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, the court must consider whether the decision is based on a consideration of the relevant factors and whether there has been a clear error of judgment.
The insurance company contested the National Highway Traffic Safety Administration's rescission of a passive restraint safety standard for all new automobiles as arbitrary and capricious under the informal rule making procedures of the Administrative Procedure Act, 5 U.S.C.S. § 553. The administration required the installation of seatbelts in all automobiles. Following that requirement, the administration then required passive restraints. The passive restraints requirement was then rescinded when it was found that they produced no safety benefits.
Under the "arbitrary and capricious" standard, did the court err when it rescinded the passive safety requirement?
The court failed to provide a clear and convincing reason for rescinding the requirement for the passive restraint system. The judgment was vacated and remanded.