Gov. Noem orders state contracts to include new 'conflict of interest' clause

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Gov. Kristi Noem issued an executive order Friday that contracts issued by the state include a clause to guard against conflict of interest if a state lawmaker is about to enter into a contract that could violate the state constitution.

According to the state constitution, lawmakers are prohibited from being either directly or indirectly interested in any contract with the state or county during their term in office and one year after.

Sen. Jessica Castleberry, R-Rapid City, at the Capitol during the 2023 legislative session
Sen. Jessica Castleberry, R-Rapid City, at the Capitol during the 2023 legislative session

"The legislature is responsible for enforcing their own constitutional requirements and conflict of interest rules,” said the second-term Republican governor. “However, state agencies can do some quality control, and that is what this Executive Order accomplishes.”

The executive order allows lawmakers the opportunity to seek independent legal advise on if signing the contract would violate the constitution.

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The executive order comes on the heels of a state investigation, led by the Attorney General's office after Noem requested the investigation, alleging Sen. Jessica Castleberry, R-Rapid City, violated the constitution and a state Supreme Court opinion when she accepted federal COVID-19 funds for her small business.

Castleberry was requested to repay $603,219.76 in COVID-19 stimulus funds by August 7. Castleberry was actively working with the AG's office to fix the situation, according to South Dakota Searchlight.

The office "continues to receive and review documents related to this issue, and we are still awaiting documents from the State Department of Social Services," according to a statement from Marty Jackley, the Attorney General.

The investigation was triggered when fiscal staff at the Department of Social Services recognized the second-term senator's name on a recent grant application for Little Nest Preschool, which Castleberry owns. Dozens of payments had been made to the preschool between 2020 and 2023

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Castleberry wrote in a statement that she had hired legal counsel at the time to give advice on if her daycare center was eligible for the federal funds, which she later decided was.

Castleberry has said she won't seek re-election in 2024.

Senate Pro Tempore Lee Schoenbeck, R-Watertown, said on Aug. 7 during a meeting of the state legislature's Executive Board committee that lawmakers were asking him for clearer guidance on the rules.

“We’ve got, and I suspect you’re going to hear it in the news in the next month, more instances of people that are in transactions (with the state),” Schoenbeck said. “We have to do something for potential candidates and current legislators so that they’re not getting in trouble. The more hands that look at that, the better.”

The executive order also encourages the judicial branch, the legislative branch and other constitutional offices, boards or authorities operating independent of executive oversight, and county governments to review their processes and procedures to make sure contracts are violating the state constitution.

This article originally appeared on Sioux Falls Argus Leader: Gov. Noem orders state contracts to include new 'conflict of interest' clause