Review of Agency Determinations of Policy

In many cases, it is not too hard to see that the agency does in fact have statutory authority to take a particular action. The APA could have left it there--as long as there is authority, the agency has unreviewable discretion. (Note, later we'll see that there are specific areas where the APA says exactly that, although it frames it as an exception to the normal rules.) In fact, Section 706(2)(A) tells us that discretion can be "abuse[d]," or so "arbitrary" or "capricious" that an agency action that is perfectly within statutory bounds is nevertheless to be held unlawful and set aside.

This Section of the APA delineates what is most commonly known as "arbitrary and capricious" review, or just "arbitrariness review" for short. Courts apply it when the question is a matter of policy discretion, not legal authority. For instance, suppose a regulatory agency is trying to regulate the safety of airplanes and it is deciding which of several technologies to mandate. The relevant statutes give the Federal Aviation Administration (FAA) ample authority to make this choice, but FAA still needs to supply reasons for choosing one technology over another, and Section 706(2)(A) tells the courts to review that decision using the arbitrariness standard of review.

Identifying what arbitrariness review is focused on is the relatively easy part. Understanding how courts construe what the standard requires is the hard part. From the very beginning, arbitrariness review has bordered on being itself arbitrary. In Overton Park, the Supreme Court said that the review is "to be searching and careful," but at the same time "the ultimate standard of review is a narrow one" where the "court is not empowered to substitute its judgment for that of the agency." See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416 (1971). What on earth are courts to do?

In this subsection, we deal with this murkiness the only way we can: by reading a sampling of important cases in which the courts have tried to flesh out what is meant by the somewhat cryptic language in Section 706(2)(A). As you read the cases, try to keep in mind the practical limits that courts face in reviewing the countless agency actions that could, in theory, be challenged on arbitrariness grounds. In this respect, a good place to start is with the classic debate between Judge Bazelon and Judge Leventhal in the Ethyl Corp. v. EPA case, which involved a highly technical regulation of lead in gasoline. The judges' competing views about how courts should engage in arbitrariness review highlight many of the problems that courts face in crafting generalizable principles to supervise agency exercises of policy discretion. We then move to the classic Supreme Court case Motor Vehicle Manufacturers Association v. State Farm, which endorsed much of the DC Circuit's efforts to prevent arbitrariness review from becoming little more than a rubber stamp. Finally, we drop in on the Court's current cases applying arbitrariness review with the Department of Commerce v. New York and Prometheus Radio Project v. FCC cases, both of which may signal a more relaxed form of arbitrariness review.