332 U.S. 194 (1947)
SEC v. Chenery Corp.
Did the SEC act arbitrarily and capriciously by changing its rationale for disapproving the merger without providing adequate reasoning?
The Supreme Court held that administrative agencies must provide a reasoned explanation for their decisions, particularly when they change their position from what was previously articulated. This principle is grounded in the Administrative Procedure Act, which requires agencies to follow certain procedural safeguards when making decisions that affect the rights of individuals or entities. The Court emphasized that an agency's decision must be based on the record and articulated in a manner that allows for judicial review.
The Supreme Court ruled in favor of Chenery Corp., holding that the SEC's decision to disapprove the merger was arbitrary and capricious because it failed to provide a reasoned explanation for its change in position. The Court emphasized that the SEC must adhere to the principles of administrative law, which require that agencies provide clear and consistent reasoning for their actions. The ruling reinforced the necessity for agencies to operate within the bounds of their statutory authority and to ensure that their decisions are grounded in the record and articulated in a manner that allows for effective judicial review.
SEC v. Chenery Corp. is a foundational case in administrative law that has had a lasting impact on how courts evaluate agency actions. The ruling established the principle that agencies must provide a reasoned explanation for their decisions, particularly when they deviate from previous positions. This case has influenced subsequent decisions regarding the scope of judicial review of agency actions and the standards of reasoned decision-making that agencies must adhere to.