Motor Vehicle Manufacturers Association v. State Farm
National Highway Traffic Safety Administration (NHTSA)
In 1969 the Department of Transportation proposed a standard requiring installation of passive restraints. Over the years there were a number of hearings and revisions to these standards. Furthermore, this standard was upheld via judicial review. The effective date for this standard was set to be August 1976. However, in June of 1976 the Secretary of Transportation initiated a new rulemaking. From the rulemaking he suspended the passive restraint requirement because of anticipated public resistance to the system. However, the successor to this Secretary disagreed with this and issued a passive restraint regulation. The regulation stated that by 1984 all care were required to have either airbags or passive belts. (Upheld on judicial review.) In September of 1982, however, the next Secretary decided, for economic reasons, to rescind the standard.
In a statement, defendant claimed that the automatic restraint system would not produce significant safety benefits. It said this was the case because the agency assumed airbags would be installed in 60% of all cars, however the manufactures only planned to install them in 1% of the cars. For this reason, the live saving potential of air bags would not be met. Furthermore, the passive seat belts could be easily disabled.
The District of Columbia Circuit held that "the agency's recission of the passive restraint requirement was arbitrary and capricious."
Defendant first claims that the court should review the agency's revocation as it reviews the agency's decisions not to act: "close to the borderline of nonreviewability." The court rejects this because it distinguishes revocation from not acting, in that the former results in a change in rules. Rather the court says it will use the "arbitrary and capricious" standard ("a court may not set aside an agency rule that is rational, based on consideration of the relevant factors and within the scope of the authority delegated to the agency by the statute.")
Second, the court rules that the change in rule was arbitrary and capricious. This is because although the court felt that the ratio of airbags to passive seat belts was not what it expected it to be, it did not explain why this was relevant to the overall safety. Although defendants claim a number of disadvantages of having an airbag only option, the agency did not cite these reasons in its decision.
Third the court rules that the fact that the agency dismissed the automatic seat belts was arbitrary and capricious. Although an agency can dismiss a policy choice because the choice may have a substantial uncertainty, the agency has to explain the evidence that is available and make a rational connection between the facts and the policy choice.
Fourth the court ruled that the fact that the agency dismissed the continuous seat belts was arbitrary and capricious. There is evidence that these seat belts might be effective and the agency did nothing on the record to rebut this evidence.
Finally, the court claims that although the agency can review the costs and benefits while making decisions, it must remember its mandate from Congress is to promote safety.