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SDPB.

The Interim Rules Review Committee will now come to order. Madam Secretary, please call the roll.

DeGroot.

Here.

Larson.

Here.

Mehlhaff.

Here.

Muckey.

Here.

Howard.

Here. Hansen.

Here.

Mr.

Chair, you have a quorum.

Thank you. We have a quorum. At this time, the chair will entertain a motion to approve the minutes of our last meeting. Moved by Representative Muckey. Seconded by Representative DeGroot. Any discussion on, on that motion? Seeing none, all those in favor of approval of the minutes of our last meeting will say aye.

Aye. Aye.

Those opposed, nay. Those minutes are approved. Well, good morning, everybody. Welcome to the Interim Rules Review Committee. We are going to take our rules in the order that they appear on the revised agenda. There is a revised agenda. The GFMP pulled the rules packets for this meeting, so we'll see them next month. So other than that though, we will take the rules as they appear on your agenda. So that means we'll begin with the South Dakota State Brand Board. With a proposed rule to amend a rule to increase the livestock ownership inspection fee by 45 cents per head, setting the fee at $1.45 per head. The committee will now hear proponent testimony on these proposed rules. Good morning. Please introduce yourself and proceed with your proponent testimony.

Good morning, Mr. Chairman, members of the committee. Debbie Trapp, Director of the Brand Board. I'm presenting today the amendment to Administrative Rule 1210.0205, Livestock Ownership Inspection Fee. This amendment would change the livestock ownership inspection fee to $1.45 per head, and this increase is projected to raise— generate additional $601,000 in fiscal year '27. This change is needed due to increasing personnel and operating expenses, and the BRAM Board operates entirely on funds generated by the program it administers. The approval to proceed with rules was received on July 9th, 2026. The public hearing was held by the BRAM Board on August 5th, 2026. The notice of public hearing was published in 3 legal newspapers on July 15th. The Black Hills Pioneer, the Aberdeen News, and the Mitchell Republic. It was also published in an additional 18 legal newspapers for the week of July 20th through the 23rd. LRC edits for style, form, clarity, and legality have been incorporated. There was no opponent testimony received during the rules hearing. Brand Board President Corey— Vice President Corey Barley is also present, and we stand by for questions. Thank you.

Thank you very much. Are there any further proponents to this proposed rule?

Good morning.

Good morning, Chair, members of the committee. My name is Cheyenne Tant. I'm a policy advisor for the Department of Agriculture and Natural Resources, here to testify in support. We want to thank the board and industry members for their collaboration and commitment over the past several years during structured ad hoc meetings and the legislative process that leads to the proposed fee of $1.45 per head. Throughout these discussions, the board provided open and transparent financial documentation demonstrating that the program is currently operating in the red. This level of operation is not sustainable for maintaining the program or providing effective service to producers. For that reason, we urge your passage and will stand by for questions. Thank you.

Thank you, Ms. Tant. Are there any further proponents? Any further proponents to these proposed rules? Okay. Seeing none, we'll move to opponent testimony. Mr. Fox, can you hear us?

Yes. Can you hear us?

We can, sir. Please go ahead and introduce yourself and then proceed with your opponent testimony.

Okay, thank you, Mr. Chairman and committee members. Uh, I'm Rick Fox. Uh, me and my family ranch in the Hermosa area. Uh, I oppose this fee increase. Uh, probably should have done this at the administrative rules hearing, but I wasn't able to attend. Um, if you look at the Brand Board's financial sheet in May of 2026, They have $3.5 million in the 3 separate funds, which are the brand fund, the inspection fund, and the prevention fund. And these can and have been transferred in the past when one fund needs more. And specifically, that's been the brand fund, which is the renewals for brands and stuff that they do every 5 years. They've transferred into the Brand inspection fund, and like was said earlier, this is all producer brand owner money, 100%, no state tax dollars. So it's on us producers and brand owners to that's where the 3.5 million has come from. The inspection fund, you know, I've seen the numbers, and yeah, they're going behind, and that's. True, but overall, I think this here fee increase could be held off for a year because of the ongoing drought in western South Dakota where there'll be a lot more cattle inspected this year. With the $3.5 million, most ranchers don't have that kind of reserve to, you know, if they're pay fund, if you want to call it that, is low, they got to get it from a different fund or borrow the money. The Brand Board has a pool of money sitting there that they can borrow from and replenish. You know, the renewal fees in the last 10 years have doubled. The recording and transfer fees, I believe, are up. The horse inspection fee has gone up. So, you know, this ain't the first time that we've had fee increases, and I think they're, they're building the pot there. In other words, uh, a lot of cattle have been shipped out of the brand inspection area from our area in southwestern South Dakota. Because of the drought, and this is not normal, which will be more inspection numbers. I believe it was back in the early 2000s when we had kind of a substantial drought in South Dakota, and I think then the inspection numbers were around 1.5 million, give or take, average year in, year out. And that drought year went up to, I believe it was around 1.8 million cattle that were inspected. Personally, on mine, we've shipped about 100 head of pairs, cow-calf pairs, East River this year. They were brand inspected, dollar a head. That's $200 if they inspect the cow and the calf. So there was $200 went into the program. These cattle, you know, because of the ongoing drought and the price of feed, we are going to sell them. I mean, we ain't got nothing to come home for with them. These cattle will be sold at Fort Pierre this fall. That'll be another 100 head of cows, 100 head of calves. There's another $200, or if the fee increase goes in, it'll be higher yet. We're not keeping any replacement heifers this year. We normally keep roughly 100 head or maybe 100, 100 to 200 head between us and our son. There'll be no replacement heifers kept this fall. So them will be above normal, above average of what we do on our place. I figured we'd probably have 600 to 700 head that'll be inspected this year that normally wouldn't. Our son is also going to sell some cows this fall higher than normal. We've got neighbors around here, one neighbor, and I told him about this, he was opposed to the increase. And he said, you can use my name. And it's Jim Baker with Baker Cattle Company and said they have shipped 12 loads of cattle out of the inspection area, some to Nebraska, Some to eastern South Dakota because of the drought. They have decided they've always sell in Fort Pierre that they will bring them calves back at least this fall, probably in October, to sell at Fort Pierre. So them cattle will be inspected again too. They'll, you know, a double shot there. I don't think they're going to keep any replacement heifers either. I've got three or four other neighbors here that I will not mention their names that have. Either sold pairs or moved them to Aberdeen area or Nebraska. That is above and beyond the normal inspection numbers that would happen. I would encourage a vote no on this. I think it could be delayed for at least a year with the kind of revenue that the brand board has. The $600,000 is going to more than offset what they're. You know, needing, I believe. Like I say, we don't have the ranchers don't have the kitty there that we can just shuffle some money from one account to another and just keep going. On a last note, South Dakota has passed the biggest tax break in history, so we're told. And now the ranchers are facing a 45% brand inspection tax increase. Thank you, and I'll stand by for questions.

Thank you, Mr. Fox. We appreciate it. Are there any further opponents? Any further opponents? Okay, seeing no further opponents, would the proponents like an opportunity for rebuttal? Good morning, sir. Please go ahead and introduce yourself and then proceed with your rebuttal testimony.

Yes, Mr. Chairman. My name is Kory Bierle. I'm the vice president of the South Dakota Brand Board. And a couple of issues specifically in relation with Mr. Fox's comments. I'm a rancher myself, and it's true. That I don't have $2 million sitting around being able to go back and forth, but I'm not administering a statewide program either with approximately 200 employees, the staff, and everything else. And that renewal fee that he mentioned, especially for the brand registration and everything, that occurs only once every 5 years. And of the funds that he indicated, the 3 funds, one of them is basically what we call our holds. And that's looking for the proper owners of the cattle that have been sold. And so that is somebody's money. We're just trying to get the proper identification and the proper paperwork in so that they can get their, get their money. And that's approximately— what's about $800,000 to $900,000 of that? That, that amount varies all the time, but it's usually a consistent number. But the big thing is too that in the last little over a year or so, there has been a transfer. He cited the number $600,000. There's been a transfer of $900,000. That's right. From the brand fund to the inspection fund to just cover costs, and we're still behind because of personnel, mainly because of personnel costs, inspectors, you know, and mileage. Mileage fees and everything have gone up also that we have to reimburse the inspectors for. So yeah, and even, even those fees, they, they increased I believe it was 5 or 6 years ago, and to use that money to again transfer over and make the other, the inspection program float, it's going to run out by the time we get to another brand renewal in 2030. That's what that is, because that only happens, that happens in the, in the 5 and the 0 years. So are there any questions from the board or the committee?

Thank you for your rebuttal testimony. We will now open it up to questions. Are there any questions from the committee? Representative Muckey. Thank you, Mr. Chair.

For you, Mr. Bierle, as I'm looking at this, just to confirm where I'm looking at this, I'm looking at your 2 funds that I have from the GOAC Blue Book, your brand board funds As well as your, um, forgive me, your, uh, one second, just pulling it over. There we go. Your Livestock Ownership Inspection Theft Prevention Fund. I'm assuming this is going to the Livestock Ownership Fund, correct, Mr. Byer?

Correct. Yeah, yeah, yes, that is correct.

Follow-up, Representative Muckey?

Yes, um, you referenced the number $900,000 in transfer. I know I'm looking back one fiscal year where you had a half-million-dollar transfer. Did you transfer another $400,000 Mr.

Bierle?

Correct.

Okay, that is correct, sir. Follow-up, Representative Muckey?

Um, maybe last one. So help me understand, you mentioned kind of the, the multi-year differences in when you're actually applying the fee. Can you explain that in more detail? I know, I think I, I think I caught what you're saying about how many years you would actually apply this fee. Just want to make sure I understand the, the logistics of this particular Yes.

Mr. Bierle.

Yeah, like in— like for instance, 2025 was you renew the registration, the right to use that brand at that location on those animals indicated. You renew that every 5 years. And that's again, that's in the 5 and the 0 years. And that fee is $90. And then it just automatically renews, you know. Well, it doesn't automatically. You have to manually redo it. You have to manually renew them. Every five-year period.

Understood.

Is that what you were looking for, sir?

That's exactly.

Yep.

Thank you.

Thank you. Further questions from the committee? I can't.

Mr.

Chair.

There we go. Thank you. Senator Howard, go ahead.

Thank you, Mr.

Chair. Probably a question for the first proponent, but I mean maybe Mr. Byerly. So whoever wants to answer these questions. But one of the reasons for this increase was. Personnel expenses. So my question is, is that due to you've increased the number of personnel, or is it due to pay increases that you've given to those personnel? I just want to dig into that a little bit if I could.

Mr. Bierle, would you like to answer that question?

I can give you some information. Mrs. Trapp can give you detailed information on that, Senator. But, uh, but yes, over the past like 3, 3 or 4 years, because the brand inspectors are state employees, so they've— the full-time, the full-time brand inspectors are state employees, so they've been granted the pay increases that all state employees have had, the cost of living increases and things like that. And if I remember my numbers correctly, I think in the past like 4 years that's gone up 24%. For those, those folks.

So follow up, follow up, Senator Howard.

So no new employees, but then I want to dig into what is the average pay increase that they've seen, because I've been there long enough to know that while we may be get— may on the books be saying, okay, the pay increase is going to be 1.7% this year, there are employees that are getting 6%, 7%, whatever, and then that compounds down the road, and because you have vacancies, so you use the, the funds that you would have normally used to pay that vacant spot instead. I'm not saying you, but I'm saying agencies give increases beyond what we on the books give, and then that compounds, and then they end up hiring into that vacant spot, and then they're short of money, and then they need more money. So I'm just trying to see if that's— I mean, what's the average pay increase that the personnel have been given? Is it what we're giving on the books, 1.7, whatever it was this year, or is it beyond that?

Ms. Trapp, welcome back.

Mr. Chairman, thank you. Debbie Trapp, Director for the BRAM Board. The BRAM Board has stuck with what the legislation has approved for the state employee increases. And we have a very low turnover rate for our full-time inspectors. So basically around 80-some percent of our costs are personnel.

Follow-up?

Senator Howard, go ahead.

Thank you for that, and I do appreciate that very much. So you also mentioned, you know, like the programs that you have could not be sustained without this increase. Have you evaluated, is everything that you are doing absolutely necessary? Have you surveyed the producers to say, are there services that we are providing that we think are necessary, but the producers really don't need them or want them?

Ms. Trafton.

Mr. Chairman, thank you. The services we provide are required in statutes, and there are a lot of permits that we do not charge a fee for. For example, there's a shipper permit where they can call in and report the number of livestock they're taking out of the state to a brand inspection area that will get inspected. There's grazing permits, there's no fee for that. There's out-of-state branding permits, there's no fee for that. And we've looked back, so in 100 years of operation of this program, the fee has increased 90 cents.

Follow-up, Senator?

That's it for now.

Thank you. Further questions from the committee? Senator Mehlhaff.

Thank you. I noticed that the increase does not hit the limit that the legislature authorized. Will you be able to recover your costs and possibly build a reserve at this level, or do you think you'll probably be back here very shortly pushing up again?

Mr. Chairman?

Ms. Chairman.

Yes, the legislature did approve the cap at $1.65. It had previously been at $1. We are asking to set the fee at $1.45, and based on projections, we will not be able to build a reserve And so chances are we will be back in a few years probably to increase it again towards the cap.

Follow-up?

I have another question.

Go ahead, Senator Althoff.

Yeah, this one is for Mr. Fox if he's still online.

Mr. Fox, can you hear us?

Yep. Yep.

Okay, I was just wondering if you believe in the program. Do you think it It adds benefit and protection that is worthwhile.

Mr. Fox, 100%. Mr. Chairman, go ahead. Yes, 100%. I've always believed in brand inspection. I ain't saying you get all the cattle theft recovered, but it is a— it's the best theft deterrent we have. I mean, if I was not to brand my cattle, I'd be a little nervous about You know, if one gets gone somewhere, that's our return address. Basically, you know, when you buy a vehicle, you have a VIN number, and it's a— it'd be a VIN number. So yes, I, I believe in the program. I think there could be a few improvements, but, uh, that's not for here, I guess. So I'll take that up with the brand board.

Thank you, Mr. Fox.

Thank you. Further questions from the committee? If you're online and have a question, just go ahead and speak up, Senators. I can't see your hands raised.

Mr.

Chair.

Go ahead, Senator Howard.

If I could just ask, how did you arrive at the 45% increase? Because that is a tremendously— that's a huge increase. And I understand you have an increase, you know, you have not had increases annually. I understand that. But was there, because you can transfer between funds, was there any consideration of, just a 20% increase even. I mean, even that's huge. Any consideration of lower increases?

Mr. Chairman.

Mr. Bierle.

Senator, the $1.45 was arrived at because it's a politically expedient amount. It is not a convenient amount. It is not enough to cover the costs. Through our negotiations with various state agencies and producer groups, That was agreed upon. That was what we were going to get the least amount of political guff over, and so we went with that one. Personally, I wanted $1.50 because now all of our inspectors, they're going to have to carry around bags of dimes and nickels in their pockets to make change for everything. I wanted it a nice even amount, but it's— again, it was the politically expedient amount and it's what we could agree on. It comes close, and in reference to what Mr. Fox earlier said about the number of inspections, we have seen increased numbers. But what that means currently is that our future numbers will be down. A lot of those cattle are not coming back. They're out of the inspection area, and they, as he indicated, they're going to get sold. Even the mama cows, the factories, and the other— even yearlings. We know that a lot of yearlings left this country, left the inspection area early to provide grass for the cows. And so they're, you know, they always go, but they had to leave early. And we're trying to hold on to our base. But the numbers currently are up a little bit. And as far as a 45.

45.

It's a 45-cent-per-head increase. Please take that at the absolute value of what that is. When you, when you run the numbers on a 550-pound calf, that's only 8 cents per hundredweight. That's less than a dime per hundredweight. It does— it sounds big when you do it on a percentage basis because yes, 45 is 45%. Even I I can even do rancher math and come up with that. But the absolute number is only 45 cents.

So thank you. Go ahead, Senator.

I am going to push back on that a little bit because, I mean, if you're a large operation, sure, you could look at it as 45 cents is only, you know, a small amount in your overall operating expenses. But if you're a small producer, It is a 45% increase in that cost. So I am going to push back a little bit on that. But you mentioned you have, you have more cattle leaving the inspection area, and that looks like it may be continuing. Is that going to bring your costs down to where you wouldn't need this large of an increase going forward?

Mr. Bierle.

No, ma'am, because we still need the numbers that we still have are are there and they they all still need to be inspected and we have to have the staff on hand to inspect the ones that are present.

Follow up, Senator Howard?

No, I'm good for now.

Any further committee questions? Representative Muckey.

Thank you, Mr. Chair. And this this might be for Mr. Fox. Mr. Fox, just. Trying to get a sense, you know, you shared how this might impact you in this current season. Do you have a sense of what the cost basis for your operation will change based on the result of this potential rules change?

Mr. Fox.

Thank you, Mr. Chair. Yeah, I mean, we're going to have, like I stated earlier, roughly probably 600 head going out of the brand inspection this year. Some of them went out and they're going to come back in and get reinspected. So I'm figuring, you know, the 45 cents times 600 to 800. I don't know where we're at yet. We still need moisture here. But, uh, you know, multiply that by roughly 50 cents. Like Corey said, 45, 50 would have been easier figure. But, uh, you know, you're looking at another $400. And I mean, $400 is $400 to me. And multiply that by lots of ranchers, I guess, is a lot. I just— I think a year delay in this, I think the brand program would survive. Thank you.

Follow-up, Representative Muckey?

No, thank you, Mr. Fox.

Thank you. Any further committee questions? Anything further from the committee? Okay, seeing no further committee questions, thank you both. We'll now move to committee discussion or action on these proposed rules. Representative DeGroot.

Mr. Chair, I move that the rule process is complete.

Second.

Motion made by Representative DeGroot, seconded by Senator Mehlhaff, that the rules process is complete. Discussion on your motion, Representative DeGroot?

Just briefly, tried to do the math on here, and I don't know what a small producer is, but if I take 200 head, that's $90 more. If we take 400, it's $180. I think most producers can absorb that cost, whether they're big or small. I believe that the board has been operating at a deficit for some time now, and this increase doesn't even secure raises for their staff for the next 4 or 5 years. So that's, that's why I moved that the rule process is complete, and I think you guys are in good Good standing.

Thank you, Senator Howard.

Thank you, Mr. Chair. I will be opposing this. I think there's a little bit of—I don't know if it's arrogance or hubris—in in saying that every producer can absorb this. I mean, this is a huge increase, and our producers West River are struggling with the drought. They have been struggling for years, years. to even survive. And yes, we passed a huge tax. We did pass a very large property tax relief. But that's for owner occupied. Ag producers are not going to see anything except on their actual home that they, they live in. Otherwise, they are not seeing any relief from that. But they are going to pay increase in sales tax. And trust me, I don't mind the shift onto sales tax from property tax. That's not it. But I'm just saying our producers have not seen the relief that they need, West River, Now they're struggling with the drought. And so I just say now is not the time for a 45% increase. If this had been a more reasonable increase, I would not have an issue, as much of an issue with it. But for the sake of our ranchers, our producers, I can't go along with this right now.

Thank you. Further discussion on the motion? Representative Muckey.

Thank you, Mr. Chair. I appreciate the testimony from Mr. Fox, particularly when it comes to the impact on his own operation, and I appreciate you sharing those numbers to help us get context. What I find interesting as we talk about this, no one wants to put more costs onto our producers more than the burdens they already have experienced, especially in a market that's challenging for cattle producers and has been made challenging for cattle producers over a lot of years. One thing I think about though with this particular Rule package as a response to statute is the statute was passed in concert with a lot of coalition members back in the session before we knew that we were going to be experiencing a drought perhaps. Now I think there are conditions there you could look at, but I think the one thing that's important to keep in mind is I know that as we look at the financials for the brand forward, particularly for the livestock ownership and theft prevention fund, two years in a row of nearly half million dollar transfers to make things solvent is not a sustainable model, and we have to. Find ways to make it work. I appreciate the, the work that's been done to build coalition to arrive at this stage. And so though I am very sympathetic, especially to what you're sharing, Mr. Fox, I know I'll be supporting this only from the same point of we have to make the— make sure this is solvent while we also continue to partner with our cattle producers to navigate a drought.

Thank you, Mr. Chair. Thank you. Further discussion on the motion? Any further discussion? Seeing no further discussion, 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. DeGroot. Aye. Larson. Aye.

Mehlhaff. Aye. Muckey. Aye. Howard.

Nay. Hansen. Aye. Mr.

Chair, 5 yeas, 1 nay. Thank you, Madam Secretary.

That motion carries. The rules process is complete. Next on our agenda is the department— excuse me, the Board of Education Standards with a proposed package of rules to amend and repeal rules regarding the elimination of unnecessary barriers to certification, clarify the requirements to obtain certification, certification, ensure educators are adequately trained, provide additional flexibility for certain renewals, and clarify and update language. Committee will now hear proponent testimony. Good morning.

Good morning, Mr. Chair and members of the committee. Thank you. Dr. Katherine Blaha, Director of Accreditation and Certification. Within the Department of Education. Part of my duties include overseeing educator certification. Today I come before you for approval that we have completed the process associated with rules promulgation for ARSD 2428 educator certification. The rules package in front of you has been developed with the effect to eliminate unnecessary barriers to certification, clarify the requirements to obtain certification, ensure educators are adequately trained, provide additional flexibility for certification renewals, and clarify and update some language. The reason for adopting the proposed rules, rules is to simplify educator certification. I will provide a brief overview of Form 15. Approval to proceed was provided by Dr. Graves on May 27th. Notice of hearing was published in 4 newspapers on June 2nd. Courtesy copies of the rules package was provided to education stakeholders, specifically ASBSD, SASD, South Dakota Parent Teacher Association, Disability Rights of South Dakota, South Dakota BOR, and SDEA. Public comments were received at the public hearing on June 22nd before the Board of Education Standards. We received 4 public comments and 2 additional comments after the deadline. These comments came from a range of individuals, all of whom are, are proponents. There are individuals, I believe, registered to testify today as well. I respectfully ask for your approval that we have completed the rulemaking process for ARSD 2428 Educator Certification and will stand by for questions. Thank you.

Thank you, Dr. Balaha. Are there any further proponents To these proposed rules, any further proponents? Sir, I see your hand. Mr. Chair. Yeah, excuse me. Yes, whoever just said that, Mr. Robs.

I think that's Mr. Robs. Say your name again.

This is Brock, but let let let Tom Culver go, please.

Culver? Is it Culver? Okay.

Culver, yes.

Okay, sir, go ahead and introduce yourself and proceed with your proponent testimony.

Thank you, Mr. Chair. My name is Tom Culver. I'm superintendent at Bonham School District. I'm representing myself. In my former position as superintendent at Avon School, what I'm asking is the eliminating of the alternative preliminary certificate. A few years ago, We had a shop teacher that retired, shop/industrial tech, and when he retired, we advertised the job for several months, did not have any applicants. And so we went into the community with someone who was in construction that was an Avon School graduate. And anyway, we had went through the process, our principal went through filling out the certificate. Well, they filled out the alternative preliminary certificate, and then in the fall when our administrative assistant was filling out the PRF, come to find out that he was not qualified under that certificate that he applied for. And everybody was kind of panicking that we, you know, we thought that We had completed the process, and to be honest, the person almost thought about giving up and saying, "You know, this isn't worth it all the hassle and the hoops I got to jump through." So I am in support of eliminating that extra step so we alleviate the confusion. We have we're in such a shortage of teachers in this state, and if we have somebody that's interested. You know, we still have to have standards. We still have to have rules to follow, but it just seems like a wasted extra step that's not needed. So I would urge you to support this, and I would stand by for any further questions. Thank you. Thank you, Mr.

Culver. We appreciate it. Further proponents? Yep, Brock Robbs. Yes, sir. Go ahead and introduce yourself and proceed with your proponent testimony.

Good morning. Thanks so much, Mr. Chairman and committee, and the opportunity to speak certainly in favor of this administrative rule 2428. My name is Brock Robson, the executive director for the South Dakota HOSA Future Health Professionals Program and a deputy director of the South Dakota Area Health Education Center. I've been in education for 26 years, 15 years in my current role, and in this current role have become quite familiar with gaps and hurdles that exist Regarding progress pertaining to ed opportunities, specifically regarding CTE health science career pathways, and specifically to smaller rural school districts and some of the challenges they face. In many other CTE pathways such as FFA, FCCLA, Ed Rising, FBLA, etc., future educators have an opportunity to major in ag ed, fax ed, business ed, And becoming a certified CTE instructor in those particular pathways, which is fantastic. The pathway for education in the health sciences does not exist, limits the CTE certification. And so that being said, I'm working on getting that education track created specifically to the health sciences. To strengthen my position in favor of this particular rule change, data in the South Dakota Department of Ed indicates school districts have made known the lack of healthcare human services opportunities for their students. And data also shows very high interest in the healthcare human services career pathway among high school students. South Dakota HOSA has seen remarkable growth in our organization with its aims of nurturing and encouraging students interested in a health career pathway and working as a future healthcare person in South Dakota. I can say with certainty our health partners Critical access hospital system partners would stand in favor of this rule change as well. Rule change will help increase the number of certified health science teachers in South Dakota, in turn offering more health science career opportunities and resources for schools, even the smallest schools in South Dakota. The rule change would allow offering of a health science practice exam, providing life science teachers and others the opportunity to pass the exam. becoming health science certified, but also open up the opportunity to utilize Perkins funding to help them grow in their profession. So I thank you so much, and I yield back my time. If you have questions, I can answer those as well. Thanks.

Thank you, Mr. Ropps. Are there any further proponents? Any further proponents? Okay, seeing none, are there any opponents to these proposed rules? Any opponents? Seeing no opponents, we'll take questions from the committee. Are there any committee questions? Representative Muckey. Thank you, Mr. Chair.

And for the department, um, just a clarifying question. Um, noticing the section around Native American Lakota Dakota Nakota language and culture permit, I noticed the striking on organization approved by tribal government in South Dakota department. Can you explain the mechanics of that, mostly just to make sure that we're not stepping on a tribal government's authority to make those decisions.

Mr. Chair, there are 2 different Lakota language permits. One is an eminent scholar and the other is, is the Lakota, Dakota, Nakota. Under the current rules, they're the— both of them can be signed off by the tribe. one of them can be signed off by a university. We have discovered through correspondence with some of our universities that they can— they've got their requirements for coursework, and if somebody doesn't meet that requirement, they can't— they're not issuing that. So then that individual goes to a different organization and gets sign-off for the same permit. What we're trying to do here is is to— both permits allow the same type of endorsement. It allows the same courses to be taught. It's just recognizing that the one would go a university route. The other is recognizing through the tribal organization. It's not removing any opportunities. It's just clarifying the path that the person is using to get that endorsement.

Follow-up?

No follow-up.

Any further questions? Any further questions from the committee? Any questions online? Okay, seeing none, we will move to committee discussion or action on these proposed rules.

Senator Mehlhaff?

Mr. Chair?

Yes, sir.

I would move that we deem the rulemaking process complete.

Seconded by Representative DeGroot that the rules process is complete. Any discussion on the motion?

Thank you, Mr. Chair. Yeah, I think I've always applauded the department for, uh, removing barriers. I think oftentimes, you know, certainly we need to have protections in place and standards, but when it gets to the point where it becomes burdensome and more difficult to, to do the right thing, it's important to fix that. So I appreciate the efforts put forth by the board.

Thank you for the comments and the motion. Representative DeGroot.

Yeah, I applaud the department. I've thought this was long overdue. Um, I read through all the testimony that, that, that you had to your committee. Uh, you, you did involve several stakeholders in this, so I applaud you for that. I know Mr. Culver and I know Mr. Ropps quite well, and so I really respect, you know, what they're saying, and I think they outlined it quite well. Why this needs to be done? You need to have an alternative way to get that person in the classroom. Anyway, thank you for bringing it forward.

Thank you for the discussion. Anything further from the committee on the motion? Okay, 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.

Aye.

Larson.

Aye.

Mehlhaff.

Aye.

Muckey.

Aye.

Howard.

Aye.

Hansen.

Aye.

Mr. Chair, unanimous.

Thank you, Madam Secretary. That motion carries. The rules process is complete. Thank you, everybody. Thank you, Mr. Secretary. Good to see you. Moving on in our agenda, we will hear from the Department of Public Safety with rules proposal to adopt Adopt the 2025 edition of the National School Transportation Specifics and Procedures Manual. Amend school bus rules to reflect the correct reference to page numbers. Adopt the 2026 edition of the Commercial Vehicle Safety Alliance Handbook. Adopt English proficiency requirements. Authorize permits and adopt requirements for the use of industrial incinerators. And amend victim services rules. The committee will now hear proponent testimony.

Good morning.

Good morning, Mr. Chair and members of the committee. My name is Christy Turman. I am the Deputy Cabinet Secretary for the Department of Public Safety, and we appreciate the opportunity to present you with this rules package on, on behalf of the department today. I do want to express my thanks to LRC co-counsel Justin Goetz. His review of our draft rules for for style, form, clarity, and legality are always helpful to our process. I exchanged several emails and jumped on a Teams call with him to implement the changes that he suggested, and I appreciate his help very much. I will quickly give you a summary of the procedural actions the department completed to bring you this rules package, and then I will also just briefly describe each rule. The approval to proceed was signed by Secretary Perry on June 12th, 2026. Notice of public hearing was published in the Mitchell Daily Republic on June 16th, as well as the Aberdeen American News on June 16th and in the Rapid City Journal on June 18th, 2026. Wildland Fire Director Jay Wickham emailed on June 17th a copy of the public notice to the Black Hills Fire Advisory Board, Pennington County Fire Administrator, the Powderhouse Pass Housing Development, and emergency managers from Pennington, Custer, Meade, Fall River, and Lawrence Counties. Director of Victim Services Annette Beasley emailed a copy of the public notice on June 22nd to 37 Victim Services Program subgrantees and partners. Captain Stahl with the South Dakota Highway Patrol On June 23rd, emailed a copy of the public notice to the South Dakota Associated General Contractors, South Dakota Trucking Association, South Dakota Petroleum and Propane Marketers Association, and the South Dakota Association of Cooperatives. Driver Licensing Director Janelle Yedegassoo on June 23rd emailed a copy of the public notice to 23 third-party CDL testers, the South Dakota Auto Dealers Association, and the South Dakota Petroleum Marketers Association. Lieutenant Matt Cole with South Dakota Highway Patrol on June 23rd emailed a copy of the public notice also to the South Dakota Trucking Association, School Bus Incorporated, Harlow's School Bus Services Incorporated, the South Dakota School Transportation Association, and the South Dakota Department of Education. Prior to Prior to the public hearing, we did receive 2 pieces of written feedback. The South Dakota School Transportation Association endorsed the draft administrative rules for the driver licensing program. And then the South Dakota Network Against Family Violence and Sexual Assault also asked a question regarding who determined the amount for crime scene cleanup. And I'll talk a little bit about— a little bit more about this when I describe that rule. We did give the network an answer. Crime victims' compensation currently has a $1,000 cap on homicide cleanup. That's not currently in administrative rule. The program's intention is to raise this cap to $1,500 and include it in the admin rule. The $1,500 is comparable to other state programs around South Dakota and across the nation. And I'll describe that a little bit more when I talk about that rule. In the 8th paragraph of the public hearing minutes, the hearing officer noted that the department had also received feedback from LRC regarding form, style, clarity, and legality. The department accepted form, style, and clarity changes identified by LRC. There were 3 legality issues that were also identified that I'll address as I go through each of the rules as well. And DPS submitted the final rules to LRC and committee members on August 10th. And I will describe each set of rules very quickly for you. For the motor carrier, the school bus rules, the National School Bus Congress meets every 5 years to update their national standards and operating procedures for school buses. The 2020 Congress was canceled due to the COVID-19 pandemic. And so it created a 10-year gap between the 2015 and the 2025 meeting. Highway Patrol motor carrier leadership did attend the 2025 Congress meeting in Des Moines. And after a careful review of the updated national safety standard and operating procedures, it was determined that those changes created minimal impact for South Dakota. We All the changes and corrections to the South Dakota administrative rules pertain to changes in the reference pages to the national safety standards and then correcting sentence structure and improving sentence structure. In addition, the stop crossing arm crossing gate was previously considered optional equipment and was not listed on the bus inspection defect form. This administrative rule change solidifies that this equipment is optional. Now, Mr. Goetz did identify a legality issue with this set of rules. The enabling statute in SDCL 13-29-6 is not very clear in how it grants rulemaking authority. And I'm going to read this to you. It's— I'm starting with just a partial sentence, but you'll catch what I'm saying here. To certify that the vehicle complies complies with state law and rules of the South Dakota Board of Education Standards, the South Dakota Department of Public Safety, and the Division of Highway Patrol. That's the only reference to rules in that enabling statute. So it's not the clear-cut DPS shall promulgate administrative rules that cover these topics that we're all used to seeing. We have had several sets of rules promulgated under this statute since 1995. We thought it was appropriate to bring the rules to the committee and let you decide if, if the legal authority is there. Either way, we are happy to bring a bill in the upcoming legislative session to clarify that rulemaking authority. And there is no fiscal impact to the state with the school bus rules. Moving on to motor carrier, the CVSA handbook. This is a rule and a bill that we bring to you. Every session followed, followed by coming to you here at the Rules Committee. South Dakota has adopted certain sections of Title 49 of the Code of Federal Regulations pertaining to motor carrier safety and the transportation of hazardous materials. Rule 6123.0104 on page 14 of the rules packet is the annual update. Of the Commercial Vehicle Safety Alliance North American Standard for out-of-service criteria. This is the criteria that we use to enforce the federal regulations, which the legislature adopted this past session with Senate Bill 10. The standard out-of-service criteria is updated annually, and it's effective April 1st of each year. The update is done annually to ensure uniformity among the states for federal safety regulations, so there's not a checkerboard approach by the states. The out-of-service criteria identifies critical vehicle inspection items and details that can prohibit a motor carrier or driver from operating a commercial motor vehicle for a specified period of time or until the condition is corrected. You might remember last year when I was here in front of you, we added to this admin rule the title and federal regulation citation for President Trump's executive order titled Enforcing Common-Sense Rules of the Road for America's Truck Drivers. We had to add this citation to our rule because the executive order was issued after the annual update became effective on April 1st, 2025, and we wanted to ensure we were compliant with that federal regulation. This year, we're deleting that reference because those regulations implementing the Trump executive order are now included in the CVSA handbook that became effective on April 21st, 2026. And there is no fiscal impact to the state with this adoption. Moving on to driver licensing. In the 2026 legislative session, legislators passed and the governor signed Senate Bill 164, which requires any CDL holder to be proficient in the English language. This law is codified as 32-12A-11, and it includes 32-12A-11.1 through 11.5. 32-12A-11.4 gave DPS rulemaking authority to determine whether an applicant meets the English language proficiency requirement. Set forth in 11.1. The draft rule on pages 15 and 16 of the rules packet mandate that the written and driving tests be administered in English and requires a CDL applicant to be able to understand and communicate effectively— continue an effective conversation in English with the driver exam staff. We talked at length with our driver examiners about how we wanted to approach determining English proficiency. Those folks are on the front lines of making that determination, and they're doing it right now. The feedback was consistent that just by having the conversation needed to apply for, test for, and request a CDL, our examiners can immediately determine whether the applicant can speak and understand English proficiently. These examiners noted that they are well-versed in recognizing some of the memorized phrases that applicants cannot speak— who cannot speak or understand English use during interactions with the examiners. LRC did identify one legality issue with our original draft rules. We had included commercial learner's permit in our original draft. However, Senate Bill 164 gave DPS rulemaking authority for commercial driver licenses. Not commercial learner's permits. Therefore, we removed commercial learner's permits from our proposed rules. However, DPS views that the commercial learner's permit is part of the commercial driver license process in accordance with federal regulation. We will be determining the English language proficiency during the application process for a commercial learner's permit. Law enforcement will also enforce English language proficiency for learner's permits and CDL holders in accordance with 32-12A-11.5, which was also part of Senate Bill 164. And there is no fiscal impact to the state with this rule. Couple more to go. Wildland fire. South Dakota Codified Law 34-3516 requires a permit for open fires in the Black Hills Forest Fire Protection District. The state issues permits for open fires on state and private land, and the Forest Service issues permits on federal land. In October of '23, we appeared before you and promulgated rules for this permit process in accordance with 34-3519. Since that time, we've been asked about the permitting process for industrial incinerators or air curtain incinerators. You'll also hear them referred to as air curtain burners. This is a mechanized machine that burns wood, yard, and agricultural waste very cleanly. It uses a powerful diesel fan to, to blow a fast wall of air over a firebox, trapping smoke and pushing unburned particles back into the fire. We still consider an air curtain burner to be an open fire that needs to be permitted. The firebox is not covered and loading debris into the firebox breaks the air curtain and allows embers to escape the firebox. However, our permitting admin rules did not account for this type of incinerator, which is why we're here in front of you today. We worked with other states who have permitted these types of incinerators to draft the language that we use in these rules. LRC also highlighted— it was a lesser legality issue, but I'll explain to you the change we made. Our language in our original rules talked about high winds and warm temperatures in 6133.01.13 sub 4. That is very vague and would be difficult for the lay reader to interpret and apply correctly. To remedy this issue, we inserted the same advisory, watch, and warning language from Sub 3 into that same rule. We also inserted National Weather Service. There's no ambiguity on which entity issues those advisories and which ones we are following. We also inserted language to cover situations where temperatures and winds can melt snow and carry embers but do not reach the threshold of an advisory watch or warning. And there is no fiscal impact to the state with this rule. Victim services, last one. In the 2026 legislative session, legislators passed and the governor signed House Bill 1022, which revised language requiring the department to handle documents only by mail. House Bill 1022 updated this language to include email and hand delivery. On pages 21 to 25, you'll find the admin rules for our Victim Services Program. Many of the changes in these rules are cleanup languages— cleanup changes to the existing verbiage. In 67-550206, on page 22, you'll see that we added video conference technology as an option for a claimant to appear in front of the Crime Victims Compensation Commission. We also continue the changes made by House Bill 1022 and revise the rule language to include hand delivery, email, or electronic transmission of documents. Those same— the same mailing language changes appear in 6755.02. 11 on page 24 as well. And the last rule is the one I talked to— talked about just a little bit earlier, 6755.04.14 on page 25, caps the payment amount for homicide scene cleanup at $1,500 and limits repairs to windows and locks. The number of homicide cleanup claims is minimal each year. In fact, In the last 11 years, we've had 6 claims for this. The increase would be covered by federal VOCA funds. The $1,500 aligns with cleanup amounts in most other states, and there is no fiscal impact to the state general fund with this rule. Thank you for listening to my description of what we're doing. I would ask for your favorable consideration on a motion to declare this rulemaking process complete, and we will stand by for your questions.

Thank you very much. Any further proponents? Any further proponents? Seeing none, are there any opponents? Any opponents? Seeing none, are there any questions from the committee? Any committee questions? Senator Larson.

I have a question.

Go ahead.

Question for, um, I guess it's not really the prime sponsor, but whatever. Question for the person who was just presenting. And this is in relation to, um, the area 61.25.01.02, which is regarding the, um, English language requirements. Just a quick couple of questions. I'll just ask them both, and then I have just a grammatical question for Justin. Is the CDL license currently already required to be done in English? That's my first question. And then I have my second question is regarding the effective conversation test. You did mention that the that sort of authority rests just with the driver's license staff. And I'm just wondering, what are the metrics of that effective conversation test, and what are the sort of standards across the board for that so it's delivered similarly to each person, or what is it based on? If you could give us more information on that, that'd be great. Thank you.

Mr. Chair, can I have Janelle Yedigasu, our driver license Absolutely.

Please go ahead and introduce yourself and then answer the question.

Thank you. Janelle Yutagesu, Director with Driver's Licensing, Department of Public Safety. The first question in regards to the testing being done or conducted in English. We conduct it in English in South Dakota. However, it can— the written testing can be done in any language according to federal regulations. Drive tests. The drive test itself must be conducted in English. And as far as the effective conversation or the conversation with the public at the counter, it's really hard to explain. But when somebody comes in and says they want a CDL license and they can conduct a normal conversation with us, that's not a concern. It's the ones where you ask them what they need and they can't answer a simple basic. Question in regards to what they're there for, what their intentions are, if they have proper documentation. So those are the ones that kind of flag our staff. It's not anything beyond that.

Follow-up, Senator?

Yeah, just a quick follow-up. So is there anything written about what the effective conversation Litmus test requires, and is there any training given to the staff who are conducting this test?

Mr. Chair, as far as an effective conversation, no, we don't have training. However, if a staff member would try or would say they need to deny somebody a CDL license, an area supervisor for us would get involved and have, um, try to follow through with an effective conversation. Before a denial would happen. At this time, we have not had a denial of a CDL license for English language proficiency.

Follow-up, Senator? That's good. Thank you. Thank you. Further committee questions?

Sorry, one question.

Go ahead, Senator Larson.

Apologies. Another question for Justin Goetz.

Go ahead.

Well, I don't mean to sound overly particular. I really do sincerely. But what is the meaning of the quotation marks around the effective conversation testing?

Stand by.

Mr. Goetz. Mr. Chairman, Justin Goetz, Code Counsel. Senator, this is with regard to what I provided in my staff memo. Is that correct? Senator Larson. That's correct.

That's correct.

Thank you for that clarification, Senator. I only put that in there as an underscore to ensure that the express quotation, the express term, is being used here and is referenced as such. So you'll see that from time to time that I will utilize quotation marks for particular terms of significance just to show that they are significant, that they are being used as provided in statute. There really wasn't too much more to the meaning of the use of those quotation marks than that.

Anything further, Senator Larson? Thank you. Okay.

Senator Mehlhaff. Thank you, Mr. Chair. And this is also for Mr. Goetz, and the department may want to weigh in as well, but it's in regard to the to the authority to promulgate rules regarding buses, busing. So the language, I agree, is very vague, but it does somewhat imply that the department has it. So the question is, going forward, I certainly think that there should be a bill whether we revert this or not or approve it to clarify that. But is there any danger or ambiguity or ineffective rulemaking if we would pass it under the current statute?

Mr.

Goetz.

Mr. Chairman, Justin Goetz, Code Counsel. Senator, that's an excellent question. I mean, the concern for legality review by LRC staff is whether there is the statutory authority of the agency to promulgate rule in particular area. Well, the South Dakota Supreme Court has provided in case law that the general authority, which is what is at issue here that you see underneath every section of rule, is that express authority to promulgate rule. And it— by their language, it would appear that that truly needs to be express, clearly expressed authority. So there's this question of, does this fall into this realm of clearly expressed Um, as Deputy Secretary Turman mentioned, there is sort of the magic words that clearly indicate this that we see throughout rule— or that we see throughout statute. Those are not necessarily present here. But even if they aren't present here, does that suggest that there is a potential legal risk? Um, conceivable, yes. There's always a question of who would then challenge The enforceability of these standards, right? And the possibility that that challenge be brought in court because somebody tries to assert that there isn't the underlying statutory authority behind it. So, you know, what is the underlying issue with all this? The potential for challenge in a court of law of the whole regulatory framework that these Uh, that, that statutory authority speaks to. Um, obviously, there have been a number of rules in the past that have been adopted under that statutory authority. So the question of legislative intent, I mean, it, you know, one could make the argument that the legislature intended for there to be this rulemaking authority, but perhaps the right words weren't quite used. Or perhaps the right words were used. It's just that they weren't used in the traditional way of expressing legislative intent to propound rule. So there is, to give a quintessential legal answer, plenty of gray area. Could it be strengthened? Yes. That, I think, is fair to say.

Mr. Chair. So oftentimes, Judges will try to determine legislative intent, as you talked about. Would this board be qualified to do the same? This board of legislators.

Mr. Chair, Justin Getz, Code Counsel. Legislative intent is a tricky thing when push comes to shove because in a legal environment, you know, if a court is looking at what the legislature is doing Um, and trying to assess legislative intent, you know, do you look to the committees that heard the legislation and the testimony there? Does that adequately capture the 105's, you know, complete intent in passing legislation? It's always been a tough thing to assess, and it's why generally the courts have utilized that as almost the last ditch to ascertain the meaning of Uh-huh. —law that is ambiguous, that may be ambiguous because LRC has failed to draft it, um, as, as, um, you know, particularly as it should. So, you know, I'll, I'll certainly point to my work as potentially being a weakness there. Um, but, you, you know, I mean, you are empowered to declare the rulemaking process complete under this rule promulgation framework. And as a part of that, you are presumably— because 126 allows you to revert because of lack of legislative intent, you are presumably ascertaining that with every rule packet that comes through. So from a true in-court legal standpoint, does this ascertain legislative intent fully? Perhaps. Perhaps not. But you are certainly empowered under a statutory framework here to make a decision to allow this rulemaking process to be complete based upon your finding of legislative intent.

Thank you.

Follow-up? Anything further? Senator Mehlhaff? Representative Muckey.

Thank you, Mr. Chair. And for the department, um, my main question is, are there any concerns at this point with the implementation of this that there are any school districts or any busing that might be out of compliance at this Ms.

Turman?

Uh, not at this time, I don't believe so.

Follow-up.

Go ahead.

Um, is there any immediate threat, just to ensure that we're paying attention to this as we're making decisions, is there any immediate threat if we do not pass this that there will be safety concerns?

Mr. Chair, um, I am going to have motor carrier come up and address that, if you don't mind.

Good morning, sir.

Go ahead and turn that microphone on, introduce yourself, and then answer the question if you need it restated.

Yeah, my name is Matt Cole, the field lieutenant with Mortar Carrier Services.

Mr.

Chair, to answer the question, there are no current school districts or school buses that are out of compliance.

The main objective of updating these admin rules is to have the admin rules reflect the actual reference pages that were changed in the School Bus Congress meeting in Des Moines to the National School Transportation Standards and Procedures Manual. Follow-up, Representative Muckey.

Thank you for that. Making sure also I'm understanding I think there was a comment made at one point that we have passed rules packages underneath this particular statute since 1995. Can you elaborate on that?

Go ahead.

Mr. Chair, from what I and our legal representation, Mr. Paul Bichon, have been able to determine, we have done that 4 times in the 2000s. The first 2 were done by the Department of Education, and the last 2— the— and I think the last one of that was in 2017, uh, were done by the Department of Public Safety. As far as what they were, I, I don't have that information.

Follow-up, Representative Muckey. Thank you. Last follow-up, I promise.

Um, just making sure I'm also taking this into account, um, looking at this, I know there's kind of an implication in that There has to be some rules that we're following in terms of this process. As far as a bill, I'm assuming in this case we have a commitment from the department to move something forward for, for next session.

Ms. Turman?

Yes, we would be. Whether you declare the rules process complete or not for that section of rules, it's our intent to bring a bill to clarify.

Thank you. Any further committee questions? Anything further from the committee? All right, seeing no further committee questions, we'll move to committee discussion or action on the proposed rules. Senator Mehlhaff.

Mr. Chair, I am going to motion that we deem the rulemaking complete.

Is there a second? I'll second it. Motion made by Senator Mehlhaff, seconded by Representative Muckey. The process is complete. Any discussion on the motion? Mr. Chair, go ahead.

Yeah, I understand the concern about— I think the only thing that we would revert if that were the motion would be on the vague authority granted by the legislature. But it's been— has been discussed. Rules have been promulgated under that vague authority. In the past. And I, I think the work that's currently been done and the commitment from the agency to clarify that the authority— it just doesn't make a lot of sense to march them down the hill just to have them march back up later on. So I think it would be— and I don't see a risk in, in going forward of, of any legal jeopardy or refusal or challenging of the rules. So I think it would just be more efficient to move forward and approve the package.

Thank you. Any further discussion? Representative Muckey.

Thank you, Mr. Chair. Um, I want to make 2 points regarding the school bus side of it. I appreciate the answers to questions, trying to make sure we're, we're covering our bases. The one thing I look at when I look at this, I know that there's a lack of clarity around Rulemaking authority, but the implication that there are rules that have to be followed as part of an inspection process. If we do not have rules, it's pretty difficult for us to have any type of process in place. So I, I think from that end, I don't think we're going to be seeing, at least the way that I'm hearing this, that we're going to be seeing folks coming to sue the state of South Dakota for having bus inspection rules. So I think we can move forward with that with the intent, and I encourage the Department of Public Safety to work with Rules Committee to present the legislation. I think you have a friendly audience here. The second comment I want to make is regarding the English language proficiency. I stood in opposition to that bill when it came to the legislature. I have concerns about the definition of effective conversation going forward. At the same time, I want to make a comment that I think is important for this committee and for folks to hear who tune into this. Our job as a committee is largely to to look at the merits— not the merits, the statutory requirements and what's been passed in terms of the legislative intent as best as we can. And though I disagree with this proposition, given that it's federal law that already governs this, I'll be supporting the motion today because I think we need to hold up the intent of the legislature even when we don't agree. So I appreciate that, Mr. Chair.

Thank you. Any further remarks on the motion?

Okay.

Seeing no further remarks, the question for the committee is a motion that the rules process is complete. All those in favor will vote aye. Those opposed, nay. Madam Secretary, please call the roll.

DeGroot?

Aye.

Larson?

Aye.

Mehlhaff?

Aye.

Muckey? Aye.

Howard?

Aye.

Hansen?

Aye.

Mr. Chair, unanimous.

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

All right.

With that, I will pass the gavel down to Senator Mehlhaff.

Thank you, Mr. Chair. At this time, we have the Gaming Commission coming forward, the South Dakota Commission on Gaming, to amend and adopt rules implementing online and mobile application Paramutual wagering through advanced deposit with multiple jurisdictional totalizer hubs, establish standards for the operation of hubs within the context of advanced deposit wagering, online and mobile applications to implement security standards, account standards, and clarify the means and methods For applications to be submitted and examinations to occur of wagering systems and to address the licensure of multi-jurisdictional totalizator hubs with the context of online and mobile wagering on horse and greyhound racing. I forgot my readers today, so that's why it's kind of a stumbled reading today. today. So thank you. We will take proponent testimony at this time on this packet.

Mr. Chair, Doug Abraham. I'm an attorney from Pierre and counsel for the South Dakota Commission on Gaming. It's a pretty substantial packet here, and I think probably the history and background as to why this is before you is maybe more— is fairly important to go through. The first packet here are the rules to implement the legislature's enactment of HB 1058. HB 1058, if you recall from last session, it was an act to require licensure for online parimutuel wagering pools for horse and dog races and clarify the application of tax therefore. So totalizator is maybe the worst word in any administrative rule anywhere. But we already have rules concerning hubs. And what you saw last session, and this was not legislation that the Gaming Commission pushed, we didn't take any position on it. It was brought forth by primarily Representative Y.S. Graham in concert with the Horsemen's Association in relation to the horse racing industry. And to the extent I can speak for what I think their goals were, their goals were to make online wagering systems subject to South Dakota tax because our South Dakota tax in relation to hubs goes to fund much of our horse racing and subsidizes that. Well, the key aspects of this legislation were it established that, you know, only a person licensed as a multi-jurisdictional totalizator hub in this state may operate an online betting platform or electronic application to offer online parimutuel wagering on a horse or dog race. So basically brought that online system which previously had been prohibited. You could have a brick-and-mortar hub that could take bets through telephone, through fax, things like that. This was, you know, some of these rules date back to very early 2000s as to the means and methods by which you could take bets. Well, there is a significant online betting industry that exists, and this was an effort to bring them within the licensure structure structure of South Dakota and make sure that they're remitting tax in South Dakota. So if you're accepting a bet in South Dakota on an online platform, you're being taxed appropriately and those funds are being remitted appropriately, and that there are safeguards in place for that to occur. So it's important that we have that carve-out because you may recall this, we've talked about it in the past, there's an express prohibition against online wagering in South Dakota right now. Roger Hunt brought that legislation It's Chapter 2225A that prohibits online wagering. So there had to be a specific statutory carve-out from the legislature for this to occur. And then as a portion of this legislation, it also required that a person with physical presence in the state operating a platform or electronic application to offer online pari-mutuel wagering on a horse or dog race would be subject to the tax imposed pursuant to SD 42-7-102. That's a tax that already exists for brick-and-mortar totalizator hubs that offer— and we don't have any currently licensed in South Dakota. The last brick-and-mortar hub went out of business in the last 12 months. That was Railbirds. And so it required subjectivity, or that individuals with this license structure be subject to the tax, and also clarified In the tax that would be remitted for individuals without a physical presence in the state operating an online betting platform or electronic application to offer online parimutuel wagering on a horse or dog race. So the idea, at least as I perceive it to be, and I think I'm on board with this, what their target was to make sure that anyone who's accepting a bet from a South Dakotan was subject to South Dakota tax, South Dakota regulation, playing by the same rules that the guys with brick-and-mortar shops who are struggling for a lot of reasons are. And so it was to level that playing field. But the problem with it is we didn't have any guardrails at all for online. South Dakota doesn't have online. You know, we have mobile— we have— we don't have mobile sports wagering. We have sports wagering where in theory you could wager from an app on a casino's physical premises, but we don't have beyond that in South Dakota. So we don't really have rules that would, that would govern that. That's what this rules package does, is basically implements through 3 separate factors here in groupings, uh, the online aspect of allowing these hubs to exist and to license them and make sure that we have adequate oversight and regulation over them. So the first chapter amendments in 20.04.33, that adds the online-specific rules to our existing hub chapter. The second chapter, 2004-34, clarifies penetration testing for the online system and what's required. We didn't reinvent the wheel when it comes to penetration testing. And the commission's concern in large part was trying to be equitable. If you are accepting individuals' payment information and their personal identifying information, because we have to verify that you are sufficient age to wager, There should be certain safeguards in place. And we already have significant safeguards that we've been— that have been developed through the sports wagering service providers. Our sports wagering service providers that operate out in Deadwood have access to very similar client personal identifying information and financial information. So we borrowed those penetration testing standards for the hubs to make sure that they're secure. That penetration testing happens on an annualized basis. It's conducted by a third-party entity to verify that those systems are, in fact, secure, because it's your information. We all know the risks presented out in this modern world for malware, for individuals hacking systems, things like that. That penetration addresses those issues on an annualized basis. And then the next chapter, 2004.35, clarifies what's required to open and verify online accounts. And this includes procedures for deposits, withdrawals, age verification requirements for opening and closing accounts, what happens if you have abandoned accounts, things like that. Because we didn't have those standards. Your typical hub that was brick and mortar may have had an account, and you could establish an account there, but that was a very different way to do so. You were physically being present in that brick and mortar establishment versus online establishing an account, and we had no guardrails whatsoever for that. And so that's the third chapter, and that's the intent, is to make sure that we have guardrails for establishing these accounts because we're going to have a new— despite the fact that we have license structures for totalizator hubs, this is an entirely new kind of chapter in this, going to legal online totalizator hubs when it applies to horse and dog racing. And so that was kind of the 3 areas, uh, that, that these rules are broken into. I can address any individual area Anyone may have questions in regard to, but I felt like it made more sense to go over the structure why we're here because normally when we're here it's either a rule from the commission or it's an industry rule. This is directly as a result of legislation, and there's a lot to the background and history of that legislation. But I can address any of those individually that you may have questions in regard to. But that's a general summary. I won't go through everything that you have in the rules presentation format that's already. been presented to you, but I wanted to give you that background for the structure and how we got where we are now, because when you have an issue like this, it's important that we get it right and protect the consumers, and this was our efforts to do so and to not reinvent the wheel to the extent we could avoid doing so.

Thank you, Mr. Abraham. Is there any other Proponent testimony on this rules packet? Seeing none in the room, I don't believe anybody is online, so we will go to opponent testimony. Are there any opponents to this package? Seeing none, we'll go to, uh, committee questions. Any questions from the committee? Seeing none, we will, uh, close questions, go to committee discussion and/or action. Representative Muckey. Mr.

Chair, I move we deem the rulemaking process complete.

The motion from Representative Muckey, second from Representative Hansen, to deem the process complete. Any discussion on the motion?

Nothing more than to say thank you. I know this is a pretty intensive packet. I know trying to find ways to protect consumers and level out playing field in an environment where we may not have a ton of regulation around online sports betting is really a challenging endeavor. So I appreciate the work that's been put into this.

Any further discussion? Seeing none, I'll ask the secretary to please call the roll.

DeGroot.

Aye.

Larson.

Aye.

Muckey.

Aye.

Howard.

Aye.

Hansen?

Aye.

Mehlhaff?

Aye.

Mr. Chair, unanimous.

Having received unanimous vote, this rules package is deemed complete. So we move on to the next one. We— Mr. Abraham will speak to this from the South Dakota Commission on Gaming, to amend and adopt rules to modify existing provisions to the most recent version of the ARCA standards for medications, offer a variation of play and corresponding pay table for a new poker game called 3-Card Prime, to offer variations of play and corresponding pay tables for existing blackjack games 21+3 and Double Down Madness, and to offer a variation of play and corresponding pay table for a new blackjack game called Trilux Blackjack Progressive. Proponents on this rules package? Welcome back, Mr. Abraham.

Thank you, Mr. Chair. Uh, I do have one clarification to offer. We are not, uh, pursuing, uh, finalization of 21+3. Uh, and just for the reason for that, and it's, it's an error on my part and, and lack in part communication back and forth with industry on it. We had one paragraph that preceded a pay table that did not get into the rules despite the fact that we sent it off to them. They didn't respond back and I didn't follow up with them. So we are going to go back to the commission, put in the right paragraph because it is substantive on that 21 plus 3. So we are not pursuing finalization on the third bullet point. In regard to the other standards, there is one typo. ARCA should be ARC-I. That is Association of Racing Commissioners International. This is much, much more in line with our— what you normally see from the Gaming Commission. We come back every year to deal with horse racing updates on these same— those who've been on the commission or on the Interim Rules Review Committee for a while have seen this multiple times because we're back literally every year to update those standards. To the most recent version of the ARC standards. Fort Pierre is the only active facility offering horse racing in South Dakota, and because of that, you know, we lean heavily on national standards to make sure that horse racing, one, can still occur here because we do have a lot of individuals with horses that travel around the area, go to various tracks. We have uniform standards, but But it also impacts when there are violations and how those violations and offenses are effective, or I should say how they impact individual jockeys, trainers, things like that. So this is just an update to the most recent version of that. It develops kind of a uniform standard so jockeys, trainers are all familiar with these standards. We're just updating that to the most recent version. Thank you. Version for this year. Then when it comes to the— and that's on the first section, but it applies to the restrictions on the use of authorized medications. They publish a standard. It's got a list of limits, amounts that each individual medication could use. And then there's a separate section on penalty for medication violations that's updated as well. It cross-references that standard. The next area is— it's a variation of play. You've also heard from the commission multiple times on variations of play. This is a variation of play of blackjack called 3-card prime. This comes from an industry— industry member named Galaxy Gaming. They're licensed. They basically develop variations of table games. And so we already have blackjack. 3-card prime is a variation of blackjack. You'll see side bets, things like that, slight modifications to the rules. This is that rules package authorizing a variation of play for blackjack. The commission has a process for which industry members can propose rules. They pay a fee to go through this process, and that's why they're here. Their hope is that casinos— and typically they are already working with a casino, and it could be a tribal casino as well— that has expressed some interest in using this game. And that's why you see, and you have to read your table felt wherever you go, because blackjack's rarely blackjack anymore. There's always modifications and different rules and things like that you need to deal with. This was another one of those variations of play. It was evaluated by the commission staff, and then we also have GLI, who we contract with. It's Gaming Labs International. They're the largest entity of their sort that verifies that odds, various aspects of if you have progressives, things like that, that they are paying out exactly what they're supposed to pay out at the same rate and verifies that the game's accurate. So that's that version. And then the last one is another variation of play and corresponding pay table for a new blackjack game called Trilux Blackjack Progressive, and that comes from Light and Wonder, similar types of situation. It's another industry member who is seeking to have the ability to place this table game with some casinos that they contract with. This is a progressive, so it's a little different in the sense that it's typically a side bet where, you know, you may— they call them sucker's bets at times, but, you know, that's for individual wagers to determine. But that side bet is linked as a progressive, and so If you hit a particular preordained card, so maybe based on a poker hand, like 3 of a kind, things like that, then you may win the progressive, and the progressive is constantly changing. This develops the standards and rules and the pay tables for that progressive to be used and put into play. But that's basically it. You have everything in the Rules Presentation Standard. That's all I have.

Thank you. Thank you, Mr. Abraham. Is there any further proponent testimony on this packet? Seeing none, we'll go to opponents. Are there any opponents to this rules package? Seeing none, we'll go to questions from the committee. Are there any questions? Seeing no questions, we will move to discussion and/or action.

Mr.

Chair, Representative Hansen. Thank you, Mr. Chair. Well, I would begin by reverting Section 2018-15-3003, which is the 21+3 section that the proponents don't want to proceed with.

Second. So we have a motion to revert the section dealing with 21+3. Is any discussion? Seeing none, so the motion by Hansen, second by Muckey. Ask the secretary to please call the roll on the reversion of that section.

DeGroot.

Aye. Larson. Aye. Muckey. Aye. Howard. Aye. Hansen.

Aye. Mehlhaff. Aye. Mr. Chair, unanimous.

Okay, though the reversion on the 21+3 gaming section is passed with the unanimous vote, is there any further action to be taken? Mr. Chair. Representative Hansen. Thank you, Mr.

Chair. Well, as to the remaining rules in the proposed rules, I would Move that the rules process be deemed complete.

Motion by Hansen, second by Representative DeGroot to declare the remaining sections of the rules process complete. Any discussion on the motion? Seeing none, I'll ask the secretary to please call the roll.

DeGroot. Aye.

Larson.

Aye. Muckey. Aye. Howard. Aye. Hansen. Aye. Mehlhaff. Aye. Mr. Chair, unanimous.

Having received unanimous vote, the remaining portion of that rules package is deemed complete. At this time, I will pass the gavel on to Representative Muckey.

Thank you, Senator Mehlhaff. Our final rules The first packet of the day is from the Department of Health, amend and adopt rules related to updates to the South Dakota Board of Nursing requirements for certified nurse aides, CNAs, and repeal duplicative rules relating to CNAs. Welcome to our proponent testimony. Please introduce yourself and begin.

Good morning, Mr. Chair, Madam Vice Chair, and members of the committee. My name is Jennifer Mason. I'm the administrator of the Office of Licensure. And certification within the Department of Health. Also have some representatives from the department in the audience here. We're here today to share changes to the administrative rules for 4474 nurse aides, 4473 nursing homes, and 4470 assisted living centers. For those not familiar, the Department of Health is responsible for ensuring the health and safety of patients and residents in South Dakota through the regulation and licensure of healthcare facilities as defined in Chapter 3412. The effect of the rules is to repeal language in Article 4474 that is duplicative of the Board of Nursing requirements for nurse aides in ARSD Chapters 2048.16 and 2048.18 that became effective in September of 2025. Section 4474.0206 is being transferred to a new rule within 4473.0616. Section 4473.06.14 is a new proposed rule that clarifies nursing home requirements related to nurse aides that was previously addressed in 4474. The other proposed rules within 4470 and 4473 update the language to reflect the ARSD changes from those September 2025 changes and repeal of 4474 as well as incorporating the legislative research Council's recommendations to move some definitions within the rules and have consistency in the language. The proposed changes do not change any existing processes, schedules, or activities, and they do not have a financial impact. The reason for the proposed rules is to repeal that duplicative regulation in 4474 based on those September 25 rule changes and to transfer and amend rules from 4473 and 4474 that may remain relevant. And to update 4473 and 4478 based on those same changes. So the procedure for our rules process: on June 2nd, we received approval to proceed from the Secretary of the Department of Health. On June 12th, the Legislative Research Council and the Bureau of Finance Management were served the proposed rules and supporting documentation, and the proposed rules and supporting documents were also posted on the rules.sd.gov website. On June 23rd, the notice of public hearing was published in the Aberdeen News, Brookings Register, and the Rapid City Journal. On June 25th, the notice and proposed rules were emailed to 11 interested, interested parties, including the South Dakota Board of Nursing, South Dakota Healthcare Association, the South Dakota Association of Healthcare Organization, and others. The proposed rules and supporting documents were also posted on the rules.sd.gov website. On July 21st, a public hearing was held and attendees included representatives from the Department of Health. The department received no oral or written proponent or opponent testimony during the public hearing as outlined in Form 10. The department received no written public comment through July 31st as outlined within Forms 10 of the rules forms. And on August 11th, the final rules and supporting documents were submitted to LRC and the committee. Committee. So, Mr. Chair, our goal with the revisions was to repeal that duplicative nurse aide rules and to update and clarify the regulations for nursing homes and assisted living that related to the nurse aides. Thank you for your time and consideration, and I'll stand by for questions.

Thank you. Any further proponents? Any further proponent testimony? Seeing none, we'll move on to opponents. Any opponent testimony? Seeing none, I'll move on to committee questions. Any questions from the committee on this rules packet? Getting quiet. Okay. Moving on to committee discussion and/or action.

Mr. Chair. Senator Mehlhaff. I would move that the rules packet be deemed complete.

I have a motion from Senator Mehlhaff, seconded by Representative Hansen, to move the rulemaking process is complete. Any discussion on the motion? Seeing none, the motion before the committee is to deem the rulemaking process complete. Madam Secretary, please call the roll.

DeGroot?

Aye.

Larson? Aye.

Mehlhaff?

Aye.

Howard? Aye.

Hansen?

Aye.

Muckey?

Aye.

Mr. Chair, unanimous.

Unanimous vote. The rulemaking process is deemed complete. I'll pass the gavel back to Chair Hansen.

All right. Thank you very much. Well, that concludes our rules packages for the day. Anything from staff? Mr. Goetz.

Mr. Chairman, Justin Goetz, Code Counsel. Nothing to report, Mr. Chairman. Just A question about next month's meeting.

Thank you, sir. Thank you, Senator Howard. Did you want to discuss next month's meeting date?

Well, thank you, Mr. Chair. It would appear that there is a conflict for at least myself due to Goack and rules now being are being scheduled on the same day. So. If it would be possible, if we could move rules review by a day, that would be of tremendous help.

So that would be moving it from September 8th to September 9th, right? Correct. Correct. Everybody want to take a look at their calendar? Mr.

Chair, Representative Muckey, are you sure you don't want it on Labor Day?

I'm just kidding. Yeah, the 9th works for me.

Thank you.

Okay, I think I'll be camping down in Yankton on the 7th. Yeah, uh, does it work for you? Okay, works for me. Okay, okay. Oh, sorry. All right, yeah, well, I think that works for everybody. So we'll go ahead and do that. We'll move our committee meeting for September from September 8th to September 9th. All right. Anything else? Okay. Nothing further. Chair will entertain a motion to adjourn. Moved by Representative Muckey. Seconded by Senator Mehlhaff. All those in favor of adjournment will say aye.

Aye.

Those opposed?

Nay.

That motion carries. We're adjourned. Thank you.