In 2011, researchers found significant disparities in the National Institutes of Health (NIH) funding of minority researchers. In particular, their study determined that—even after controlling for education, country of origin, training, previous research awards, publication records, and employers—“[B]lack applicants remain 10 percentage points less likely than whites to be awarded NIH research funding.” This study spurred the NIH to examine individual and system-wide potential contributors and solutions to this funding disparity.
Such racial disparities in federal (and state) agency distribution of grants, loans, and licenses are not unusual. Administrative law treats these types of agency actions as informal adjudications: a sort of “catch all” category implied by the terms of the Administrative Procedure Act (APA), and a category for which there are relatively fewer procedural requirements than for other categories of agency actions. For these sorts of actions, APA § 706(2)(A) requires a relatively light substantive standard of review: whether the particular action was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.
This essay explores the disjoint between racial disparities in agency informal adjudicative funding decisions and the arbitrary and capricious standard of review for informal adjudicatory decisions. It urges administrative law scholars to more deliberately attempt to reconcile this disjoint and provides the Coronavirus Aid, Relief, and Economic Security (CARES) Act as a thought experiment for future discussion and analysis.
Examples of racial disparities in agency funding decisions
As described earlier, researchers found significant racial disparities in the NIH funding of minority researchers. These funding disparities still have not abated. In a subsequent 2015 report in Nature, data provided by the NIH demonstrated no consistent improvement in racial disparities in funding. Causes for the disparities remain disputed, and potential explanations included in-group bias, implicit racial bias, and lack of diversity in terms of areas of scientific research prioritized by funding programs.
Similarly, the U.S. Department of Agriculture (USDA) has also faced claims of systemic racism, whereby minority loan applicants, like with the research grant applicants with NIH, faced patterns of underfunding and even loan denial. In Pigford v. Glickman and Keepseagle v. Vilsack, as well as in later claims filed by women and Hispanic farmers and ranchers, multiple groups alleged both racism and sexism in the USDA’s lending practices. As Judge Paul Friedman noted in one iteration of the Pigford cases:
For decades, despite its promise that “no person in the United States shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under any program or activity of an applicant or recipient receiving Federal financial assistance from the Department of Agriculture,” . . . the Department of Agriculture and the county commissioners discriminated against African American farmers when they denied, delayed or otherwise frustrated the applications of those farmers for farm loans and other credit and benefit programs. Further compounding the problem, in 1983 the Department of Agriculture disbanded its Office of Civil Rights and stopped responding to claims of discrimination. These events were the culmination of a string of broken promises that had been made to African American farmers for well over a century.
Finally, recent studies have documented racial disparities in the federal buyout of flood-prone homes. That is, researchers found that the Federal Emergency Management Agency (FEMA) voluntary flood buyout program “disproportionately targeted whiter counties and neighborhoods” even though “neighborhoods of color in neighboring areas [were] historically more likely to accept buyouts in greater numbers.” Again, the causes for these disparities are complex, and they cannot necessarily be attributed to conscious intent to discriminate. Researchers suggested histories of racial privilege may have led whiter communities to more effectively organize for buyout access than minority communities, meaning that the causes of the racial disparate outcomes may have arisen more from the empowerment (or disempowerment) of the organizing communities rather than the agency decisionmakers themselves. Yet the effects remain disproportionate and create hardships for minorities that similarly situated white neighbors do not face.
Disjoint with the arbitrary and capricious standard of review
The only recourse, at least under the Administrative Procedure Act, for challenging individual decisions creating these racial disparities is to claim that the actions were arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Non-legal anti-racist advocates would very reasonably suggest that decisions leading to significant racial disparities are per se arbitrary and capricious. Yet the § 706(2)(a) standard is ill-fit for claims of systemic discrimination. That is, the APA § 706(2)(A) standard of review is tailored towards determinations of whether individual agency decisions are arbitrary and capricious, rather than whether a series of agency decisions would lead to arbitrary and capricious outcomes. For example, the U.S. Court of Appeals for the 7th Circuit in Head Start Family Educ. Program, Inc. v. Cooperative Educational Service Agency 11 held that while an individual grant determination was reviewable under the arbitrary and capricious standard, review of the agency’s decision was limited to whether the agency’s decision in that case was “was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” No inquiry was made into the overall effects of the agency’s decision-making process.
This is not to say that other forms of recourse for discriminatory federal actions are unavailable. After all, Title VI of the Civil Rights Act of 1964 prohibits discrimination on the basis of race, color, or national origin in any program or activity that receives Federal funds or other Federal financial assistance. But Title VI does not provide private relief against agencies based upon discriminatory impacts alone. This is because the Supreme Court, in Alexander v. Sandoval, 121 S. Ct. 1511 (2001), held that private suits under Title VI and its implementing regulations can only be brought for intentional discrimination, rather than through showings of disparate impacts, even if no justification can be shown for the agency’s actions. In contrast, the same sort of lack of justification could render an agency’s decision arbitrary and capricious in an individual § 706(2)(a) challenge.
The CARES Act as a thought experiment
The CARES Act was passed on March 27, 2020, to distribute funds to individual Americans, provide increased unemployment benefits, create a Paycheck Protection Program (PPP) offering forgivable loans to small businesses, and to provide aid for large corporations and state and local governments. Already, observers are concerned about racial disparities in the distribution of funds, with more funds alleged to be distributed towards white-owned businesses than minority-owned businesses. Four class-action lawsuits have already been filed challenging banks’ use of PPP funds, noting the drastic disparity between Black, Latino, and Native Hawaiian and Pacific Islander-owned businesses’ ability to secure PPP loans versus white-owned businesses’ ability.
What would it mean if APA § 706(2)(a) could be applied to a set of informal adjudicatory decisions rather than only individual decisions? It could entail agencies justifying their overall adjudicatory decision-making approach (as necessary to demonstrate that the agency was not acting in an arbitrary and capricious manner), rather than providing justification for individual decisions, which is easier to do without the systemic context. That is, inquiries into the bases behind individual decisions can often ignore the effects of systemic racism and structural disempowerment. 
This more systemic approach for judicial review of agency adjudicatory decisions might not necessarily lead to courts overturning sets of informal adjudicatory decisions even if they exhibited racially discriminatory outcomes, but it would at least create a locus for further inquiry into the processes behind these decisions, which, in turn, could create opportunities to explore ways to refine these decision-making processes. Such an inquiry might look a bit like the research into racial funding disparities conducted by the NIH after the initial Ginther et al. study came out in 2011. Instead, the confinement of § 706(2)(a) informal adjudicatory review limits the ability of addressing systemically biased decisions, and should be an element that legal scholars contemplate as we work to address racism in the administrative law context.
 Pigford v. Glickman, 185 F.R.D. 82, 85 (D.D.C. 1999).
 Head Start Family Educ. Program, Inc. v. Cooperative Educational Service Agency 11, 46 F.3d 629, 633 (1995).
 Id. (citing Motor Vehicle Mfrs. Ass’n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).
 See generally Jasmine B. Gonzales Rose, Towards a Critical Race Theory of Evidence, 101 Minn. L. Rev. 2243 (2017).