The constitutional foundations of Chenery.

• Author: Stack, Kevin M.

ARTICLE CONTENTS INTRODUCTION I. THE CHENERY PRINCIPLE IN CONTEXT A. The Chenery Decisions B. The Chenery Principle Beyond the Chenery Decisions 1. Forms of Agency Action 2. Types of Reason-Giving Deficits 3. The Limits of Chenery, C. The Distinctiveness of Chenery as a Principle of Judicial Review in Public Law 1. Constitutional Review 2. Appellate Review D. The Consequences of the Chenery Principle II. THE CHENERY PRINCIPLE'S CONVENTIONAL JUSTIFICATIONS A. As an APA Requirement B. As Necessary to Judicial Review or Article III C. As a Principle of Deference (and Delegation) III. THE NONDELEGATION DOCTRINE AND THE CHENERY PRINCIPLE A. Two Arms of Nondelegation 1. Intelligible Principles in Context 2. Enforcement and Underenforcement B. Chenery and Nondelegation Values 1. Democratic Accountability 2. Nonarbitrariness and the Rule of Law 3. Judicial Manageability C. Scope, Fit, and Constitutional Status 1. Scope 2. American Trucking 3. Constitutional Status IV. CHENERY IN THE AGE OF CHEVRON A. The Chenery Principle as a Condition for Chevron Deference B. The Scope of Chenery Under Chevron C. Qualifying Conditions for Chenery and Chevron V. THE REASON-GIVING PRESIDENT A. Chenery, and the President B. The President Under Chevron CONCLUSION INTRODUCTION

Administrative agencies may act with the force of law, but their obligations to give reasons for their decisions are very different from those that apply to Congress or the federal courts. A background rule of constitutional law is that Congress is not required to "articulate its reasons for enacting a statute." (1) Thus, a court generally may uphold the constitutionality of federal legislation despite the fact that Congress has not provided any formal statement of reasons for it. A similar rule of review applies to appellate consideration of lower court judgments. The settled principle is that if the "decision below is correct, it must be affirmed, although the lower court relied upon a wrong ground or gave a wrong reason." (2)

Precisely the opposite background presumption applies to administrative agencies. One "fundamental" and "bedrock" principle of administrative law is that a court may uphold an agency's action only for the reasons the agency expressly relied upon when it acted. (3) The Supreme Court's 1943 decision in SEC v. Chenery Corp. provides the classic formulation of this principle in American administrative law: "[A]n administrative order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its actions can be sustained." (4) Thus, in sharp contrast to the background presumption in constitutional review of legislation and in appellate review of lower court judgments, the court reviewing an agency action will not supply or substitute justifying reasons on behalf of the agency. The Chenery principle makes the validity of agency action depend upon the validity of contemporaneous agency reason-giving.

The Chenery principle has been taken as settled since it was announced, and administrative law has grown up around it, incorporating the principle into new structures. The growth and shifts in administrative law since Chenery have been significant: to name a few headliners, the enactment of the Administrative Procedure Act (APA), (5) the Supreme Court's development of the Chevron doctrine (6) and the hard look mode of review, (7) presidential assertion of increasingly formal review and influence over agency action, (8) and Congress's continued allocation of vast discretionary powers to administrative agencies. Throughout these developments, which have come to characterize contemporary administrative governance, the Chenery principle has quietly and steadily grown in scope. The Chenery decision itself involved review of a formal adjudication, in which the SEC had relied upon erroneous legal principles to justify a decision that might have been sustained on other grounds. (9) The principle now applies in review of every form of agency action, from agency rulemaking to informal adjudication, as well as in review of all manner of deficiencies in agency fact-finding and insufficient statements of reasons, not merely to agency reliance on legally erroneous grounds. (10)

The persistence and extension of the Chenery principle have had tremendous practical significance for administrative government. At its core, the Chenery principle directs judicial scrutiny toward what the agency has said on behalf of its action, not simply toward the permissibility or rationality of its ultimate decision; Chenery links permissibility to the agency's articulation of the grounds for its action. On the one hand, that focus of judicial review gives agency officials strong incentives to attend to the justifications they provide for their actions, and it has helped make explicit reason-giving a major part of the industry of the administrative state. On the other hand, even with tremendous resources devoted to contemporaneous justification, the inadequacy of an agency's contemporaneous explanation for its decisions remains one of the most common grounds for judicial reversal and remand. (11)

Despite the fixed character of the Chenery principle and its far-reaching impact on administrative governance, there is a curious uncertainty concerning its basis and its fit with the core principles of administrative law that have developed alongside it and with doctrines of judicial review more generally. At times, courts have attributed the principle to the APA, (12) a statute enacted after Chenery that is silent on this rule of review. (13) Others have claimed that the Chenery principle is a necessary condition for judicial review (14) or an expression of Article III limitations on the judicial power (15)--stances that are difficult to square with the fact that federal courts routinely supply or substitute reasons on behalf of Congress and lower courts when reviewing those actors' decisions. Still others have helpfully suggested that the Chenery principle has a basis in separation of powers principles, but they have not specified the parameters of the separation of powers principle that Chenery reflects. (16)

This Article aims to provide an alternative understanding of the Chenery principle and to expose its connections to other central features of administrative law, including the Chevron doctrine. It argues that although the conventional justifications for the Chenery principle are inadequate, the principle has a constitutional foundation. Specifically, the Chenery principle is a default rule of statutory construction that implements the nondelegation doctrine in ways that complement and reinforce that doctrine's other modes of enforcement.

The current nondelegation doctrine requires that when Congress grants binding authority to another institution, Congress must specify an "intelligible principle" or a standard to which the agency must conform. (17) Though this requirement is now treated as a stand-alone test for assessing whether a delegation exceeds Congress's constitutional authority, it was not always so. Instead, this formulation emerged as one aspect of a two-part evaluation: whether the statutory grant conditioned the exercise of authority upon an agency's stating the grounds for its invocation of the statutory authority; and whether the legislation included a sufficient standard to guide the agency's discretion in making that determination. The Supreme Court has enforced the former requirement by treating the failure of agencies to make such an express statement not only as a statutory violation, but also as a violation of the constitutional requirements governing delegation. While this requirement of an express statement of the agency's predicate grounds for action has slipped from constitutional doctrine, the Chenery principle's prohibition on post hoc rationales enforces this arm of the nondelegation doctrine. On this view, the nondelegation doctrine operates not merely to constrain the scope of discretion Congress may vest in others, but also to impede Congress from giving away its own prerogative to establish binding norms without providing justification for them.

The Chenery principle also promotes core values of the nondelegation doctrine in ways that supplement the enforcement of the intelligible principle requirement. The Chenery principle operates both to bolster the political accountability of the agency's action and to prevent arbitrariness in the agency's exercise of its discretion. It provides assurance that accountable agency decision-makers, not merely courts and agency lawyers, have embraced the grounds for the agency's actions, and that the agency decision-makers have exercised their judgment on the issue in the first instance.

This understanding of the Chenery principle has several implications for contemporary administrative law; in particular, it clarifies the relationship between the Chenery and the Chevron doctrines and exposes the extent to which they are conceptually intertwined. On the one hand, it shows that compliance with the Chenery principle is not just a general feature of judicial review of agency action, but also a necessary condition for an agency to receive deference under Chevron. Indeed, on this understanding, Chenery provides a structural check for the very presumptions of agency accountability, rationality, and expertise upon which Chevron deference is based. Chenery is the coin with which the agency pays for Chevron deference. On the other hand, Chevron holds implications for Chenery's scope. Chevron clarifies that the range of determinations entrusted to the agency includes the interpretation of ambiguities and gaps in the statutes it administers. (18) And once the delegation of authority includes interpretive authority, as Chevron requires, the agency's explanation for its interpretative decisions falls within Chenery's scope.

The nondelegation account of the Chenery...