Policy by Rule or "Ad Hoc" Approach. Which Should It Be?

The cornerstone of the procedural requirements set forth in the Administrative Procedure Act, which became law in 1946, was the dichotomy between adjudication and rule-making.' Stated very simply, rule-making is agency action regulating future conduct and is intended to implement and prescribe law or policy, while adjudication is intended to cover application of law and policy to past conduct or to licensing determinations. Nevertheless, just as court decisions in applying law to specific cases may lay down new law and policy for the future, agency adjudication also has a prospective application. In the eleven years since the enactment of the Administrative Procedure Act, the procedural requirements applicable to the two different activities have been extensively refined by court decisions. Nevertheless, rather than being greatly clarified, the demarcation between these two has become somewhat blurred. Furthermore, interpretative decisions have made it more apparent that there is a broad area for agency action in which policies are formulated by rule on the one hand, or by ad hoc adjudication on the other, solely at the discretion of the agency. This article is not concerned with the legal question of where agency action must be adjudicatory or rule-making, but rather with the discretionary question of when a proposed action ought to be taken by rule-making instead of adjudication. The great strength of the administrative process, as contrasted with the purely judicial, is the flexibility made possible by the broad areas existing for discretionary action by an agency. The continued development and advancement of the administrative process, rather than its decline or demise, may well depend upon the wisdom exercised in these areas of discretion. Therefore, a critical examination of the various considerations which may determine whether agency policy, and particularly that of the Federal Communications Commission, is developed through rule-making, or caseby-case adjudication, or some hybrid method is desirable. Before turning to these considerations, it is believed appropriate to set out briefly the legal background of the topic.