Question

An administrative agency is passing a new regulation interpreting a statute that was recently passed by Congress. The statute specifically and broadly calls for the agency to make new rules setting a maximum interest rate for payday loans, and the administrative agency's new regulation sets that maximum interest rate at 40 percent. The administrative agency posts the proposed rule on its website and gives the public 120 days to comment. An overwhelming number of comments from the public state that the proposed maximum interest rate is far too high. As a result, the administrative agency's final rule cuts the maximum interest rate in half to 20 percent.

Assume that a court has found that the administrative agency's actions have violated the Administrative Procedure Act (APA). What is the most likely reason why the court made that decision?

Answer 1

The likely reason for the court finding that the administrative agency violated the APA is the lack of a logical and rational explanation for the significant change in the proposed rule following public comments.

Step-by-step explanation:

A court finding that an administrative agency violated the Administrative Procedure Act (APA) typically implies that the agency has failed to follow proper rulemaking procedures as defined under the APA. In the scenario described, the agency provided a notice and a comment period, which are both in compliance with the APA. However, the most likely reason for the court's decision might be that the agency did not provide a logical and rational explanation for why it decided to change the proposed maximum interest rate from 40 percent to 20 percent in response to public comments. This sudden and significant alteration may appear arbitrary without an accompanying explanation of how the public's feedback influenced the agency's decision-making process. The APA requires agencies to consider and respond to significant comments received during the public comment period, thereby ensuring that the rulemaking process is open and based on a reasoned decision-making process.