- Eighty years ago in SEC v. Chenery, the Supreme Court declared, “an 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.” Translation: Courts and agencies must not deploy post hoc rationales during judicial review to save discretionary administrative actions. Over time, this contemporaneous-rationale rule has seeped deep into the marrow of administrative law.
But this Chenery rule is wrong — or at least not quite right. Chenery’s basic, procrustean mistake was to state a categorical rule even though reliance on post hoc rationales is sometimes sensible. Courts have reasonably responded to this overreach by cheating on Chenery. The law in this area is therefore more confused than it should be, which impedes clear thinking about how post hoc rationales could be integrated into administrative and judicial procedures to improve them both. Chenery's bar is, at bottom, a judicially-crafted, common-law style rule designed to encourage agency responsibility and judicial efficiency. It is not constitutionally compelled. Courts therefore can change it, and they should do so, giving up Chenery's misleading clarity for a pragmatic, rule-of-reason approach.
Or, as Judge Friendly suggested over forty years ago, courts should recognize that applying Chenery is “perhaps more art than science.”