NLRB v. Bell Aerospace Co.
Citation: 416 U.S. 267 (1974) Court: Supreme Court of the United States
Facts
The NLRB sought to certify a unit of buyers (purchasing employees) at Bell Aerospace as eligible to organize under the NLRA. Rather than promulgating a general rule through notice-and-comment rulemaking about the status of managerial employees, the NLRB announced its new policy through this individual adjudication. Bell Aerospace argued that the NLRB was required to use rulemaking to announce such a broad policy change.
Issue
Whether an agency is required to use notice-and-comment rulemaking rather than adjudication when it announces a new policy that will have broad prospective effect.
Holding
The Supreme Court held that the NLRB had the discretion to announce new policy through adjudication even when it could have used rulemaking. However, the Court also held — on the merits — that managerial employees are categorically excluded from NLRA coverage, remanding for a determination of whether the buyers were managerial employees.
Rule / Doctrine
An agency generally has discretion to choose between adjudication and rulemaking when developing policy. The choice between these two modes of policymaking is committed to the agency’s judgment. An agency may announce a new rule of general applicability through an adjudicated case, and the resulting rule may then be applied to future cases. Retroactivity concerns may, in egregious cases, counsel against adjudicatory policymaking, but those concerns alone do not compel rulemaking.
Significance
NLRB v. Bell Aerospace Co. is the leading case on the agency choice between adjudication and rulemaking as a mode of policy development, and is regularly paired with NLRB v. Wyman-Gordon Co. (1969). Together they establish that while agencies have wide discretion to use adjudication, they cannot use adjudication to create rules that require parties other than those in the proceeding to comply prospectively without going through notice-and-comment.