Motor Vehicles Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co.

Motor Vehicles Manufacturers Association v. State Farm

Argued April 26, 1983
Decided June 24, 1983
Full case name Motor Vehicle Manufacturers Association of the United States, Inc., et al. v. State Farm Automobile Insurance Company et al; Consumer Alert, et al. v. State Farm Mutual Automobile Insurance Company et al.; United States Department of Transportation, et al. v. State Farm Mutual Automobile Insurance Company et al.
Docket nos. 82-354-56
Citations

463 U.S. 29 (more)

103 S. Ct. 2856; 77 L. Ed. 2d 443; 13 Envtl L. Rep. 20,672
Argument Oral argument
Holding
The standard of review for rescinding notice and comment rules is the same as that for enacting rules. The rescission was arbitrary and capricious for failing to consider the alternative of requiring airbags, and for too quickly dismissing the benefits of automatic seat belts.
Court membership
Chief Justice
Warren E. Burger
Case opinions
Majority White, joined by unanimous (Parts I-IV, V-A); Brennan, Marshall, Blackmun, Stevens (Part V-B, VI)
Concur/dissent Rehnquist, joined by Burger, Powell, O'Connor
Laws applied
Administrative Procedure Act

Motor Vehicles Manufacturers Association v. State Farm, 463 U.S. 29 (1983), is a United States Supreme Court decision concerning regulations requiring passive restraints in cars. In it, the Court struck down an order by the National Highway Traffic Safety Administration rescinding regulations requiring either airbags or automatic seat belts in new cars. The Court held that the arbitrary and capricious standard for reviewing agency actions applied to rescinding regulations the same as to enacting regulations. It also held that the rescission of the rule requiring some sort of passive restraint was arbitrary and capricious because it failed to consider the alternative of requiring all cars to have airbags. Finally, it held that the agency dismissed the safety benefits of automatic seat belts too quickly.

The case is noteworthy not only for its effects on car safety, but also in clarifying the Supreme Court's approach to reviewing agency actions under the Administrative Procedure Act.

Background

The National Traffic and Motor Vehicle Safety Act of 1966 directs the National Highway Traffic Safety Administration (NHTSA) to issue safety standards, saying they "shall be practicable, shall meet the need for motor vehicle safety, and shall be stated in objective terms."15 U.S.C. § 1392(a). The resulting regulations went through a tumultuous history, with over 60 rulemaking notices, having been amended, rescinded, reimposed, and then re-rescinded.

The original rulemaking simply mandated seat belts. However, this soon proved to be ineffective, as more than half of people never wore their seat belt during that time period.[1] So the NHTSA proposed using passive restraint systems—devices which would protect drivers even if drivers took no action other than that necessary to drive the car. The two main proposed mechanisms were automatic seat belts, and airbags. In 1969, the NHTSA proposed a standard requiring installation of some kind of passive restraint for drivers,[2] and later amended this to include all front seat passengers.[3] The regulations adopted required passive restraints for vehicles built after 1975, and allowed those built between 1973 and 1975 to use a system whereby the car wouldn't start unless the seatbelt was in use.

This "ignition interlock" option proved unpopular, and resulted in Congress passing the Motor Vehicle and Schoolbus Safety Amendments of 1974, which disallowed ignition interlocks, and required restraint systems other than seat belts to be approved by Congressional resolution before going into effect.15 U.S.C. § 1410b(b)(2). In 1976 the optional alternatives were extended indefinitely by Secretary of Transportation William Coleman, and the passive restraint requirement suspended, due to expected public resistance. They were then reinstated by Coleman's successor, Brock Adams, and then re-rescinded by his successor, Andrew Lewis. The last rescission is the action which the Supreme Court reviewed.[4]

The NHTSA justified this rescission by saying that there was no longer sufficient evidence for the efficacy of the regulations. This was due not to a change in judgment about the technology, but due to a change in car manufacturers' plans. Whereas the NHTSA originally estimated that 40% of new cars would have automatic seat belts, it turned out that 99% of cars would use them. In addition, they were going to use a detachable type of automatic seat belt, which could easily be detached, at which point they would operate like normal seat belts. The NHTSA also worried that the change would be expensive, and would sour the public's view towards safety regulations, as it would be seen as a wasteful, imposing example of bureaucratic overreach.[5]

Though the DC Circuit found that rescinding a rule has "parallels" to failing to act, and agency's failure to act was only subject to "very narrow" review,[6] thus suggesting a narrow review in the case of rescission, they still vacated the rescission, partially due to Congressional action in response to NHTSA regulations, which they saw as heightening the standard of review. They gave three reasons for vacating the rescission: that there was insufficient evidence to sustain the conclusion that they could not predict an increase in seat belt usage, and that "only a well-justified refusal to seek more evidence could rencer rescission non-arbitrary";[7] that the NHTSA inadequately considered the possibility of requiring nondetachable automatic seat belts; and that they inadequately considered the possibility of requiring airbags.

Opinion of the Court

Justice White, writing for the majority, disagreed with the DC Circuit and held that the scope of judicial review was the same for rescission as it is for enacting regulations in the first place. The Court explicitly rejected the view that they should treat rescission the same as a refusal to regulate in the first place: "The Motor Vehicle Safety Act expressly equates orders “revoking” and “establishing” safety standards; neither that Act nor the APA suggests that revocations are to be treated as refusals to promulgate standards."[8]

The Court also rejected the view that Congressional action after the enactment of the National Traffic and Motor Vehicle Safety Act affected the standard of review, even if Congressional action can inform the Court's interpretation of the statute.[9]

However, the Court agreed with the DC Circuit that the rescission was arbitrary and capricious for failing to consider the possibility of requiring airbags. Although agencies need not consider every possible alternative, requiring air bags was an obvious option considering that they were part of the original regulations. White said that the fact that the car companies - which "waged the regulatory equivalent of war" against airbags - would try to evade the regulations, is not a reason to repeal the regulations.[10] The Court also refused to consider rationales the NHTSA raised in court that they didn't raise in their original order.

Although the Court considered it a "closer issue", it also held the rescission arbitrary and capricious based on its dismissal of automatic seat belts' effectiveness.[11]

Concurring opinion of Justice Rehnquist

In a concurrence, Justice Rehnquist defended agencies which changed their minds on policy issues due to a changing political climate. He noted that the NHTSA's change of heart on safety regulations likely reflected the election of Ronald Reagan, but defended this as a reason for agency reconsideration of previously adopted rules:

The agency's changed view of the standard seems to be related to the election of a new President of a different political party. It is readily apparent that the responsible members of one administration may consider public resistance and uncertainties to be more important than do their counterparts in a previous administration. A change in administration brought about by the people casting their votes is a perfectly reasonable basis for an executive agency's reappraisal of the costs and benefits of its programs and regulations. As long as the agency remains within the bounds established by Congress, it is entitled to assess administrative records and evaluate priorities in light of the philosophy of the administration.[12]

Arbitrary and Capricious Review

Motor Vehicles v. State Farm is notable for laying out the Supreme Court's interpretation of arbitrary and capricious review, also known as "hard look" review,[13] as set out by the Administrative Procedure Act:

[A] reviewing 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 ... 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, we must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. Normally, an agency rule would be arbitrary and capricious if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise ... We may not supply a reasoned basis for the agency's action that the agency itself has not given. We will, however, uphold a decision of less than ideal clarity if the agency's path may reasonably be discerned.[14]

References

  1. ↑ 463 U.S. at 54, n.19
  2. ↑ 34 Fed. Reg. 11,148-01
  3. ↑ 37 Fed. Reg. 3911
  4. ↑ 463 U.S. at 34-38
  5. ↑ 463 US at 38-39
  6. ↑ 680 F.2d 206, 219
  7. ↑ 680 F.2d 206, 232
  8. ↑ 463 U.S. at 41
  9. ↑ 463 U.S. at 45
  10. ↑ 463 U.S. at 49
  11. ↑ 463 U.S. at 51
  12. ↑ 463 U.S. at 57
  13. ↑ Miles, Thomas J.; Sunstein, Cass R. (2008). "The Real World of Arbitrariness Review". U. Chi. L. Rev. 75 (2): 761–814 [p. 763]. JSTOR 20141924.
  14. ↑ 463 U.S. at 42-43, internal quotations and citations omitted

Further reading

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