WASHINGTON — The Federal Reserve told a U.S. Appeals Court Monday afternoon that its rule setting swipe fee caps under the Durbin Amendment should be allowed to stand because the Fed set the cap "in complete fealty to the statute and its purpose."
The Fed, which is appealing the lower court's ruling overturning the Durbin cap, said the regulator "exercised its rulemaking authority in complete fealty to the text and the purpose of the statute notwithstanding Congressional silence on important issues. This is precisely what Congress expects when it delegates rulemaking authority to federal agencies, and the board's interpretations are entitled to deference as a result."
The Fed is appealing a ruling prompted by a suit by the National Association of Convenience Stores, which said the Fed went beyond the intent of Congress in setting the cap at 21 cents per transaction for card issuers over $10 billion in assets and setting new standards for network exclusivity. The lower court agreed and could strike down the swipe fee rules if the U.S. Court of Appeals for the D.C. Circuit upholds the ruling. The lower court has agreed to keep the Fed's swipe fee rules pending a ruling by the appeals court.
The Fed told the appeals court under the well-known Chevron ruling that federal agencies should be afforded deference in developing implementing regulations for legislation.
It is well established that "ambiguities in statutes within an agency's jurisdiction to administer are delegations of authority to the agency to fill the statutory gap in reasonable fashion" and that "[f]illing these gaps... involves difficult policy choices that agencies are better equipped to make than courts," argued the Fed. "It is also well established that the second step of the Chevron analysis, to which courts must turn in the face of statutory ambiguity, is 'highly deferential' to the agency."
CUNA, NAFCU, the American Bankers Association and several other parties—who oppose the Durbin amendment—are expected to file a joint brief opposing the lower court ruling as having gone too far.
