There's a key Congressional Research Service report that analyzes Chertoff's legal authority to make the changes that he proposed in his 2SR plan.

RS21450, "Homeland Security: Scope of the Secretary's Reorganization Authority", was released in revised form on August 9, 2005.

This CRS report has been totally rewritten in light of Chertoff's plan to reorganize DHS. From the text:

From the information that is available, it appears the Secretary is primarily reallocating functions among the officers of DHS, consolidating certain responsibilities, and establishing new organizational units. There are some proposed changes, nonetheless, that might need legislative action. According to a July 13, 2005, letter from DHS to Congress, the Secretary plans on seeking congressional action for the following organizational changes:

Elevating the Assistant Secretary for the newly created Office of Policy

to an Under Secretary;

Eliminating the position of Under Secretary for Border and Transportation Security; and

Requiring the Director of FEMA to report directly to the Secretary of DHS, rather than the Under Secretary for Emergency Preparedness and Response.

In DHS, all the current directorates were established by statute. Accordingly, it would appear consistent with the presumed intent of Congress that completely new directorates also be established by statute. Moreover, because the directorates currently in place at DHS all contain agencies, bureaus, and other large entities, it is would seem that establishing a new directorate is something beyond establishing an organizational unit. Establishing a new directorate, therefore, would seem to need authorizing legislation, and presumably, that is what the Secretary might be doing in his attempt to seek legislation for the elevation of the Assistant Secretary position to an Under Secretary.

The report seems to conclude that the crux of Chertoff's 2SR plan goes against the original intent of Congress in allowing for the Secretary to reorganize DHS. It's no wonder that a full report of Chertoff's 2SR isn't being made available as it seems to say that much of the reorganization plan wouldn't stand up in a court of law.