The Arkansas Court of Appeals recently issued a ruling in the case of Clark County, Arkansas, ex rel. Troy Tucker, in his official capacity as County Judge of Clark County, Arkansas, individually and on behalf of a class of similarly situated parties, v. AT&T Corp. and Southwestern Bell d/b/a AT&T Arkansas. The court's decision, delivered on May 20, 2026, addresses the legality of fees charged by AT&T to Clark County and other Arkansas counties for telephone services. This ruling has significant implications for local governments and their budgets.

The case arose from a class-action lawsuit filed by Clark County against AT&T, alleging that the company unlawfully charged the county three specific fees: a 911 fee, a Special Municipal Charge, and an Arkansas Universal Service Fee. These charges were imposed on counties for their use of AT&T's telephone services. The circuit court had initially ruled in favor of AT&T on all claims, prompting Clark County to appeal the decision.

Background

Clark County, located in Arkansas, provides various services to its residents, including emergency response services that rely on telephone communications. AT&T, a major telecommunications provider, supplies telephone services to the county. As part of these services, AT&T assesses several fees, including the 911 fee, which is mandated by state law to support emergency communication services, and the Special Municipal Charge, which recovers franchise fees imposed by municipalities. The Arkansas Universal Service Fee is another charge intended to support telecommunications services in rural areas.

In 2018, Clark County filed a class-action lawsuit, claiming that these fees were unlawfully charged to the county and other Arkansas counties. The lawsuit sought a declaratory judgment stating that the counties were not subject to these fees and requested refunds for any fees paid. The circuit court certified a class of similarly situated parties and conducted a bench trial in December 2022. Following the trial, the court ruled in favor of AT&T, leading to the appeal.

The Ruling

The Arkansas Court of Appeals reviewed the circuit court's findings and ultimately affirmed part of the lower court's ruling while reversing and remanding part of it. The court found that the circuit court had erred in its interpretation of the Arkansas Public Safety Communications Act (APSCA) regarding the imposition of the 911 fee on political subdivisions like Clark County. The court stated, "The repeated use of 'political subdivision' throughout the Act—paired with the absence from the 'service user' definition—confirms that political subdivisions such as counties and municipalities are not 'service users' within the meaning of the statute."

This ruling means that Clark County is not liable for the 911 fees that AT&T had charged. However, the court upheld the legality of the Arkansas Universal Service Fee and the Special Municipal Charge, stating that these fees are lawful and necessary for AT&T to recover costs associated with providing services. The court emphasized that these charges are not improper diversions of public funds but are instead legitimate costs of doing business that AT&T is permitted to recover from its customers.

Impact

The court's ruling has significant implications for local governments in Arkansas. By reversing the lower court's decision regarding the 911 fee, the ruling provides clarity on the financial obligations of counties regarding emergency service charges. This decision could potentially lead to refunds for counties that have previously paid these fees, impacting their budgets and financial planning.

Moreover, the affirmation of the Arkansas Universal Service Fee and the Special Municipal Charge means that local governments must continue to account for these charges in their budgets. The ruling reinforces the legal framework that allows telecommunications providers to recover costs associated with franchise fees and universal service obligations, which could influence future negotiations between local governments and service providers.

What's Next

Clark County may seek to appeal the court's decision regarding the Arkansas Universal Service Fee and the Special Municipal Charge, but the court's ruling provides a strong legal basis for AT&T's continued collection of these fees. There are no related cases pending at this time, but the implications of this ruling may prompt further discussions and potential legislative actions regarding telecommunications fees and local government funding.