Arbitrary-or-capricious test

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The arbitrary-or-capricious test is a legal standard of review used by judges to assess the actions of administrative agencies. It was originally defined in a provision of the 1946 Administrative Procedure Act (APA), which instructs courts reviewing agency actions to invalidate any that they find to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The test is most frequently employed to assess the factual basis of an agency's rulemaking, especially informal rulemakings.[1][2][3][4]

Background

The Administrative Procedure Act (APA) makes final agency decisions (such as those made during rulemaking or adjudication) subject to judicial review. The APA provides for judicial review for persons and parties "adversely affected or aggrieved by agency action within the meaning of a relevant statute" or suffering "legal wrong because of agency action."[1][2][3]

The APA establishes two standards of review for courts assessing the actions of administrative agencies: arbitrary-or-capricious and substantial evidence. The latter standard is required by the APA in cases involving decisions made through the formal rulemaking or formal adjudication processes. The arbitrary-or-capricious test, while applicable to all agency decisions, is most frequently used to review the factual basis of informal rulemakings. According to the Regulatory Group and the Center for Effective Government, in practice, these two tests are applied in very similar ways.[1][4][2]

Examples of federal courts applying the arbitrary-or-capricious test

Federal judges block Trump administration abortion rule (2019)

Second federal judge blocks Trump administration restrictions on abortion (2019)

U.S. District Judge Michael McShane issued a nationwide preliminary injunction to block a rule issued by the U.S. Department of Health and Human Services (HHS) aimed at keeping Title X fund recipients from engaging in abortion-related activities.[5] McShane’s ruling followed a similar decision made by Judge Stanley Bastian in the Eastern District of Washington, who granted an injunction on April 25, 2019.[6] Preliminary injunctions keep new rules from going into effect while courts decide how to resolve legal challenges brought against them. In this case, HHS issued a final rule prohibiting the use of Title X funds to perform, promote, or refer for abortion as a family planning method.[7] The rule also requires clear financial and physical separation for clinics conducting Title X and non-Title X activities.[7]

McShane’s order, issued on April 29, 2019, came down four days before the HHS rule was supposed to go into effect.[5] He argued that the rule is “a solution in search of a problem” and that “[a]t worst, it is a ham-fisted approach to health policy that recklessly disregards the health outcomes of women, families, and communities.”[5] He also held that the people challenging the rule raised serious claims that the rule was arbitrary and capricious.[5]

Judge McShane said that a previous version of the HHS rule survived a challenge at the U.S. Supreme Court in the 1991 case Rust v. Sullivan.[5] There, the court applied the Chevron doctrine and held that the HHS interpretation of Title X reflected a plausible reading of the law and must be upheld.[5] Under the Chevron doctrine, federal courts defer to agency interpretations of ambiguous laws that Congress empowers the agency to implement.

However, McShane held that post-Rust actions by Congress and HHS changed the way courts should approach the issue.[5] He ruled that “HHS must do more than merely dust off the 30-year old regulations and point to Rust.”[5] He said, “That HHS appears to have failed to seriously consider persuasive evidence that the Final Rule would force providers to violate their ethical obligations suggests that the rule is arbitrary and capricious.”[5]

First federal judge blocks Trump administration restrictions on abortion (2019)

Judge Stanley Bastian issued a preliminary injunction to block a new Trump administration rule aimed at keeping Title X fund recipients from engaging in abortion-related activities.[6] Preliminary injunctions keep a new rule from going into effect while a court decides how to resolve legal challenges brought against it. In this case, the U.S. Department of Health and Human Services (HHS) issued a final rule prohibiting the use of Title X funds to perform, promote, or refer for abortion as a family planning method.[8] The rule also requires clear financial and physical separation for clinics conducting Title X and non-Title X activities.[8]

Judge Bastian argued that his April 25 injunction was appropriate because the plaintiffs in the case presented facts and arguments supporting the claims that the rule would violate existing laws and regulations, was made in violation of the Administrative Procedure Act (APA), and would cause Title X fund recipients to suffer irreparable harm.[6] Bastian also said that the state of Washington showed that it stood to lose over $28 million dollars in savings because “it is not legally or logistically feasible for Washington to continue accepting any Title X funding subject to the Final Rule.”[6] He said one of the plaintiffs, the National Family Planning & Reproductive Health Association, represents over 65 Title X grant recipients and that many members of their network would leave once the final rule went into effect, “thereby leaving low-income individuals without Title X providers.”[6] The Title X rule was scheduled to go into effect on May 3, 2019, and more lawsuits against the rule were pending in other courts.[6][9]

Judge Bastian devoted most of his analysis to what he considered to be the likely effects of the final rule, but his order granting the injunction also mentions the arbitrary-or-capricious test.[6] The people challenging the rule argued that it was “arbitrary and capricious because it reverses long-standing positions of the Department without proper consideration of sound medical opinions and the economic and non-economic consequences.”[6]

Federal judge rules against Trump administration expansion of association health plans (2019)

On March 28, 2019, Federal Judge John Bates published a 43-page opinion vacating a Trump administration rule designed to expand association health plans (AHP). The U.S. Department of Labor (DOL) rule allowed self-employed people to join associations that provided group health insurance plans like those offered by employers. Bates’ opinion said that the Administrative Procedure Act (APA) and the Chevron doctrine required him to block the DOL rule because the agency used an unreasonable interpretation of federal law.[10][11]

The Chevron doctrine is a two-step framework that compels federal judges to defer to agency interpretations of laws in some cases. When judges review agency interpretations of law under Chevron they must first determine whether the law is clear. If the law is ambiguous, then the judge will defer to the agency interpretation unless it is unreasonable. The APA requires judges to invalidate agency actions that are arbitrary, capricious, an abuse of discretion, or otherwise contrary to law.[10]

In this case, Judge Bates held that the DOL rule was designed as an end-run around the Affordable Care Act (ACA) that ignored the language and purpose of both the ACA and the Employee Retirement Income Security Act of 1974 (ERISA).[10]

Bates held that ERISA defined employer in an ambiguous way, but that the DOL rule’s definition was unreasonable. He wrote that the DOL rule failed at Chevron step two because its definition of employer stretched beyond the limits of ERISA in an unlawful way. His judgment also said that Congress did not intend for ERISA to regulate commercial healthcare insurance providers directly or to expand citizen access to healthcare benefits outside of employment relationships. Bates held that the DOL rule also contradicted the Affordable Care Act. He said Congress did not intend “that fifty-one distinct individuals employing no others could exempt themselves from the individual market’s requirements by loosely affiliating through a so-called ‘bona fide association’ without real employment ties.”[10]

Federal judge restores Obama-era compensation reporting requirements blocked by Trump administration (2019)

Federal Judge Tanya S. Chutkan set aside a decision to delay and review an Obama-era requirement that employers submit pay data along with other employee information. Her March 4, 2019, decision held that the Trump administration’s delay was illegal because it violated the requirements of the Administrative Procedure Act (APA).[12]

Since 1966, the Equal Employment Opportunity Commission (EEOC) has required employers with over 100 employees to submit an annual report with information about employees’ sex, race, and ethnicity, sorted by job category. In September 2016, the Office of Management and Budget (OMB) approved an EEOC request to add earnings and hours worked to the reporting requirements.[12]

In September 2017, OMB directed the EEOC to announce a stay for the effective date of the pay data collection requirements for the duration of an OMB analysis. OMB said that it was reviewing the new data collection forms under the Paperwork Reduction Act (PRA), which aims to minimize the burdens of information requests from federal agencies. The National Women’s Law Center (NWLC) sued saying that OMB had violated both the PRA and the APA when it issued a stay for the pay data collection requirements.[12]

Judge Chutkan ruled that OMB’s action staying EEOC’s collection of pay data failed the APA’s arbitrary-or-capricious test. She said that OMB’s decision to issue the stay “totally lacked the reasoned explanation that the APA requires.” Judge Chutkan rejected the government’s request for Auer deference, which requires courts to yield to agency interpretations of their own ambiguous regulations. She said that courts do not defer to an agency’s unsupported suppositions.[12]

Federal judges block Trump administration contraception rules

Second federal judge blocks contraception rules (2019)

On January 14, 2019, Judge Wendy Beetlestone issued a nationwide injunction against new contraception rules promulgated by the Trump administration. A day earlier, a federal judge in California blocked the rules in 13 states and Washington, D.C. The Departments of Health and Human Services, Treasury, and Labor announced the two final rules on contraception in November 2018. According to the agencies, those rules provide flexibility to employers with moral or religious objections to health insurance plans that cover contraception and sterilization. Under the new rules, those employers would be able to offer alternative health insurance plans without such coverage.[13][14][15][16][17]

The agencies followed a process called notice-and-comment rulemaking to issue the rules. That process allows agencies to amend, repeal, or create administrative regulations after considering public feedback on proposed rules.

Pennsylvania and New Jersey sued the Trump administration over the final rules and made five arguments against them:[17]

Judge Wendy Beetlestone held that the states’ argument that the agencies failed to follow notice-and-comment procedures, in violation of the APA, was likely to succeed. She also held that the rules failed the arbitrary-or-capricious test because they exceeded the scope of agency authority granted by the Affordable Care Act (ACA). She cited Chevron v. NRDC (1984) and wrote that the ACA was clear on the question so the agencies were not entitled to judicial deference.[17]

Judge Beetlestone ruled that the negative effects of a short period of decreased access to no-cost contraceptive services would be direct and irreversible. She said that states would be obligated to shoulder much of the burden of providing contraception for women who lose coverage following the final rules.[17]

Beetlestone defended the nationwide scope of her injunction in response to criticism of nationwide injunctions from Trump v. Hawaii (2018) and from law review articles.[17] She argued that an injunction limited to Pennsylvania and New Jersey would not reach citizens of those states who work for out-of-state employers nor reach students who may not be considered residents of those states. She said that her injunction might be broader than necessary to provide full relief to the states, but that the lack of empirical data requires judges to exercise discernment when crafting such orders.[17]

First federal judge blocks contraception rules (2019)

On January 13, 2019, Federal Judge Haywood Gilliam blocked Trump administration contraception rules from going into effect in Washington, D.C., and 13 states. The plaintiff states challenged two final rules announced by the Departments of Health and Human Services, Treasury, and Labor in November 2018.[13][18][14][15]

Judge Gilliam agreed to issue an injunction against the new rules because he found that the suing states’ finances would suffer as a result of the new rules. First, the states claimed the rules would lead women to lose employer-sponsored contraceptive coverage and turn to the state for reimbursement after purchasing contraceptives. Next, the states argued that the rate of unintended pregnancies would rise following the implementation of the new rules. They claimed that the rise in unintended pregnancies would lead to higher expenses because states pay for child delivery and newborn care for mothers who have low incomes.[18]

Judge Gilliam held that the states showed that the rules posed a reasonably probable threat to their economic interests because they would have to pay for contraceptives that had been guaranteed cost-free by the Affordable Care Act (ACA). Gilliam held that granting an injunction against the rules was the only way to redress the potential harm to the states while they waited for the lawsuit to make its way through the court system. He limited the injunction to the plaintiff states and Washington, D.C., because the case involved difficult questions of law that might benefit from multiple decisions in various courts of appeals.[18]

Judge Gilliam also defended his decision to issue a preliminary injunction against the contraception rules using the arbitrary-or-capricious test. The plaintiff states argued that the new rules are not in accordance with the ACA, which is one of the relevant laws that determine what rules agencies may pass regarding contraception.[18]

Federal court temporarily blocks Trump administration's order ending DACA program (2018)

On February 13, 2018, Judge Nicholas Garaufis issued a preliminary injunction temporarily blocking the Trump administration's order ending the Deferred Action for Childhood Arrivals (DACA) program created by the Obama administration. The program established that individuals who were brought to the United States as children and who met certain criteria would receive relief from being deported for a period of time. On September 5, 2017, Attorney General Jeff Sessions announced that the Trump administration would be rescinding the DACA program, effective March 5, 2018. The plaintiffs in the case filed suit to challenge that order. They argued in part that the Trump administration's order violated the Administrative Procedure Act (APA). They asked the court to issue a preliminary injunction to temporarily block the order while the case proceeded.[19]

Garaufis ruled that while the administration possessed the legal authority to end the DACA program, its stated rationale in its September 2017 order could not survive judicial review. Garaufis wrote, "The question before the court is thus not whether [the administration] could end the DACA program, but whether they offered legally adequate reasons for doing so." In this case, Garaufis wrote, the Trump administration's stated rationale for ending the DACA program was its belief that the program was unconstitutional. Garaufis ruled that the Obama administration's creation of the program was within its legal authority. "Because [the Trump administration's] conclusion was erroneous," Garaufis concluded, "the decision to end the DACA program cannot stand." The preliminary injunction required the administration to continue processing DACA applications while the litigation was underway. Garaufis emphasized that his order did not mean that the administration was unable to lawfully rescind DACA on different grounds.[19]

This was the second decision by a federal district court to enjoin the administration's September 2017 DACA order. A federal district court in San Francisco enjoined the order in a separate lawsuit earlier this year. The Trump administration appealed that decision to the United States Supreme Court.

Order returning Yellowstone grizzly bear to endangered species list (2018)

On August 30, 2018, Judge Dana Christensen issued a 14-day restraining order blocking Wyoming and Idaho from opening the first public grizzly bear hunts since 1975. He later extended the order to September 20.[20]

Grizzly bear hunts were scheduled to begin September 1 in Wyoming and Idaho. Hunts were announced after the U.S. Department of the Interior delisted Yellowstone grizzly bears from the endangered species list in 2017.[20] Plaintiffs, including the Crow Indian Tribe, sued the state of Wyoming and the U.S. federal government, challenging the bears' removal from the list.[21] The plaintiffs argued the bears' survival was still questionable. Supporters of the hunt argued there were too many bears in the area killing livestock and negatively impacting deer and elk populations.[22] Click here to read Christensen's August 30 ruling.

On September 24, Christensen issued an order returning grizzly bears in Yellowstone National Park to the endangered species list. Yellowstone covers areas in Wyoming, Idaho, and Montana. Christensen ruled the federal government failed to consider the impact delisting the Greater Yellowstone Ecosystem grizzly would have on other bear populations. He also said the U.S. Fish and Wildlife Service "acted arbitrarily and capriciously" in its application of the Endangered Species Act's threats analysis.[23] Click here to read Christensen's September 24 ruling.

Earthjustice attorney Tim Preso, who argued the case, said in a statement, "This is a victory for the bears and for people from all walks of life who come to this region to see the grizzly in its natural place in the world." Bonnie Rice, senior representative for the Sierra Club's Our Wild America campaign, also supported Christensen's decision. "We’re glad the court sided with science instead of states bent on reducing the Yellowstone grizzly population and subjecting these beloved bears to a trophy hunt," she said.[24]

Wyoming Sen. John Barrasso (R) opposed the ruling, which he said was a "prime example why Congress should modernize the Endangered Species Act." Rep. Liz Cheney (R-Wyo.) introduced legislation directing the Interior Department to reissue an order delisting the bears and prohibiting further judicial review of the decision.[25][26] The U.S. Fish and Wildlife Service issued a statement expressing disappointment in the judge's ruling and defending its decision to delist the bears.[27]

See also

External links

Footnotes

  1. ↑ 1.0 1.1 1.2 The Regulatory Group, "Regulatory Glossary," accessed August 4, 2017
  2. ↑ 2.0 2.1 2.2 Electronic Privacy Information Center, "The Administrative Procedure Act (APA)," accessed August 14, 2017
  3. ↑ 3.0 3.1 Environmental Protection Agency, "Summary of the Administrative Procedure Act," accessed August 14, 2017
  4. ↑ 4.0 4.1 Center for Effective Government, "Arbitrary-or-Capricious Test," accessed August 15, 2017
  5. ↑ 5.0 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 United States District Court, District of Oregon, "State of Oregon v. Alex M. Azar II, Opinion and Order," April 29, 2019
  6. ↑ 6.0 6.1 6.2 6.3 6.4 6.5 6.6 6.7 United States District Court, Eastern District of Washington, "Order Granting Plaintiffs' Motions for Preliminary Injunction," April 25, 2019
  7. ↑ 7.0 7.1 Federal Register, "Compliance With Statutory Program Integrity Requirements, A Rule by the Health and Human Services Department," published March 4, 2019
  8. ↑ 8.0 8.1 Federal Register, "Compliance With Statutory Program Integrity Requirements, A Rule by the Health and Human Services Department," published March 4, 2019
  9. ↑ POLITICO, "Judge freezes Trump abortion rule," Alice Miranda Ollstein, April 25, 2019
  10. ↑ 10.0 10.1 10.2 10.3 United States District Court for the District of Columbia, "State of New York v. United States Department of Labor," March 28, 2019
  11. ↑ MedCityNews, "Federal judge stymies Trump Administration’s association health plan expansion efforts," Kevin Truong, accessed April 2, 2019
  12. ↑ 12.0 12.1 12.2 12.3 Bloomberg Law, "National Women's Law Center, et. al. v. Office of Management and Budget, et al.," accessed March 19, 2019
  13. ↑ 13.0 13.1 POLITICO, "Judge freezes Trump administration contraception rule," Alice Miranda Ollstein and Victoria Colliver, January 13, 2019
  14. ↑ 14.0 14.1 Federal Register, "Moral Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act," November 15, 2018
  15. ↑ 15.0 15.1 Federal Register, "Religious Exemptions and Accommodations for Coverage of Certain Preventive Services Under the Affordable Care Act," November 15, 2018
  16. ↑ NBC News, "Federal judge in Pennsylvania blocks Trump administration birth control rules," Reuters, January 14, 2019
  17. ↑ 17.0 17.1 17.2 17.3 17.4 17.5 Attorney General of Pennsylvania, "Commonwealth of Pennsylvania and State of New Jersey v. Donald J. Trump, et al.", Judge Wendy Beetlestone, January 14, 2019
  18. ↑ 18.0 18.1 18.2 18.3 United States District Court Northern District of California, "State of California, et al., v. Health and Human Services, et al., Order Granting Plaintiffs' Motion for a Preliminary Injunction," accessed January 14, 2019
  19. ↑ 19.0 19.1 United States District Court for the Eastern District of New York, "Batalia Vidal et al. v. Trump" Amended Memorandum & Order & Preliminary Injunction
  20. ↑ 20.0 20.1 Missoula Current, "District Court judge extends block on grizzly bear hunt for another 14 days," September 13, 2018
  21. ↑ CBS News, "Judge blocks first trophy hunt of Yellowstone grizzlies in 40 years," August 31, 2018
  22. ↑ U.S. News & World Report, "Judge Blocks Saturday's Grizzly Hunts in Wyoming, Idaho," August 30, 2018
  23. ↑ Casper Star Tribune, "Judge returns Yellowstone grizzly bears to endangered species list," September 24, 2018
  24. ↑ Center for Biological Diversity, "Grizzlies Saved: Court Stops Trophy Hunt of Yellowstone's Iconic Bears," September 24, 2018
  25. ↑ The Washington Post, "The Energy 202: Republicans rev up calls to rewrite Endangered Species Act," September 27, 2018
  26. ↑ Congresswoman Liz Cheney, "Cheney Introduces Legislation Directing Dept. of the Interior to Re-issue Rule Delisting Grizzly Bear, Prohibit Further Judicial Review of Decision," September 25, 2018
  27. ↑ The New York Times, "Hunt of Yellowstone Grizzly Bears Canceled as a Result of Judge’s Ruling," September 25, 2018
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