Three judges from the U.S. Court of Appeals for the DC Circuitwill meet Friday to ask questions about the Federal Reserve's debitinterchange regulation, much of which was overturned last July.

In an acerbic July 31 decision, U.S. District Court Judge Richard Leon threwout the regulation's cap on debit card interchange earned by cardsissued by financial institutions with more than $10 billion inassets. Leon's decision also voided how the Fed interpreted therequirements for how debit transactions should be processed.

The Fed appealed Leon's decision and an appeals court panel madeup of Judges David Tatel, Harry Edwards and Stephen Williams willhear from lawyers representing financial institution debit cardissuers, the Fed and the merchants Friday morning.

Lawyers familiar with the process say the judges read eachside's legal briefs before the hearing and are likely to askquestions early during each side's presentations.

According to a lawyer familiar with the case who spoke onbackground, the Court has allotted 10 minutes to counsel forthe debit card issuers and 15 minutes to the Federal Reserve. Themerchant's counsel has been given 25 minutes. It may be that theFederal Reserve counsel may reserve some of its time to rebutstatement's made during the merchant's presentation, but that isnot guaranteed, the lawyer said.

The core of each side's arguments are differences about how theFed interpreted what the Durbin Amendment to the Dodd-FrankFinancial Reform law requires and how well its debit interchangeregulation met those requirements.

The point of the appeals hearing is for each side to clarify orhighlight parts of their arguments that might not have beensufficiently clearly presented in the briefs, the lawyer explained,and the appeals judges have the responsibility of asking questionsabout parts of the case that remain unclear to them.

The lawyer credited the court putting the case on an expeditedschedule, but added the quick schedule shouldn't be read as acommitment to come to a quick decision.