Legally Binding Action: Formal Rulemaking and General Rulemaking

No DP reqirement --> efficient and consistant

Quickly resolve dispute and contribute to CL

NOTE: congress has to have delegated adjudication AND rulemaking authority.

For formal rulemaking under 553(c), agencies must follow the procedures specified in APA 556 and 557 (this is not practicable which is the key issue - expensive and time consuming).

a. The APA's formal rulemaking procedures only apply where an organic statute requires a hearing to be made "on the record." (or uses similar phrasing.) and with opportunity for hearing

Very few statutes contain these magic words to trigger → As such, formal rulemaking is almost never required and has declined in use while informal rulemaking has become the norm. (Florida East Coast Railway)

Agency May have choice bw rulemaking and adjudication
When deciding between adjudication and rulemaking, first question an agency must ask is whether Congress has in fact delegated rulemaking authority to an agency.

i. Agency must look to its organic statute to find this delegation. (National Petroleum Refiners Ass'n).

When deciding between adjudication and rulemaking, the first question an agency must ask is whether Congress has in fact delegated rulemaking authority to the agency. Agency must look to its organic statute (National Petroleum Refiners Ass'n)

Unless the statute explicitely says that the agency is not allowed to make substantive rules with binding effect then A can make rules

i. The power to issue rules derives from congressional delegations of rulemaking authority. Statutes express delegations in variety of ways: some are specific saying that an agency "shall" or "may."

Agency can also use it's adjudication authority to confer rulemaking authority

1. EX: "The Communications Act of 1934 provides that Fed Communications Commission 'shall, by rule, prescribe a uniform system of accounts for use of telephone companies.'"

1. Court has recognized that even where an agency's enabling statute expressly requires it to hold a hearing, agency may rely on its rulemaking authority to determine issues that do not require case by case consideration.

First holding: A reviewing court must judge the propriety of an Agency action based on the grounds articulated by the agency when taking action.

Second Holding: when a statute authorizes an agency to engage in both rulemaking & adjudication, an agency may choose between the two forms of procedural action when making policy and announcing general standards of conduct. To give flexibility.

Agencies can also issue rules during/through adjudication, and apply retroactively to the case (can do both although it shouldn't)

Agency issued general guidelines for disability hearings for efficiency and consistency.
Court says this is OK

Did the agency use the appropriate procedure?

Did the enabling statute include the phrase "on the record after a hearing" or similar words?
• No—If no, then the agency could choose to use formal rulemaking procedures but was not required to do so under the APA unless the enabling statute otherwise specifically required formal procedures.
• Yes—If yes, then the agency was required to use formal rulemaking procedures, and its decision not to is invalid.

APA §§ 556 and 557 sets forth trial type procedures that the agency must use. Oral hearings including neutral presiding officer(s), submission of evidence, oral testimony and cross-examination, and written decisions.