Discretionary power of administrative agency is the right to make reasonable decisions by choosing from among acceptable choices. Discretionary powers are conferred on administrative agencies because administrative agencies possess expertise and specialization to deal with matters delegated by legislatures to the agencies.
When a statute provides that an administrative agency has discretionary powers, it does not allow unlimited discretion[i]. Discretionary power can be exercised only in accordance with the statute. Administrative agencies can discharge discretionary functions within express or implied powers allotted to agencies by legislature. Where a statute is clear and unambiguous, administrative agencies cannot disregard the statute. Administrative agencies are not to exceed or ignore legislative limitations imposed upon agencies’ power. Similarly, administrative agencies are not allowed to withhold its approval or authorization when statutory conditions for approval are met.
Administrative agencies are not supposed to exceed its power while exercising discretionary powers. An agency which has been granted discretion by statute is expected to limit its discretion based on the regulations imposed by the statute[ii]. When the legislature has provided a clear and unambiguous law, agencies are not justified in altering, modifying, or extending the reach of law. Administrative agencies are expected to apply just and fair discretion. These agencies should comply with established principles of justice while exercising discretion. It would amount to abuse of discretionary power if administrative agencies act arbitrarily, carelessly, fraudulently, or without factual basis[iii].
[i] Dickson v. Secretary of Defense, 68 F.3d 1396 (D.C. Cir. 1995)
[ii]  Ashcroft v. Industrial Comm’n, 855 P.2d 267 (Utah Ct. App. 1993)
[iii] Louisiana State Board of Medical Examiners v. Beatty, 220 La. 1 (La. 1951)