National Petroleum Refiners Ass'n v. Federal Trade Commission
482 F.2d 672 (1973)

  • The FTC issued a rule saying that gas stations had to post octane ratings for their gasoline on their pumps.
    • FTC believed that it had the authority to issue the rule based on its Enabling Act (15 U.S.C. 46(g)), which they claimed allowed them to issue substantive rules of business conduct.
    • There are two methods that an Administrative Agency can use to make a new law:
      • A rulemaking, where the Agency announces a new draft law, takes comments from the public, and then promulgates the final version as a rule.
      • An adjudication, there the Agency makes an internal decision, then finds someone who is breaking this new law, and sues them for breaking it.
  • A gasoline trade association (the Refiners) did not like this rule and sued for an injunction, arguing that the FTC did not have the authority to make such rules under 15 U.S.C. 46(g).
  • The Trial Court found for the Refiners. The FTC appealed.
    • The Trial Court found that FTC did not have the statutory authority to make such a rule. It was outside the scope of their Enabling Act.
  • The Appellate Court reversed.
    • The Appellate Court looked at the plain language of 45 of the Enabling Act, and found that it specifies that the FTC is to accomplish this goal by means of issuance of a complaint, a hearing, findings as to the facts, and issuance of a cease and desist order.
      • That's an adjudication.
    • However, the Court found that the plain language for that section was not limiting, and so just because the Statute said that they could use adjudication, it didn't imply that was the only thing FTC could do.
      • In fact, 46(g) explicitly said that the FTC "may make rules and regulations for the purpose of carrying out the provisions of sections 41 to 46 and 47 to 58 of this title."
    • There are two types of rules that an Administrative Agency can make, substantive rules, which actually have the force of a new law, and interpretive rules, which only are the Agency's opinion on how to interpret the law. The Refiners unsuccessfully argued that 46(g) only gave the FTC the ability to make interpretive rules.
      • But again, the Court found that the language was not limited.
    • The Court looked to how other courts had interpreted the statutory construction of various Administrative Agencies' Enabling Acts, and found that it is generally construed broadly.
      • In fact, case law shows that the courts seem to prefer rulemaking to adjudication in the making of new administrative law.
    • The Court looked to the legislative history and found it to be ambiguous.
      • The Court found that the specific intent was to have a "strong agency" to avoid inefficiencies. Therefore, the Court felt they should look to the over-arching intent of the authors and favor a broad interpretations.
      • The Court found that there was a broad purpose to the Statute, so the Court felt they should interpret that as giving broad authority.
        • "Our job is to make the policies behind the enactment effective."
  • In this case, the Court decided that although the specific intent is unclear, the general intent motivating the law's framers is clear.