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The latest twist of events has Connecticut's struggle over the surcharge bouncing from the nation's highest court to the state's highest court. On June 14, the U.S. Supreme Court rejected hearing the matter involving the legality of issuing surcharges in Connecticut. At a hearing two days later in Hartford (Conn.) Superior Court, the parties involved -- Fleet Financial Group, First Union National and the Attorney General's office -- agreed to have the case heard by the state Supreme Court, said Fleet spokesman Jim Schepker. Responding to the Supreme Court's action, State Attorney General Richard Blumenthal sued in Hartford Superior. Blumenthal's office is representing the Connecticut Department of Banking in the matter. At a hearing afterward, both sides agreed "at least in principle" to by-pass the local courts and allow the state Supreme Court to hear the case, Schepker said. A formal agreement is expected to be filed soon, he added. In a statement, Blumenthal called the agreement a "win for consumers." However, Schepker said it's too early for either side to begin declaring victory. "It's interesting to characterize this as a win or a victory when we haven't yet had the court hear the positions." Those positions stem from state Banking Commissioner John P. Burke's interpretation that a state statute prohibited surcharging even though it wasn't specifically addressed in the statute. Burke's interpretation led to litigation and conflicting court decisions. Boston-based Fleet won the first round when it sued in U.S. District Court in New Haven. However, its plans to proceed with imposing a $1 fee on some ATM users stalled when the state won a temporary stay in the 2nd U.S. Circuit Court of Appeals. Once the stay expired, Fleet, Charlotte, N.C.-based First Union and BankBoston began surcharging. However, they were stonewalled again when Burke issued a cease and desist order forcing them to stop imposing the fees. The Office of the Comptroller of Currency joined the battle by filing a brief that declared the state was out of its jurisdiction in tackling the matter. It belonged at the federal level because it involved nationally-chartered banks, according to the OCC. In a related lawsuit filed by the banks, a federal judge ruled this past spring that the state Banking Commissioner has no authority to prevent national banks from implementing the fees. However, the judge also ruled that the state could utilize other measures to block surcharges, according to an article published in the Hartford Courant. Hours after the U.S. Supreme Court turned down the case, another federal judge denied an injunction filed by Fleet to overturn the Banking Commissioner's cease and desist order. While Fleet's position has always been to keep the issue at a federal level, the banks support this recent move to the state Supreme Court to expedite the matter, Schepker said. "We're absolutely confident that our interpretation of this statute is accurate. To date, there has only been one review of the issue on its merits and that was by a federal court," which found in Fleet's favor, Schepker said. Schepker said the media's interpretation of the U.S. Supreme Court's action was mischaracterized as a defeat for the banks. He said the ruling simply meant that the court would not hear the issue on its current docket. "It (was) in no way a vote for or against any particular side in this issue," Schepker said. "It's like two teams showing up for a ball game and getting rained out. Neither team won the game, neither team lost the game." Blumenthal is equally confident that the state's highest court will favor the state's view of the statute that the fees are "illegal, unfair and unnecessary," he said in his statement. In the meantime, Fleet and First Union have agreed to postpone imposing the fee until a ruling is made. Schepker said he expects lawyers to prepare briefs this summer. If all goes smoothly, a hearing could be held this fall. For Fleet, surcharge litigation isn't the only matter occupying the company's time. The bank plans to complete a merger with BankBoston by the end of this year. Schepker said the litigation doesn't impact that merger, except that BankBoston is also affected by the inability to issue convenience fees. Schepker estimates that Fleet alone, with 166 branches and 378 ATMs in Connecticut, is losing $15,000 per day in revenue as a result of the cease and desist order. BankBoston will give Fleet an even greater revenue potential, with its 64 branches and 150 ATMs in that state.