State and federal regulators, as administrative agencies, are bound by the procedural requirements of the relevant administrative procedures act. The substantive standards developed by the regulatory agency must not be arbitrary and capricious and must fall within the agency’s statutory authority.
Issue of contention: whether rules and standards issued by the agency have legislative effect (requiring notice and comment under § 553 of the Administrative Procedures Act [5 U.S.C.A. § 553]), or are merely interpretative or procedural (which doesn’t require notice and comment)
Plaintiffs may challenge regulatory standards as:
- arbitrary and capricious
- inconsistent with the authority granted the agency by the statute
- unconstitutional delegation of legislative authority to an administrative agency (plaintiffs have generally not succeeded in this approach)
- unconstitutionally vague (question is one of adequate notice) (rarely successful)
