He did so despite the testimony of an insurance agent as well as the state's governor, M. Michael Rounds, also an agent and owner of Fischer, Rounds & Associates Inc., during a trial in late September.

Gov. Rounds testified that, "The countersignature law provides a safeguard to South Dakotans and an opportunity for South Dakotans to have personal contact with a local insurance agent," according to the court record.

But Judge Kornmann found that "technological advances have molded today's marketplace such that business is increasingly conducted by telephone, facsimile, electronic mail and the Internet."

He said in his decision that technological advances "have made communications more effective in all industries, including the insurance industry," adding that, "Realistically, no reasonable consumer makes a trip to his insurance agent's office each time there is a question of concern about an insurance policy, even if the agent is just across town.

"Rather, most questions or concerns that South Dakota's businesses or individuals have about their insurance policies would be handled over the telephone or by similarly convenient means."

Judge Kornmann ruled that, "The notion that a nonresident agent is less capable of providing assistance on a policy outside of that agent's state of residence does not constitute a sufficient reason for the difference in treatment and the discrimination practiced."

Furthermore, he said, "The countersignature laws and the discrimination practiced do not bear a substantial relationship to any legitimate objectives of South Dakota."

There are less restrictive means available to advance the state's goals, he said. "The Division of Licensing could alter licensing requirements or even require that nonresidents pass the same examination that residents take, one which covers South Dakota law.

"Even if licensing requirements were heightened to the point of requiring nonresident agents to pass an examination, it would be much less burdensome on each and every insurance transaction where nonresident agents are involved," Judge Kornmann said.

The state can still appeal the case, and Nevada's countersignature law remains on the books pending disposition of the state's appeal to the 9th Circuit Court of Appeals, based in San Francisco, Scott Sinder, counsel to the Council of Insurance Agents and Brokers, said late yesterday.

CIAB predicted South Dakota will likely appeal the decision.

The organization said in a statement that it is optimistic that, "soon, no out-of-state insurance broker will again be faced with the burden of have to obtain the signature of a resident agent - and be required to pay a fee for that service.

"These countersignature laws are stubborn vestiges of protectionism that have no place in the 21st Century," said CIAB President Ken A. Crerar. He added that, "The Council is delighted to have helped bring down these egregious barriers to free commerce."

James Moore, a lawyer at Woods, Fuller in Pierre, S.D., who argued the case for the state, said that he is "disappointed with the decision," but that state officials will ultimately have to determine whether it should be appealed.

A spokesman for Gov. Michael Rounds, an insurance agent who testified in the case in support of the law, referred all calls to the lawyers and to the state Attorney General's office.

Wes Bissett, senior vice president, government affairs and state relations for the Independent Insurance Agents and Brokers of America, said in reaction to the verdict that, "We have had an official position in opposition to countersignature laws for more than 30 years."

Mr. Bissett added that, "The IIABA is not involved in this case. We share the Council's commitment to repeal of countersignature laws and we hope this case is not appealed by the state.

"We have even supported such a provision in SMART (the State Modernization and Regulatory Transparency Act] now being drafted in the House Financial Services Committee. We are very committed to having these eliminated in every jurisdiction. "

Puerto Rico's countersignature law has also been ruled unconstitutional, but is awaiting appeal, Mr. Sinder said.

Disposition of a similar case is pending in the Virgin Islands, he added.