Agencies may be delegated the responsibility of establishing rates for an industry. This function is normally legislative in nature, and therefore, free from due process concerns. However, not every instance of ratemaking is legislative. It is possible for an agency to be engaged in what amounts to an adjudicative function when setting rates. When an agency sets a rate that applies to an industry that has many producers or providers, it has made a rule of general applicability. For these decisions, legislative-type facts are relied upon.

Information about an industry, without particular attention to one member of that industry, is legislative. It is different when there is only one member of an industry and an agency sets its rate. If an agency focuses on one particular individual or entity when making a decision—whether that decision is characterized as a rule or an adjudication—it is conducting an adjudication. If there is only one member of an industry, as is often true of gas or electric companies, an examination of that industry is an ex-amination of a single business.

Due process applies to adjudicative proceedings; therefore, if there is only one member of an industry, that entity is entitled to due process in ratemaking. When an agency engages in ratemaking that is legislative in character, it must comply with the APA’s rulemaking requirements. When an agency engages in ratemaking, it must comply with APA’s adjudication and due process standards.