End of the Road for City’s ATM Law

May 27 -- Snarled for nearly four years in the courts, Santa Monica's pioneering ban on ATM surcharges came to an end without ever going into effect, after the U.S. Supreme Court refused to consider an appeal Tuesday.

The decision follows a federal appeals court refusal in December to revisit its earlier ruling that any local ordinances restricting banks from charging non-customers an extra fee violates federal law and that only the federal government can create such regulations, not city councils or local voters.

The Supreme Court’s decision not to hear the case ends a national movement spurred by the Santa Monica City Council and San Francisco voters, both of whom adopted similar laws in the fall of 1999 banning banks from charging non-customers an additional fee, which averages about $1.50 per transaction.

City officials said they were disappointed with Tuesday’s decision, calling it a victory for “big capital.”

“If the Supreme Court was interested in justice, it would have taken the ATM case and not taken Bush vs. Gore,” said Councilman Michael Feinstein, who pushed for the measure along with fellow Green Party Councilman Kevin McKeown. “It would have given people a chance against big capital.

“This is part of a trend of Federal preemption of states’ rights and abilities to protect consumers,” Feinstein said. “It should be seen as part of a larger pattern… The court has affirmed that might makes right.”

But Councilman Robert Holbrook, who opposed the measure, said he was not surprised the nation’s highest court declined to hear the case.

“It’s entirely predictable,” Holbrook said. “We didn’t have legislative authority to do it… It’s kind of like a Don Quixote adventure. It was fighting windmills. I thought it was at least going to take some time and effort from the City Attorneys office.”

In passing their bans, the Cities of Santa Monica and San Francisco argued that ATM fees unduly burden the elderly, disabled and poor and undermine competition in the local banking industry.

The banks claimed that ATMs actually lose money and denied that the surcharges led to greater concentration in the local banking industry. They also argued that the ordinances impaired their ability to compete.

Santa Monica's law fueled a nationwide movement, with local governments as far flung as Miami, New York, San Diego and New Orleans exploring similar bans.

It also triggered a counter attack by California's two biggest banks -- Wells Fargo and Bank of America -- which stopped allowing non-customers to use the 33 ATMs they operate in the city.