Under what condition is an agency decision considered arbitrary?

An agency decision is deemed arbitrary when it lacks a rational basis, often demonstrated by being founded on no prior policy or rule and exhibiting irrational reasoning. This understanding stems from the principle that administrative agencies must operate within the confines of reasoned decision-making. When an agency makes a decision that does not logically follow from the facts available or departs from established procedures or policies without a reasonable justification, it can be challenged as arbitrary.

An agency’s decision could also be deemed arbitrary if it disregards relevant evidence or fails to consider significant factors that should influence the outcome. This is integral to ensuring that administrative agencies act in accordance with the rule of law and fair procedures, maintaining accountability and fairness in governance.

The other options, while potentially relevant in various contexts, do not accurately capture the essence of what constitutes an arbitrary decision within the framework of administrative law. Rational policy, established procedures, and substantial evidence suggest a structured and justifiable decision-making process, which aligns with legal standards for agency actions rather than illustrating irrational behavior.