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U.S. Supreme Court Opens Door for North Dakota Retailer to Challenge Swipe Fees

The 6-3 decision allows Corner Post to argue that the cap on debit card fees was set higher than Congress intended.
Angela Hanson
A person tapping a debit card at checkout

WASHINGTON, D.C. — A North Dakota convenience store can move forward with its lawsuit against the Federal Reserve over debit card swipe fee regulations, the U.S. Supreme Court ruled July 1.

The 6-3 decision found that the lawsuit filed by Corner Post, located in Watford City, N.D., is not blocked by the statute of limitations because the time limit did not begin for the business until it began accepting debit cards upon opening for business in 2018, reported the Associated Press (AP).

[Read more: Retailers React as Judge Rejects Swipe Fee Settlement]

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Corner Post is challenging the Federal Reserve's Regulation II, which was implemented in 2011 and capped the amount of interchange fees banks can charge merchants for processing debit card transactions, as Convenience Store News reported. The retailer argues that the cap on debit card swipe fees was set higher than intended by Congress.

The issue before the Supreme Court is whether the lawsuit was timely filed under the Administrative Procedure Act (APA), which has a six-year statute of limitations for rules challenges. The U.S. Court of Appeals for the Eighth Circuit previously ruled, and the Biden administration argued before the Supreme Court, that the time in which to file APA claims started from the date of rule publication, not from the date of the alleged injury.

During oral arguments for the case in February, Chief Justice John Roberts noted that ruling for Corner Store could open the door to federal agencies facing challenges decades later. However, he also stated that ruling against the business could result in a scenario in which "you have an individual or an entity that is harmed by something the government is doing, and you're saying, well, that's just too bad, you can't do anything about it because other people had six years to do something about it."

In her dissent, Justice Ketanji Brown Jackson wrote that the ruling and the court's decision in another case released this term, Loper Bright Enterprises v. Raimondo, authorized a "tsunami of lawsuits" against agencies that have the potential to "devastate the functioning of the Federal Government."

Justice Amy Coney Barrett wrote the majority opinion in the case.

Former U.S. Justice Department lawyer Dan Jarco told the AP that he predicts litigants such as Corner Post will win their cases more often following the recent decisions.

"Combined with last week's decision eliminating Chevron deference, the Corner Post decision will unquestionably lead to more successful litigation challenges to federal regulations, no matter which agency issued them," he said.

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