The City Council is taking a lead role in growing state and local efforts to ban so-called ATM surcharge fees - the additional fees banks charge when non-customers use a "foreign" ATM.

City officials have asked staff to examine whether Santa Monica should join three other California cities - San Francisco, Berkeley and Santa Cruz - which are currently attempting to ban the fees. Similar legislation is pending at the state level and faces a key vote on Wednesday, May 12.

"We can't get to our money without paying a toll at the end of the bridge," said Councilman Michael Feinstein, a proponent of the ban who called the fees "obscene."

Feinstein said government has been "delinquent" in protecting the consumers - particularly those who use ATMs frequently and can find themselves paying upwards of $2.50 in fees to get $20 of their earnings.

Deputy City Attorney Adam Radinsky would not say whether his office has found compelling legal ground for a local ban on surcharges, but he said the staff report should be finalized this month and then brought to council.

No one knows how many ATM's there are in Santa Monica, but John Golinger, consumer program director for CALPIRG, a consumer protection organization, estimates that there are 11,000 bank-owned ATM's in California. Another 2,000 are owned by credit unions, and up to 8,000 are independently owned or leased to retail outlets or individuals.

A surcharge ban is a hot button issue for the California Bankers Association, which has released a five page report calling the senate bill an unconstitutional assault on consumer choice.

Bankers contend that it is unconstitutional to deny banks the right to a surcharge if the independents -- which are rapidly increasing -- are exempt. They note that all pending legislation is aimed at banks - an unacceptable "anti-bank" assault according to CBA spokesman John M. Stafford. The bankers claim that the boom in non-bank ATMs is fueled entirely by the right to charge fees - some higher than those charged by banks.

Stafford contends that access fees have resulted in more ATMs and spurred the appearance of "next-generation" ATMs which also sell stamps and tickets. Bankers also say you can avoid fees by using your own bank's ATMs or by getting cash at 82,000 point of sale locations - buy a candy bar at the supermarket and get $20 back.

Opponents, however, counter that the surcharges have grown since banks began charging a fee to use "foreign" ATMs. Ostensibly, this fee covered the cost involved in transferring money from a user's bank to the host bank. The fee was split between the two banks. Since 1996, however, banks have added a surcharge - commonly $1.50 - and have also kept their share of the original transfer fee, Golinger said.

Golinger contends that the "double fee" is a blatant attempt by big banks to ruin competitors. If you bank at a small bank with few ATMs, he points out, you will inevitably use "foreign" ATMs. As a result, the fees drive customers to a bigger bank with more ATMs.

The CBA's Stafford disagrees. He contends that the two fees are for entirely separate services and are not a double charge. Stafford says that fewer than 2 percent of consumers switch banks to avoid fees - and that the smaller banks have no objections to the fees. These banks sometimes charge such fees themselves, or use their "no-fee" status as a draw.

The bankers also argue that many customers pay the fee willingly. According to Stafford, 60 percent of ATM surcharge revenue comes from 20 % of ATM users - who, by California law, must be informed of the fee before it is charged.

ATMs are not a low-cost service to operate, Stafford argues, and must enact more than 1,000 transactions a month to cover costs. The machines cost $30,000 to $60,000 each and there are large rental and operational costs. Those costs include repair, leasing, cash replenishment, network fees, phone lines and revenue sharing.

Small banks, Stafford says, opposed the San Francisco law, which was tabled by the city's board of supervisors.

Anti-surcharge forces in San Francisco are currently gathering signatures to put a measure up for vote. Berkeley city officials are expected to enact a surcharge measure soon, and Santa Cruz is also working on legislation.

California could join Iowa and Connecticut as the only states that have banned the surcharges. On Wednesday, the Senate Finance Committee is expected to vote on whether a senate bill authored by 27th Dist. Sen. Betty Karnette (D-Long Beach) gets out of committee this year. Sources say 26th Dist. Sen. Kevin Murray (D-Culver City) is undecided and is considered a swing vote. A previous version of the bill died in committee in 1997.

According to Dan Ehrler, executive vice president of the Santa Monica Chamber of Commerce, the chamber's governmental affairs committee is expected to recommend opposing the senate bill.

Ehrler said that the recommendation is expected to be discussed at the next meeting of the chamber's board of directors set for May 25. He said it would be "inappropriate" at this point to suggest the chamber is opposed to the surcharge ban.