Monday, the Supreme Court handed down a 6-3 decision in which a small North Dakota truck stop prevailed over the Federal Reserve System that may do as much to dismantle the Administrative State as did the pair of decisions that sent "Chevron deference" to the boneyard of bad ideas (see BREAKING: Supreme Court Issues Monumental Ruling on Chevron Deference – RedState). The case is called Corner Post v. Board of Governors, Federal Reserve, and it involves the exciting and sexy subject of swipe fees charged for credit and debit card transactions.

The specific issue was a federal law, the 2010 Dodd-Frank Act, that required the Federal Reserve to come up with rules governing swipe fee or Interchange fee rates. Congress required the fees developed by the Federal Reserve to be “reasonable and proportional.” 

In 2011, the Fed issued a regulation that capped fees at 21 cents per transaction plus 0.05% of the transaction’s value.

Merchant trade groups quickly sued, contending that the fee cap was too high, and a federal appeals court in Washington largely upheld the rule.

Merchant trade groups in North Dakota filed another suit in 2021, eventually adding the convenience store Corner Post Inc. as a plaintiff. Corner Post has operated its store and truck stop in Watford City, North Dakota, since March 2018.

At issue was a 2011 Fed rule that capped debit-card interchange fees. Corner Post, a North Dakota truck stop that opened in 2018, challenged the regulation in 2021 under the Administrative Procedure Act. That’s the 1946 law that sets the process federal agencies must follow to issue rules.

But lawsuits against the U.S. must generally be filed “six years after the right of action first accrues.” The government argued that for regulations this means the clock starts ticking as soon as the rules are finalized. In other words, to challenge the Fed’s 2011 rule, Corner Post would have needed to sue before it came into existence. Tough luck.

Fortunately, the six conservative Justices disagreed. “A right of action ‘accrues’ when the plaintiff has a ‘complete and present cause of action,’” Justice Amy Coney Barrett writes for the majority. She says the meaning of the word “accrue” is well settled, citing a precedent holding that a right “accrues when it comes into existence.’”

This seems like common sense. If an agency made a terrible, business-killing decision in the 1950s, you can't be expected to challenge their regulation within six years of enactment. Being told that your only option is to suck it up and deal with it doesn't seem terribly just or even very smart.

The litigation on this issue goes all the way back to its inception. This is from 2013.

A U.S. judge has sided with retailers seeking a lower cap on fees charged by banks for debit card transactions in a key ruling that dragged down the shares of card companies Visa Inc and MasterCard Inc.

Judge Richard Leon of the U.S. District Court for the District of Columbia ruled on Wednesday that the Federal Reserve had ignored the intent Congress when it capped the fees banks can charge retailers when their customers use debit cards.

The 2010 Dodd-Frank law called for limits on those fees. Retailers have since argued that the Fed's cap of 21 cents per transaction was higher than Congress intended.

"Today's decision ... is a victory for consumers and small business around the country and will lead to lower interchange rates for billions of debit card transactions each year," said Senator Richard Durbin, an Illinois Democrat who introduced the swipe fee provision to Dodd-Frank.

The ruling caused the shares of the two largest payment network operators to plunge. Visa and MasterCard set the fee level that banks charge retailers for using their networks.

Visa's shares fell as much as 11 percent and ended 7.5 percent lower, while MasterCard, which reported stronger-than-expected earnings earlier in the day, dropped as much as 6 percent before recovering to end 1.5 percent higher.

This case has taken 13 years to conclude. Billions of dollars were lost to consumers in what will ultimately be seen as excess fees. 

With Loper Bright opening the door to challenging agency regulations and Corner Post removing a six-years-from-rule-finalization statute of limitations, many regulations that should be tossed out will no longer have the shield of Supreme Court precedent and a lapsed statute of limitations to hide behind. This is the beginning of an Administrative State that is modest and chastened, and it remembers that it works for the people, not for the post-retirement careers of the bureaucrats writing rules to favor industries.