SDN Blog

A telecommunications recap of the 2016 SD Legislative Session

Posted on Monday, April 04, 2016

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2016 SD Legislature Recap

Going into the 2016 South Dakota Legislative session, there looked to be more possible legislation affecting small communications providers than there had been in several years.

With the industry transitioning to IP-based data networks, many of the legislative and regulatory decisions are now made at the federal level. However, 2016 proved to be a year when there were still substantive communications and utility issues on the state level.

REMOVING AUTHORITY OVER IP SERVICES

What appeared to be the biggest issue for the South Dakota Telecommunications Association at the start of the session was a proposal from AT&T to remove regulatory authority from the state Public Utilities Commission for IP services. Similar bills with AT&T’s backing had been passed in more than 30 other states in recent years.

SDTA had significant concerns about removing regulatory authority from the PUC, based on the fact that the Federal Communications Commission has not clearly defined the role for state commissions following the release of its Net Neutrality order just more than a year ago.

Following several meetings with SDTA staff, AT&T officials decided there were opportunities to achieve their purposes in South Dakota without pushing the bill forward and asked the bill to be withdrawn prior to its initial committee hearing.

UTILITY RAILROAD CROSSING NEGOTIATIONS

Railroad crossings and right of way access has been an issue that has dogged SDTA member companies and other utilities for more than a decade. In 2014, the South Dakota Legislature passed, and Gov. Daugaard signed, a bill that instituted a one-time fee of $750 for a crossing permit, laid out various timelines for permit approval and instituted an appeal process to the state PUC.

After that bill went into effect in July, 2014, reports began to circulate of fees being charged to contractors for right of way entry access. This led South Dakota’s utilities to attempt to negotiate master agreements with the Burlington Northern and Rapid City, Pierre and Eastern Railroads in the summer of 2015.

After several months of negotiations, which eventually came to a stalemate, Sen. Corey Brown (R-Gettysburg) introduced SB 127. It aimed to resolve several provisions from the 2014 legislation:

  • That no fee could be applied against a contractor or agent of utility tasked with doing work in the railroad right of way.
  • It clarified insurance provisions
  • It more clearly defined timelines of permit approval and appeals.

The bill eventually passed both the Senate and House and Governor Daugaard signed it into law.

CENTURYLINK BROADBAND PROJECTS

A bill from CenturyLink, which eventually became SB 100, took several twists and turns through the 2016 Session. CenturyLink plans to build additional broadband facilities into parts of South Dakota that are currently defined as unserved and underserved using revenue from the Connect America Fund (CAF) II program.

In order to make the project financially viable, CenturyLink sought to add broadband projects to the Building Dakota program. This incentive program, which is housed within the Governor’s Office of Economic Development (GOED), allows entities that invest in major construction projects to apply to the state Board of Economic Development (BED) for rebates on sales tax and contractors excise tax. CenturyLink estimated that passage of SB 100 could bring an additional $327,000 annually for the next six years, which could be used to upgrade infrastructure in adjacent areas.

The bill passed the Senate 35-0, but received opposition in the House State Affairs committee from GOED and the state Bureau of Information and Telecommunications. The opposition arose based on concerns that the bill’s language would not allow the BED to deny any applications for broadband projects. The bill was later amended on the House floor in an attempt to deal with those concerns. The bill passed the House 61-5, but Governor Daugaard eventually vetoed it.

The Governor’s concerns lay in the belief that the amended bill did not address GOED’s concerns about the approval process and that the incentive program should be limited. In CenturyLink’s case, the Governor believed that since the company had already agreed to take CAF II funds, they were committed to the project despite any state tax rebates that might be applied to the project.

The Senate voted to override the veto, but the House fell four votes short of the override.