In a decision with implications for projects before the Federal Energy Regulatory Commission, as well as the Departments of Energy and Interior, the U.S. Supreme Court refused to overturn a long standing precedent that directs judges to defer to agencies' interpretations of their regulations in cases where those rules are "genuinely ambiguous."

The case (Kisor v. Wilkie 18-15) centered on veterans' rights, but it could have broader implications because the petitioner, James Kisor, asked the court to overrule the Auer deference, which is used by many federal agencies.

In an 80-page ruling issued Wednesday, the court found that those arguments failed, and allowed the precedent, set in the 1997 case Auer v Robbins 519 U.S. 452, to stand.

"As a policy matter, [Kisor] contends that Auer encourages agencies to issue vague and open-ended regulations, confident that they can later impose whatever interpretation of those rules they prefer," according to an opinion written on behalf of the majority by Justice Elena Kagan. "But no real evidence backs up that assertion and strong incentives cut in the opposite direction."

Kisor also argued that Auer deferences violate "separation-of-powers principles" by vesting both legislative and judicial functions in one branch. Again, the court disagreed with the petitioner.

But at the same time the court sought to reinforce limits on the precedent.

"Auer deference is sometimes appropriate and sometimes not," Kagan wrote. "Whether to apply it depends on a range of considerations that we have noted now and again, but compile and further develop today. The deference doctrine we describe is potent in its place, but cabined in its scope."

The court remanded the case to the U.S. Court of Appeals for the Federal Circuit to decide whether Auer applies to the Department of Veterans Affairs' interpretation in the case.