Merchants, Fed get expedited appeal schedule in interchange suit
Sept. 20, 2013 – The Federal Reserve and merchants suing the regulator over its debit interchange rule jointly requested – and won – an expedited schedule Thursday for briefing and consideration of the Fed’s appeal of a district court ruling vacating the rule.
The expedited schedule gives the Fed until Oct. 21 to submit its brief in the appeal. Amici – which include NAFCU – also have until Oct. 21 to submit their brief supporting the appeal. Merchants will have until Nov. 20 to respond, and the Fed will have until Dec. 4 to reply to that.
The Fed is appealing federal district court Judge Richard Leon’s July 31 order to vacate the Fed’s regulation implementing the debit interchange provisions (the “Durbin amendment”) of the Dodd-Frank Act.
Leon said the Fed’s rule is illegal because the Fed considered prohibited factors in setting a debit interchange fee cap and because he found the Fed’s provisions against network exclusivity to be inadequate. On the fee cap, the Fed argues that the statute doesn’t address certain categories of costs that might be considered, “leaving them instead for the Board’s informed consideration.”
The fee cap, 21 cents per transaction plus 1 cent for anti-fraud costs, applies directly only to debit card issuers that have more than $10 billion in assets, but market forces are expected to bring the fees down for all issuers over time.
The parties in this suit are waiting to learn whether Leon will decide to issue a stay of his ruling while the Fed’s appeal proceeds, and whether the Fed must issue an interim rule to supplant the current rule. If the judge declines to grant a stay, the parties are likely to seek one from the court of appeals.
In Thursday’s motion, the Fed noted that if the current rule is vacated, there will be no regulatory limits on debit interchange fees; merchants make the same argument. The Fed adds that if it adopted an interim rule now, that would render the current appeal moot.
NAFCU and other amici in this case jointly filed a brief last month arguing against requiring the Fed to issue an interim final rule. NAFCU strongly supports keeping the status quo in
place so as to not disrupt or confuse the financial sector with a new
Motion to expedite
Order for expedited briefing
"NAFCU files amici brief in interchange case," 8/29
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