Author Archives: Bob Mercer

About Bob Mercer

Bob Mercer is a newspaper reporter in Pierre where I cover state government, issues and politics for the Aberdeen American News and four other separately owned newspapers: the Black Hills Pioneer, the Pierre Capital Journal, the Mitchell Daily Republic and the Watertown Public Opinion. I began covering the Legislature in 1985 and have lived in Pierre since December 1986. I grew up in Wisconsin, worked my way through college, took my first full-time newspapers jobs in Wyoming, and have lived in South Dakota since the summer of 1984 when I moved to Aberdeen to join the American News. I worked for the Rapid City Journal as its state government reporter in Pierre from late 1992 through late 1998. I spent four years as press secretary and a senior aide to Gov. Bill Janklow during his fourth and final term from late 1998 through 2002. I returned to journalism in January 2003 as a self-employed reporter, providing state government coverage to the Mitchell, Watertown, Spearfish, Pierre and, depending on the year, Aberdeen newspapers. In 2008, the Aberdeen American News offered to hire me as full-time member of the AAN staff, with my reports continuing to be available to the Mitchell, Watertown, Spearfish and Pierre papers. The new arrangement has been in effect since January 2009 as the five papers continue their remarkable dedication to their readers and the general public, as the only South Dakota news outlets with a full-time reporter covering state government in Pierre throughout the year. In addition to focusing on the Legislature during the annual winter session and its various activities during the interim periods between sessions, I spend many days throughout the year -- traveling as often necessary -- to cover state government boards and commissions which oversee the state universities, technical institutes, outdoors, water, environment, business, public schools, banking, agriculture, utilities, health care and various other areas of public interest. I purposely don't register to vote because of my profession; the last time I recall voting in a presidential election was the first time, 1976, when I had just turned 18. I think I voted for Jimmy Carter over Gerald Ford. Make of that what you want, just don't make much of it.

Fresh start coming for SoS office

Secretary of State-elect Shantel Krebs will install a new team in the office come January. She’s already moving toward that goal on several fronts. Nine jobs are posted as openings and the application period closes Nov. 25. Three are in business services, three are in elections and three are in office management and various services. Unofficial word in the Capitol is she’s bringing back two experienced top hands in Teresa Bray and Kea Warne who were part of Chris Nelson’s team when he was secretary of state. She’s also reportedly bringing in former state Rep. Tom Deadrick, R-Platte, to join Bray and Warne as senior management. Bray and Deadrick, a former speaker of the House, were candidates for the Republican nomination in 2010 but lost to Jason Gant of Sioux Falls at the Republican state convention. Krebs, a state senator from Renner, decided in the summer of 2013 that she would run for the nomination. She filed her organizational paperwork before Gant had announced his plans. He ultimately didn’t seek a second term. Krebs won the nomination over Gant’s current deputy, Pat Miller. Since deciding he wouldn’t run for re-election, Gant moved back to Sioux Falls. It also will be interesting to see whether interaction and involvement increase between the state Board of Elections and the secretary of state office after Krebs moves in. That’s been a fractious relationship during Gant’s time. The board met three times in the past two years — one hour and 59 minutes total on two occasions so far in 2014 and two hours and 48 minutes at the one meeting in 2013. Krebs showed her work ethic as a legislator for 10 years. She’s bringing aboard solid professionals as her top administrators. It would seem better times are ahead for one of the most important offices in state government.

Watershed meeting will feature big choices

The Nov. 24 meeting of the Legislature’s watershed task force will be anything but puffery. The panel’s four subcommittee chairs will present their reports:

Former state Rep. Kim Vanneman of Ideal on water management entities and districts, water management assets and funding of best practices;

Sen. Mike Vehle of Mitchell on standardized disclosures of new drainage projects, tracking of drainage and infrastructure activity;

Attorney Dennis Duncan of Parker on mediation and dispute resolution; and

Rep. Brian Gosch of Rapid City on the retention pond concept.

The meeting starts at 10 a.m. CT at the state Capitol (room 413) with public testimony scheduled for 11 a.m. More public testimony will be taken at 1:15 p.m. if needed. The task force expects to make recommendations for possible action in the 2015 legislative session.

Other legislators on the task force are Sen. Jason Frerichs of Wilmot, Sen. Tom Jones of Viborg, Sen. Jim White of Huron, Rep. Dennis Feickert of Aberdeen, Rep. Spencer Hawley of Brookings and Rep. Leslie Heinemann of Flandreau. Two other former legislators on the panel are Mike Jaspers of Sioux Falls and Paul Symens of Amherst. Mike Traxinger, a lawyer for Wheat Growers, and George Vandel, a former state Wildlife Division official, round out the task force. Two pieces of draft legislation are available regarding mediation disputes and river basin natural resource districts.

GFP Commission will discuss Vonk’s successor

The state Game, Fish and Parks Commission meets Thursday (11 a.m. CT) by teleconference to talk about the commission’s involvement in the search for a new department secretary. Jeff Vonk has declared his intention to retire effective Jan. 8. State law allows the commission to offer names of candidates for the post, but the final word belongs to Gov. Dennis Daugaard. A Nov. 17 letter to the commissioners from Nathan Sanderson, a senior aide to the governor, notes that the governor isn’t bound to make his choice from any names offered by the commission but he requests their suggestions. Sanderson told the commission he will be leading the search on behalf of the governor. He asked for the commission’s suggestions by Nov. 28 and says the governor would like Vonk’s successor in place by late December so there can be a smooth transition. The commission’s current chairman is John Cooper of Pierre, who was Game, Fish and Parks secretary prior to Vonk. Cooper, a former U.S. Fish and Wildlife Service agent, was GFP secretary from 1995 through 2006. He was appointed to the commission by Gov. Mike Rounds and confirmed by the state Senate on a vote of 22-12 in March 2010. Vonk was appointed by Rounds as secretary in January 2007. Daugaard retained Vonk when his new administration began in 2011. Vonk is a forester by formal training and made his career in public service, mostly in work for the federal government. He was director for the Iowa Department of Natural Resources prior to his hiring for the South Dakota job. Sanderson received a promotion this month to director of policy and operations for the Daugaard administration. He takes part of the job previously held by Tony Venhuizen, who was promoted to chief of staff. Venhuizen succeeded Dusty Johnson, who left state government for a job in the private sector with a telecommunications business at Mitchell.

State Board of Education is boxed-in

Some state boards and commissions — and even committees of the Legislature, the governor with the Capital for a Day program, and the state Supreme Court at times — prefer to take their meetings out to the people on occasion. The controversy over Common Core standards in math and English for K-12 schools in the past four years has created an unusual situation for the state Board of Education. Here’s why.

State law requires the state board and the state Department of Education to revise standards on a scheduled basis. That’s currently every seven years for most subjects and every five years for career and technical education subjects. Backlash among legislators, who felt they and the general public weren’t adequately notified about South Dakota joining Common Core back in 2010, led to restrictions on the state board. Through a series of laws passed in recent years, the board now must hold a series of at least four meetings on each proposed revision of standards, and those four meetings must be in Aberdeen, Pierre, Sioux Falls and Rapid City. There are 28 sets of standards. The board and the department had fallen behind on revisions and is now on a schedule that means standards for at least one or more subjects at some level will be revised every year. Because these are public hearings, a quorum of at least five board members must be present in person at the meeting place. Up to three members can participate by teleconference, but the board as a whole can’t meet over the telephone or videoconferencing network.

The board normally  holds six regular meetings in the course of a year. In addition to overseeing K-12, the board also has responsibility for the four public technical institutes at Watertown, Mitchell, Rapid City and Sioux Falls. The board typically holds its January meeting in Pierre because of the legislative session. You can see where this leads. You won’t be seeing the board in Spearfish, Sturgis, Huron, Brookings, Brandon, Yankton, Madison, Chamberlain, Vermillion or any mid-sized or smaller communities any time soon — that is, unless the board wants to hold more than six meetings. In fact, the board likely won’t even be able to get to both Mitchell and Watertown in the same year.

The board sets its 2015 meeting schedule on Monday. Here it is:

Jan. 15 — Pierre;

March 16 — Sioux Falls;

May 18 — Aberdeen;

July 27 — Rapid City;

Sept. 21 — Watertown; and

Nov. 16 — Sioux Falls.

The board has taken steps to make meetings more accessible to the public. All meeting documents are available on-line and at the meetings for the public. A telephone line is available for people to listen and to comment. The meetings aren’t held in small rooms any longer. The step that hasn’t been made yet is getting the meetings on-line; audio from some recent meetings is archived.

Go here for the schedule of standards revisions.

Governor reappoints rail board members

Carl Anderson of Aberdeen and Todd Yeaton of Kimball received new terms on the state Railroad Board from Gov. Dennis Daugaard. They are the two longest-serving members. Each originally was appointed in July 2003. Their new terms run through Oct. 30, 2017. The board received three new members earlier this year in Jerry Cope of Rapid City, Harlan Quenzer of Mitchell and Jeffery Burket of Spearfish. Sheldon Cotton was appointed in 2012. Gary Doering was appointed in 2008. The board oversees grants and loans for railroad development projects.

Republicans did and Democrats didn’t w/update

UPDATE: The Legislative Research Council issued a news release for both parties. The release is available here.

The South Dakota Republican Party posted a news release Saturday announcing the results of the legislative leadership caucus elections. The South Dakota Democratic Party didn’t. That might seem trivial but it shows once again the differences in the current status of the two political organizations. The Associated Press assembled a news story through good old-fashioned reporting.

Senate Republicans kept their team the same at the top. Corey Brown of Gettysburg returns as Senate president pro tem. Tim Rave of Baltic is the Senate Republican leader again and Dan Lederman of Dakota Dunes comes back as Senate Republican assistant leader.

House Republicans shuffled their deck as the result of term limits and tradition. Moving up to House speaker is Dean Wink of Howes. He was speaker pro tem for the 2013-2014 term. The departing speaker, Brian Gosch of Rapid City, moves to House Republican leader. Gosch succeeds David Lust of Rapid City, who is leaving the Legislature after serving the maximum of four consecutive terms in the House. The new House Republican assistant leader is Steve Westra of Sioux Falls, replacing Justin Cronin of Gettysburg who didn’t run for the slot again.

House Democrats chose Spencer Hawley of Brookings as their new leader. He succeeds Bernie Hunhoff of Yankton, who won election to the Senate. Julie Bartling of Gregory returns as House Democratic assistant leader.

Senate Democrats selected Billie Sutton of Burke as their new leader. He replaces Jason Frerichs of Wilmot, who didn’t won re-election to the Senate unchallenged but didn’t want to continue as the caucus leader. The Senate Democratic assistant leader will be Sen.-elect Troy Heinert of Mission. Sutton had been in that spot. Bernie Hunhoff didn’t seek a caucus leadership spot in the Senate. He will focus on a middle-road approach to winning the Legislature’s approval of Medicaid expansion.

 

We keep digging on EB-5 because otherwise you won’t know

Bit by bit, week by week, month by month, the public learns a little more about the previously secret operations of the EB-5 immigrant investor program in South Dakota. During the year since the Oct. 20, 2013, death of Richard Benda, the public’s knowledge gradually progressed.

There were rumors of an FBI investigation and an admission by the governor that his office received a federal grand jury subpoena. There was confirmation from a man who said he took the topic to the FBI. There was the revelation last December that Northern Beef diverted $550,000 from a $1 million state grant and sent the money to SDRC Inc. to pay Benda, who had helped arrange for the grant in December 2010 while he was still secretary of tourism and state development , then went to work for SDRC Inc. in January 2011. There were the revelations last winter from the state Department of Legislative Audit and from state Attorney General Marty Jackley about Benda’s activities while he was secretary and how he arranged to increase a second grant by $550,000 that made its way to Northern Beef. There was the revelation on July 29 by Jackley that in October 2013 Jackley had a warrant ready to have Benda arrested and had a state grand jury scheduled for that month, but Benda died of a self-inflicted shotgun wound a week before before the grand jury could meet and before the arrest could be made on theft charges. We learned in depth in September and October about a lawsuit in California involving Joop Bollen, who was South Dakota’s EB-5 administrator and who formed his own EB-5 management company while he was a public employee. From that lawsuit we learned Bollen essentially was cold-shouldered from his job as South Dakota International Businesses Institute director at Northern State University in 2009 after the lawsuit was filed, because the university and Board of Regents saw EB-5 outside their management scope, but lawyers for the regents and the attorney general’s office worked to defend Bollen and South Dakota in the lawsuit. There was the admission this week from Bollen, who worked closely with Benda and hired him at SDRC Inc., that Bollen was interviewed twice by federal investigators in 2013. Next came the revelation that Jackley and his state investigators relied on the FBI reports for their understanding of Bollen, rather than interview Bollen directly in the state investigation last year of Benda’s activities. We learned from Jack Warner, executive director for the state Board of Regents, that Bollen didn’t disclose his formation of SDRC Inc. to university officials and didn’t seek permission to sign a state agreement with his for-profit company in 2008. We learned state government spent $510,000 on attorney fees defending Bollen and South Dakota in the California lawsuit, and that Bollen wasn’t disciplined by the regents or the university because he was needed to defend against the lawsuit. We learned from Warner that $195,000 was in reserve at the institute from activities other than EB-5 and those funds helped offset some of the lawsuit defense costs. Warner said NSU and the institute didn’t receive any funds from SDRC Inc. and the university system wasn’t connected in any way with SDRC Inc. We also know some legislators on the Government Operations and Audit Committee think it was appropriate for Bollen to have left NSU in December 2009 and run the state’s EB-5 program under a state contract with his company SDRC Inc.in January 2008. We don’t know what happened to documents and records that Bollen allegedly took when he left the university. We don’t know the degree of involvement in the December 2009 EB-5 contract by others in state government such as the governor and the governor’s chief of staff at the time. We know Bollen hasn’t been charged with any state crimes and the attorney general views Bollen’s activities as a federal matter. We don’t know what U.S. Attorney General Brendan Johnson and the federal investigators have done or what they plan, if anything. We don’t know how many EB-5 investors from South Korea and China (and possibly other places) received or were denied permanent visas for them and their families to live in the United States. We do know from Bollen that, to his knowledge, none of those investors moved to South Dakota.We don’t know precisely why the current governor and his economic development commissioner severed the state contract with Bollen and SDRC Inc. in September 2013. We do know they say they aren’t pursuing new EB-5 projects or more EB-5 investors for South Dakota. We don’t know how much SDRC Inc. received in total fees from investors and what the net revenue was after paying for recruiters and lawyers to service those investors. We don’t how much was received from interest payments paid by business projects to the pools of EB-5 investors and whether the interest payments were kept by SDRC Inc. or paid to the investors or shared between the parties. We know legislators have a range of opinions, from accusations of criminal behavior to finding nothing wrong with any of what transpired (except for Bollen signing an agreement with his new for-profit company in 2008 while he was at the university). We know there was a belief among legislators that Jackley and his investigation had interviewed Bollen. We don’t know what was covered by the FBI reports about Bollen upon which Jackley and his team relied. We don’t know whether the handling of Bollen was affected by the simultaneous need of Bollen in defense against the California lawsuit. We know there will be legislation in the 2015 session dealing with some of the loopholes exposed by Benda and Bollen. We know there will be a report no later than Dec. 1 to the full Legislature on GOAC’s work this year. We know there are suggestions of additional steps GOAC might take in 2015 such as inviting additional witnesses. We know the release of the federal subpoena to state government from March 2013 would provide additional insight into this matter. We know the release of the FBI reports on Bollen would provide additional insight as well. We know that an appearance by U.S. Attorney Johnson before GOAC would be extremely valuable. We know that he has declined two invitations from GOAC to do so. We don’t know the nature of the cooperation between Jackley, who was the previous U.S. attorney for South Dakota, and Johnson in their respective investigations. And we know that Northern Beef at Aberdeen remains closed more than a year after it shut down because of financial problems.

We learned a lot in the past year. We hope to learn much more in the year ahead.

P.S. — We also know South Dakota is still out about $865,000 of state funds from the additional $550,000 of grant money that was routed to SDRC Inc. and the $365,000 remainder of the legal defense costs spent defending Bollen and South Dakota in the California lawsuit.

New S.D. trust company plans Nebraska offices

Dakota Guardian Trust Company incorporated Aug. 12, 2014, and is headquartered at 805 Fifth Street in Rapid City. Now the new company has filed applications with the South Dakota Division of Banking to open a trust service office in Lincoln, Neb., and a trust service office in Omaha, Neb. The public comment period runs through 5 p.m. CST on Dec. 15. After that, division director Bret Afdahl will make a decision on each application. The decisions can be appealed. The organizer for Dakota Guardian Trust Company is James Wefso of Rapid City. He is one of the six initial managers for the company. The others are Gregory Hunter and Bob Wentz, both of Rapid City; and three from Lincoln, Neb.: John Decker, Jr.; Thomas Smith; and Todd Peterson. The growth of trust offices outside South Dakota but regulated by the South Dakota Division of Banking is similar to the regulation of banking offices outside South Dakota that are part of state-chartered companies in South Dakota. The list of South Dakota-licensed trust companies as of Oct. 1 is here.

Noem solidifies strength among SD voters

First, a note of caution. Before Democratic U.S.Rep. Stephanie Herseth Sandlin lost in 2010 with 45.9 percent of the vote, she had won re-election in 2008 with 67.6 percent. So it’s difficult to extrapolate from one election to the next. She lost in 2010 to Republican Kristi Noem, who received 48.1 percent of the vote in the three-way contest. Since then, Noem has steadily increased her margins of victory, getting 57 percent of the vote against Democrat Matt Varilek in 2012 and 67 percent two weeks ago against Democrat Corinna Robinson. Noem also has steadily increased the numbers of counties she’s won in each election, from 36 to 54 to 61. The only places Noem lost to Robinson were Buffalo, Clay, Dewey, Shannon and Todd counties. Her chief of staff, Jordan Stoick, pointed out many of these facts in a memo to news reporters last week. He also noted that she didn’t need to spend all of her campaign’s resources. He said she relied “heavily” on volunteer Republicans’ effort to get out the vote rather than spending on direct voter contact. The result, he said, is her campaign finished with $800,000 in remaining cash and “is well-positioned to surpass” $1 million by mid-2015. All of which seems like a message to any possible challengers considering 2016: I am ready and waiting. With Noem’s Nov. 4 victory, by the way, women — Herseth Sandlin and Noem — have now held the U.S. House seat since mid-2004. In many ways, being South Dakota’s lone member in the U.S. House of Representatives is the hardest job among the statewide elected officials: All of the responsibility for the entire state but the weakest possible position to accomplish it as one of 435. If she did go unchallenged in 2016, she could hold the money for a 2018 run at re-election or disperse it to Republican candidates on the 2016 ballot including those running for the Legislature in South Dakota. A big investment in 2016 legislative candidates might be the tip as to whether a run for governor is in her plans for 2018. Former Gov. Mike Rounds used his Norbeck PAC to help legislative and some statewide candidates in 2012 (and somewhat in 2013) and that laid the foundation for support in the 2014 primary for the Republican nomination for U.S. Senate. Now he is on his way to the Senate for the next six years. As for Noem, it would take a lot to dislodge her from the U.S. House seat in 2016 — or beyond, if she would choose to continue serving in the House. She could build a long and potentially strong career there if that’s what she wants.

Sunsets ahead for Vonk and Hollingsworth

Two talented Cabinet members are departing the Daugaard administration in the weeks ahead as the governor prepares to start his second term. Health Secretary Doneen Hollingsworth deserves her reputation as a very nice person who believed in improving public health. She’s been in the post since 1995 when then-Gov. Bill Janklow appointed her. She stayed through Janklow’s fourth term, two terms of Mike Rounds and now the first term of Dennis Daugaard. She retires Dec. 12. Then there’s Game, Fish and Parks Secretary Jeff Vonk, who spent most of his life as a civil servant in the natural-resources field in other places before Rounds appointed him in 2007. His skill set includes the ability to work with/under the person who preceded him as GFP secretary, John Cooper, who was appointed by Rounds to the GFP Commission in 2010. Vonk retires Jan. 8, 2015. It seems no replacements are lined up yet. Said the governor’s new chief of staff Tony Venhuizen today, “The governor hopes to have successors for Vonk and Hollingsworth in place before they retire, but he always prioritizes finding the right person over speed. He’s open to appointing an interim if need be.”

Must have been a great going-away party last Thursday night for Dusty Johnson, whose last day as chief of staff was the next day. Four years ago he gave up a second term on the state Public Utilities Commission, after he had already won it, to work on the Daugaard transition team and then be the chief of staff. Johnson headed home to his family at Mitchell last weekend and a new job in the telecommunications industry.  Venhuizen, who is a son-in-law of the governor, moved up one rung to succeed Johnson. Venhuizen has been director of policy and communication. Also moving up to the governor’s senior team is legal counsel Jim Seward and policy advisor Nathan Sanderson. Others in the top tier are Lt. Gov. Matt Michels, senior advisor Kim Malsam-Rysdon, commissioner of economic development Pat Costello and state finance commissioner Jason Dilges.