| Federal agencies make administrative decisions in regulatory, entitlement, and enforcement cases. The agency can make an informal decision or hold a formal administrative hearing in a case. If the person or company affected by the decision is dissatisfied with the agency's decision, the decision is subject to review by a higher level within the agency or by a court. This article discusses the standards of review applied by a court in evaluating federal administrative agency decisions.
Federal Administrative Procedure Act
The Federal Administrative Procedure Act (FAPA) is a law that governs the procedures used by federal administrative agencies in enforcing their rules and regulations. FAPA also lists the standards of review that courts must use in reviewing agency decisions.
A reviewing court is required to give substantial deference to agency factfinding. The court can set aside an agency's findings of fact and conclusions of law if the decision is arbitrary, capricious, or an abuse of discretion. The agency's decision can also be overturned if it is unsupported by substantial evidence.
Arbitrary, Capricious, or Abuse of Discretion Standard of Review
The court applies the arbitrary and capricious standard of review to determine if there is a rational connection between the evidence and the agency's decision. An agency's action might be considered arbitrary or capricious if the agency failed to consider relevant factors set by law in making its decision or if the agency based its decision on irrelevant factors. Agency action may also be held arbitrary or capricious if the agency used an incorrect legal standard in weighing the evidence.
Substantial Evidence Standard of Review
To determine whether an administrative decision is supported by substantial evidence, the court reviews the whole record to determine if there is evidence that a reasonable mind might see as adequate to support the agency's conclusion. The reviewing court is not supposed to weigh the evidence, resolve conflicting testimony, decide the credibility of witnesses, or draw any inferences from the evidence when using the substantial evidence standard of review.
De Novo Standard of Review
FAPA authorizes de novo (a Latin phrase meaning "from the beginning") review of an agency decision if the agency's fact-finding procedures were inadequate. A person or company claiming that the agency used inadequate fact-finding procedures has the burden of showing how the procedures were inadequate. If such procedures were inadequate, de novo review allows the reviewing court to make its own findings of fact even though those findings might differ from the findings of the administrative agency.
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