Bob Mercer
State Capitol Bureau

PIERRE — The ethics and truthfulness of Senate Democratic leader Scott Heidepriem came under scrutiny Wednesday at the Legislature involving his proposal for a constitutional amendment to allow unlimited gambling in South Dakota.

A House committee killed his resolution seeking to put the amendment on the 2010 general election ballot, while House Republican assistant leader Kristi Noem, of Castlewood, revealed facts suggesting a possible conflict of interest involving Heidepriem over the gambling issue.

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Heidepriem is a partner in the Sioux Falls law firm which began representing the Flandreau Santee Sioux Tribe this month in a gambling lawsuit in U.S. district court against the state, Gov. Mike Rounds, the state Commission on Gaming, and state Attorney General Larry Long.

The tribal government operates a casino at Flandreau northeast of Sioux Falls. The lawsuit is an attempt to get more slot machines than the 250 allowed under the existing tribal-state gambling compact.

A general standard under federal court rulings and the federal Indian Gaming Regulatory Act is that tribal governments are entitled to the same types and levels of legal gambling as state governments allow in a state.

Heidepriem has repeatedly portrayed his amendment as a method to discourage construction of a casino in Larchwood, Iowa, a short distance from Sioux Falls.

Directly questioned by Noem, Heidepriem told a House committee Wednesday he didn’t know whether his firm did any work in the gambling industry.

He mentioned Wednesday the possibility the Flandreau Santee Sioux Tribe could be chosen to operate a new casino in the Sioux Falls area in order to stop development of the Iowa casino.

During the committee’s discussion about the bill, Noem said Heidepriem’s law firm is representing “someone looking for expansion of gaming in the state.”

“I would believe there are other motivating factors here. There are ties that haven’t come to light yet,” she said.

Within hours of Noem’s questions and statements, Heidepriem fired back at her in a letter. He said in the letter that he contacted his law partners after the hearing and learned the firm had been hired in the lawsuit.

“Until now I was not aware of our firm’s involvement in this case. At the time I testified I was not aware of our firm’s involvement in the case, but it would not have been a conflict in any case,” Heidepriem said in the letter.

He further wrote that he was “disappointed” that Noem suggested he was trying to advance the interest of a client.

The tribe’s lawsuit was originally filed March 19, 2007, by lawyers from the Omaha, Neb.-based firm of Monteau & Peebles, which has an extensive practice in tribal issues.

Heidepriem introduced his legislative resolution proposing the constitutional amendment Jan. 29. The amendment sought to allow the Legislature to approve “any game of chance, lottery, or gift enterprise” in order to prevent the start or curtail the operation of legal gambling in a bordering state.

A Senate committee endorsed the resolution after a public hearing Feb. 4 at which Fred Assam, representing the Flandreau Santee Sioux Tribe, testified in support of Heidepriem’s resolution.

Two days later, Heidepriem’s law firm officially began representing the tribe in the gambling lawsuit against South Dakota.

The Senate approved Heidepriem’s resolution, SJR1, Feb. 9 by a vote of 20-15.

The House State Affairs Committee voted 10-3 against Heidepriem’s resolution Wednesday.

Questions by legislators on the committee focused on how Heidepriem’s amendment could open South Dakota to larger tribal casino operations and casinos in more communities beyond Deadwood and tribal reservation areas.

Heidepriem said expansions were possible but would depend on whether “the numbers” supported such expansions.

Noem subsequently questioned Heidepriem whether his firm or he has any financial ties to someone with an interest in the amendment.

 “My law firm?” Heidepriem responded. “I have no idea what you’re talking about, Rep. Noem. I don’t know if my firm does any work in the gaming industry.”

“I just wanted to know if that’s something we need clarification on today,” Noem said.

House Democratic leader Bernie Hunhoff of Yankton, a co-sponsor of Heidepriem’s resolution, told the committee he didn’t think it’s appropriate to question the motives of legislators.

“The suggestion that I would promote legislation because my firm has an interest in it is stunning to me,” Heidepriem said to the committee.

Noem later showed reporters a copy of Steven Johnson’s notice to the court that he was representing the tribe in the lawsuit.

She said the law firm, which lists eight lawyers, is small enough that its members should be “generally aware of the kind of agreements they are entering into.”

Hunhoff told the committee he resented the questioning of a legislator’s motivation for a piece of legislation. He said many members of the Legislature bring issues affecting their livelihoods and specialties, whether they are farmers or business people.

“That’s the nature of a citizen legislature,” Hunhoff said.