Commercial Litigation and Arbitration

Standard of Review Under the Administrative Procedure Act

From Greater Yellowstone Coalition v. Kempthorne, 2008 U.S. Dist. LEXIS 69802 (D.D.C. Sept. 15, 2008):

Under the APA, federal agency actions are to be held unlawful and set aside where they are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." See 5 U.S.C. § 706(2)(A). While this standard does not empower courts to substitute their judgment for that of the agency, it requires "a thorough, probing, in-depth review" of challenged decisions. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415-16 (1971). Accordingly, an administrative action must be vacated where the agency

relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983); see also Daingerfield Island Protective Soc'y v. Babbitt, 40 F.3d 442, 446 (D.C. Cir. 1995) (deference only to "reasoned, permissible construction[s] of ... relevant statute[s]") (internal quotations omitted). Review of an agency action is more demanding where the challenged decision stems from an administrative about-face. "For [an] agency to reverse its position in the face of a precedent it has not persuasively distinguished is quintessentially arbitrary and capricious." La. Pub. Serv. Comm'n v. FERC, 184 F.3d 892, 897 (D.C. Cir. 1999). Thus, when reversing itself, "[an] agency is 'obligated to supply a reasoned analysis for the change beyond that which may be required when an agency does not act in the first instance.'" FFA I, 294 F. Supp. 2d at 104 (quoting State Farm, 463 U.S. at 41-42) (emphasis in original). This obligation is all the more pronounced where the agency's reversal is at odds with a clear statutory mandate governing the agency's actions. See id. at 105, 108.

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