Nat’l Pet. Refiners Ass’n v. FTC – choice of policymaking vehicles

1. Nat’l Pet. Refiners Ass’n v. FTC – choice of policymaking vehicles • Advantages to using rulemaking as the policymaking vehicle: • Fairness – opens policymaking process to more people • Better results – greater openness leads to increased data and more information on which policy decisions can be based • Specificity – rule can be drawn to better deal with specific issue because have better information • Consistency – rule applied to all in similar way/less risk of inconsistent application in multiple proceedings • Efficiency – announce rule at beginning and avoid incremental, lengthy development of which people may be unaware

2. Nat’l Pet. Refiners Ass’n v. FTC – does the FTC have the authority it enact rules • Choice of policymaking vehicles is dictated, at least in part, by whether an agency has been given the power to engage in an activity – rulemaking or adjudication. • If the agency literally has no rulemaking authority it cannot make rules on any topic. • Does the FTC have the power to enact rulespertaining to octane postings? • What does the language of Sec. 6(g) suggest? • Are there other relevant considerations that argue against the text of Sec. 6(g)? Should they matter?

3. Excelsior Underwear (p.352) – policymaking through adjudications • What did the NLRB do in response to the employer’s refusal to provide the union with an employee list? • Why does Justice Fortas think that this action violates the APA? • Note – NLRB has rulemaking authority • Don’t courts (and agencies that adjudicate) announce binding precedent on parties that serves as a template for other parties action? • How is that different from what the NLRB did here (or is it)?

4. Making “rules” in adjudications – some issues • Justice Fortas (& dissenters) argue agencies can’t make generally applicable rules (as opposed to simply decide cases that result in precedents) in adjudications. • Does the text of the APA dictate whether the agencies must make “rules” in rulemakings (i.e., following Sec. 553 procedures)? • Why might Justice Fortas be concerned about announcing a generally applicable, binding principle in an agency adjudication? • How did NLRB try to avoid those problems in Excelsior Underwear?

5. Why shouldn’t the agency be forced to use rulemaking? • What does Black think the appropriate approach should be to whether agencies can make “rules” during adjudications? • Why – what are the advantages of using adjudications to make generally applicable policy?

6. Supreme Court’s general approach to policymaking in adjudications (outside of Wyman-Gordon) • Chenery II – (1947) – text p. 363 • Since the SEC . . . does have the ability to make new law prospectively through the exercise of its rule-making powers, it has less reason to rely upon ad hoc adjudication to formulate new standards of conduct within the framework of [federal law]. The function of filling in the interstices of the [law] should be performed, as much as possible, through this quasi-legislative promulgation of rules to be applied in the future. But any rigid requirement to that effect would make the administrative process inflexible and incapable of dealing with many of the specialized problems which arise. Not every principle essential to the effective administration of a statute can or should be cast immediately into the mold of a general rule. Some principles must await their own development, while others must be adjusted to meet particular, unforeseeable situations. In performing its important functions in these respects, therefore, an administrative agency must be equipped to act either by general rule or by individual order. • Bell Aerospace (p. 365) reaffirms Chenery II

7. Bell Aerospace • NLRB held an adjudication in which it switched a long held position on the role of managerial employees. Held that buyers for Bell Aerospace were entitled to Act’s protection • SCT ruled • agencies substantive interpretation of statute to cover managerial employees was wrong and earlier interpretation was right • On remand to agency, it could decide issue of whether buyers were “managerial employees” via an adjudication rather than a rulemaking • “The views expressed in Chenery II and Wyman-Gordon make plain that the Board is not precluded from announcing new principles in an adjudicative proceeding and that the choice between rulemaking and adjudication lies in the first instance within the Board’s discretion.” p. 365

8. When will courts frown on agency decision to use adjudication to make policy • Bell Aerospace – there may be situations where announcing new principles in adjudications amounts to an “abuse of discretion” • Big concern – retrospective application of new principles • Would application of newly announced principle be “unfair” or “work a manifest injustice” in this particular case? • Factors to consider: • Is this a case of first impression? • Does the new legal principle abruptly depart from well-established practice or does it merely fill in portions of a vague statute or extend existing rules and practices? • How much did the parties actually rely on the old rule when taking action? • How burdensome is the retroactive application? • Is there a statutory interest in applying the new legal principle – i.e., what are the statutory purposes and does the new rule implement or cut against?