What does the Administrative Procedure Act govern, and what does the term 'arbitrary and capricious' mean?

• A. It governs civil procedure in federal courts; 'arbitrary and capricious' means legal error.
• B. It governs state taxation; 'arbitrary and capricious' means random.
• C. It governs only criminal procedures; 'arbitrary and capricious' means intentional misconduct.
• D. It governs federal agency rulemaking and adjudication; arbitrary and capricious means irrational or not supported by reasons or evidence.

Answer: (D)

The Administrative Procedure Act governs how federal agencies create rules and decide disputes through rulemaking and adjudication. It sets the procedures agencies must follow and lays out how courts review agency actions. The phrase “arbitrary and capricious” is the standard courts use when assessing those actions. It means the agency’s decision must have a rational basis, be supported by the record and relevant evidence, and reflect careful consideration of the facts and statutory factors. If an agency ignores important factors, relies on factors not in the record, or offers a rationale that is implausible or not tied to the facts, a court can set the action aside. This emphasis on reasoned decision making distinguishes legitimate agency choices from ones that appear irrational or unsupported by evidence.