Noem, Jackley weigh in on conflict-of-interest decision

Supreme Court asked to outline standards for lawmaker behavior

By: - December 15, 2023 5:02 pm
Gov. Kristi Noem speaks Sept. 8, 2023, during a rally at The Monument in Rapid City featuring former President Donald Trump. (Seth Tupper/South Dakota Searchlight)

Gov. Kristi Noem speaks Sept. 8, 2023, during a rally at The Monument in Rapid City featuring former President Donald Trump. (Seth Tupper/South Dakota Searchlight)

Gov. Kristi Noem wants the state Supreme Court to make the call on nine conflict-of-interest questions before she fills two vacant West River legislative seats.

That was among the major takeaways from court documents filed on her behalf by General Counsel Katie Hruska on Friday, the deadline for briefs in a request for an advisory opinion that could clarify if, when and how lawmakers can benefit from state contracts.

Among the questions: Can a citizen be a lawmaker and also an employee of a state, county, city or school district? Can a lawmaker be a foster parent and get state reimbursement for the costs? Can a business owned by a lawmaker collect Medicaid payments?

Attorney General Marty Jackley also submitted a brief on Friday in the advisory opinion case, sought by Noem, Jackley and state lawmakers. The Legislature submitted its briefs earlier in the week.

COVID funds spark inquiry

The issue bubbled over earlier this year when Noem called out now-resigned Sen. Jessica Castleberry, R-Rapid City, for her receipt of more than $500,000 in COVID-related financial assistance for her preschool. Castleberry has since entered into an agreement with the state to repay the money.

Noem used a 2020 advisory opinion from the state Supreme Court on lawmakers’ eligibility for program funds to cry foul over the Castleberry situation. The incident spurred a host of questions on what constitutes conflicts of interest in a state whose small population often sees its part-time legislators or their family members working on government funded projects or, in some cases, serving as elected officials or employees in counties that receive state assistance.

Legislator resigns and agrees to repay nearly $500,000, plus interest, in pandemic relief funds

Conflict of interest questions have bubbled since Castleberry’s resignation, and “inquiries hit a fervor of uncertainty,” Noem’s brief says, which is why she requested an advisory opinion from the state’s high court.

Noem has yet to fill the seats relinquished by Castleberry and another West River lawmaker, Sen. Jess Olson, R-Rapid City, who resigned for medical reasons earlier this fall. The brief says that’s because of a “lack of clear guidance” on what constitutes a conflict of interest – guidance that will be instructive in her choices for replacement lawmakers.

The questions are not hypothetical, the brief says.

“Each of the nine questions posed in the Request involves an inquiry either made by Legislators or state employees to the Governor’s Office,” it reads.

The Noem brief did not take a position on the questions, but rather encouraged the justices to address each to clarify the meaning of the state constitution’s conflict clause.

Lawmakers: Appropriations votes alone don’t create conflicts

Lawmakers weighed in on the issue earlier this week through a brief filed by Ron Parsons, a former U.S. attorney from Sioux Falls.

Parsons argued in his brief that merely voting on appropriations ought not disbar lawmakers from eventually collecting state dollars as private citizens might.

There’s considerable legal distance between the specific conflict-of-interest verbiage in the state constitution and general appropriations votes taken by lawmakers, Parsons asserts.

State auditor says legislative factions are spreading conflict-of-interest allegations

The constitution says that lawmakers cannot “be interested, directly or indirectly, in any contract with the state or any county thereof, authorized by any law passed during the term for which he shall have been elected.”

The general appropriations bill, Parsons argued, is not a law that authorizes contracts. Instead, it sets aside funds that may be awarded in contracts at a later date. 

“The Contracts Clause clearly does not flatly prohibit a legislator from being interested in any contract with the state,” wrote Parsons.

That clause would clearly apply in special appropriations votes, the legislature’s brief says, which target money to specific programs for specific purposes.

Parsons encouraged the court to engage in a “textual analysis” of the constitutional language to draw clear lines around what does and does not constitute a vote in violation of the contracts clause.

Jackley: broad prohibitions for lawmakers unrealistic

Like Parsons, Attorney General Jackley’s brief homed in on the practical implications of a strict interpretation of the contracts clause, though it doesn’t always reach the same conclusions. 

Much of the brief serves as an attempt to help the court answer Noem’s questions.

Solicitor General Paul Swedlund, who wrote the brief, argued that the meaning of the word “interest” in “conflict of interest” could be interpreted quite broadly.

“A legislator certainly benefits from an appropriation to fund a contract to reconstruct a roadway near her home by providing her with an improved road on which she can drive, which arguably constitutes an ‘interest’ in the project in a literal sense,” wrote Swedlund.

Legislator’s conflict of interest puts meaning of ‘indirect’ under microscope

The court has already determined that a company owned by a lawmaker cannot ink a direct contract with the state, in a case referenced  by all three briefs submitted this week.

The standards for what constitutes indirect benefits to a lawmaker are less clear, but Swedlund’s brief points out that court decisions in other conflict cases have turned on benefits far removed from business ownership. 

One state Supreme Court case from 2005 saw a local city council’s decision to deny a liquor license overturned because a councilwoman worked as a server and collected tips in a competing restaurant with its own liquor license. Another from 2001 saw the court strike a lawmaker and South Dakota State University employee’s contract because her pay was an “indirect” benefit of the appropriations on which she voted. That case came down 3-2.

As to the issue of whether an appropriations vote alone can create a conflict, Swedlund’s brief says that South Dakota would likely say “yes.”

Courts in states with similar constitutional clauses, including Texas and Oklahoma, have interpreted the verbiage to mean that “an appropriation serves to ‘authorize’ a contract,” Swedlund wrote. 

The brief suggests a test to determine conflict: If the state could have entered into a contract without an appropriations vote by a hypothetically offending lawmaker, such as in contracts paid for with federal dollars, no conflict exists.

If the state can’t award funds without a vote from lawmakers, he wrote, there’s a conflict.

The timeline for the release of an advisory opinion is unclear. Unified Judicial System spokesperson Alisa Bousa said Friday there was no information to share on when a ruling may be expected.




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John Hult
John Hult

John is the senior reporter for South Dakota Searchlight. He has more than 15 years experience covering criminal justice, the environment and public affairs in South Dakota, including more than a decade at the Sioux Falls Argus Leader.