UPDATE 1-U.S. Supreme Court appears open to limiting federal agency power

Conservative U.S. Supreme Court justices on Wednesday expressed skepticism toward the wide latitude courts give federal agencies to interpret their own regulations in a case that could bolster the Trump administration's push toward curbing agency power. The case, involving a Vietnam War veteran's fight with the Department of Veterans Affairs over retroactive disability benefits, focuses on whether the high court should overrule its own precedents dating back to 1945 that call for judges to defer to administrative agencies' views on what their own regulations mean.

Ridding judges of a duty to defer could undercut agencies' ability to issue certain informal policies and rules. During an hour of arguments, the court's 5-4 conservative majority seemed more willing to limit such judicial deference - as suggested by U.S. Solicitor General Noel Francisco, the Trump administration's top Supreme Court lawyer - rather than eliminate it entirely.

Conservative Justice Brett Kavanaugh told Francisco that under the legal doctrine known as "Auer deference," judges must sometimes side with an agency even when they feel it has made the wrong call on a regulation. "Doesn't that trouble you?" Kavanaugh asked.

Liberal justices said judicial deference is important because agencies often have technical expertise that judges do not possess. Retired U.S. Marine named James Kisor, 75, challenged a lower court's ruling that deferred to an interpretation by the Department of Veterans Affairs, or VA, of its regulations in denying his disability benefits arising from battle-related post-traumatic stress disorder.

In his appeal, Kisor said the justices should get rid of Auer deference as courts are best equipped to resolve the meaning of regulations. Paring back the authority of federal agencies - which can control regulation in many critical areas including energy, climate change and the workplace - has been a key goal of many business and conservative groups, which complain about what they call the "administrative state."

These critics have said judicial deference has allowed agencies to accumulate power by enabling them to issue vague or burdensome regulations and then enforce them according to the policy preferences of unelected administrators. President Donald Trump's administration has pursued an aggressive policy of scaling back government regulations including on environmental protections, financial services and other industries.

Auer deference refers to a 1997 Supreme Court ruling in the case Auer v. Robbins, which extended a 1945 precedent, Bowles v. Seminole Rock & Sand Co, that had accepted an agency's take unless it was plainly wrong or inconsistent with the regulation. In recent years, the court's conservative justices have questioned the validity of this form of deference.

(Reporting by Andrew Chung)