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US Supreme Court Ruling on Swipe Fees Challenges Longstanding Federal Regulations

 |  July 1, 2024

In a decision regarding debit-card swipe fees that could reshape the landscape of federal regulations, the U.S. Supreme Court has ruled that some regulations can be challenged many years after they were enacted. The ruling, which addresses a case over debit-card swipe fees, suggests that a wide array of long-standing rules could now be vulnerable to legal challenges.

According to Bloomberg, the court’s 6-3 decision was split along ideological lines, and allows a North Dakota convenience store and truck stop to sue over a 2011 rule governing charges that banks impose on merchants. The majority opinion, written by Justice Amy Coney Barrett, determined that the suit was not barred by a six-year statute of limitations because the business in question did not open until 2018.

“A claim accrues when the plaintiff has the right to assert it in court — and in the case of the APA, that is when the plaintiff is injured by final agency action,” Barrett wrote. This interpretation means that the clock for the statute of limitations starts only when a plaintiff is directly affected by a regulation, regardless of when it was originally enacted.

This decision could have widespread implications, making many established rules susceptible to new challenges under the federal Administrative Procedure Act. The swipe-fee case will now proceed, despite merchant trade groups having previously lost a similar lawsuit filed soon after the Federal Reserve’s rule was adopted, reported Bloomberg. 

The recent ruling amplifies the impact of a precedent set just last week, where the Supreme Court overturned a 1984 decision that had required judges to defer to an agency’s reasonable interpretation of ambiguous statutes. This prior ruling empowers judges to discard regulations they find inconsistent with Congress’s intentions, enhancing judicial scrutiny over agency actions.

In a strongly worded dissent, Justice Ketanji Brown Jackson, joined by Justices Sonia Sotomayor and Elena Kagan, warned of the potential chaos resulting from these decisions. Jackson asserted that the new rulings mean any recent objection to an old rule must be reconsidered from scratch, with judges now able to use their own judgment to decide whether to invalidate a regulation.

“At the end of a momentous term, this much is clear,” Jackson wrote. “The tsunami of lawsuits against agencies that the court’s holdings in this case and Loper Bright have authorized has the potential to devastate the functioning of the federal government.” She urged Congress to intervene and clarify that its statutes are intended to support the functioning of agencies rather than hinder them.

The rule in question originated from the 2010 Dodd-Frank Act, which mandated that swipe fees, or interchange fees, be “reasonable and proportional.” The Federal Reserve was tasked with implementing this provision through regulation.

Source: Bloomberg