Arbitrary and Capricious Test. In 1977, the Department of Transportation (DOT) adopted a passive-restraint standard (known as Standard 208) that required new cars to have either air bags or automatic seat belts. By 1981, it had become clear that all of

Question

the major auto manufacturers would install automatic seat belts to comply with this rule. The DOT determined that most purchasers of cars would detach their automatic seat belts, rendering them ineffective. Consequently, the department repealed the regulation. State Farm Mutual Automobile Insurance Co and other insurance companies sued in the District of Columbia Circuit Court of Appeals for a review of the DOT's repeal of the regulation. That court held that the repeal was arbitrary and capricious because the DOT had reversed its rule without sufficient support. The motor vehicle manufacturers, which initially had wanted to avoid the costs associated with implementing Standard 208, then appealed this decision to the United States Supreme Court. What will result? Discuss fully.

Answer 1

Arbitrary and capricious test
The United States Supreme Court held that the rescission of the standard was arbitrary and capricious. The Court remanded the case to the court of appeals, with directions to remand to the Department of Transportation (DOT) for further consideration of the air-bag rule. A major reason for finding the rescission arbitrary and capricious was that the DOT apparently did not consider modifying the standard to require that air-bag technology be used. "Standard 208 sought to achieve automatic crash protection by requiring automobile manufacturers to install either of two passive restraint devices: airbags or automatic seatbelts. There was no suggestion in the long rulemaking process that led to Standard 208 that if only one of these options were feasible, no passive restraint standard should be promulgated."