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Supreme Court Review



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SEC v. Chenery Corp., Chenery II, Chevron, U.S.A., Inc. v Natural Resources Defense Council, legislative prospectivity, adjudicative retroactivity


Although decided forty-five years ago, SEC v Cbenery Corp. ("Cbenery II") remains the Supreme Court's leading statement on the issue of retroactivity in administrative adjudication. According to Chenery II, administrative agencies may give meaning to statutory terms through adjudication, even if the rules applied in a particular adjudication have not been previously announced. The Court acknowledged that "announcing and applying a new standard of conduct" in an adjudicative proceeding would have a retroactive effect, but concluded that the agency's duty to be faithful to the "statutory design or to legal and equitable principles" may override concerns about retroactivity. The Court has since reaffirmed the Chenery II principle, but it has not revisited in detail the issue of adjudicative retroactivity in the administrative law setting. A newer chestnut, Chevron, U.S.A., Inc. v Natural Resources Defense Council, Inc., has added another principle of deference to the administrative law lexicon. According to Chevron's two-stage test, if a reviewing court cannot determine congressional intent on a particular issue of statutory construction (stage 1), then the court should defer to a reasonable agency interpretation (stage 2), rather than construct what the court believes would be a generally sound rule of law. Although Chevron might be considered jurisprudentially consistent with Chenery II in establishing a rule of deference to administrative agencies, it contains instead the seed of Chenery II's undoing. For one can read Chevron as establishing not merely a principle of deference, but also a method for distinguishing between when agencies are following the law laid down by Congress, and when they are, in essence, acting as legislators in their own right. In Part II, I discuss the connection between values of the rule of law and the concurrent norms of legislative prospectivity and adjudicative retroactivity. In Part III, I argue that adjudicative retroactivity should hold only when the premise that adjudicators are merely applying antecedent rules also holds. In Part IV, I respond to various defenses of Chenery II, which acknowledge the possible damage to values of the rule of law done by applying rules retroactively in some adjudications, but which nonetheless contend that the modem administrative state requires such retroactivity. Finally, in Part V, I defend the view that adjudicators may sometimes apply rules prospectively only.