The Court vs. the Regulatory State

A big moment arrives at the Supreme Court Wednesday when the Justices have a chance to rethink their long deference to the administrative state. This could be the first major benefit of the return to an originalist Court majority.

At issue in Kisor v. Wilkie is the Department of Veterans Affairs’ interpretation of its regulation prescribing eligibility for disability benefits. Vietnam War veteran James Kisor in 1982 applied for benefits based on psychological trauma from combat duty. A VA psychiatrist suggested he had “a personality disorder as opposed to PTSD,” so the department denied his claim.

In 2006 Mr. Kisor asked the VA to review the denial based on unearthed service records. The VA then determined that he did suffer from PTSD. But it declined to award him benefits retroactive to 1982 despite a regulation that says it “will reconsider” a claim if it receives “relevant official service department records that existed and had not been associated with the claims file when VA first decided the claim.”

The D.C. Circuit Court of Appeals upheld the government’s interpretation of what is “relevant” based on the Supreme Court’s 1945 Seminole Rock and 1997 Auer precedents. These rulings require courts to defer to an agency’s interpretation of its own regulation “as long as the regulation is ambiguous and the agency’s interpretation is neither plainly erroneous nor inconsistent with the regulation.” In short, government always gets the benefit of doubt.

Seminole Rock was premised on the notion that regulators can best interpret their own rules because they have the expertise. But it lacked a Constitutional underpinning and was issued one year before Congress enacted the Administrative Procedure Act (APA) that established a process for rule-making.

Read more of this Wall Street Journal Editorial by clicking here.