Three judges from the U.S. Court of Appeals for the DC Circuit will meet Friday to ask questions about the Federal Reserve's debit interchange regulation, much of which was overturned last July.
In an acerbic July 31 decision, U.S. District Court Judge Richard Leon threw out the regulation's cap on debit card interchange earned by cards issued by financial institutions with more than $10 billion in assets. Leon’s decision also voided how the Fed interpreted the requirements for how debit transactions should be processed.
The Fed appealed Leon's decision and an appeals court panel made up of Judges David Tatel, Harry Edwards and Stephen Williams will hear from lawyers representing financial institution debit card issuers, the Fed and the merchants Friday morning.
Lawyers familiar with the process say the judges read each side's legal briefs before the hearing and are likely to ask questions early during each side's presentations.
According to a lawyer familiar with the case who spoke on background, the Court has allotted 10 minutes to counsel for the debit card issuers and 15 minutes to the Federal Reserve. The merchant's counsel has been given 25 minutes. It may be that the Federal Reserve counsel may reserve some of its time to rebut statement's made during the merchant's presentation, but that is not guaranteed, the lawyer said.
The core of each side's arguments are differences about how the Fed interpreted what the Durbin Amendment to the Dodd-Frank Financial Reform law requires and how well its debit interchange regulation met those requirements.
The point of the appeals hearing is for each side to clarify or highlight parts of their arguments that might not have been sufficiently clearly presented in the briefs, the lawyer explained, and the appeals judges have the responsibility of asking questions about parts of the case that remain unclear to them.
The lawyer credited the court putting the case on an expedited schedule, but added the quick schedule shouldn’t be read as a commitment to come to a quick decision.