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 DistinctionRulemakingForward-lookingGeneral applicabilitySets standards before conduct happensTypically uses notice-and-comment proceduresAdjudicationBackward-looking (or present-focused)Applies to specific parties and factsDetermines liability, rights, or obligations in individual casesProcedural protections vary widelyWhy This Distinction ExistsGovernment 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 FoundationLondoner v. Denver (1908)Individualized determinations → hearing requiredBi-Metallic Investment Co. v. State Board of Equalization (1915)General rules affecting many people → no individual hearing requiredThese cases still structure how courts think about procedural rights today.The Gray Area: Agencies Can Make Policy Through AdjudicationUnder Supreme Court precedent (Chenery), agencies can choose whether to announce policy through rulemaking or through individual cases.That means agencies can:Announce a new standardApply it in the same caseEffectively change national policy overnightReal-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 chainsTriggered years of litigation, rulemaking reversals, and political conflictShows how one case can reshape an entire sectorWhy This Matters Outside Law SchoolThis structure affects:Labor rightsEnvironmental regulationData security expectationsFinancial regulationHealthcare complianceLicensing and professional disciplineOften, regulated parties don’t get a clean rulebook. They piece together standards from enforcement actions.Key TakeawayAgencies exercise two fundamentally different kinds of power:Setting general rules for the futureDeciding what happens to specific partiesWhich path they choose determines procedure, fairness expectations, and how predictable regulation feels.Coming NextNext 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.