securities exchange commission chenery argued decided june rehearing denied see securities exchange commission chenery roger foster philadelphia petitioner spencer gordon washington chenery corporation others allen hubbard new york city federal water gas corporation justice murphy delivered opinion case second time chenery corporation held order scurities nd exchange commission sustained grounds upon agency acted therefore directed case remanded commission proceedings might appropriate remand commission reexamined problem recast rationale reached result issue whether commission action proper light principles established prior decision case first emphasized simple fundamental rule administrative law rule effect reviewing dealing determination judgment administrative agency alone authorized make must judge propriety action solely grounds invoked agency grounds inadequate improper powerless affirm administrative action substituting considers adequate proper basis propel domain congress set aside exclusively administrative agency also emphasized prior decision important corollary foregoing rule administrative action tested basis upon purports rest basis must set forth clarity understandable pelled guess theory underlying agency action expected chisel must precise agency left vague indecisive words must know decision means duty becomes say whether right wrong chicago applying rule corollary unable sustain commission original action commission dealing reorganization federal water service corporation federal holding company registered public utility holding company act stat et seq period successive reorganization plans proposed management commission officers directors controlling stockholders federal purchased substantial amount federal preferred stock market fourth reorganization plan preferred stock converted common stock new corporation basis purchases preferred stock management received new common stock frankly admitted management purpose buying preferred stock protect interest new company also plain fraud lack disclosure making purchases commission approve fourth plan long preferred stock purchased management treated parity preferred stock felt officers directors holding company process reorganization act fiduciaries duty trade securities company reorganization period plan amended provide preferred stock acquired management unlike held others verted new common stock instead surrendered cost plus dividends accumulated since purchase dates amended plan approved commission management objections interpreted commission order approving amended plan grounded solely upon judicial authority commission appeared treated preferred stock acquired management accordance thought standards theretofore recognized courts intended create new standards growing experience effectuating legislative poliy fail ed express sufficient clarity precision understood hence order judged standards clearly invoked commission basis order stand opinion pointed courts impose upon officers directors corporation fiduciary duty stockholders precludes merely officers directors buying selling corporation stock felt cases upon commission relied established principles law equity sufficient justify order opinion noted neither congress commission promulgated general rule proscribing action purchase preferred stock federal management rule equity might justified commission order related fraud mismanagement reorganization officers directors matters admittedly absent situation case remanded commission federal water gas federal water surviving corporation reorganization plan made application approval amendment plan provide issuance common stock reorganized company stock distributed members federal management basis shares old preferred stock acquired period reorganization thereby placing position public holders old preferred stock intervening members federal management joined request commission denied application order issued february holding company act release order reversed appeals felt prior decision precluded action commission latest order commission definitely avoids fatal error relying judicial precedents sustain time thorough reexamination problem light purposes standards holding company act commission concluded proposed transaction inconsistent standards act drawn heavily upon accumulated experience dealing utility reorganizations expressed reasons clarity thoroughness admit doubt underlying basis order argument pressed upon us however commission foreclosed taking step following prior decision said absence findings conscious wrongdoing part federal management commission determine order particular case inconsistent statutory standards permit federal management realize profit reorganization purchases enter order allowing amendment plan proposed transaction consummated view commission free promulgate general rule outlawing profits future utility reorganizations rule prospective nature retroactive effect upon instant situation reject contention grows misapprehension prior decision commission statutory duties held less commission first order unsupportable reasons supplied agency case left problem whether federal management treated equally preferred stockholders still lacked final complete answer clear commission give negative answer resort prior judicial declarations also clear commission bound settled judicial precedents asituation nature page page still unsettled however answer commission might give bring bear facts proper administrative statutory considerations function belongs exclusively commission first instance administrative process taken erroneous rather final turn hence carefully refrained expressing views propriety order rooted proper relevant considerations see siegel federal trade commission case directed remanded commission proceedings might appropriate thought commission give full effect duties harmony views expressed ford motor national labor relations board federal radio commission nelson bros bond mortgage obviously meant something entry perfunctory order giving parity treatment management holdings preferred stock fact commission committed legal error first disposition case certainly gave federal management vested right receive benefits order see federal communications commission pottsville broadcasting remand made therefore commission bound deal problem afresh performing function delegated congress charged duty measuring proposed treatment management preferred stock holdings relevant proper standards way legislative policies embodied act effectuated absence general rule regulation governing management trading reorganization affect commission duties relation particular proposal commission asked grant deny effectiveness proposed amendment federal reorganization plan whereby management accorded parity treatment holdings form order entered due consideration particular facts light relevant proper standards true regardless whether standards previously spelled general rule regulation indeed commission rightly felt proposed amendment inconsistent standards order giving effect amendment merely general rule regulation covering matter unjustified true prior decision explicitly recognized possibility commission might promulgated general rule dealing problem statutory powers case issue consideration entirely different confront us pages pages mean imply thereby failure commission anticipate problem promulgate general rule withdrew power agency form statutory duty case hold commission alternative proceeding approve proposed transaction formulating general rules might desire use future cases nature stultify administrative process refuse since commission unlike ability make new law prospectively exercise powers less reason rely upon ad hoc adjudication formulate new standards conduct within framework holding company act function filling interstics ct performed much possible promulgation rules applied future rigid requirement effect make administrative process inflexible incapable dealing many specialized problems arise see report attorney general committee administrative procedure government agencies doc every principle essential effective administration statute cast immediately mold general rule principles must await development others must adjusted meet particular unforeseeable situations performing important functions respects therefore administrative agency must equipped act either general rule individual order insist upon one form action exclusion exalt form necessity words problems may arise case administrative agency reasonably foresee problems must solved despite absence relevant general rule agency may sufficient experience particular problem warrant rigidifying tentative judgment hard fast rule problem may specialized varying nature impossible capture within boundaries general rule situations agency must retain power deal problems basis administrative process effective thus definite place evolution statutory standards choice made proceeding general rule individual ad hoc litigation one lies primarily informed discretion administrative agency see columbia broadcasting system hence refuse say commission previously confronted problem management trading reorganization forbidden utilizing particular proceeding announcing applying new standard conduct cf federal trade commission keppel action might retroactive effect necessarily fatal validity every case first impression retroactive effect whether new principle announced administrative agency retroactivity must balanced mischief producing result contrary statutory design legal equitable principles mischief greater ill effect retroactive application new standard type retroactivity condemned law see addison holly hill case fact commission order might retroactively prevent federal management securing profits control objects preferred stock purchases may well outweighed dangers inherent purchases statutory standpoint true argument retroactivity becomes nothing claim commission lacks power enforce standards act proceeding claim deserves rejection problem case thus resolves determination whether commission action denying effectiveness proposed amendment federal reorganization plan justified basis upon clearly rests noted commission avoided placing sole reliance inapplicable judicial precedents rather derived conclusions particular facts case general experience reorganization matters informed view statutory requirements hose matters guide review commission concluded find reorganization plan amended proposed equitable persons affected thereby within meaning act reorganization taking place view amended plan involve issuance securities terms public interest interest investors contrary result inequitable distribution voting power among federal security holders within meaning led result proof interveners federal management committed acts conscious wrongdoing character conflicting interests created interveners program stock purchases carried plans reorganization consideration commission noted federal management controlled large utility system influence permeated lowest tier operating companies financial operational accounting policies parent subsidiaries therefore management strict control broad range business judgments vested federal management multiplied opportunities affecting market price federal outstanding securities made exercise judgment matter subject greatest significance investors added normal managerial powers commission pointed holding company management obtains special powers course voluntary reorganization holding company act management represents stockholders reorganization initiates proceeding draws files plan file amendments thereto time additional powers may introduce conflicts management normal interests responsibilities various classes stockholders represents reorganization moreover representative status management special opportunities obtain advance information attitude commission drawing upon experience commission indicated normal special powers holding company management course reorganization placed management command formidable battery devices enable choose use selfishly affect material degree ultimate allocation new securities among various existing classes influence market gain manipulate obstruct reorganization required mandate statute setting commission felt management program stock purchase give rise temptation opportunity shape reorganization proceeding encourage public selling market low prices management engage program without raising serious questions whether personal interests opposed duties exercise disinterested judgment matters pertaining subsidiaries accounting budgetary dividend policies present publicly unprejudiced financial picture enterprise effectuate fair feasible plan expeditiously commission felt answer even proof intentional wrongdoing management part lacking assuming conflict interests commission thought absence actual misconduct immaterial injury public investors corporation may result readily transactions may explained away abuse investors administrative process may perpetrated without evil intent yet injury remain moreover commission view delays difficulties involved pobing mental processes personal integrity corporate officials warrant distinction basis evil intent plain fact absence unfairness detriment cases sort practically impossible establish proof turning facts case commission noted salient fact primary object federal management buying preferred stock admittedly obtain voting power accruing stock reorganization profit investment therein stock purchased market prices depressed relation management anticipated fact earning asset value reorganization equivalent commission admitted good faith personal integrity management question management justification motives commission concluded merely trying made selfish use powers period conflict interest public investors existence owing purchase program federal management thus placed position susceptible temptation conduct reorganization personal gain rather public good desire make advantageous purchases stock important influence even though subconsciously upon many decisions made course reorganization accordingly commission felt general considerations problem applicable case scope review administrative order wherein new principle announced applied different pertains ordinary administrative action wisdom principle adopted none concern see board trade kansas city mo duty end becomes evident commission action based upon substantial evidence consistent authority granted congress see national broadcasting unable say case commission erred reaching result facts undisputed free disturb commission conclusion lacks rational statutory foundation connection commission made thorough examination problem utilizing statutory standards accumulated experience reorganization matters essence made indicated prior opinion informed expert judgment problem taken account subtle factors marketing utility company securities gave rise grave evils public utility holding company act designed correct relied upon fact corporate position influence access information may raise questions subtle law deal effectively bitions concerned fairness particular transaction page page factors may properly considered commission determining whether approve plan reorganization utility holding company amendment plan equitable rule standard public interest interest investors consumers inserted framers act order commission might broad powers protect various interests stake pages pages application critera whether form particular order general regulaton necess arily requires use informal discretion commission breath statutory language precludes reversal commission judgment save plainly abused discretion matters see lowden railway labor executives abuse present case purchase holding company management company securities course reorganization may well thought fraught danger warrant denial benefits profits accruing management possibility stock purchase program result detriment public investors fanciful one influence program may upon important decisions made management reorganization inconsequential since officers directors occupy fiduciary positions period actions held higher standard imposed upon general investing public thus reasonable basis value judgment benefits profits accruing management stock purchases prohibited regardless good faith involved judgment justifiably reached terms fairness equitableness end interests public investors consumers might protected judgment based upon public policy judgment congress indicated type commission make commission conclusion rests squarely area administrative judgments entitled greatest amount weight appellate courts product administrative experience appreciation complexities problem realization statutory policies responsible treatment uncontested facts type judgment administrative agencies best equipped make justifies use administrative process see republic aviation corporation national labor relations board whether agree disagree result reached allowable judgment disturb reversed justice burton concurs result chief justice justice douglas took part consideration decision case justice frankfurter justice jackson dissent opportunity response adequate issues raised opinion concern rule law application administrative process function reviewing administrative action accordingly detailed grounds dissent filed due course dissenting opinion justice jackson see justice jackson dissenting present decision sustains identical administrative order recently held invalid securities exchange commission chenery correctly notes commission rationale reached result par change order additional evidence record amendment relevant legislation clear shift attitude controlling membership case first power decision second review justice jackson announced filed opinion justice frankfurter joins setting forth detailed grounds dissent opinion judgment entered june cases feel constrained disagree reasoning offered rationalize shift makes judicial review administrative orders hopeless formality litigant even granted congress reduces judicial process cases mere feint opinion adherence majority full pronouncements become governing principles practice put administrative orders law essential facts dispute corporation filed securities exchange commission voluntary plan reorganization reorganization proceedings pending sixteen officers directors bought open market corporation preferred stock commission admit purchases forbidden law judicial precedent regulation rule commission nevertheless commission ordered individuals surrender shares corporation cost plus interest approves order helpful considering whether order authorized law reflect conceivably discharge commission duty determine whether proposed plan reorganization equitable nothing corporate structure classes amounts stock voting rights dividend preferences remotely affect impersonal financial legal factors plan personal deprivation denying particular persons right cntinue stock exercise privileges persons bought time price open market allowed keep convert stock thus order sense exercise function control terms relations corporate securities neither order one merely regulate future use property literally takes valuable property away lawful owners benefit private parties without full compensation expressly approves taking says stock owned persons denied conversion along similar stock owned others surrendered cost plus dividends accumulated since purchase dates par noted formula subsequently altered read plus interest basis less value recognized says stock purchased market prices depressed relation management anticipated fact earning asset value reorganization equivalent par admittedly value cost interest simply taken owners without compensation power ever confirmed administrative body also noted neither commission purports adjudge forfeiture property consequence sharp dealing breach trust says commission admitted good faith personal integrity management question par frankly admitted management purpose buying preferred stock protect interest new company also plain fraud lack disclosure making purchases par ii reversal position due fundamental change prevailing philosophy basic assumption earlier opinion therein stated transactions otherwise legal outlawed denied usual business consequences must fall ban standards conduct prescribed agency government authorized prescribe standards securities exchange commission chenery basic assumption present opinion stated thus absence general rule regulation governing management trading reorganization affect commission duties relation particular proposal par puts juxtaposition two conflicting philosophies produce opposite results case facts difference first latest decision thus simply difference holding administrative orders must basis law holding absence legal basis ground courts may annul admittedly law regulation support order peruse opinion diligently find grounds held appeals pain reversed error required stamp order approval find one principle judicial deference administrative experience argument five times stressed many different contexts quote enough identify instances commission says drawn heavily upon accumulated experience dealing utility reorganizations par derived conclusions particular facts case general experience reorganization matters informed view statutory requirements par upon experience commission indicated etc par commission made thorough examination problem utilzing statu tory standards accumulated experience reorganization matters par finally order says product administrative experience etc par make reiterated deference experience another context says refuse say commission previously confronted problem management trading reorganization forbidden utilizing particular proceeding announcing applying new standard par emphasis supplied reasoning adds commission must sustained accumulated experience solving problem never confronted course thus uphold commission professing find enunciated standard conduct brings squarely invalidity retroactive falter action might retroactive effect necessarily fatal validity par retroactivity must balanced mischief producing result contrary statutory design legal equitable principles par course parties really condemned design equitable principles stopped without resort new rule retroactivity condone view law already prohibited purchases hardly necessary three sentences earlier hold commission prohibited utilizing particular proceeding announcing applying new standard conduct par emphasis supplied give realize fully mark twain meant said explain understand iii one need comprehend processes minds reach given result order estimate practical consequences pronouncement upon judicial review administrative orders consequence rule law existent support administrative order appeals obliged defer administrative experience sustain commission power merely asserted exercised use print record briefs case hear argument administrative experience always present least degree always dictate like deference assertion administrative power must reviewing opinion support order presumptive imputed experience even though obliged discredit experience opinion fictitious experience conclusive matters law particularly interpretation statutes opinion intimates fact finding function heretofore sustained upon argument administrative experience suggest administrative experience weight judicial review persuasive reason deference commission exercise discretionary powers within law invoked support action outside law action within law must determined courts authorized review matter much deference due agency fact finding surely administrative agency law unto really face fact justification offering sustaining commission action even commission says utilized case announce new legal standard conduct hurdles cleared need dwell promulgate general rule law either regulation case law something commission expressly declined previously promulgate order profess promulgate rule regulation prohibit purchases absolutely stated conditions hand position rule standard fair equitable cases iv whether matter policy corporate managers reorganization prohibited buying selling stock question us decide us decide whether long law regulation prohibits buying purchases may forfeited discretion commission power exists words statute implication possible point thus end case instead admits law prohibiting purchases made time thereafter except decision none truth decision approves commission assertion power govern matter without law power force surrender stock purchased whenever power also overlook acquisitions chooses reasons lead take one course remain locked breast apparently intend commit rule regulation administrative authoritarianism power decide without law seems approve many words absence general rule regulation governing management trading reorganization affect commission duties par seems undervalue belittle place law even system administrative justice calls mind justice cardozo statement guide conduct reduced level mere futility unknown unknowable averment concerning order type judgment administrative agencies best equipped make justifies use administrative process par first instance administrative process sustained reliance disregard law enemies process always alleged principal evil first encouragement given conscious lawlessness permissible rule administrative action decision ominous one believe men governed laws may ascertain abide guide action authoity wel subject authority long urged still believe administrative process deserves fostering system expeditious nontechnical method applying law ized fields agree used think continued effectiveness endangered used method dispensing law fields justice frankfurter joins opinion footnotes convenience reference numbered consecutively paragraphs opinion cite quotations accordingly facts law case generally fully set forth first opinion chief justice groner appeals reversed commission order second opinion reversing commission order rationale commission speaking rule appends following note opinion flexibility rule might operate unfairly limitation cost appears appropriate inappropriate case cost security purchased excess reorganization value instances cash payment company feasible addition special treatment sort might inappropriate incidental purchases made part program contemplation reorganization benefits connection wish emphasize concern primarily normal corporate powers make possible officers directors influence market gain absence reorganization choice dividend policies accounting practices published reports like questions fairness detriment presented arise us context capital readjustment point scrutiny called scrutiny vigilant doubted see appendix sess quoted supra growth law day denied authority recognize enforce without congressional action unlegislated liability much less novel one imposed field tort law traditionally developed decisional rather legislative process result confirm executive agency discretion act outside established law goes beyond judicial discretion well beyond legislative delegation compare standard oil see statement house delegates american bar association proceedings house delegates xxxv journal also see report attorney general president roosevelt recommending veto billmade part veto message vol part congressional record congress session