Also known as: arbitrary and capricious · arbitrary or capricious · APA arbitrary and capricious standard · abuse of discretion
Written by attorneys · grounded in primary & secondary sources — see below
A standard of review under which courts set aside discretionary decisions, particularly agency actions, that lack a rational basis in the record or fail to consider relevant statutory factors.
Aaron Adams offered an expert who linked workplace chemicals to his respiratory illness using animal studies and exposure data. The district court excluded the testimony, citing an analytical gap between the studies and the specific conclusions. On appeal, Adams argued the exclusion was arbitrary and capricious because the court ignored the expert's methodology and the data's relevance to causation.
The Nuclear Regulatory Commission adopted a rule limiting environmental reviews in individual reactor licensing proceedings. Environmental groups challenged the rule, claiming the agency ignored the environmental effects of the uranium fuel cycle. The court found the Commission's refusal to consider those effects arbitrary and capricious because the record showed no reasoned explanation for the omission.
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The Atomic Energy Commission issued rules governing nuclear power plant licensing without addressing environmental impacts of the uranium fuel cycle. Natural Resources Defense Council sued, arguing the agency failed to consider relevant environmental factors. The court held the rulemaking arbitrary and capricious and remanded for further proceedings.
The National Highway Traffic Safety Administration rescinded a passive-restraint requirement for new cars after manufacturers demonstrated difficulties with airbags. State Farm challenged the rescission, asserting the agency offered no reasoned explanation for abandoning the prior policy. The court found the decision arbitrary and capricious because the agency failed to address the safety benefits documented in the record.
Rodd Electrotype's controlling shareholders authorized a repurchase of shares from one family member at a premium price while refusing similar treatment to minority shareholder Donahue. Donahue sued, claiming the selective repurchase lacked any legitimate corporate purpose. The court held the transaction arbitrary and capricious because it served no valid business objective and violated fiduciary duties to equal treatment.
Sinclair Oil caused its controlled subsidiary to pay large dividends to the parent while denying proportional distributions to minority shareholders. Levien, a minority shareholder, challenged the dividends as lacking any business justification. The court ruled the payments arbitrary and capricious because they advanced no corporate purpose and merely extracted value for the controlling entity.
The agency must demonstrate that it examined the relevant data and articulated a satisfactory explanation for its action, including a rational connection between the facts found and the choice made.
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No. The standard also governs review of discretionary trust distributions, corporate fiduciary decisions, and certain evidentiary rulings when a party claims the decision lacked a rational basis.
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Arbitrary-and-capricious review is highly deferential and focuses on whether the decision maker considered relevant factors and offered a reasoned explanation. De novo review permits the court to substitute its own judgment for that of the original decision maker.
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Yes. If the agency failed to consider an important aspect of the problem or offered an explanation that runs counter to the evidence, the action may still be set aside despite isolated supportive facts.
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…finding. The EPA’s alternative argument that it would not regulate greenhouse gases even if it had authority to do so is arbitrary and capricious. The EPA’s reasons for not regulating—scientific uncertainty and foreign policy considerations—are not supported by the record. The EPA has not provided a reasoned explanation for its…