U.S. Supreme Court Ruling on Swipe Fees Upends Long-standing Federal Rule

In a decision on debit card swipe fees that could change the federal regulatory landscape, the U.S. Supreme Court ruled that some laws can be challenged years after they go into effect. The ruling, which involves a case involving debit card swipe fees, suggests that a wide range of long-standing laws may now be vulnerable to legal challenges.

According to Bloomberg, the court’s 6-3 majority decision was split along ideological lines and allows a North Dakota convenience store and truck stop to sue over a 2011 rule regulating fees that banks impose on merchants. The majority opinion, written by Justice Amy Coney Barrett, said the lawsuit was not subject to the six-year statute of limitations because the business in question only opened in 2018.

“A claim arises when a plaintiff has a right to pursue it in court—and in the case of an APA, that occurs when the plaintiff is harmed by the agency’s final action,” Barrett wrote. That interpretation means the statute of limitations begins to run only when the rule directly affects the plaintiff, regardless of when it was originally enacted.

The decision could have broad implications, making many established rules vulnerable to new challenges under the federal Administrative Procedure Act. The swipe fee case will now proceed, even though trade groups previously lost a similar lawsuit filed shortly after the Federal Reserve passed the rule, Bloomberg reported.

The recent ruling reinforces the impact of a precedent set just last week when the Supreme Court overturned a 1984 decision that required judges to defer to an agency’s reasonable interpretation of ambiguous statutes. That earlier ruling authorizes judges to strike down rules they deem inconsistent with congressional intent, strengthening judicial review of agency actions.

In a strongly worded dissent, Justice Ketanji Brown Jackson, joined by Justices Sonia Sotomayor and Elena Kagan, warned of the potential chaos that would result from the decisions. Jackson said the new rulings mean that any recent challenges to the old rule must be retried, and the justices can now use their own judgment to decide whether to invalidate the regulation.

“At the end of an important term, one thing is clear” Jackson wrote. “The tsunami of lawsuits against agencies that have been authorized by the court’s rulings in this case and Loper Bright has the potential to destroy the functioning of the federal government.” She called on Congress to intervene and make clear that its statutes are intended to support the functioning of agencies, not hinder them.

The rule comes from the 2010 Dodd-Frank Act, which mandated that card-swipe fees, or interchange fees, be “reasonable and proportionate.” The Federal Reserve was required to implement the provision through regulation.

Source: Bloomberg