involved a Board rule, developed but not applied in an earlier Board adjudication, that required employers to furnish unions with names and addresses of employees prior to a representation election. When the Board applied the rule in the next case, the employers challenged it as not being promulgated in accordance with the APA. A majority of the Supreme Court, while upholding the order on separate grounds, expressly disapproved the Board's practice of promulgating general rules through adjudication.

However, before the implications of that ruling could be 24 fully sorted out, the Court in NLRB v. Bell Aerospace Co. reversed a lower court ruling that relied on it. The Court disagreed with the Second Circuit's reading of Wyman-Gordon and harked back to Chenery. "... the Board is not precluded from announcing new principles in an adjudicative proceeding... the choice between rulemaking and adjudication lies in the first instance within the Board's discretion. Although there may be situations where the Board's reliance on adjudication would amount to an abuse of discretion or violation of the Act, nothing in the present case would justify such a conclusion."25

26

After Bell Aerospace, few decisions have overturned rules announced in adjudication. Those that have done so have invoked the "abuse of discretion" window left open by Bell Aerospace. The Ninth Circuit has been the primary exponent of this. For example, in Patel v. INS, an Immigration and Naturalization Service attempt to add a new "job-creation" criterion to status-adjustment cases without using rulemaking was held to be an abuse of the agency's discretion. And in a recent controversial decision, Ford Motor Co. v. FTC, that court seemingly flouted the Chenery/Bell Aerospace doctrine by setting aside an FTC cease-and-desist order against a car dealership because the credit practice rule announced in the case would have general application. This surprising holding,

27

23/ 394 U.S. 759 (1969).

24/ 416 U.S. 267 (1974). 25/ Id. at 294.

26/ 542 F. 2d 796 (9th Cir. 1976). See also Bahat v. Sureck, 637 F. 2d 1315 (9th Cir. 1981).

27/ 673 F. 2d 1008, reh. en banc denied (9th Cir. 1982), cert. denied 103 S. Ct. 358 (1982).

which provoked a vigorous dissent from the denial of rehearing en banc, may have been motivated by the fact that, while the case was pending, the FTC was also conducting a rulemaking proceeding on a closely related issue. 28

B. Practical Considerations in Choosing Rulemaking or Adjudication. Rulemaking and adjudication can both be used to establish standards of conduct for those who are regulated. Both types of decisionmaking can be used for creating the necessary predicate for penalizing violators of those standards. They both require the assembly of sufficient factual information to support wise policy judgments. Nevertheless, there are various advantages associated with each procedure.

1. Advantages of rulemaking. In the last decade most commentators have espoused the benefits of rulemaking over adjudication for policymaking. 29 Among the possible benefits are:

Wider coverage

Rulemaking allows the agency to craft into
one rule as many elements of policy and as
wide a coverage as the agency wishes
(within its statutory mandate, of course).
The resulting rule, while limited to
supportable positions, need not
be
constrained by the particular facts involved
in an adjudicative dispute. Furthermore, a
rule will apply equally to all who are
similarly situated. It also avoids problems
of retroactive effect that are present when
an agency seeks to apply a rule enunciated
for the first time in an adjudication to the
respondent in that adjudication.

b. Better

information gathering;

participation

public

28/ Id. at 1010 ("The pending rulemaking proceeding and this adjudication seek to remedy, more or less, the same credit practices.... If the rule for deficiencies is thought by the F.T.C. to be 'appropriately addressed by rulemaking,' it should also address the problem of accounting for surpluses by a rulemaking proceeding. . . .").

29/ See, however, Robinson, supra note 13.

C.

Notice and comment procedures allow for the widest possible dissemination of the proposal and for seeking comments from all interests likely to be affected by the rule. In addition, the solicitation of comments and information can be focused on particular issues. Beyond informationgathering, broad public participation may lead to greater acceptance of the agency's policy or action.

Procedural freedom

While this benefit is being eroded by the increasing complexity of the rulemaking process, it is still true that much rulemaking basically involves a simple notice and comment procedure-one that avoids the need for trial-type procedures, separation of functions, excessive layers of agency decision and excessive lawyering.

d. Reduction of litigation costs

One rulemaking can take the place of a long process of formulating policy through caseby-case adjudication. Once established through rulemaking, a rule makes legal standards more clear and more solid since changing the rule requires a new round of notice and comment. This clarity and certainty may: (1) reduce the cost to business of determining whether a particular practice violates the law; (2) reduce the cost to the agency in identifying and investigating law violators; and (3) reduce the number of issues to be tried in ensuing cases and so reduce the costs of litigation.

e. More systematic address to policy

Rulemaking allows for the replacement of
less publicized adjudicative principles or
internal guidelines with well-publicized
rules-thereby helping to confine and
control unstructured or unprincipled
administrative discretion and
discretion and providing
fairer notice to the regulated
community. And a discrete body of rules
is more easily re-evaluated when changing

2.

conditions warrant.

Advantages of Adjudication.

31

With the recent difficulties encountered by major rulemaking programs, such as those administered by the Federal Trade Commission" and Consumer Product Safety Commission 32, and with the recent addition of procedural steps to the rulemaking process, policymaking by adjudication deserves renewed consideration. Among the possible advantages to policymaking by adjudication (or disadvantages to policymaking by rulemaking) are:

Avoidance of the increasing procedural
complexity of rulemaking

New statutes and executive orders have
imposed many new requirements on the
rulemaking process. Whatever their
benefits in other respects, clearance
provisions (OMB review, legislative veto
provisions), impact statements (regulatory
impact analyses, regulatory flexibility
analyses) and statutes requiring more
cumbersome hybrid procedures tend to
make rulemaking by some agencies a more
difficult and protracted venture. If an area
is equally susceptible to regulation by
adjudication or rulemaking-where, for
example, there are a small number of firms
engaged in the regulated activity-
policymaking through adjudication may be
more efficient.

b. Ease of modification

Specific rules may become obsolete more

30/ See 2 K. Davis, Administrative Law Treatise S 7:27 (2d ed. 1978) (for discussion of constraints on ad hoc policy changes through adjudication).

31/ See B. Weingast & M. Moran, The Myth of the Runaway Bureaucracy: The Case of the FTC, Regulation 33 (May/June 1982); T. Muris, Rules Without Reason: The Case of the FTC, Regulation 20 Sept./Oct. 1982).

32 See generally Schwartz, The Consumer Product Safety Commission: A Flawed Product of the Consumer Decade, 51 Geo Wash. L. Rev. 32 (1982).

C.

quickly than more general statutory
standards. However, modifications or
repeal of rules for policy or technical
reasons may be difficult or protracted since
a new rulemaking would have to be
conducted. This may be especially
difficult for agencies governed by "hybrid"
rulemaking statutes or for rules defined as
"major rules" under Executive Order
12291. Changing policy established by
adjudication may, therefore, consume much
less time.

Conflict minimization

At least one commentator has explained the
NLRB's steadfast reluctance to abandon the
making of policy through adjudication as
based on a desire to avoid political conflicts
with congressional oversight committees
and other overseers. The premise is that
the slow case-by-case accretion of policy is
less dramatic or visible, easier to modify,
and yet also more impregnable to political

attack.

d. Avoidance of overinclusiveness or

underinclusiveness

Rules may unintentionally be overinclusive,
reaching unanticipated fact situations with
the result of deterring socially desirable
behavior or imposing unnecessary costs on
society. On the other hand, a rulemaking
intended to create a predicate for
regulatory sanctions may lead to rules

33/ The extent of the agency's burden in proceedings to amend or repeal rules is an issue that has been raised in cases involving challenges to Reagan Administration deregulation efforts. The U.S. Supreme Court recently issued a decision in one such case, involving DOT rescission of its passive restraints ("airbag") rule. Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co., 51 U.S.L.W. 4953 (U.S. June 24, 1983), aff'g, 680 F.2d 206 (D.C. Cir. 1982).

34/ Note, NLRB Rulemaking: Political Reality Versus Procedural Fairness, 89 Yale L. J. 982 (1980).