statute.
- Frontier problem: whether risk/risk tradeoffs are an important or statutorily relevant factor
- Whether to allow cost-benefit analysis here is difficult, especially considering risks to life/health; there are problems with valuation, as well as moral issues about valuing future generations
- The agency entirely failed to consider an important aspect of the problem
- This means that agencies must at least determine "technological alternative(s) within the ambit of the existing standard(s) it uses" (State Farm) (holding that the NHTSA should have considered the technological benefits of airbags when considering whether to abandon a passive-restraint requirement for cars)
- This has been read broadly to require that agencies should consider known alternatives
- Breyer: making agencies consider every possible alternative wastes time, money
- See also [Syracuse Peace Council v FCC]: The DC Circuit argues that an agency can abandon a doctrine without looking at alternatives if it's "obvious" (upholding decision to abandon fairness doctrine as not in "public interest")
- Agencies can make "normative and predictive judgments" where necessary [Syracuse Peace Council v FCC] (abandoning the "fairness doctrine")
- Predictive judgments are more likely to involve agency expertise, so courts should defer [Syracuse Peace Council v FCC]
- Agencies can consider "serious uncertainties if supported by the record and reasonably explained" (State Farm)
- This implies more broadly that information costs are relevant
- See also [ADA v Martin] (rejecting need for cost-benefit analysis where "imperiling the existence" of the industry was the standard)
-Posner: courts should defer where agency methodology based on expertise
- Agencies can and must consider enforcement issues. [Chrysler v DOT] (vacating test dummy standards for impreciseness that made enforcement difficult)
- Courts disagree on how to review the choice to do cost-benefit analysis, and the methods thereof
- [ADA v Martin]: Posner: agencies don't have to do cost-benefit analysis at a fine-grained level (upholding Hepatitis B regulation where OSHA lumped all health-care industries together, against ADA's argument that OSHA erred by not considering different industries differently, and where statutory standard was whether costs would "imperil the industry," even where the costs might outweigh the benefits as applied to dentists)
-But see [Corrosion-Proof Fittings v USEPA]: creating an implicit presumption that agencies should weigh costs and benefits (remanding case back to agency for further consideration, on grounds that EPA failed to muster substantial evidence for its opinion, questioning EPA’s definition of reasonable risk and its methodology, for example measuring discount rates by exposure rather than by injury)
-Agencies can't use unquantified benefits to trump known costs [Corrosion-Proof Fittings v USEPA]
- Note the special difficulty of reviewing agency inaction, since it's hard for judges to tell whether or not an agency is not acting for a principled reason
- Note also Breyer arguments: judicial review leads agencies to act either overbroadly or overcautiously
- The agency offered an explanation for its decision that runs counter to the evidence before the agency.
- The agency's decision is so implausible that it could not be ascribed to a difference in view or the product of agency expertise
[alias: hard look]
[alias: arbitrary or capricious]