Interim Rules Review Committee

This webcast is a service of SDPB. Good, useful, and full of wonder. SDPB. The Interim Rules Review Committee will now come to order. Madam Secretary, please call the roll.

DeGroot.

Excused. Larson.

Here.

Mehlhaff.

Here.

Muckey.

Here.

Howard.

Here. Hansen.

Here.

Mr. Chair, you have a quorum.

Thank you. We do have a quorum. Just a reminder for everybody who's here to testify, if you plan on testifying today, please do sign in at the podium in the back using that iPad to make sure that your name is reflected in the record. We would sure appreciate that. We will take the— we're going to approve our minutes. The chair will entertain a motion to approve the minutes of our last Interim Rules Review Committee.

So moved.

Moved by Senator Melhoff. Is there a second online?

Second.

Seconded by Representative Muckey. Any discussion? Seeing none, we'll do a voice vote. All those in favor of approval of the minutes will say aye.

Aye.

Those opposed?

Nay.

The minutes are approved. All right, we will take our proposed rules in the order that they appear on our agenda, and so we will begin with the Department of Game, Fish, and Parks. With a proposal to amend rules to establish a resident allocation of 60% of first draw licenses for trophy bison bull licenses and non-trophy bison bull licenses. The committee will now hear proponent testimony. Good morning, sir.

Good morning.

Hit that microphone on there.

There you go. Thank you. Good morning, Chairman and members of the committee. Jeff Van Meter, Director of Parks and Recreation for Game, Fish, and Parks. So I'll be just dealing with the first one, dealing with, uh, Trophy and non-trophy, and my counterpart will come up for the rest of the Game Fish Parks items. So the rule we have the two rules before you dealing with both the Custer State Park trophy bison and non-trophy bison bull seasons hunting seasons really came out of were born out of a citizen proposal requesting a 60% resident allocation preference in the first draw, with the remaining 40% going to both residents and non-residents. Currently, we use a set amount of 2 and 7 for those 2 seasons. So, 2 trophy go to residents, 7 trophy or non-trophy go to residents. And that has worked well over the years, but time has kind of caught up to us.

Yes.

In practice, the only licenses going to residents right now are those 2 and 7. There's just substantially more non-residents applying for these seasons. In fact, with the trophy season, we have about 4 times the number of non-resident applications and 2 times for the non-trophy season. So we sat down and talked to the petitioner. Reviewed it, thought this, this made more sense given today's culture or climate with the application numbers, and re-recommended to our commission the approval of, of the, the rule changes before you. We did put it out for a 30-day comment period. We received one negative comment from a non-resident who didn't like the allocation process, as you can imagine. Other than that, Everyone seemed to be pretty supportive. Additionally though, as part of this rule change, we also evaluated our herd size, the condition of our herd, and we created a ceiling or a cap with the idea that when conditions are right, we can raise those licenses up to 15 trophy licenses and 30 non-trophy licenses when the conditions are right. So we'll look at those conditions every year and we'll make those adjustments. So that's, that's really what you have before you here. I, I would stand by and entertain any questions.

Thank you, sir. Appreciate it. Are there any further proponents to these proposed rules? Any further proponents? Seeing none, are there any opponents? Any opponents? Okay, seeing no opponents, are there any questions from the committee? I just have a question.

Could you elaborate on the cost for those trophy licenses and the non-trophy?

Mr. Van Meter.

Yes, Senator Mehrlhoff. Currently, for a non-trophy license, that cost is $3,250, and for a trophy Bull license, that costs us $6,500. Just a little side note, we try to keep that non-trophy license up there because we are pushing that with even our auction sales right now. So we're still above that, but we're getting close to that. So, and we feel— think it's a pretty special deal to be able to shoot a Custer State Park bison. Follow-up?

Yeah, and then that money, is that dedicated or does that just go right into Game, Fish, and Parks fund, or do you use that for a particular purpose for habitat?

Um, Mr. Van Meter.

Through the chair, Senator Mehlhaff, that money goes back to Custer State Park. We use that for the management of the buffalo, the bison herd, in a variety of ways.

Thank you.

Senator Larson.

Yes, thank you. I just have a few questions.

Go ahead.

I didn't quite follow all the numbers that you were discussing. Can I just have a run-through? Right now you have 2 trophy buffalo Custer State Park licenses and 7 non-trophy that are dedicated to South Dakota state residents, and that's out of how many currently?

Through the chair, Senator Larson, yes, that is the case. Your numbers are exactly right. So with the trophy licenses, we have a total of 10, 2 going to the residents as you indicated. The other 8 Uh, just go between residents and non-residents, no preference there.

So with the total number— sorry, follow-up?

Stage question.

What is the total number of licenses in this category?

Mr. Van Meter.

10 total currently. Uh, we're moving towards 12. Uh, that was part of our reallocation of those license numbers based on the herd size and that.

Follow-up, Senator Larson?

Yes, just a couple follow-ups. Um, 10 total of the 2 trophies, or 10 total of both the 7 and the 2 added together?

Oh, Mr. Van Meter, through the chair.

Let me, let me start over, Senator Larson. So we'll deal with the trophy season first. Currently we have 10 total licenses And an additional license that is part of a habitat raffle.

Okay.

So of those 10 total licenses for the trophy bison season, 2 right now are guaranteed to go to residents. The remaining 8 are open to residents and non-residents. This proposal would make that allocation 60% in the future. Now, with the non-trophy, our current number is set at 20, and 7 of those are guaranteed for residents, with the remaining 13 to either residents or non-residents depending on how their application is drawn, how the draw goes. Again, that season would also guarantee them Follow-up, Senator Larson.

Yes. Okay. So the trophy licenses would change then from 2 designated per residence to somewhere between 6 and 7 designated for residents, depending on if you change the total number of trophy licenses to 12.

Yes.

Mr. Van Meteren.

Through the Chair, that is correct. It'll be a moving target every year based on how we administratively set those final numbers for both the trophy and non-trophy, but it'll be based on 60% rather than a hard number like it has been in the past of 2 or 7.

Follow-up, Senator Larson. Yeah, thank you, Mr. Chair. And then for the non-trophy, it is going to go from 7 reserved for residents to more like 14 or somewhere in there.

Mr. Van Meter.

Through the chair. Correct, Senator Larson, whatever that number is, 20% or 60% of 20, it could be 60% of 25 or 24, depending on whatever we set that number at. But 60% will always be guaranteed to go to the residents. Then the second draw is open to both residents and non-residents.

Okay.

Follow-up, Senator Larson?

Yes, Mr. Chair, one more follow-up. Just a little bit about the total numbers right now. You mentioned that there was, you would evaluate the herd size and that there is also a cap. What is the current herd size of the Custer buffalo herd? buffalo herd? And what is that cap that you were referring to?

Mr. Van Meter, through the chair.

Senator Larson, the cap that we've set for the trophy is set at 15 total. So every— and then the non-trophy will be set at 30 total. So every year, based on the range size, we will have a total number underneath those 2 numbers, depending again on the range, the herd condition, just varying factors. You asked the question, what is the total number of bison? We try to operate somewhere between, oh, I would say 1,400 to 1,500 bison at the highest point every year. Again, though, if the range conditions are poor, we will And so we're going to have to manipulate that by auctioning off more bison at the annual sale every year. And right now that's kind of looking like the situation we might be in.

Any follow-up, Senator Larson?

Just one more follow-up, Mr.

Chair.

So the, the current size of the herd is between 1,400 and 1,500. I suspect that the range conditions this year have been poor, and so sales numbers will likely go down in the annual auction based on the range conditions, likely.

Mr. Van Meter.

Through the chair, actually the opposite, Senator Larson. If we— if the range conditions do not improve, and I just talked to the herd manager yesterday, Most likely we will auction off more animals to bring those total numbers down.

Follow-up, Senator Larson?

No, thank you very much for your patience.

Thank you. Any further questions? Seeing none, thank you very much. We appreciate it. We'll move to committee discussion or action on these proposed rules.

Mr. Chair, I would move that we deem the rulemaking process complete.

Is there a second?

Second.

Motion made by Senator Mehlaaf, seconded by Representative Muckey, that the rules process is complete. Any discussion on that motion? Any discussion? Seeing none, then the motion before the committee is that the rules process is complete. All those in favor will vote aye. Those opposed, nay. Madam Secretary, please call the roll.

Aye. Aye.

Aye.

Aye.

DeGroot, excused.

Howard?

Aye.

Hansen?

Aye.

Mr. Chair, unanimous.

Thank you, Madam Secretary. That motion carries. The rules process is complete.

Thank you, sir.

Thank you. All right, next up is another set of proposed rules from the Department of Game, Fish, and Parks. Amending rules to restrict Iron Creek Lake in Lawrence County to a no-wake zone, remove refuge status for the Lake Albert State Waterfowl Refuge, and remove the specific number and types of licenses available to bison, deer, and elk with no more than the maximum number of licenses authorized by statute. Committee will now hear proponent testimony. Good morning.

Good morning, Mr. Chairman and committee members. Tom Kirschman, Director of the Wildlife Division, Department of Game, Fish, and Parks, and here to present our short list of additional rules from the Division of Wildlife that were just read off by Mr. Chairman. So I'll just go right into them, if I may. Obviously, the rules package itself always takes into consideration and incorporation of any comments submitted by LRC. Those items have been worked on and addressed. And then the rules themselves, I'll go through each one of them very briefly for you, as we do not have a lot this time around. So the first one has to do with a no-wake zone on Iron Creek Lake. This is a small body of water in the Black Hills over in, I believe it's in Lawrence County. We've been working with locals there doing some additional improvements around that particular lake. I think it's 23 acres in size in terms of water acres, primarily used for people that are using kayaks or very small boats. And so makes very good sense from the standpoint of implementing a no-wake zone. Doesn't mean a larger vessel or boat couldn't be used, it's just you cannot create a wake on that body of water. Had a lot of conversations with local— locals there, no opposition. There was support for that. And so we bring that forward. Thank you. Brought that forward to the commission, which unanimously passed as well. The next rule change we have actually is for a waterfall refuge in Grant County. We have waterfall refuges, game bird refuges, a couple other ones across the state. This is this particular one is actually a body of water that's completely surrounded by private land, and the private landowners came to our agency about removing. This particular waterfall refuge, again, Lake Elbert State Waterfall Refuge, every single landowner around this body of water signed off and were in agreement to remove the refuge that was brought forward to the commission, and they passed that unanimously as well to remove that refuge. In particular, from the standpoint because it was the landowners themselves coming forward to bring that particular change. And then the last rule change we have has to do with the Hunt for Habitat. This was implemented back in 2019. State statute allows the use of 10 big game licenses to conduct this. We do this as an effort to raise funds that are used for habitat development on game production areas across the state, as well as improve access on those public lands. And basically the rule package says that there would be no more than 10. Again, that is dictated in state statute as well. Residents, non-residents are both eligible to put their name in the hat, if I may. State statute does dictate it is a $10 opportunity for each opportunity you want to put yourself in there for, for residents, and for non-residents it's $20. And again, that is driven by state statute. And then the rule also just points out that no more than one of a particular type of package could be won or distributed to a nonresident. So for example, we do have one package that includes a deer license and an elk license. So it's 2 different licenses in a package. There's 3 of those packages. No more than one of those would be able to go out to a nonresident. And that just clarifies that in rule as well. So, Mr. Chairman, those are the 3 changes we have for this particular rules package, and I would sure try to answer any questions that you may have.

Thank you very much. Are there any further proponents on these proposed rules? Any further proponents? Seeing none, are there any opponents to these proposed rules? Any opponents? Seeing no opponents, are there any questions from the committee? Senator Larson.

Thank you, Mr. Chair. A question for Mr. Tom Kirschmann.

Go ahead.

Um, I am just still a little bit— I want to have a couple clarifying questions I want to ask about the Lake Albert Waterfowl Refuge. Um, I'll just ask a few of them and then let you, let you speak. What is the official process by which a refuge, a piece of land that is a refuge, normally gets unrefuged, if that, if that is obviously not a verb, but you know what I mean. What does that official process look like? Let's just start there.

Thank you, Mr. Chairman, and thank you, Senator Larson. It is not a common process because we only have probably less than about 10 refuges outside of the Missouri River water system where we have other waterfall refuges. But in this particular case, why the landowners even brought this concept to our local staff— again, the waterfall refuge was on the body of water which includes some of the private property outside of the water boundary. Those landowners then do not either have the opportunity to hunt waterfowl because of the waterfowl refuge status. There were a couple of them that have the desire to do waterfowl hunting, so collectively they brought forward the request to remove the waterfowl refuge to our local staff. Our local staff, then we go through our internal discussions, and then we brought forward the concept to the commission. And then also in that process, our staff would work with all those respective landowners. In this particular case, if I remember, there was 7 or 8 landowners that were engaged as part of this refuge. They all signed on a piece of paper saying that they all agree to the removal of the refuge. And with that background and information and that request to the commission, they made a proposal, did a public hearing. There was no opposition to it other than the support signatures we had from the landowners themselves. The commission then went ahead And approved the recommendation to remove the Waterfowl Refuge, which is listed in administrative rule as you see in front of you. And so that would essentially repeal that specific portion of administrative rule where that refuge is listed. So essentially, that's how that particular process took place.

Follow-up, Senator Larson?

Yes, please. So you're saying— you kind of described a process And, and, but because this is so rare, it does— there isn't maybe necessarily a formalized process, but this would fit the bill. Um, I— so that's what I understand. Um, just a few follow-ups. I, I'm just concerned about how other refuges— how this might affect other refuges which are surrounded by privately held land, which I would assume, besides like what you said on the Missouri River, I would assume there would be a lot more Refuge status type of land that is surrounded by private land or mostly private land. And I would be concerned that this would start, you know, to cause people to maybe, you know, try and do this more often. In addition, how— is there a natural way where the refuge status disappears on its own? Like, what are the original governing documents? that created this, um, the refuge status? And do they expire ever? Is it in perpetuity? Kind of just discuss with me a little bit more about that. Thank you.

Mr. Kirschenmann.

Thank you, Mr. Chairman. Senator, so number one, there is no expiration date or time frame for a refuge once it's put in place. Every refuge that we have out there, whether it's on the Missouri River system as a waterfall refuge or some other type of a waterfowl or a game bird refuge that exists out there, they are all in administrative rule. None of them have an expiration date. So to remove any type or any one of those refuges would have to go through the commission process, which includes the public hearing, which includes public comment, and going through this body here, interim rules, should a commission decide to remove a refuge. There is ample opportunity for public input. I would share with you, Senator, we have removed 2 refuges in probably the last 10 to 12 years that I can think of, this being the second one that I'm most familiar with and can remember. And this second one, like the other one that I can recall, were both driven by the landowners because the refuge itself was completely surrounded by private land. In most other instances where we have refuges, those refuges exist on maybe a partial of private land but also public land and public waters. And so those typically are going to generate more conversation, more discussion from the public should there would ever be the consideration of moving a refuge like that or removing a refuge that exists with public waters and public lands as well. And so These are somewhat unique, like this one, because it was 100% contained by private land.

Follow-up, Senator?

No, thank you.

Thank you. Any further questions? Representative Muckey.

Thank you, Mr.

Chair.

And this might be related in terms of the line of questioning from Senator Larson as well. One of the things I guess I'm trying to get my arms wrapped around When it comes to— and this is maybe more of an appropriations-based question— how will this impact any state funding going to refuge care in this case for this particular instance? Or how, how will that, how will that be seen or played out here, I guess, as far as that goes?

Mr. Kirschenmann.

Thank you, Mr.

Chair.

Representative Muckey, so in this particular case, please keep in mind This was a waterfall refuge, which means the refuge status means there is no waterfall hunting allowed. In this particular case, there is no habitat work, there's no management activity that has to take place on this particular refuge, if I may. So don't think of it as an individual parcel of property. It is simply a status that means waterfall cannot be hunted in that designated area.

Okay.

Now, on the flip side, where we have a couple of our own properties, game production areas, that do have a portion of it that has some type of refuge on it, that does not preclude us from continuing to do habitat management, maintenance, and the things that we do on those properties. It just says or means that that particular species cannot be hunted. So in the case if it's a waterfowl refuge, waterfowl cannot be hunted, but yet upland bird game, Pheasants could be, or big game still could be hunted. It just means waterfowl cannot. If it's a game bird refuge, then it means both waterfowl and pheasants could not be hunted, but deer could be. So it's more about the hunting status. It's not about doing management on that particular site.

Follow-up, Representative?

No, thank you very much.

Thank you. Any further questions from the committee? Any further questions? Seeing none, thank you, Mr. Kirschman. We'll move— oh, we got another one. Senator Larson.

One question. Sorry, just one follow-up question for Mr. Kirschman, digging into his wildlife biologist hat.

What are—

what is the general— I would assume if this is a waterfowl, for waterfowl, we're talking about, you know, wetland birds and ducks and that Ducks and geese and whatnot. Can you talk a little bit about the population of those species who would utilize this habitat and their numbers over, you know, the past, say, decade or two? Like, just what is the overall trend of their numbers since this particular place has been in existence?

Thank you, Mr. Chair. Senator, um, this particular refuge and I'd have to go back and look, has probably been in place for more like 40 years, probably 40 decades. And the primary purpose for these refuges, especially a waterfowl refuge, is to provide a resting area during the fall, or an area where the birds would not be disturbed, to retain ducks, in particular ducks, in that area so that hunting pressure does not push them out of the immediate area, so they would still be available for hunting opportunities.

Okay.

Are there waterfowl produced on these refuges in the spring and summertime? Yes, be by local ducks. But primarily, these refuges were put in place for the purpose of providing a secure resting area for the concept of holding birds in the area for waterfowl hunting opportunities. What we see right now, in particular in the Northeast and in this particular case, While this refuge might be gone, there's so many bodies of water in that particular area, there are still plenty of quote-unquote resting areas and secure areas to hold birds, in particular ducks, again, for hunting opportunities. But that's the primary purpose over the years, over the decades, for a refuge to be put in place for waterfowl.

Any follow-up?

And just one follow-up. What are the overall trends population-wise in terms of waterfowl in that? Doesn't necessarily need to be specifically this refuge, but in that general area of the state, the eastern half.

Mr. Kirschman.

Thank you, Mr.

Chair.

Senator Larson, so when we look at eastern half of South Dakota, in particular northeast South Dakota, part of the Prairie Pothole Region, duck factory of North America, We continue to produce a lot of birds in the northeast part of the state. We look at continental waterfowl populations, they're still strong. There are some species that are a little bit lower right now over the last couple years than others. A lot of that has to do with their overall breeding habitat conditions between North Dakota, South Dakota, going up into Canada are the primary areas where most waterfowl, ducks in particular, are produced. In the United States. We still see waterfowl production, but it all results into what water conditions are. When water conditions improve, we have more water, we produce more birds. When it's less, we produce fewer birds. But in general, every year we are producing waterfowl in this state. And no other place in South Dakota produces more birds than the northeast corner of South Dakota and the eastern half of South Dakota. Again, part of the Prairie Pothole Regions, which is oftentimes called the duck factory of North America. And so we're very fortunate where we are to continue to produce waterfowl. Most of it's contingent on habitat conditions and water conditions really dictate overall production. Continentally-wise, bird numbers are still strong. We're in liberal harvest opportunities. And so I would say in general, things look good for waterfowl.

Follow-up.

Thank you. Thank you, Mr. Chair.

Thank you. Any further questions from the committee? Any further questions? Okay. Seeing none, the committee will now move to committee discussion or action on these proposed rules. Senator Melhoff.

Mr.

Chair, I would move that the rulemaking process be deemed complete.

There's second.

Second.

Motion made by Senator Mehlhaff, seconded by Senator Howard, that the rules process is complete. Any discussion on that motion? Senator Mehlhaff.

Mr. Chair, yeah, I think we had a good discussion. We all learned a lot about ducks and habitat, so appreciate the, the department for coming in and enlightening us.

Thank you. Any further discussion on the motion? Any further discussion? All right, seeing none, the motion before the committee is that the rules process is complete. All those in favor will vote aye. Those opposed, nay. Madam Secretary, please call the roll.

DeGroot, excused. Larson? No.

Mehlhaff?

Aye.

Muckey?

No.

Howard?

Hansen.

Aye.

3 yeas, 2 nays.

That motion carries. The rules process is complete. With that, the chair will pass the gavel to Senator Mehlhoff.

Thank you, Mr. Chair. We will move on to the next item on the agenda, which is the South Dakota Commission on Gaming. Department of Revenue to adopt a rule to offer a variation of play and corresponding pay table for a new poker game called Heads Up Hold'em. Do we have any proponent testimony? Welcome, Mr. Abraham.

Mr.

Chair, committee members, both of you, everybody online, Doug Abraham, counsel for South Dakota Commission on Gaming. The Thank you, Mr. Chairman. Thank you, Mr. Muckey. The first portion of our packet is just another— and you've seen this over the past few years— it just offers another variation of play and corresponding pay tables for a new poker game called Heads Up Hold'em. This was an industry submission. We have a process before the South Dakota Commission on Gaming wherein industry members, if they have interest by a gaming establishment to offer a variation, may submit proposed rules concerning that variation, pay a fee, And then we have it evaluated by our vendor GLI to verify that the pay tables are accurate and the game is otherwise in compliance with our provisions. I won't reiterate any of what's in the rules presentation format concerning that aspect of it, but this is just another variation of poker that would be legal for play in Deadwood and consequently be legal based on Gaming compacts in various reservation casinos as well. This is the 25th variation of poker. Um, Galaxy Gaming was the entity that, that, uh, brought it forward to the commission, and that's basically it.

Thank you, Mr. Abraham. Is there any further proponent testimony? Seeing none, is there any opponent testimony? Hearing none, seeing none, we will move to committee questions and/or action.

Mr.

Chair, I move that the rules process is complete.

Second.

We have a motion that the rules process is complete by Representative Hansen, a second by— was that Muckey? Representative Muckey, any comments on the motion? Seeing none, uh, secretary, please call the roll.

DeGroot, excused. Larson.

Aye.

Muckey.

Aye.

Howard.

Aye.

Hansen.

Aye.

Mehlhaff.

Aye.

Mr.

Chair, unanimous.

Having received a unanimous vote, the process is deemed complete. We'll move on to our next item now, which is the South Dakota Commission on Gaming, Department of Revenue, to amend and adopt rules to develop and administer a self-exclusion plan for individuals who want to be excluded from participating in gaming, update technical standards to reference the most recent version available, Update reporting requirements to be in line with the Internal Revenue Service. Clarify access to the cashier's cage in a gaming establishment. Correct pay table information for the cover-all bonus game. Clarify what products constitute parts for the maintenance of slot machines. Clarify the amounts of abandoned credits and payouts for which licensees must conduct investigations to return abandoned tokens, cash, or chips; update W-2G references in the gaming internal control and revenue reporting manual to correspond with the amounts mandated by the Internal Revenue Service; and to repeal rules relating to drop buckets on slot machines and the duties and termination of qualifying licensees. agencies, managers, and agents. That's quite a bit. Do we have any proponent testimony for this rules packet?

Mr. Chair, Doug Abraham again, Councilor for South Dakota Commission on Gaming. Uh, this is kind of a mixed bag, many of which is just cleanup, but there were some substantive changes, particularly when you look at the first The last bullet point for develop and administer a self-exclusion plan for individuals who want to be excluded from participating in gaming. We currently have a self-exclusion plan already. And we refer to it as a self-exclusion plan because we do have a separate exclusion list that's maintained by the, by the commission. The exclusion list is the involuntary version where you get put on if you're in trouble or have been in trouble. The self-exclusion list is there for problem gamblers. And under the existing rules prior to these changes, the self-exclusion list would require an individual to go into a particular establishment and essentially request to be placed on that establishment's list. It wouldn't place them on all gaming establishment lists. As you can see in Deadwood, individuals could then, if they placed themselves on a list at any particular establishment, could simply walk across the street to another gaming establishment that they hadn't placed themselves on the list on And didn't resolve their issues concerning problem gaming. So the commission took a different approach here, and this change basically has the commission maintaining the self-exclusion list. So an individual could still go to any gaming establishment. They'll all be required to have a form to submit that would be submitted to the commission staff. Then commission staff will maintain the exclude— self-exclusion list and supply it to all establishments. So if you're an individual who's a problem gambler, You can go to any establishment, get a form, get placed on the self-exclusion list, and then in a very short timeframe, the commission will distribute your identification and information to all the gaming establishments that are licensed and under the purview of the South Dakota Commission on Gaming, and you'll be placed on a self-exclusion list that way. The commission took the approach that that was a more practical way not to actually, you know, fundamentally help these individuals who are problem gamblers. So that they're on self-exclusion for all licensees instead of just the individual establishment that they had picked at any given time. I think it's a more practical way to help individuals who have issues with problem gaming and takes a burden— other than supplying the form— takes the burden off individual licensees for maintaining their list and puts it on the commission. So the commission will then distribute that much like they do the exclusion list for individuals who have been placed on there involuntarily by the commission. Moving on to the next bullet point, update technical standards. That deals with GLI 33. That's the standards for event wagering. GLI is a vendor. It's also essentially the gold standard nationally for developing technical standards and security standards, including penetration, things like that. GLI is now on GLI 33. It provides expectations for both penetration, for testing, for standards, for security of individuals that are participating in event wagering and sports wagering. This just updates this to the most recent version that GLI has to make sure that we are up to date on all those technical standards. The next update, reporting requirements to be in line with Internal Revenue Service. This is actually kind of pairs well with the update to W-2G references. You got a huge packet from us because we have a large appendix that the Commission on Gaming maintains. It contains all of our forms and references for administration of gaming and samples for internal controls for our gaming establishments. Well, part of that is this W-2G reference.

Okay.

And then we've got a separate rule that also references that as well. The One Big Beautiful Bill Act Increased the amount for W-2G reporting for establishments up to $2,000. So this just brings the South Dakota Commission on Gaming and its licensees in compliance and consistent with the IRS standard for $2,000 for W-2G reporting. And so we had these 2 changes. Unfortunately, the appendix is one item. It's not separate rules. So it's massive. I talked with LRC staff. There's not a great way around that. So you got a phone book in the mail from me.

Okay.

But there were a handful of changes in there and cross-references there. But that was mandated and brings us in compliance with the IRS standards from the One Big Beautiful Bill Act. The provision concerning clarifying access to cashier's cage in a gaming establishment just provides some process clarification. And that's the only area where after the initial draft the commission actually made a change. It was required initially in the first draft of the rules that the commission would make and approve exceptions for unlicensed individuals to enter the cage. The commission at the meeting actually changed that so that the executive secretary would approve those. It's more pragmatic, can occur faster. You don't have to go back to the commission and have that approved. So that made sense for the commission. They didn't want to micromanage the commission staff as to who was approving unlicensed individuals to go in a cage. Right now, current standards, unlicensed individuals can't go into your cage. This would allow— so if you had a service technician who was unlicensed, or even as simple as a repairman or electrician who had to fix something in the cage, then they could call up staff at the South Dakota Commission on Gaming, and executive secretary can approve that relatively quickly, so they can go in there with a licensed individual and do whatever work is necessary. This is more of a practical change to that. Next section, there was a correction to a pay table for the coverall bonus game. It wasn't something that we could necessarily consider an apparent error because it didn't have the figure amount in the pay table, so we had to go back in and change that. But it was just— we're not sure exactly where the error started because it's— the It's been adopted, uh, from— for a period of time, probably on our end, on how we published that, that pay table. That was just to correct that. Um, next was to clarify what products constitute parts for the maintenance of slot machines. And so we have a couple of different licenses by the South Dakota— that are issued by the South Dakota Commission on Gaming, and there's parts and associated equipment manufacturers, and then there's just And associated equipment. So we've got 2 separate standards for those, and we just clarified because we didn't have clarity as gaming and the technology evolves. We didn't have anything that specifically applied to third-party software applications and interface with the casino management system of a licensee. So all casinos have casino management systems that kind of integrate their systems so they can track on a more ongoing basis exactly what's happening on their floor, where wagering is occurring. They can optimize their floor location, machines, things like that. Third-party software applications has become a much bigger business in the business of operating gaming. And we didn't have a clear area where this would fit into our existing rules for where these folks would be licensed, but they needed to be licensed to have access to machines, make sure we're they're backgrounded and that we have appropriate individuals and appropriate licensed individuals who are conducting that. So we included that language there. And then we hadn't previously defined where manufacturers for playing cards and chips would be licensed. Many other jurisdictions do, and we wanted to clarify that. So we included playing cards and chips within the definition of— or within the list of associated equipment. There's not a lot of individuals that are actively engaged in that, although we do have a new licensee application, or an individual that's probably going to be submitting an application for a new playing card manufacturer and design. It's very exciting for the commission. That was a minor change there, though, to clarify and ease in the administration of those rules. Then the next rule, clarify the amounts of abandoned credits and payouts for which licensees must conduct investigations to return abandoned tokens, cash, or chips. So we want to clarify this for administration as to what that amount is that would require an investigation by a licensee to try to return chips or abandoned credits. Most commonly, it's abandoned credits on a machine. If you'd envision a situation where you're playing a $1 or $2 machine and your friends are going to leave the establishment, You get up and walk away because you only have a dollar on it and you don't want to pull out your voucher and go turn it in, get your dollar back out. People tend to walk away from time to time. To deal with those, we established the dollar amount. The commission had quite a bit of discussion as to what an appropriate dollar amount would be that should justify an investigation and to locate that individual, taking into account our licensees as businesses and and their time that they should put into it. And the amount that the commission came up was $50. Uh, that is— it's completely arbitrary, uh, but we had to come up with sort of a practical amount because there's a report then that typically would go to the commission if they can't locate it, and it'd be an entire process for that and how that dollar amount is reported then to the commission. And, and because that, that's real money that's acquired, it's essentially abandoned. So it comes out of the— you know, the casino doesn't get to just keep that, but it gets reported. And this clarifies the process and the amount that requires or that triggers an investigation to locate that individual. Because we do have a lot of information concerning the identities of individuals through players' club cards, things like that, that would allow establishments to locate these folks. But we're kind of drawing a line in the sand about what a practical amount is that you should try to locate that individual. Okay. Individual and put the effort into it. And so that's, that's, uh, what that change does. Um, next, again, that's the W-2G references from the one big beautiful bill. And then the last bullet point is repealing rules relating to drop buckets on slot machines. And then there's another set of rules concerning keys for drop buckets and associated issues with that. Gaming doesn't occur with drop buckets anymore. Drop buckets were used for coin, and we don't have any licensees operating with coin, haven't for an extended period of time as technology's moved away from that. It's cumbersome and it's expensive. So those are obsolete rules that we're just repealing concerning drop buckets and the method to conduct those drops and to access them because That doesn't occur in Deadwood anymore, and it doesn't occur anywhere within the purview of our licensee regulations. So that's truly cleanup, just eliminating obsolete rules from the record. So I've talked for a long time about that. I won't repeat any— but we did have a large packet. I won't repeat anything that's in the rules presentation format, but otherwise, that's basically our packet.

Thank you, Mr. Abraham. Is there any other proponent testimony on this packet? Seeing none, is there any opponent testimony? Seeing none, we will move to committee questions and/or action. Are there any questions? I don't have the thing in front, so I can't see if anybody's— if anybody has a question, just Speak up. Okay. I have a question. With respect to the self-exclusion plan, does that— that just affects like Deadwood Gaming, and is there any cooperation between the tribal casinos with that? Is that shared with them, or do you share that back and forth?

Mr. Chair, uh, no, at this point we do not. And I'm not aware— we don't manage tribal casinos within the context. One, we don't manage the licenses. We provide support to the governor's office who negotiates the gaming compacts. But we do provide support with backgrounds. So if a tribal casino would have a new employee and they would submit their information for a background check, Commission staff would conduct that. There's a fee associated with that. But beyond how they actually operate, if they hadn't— if they have an exclusion list or if they have a self-exclusion list, that all occurs directly within the tribal oversight. It's not correlated back to Deadwood. So there's no back and forth there because the rules vary dramatically from— from even from tribe to tribe.

Okay, any other questions? Seeing none, we'll look for some action on this packet. Yes.

Thank you, Mr. Chair. I move that the rules process is complete.

By Representative Hansen. Second by— was that Representative Muckey?

Yes.

Okay, so motion by Hansen, second by Muckey to deem the rule process complete. Any discussion on the motion? Seeing none, I'll ask the secretary to please call the roll.

DeGroot, excused. Larson?

Aye.

Muckey?

Aye.

Howard?

Aye.

Hansen?

Aye.

Mehlhaff?

Aye.

Mr. Chair, unanimous.

Having received a unanimous vote, the rules packet process is deemed complete. This time I will return the gavel to Speaker Hansen. All right.

That concludes our rules packages for the day. We'll now turn to staff reports. Mr. Goetz.

Mr. Chairman, Justin Goetz, Code Counsel. The first item under staff reports relates to the October meeting date of rules review for this interim. In the process of going through dates Uh, we did not ascertain that, in fact, October 12th corresponds to a federal and state holiday, and so we may want to look at moving that particular meeting date to a different date.

Okay.

Okay, so we had set a rules review hearing for October 12th, which looks like it's Columbus Day. So the consideration would be perhaps to move that to Either— well, I'm open to suggestions. The 13th, there's a GOAC meeting. Um, the 5th and the 6th, I'm not sure why we didn't schedule it for those dates before.

I think I was flying.

Okay, that's it.

Would it be possible to do it on the 14th?

Well, the 14th works for me. Works for Senator Melhoff.

I can do that.

Okay. Senator Larson?

I can do it.

Okay.

Okay.

Well, does it work for you guys? All right, let's do the 14th, October 14th.

Thank you for that, Mr. Chairman. And Justin Goetz, Code Counsel. The 2nd item on the staff report listing— I'll pull that up here real quick— is more of an FYI than anything. I'll share my screen briefly. Just wanted to alert the committee to Revisions that were made to the ARSD pursuant to SDCL 126, and the particular revision— I'll just share this window— is referenced in the South Dakota Register. This was at the request of the Department of Education. Specifically, it was authority that was removed here in the 2025 regular session pertaining to the state library boards.

Okay.

Authority to promulgate rules. Nearly all of that authority, general authority, was repealed in that bill. There's one vestigial bit of authority that exists with regard to information retention, government publications that are retained by the state library, that has not been fully excised from the code. And so that chapter remains, but that is the only chapter of Article 24-30 that remains. The remainder—

Right.

are now obsoleted by virtue of the underlying statutory authority to promulgate those rules being repealed. Are there any questions?

Any questions on that, committee members? Okay. Moving on.

Thank you, Mr. Chairman. Justin Goetz, Code Counsel. The final item pertains to a question that was posed by an agency looking to promulgate rules. Where an effective date for that rule promulgation authority, which was newly created in this last session, uh, was established in statute for January 1st, 2027. So the issue then became, well, what does statute say with regard to promulgation of rule where the authority that underlies the rule isn't yet effective? And clearly in statute, we have a provision that speaks to this, 126.4.4. The issue that we run up against, and I will again share the screen for that as well, is that the precise language in 126.4.4, which is a statute that allows expressly for agencies to promulgate rules, go through the rule promulgation process before the effective date of the underlying statutory authority, basically it's there to ensure that You can go through the processes of the agency, get all the rules in place, so that effective the date of the overarching statute, you also have the rules now effective. So, the entire framework of law and rule is there in place and able to be enforced at the same time. Well, since 1977, we've had this express provision, but that express provision Only applies to, quote, statutes that, quote, become effective on the date set by 2-14-16, end quote, that being when statute is silent, when bills are silent regarding when the effective date is, there is the default to July 1st of 20— of the year of enactment, okay? So what about statutes or bills Yes. — bills with delayed effective dates. They are not, by express, uh, provision, effective July 1st, 2026, as in the case of, uh, bills enacted this year. Uh, so this, you know, it— so 2 questions posed here. One, um, does the, uh, committee have any issue with an agency that has a delayed effective date on their authority proceeding with The rule promulgation process beforehand, um, with the idea that those rules will not be effective and therefore enforceable until that delayed effective date for the statutes that provide the authority in the first place. So that's the first question. And then the second question is, is there any interest in the committee, um, looking at potentially a legislative fix? Uh, staff is very cognizant of not bringing up proposals for legislation that have a substantive effect. This is meant to be more in the vein of cleanup to address what appears to be an oversight in the statute.

Well, thank you, Mr. Goetz. That's interesting. You know, first of all, I'd like to know a little more details on the practicality of what we're dealing with Which bill was the one with the delayed implementation that doesn't fall under 214.16? Is the delayed implementation such that they wouldn't be able to promulgate the rules this interim, that it would have to wait until another interim? In terms of the legislation, I'd be open to that. I think that'd be fine. I think they'd fly through the legislature, but—

Okay.

To the practical question, maybe you could address that.

Absolutely, Mr. Chairman. Justin Goetz, Code Counsel. The bill in question is Senate Bill 221. That is the nicotine products bill, I believe. And so there it's creating a new taxing licensing for— well, I should say licensing framework is, is really the focus of it, based on my recollection. So The effective date of that legislation is, I believe, January 1st, 2027. So if the idea is that the authority needs to be effective before the rule process can begin, that would mean that the rule process would begin next interim, and the earliest that the Department of Revenue would be able to promulgate rules would likely be May And then with an effective date— well, April, with an effective date of May, thereabouts. So you're talking a delay of approximately 5 months between when the laws that make up this framework are enacted and effective compared to when the rules would be effective.

Okay.

It—

and, Mr. Chairman, I would add that, you know, the— given the history of administrative rules, uh, uh, uh, U.S. Congress at its first session, uh, propounded administrative rules. The first territorial assembly of the Territory of Dakota promulgated rules.

The—

if the concept is that rules are meant to be a part of the greater enforcement framework, um, and therefore effective at the same time as the statutes that make up that framework, then that appears to be what the intent is behind 126.4.4. Um, it just so happens that the express authority to do that—

Right.

Is conditioned upon there not being a specified implementation date for the law. And as mentioned in the memo, the only thing that I can think of as a potential negative is that if you have a delayed effective date 2 or 3 years hence from when the bill was passed by the legislature and signed into law by the governor, there is always the possibility that if The, you know, rule promulgation process begins too early, the process that begot it is a stale process by the time it's ultimately to be effective. But that seems like such an attenuated risk because, you know, in my experience with the Rules Committee, the issue isn't about the—

The timing.

rules being promulgated too quickly. It's whether they get promulgated in the first place, or if it takes a long time before they get promulgated. So just a little bit of context.

Well, could they put a delayed implementation Date in the rules?

Justin Goetz, Code Counsel.

Yes.

I, I would only add, uh, Mr. Chairman, that even if they didn't put a delayed implementation date in there, the, um, the effective date would be monitored by LRC staff, and the enforceability of it, you know, by the courts would be entirely dependent upon, you know, the fact that there is an effective date underlying the law. Because ultimately, a rule is enforceable as law, but it is not law. It is entirely dependent upon the law that allows it to be created in the first place. So you would not be able to enforce Mr.

Chair.

Senator Mehlhaugh.

Question for Mr. Goetz. So the way I understand it, so this rule becomes effective January 1st, the statute, 2027. So Is what we're discussing that in— during this interim, a rulemaking process would take place, come before this body, and either be reverted or deemed complete ahead of when the law takes effect?

Mr. Goetz.

Mr. Chairman, Justin Goetz, Code Counsel. Senator Mehlhoff, that is correct.

So, so as Speaker Hansen, Mr. Chair, said before, that if they put a provision in there with an effective date as to when that would start, that they could kind of dovetail together and all begin at one time. And do you view a process such as that happening to be out of step Mr. Goetz.

Mr. Chairman, Justin Goetz, Code Counsel. That's an excellent question, Senator. I do not believe that it is out of step with the spirit of the law at all. The express provision in the law, I would argue, is in the manner of cleanup to address, because ultimately, as I mentioned, the, the fundamental is that Constitutionally, the rule has no effect until the underlying statute that gives it the authority to promulgate is itself effective. So, what you're saying is the, you know, adding in a delayed effective date to the face of the rules that are proposed in the rules packet that comes before the Rules Committee, that would be my recommendation, what you've suggested, so that it's clear from both a procedural standpoint And that then aligns with the overarching legal framework that it's all going to be effective January 1st, 2027. There's no ambiguity. It all dovetails, as you said, exactly.

Senator Mehlhaff.

Well, I would just comment, I mean, that seems like a very reasonable and good path forward to, uh, to allow the agency to do the rules to comply with the statute and just have everything begin at once. And as long as it's in step with the spirit of the law and not out of step with the letter of the law, I think that would be the best way to proceed.

Any other thoughts?

Mr.

Chair, Representative Muckey.

Thanks, Mr. Chair. Just another question for Mr. Gatz. As we're looking at this, I'm understanding the reading as well as I can in this case, but just want to clarify when I'm looking at 126.4. The way it's written as it stands today, you would not be required to start the rule promulgation process immediately following the signing. You can do it at any time. Am I correct?

Mr. Goetz.

Mr. Chair, Justin Goetz, Code Counsel. Representative Muckey, another great question. The statute reads as a— basically tells agencies you can do this. Not that you shall do this, you must do this. It's that you have the ability to begin the rule promulgation process as soon as the governor signs the legislation. And I mean, one could argue that even that isn't necessary to put in statute because there is nothing legally binding that is being done in the rule promulgation process except That the rule has passed all of the procedural steps needed for it to then come into existence, but its existence is not made effective, is not perfected until the effective date of the underlying statute. Um, so, I, I, I would just qualify this as, as saying that, yes, in, in a sense, you're correct that this does not You know, limit the ability of agencies to seek, uh, to, to begin the rulemaking, uh, process at a later point. Certainly, m— my recommendation to agencies is that if a statute creates new rulemaking authority, and there's a shall in that, meaning that they must promulgate the rule, I would recommend that they promulgate the rule, particularly given this authority, So that the rule is there and able to be effective the day that the underlying statutory authority is effective, oftentimes July 1st. So my recommendation is usually get on the horse, get it done so that everything is effective, because that is, you know, most aligned with legislative intent. If the legislature says shall, the legislature wants those rules promulgated.

Okay.

Does that make sense, sir?

Follow-up, Representative Muckey.

That makes sense, and I appreciate your willingness to answer that. I think when I read your concern in the staff memo about making rules, so to speak, too early, you know, prior to a multi-year delay in the process, based on that answer, I don't know that I would have grave concern that we're going to see rules packets coming to us years in advance, especially if it's going to especially in the view of a department, fundamentally change the implementation of a rule. So from my end, I think I would very much agree with Senator Mehlhoff. This seems like a pretty reasonable request. Thank you.

Thank you. Any further thoughts from any of the committee members? Well, I agree. I think if The authority— who is promulgating this?

The—

who is it, Mr. Chair?

Mr. Chair, Justin Goetz, Code Counsel. Uh, it's the Department of Revenue, sir.

Revenue. Okay, so if the Department of Revenue wants to bring this forward with a delayed implementation that matches the statute that was passed, I, I wouldn't have a problem with that. Anybody else? Any other thoughts?

Okay.

Okay. You can forward on that guidance to the department.

Thank you, Mr. Chairman.

Thank you.

All right.

Anything else for the benefit of this committee before we adjourn?

All right, I would move that we adjourn.

Is there a second?

Second.

Motion by Senator Mehlhoff, seconded by Representative Muckey, that we adjourn. All those in favor of adjournment will signify by saying aye.

Aye.

Aye.

Aye.

Those opposed, nay. We are adjourned.