Governor’s lawyer briefs state board on ethics legislation

PIERRE — The governor’s legal counsel provided a briefing Wednesday for South Dakota Board of Internal Control members about a new law that redefines conflicts of interest for members and spouses of 23 state boards and commissions.
Attorney A.J. Franken said House Bill 1170, passed during the 2017 legislative session, deals with what he described as “ambiguities” and “overburden” of disclosures already required by state law. He said they resulted from the Legislature’s passage of the original conflicts law, HB 1214, in 2016.
Franken said he has consulted with legal counsel for the affected boards and commissions, and with state Attorney General Marty Jackley’s staff, since Gov. Dennis Daugaard signed HB 1214 into law in March 2016.
After the passage of HB 1170 this year, Franken said, the attorney general’s office is developing a standard disclosure form that the 23 boards and commissions could use.
Franken said he would work with Jackley’s staff to ensure the affected boards and commissions, and their lawyers, have received the form.
“Obviously that would be sometime in June?” Lt. Gov. Matt Michels asked.
“Yes,” Franken replied.
The new definitions take effect July 1.
HB 1170 refines the process for boards and commissions to publicly declare their conflicts regarding contracts and services. Franken said the bill defines a direct benefit as having 5 percent or greater ownership interest, or allows a member to acquire property under contract, or a member receives some other financial benefit.
The new law requires disclosure of direct benefit followed by a state board or commission voting whether the contract is in the public interest. The board member is prohibited from participating in the vote and could resign before the vote occurs, according to Franken.
He said the new law also covers a second tier of what he described as “relationship contracts.”
Those are situations in which the state board or commission member has an interest if the member or spouse is employed by the contracting party, or has an employment-like relationship — such as a board membership — with the contracting party.
These relationship contracts must be disclosed on an annual basis, but the state board or commission isn’t required to conduct a vote, he said.
The 2017 law’s exclusions include situations that involve the public bidding process, or the contract must be disclosed under state-employee conflict law, according to Franken. He said routine maintenance and repair services also are exempt.
“It can be done without having to go through the approval process,” Franken said.

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