South Dakota Telecommunications Traffic Identification Requirements Found Unconstitutional

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January 3, 2008

A South Dakota law that required telecommunications carriers to identify the jurisdiction of originating traffic has been struck down as unconstitutional. Briggs’ client, Verizon Wireless, challenged a state statute passed in 2004 that required originating telecommunications carriers to provide specified “accurate and verifiable” information to terminating carriers regarding the jurisdiction of calls made. If this law had not been successfully challenged, any carrier not in compliance was at risk for being billed high intrastate access rates for all minutes delivered.

In this case, Verizon Wireless argued that the South Dakota legislature had imposed standards that could not be met by wireless carriers, and the statute conflicted with the Telecommunications Act of 1996 and the Federal Communications Commission’s (FCC) Rules and Orders. In an Opinion and Order issued December 28, 2007, Judge Charles B. Kornmann, U.S. district judge for the District of South Dakota, held that SDCL 49-31-109 through 49-31-115 are preempted and unenforceable because they establish telecommunications traffic identification and compensation standards that conflict with federal law. After a bench trial, the Court concluded that South Dakota’s legislation imposed obligations that could not be met, and that compensation obligations between carriers should be subject to negotiation and arbitration under the 1996 Telecommunications Act:

SDCL 49-31-110 and 111 serve only to authorize the imposition of penalties, not to facilitate the identification of CMRS traffic. By imposing requirements that cannot be met, and authorizing penalties that conflict with the federal scheme for intercarrier compensation, the state has clearly undermined federal law.

The Court enjoined the Commissioners of the South Dakota Public Utilities Commission from enforcing these preempted provisions for wireless providers or wireless traffic. The Court then found it could not sever the unconstitutional portions of the 2004 session law while saving the remaining provisions, and thus declared the entire Chapter 28 to be unconstitutional.

Verizon Wireless was represented in this case by Phil Schenkenberg. Lawyers in Briggs’ Telecommunications Practice Group have represented telecommunications carriers at the FCC, before more than 30 state public utilities commissions, and in federal and state courts. For additional information about this decision and its impact, please contact your Briggs and Morgan attorney or a member of the Telecommunications Group.