Motor Vehicle Mfrs. Ass'n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983)
Motor Vehicle Manufacturers v. State Farm is a cornerstone of modern administrative law.
Under APA § 706(2)(A), was NHTSA's rescission of the passive restraint requirement in FMVSS 208 arbitrary and capricious because the agency failed to provide a reasoned explanation and to consider important alternatives, such as mandating airbags or non-detachable belts?
Under APA § 706(2)(A), a court must set aside agency action—whether adopting, amending, or rescinding a rule—if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. An agency must: (1) examine the relevant data; (2) articulate a satisfactory explanation for its action, including a rational connection between the facts found and the choice made; (3) consider the important aspects of the problem and factors Congress intended it to consider; and (4) address significant, obvious alternatives within the scope of its statutory authority. A change in policy is permissible, but the agency must provide a reasoned analysis for the change; courts may not accept counsel's post hoc rationalizations not stated by the agency in the administrative record.
Yes. The Supreme Court held that NHTSA's rescission of the passive restraint requirement was arbitrary and capricious. The agency failed to consider important alternatives—most notably mandating airbags or requiring non-detachable automatic belts—and did not provide an adequate, reasoned explanation for reversing course. The Court set aside the rescission and remanded for further proceedings.
State Farm is the canonical articulation of "hard look" review. It instructs that agencies must provide a reasoned explanation grounded in the record for both regulatory action and deregulation, and must grapple with important alternatives. The case is frequently cited for propositions that: (1) rescissions receive the same APA scrutiny as adoptions; (2) agencies must consider important aspects and alternatives; (3) courts cannot accept post hoc rationalizations; and (4) a change in administration does not substitute for evidence-based analysis. For law students, State Farm is indispensable for framing standards of review, structuring arguments about arbitrary-and-capricious defects, and understanding how courts police the administrative record.