Court Invalidates Interchange Fee Rules Because Fed Completely Misunderstood Durbin Amendment

The United States District Court has invalidated the Fed’s Interchange Rules in NACS et al v Board of Governors of the Federal Reserve Board.  The reasons are almost too numerous to mention, with the court at one point calling the Fed’s rules “utterly indefensible.”

The court winds up by noting “First, the interchange transaction fee and network non-exclusivity regulations are fundamentally deficient. It appears that the Board completely misunderstood the Durbin Amendment’s statutory directive and interpreted the law in ways that were clearly foreclosed by Congress.”

One interesting point is what happens next.  The court stated it would stay vacatur, to provide the Fed an opportunity to replace the invalid portions of the final rule. In so doing, the court believes it can prevent the Fed from adopting similar regulations while at the same time avoid the disruption of vacating the entire regime. To properly effect the stay of vacatur, two issues remain:

  • the appropriate length of the stay; and
  • whether current standards should remain in place until they are replaced by valid regulations or the Fed should develop interim standards sufficient to allow the court to lift the stay.

Because the parties failed to address the proper remedy in their motions, the court invited supplemental briefing on these issues, stating it was inclined toward a stay of vacatur “for months, not years.”

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Stinson Leonard Street - Dodd-Frank and the Jobs Act | Attorney Advertising

Written by:


Stinson Leonard Street - Dodd-Frank and the Jobs Act on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.