WASHINGTON - Government officials in Iowa are going to the U.S. Supreme Court in their battle with Bank One Corp. over regulating automated teller machines operated by national banks.
State Attorney General Tom Miller and Banking Superintendent Holmes Foster said they asked the justices in a filing Wednesday to overturn a lower court decision that one of Iowa's restrictive ATM laws does not apply to national banks.
Although the court fight began in 1997 as a dispute over whether Bank One could place ATMs in retail stores, it has expanded into a question about the legality of another Iowa statute that bans ATM surcharges.
Specifically, a three-judge panel of the U.S. Court of Appeals for the Eighth Circuit in St. Louis ruled in September that federal law pre-empts a state law barring banks without branches in Iowa from operating ATMs there. If upheld, that would mean Bank One could locate their machines in Sears, Roebuck and Co. stores as they originally intended. But Iowa officials and state-chartered banks fear the decision could lead to the undoing of the separate state Electronic Funds Transfer Act, which prohibits banks from imposing fees on noncustomers who use their ATMs.
"We are asking the court to uphold Iowa's law that requires universal ATM access without surcharges to all cardholders in the state, no matter who controls the ATM machine," Mr. Miller said.
Besides threatening state consumer protection laws, the appeals court ruling would harm the dual charter system by exempting national banks - but not state-charted banks - from restrictions on ATM operations, Mr. Miller said.
"We argue there should be competitive equality between all financial institutions, and that national banks such as Bank One are merely seeking to tilt the playing field in their favor," Mr. Miller said.
"If the sweeping conclusion of the Eighth Circuit leads to dismantling all state regulations as they apply to national banks - including bans on ATM fees and surcharges - then competitive equality will stop short of the doorsteps of small banks in rural states like Iowa."
Iowa officials are basing their case on a provision in the federal Electronic Funds Transfer Act that, they say, protects state laws that go beyond it. A U.S. district court judge in Des Moines supported a similar argument, but the appeals court panel sided with Bank One and the full appeals court refused to reconsider.
