A federal judge has ruled against Connecticut regulators in their attempt to prevent two nationally chartered banks from imposing automated teller machine surcharges.
U.S. District Judge Janet Bond Arterton did not directly authorize national banks in that state to assess the controversial fees on other banks' ATM cardholders.
Rather, the Office of the Comptroller of the Currency now must decide whether a Connecticut law prevents Fleet Bank, First Union National Bank, and other national banks from surcharging, the judge's ruling said.
An OCC official declined to comment when asked if banks under the agency's jurisdiction would be able to surcharge in Connecticut. "We haven't even come close to a decision on that," a spokesman said.
But the state's attorney general, Richard Blumenthal, vowed to appeal the temporary injunction that the judge granted late Wednesday.
"We are preparing to take immediate action assuring that Connecticut's ban on ATM surcharges remains in effect," he said in a statement released Thursday. "These surcharges are anti-consumer-unfair, unnecessary and illegal-as well as anti-competitive and contrary to the public interest."
The First Union Corp. and Fleet Financial Group subsidiaries filed a lawsuit that charged Connecticut Banking Commissioner John P. Burke with exceeding his authority in 1995 when he ruled that state law prohibits surcharges.
This week's ruling "is a big win for Fleet and First Union and for national banks in Connecticut," said Lynne Barr, a partner at Goodwin, Proctor & Hoar in Boston and general counsel of the Electronic Funds Transfer Association.
The OCC joined the suit in December. It asked the court to enjoin the state from enforcing the law, arguing that the OCC has exclusive jurisdiction over national banks.
Judge Arterton, sitting in U.S. District Court for the District of Connecticut in New Haven, essentially conceded that the OCC would ultimately win because of that argument. Her injunction is to remain in effect until a further ruling on the merits of the banks' complaint.
Mr. Burke stood by his judgment, saying in a statement that his 1995 interpretation remains in effect for all state and national banks in Connecticut. The ruling on the injunction only affects which regulator enforces the Connecticut ban, he said.
Fleet and First Union stopped short of declaring victory.
"We have no immediate plans to reintroduce the surcharge fee until we've completed our review of the court's ruling," a Fleet spokesman said. The spokesman added that the bank loses $15,000 a day, or $1.4 million per quarter, because of the ban.
A spokeswoman for First Union declined to comment, saying the bank is studying the decision.
Fleet first sued Connecticut in 1997 over the surcharge ban. The company won a favorable ruling in September, which was later overturned.
Mr. Burke issued cease-and-desist orders to banks that were charging fees on Nov. 10. That prompted the OCC to intervene in the case a month later.
Only one other state, Iowa, bans the ATM fees. Arkansas, Mississippi, and Wyoming impose some limits, according to the Conference of State Bank Supervisors.
Separately, the Office of Thrift Supervision has exempted federal thrifts in Massachusetts from some state ATM rules. In a December opinion that surfaced only recently, the OTS said state banking regulators may not charge fees to, or otherwise regulate, federal thrifts that establish ATMs.
Steven Antonakas, senior deputy commissioner of the Massachusetts Division of Banks, had no comment as of Thursday afternoon.
