South Dakota Supreme Court hears arguments on lawmaker conflict of interest

PIERRE — The South Dakota Supreme Court heard lawyers from the Governor's Office, the Attorney General's Office and the Legislature make a case as to why the five justices should issue an opinion more clearly defining what a direct and indirect conflict of interest are within the state's Constitution.

The arguments, which lasted more than an hour Monday morning, came a day before lawmakers gathered for the start of the 99th Legislative session. Two seats, one in the House and one in the Senate, both representing the Rapid City area, remain vacant after resignations earlier in the summer and the fall.

Gov. Kristi Noem has said she will not appoint people to fill the vacant seats until the Supreme Court issues its opinion.

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Attorneys took questions from the five justices related to whether establishing a new standard in court law would be enough to accurately define what is a direct or indirect conflict of interest when a lawmaker votes on bills for funding state government and its operations. While the Attorney General's Office argued there was already a court standard through a legal opinion from then Attorney General Bill Janklow, the Governor's attorney said the nine questions her office posed to the justices would act as guiding posts in the justices' eventual opinion.

However, the attorney for the Legislature pointed out most states don't have its Supreme Court issue opinions on conflict of interest; instead it's a policy decision state legislatures take up.

"The bottom line is most states do that through their statutes, and respectfully, I think that's what ought to be occurring in South Dakota," said Ron Parsons, the former U.S. Attorney for the District of South Dakota, who's representing the Legislature.

The arguments followed up on legal briefs sent in December to the Supreme Court, outlining the need for a better definition of "indirect" within Article III, Section 12 of the state's Constitution. The passage in need of clarifying states:

"Any member of the Legislature during the term for which he shall have been elected, or within one year thereafter, 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.”

How did we get here?

Former Sen. Jessica Castleberry, R-Rapid City, resigned in August, following an investigation by the Attorney General's Office about whether her daycare businesses had illegally received federal COVID-19 stimulus funds, despite a Supreme Court opinion barring lawmakers from taking said funds.

More: Rapid City senator resigns after she violated constitution for accepting COVID-19 funds

While Castleberry has continued to repay the funds \she received, according to South Dakota Searchlight, the incident encouraged Noem to call on the Supreme Court to issue further guidance about what an "indirect benefit" means.

Attorney General: There's already a legal test

Attorney General Marty Jackley argued there's already legal precedence for determining what a legislator conflict of interest is and the state and the courts had been using the legal test since Janklow had been in the Attorney's General Office.

That test relies on whether either a direct or indirect interest would have the ability to impact the thinking of the lawmaker, and therefore, their vote.

And while Jackley agreed the nine questions posed by the Governor's Office were good guiding posts, the test could apply to five of those questions while the others must rely on an analysis of the facts on a case-by-case basis.

Katie Hruska, the attorney for the Governor's Office, told the justices the questions submitted by the Governor were only examples of the most common questions they get asked from people considering running for office who are worried about preemptively violating the conflict of interest clause.

When questioned by Justice Mark Salter about the process the Supreme Court is taking by issuing an advisory opinion, Jackley said it was the right process and that a number of cases "begged" for the test.

"It would aid the auditor, it would be the Attorney General enforcement and law enforcement and aid current legislators and future legislators to know that that is in fact the standard by the highest court," he said.

But with or without a guiding opinion from the state Supreme Court, Jackley's Office would continue to use the test created by Janklow.

Legislature: Conflict of interest is a policy decision

Parsons hinged his argument on the idea that South Dakota's founders, when writing the state's Constitution, said what they said and meant what they meant. That the idea of a indirect or direct benefit within a contract is determined by the source of funding and how the lawmakers voted on it.

In his arguments, lawmakers don't violate the conflict of interest clause when voting on the general appropriations bill that gives blanket spending authority to state agencies that can then enter into contracts with businesses that lawmakers may be involved in. However, that changes if lawmakers vote on a special appropriation for specific contract.

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Salter questioned Parsons about whether two cases involving lawmaker conflict of interest were in contraction to a third case, based on how the Legislature interpreted the text of the general appropriations bill.

"Your honor, I think Asphalt Surfacing and Pitts are in direct contradiction to Norbeck 2," Parsons said.

However, the court's 2020 advisory opinion on lawmakers receiving COVID-19 stimulus funds — what set off the arguments three years later — was an outlier situation that proved the conflict of interest clause could be violated with a special appropriation.

"There you have what is essentially a line item amendment. The one page law that distributes these funds, married to this joint resolution that gives the very specific purposes that every legislator knows that these funds are being used for," Parsons said.

What happens now?

The justices will issue an opinion within the coming days or weeks regarding the conflict of interest clause. It's unknown whether that opinion will be issued as early as Tuesday, when the legislative session is scheduled to begin, or whether lawmakers and the Governor will be left waiting for guidance.

This article originally appeared on Sioux Falls Argus Leader: Lawmaker conflict of interest in front of South Dakota Supreme Court