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Supreme Court: States
can't
regulate national banks' ATMs
By John
Latta • Bankrate.com
 As
ATM fees continue to rise, the Supreme Court has decided that states
can't do much about it.
The justices let stand a lower court ruling
that prevents Iowa from regulating ATMs owned by national banks.
That September 1999 ruling by the 8th U.S. Circuit
Court of Appeals said state law was overruled by the National Bank
Act, which the court said clearly intends "that ATMs are not to
be subject to state regulation."
The Supreme Court declined, without comment,
to hear an appeal by Iowa's superintendent of banking against that
earlier ruling.
The Supreme Court's action comes as more
banks than ever are levying ATM surcharges, which should earn
them an estimated $2 billion this year.
"This is exactly as it should have come out.
A national bank really is a creature of the federal government and
the states are really limited in what they can do in limiting the
ability of a national bank to do business in different places. We've
seen that in a variety of different settings over the years," says
Mathew Street, associate general counsel for the American
Bankers Association.
"The states simply don't have the power to stop
a national bank from placing ATMs where its business plan suggests
they should be. This really is about where you can do business,
rather than what you can do once you get there. It's pretty clearly
a question of states vs. federal government, that permanent tension.
Here, the states are limited, in fact barred, from acting in this
area."
Closings
lead to lawsuit
The Iowa ruckus heated up after Bank One of Utah was forced to close
its ATMs in the Hawkeye State. The bank challenged a 1976 Iowa law
that required banks operating ATMs to have an in-state office, to
give locations for all in-state ATMs, to comply with Iowa laws and
to place no bank advertising on the ATMs.
A federal judge ruled against the banks and
for the state. The bank's appeal led to the Circuit Court ruling
for the banks.
The state argued during the appeal that the
National Bank Act required national banks to comply with state laws
governing bank branches. But the appeals court disagreed. While
the act does require national bank branches to conform to state
laws, said the appeals court, an amendment to the act specifies
that an ATM is not a branch.
But the battle isn't over. Bank One also is
challenging an Iowa law that says automatic teller machines must
provide "universal, nondiscriminatory" access to anyone with an
ATM card. In plain English -- they can't surcharge non-customers
if they don't surcharge customers.
Long
hot summer?
The Supreme Court's move comes hard on the heels of a decision by
the 9th U.S. Circuit Court of Appeals to uphold a lower
court's decision to stop the cities of San Francisco and Santa
Monica from enforcing a voter-approved ban on ATM surcharges. That
case is expected in court this summer.
And as this summer heats up, so will the anti-surcharge
movement. Nine states have backed the two California cities' right
to ban surcharges (California, Connecticut, Iowa, Oregon, Minnesota,
Nevada, New York, Washington and West Virginia). Grass-roots movements
in other states, including New Jersey and Oregon, have also mushroomed.
-- Posted: April 25, 2000
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