((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Recast with decision) by John Kruzel
The U.S. Supreme Court on Monday revived a North Dakota convenience store’s challenge to a Federal Reserve regulation on debit card fees, in a ruling that could allow companies to try more easily overturn long-standing federal rules.
The decision (6-3) overturned a lower court’s dismissal of a 2021 lawsuit filed by the Corner Post, located in Watford City, which challenged the 2011 rule governing how much companies pay banks when Customers use debit cards to make purchases. The rejection was motivated by the fact that the store had not respected the six-year limitation period which generally applies to this type of dispute.
The ruling was delivered on the last day of the Supreme Court’s session that began in October.
Transaction fees, also called interchange fees, reimburse banks for the costs of offering debit cards. These fees are determined by Visa VN, MasterCard MA.N and other card networks, with a cap of 21 cents per transaction set by the Fed rule.
The question in this case is whether Corner Post filed its lawsuit too late. The store argued that it should not be bound by the six-year statute of limitations for challenging the 2011 regulations because it opened in 2018, after that deadline had expired.
Corner Post, backed by various conservative and business interest groups including billionaire Charles Koch’s network and the U.S. Chamber of Commerce, has argued that businesses should be given wide latitude to challenge regulations that they consider illegal and restrictive.
The outlet argued that the six-year time limit should not begin to run until a business has been negatively impacted, which Corner Post said would be March 2018, when it agreed your first debit card payment.
The administration of President Joe Biden (), representing the Board of Governors of the Federal Reserve, had argued that adopting Corner Post’s legal position would “significantly expand the class of potential challengers” to government regulations and threaten to “increase the burden on agencies and courts.”
A group of small business associations filed a brief asking the Supreme Court to maintain a strict statute of limitations that begins the moment a regulation is finalized. They said allowing lawsuits beyond that date “would create chaos, uncertainty, and inconsistent regulatory regimes for the nation’s regulated industries and the American people the regulations seek to serve.”
Before Congress passed the Dodd-Frank Wall Street Reform Act of 2010, which called on the Fed to cap transaction fees, retailers were paying as much as 44 cents per transaction, making it difficult for small businesses to accept debit cards.
Retailers who expected a much lower cap sued after the Fed set it at 21 cents per transaction. In 2015, the Supreme Court left in place a lower court ruling that had supported the regulation.
In its 2021 lawsuit, Corner Post argued that the rule went against congressional intent and was “arbitrary and capricious” under a federal law called the Administrative Procedure Act.
In 2022, District Judge Daniel Traynor dismissed the lawsuit. The 8th St. Louis Circuit Court of Appeals upheld Mr. Traynor’s decision, allowing the Supreme Court to take up the case.
Last year, the Fed proposed reducing the current cap to 14.4 cents per transaction.
