The amendment raises the threshold for what counts as a "major rule" requiring legislative oversight from $1,000,000 to $3,000,000 in costs, and shortens the evaluation period from five years to two years after a rule's adoption, which NARROWS the bill's oversight scope by making fewer rules subject to legislative review.
26.586.11 26.586.12 101st Legislative Session 133 2026 South Dakota Legislature Senate Bill 133 SENATE STATE AFFAIRS ENGROSSED Introduced by: Senator Peterson (Sue) Underscores indicate new language. Overstrikes indicate deleted language. An Act to provide additional legislative oversight of rulemaking. 1 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF SOUTH DAKOTA: 2 Section 1. That § 1-26-1 be AMENDED: 3 1-26-1. Terms used in this chapter mean: 4 (1) "Agency," each association, authority, board, commission, committee, council, 5 department, division, office, officer, task force, or other agent of the state vested 6 with the authority to exercise any portion of the state's sovereignty. The term 7 includes a home-rule municipality that has adopted its own administrative appeals 8 process, whose final decisions, rulings, or actions rendered by that process are 9 subject to judicial review pursuant to this chapter. The term does not include the 10 Legislature, the Unified Judicial System, any unit of local government, or any 11 agency under the jurisdiction of these exempt departments and units unless the 12 department, unit, or agency is specifically made subject to this chapter by statute; 13 (2) "Contested case," a proceeding, including rate-making and licensing, in which the 14 legal rights, duties, or privileges of a party are required by law to be determined 15 by an agency after an opportunity for hearing but the term does not include the 16 proceedings relating to rule making other than rate-making, proceedings related 17 to inmate disciplinary matters as defined in § 1-15-20, or student academic 18 proceedings under the jurisdiction of the Board of Regents; 19 (3) "License," the whole or part of any agency permit, certificate, approval, 20 registration, charter, or similar form of permission required by law; 21 (4) "Licensing," the agency process respecting the grant, denial, renewal, revocation, 22 suspension, annulment, withdrawal, or amendment of a license; 23 (5) "Major rule," any proposed rule that is to have or is likely to have more than $1,000,000 24 $3,000,000 in 24 implementation and compliance costs incurred by or passed along 25 to businesses, 25 26.586.11 individuals, other nongovernmental entities, and units of local 26 26.586.12 2 133 Underscores indicate new language. Overstrikes indicate deleted language. individuals, other nongovernmental entities, and units of local government as a 1 result of the proposed rule, over the five-year two-year period following adoption of 1 the rule; 2 (6) "Party," each person or agency named or admitted as a party, or properly seeking 3 and entitled as of right to be admitted as a party; 4 (6)(7) "Person," all political subdivisions and agencies of the state; 5 (7)(8) "Rule," each agency statement of general applicability that implements, interprets, 6 or prescribes law, policy, procedure, or practice requirements of any agency. The 7 term includes the amendment or repeal of a prior rule, but does not include: 8 (a) Statements concerning only the internal management of an agency; 9 (b) Statements not affecting private rights or procedure available to the public; 10 (c) Declaratory rules issued pursuant to § 1-26-15; 11 (d) Official opinions issued by the attorney general pursuant to § 1-11-1; 12 (e) Executive orders issued by the Governor; 13 (f) Student matters under the jurisdiction of the Board of Regents; 14 (g) Actions of the Department of Transportation pursuant to § 1-44-28; 15 (h) Inmate disciplinary matters as defined in § 1-15-20; 16 (i) Internal control procedures adopted by the Gaming Commission pursuant 17 to § 42-7B-25.1; 18 (j) Policies governing specific state fair premiums, awards, entry, and exhibit 19 requirements adopted by the Department of Agriculture and Natural 20 Resources pursuant to § 1-21-10; and 21 (k) Lending procedures and programs of the South Dakota Housing 22 Development Authority; and 23 (8)(9) "Substantial evidence," such relevant and competent evidence as a reasonable 24 mind might accept as being sufficiently adequate to support a conclusion. 25 Section 2. That § 1-26-1.2 be AMENDED: 26 1-26-1.2. The Interim Rules Review Committee shall choose a chair and a vice 27 chair from its members and prescribe its rules of procedure. Meetings of the committee 28 are at the call of the chair or a majority of the committee. 29 On or before the first Monday following the last day of the legislative session, the 30 committee and the agencies shall determine a schedule of dates for meetings to be held 31 during the following twelve months. However, the committee is not required to hold a 32 meeting if no submission has been made to committee members in accordance with 33 26.586.11 26.586.12 3 133 Underscores indicate new language. Overstrikes indicate deleted language. subdivision 1-26-4(8). All meetings are open to the public and any interested person may 1 be heard and present evidence. 2 The committee shall review all proposed agency rules and make recommendations 3 to the agencies regarding rules and legislation authorizing rules, and to the Legislature 4 regarding administrative law. In its review of agency rules, the committee shall consider 5 the regulatory impact analysis provided pursuant to section 4 5 of this Act and the resulting 6 review of code counsel and Legislative Research Council personnel. 7 Members of the committee are compensated for their attendance at meetings and 8 for time spent in the conduct of committee business, at rates established by the Executive 9 Board of the Legislative Research Council. Code counsel, and one or more personnel from 10 the Legislative Research Council with the consent of the council's director, shall staff the 11 committee. 12 Section 3. That § 1-26-4 be AMENDED: 13 1-26-4. The following notice, service, and public hearing procedure must be used 14 to adopt, amend, or repeal a permanent rule: 15 (1) An agency shall serve a copy of a proposed rule, the regulatory impact analysis 16 required by section 4 5 of this Act, and any publication described in § 1-26-6.6, upon 17 the departmental secretary, bureau commissioner, public utilities commissioner, 18 or constitutional officer to which it is attached for the secretary's, commissioner's, 19 or officer's written approval to proceed; 20 (2) After receiving the written approval of the secretary, commissioner, or officer to 21 proceed, and at least twenty days before the public hearing, the agency shall serve 22 code: 23 (a) Serve code counsel with a copy of: the proposed rule; any publication 24 described in § 1-26-6.6; the fiscal note required by § 1-26-4.2; the impact 25 statement on small business required by § 1-26-2.1; any housing cost 26 impact statement required by § 1-26-2.3; and the notice of hearing 27 required by § 1-26-4.1. The copy of these documents must be served at 28 least twenty days before the public hearing to adopt the proposed rule; and 29 the regulatory impact analysis required by section 4 5 of this Act. Any 30 publication described in § 1-26-6.6 must be returned to the agency upon 31 completion of the code counsel's review and retained by the agency. Twenty 32 days before the public hearing, the agency shall serve the; and 33 26.586.11 26.586.12 4 133 Underscores indicate new language. Overstrikes indicate deleted language. (b) Serve the commissioner of the Bureau of Finance and Management with a 1 copy of: the proposed rule; the fiscal note required by § 1-26-4.2; the 2 impact statement on small business required by § 1-26-2.1; any housing 3 cost impact statement required by § 1-26-2.3; and the notice of hearing 4 required by § 1-26-4.1, and the regulatory impact analysis required by 5 section 4 5 of this Act; 6 (3) At least twenty days before the public hearing, the agency shall: 7 (a) Publish the notice of hearing in the manner prescribed by § 1-26-4.1; and 8 (b) Publish, on the agency's website, a single website designated by the Governor and 9 maintained by the executive department, a copy of the proposed rule, any 10 housing cost impact statement 9 required by § 1-26-2.3; 1-26-2.3, the notice of hearing 11 required by § 1-26-4.1, the fiscal note required by § 1-26-4.2, and 10 (c) Publish, on a state website designated for proposed rule filings, the 11 12 regulatory impact analysis required by section 4 5 of this Act; 12 13 (4) After reviewing the proposed rule pursuant to § 1-26-6.5, code counsel shall advise 13 14 the agency of any recommended corrections to the proposed rule and whether the 14 15 proposed rule is a major rule. If the agency does not concur with any 15 16 recommendation of code counsel, the agency may appeal the recommended 16 17 correction to the Interim Rules Review Committee for appropriate action; 17 18 (5) The agency shall afford all interested persons reasonable opportunity to submit 18 19 amendments, data, opinions, or arguments at a public hearing held to adopt the 19 20 rule. The hearing may be continued from time to time. The agency shall keep 20 21 minutes of the hearing. A majority of the members of any board or commission 21 22 authorized to pass rules must be present during the course of the public hearing; 22 23 (6) If the authority promulgating the rule is a secretary, commissioner, or officer, the 23 24 agency shall accept written comments regarding the proposed rule for a period of 24 25 ten days after the public hearing. If the authority promulgating the rule is a board, 25 26 commission, committee, or task force, each interested person shall submit written 26 27 comments at least seventy-two hours before the public hearing. The seventy-two 27 28 hours does not include the day of the public hearing. The written comments may 28 29 be submitted by mail or email. The record of written comments may be closed at 29 30 the conclusion of the public hearing. The hearing may be continued for the purpose 30 31 of taking additional comments; 31 32 (7) After the written comment period, the agency shall consider all amendments, data, 32 33 opinions, or arguments regarding the proposed rule. A proposed rule may be 33 34 26.586.12 5 133 Underscores indicate new language. Overstrikes indicate deleted language. modified or amended at this time to include or exclude matters that were described 34 1 in the notice of hearing; and 35 26.586.11 5 133 Underscores indicate new language. Overstrikes indicate deleted language. 2 (8) The agency shall serve serve, at least seven days before the agency appears before the 3 Interim Rules Review Committee to present the rules: 4 (a) Serve the minutes of the hearing, a complete record of written 1 comments, 5 the impact statement on small business, any housing cost impact 2 6 statement, the fiscal note, the information required by § 1-26-4.8, the 7 regulatory 3 impact analysis required by section 4 5 of this Act, and a corrected 8 copy of the rule 4 on the members of the Interim Rules Review Committee 9 and on code counsel at 5 least seven days before the agency appears before 10 the committee to present the 6 rules. 7 rules; and 11 (b) Publish, to the website referenced in subsection (3)(b) of this section, code 12 counsel's advisement referenced in subdivision (4), the agency financial 13 resource information required by § 1-26-4.8, the corrected copy of the rule 14 referenced in subsection (8)(a), and any update to the regulatory impact 15 analysis required by section 5 of this Act. 16 The time periods specified in this section may be extended by the agency. The 8 17 requirement to serve the committee and code counsel within the time limit specified in 9 18 subdivision (8) may be waived by the committee chair, if the agency presents sufficient 10 19 reasons to the committee chair that the agency is unable to comply with the time limit. 11 20 The waiver may not be granted solely for the convenience of the agency. 12 21 Section 4. That § 1-26-4.2 be AMENDED: 22 1-26-4.2. An agency shall, when submitting any proposed rule, except an 23 emergency rule, include a NEW SECTION be added fiscal note. The fiscal note must provide what effect, if any, the 24 proposed rule will have on the revenues, expenditures, or fiscal liability of the state or its 25 agencies and subdivisions. The fiscal note must include an explanation of how such effect, 26 if any, was computed. 27 The Bureau of Finance and Management shall prepare its own fiscal note and serve 28 it on the agency, code counsel, and the co-chairs of the Joint Appropriations Committee 29 prior to chapter 1-26: 13 For all the hearing. If a proposed permanent rules, rule has a negative fiscal impact on a political 30 subdivision, the agency seeking must direct the bureau to promulgate the rule shall, 14 prior to proceeding under § 1-26-4, prepare transmit a regulatory impact analysis that details 15 whether the proposed rule is a major rule. 16 The regulatory impact analysis must contain: 17 (1) A statement of whether the proposed permanent rule is a major rule; 18 (2) A statement detailing the need for the rule; 19 (3) The legal basis for the rule; 20 (4) An examination of alternative options; 21 (5) A cost-benefit evaluation that contains the proposed rule's: 22 (a) Estimated primary or direct benefits; 23 (b) Estimated cost savings or financial benefits to businesses, individuals, other 24 nongovernmental entities, and units of local government; 25 (c) Estimated compliance costs for businesses, individuals, other 26 nongovernmental entities, and units of local government; 27 (d) Estimated secondary or indirect costs for businesses, individuals, other 28 nongovernmental entities, and units of local government; and 29 (e) Estimated opportunity cost. The analysis must identify the opportunity cost 30 of compliance as a result copy of the removal bureau's fiscal 31 note to the South Dakota Municipal League, the Associated School Boards of private capital from South 32 Dakota, and the market; 31 (6) Sources consulted; and 32 (7) Key assumptions and sources South Dakota Association of uncertainty. County Commissioners, as applicable, prior 33 The chief officer of to the agency shall sign the analysis upon verifying its contents. hearing. 34 26.586.11 26.586.12 6 133 Underscores indicate new language. Overstrikes indicate deleted language. Section 5. That a NEW SECTION be added to chapter 1-26: 1 For all proposed permanent rules, the agency seeking to promulgate the rule shall, 2 prior to proceeding under § 1-26-4, prepare a regulatory impact analysis. 3 The regulatory impact analysis must contain: 4 (1) A statement of whether the proposed permanent rule is a major rule; 5 (2) A statement detailing the need for the rule; 6 (3) The legal basis for the rule; 7 (4) An examination of alternative options; 8 (5) A cost-benefit evaluation that contains the proposed rule's: 9 (a) Estimated primary or direct benefits; 10 (b) Estimated cost savings or financial benefits to businesses, individuals, other 11 nongovernmental entities, and units of local government; 12 (c) Estimated compliance costs for businesses, individuals, other 13 nongovernmental entities, and units of local government; 14 (d) Estimated secondary or indirect costs for businesses, individuals, other 15 nongovernmental entities, and units of local government; 16 (e) Estimated opportunity cost. The analysis must identify the opportunity cost 17 of compliance as a result of the removal of private capital from the market; 18 and 19 (f) Impact on small business, with an identification of the type and the 20 estimation of the number of small businesses subject to the proposed rule, 21 and projected reporting and recordkeeping required for compliance with the 22 proposed rule; 23 (6) Sources consulted; and 24 (7) Key assumptions and sources of uncertainty. 25 The chief officer of the agency shall sign the analysis upon verifying its contents. 26 For purposes of this section, "small business" means a nongovernmental entity 27 that employs twenty-five or fewer full-time employees. 28 Section 6. That a NEW SECTION be added to chapter 1-26: 29 For a major rule, the Interim Rules Review Committee shall: 2 may: 30 (1) Revert the rule to an earlier step in the rule adoption procedure to consider permit 31 consideration of an 3 amendment to the proposed rule that would no longer make it 32 a major rule; 33 26.586.12 7 133 Underscores indicate new language. Overstrikes indicate deleted language. (2) Determine there is sufficient legislative authority for the agency to implement the 1 proposed rule and 4 (2) declare the rulemaking process complete; or 2 (3) Recommend that, should that the rule be brought as future legislation, and that the Legislature 5 3 vote to enact or not to enact the legislation. 6 4 If the agency proposing the major rule seeks to amend the rule for the Interim 7 5 Rules Review Committee's reconsideration, the agency must submit an updated regulatory 8 6 impact analysis to the commissioner of the Bureau of Finance and Management, code 9 7 counsel, and the Interim Rules Review Committee, at least twenty days prior to the 10 8 committee hearing at which the rule is to be reconsidered. 11 9 Any proposed rule addressed pursuant to this section must be reported to the 12 10 Executive Board of the Legislative Research Council annually prior to the regular session. 13 11 Any legislation seeking to enact the substance of any proposed rule addressed 14 12 pursuant to this section, whether in statute or as directed via the permanent rulemaking 15 13 process, must be denoted as having substance that was previously brought before the 16 14 Interim Rules Review Committee as a major rule, and whether or not the Interim Rules 17 15 Review Committee recommended enactment of that substance. 18 Section 6. That § 1-26-5 be AMENDED: 19 1-26-5. Prior to the adoption or amendment of an emergency rule, an agency shall 20 publish the text of the emergency rule on its website, publish a notice of intent to adopt 21 an emergency rule in the manner prescribed in § 1-26-4.1, and serve on the person 22 individual specified by subdivision 1-26-4(1), each member of the Interim Rules Review 23 Committee, and code counsel: 24 (1) A copy of the proposed rule, bearing a special number to distinguish it from a 25 permanent rule; and 26 (2) A statement, with the reasons, that the emergency procedure is necessary for one 27 or more of the following circumstances: 28 (a) Because of imminent peril to the public health, safety, or welfare; 29 (b) To prevent substantial unforeseen financial loss to state government; or 30 (c) Because of the occurrence of an unforeseen event at a time when the 31 adoption of a rule in response to such the event by the emergency 32 26.586.11 7 133 Underscores indicate new language. Overstrikes indicate deleted language. procedure is required to secure or protect the best interest of the state or 1 its residents; and 2 (3) A statement: 3 (a) Explaining whether the proposed rule would be a major rule if made 4 permanent; and 5 (b) If the Legislature is not in session, explaining why the Legislature cannot 6 be called back into session to consider and vote on the major rule. 7 If a publication is incorporated by reference in the proposed emergency rule, 8 pursuant to § 1-26-6.6, the publication and statement statements must also be served on 9 the person individual specified by subdivision 1-26-4(1) and on code counsel. Code 10 counsel shall return the publication to the agency upon completion of code counsel's 11 review and the agency shall retain the publication. 12 Any agency may use the emergency rule adoption procedure. An agency may not 13 use the emergency rule adoption procedure for the convenience of the agency merely to 14 avoid the consequences for failing to timely promulgate rules. 15 An agency may not use the emergency rule adoption procedure merely to allow for 16 the enactment of a major rule. 17 Section 7. That § 1-26-6 be AMENDED: 18 17 1-26-6. The adoption, amendment, or repeal of a rule is complete when: 19 18 (1) The requirements of § 1-26-4 have been completed or, if the rule is an emergency 20 19 rule, three days have passed since the requirements of § 1-26-5 have been met; 21 20 (2) It has been signed by a majority of the members of the multi-member body or by 22 21 the officer having the authority to adopt it; 23 22 (3) It has been signed by code counsel; 24 23 (4) A copy has been filed with code counsel, in a form prescribed by code counsel to 25 24 show amendments, deletions, and other changes to existing rules, for use in 26 25 preparation of copy for the Administrative Rules of South Dakota; 27 26 (5) The rule and a certificate have been filed with the secretary of state. The certificate 28 27 must affirm that the rule filed is a true and correct copy of the rule as adopted and 29 28 that the agency has complied with § 1-26-4 or 1-26-5, and with this section; and 30 29 (6) For a permanent rule, the agency has appeared and presented the proposed rule 31 30 to the Interim Rules Review Committee; and 32 31 (7) For a permanent major rule, statute specifically directs rule on which the enactment Interim Rules Review Committee does 32 not make a determination of the sufficient legislative authority pursuant to subdivision 33 adoption, amendment, or repeal of a rule. 34 26.586.11 26.586.12 8 133 Underscores indicate new language. Overstrikes indicate deleted language. (2) of section 6 of this Act, statute specifically directs the enactment of the 1 adoption, amendment, or repeal of the rule. 2 A certificate required by this section must be an affidavit executed, under oath, by 1 3 the officer authorized by statute to promulgate the rule. If a rule is promulgated by a 2 4 multi-member body, the body's presiding officer must sign the certificate. 3 5 An emergency rule is provisionally effective immediately after being filed. 4 6 Notwithstanding § 15-6-6(a), all other rules are provisionally effective on the twentieth 5 7 day after being filed, not counting the day of filing. In either case a later effective date 6 8 may be specified as part of the rules being filed. A rule that is not yet effective or a 7 9 provisionally effective rule may be suspended in the manner specified by § 1-26-38 any 8 10 time prior to the first day of July of the year following the year in which it became, or 9 11 would have become, effective. The rule's provisional status ends at that time, and the rule 10 12 may not thereafter be suspended by the rules committee. Unless suspended, a 11 13 provisionally effective rule must be enforced by the agency and the courts as if it were not 12 14 so conditioned. 13 15 No rule promulgated after June 30, 1975, is valid unless adopted in compliance 14 16 with § 1-26-4 or 1-26-5, and this section and copies of the rule are made available to the 15 17 public upon request, by the agency. 16 18 Section 8. That § 1-26-14 be AMENDED: 17 19 1-26-14. The validity or applicability of a rule may be determined in an action for 18 20 declaratory judgment in the circuit court for the county of the plaintiff's residence, if it is 19 21 alleged that the rule, or its threatened application, interferes with or impairs, or threatens 20 22 to interfere with or impair, the legal rights or privileges of the plaintiff. The agency shall 21 23 must be made a party to the action. A declaratory judgment may be rendered whether or 22 24 not the plaintiff has requested the agency to pass upon the validity or applicability of the 23 25 rule in question. 24 26 The court shall review de novo whether a rule is a major rule. 25 27 Section 9. That a NEW SECTION be added to chapter 1-26: 26 28 Legislation directing the promulgation of a major rule may not: 27 29 (1) Be interpreted as a grant or modification of statutory authority by the Legislature 28 30 for the promulgation of a rule; 29 or 31 (2) Extinguish or affect any claim, whether substantive or procedural, against any 30 32 alleged defect in a rule; or 31 (3) Form part rule. 33 26.586.12 9 133 Underscores indicate new language. Overstrikes indicate deleted language. Section 10. That § 1-26-2.1 be REPEALED. 1 An agency shall, when submitting any proposed rule that will have a direct impact 2 on small business, prepare an impact statement that includes the following: 3 (1) A narrative explanation in plain, easy-to-read language of the record before effect of the court in any judicial proceeding concerning a 32 rule, except rule on 4 small business, the basis for purposes of determining whether or not its enactments, and why the rule is in effect. 33 needed; 5 (2) An identification and estimate of the number of small businesses subject to the 6 proposed rule; 7 (3) The projected reporting and recordkeeping required for compliance with the 8 proposed rule, including the types of professional skills necessary for preparation 9 of the report or record; and 10 (4) A description of any less intrusive or less costly alternative methods of achieving 11 the purpose of the proposed rule. 12 An agency is only required to use readily available information and existing 13 resources to prepare the impact statement. 14 For purposes of this section, "small business" means a nongovernmental entity 15 that employs twenty-five or fewer full-time employees. 16