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U.S. Supreme Court applies limits to federal agency power

WASHINGTON, June 26 (Reuters) - The U.S. Supreme Court on Wednesday constrained the power of federal agencies, scaling back a legal doctrine that called for judges to give agencies deference to interpret their own rules but declining to eliminate it all together.

The ruling, coming in a case in which a Vietnam War veteran sued the Department of Veterans Affairs (VA) after being denied retroactive disability benefits, could buoy business groups and others wanting to curb governmental regulatory authority.

The justices imposed new limits on the legal doctrine, which is called "Auer deference," that was rooted in Supreme Court precedents dating back to 1945. The ruling could constrain administrative agencies in issuing certain informal policies and rules.

The Supreme Court threw out a lower court's ruling denying retired U.S. Marine James Kisor, 75, benefits dating back to 1982 arising from battle-related post-traumatic stress disorder. The justices sent the case back to the lower court to reconsider Kisor's claim on the meaning of a regulation that the agency had said was unfavorable to Kisor. (Reporting by Andrew Chung; Editing by Will Dunham)