A federal judge in New Jersey has rejected another attempted ban on automated teller machine surcharges, in perhaps the toughest stance yet against local attempts to regulate the fees.

Two days after the Woodbridge, N.J., Town Council voted to ban noncustomer fees, U.S. District Court Judge Joseph A. Greenaway - ruling on a lawsuit filed by the New Jersey Bankers Association and several financial institutions - issued a temporary restraint barring the town from adopting or enforcing the prohibition.

"I think Judge Greenaway was thoroughly unconvinced with the argument presented by the township," said Timothy O'Neill, the trial lawyer representing the New Jersey trade group and the plaintiff banks.

"The court said the evidence here is overwhelming" that federal law pre-empts state- and local-level attempts to ban surcharging, Mr. O'Neill said. "I would say that this is probably the strongest verdict to date for the bankers."

Judge Greenaway is scheduled to consider a preliminary injunction on the ordinance April 10. But Mr. O'Neill said "it is entirely possible" that the judge will issue a permanent injunction at that time, which would kill the ordinance.

The New Jersey ruling builds on previous pro-bank decisions. Last fall U.S. District Court Judge Vaughn Walker in California temporarily enjoined San Francisco and Santa Monica, Calif., from enforcing ordinances until a lawsuit filed by the California Bankers Association, Bank of America Corp. and Wells Fargo & Co. is decided. The two cities were the first to approve local-level ordinances prohibiting the charges.

The Office of the Comptroller of the Currency said Friday that it plans to file a legal brief on behalf of the New Jersey bank plaintiffs, as it has in the California case and other litigation. At the core of the dispute is the OCC's argument that the National Bank Act authorizes national banks to set and charge fees for ATM services and therefore pre-empts city and state laws that run counter to that. A spokesman said the filing could come as soon as Tuesday.

As proposals crop up around the country, banks charge that ATM fees have become a convenient rallying point for politicians in an election year. The mayor of Woodbridge, James McGreevey, is a major player in New Jersey politics, having already made run at the governorship. Mr. McGreevey could not be reached for comment.

"The court is not going to judge it on the political front. They're going to judge it on the facts, and that's why I think we've been very successful in court," said W. Stuart Cameron, executive vice president of the New Jersey Bankers Association.

Lawyers for the New Jersey Bankers Association vowed to fight any municipality that attempts to restrict ATM fees. The next hot spot may be Newark. Councilman Anthony Carrino introduced an ordinance there Wednesday, and hearings before the nine-member council are to begin in March.

"In the long run, they're going to waste their taxpayers' money on litigation fees that are going to produce no benefit," Mr. O'Neill said.

Surcharge opponent Jon Golinger, consumer program director for the California Public Interest Research Group, said Judge Greenaway's ruling does not discourage him. California Attorney General Bill Lockyer and eight other state attorney generals sided with San Francisco and Santa Monica this month, filing a legal brief arguing that another federal law, the Electronic Funds Transfer Act, authorizes local-level ordinances.

"It sounds like he bought the banks' line about the legal issues hook, line, and sinker, and either didn't know or didn't care that attorneys general of nine states … think otherwise," Mr. Golinger said. "The banks are telling half-truths about the legality here" and are "extrapolating a few rulings and building a gigantic house of cards upon which their entire defense stands."

A fight over the fees is also brewing in Chicago, where Alderman Joseph Moore recently introduced a ban. The Illinois Bankers Association has vowed to fight the proposal.

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