The Chevron doctrine enables courts to defer to authoritative, legally binding agency interpretations of ambiguous statutes. Though more frequently applied when reviewing rulemaking, the doctrine is actually more powerful when applied to an adjudication. In an adjudication, the agency can attach consequences to past actions made before the interpretation announced in the adjudication itself. Since such a determination will receive deference on review, this declaration effectively becomes a new rule, having gone through neither public notice or public comment. Not only does it become a new rule, it becomes a new rule that is effective retroactively. It is illogical to have a system that gives more power to a less democratic process, and Chevron deference should therefore not apply to adjudication.
The notice and comment process that Chevron more typically defers to is the best method yet devised to enable an agency to benefit from not only its own expertise but that of the general interested public as well. Public comment can point out potential problems with the agency’s preferred approach that the agency has not otherwise foreseen as well as present solutions not yet considered by the agency. This type of input could be beneficial for ambiguities that come to light in an adjudication as well as those initially addressed in rulemaking. Agencies should therefore be encouraged to undertake rulemakings when ambiguities arise in adjudications. But because of the retroactive nature of adjudication itself, these rules would need to (at least potentially) be used retroactively in the adjudication that gave rise to them, or there would be no incentive for the agency to undertake the delay and effort of the rulemaking.

This Article argues that not only should adjudications not receive Chevron deference, but a limited exception should also be created to the current ban on retroactive rulemaking to encourage agencies to engage in the rulemaking process to address ambiguities arising in adjudication. This exception could be specifically cabined to apply only in these unique situations. Enabling such an exception would provide the agency and the public with the benefits arising from public participation.