Rulemaking and Adjudication - the Two Engines of Agency Power

This episode introduces one of the most important structural distinctions in administrative law: the difference between rulemaking and adjudication. Agencies don’t just enforce law — they also create policy. Sometimes they do it prospectively through general rules. Other times they do it case-by-case while deciding what happens to a specific party. That choice affects procedure, fairness expectations, and how quickly entire industries can change.

The Core Distinction

Rulemaking

• Forward-looking
• General applicability
• Sets standards before conduct happens
• Typically uses notice-and-comment procedures

Adjudication

• Backward-looking (or present-focused)
• Applies to specific parties and facts
• Determines liability, rights, or obligations in individual cases
• Procedural protections vary widely

Why This Distinction Exists

Government can’t realistically give individualized hearings before adopting rules that affect millions of people. But when the government is deciding what happens to a specific person or company, due process concerns become much stronger.

Constitutional Foundation

Londoner v. Denver (1908)

• Individualized determinations → hearing required

Bi-Metallic Investment Co. v. State Board of Equalization (1915)

• General rules affecting many people → no individual hearing required

These cases still structure how courts think about procedural rights today.

The Gray Area: Agencies Can Make Policy Through Adjudication

Under Supreme Court precedent (Chenery), agencies can choose whether to announce policy through rulemaking or through individual cases.

That means agencies can:

• Announce a new standard
• Apply it in the same case
• Effectively change national policy overnight

Real-World Example: Browning-Ferris (NLRB, 2015)

The NLRB expanded the definition of “joint employer” through a single adjudication.

Why it mattered:

• Affected staffing agencies, franchises, contractors, and supply chains
• Triggered years of litigation, rulemaking reversals, and political conflict
• Shows how one case can reshape an entire sector

Why This Matters Outside Law School

This structure affects:

• Labor rights
• Environmental regulation
• Data security expectations
• Financial regulation
• Healthcare compliance
• Licensing and professional discipline

Often, regulated parties don’t get a clean rulebook. They piece together standards from enforcement actions.

Key Takeaway

Agencies exercise two fundamentally different kinds of power:

1. Setting general rules for the future
2. Deciding what happens to specific parties

Which path they choose determines procedure, fairness expectations, and how predictable regulation feels.

Coming Next

Next episode: The spectrum of adjudication procedures — from trial-like hearings to simple denial letters — and why the same statute can produce radically different levels of process.