Agency Findings of Fact & Policy Decisions in Informal Proceedings

1. Agency Findings of Fact & Policy Decisions in Informal Proceedings Judicial Review

2. Judicial Review of Findings of Fact – Formal v. Informal Proceedings • “Substantial evidence” test (APA Sec. 706(2)(e)) applies to agency findings of fact in formal rulemakings/adjudications • Such proceedings are “trial-like” • Involve “adjudicative” facts – specific, retrospective in nature • Example – “Chairman and Weintraub fought. Chairman called Weintraub a drunk” • How are fact findings in informal proceedings – especially informal rulemakings under APA Sec. 553 – different from formal proceedings? • Sec. 553 does not require fact finding of any kind. It only requires: • (1) Notice of proposed rulemaking, (2) Opportunity of interested parties to “comment”, (3) Concise statement of basis & purpose of final rule • Facts involved in such cases are usually “legislative” – broad, prospective in nature • Example – When determining whether to enact a rule prohibiting certain benzene levels in the workplace agency must ask - “How much benzene in the workplace will, over time, cause cancer?” • Such facts are usually subsumed within the agency’s determination to adopt one policy over another – i.e., to adopt a rule setting benzene exposure levels at .1 ppm rather than .2 ppm

3. What is the standard of review for findings of fact in informal proceedings? • Generally – APA Sec. 706(2)(a) – arbitrary & capricious review • BUT what if an organic statute provides that “substantial evidence” is the standard of review for challenges to agencies’ informal rulemakings? • Some courts say substantial evidencestandard applies only to “adjudicative” facts and that arbitrary & capricious standard applies to review of policy judgments. • Industrial Union v. Hodgson (p. 187) – “On a record of this mixed nature, when the facts underlying the Secretary's determinations are susceptible of being found in the usual [adjudicative] sense, that must be done, and the reviewing court will weigh them by the substantial evidence standard. But, in a statute like OSHA where the decision making vested in the Secretary is legislative in character, there are areas where explicit factual findings are not possible, and the act of decision is essentially a prediction based upon pure legislative judgment, as when a Congressman decides to vote for or against a particular bill. . . . [P]olicychoices of this sort are not susceptible to the same type of verification or refutation by reference to the record as are some factual questions.” • Others say that the “substantial evidence” and “arbitrary & capricious” standard are equivalent in this context. • Ass’n of Data Processing Serv. Org. v. Fed. Res., 745 F. 2d 677 (1985) (Scalia) (p. 189) – substantial evidence & arbitrary & capricious review are effectively the same. The former is merely a subset of the latter in a specific circumstance designed to indicate that in formal proceedings judges can look only to a closed record for evidentiary support.

4. Review of agency “policy choices” • What should a court do when most challenges to an agency’s decision to adopt, not adopt or rescind a specific rule are based not on specific, adjudicative findings of fact BUT on broad “legislative” facts that Hodgson notes are “not susceptible to the same type of verification or refutation by reference to the record as are some factual questions.” • In effect, challenges of this sort claim that the agency’s decision between several possible courses of action are simply “wrong.” • Do courts review to determine if the substantive rule is “right” or “wrong” or does “arbitrary & capricious” review mean something else?

5. Evolution of “arbitrary & capricious” standard (aka “hard look” review) in policy challenges • Originally: Standard was probably meant to be VERY deferential to agency. • BUT over time evolved to the more rigorous “hard look” version. Examples: • Overton Park (SCT1971) – Court will not “substitute” its judgment for the agency but the review must be “searching and careful.” Agency “must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment” • Greater Boston (DC Cir. 1970) – Court’s function “is to assure that the agency has given reasoned consideration to all the material facts and issues. This calls for insistence that agency articulate with reasonable clarity its reasons for the decision, and identify the significance of the crucial facts . . .” • Hodgson (DC Cir. 1974) – What we are entitled to . . . is a careful identification [by the agency] of the reasons why [it] chooses to follow one course over another. • What are courts trying to achieve with this form of review?

6. Motor Vehicle Manufacturers Assn v. State Farm -- the facts • NTMVSA authorized DOT/NHTSA to enact motor vehicle safety standards for the purpose of reducing traffic accidents and resulting deaths/injuries. • When enacting regs, the statute also required DOT/NHTSA to consider (1) relevant available motor vehicle safety data, (2) whether proposed regswere reasonable, practicable, appropriate for particular types of vehicles and (3) the extent to which the regsimplemented the Act’s purposes. • DOT/NHTSA proposed regs requiring passive restraints (i.e. airbags and automatic seatbelts) (1969), then abandoned the proposal (1976). • In 1977 - DOT/NHTSA finally adopted regs requiring passive restraints which gave auto makers choice of installing either airbags or automatic seatbelts. • These regs were rescinded in 1982 because DOT/NHTSA claimed changed economic circumstances, especially of auto industry. • State Farm challenged revocation as arbitrary & capricious.

7. State Farm’s framing of “hard look” review (p. 194 casebook) • The scope of review under the "arbitrary and capricious" standard is narrow, and a court is not to substitute its judgment for that of the agency. Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action, including a rational connection between the facts found and the choice made. In reviewing that explanation, we must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. • Normally, an agency rule would be arbitrary and capricious if the agency has 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.

8. Applying “Hard Look” Review in State Farm • 1st issue: Rescission of the airbags requirement • Why does DOT’/NHTSA’s rescission of the airbags requirement fail “hard look” review? • What are the agency’s reasons for rescinding the rule? • Where do “airbags” fit into this reasoning? • What about the reasons in n. 1 p. 198?

9. Applying “Hard Look” Review in State Farm -- cont’d • 2nd issue: Automatic seatbelts • Application of Hard Look Review • Does the agency give a reason for its decision not to require automatic seatbelts? • Why does the SCT reject the agency’s decision?

10. Politics and “hard look” review • Could the agency in State Farm have successfully justified the revocation of the passive restraint regulations by saying “we are revoking the regs because Reagan promised in the 1980 presidential election that we would”? • If not why not? • How would Justice Rehnquist answer this question?