Reagan National Airport in Washington, D.C. (“National”) is one of the busiest and most crowded airports in the nation. Accordingly, the Federal Aviation Administration (FAA) has restricted the number...

Reagan National Airport in Washington, D.C. (“National”) is one of the busiest and most crowded airports in the nation. Accordingly, the Federal Aviation Administration (FAA) has restricted the number of commercial landing and takeoff slots at National to forty per hour. Allocation of the slots among the air carriers serving National had been by voluntary agreement through an airline scheduling committee (ASC). When a new carrier requested twenty slots during peak hours, National’s ASC was unable to agree on a slot allocation schedule. The FAA engaged in informal rulemaking and invited public comment as a means to solve the slot allocation dilemma. The FAA then issued Special Federal Aviation Regulation 43 (SFAR 43) based on public comments and a proposal made at the last National ASC meeting, thereby decreasing the number of slots held by current carriers and shifting some slots to less desirable times. SFAR 43 also granted eighteen slots to a new carrier, New York Air. More specifically, SFAR 43 requires five carriers to give up one or more slots in specific hours during the day, requires twelve carriers to shift one slot to the latest hour of operations, and then reserves and allocates the yielded slots among the new entrants and several other carriers. Northwest Airlines seeks judicial review of SFAR 43, claiming that it is arbitrary, capricious, and not a product of reasoned decision making, and that it capriciously favors the Washington–New York market as well as the new carrier. What standard would apply to the agency’s actions? Should Northwest prevail? Explain.