Final answer:
The substantial evidence rule is applied by courts to review formal rulemaking decisions made by administrative agencies, ensuring decisions are based on substantive evidence.
Step-by-step explanation:
The substantial evidence rule is a standard used by courts to review decisions made during formal rulemaking by administrative agencies. The rule requires that the agency's decision is supported by substantial evidence on the record considered as a whole. This means there must be more than a scintilla of evidence, but it does not have to reach the level of a preponderance of evidence.
The substantial evidence rule usually applies to formal rulemaking decisions or adjudicatory actions taken by an agency after a formal hearing process. However, it does not typically apply to non-adjudication decisions, proposed rule changes, or challenges to the internal rules of an agency; these are subject to different review standards.