National Labor Relations Board v. Bell Aerospace Co.

Choice of Procedures: Rulemaking or Adjudication

 Sometimes, in adjudicative undertakings, agencies make decisions that set precedents for non-parties without going through the rulemaking process. Some administrative law scholars call these types of actions “nonlegislative rules.” This name is appropriate because, while these decisions do not technically bind third parties or undergo the legislative rulemaking process described in APA Section 553, they are “rules” according to APA Section 551(4). They are agency statements “of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describ[e] the organization, procedure, or practice requirements of an agency.” 

 If an agency has the authority to engage in both rulemaking and adjudication, it gets to determine which procedures it will use to make decisions. The agency can make rules that have future effect and bind large groups, or they can make decisions on a case-by-case basis that primarily affect only the parties involved. Each choice, rulemaking and adjudication, has its pros and cons:

Rulemaking provides for public participation and puts all regulated entities on notice about what is permissible by law. Rulemaking is also efficient because it binds all stakeholders to the same, uniform obligations. When an agency makes a rule, that rule settles debate between competitors about what is allowed and what is prohibited. A bright-line policy brings clarity and conclusiveness, avoiding a series of ad hoc decisions through drawn out, punitive adjudicative proceedings.

Adjudication, on the other hand, allows agencies to be more flexible and to resolve issues and questions that the agency did not foresee. Sometimes, agencies have to solve problems they did not contemplate in rulemaking processes. Adjudication also avoids rigid rules in situations where case-by-case evaluations are a better fit than a hard and fast rule.

The debate is complex, and in a few cases, regulated parties have tried to push courts to tell agencies that they must use one form of decisionmaking or another. As we see in National Labor Relations Board (“NLRB”) v. Bell Aerospace Co., courts generally defer to agencies’ choice of rulemaking or adjudication so long as Congress authorizes the agencies to utilize those decisionmaking methods.