The Supreme Court’s 1947 decision in SEC v. Chenery Corp. (“Chenery II”) is generally taken as blanket authorization for agencies to make law through either adjudication or rulemaking if their organic statutes permit both modes. We think this is an overreading of the doctrine. The decision in Chenery II need not be read so broadly, and there are good reasons to read it more narrowly. The most important reason is that agency lawmaking through adjudication presents serious constitutional concerns involving due process of law and subdelegation of legislative power, at least if the agency action deprives people of life, liberty, or property. The subdelegation concern is present even if, as we assume in this article, Congress has some authority to subdelegate a measure of legislative power. Congress can only subdelegate power that it possesses, and Congress possesses no power to deprive people of rights through adjudication, so agencies cannot receive such power from Congress. Nor do agencies have any inherent executive power to deprive people of rights through adjudication; that principle is the essence of due process of law.
We treat these constitutional concerns as a reason to read statutory authorizations to federal agencies narrowly to create a presumption against, rather than for, agency power to make law through adjudication. We also take a close look at the Chenery II case, including close looks at the arguments of counsel and the correspondence of the Justices, to show how a narrower reading of Chenery II is both possible and desirable. Finally, we examine some of the consequences of a narrower reading of Chenery II. Those consequences are both modest and consistent with rule-of-law values.
Gary S. Lawson & Joseph Postell,
Against the Chenery II "Doctrine"
Available at: https://scholarship.law.bu.edu/faculty_scholarship/3429