South Dakota's labor secretary told lawmakers Thursday that officials had decided to give Gov. Kristi Noem's daughter another chance to win her state real estate appraiser license even before a meeting in the governor's mansion that has spurred conflict of interest questions.
The Associated Press reported last month that on July 27, just days after a state agency moved to deny Kassidy Peters' license, her mother, Noem, convened a meeting that included Secretary of Labor and Regulation Marcia Hultman, the then-director of the appraiser certification program, and Peters herself.
Testifying before the Legislature’s Government Operations and Audit Committee, which is looking into the agency at the center of the controversy, Hultman acknowledged it was unusual to have an applicant like the governor’s daughter in a meeting that she said mostly covered potential changes to the application process but included a discussion of Peters' application. However, Hultman defended her department’s handling of Peters’ licensure as keeping with the normal course of business.
Hultman told lawmakers that before the meeting in the governor’s mansion, state regulators had worked out an agreement with Peters to seek further education and resubmit work samples to be reviewed for compliance with federal standards. Hultman did not give specifics on how or when that decision was made but said it was not unusual for applicants to enter into such an agreement.
“We should not say ‘never’ to an applicant who wants to take extra steps to learn the trade,” Hultman said.
When asked by lawmakers why Peters was at the meeting, Hultman said, “Someone who is going through the process, regardless of who they are, has insight.”
But Kathleen Clark, a law professor who specializes in government ethics at Washington University in St. Louis, told the AP the fact that Peters' application was discussed at the meeting was "evidence" the governor had used her power to aid her daughter because it brought pressure on the government employees.
“There’s every reason to think this applicant was being treated differently to other applicants,” she said.
The governor's spokesman, Jordan Overturf, insisted the committee testimony showed just the opposite, saying it “confirms that Kassidy Peters never received special treatment.”
After several hours of questioning, Republican lawmakers acknowledged the episode did not look good for the governor but said there was no evidence of direct pressure from the governor. Democrats, who hold just two seats on the 10-member committee, pressed for a deeper inquiry. As the committee concluded its meeting Thursday, it moved to submit a request for the training agreements between Peters and the Department of Labor and Regulation.
Part of the committee's investigation has dealt with another official who was in the meeting, Sherry Bren, the former director of the state's real estate certification program. About a week after Peters received her license in November 2020, Bren was pressured to retire by Hultman. She eventually did so this year but not before receiving a $200,000 payment from the state to withdraw an age discrimination complaint.
Republican Sen. David Wheeler said it looked, at the onset, like the governor created a conflict of interest by including her daughter in the meeting. But he was convinced by Hultman's explanation that the agreement was reached before the meeting. He also pointed out that Bren herself did not review Peters' work samples.
“At no point, was there pressure placed on Sherry Bren to approve the license," he said.
Lawmakers also requested that Bren appear before the committee, but she declined. She and Hultman are both barred from disparaging each other as part of Bren's settlement.
In a statement to the AP, Bren said, “I am at this time working with my attorney to achieve an opportunity to provide relevant facts to members of the Government Operations and Audit Committee and to correct any factual inaccuracies that were provided to them by Secretary Hultman in her testimony today.”
Lawmakers learned Thursday the state had to pay an additional $19,000 in outside legal fees to negotiate the settlement agreement.
Noem, who has positioned herself as a prospect for the GOP presidential ticket in 2024, has defended her conduct by saying she was working to “cut red tape” to solve a shortage of appraisers. But the organization that represents appraisers in South Dakota told lawmakers they were worried about changes to the agency since Bren's departure.
Sandra Gresh, the president of the Professional Appraisers Association of South Dakota, told lawmakers there has been a breakdown in communication with state regulators since shortly before Bren left her position. She also reported that delays to license renewals had disrupted business for some appraisers and took issue with recent rule changes proposed by the agency.
Hultman said the agency would work to smooth the relationship with the appraiser's association.
The committee chair, Republican Sen. Kyle Schoenfish, said the committee could potentially take further action next month. A separate government ethics board is also expected to review the issue next week.
“It still seems like there are a lot of questions that remain unanswered,” said Democratic Sen. Reynold Nesiba. “And I’ll just leave it at that.”