The New York City Council will not see Speaker Peter F. Vallone's proposal to curtail automated teller machine fees this year.

The council head last month abruptly announced his intention to propose a law to limit ATM charges, a policy that grabbed headlines this fall when Santa Monica, Calif., and San Francisco both approved bans on banks that surcharge noncustomers.

Mr. Vallone had planned to hold hearings on the bill this month, but his staff was "sidetracked" by the threat of a citywide transportation strike and other projects, said Michael Clendenin, a spokesman for Mr. Vallone. Although the council speaker could unveil his proposal this year, it would not be in time for presentation to the council. Thursday was the last City Council meeting of the year, and Mr. Clendenin said hearings can be expected "early next year."

New York and several other cities have begun exploring restrictions despite a federal judge's ruling that bars the two California cities from enforcing their ordinances during litigation challenging their validity. In Santa Monica - the only city that has implemented the ban - Bank of America Corp. and Wells Fargo & Co., the biggest and third-biggest bank ATM deployers respectively, shut off their ATMs to noncustomers just after the law went into effect. Despite the temporary injunction, the banks have not reopened their ATMs, signaling that nothing short of surrender by opponents will suffice.

Earlier this month, Mr. Vallone met with Michael P. Smith, president of the New York Bankers Association, and executives from Chase Manhattan Corp., both of which have vowed to fight any new rules. At the Bank Administration Institute's Retail Delivery '99 conference in Miami Beach last week, William B. Harrison Jr., Chase president and chief executive officer, warned that limitations on surcharging would backfire on consumers.

"As we saw in California with the actions of Bank of America and Wells Fargo, surcharge limits will diminish customer convenience," Mr. Harrison said in a keynote speech.

He would not say whether Chase would follow suit should Mr. Vallone succeed in his efforts, but he suggested it would not come to that.

"I think we can work through this ATM surcharge issue and come out with a reasonable outcome," he said during a press briefing.

After meeting with bankers, Mr. Vallone still planned to introduce a bill, although he is "open to all suggestions for trying to achieve the same ends," Mr. Clendenin said at the time.

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