Most statutes do not expressly approve use of alternatives, and many certainly preclude their use. Beyond the non-regulatory alternatives discussed above, most agencies may take a variety of actions short of rulemaking to address problems. For example, agencies make generally applicable pronouncements through instruments of varying formality, including final adjudicatory decisions, rulings, press releases, speeches, policy statements, interpretations, letters, advisory opinions, and memoranda. However, to be binding on parties in subsequent agency or court proceedings, agency action under the APA either must be an "order" formulated in adjudication or a "rule" formulated in rulemaking. The remainder of this chapter, therefore, is devoted to the choice between establishing policy through adjudication or rulemaking. Some agencies, charged with enforcing a fairly detailed statute through enforcement actions, rely almost exclusively on decisions made in adjudicative proceedings for the making of policies to be applied in future cases. The National Labor Relations Board is the best-known example. Most regulatory agencies, however, regularly issue rules designed to flesh out their statute and also bring enforcement actions against violators of the regulations and statute. Some such enforcement actions are "tried" within the agency's own adjudicative system. For example, the Federal Trade Commission issues cease-and-desist orders to violators of the Federal Trade Commission Act and the Department of Labor tries child labor civil penalty actions. Other agencies must seek enforcement in special adjudicative agencies. For example, Department of Labor occupational safety and mine safety cases are tried before the Occupational Safety and Health Review Commission and the Federal Mine Safety and Health Review Commission, respectively, and Federal Aviation Administration pilot license revocation cases are tried before the whenever compliance with such voluntary standards 4/ See Baram, supra note 2, at 137-149. National Transportation Safety Board. Still other agencies must seek enforcement in the courts, after referral to the Department of Justice (e.g., Department of Labor for Fair Labor Standards Act cases.) Thus, many agencies regularly make policy through both rulemaking and adjudication, and may be confronted with the problem of choosing the more appropriate route. A. Legal Constraints on on Choosing Rulemaking or Adjudication. 1. Statutory requirement. Some agencies have their discretion limited by a statutory mandate that requires them to undertake a rulemaking within a prescribed period. For example, under the Federal Water Pollution Control Act Amendments of 5 1972, the EPA was required to publish, within 180 days from October 18, 1972, proposed rules establishing pretreatment standards for the discharge of pollutants into publicly owned treatment works.6 Final rules were required to be promulgated 7 within 90 additonal days. In such situations, there is no decision whether to use rulemaking, although the content, timing and procedures used to promulgate the rule may involve significant questions. 2. Statutory authority. Though only a minority of statutes contain such forthright instructions to make rules, most regulatory agencies have no difficulty in pointing to statutory language authorizing them to make "such rules and regulations as #19 may be necessary to carry out the provisions of the Act.' Such an authorization clearly enables an agency to promulgate procedural, organizational or other "housekeeping" rules, and it also clearly 10 5/ Pub. L. No. 92-500, 86 Stat. 816. 6/ Id., S 307(b)(1), 86 Stat. 857. 7/ Id. Time limits are common in EPA's authorizing statutes. See Tomlinson, Report on the Experience of Various Agencies With Statutory Time Limits Applicable to Licensing or Clearance Functions and to Rulemaking, 1978 ACUS Recommendations and Reports 119, 216–233. 8/ See Natural Resources Defense Council v. EPA, 683 F.2d 752 (3rd Cir. 1982) (challenge to EPA's indefinite postponement of effective date of pretreatment regulations). 9/ See, e.g., NLRB's authority, 29 U.S.C. $156 (1976). enables an agency to issue non-binding guidelines or interpretations of its statutory authority. These powers are now quite accepted and may even be deemed within an agency's "inherent" authority. Whether such language permits an agency to issue binding regulatory prescriptions is less clear, but recent decisions of the U.S. Supreme Court and the Court of Appeals for the D.C. Circuit indicate judicial willingness to find legislative rulemaking authority in such language. Finally, it even has been suggested that the terms of a statute might justify a finding of implied rulemaking authority.12 11 3. Judicial constraints-choosing rulemaking. Although many commentators and some courts have expressed dissatisfaction with the manner in which agencies have performed (or not performed) their policy-making functions, it has been accepted that the choice of procedures is one primarily for the agency to make. 14 The Supreme Court in SEC V. Chenery Corp., foreshadowed its continuing permissiveness in this regard. The case involved the Securities and Exchange Commission's disapproval of a reorganization of a public utility holding company on the ground that it violated standards of fairness derived from the SEC's interpretation of the relevant Act. In effect the Commission formulated a rule and applied it in the instant adjudication. The Court mildly chided the agency: "The function 10/ See 5 U.S.C. S 301 (1976) for specific authority for adoption of "housekeeping" rules. 11/ See E.I. du Pont de Nemours & Co. v. Train, 430 U.S. 112, 132 (1977); Mourning v. Family Publications Service, Inc., 411 U.S. 356, 372-73 (1973); In re Permanent Surface Mining Regulation Litigation, 653 F.2d 514, 522-24 (D.C. Cir. 1981) (en banc); Citizens to Save Spencer County v. EPA, 600 F.2d 844, 873 (D.C. Cir. 1979); National Petroleum Refiners Ass'n v. FTC, 482 F.2d 672 (D.C. Cir. 1973), cert. denied, 415 U.S. 951 (1974). 12/ Citizens to Save Spencer County v. EPA, id. at 874 (citing Morton v. Ruiz, 415 U.S. at 231). 13/ See Robinson, The Making of Administrative Policy: Another Look at Rulemaking and Adjudication and Administrative Procedure Reform,. 118 U. Pa. L. Rev. 485, 508-13 (1970). 14/ 332 U.S. 194 (1947). of filling in the interstices of the Act should be performed, as much as possible, through the quasi-legislative promulgation of „15 rules to be applied in the future." But the Court ultimately gave the agency the choice: "the choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative 16 agency." This principle was strained in some later cases involving rulemaking-by-adjudication, as will be explained in the next section, but it helped pave the way for judicial validation of policymaking by rulemaking. Co.17 of A leading Supreme Court case that approved policymaking by rulemaking was U.S. v. Storer Broadcasting In this case the Federal Communications Commission issued a notice of proposed rulemaking to amend its rules that limited the number of radio and television stations an entity could own or control. After the notice but before the adoption of the amendment, Storer, which already held the maximum number allowed under the new proposal, applied for an additional station. Storer also participated in the rulemaking proceeding by opposing the proposal, but the the Commission adopted the the rule and simultaneously dismissed Storer's application for the new station as violative of the new rule. Storer, on judicial review, claimed it was deprived of a "full hearing" which the Commission's rules made a prerequisite to the denial of applications. The Supreme Court 15/ Id. at 202. 16/ Id. at 203. In Independent U.S. Tanker Owners Comm. v. Lewis, 690 F.2d 908 (D.C. Cir. 1982), the Court was presented with the following issue: "What is the effect of an invalidly promulgated rule upon an adjudicative decision that relies on that rule when the decision, without any rule, would have been within the discretion of the agency?" or, as the court bluntly rephrased the question: "MarAd having botched the rulemaking, the question is whether the subsequent adjudication . . . can still be upheld in its own right." Id. at 920. The answer apparently depends on the nature of the rule and its impact on the challenger; in this case, the court refused to invalidate the decision. Id. at 922. 17/ 351 U.S. 192 (1956). For a recent Supreme Court decision following Storer, see Heckler v. Campbell, 51 U.S. L.W. 4561, 4563 (U.S. May 16, 1983). upheld the Commission's power to issue such rules and to deny the application without hearing, on the basis of the rule. The Court did, however, caution that the rules must be flexible enough to permit applicants to seek amendments or waivers. 19 Storer did not result in any rush by agencies to employ rulemaking, but slowly other agencies and courts followed its lead. The Federal Power Commission began to use rulemaking to set gas rates, an action theretofore undertaken through individual trial-type proceedings, and the Supreme Court approved this 18 development in FPC v. Texaco and the Permian Basin Area Rate Cases. The Civil Aeronautics Board's move toward rulemaking was also upheld by the courts despite claims that the rules, in effect, modified existing certificates without adjudica tory hearings. Especially influential was American Airlines, Inc. v. CAB, where Judge Leventhal wrote that, "rulemaking is a vital part of the administrative process... and... is not to be shackled, in the absence of clear and specific congressional requirement, by importation of formalities developed for the adjudicatory process and basically unsuited for policy rulemaking."20 By 1978 the CAB was confidently moving toward expansive informal rulemaking to set domestic fare policies. 21 22 4. Judicial constraints—issuing rules in adjudications. After the Supreme Court's decision in SEC v. Chenery Corp., agency discretion to issue prospective rules in the course of adjudication seemed unbounded. However, a kind of reaction set in. Courts and commentators exhorted agencies to employ rulemaking procedures, and there were complaints that formulating general policy rules through adjudication might violate the noticeand-comment provisions of section 553 of the APA. The controversy came to a head in the Supreme Court's badly-split decision in NLRB v. Wyman-Gordon Co." The case 23 18/ 377 U.S. 33 (1964). 19/ 390 U.S. 747 (1968). 20/ 359 F. 2d 624, 629 (D.C. Cir. 1966), cert. denied, 385 U.S. 843 (1966). 21/ See 43 Fed. Reg. 39522 (Sept. 5, 1978). 22/ Supra note 14. (Continued) |