"These countersignature laws are stubborn vestiges of protectionism that have no place in the 21st century," said Ken Crerar, president of CIAB. "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 he is "disappointed with the decision," but that state officials will ultimately have to determine whether it should be appealed.

A representative for Gov. Michael Rounds–an insurance agent who testified in the case in support of the law–referred all calls to the state's lawyers and to the state attorney general's office.

Wes Bissett, senior vice president of government affairs and state relations for the Independent Insurance Agents and Brokers of America, said in reaction to the decision that "we have had an official position in opposition to countersignature laws for more than 30 years." He noted that IIABA "is not involved in this case," but added that "we share the Council's commitment to repeal countersignature laws and we hope this case is not appealed by the state."

"We have even supported such a provision in SMART," he said, referring to the State Modernization and Regulatory Transparency Act now being drafted in the House Financial Services Committee, which would set federal standards for state regulation. "We are very committed to having these [countersignature laws] eliminated in every jurisdiction."

U.S. District Court Judge Charles B. Kornmann for the Central Division of South Dakota in Pierre issued the injunction barring enforcement of the state's countersignature law after finding it to be discriminatory and serving no legitimate state goals.

Gov. Rounds–an agent and owner of Fischer, Rounds & Associates–testified during a trial in late September 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."

However, 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 such advances "have made communications more effective in all industries, including the insurance industry."

"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," he added. "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," he ruled. "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."

Nevada's countersignature law remains on the books pending disposition of any appeal to the 9th Circuit Court of Appeals, based in San Francisco, noted Scott Sinder, a CIAB counsel. 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.

"These countersignature laws are stubborn vestiges of protectionism that have no place in the 21st century."

Ken Crerar, CIAB President