Author Archives: Colton Hall

The South Dakota Retailers Association (SDRA) today welcomed a summary judgment by Circuit Court Judge Mark Barnett regarding South Dakota’s lawsuit against three large online retailers. SDRA says the ruling is precisely what is needed to move South Dakota one step closer to tax parity between South Dakota brick and mortar stores and giant out-of-state companies.

Although the ruling resulted in the entry of a judgment in favor of out-of-state online retailers, Judge Barnett’s Order specifically recognized that he was bound by existing United States Supreme Court precedent “…even when changing times and events clearly suggest a different outcome; it is simply not the role of a state circuit court to disregard a ruling from the United States Supreme Court.”

This week’s decision by Judge Barnett is an important and necessary step toward U.S. Supreme Court reconsideration of now-outdated tax precedents set by the Court in cases from half a century and a quarter of a century ago.

Last year, South Dakota passed a law, SB 106, requiring large out-of-state companies that sell goods into the state to collect and remit South Dakota sales tax on those purchases. The law applies only to businesses whose sales in the state exceed $100,000 annually, or that make 200 or more separate transactions in the state in a year.

Following passage of SB 106 last year, the State of South Dakota filed a lawsuit seeking a determination that the state may validly require out-of-state retailers that conduct significant business in the state to collect and remit the state’s sales tax on purchases made in the state, even if they do not have a physical location in South Dakota.

The state’s lawsuit was filed one year after U.S. Supreme Court Justice Anthony Kennedy recognized in his concurring opinion in DMA v. Brohl that, “[t]he Internet has caused far-reaching systemic and structural changes in the economy” so that “a business may be present in a State in a meaningful way without that presence being physical in the traditional sense of the word.” Justice Kennedy called on the “legal system [to] find an appropriate case for this Court to reconsider” its prior decisions in 1967 and 1992.

When SB 106 was enacted last year, the bill itself and the State of South Dakota acknowledged that only the U.S. Supreme Court can overturn the 1992 Quill v. North Dakota decision that restricts states from requiring remote sellers that do not have a physical presence in the state from collecting the taxes already owed on those purchases. To reach the U.S. Supreme Court, however, the case must first go through the South Dakota circuit court and the South Dakota Supreme Court. Today’s ruling checks off that first step.

The South Dakota Retailers Association played a key role in the discussions that led the state to pass SB 106 and to file suit against out-of-state online retailers.

“Right now, giant out-of-state conglomerates are able to avoid collecting and remitting taxes only because of a loophole that was created before there was an internet, and before e-commerce,” said SDRA Executive Director Shawn Lyons. “Online commerce is expanding dramatically, and the tax inequity gap between in-state retailers and out-of-state online retailers is widening. We are encouraged that this ruling gets us one step closer to having the U.S. Supreme Court take another look at this crucial tax issue, and one step closer to tax fairness.”

State Senator Gary Cammack, owner of Cammack Ranch Supply in Union Center, South Dakota and president of SDRA’s Board of Directors, agrees.

“Only the U.S. Supreme Court can overturn the 1992 court decision, and Judge Barnett’s decision helps us move the issue along,” Cammack said. “Larger online retailers should play by the same rules as the small businesses on Main Street, and this ruling is one of the necessary steps in accomplishing that.”

South Dakota Attorney General Marty Jackley also praised the decision.

“South Dakota retailers should have a fair and equal playing field with other large out-of-state companies that have been benefiting from an outdated sales tax structure,” said Attorney General Jackley. “The South Dakota Retailers Association and their retail partners should be commended for their diligent work on this case and serving as a strong voice for South Dakota’s retail industry.”

Lyons said it’s important to note that the law passed by South Dakota last year did not implement a new tax.

“When South Dakotans make purchases, whether that’s in a store in their hometown or online from a company based in another state, the consumer has a legal obligation to pay taxes on those purchases,” he stated. “The law we passed in South Dakota in 2016 says the burden shouldn’t be on the customer, it should be the responsibility of those huge companies to collect and remit the tax. When you get down to it, this is just simply a matter of fairness all the way around.”

By the Associated Press

Opponents of the Keystone XL pipeline argued last Wednesday that a South Dakota judge should reverse state regulators’ decision last year to authorize again the portion of the project that would go through the state. A portion of the pipeline will go through Tripp County if construction is approved.

Here is a look at the pipeline proceedings: The Keystone XL project has prompted opposition from Native American tribes, some landowners and environmental groups concerned the pipeline would contaminate water supplies and contribute to pollution. Opponents appealed the South Dakota Public Utilities Commission’s decision to the state court which heard arguments in the case on March 8.

It is not clear when Judge John Brown of Pierre will rule.

The commission initially authorized TransCanada’s project in 2010 but the permit had to be revisited since construction didn’t start within four years.

The commission voted last year to accept the company’s guarantee that it can complete the pipeline project while meeting the conditions of the 2010 approval.

Former president Barack Obama rejected the pipeline in 2015 but President Donald Trump has said he supports it and in January moved to make it easier for the project to proceed.

The $8 billion project would go from Canada through Montana and South Dakota to Nebraska where it would connect with existing pipelines to crude oil to refineries along the Gulf Coast.

TransCanada said last month that it is once again seeking state approval for a route through Nebraska. It has also submitted a new presidential permit application to the U.S. Department of State for approval.

A company spokesman, Terry Cunha, said the company’s “commitment is to ensure we build a state of the art pipeline system that will be monitored 24 hours a day, seven days a week using satellite technology along with regular aerial patrols to monitor the pipeline.”

Robin Martinez, an attorney for conservation and family agriculture group Dakota Rural Action, said the commission’s decision should be reversed because it appeared to his clients that the regulatory panel was biased toward TransCanada during the proceedings and because the company failed to demonstrate that it could build the pipeline safely.

Tracey Zephier, an lawyer for the Cheyenne River Sioux Tribe, said the commission abused its discretion by allowing an out of state company “drive the bus” in the pipeline permitted process.

Attorneys for TransCanada and the PUC asked the judge to uphold the order.

James Moore, a lawyer for TransCanada said the commission’s proceedings were fair and thorough.

More than 50 pipeline opponents gathered outside the Hughes County Courthouse in Pierre before the hearing.
Crow Creek Sioux Tribe Chairman Brandon Sazue called on South Dakota to “wake up.”

“It’s a human thing,” Sazue said. “It doesn’t matter what color you are. It matters if you drink water or not.”

Gov. Dennis Daugaard is pushing legislation preparing for potential protests in South Dakota like the demonstrations over the Dakota Access pipeline in North Dakota. The bill includes provisions that would make it a Class 1 misdemeanor for someone to stand in the highway to stop traffic or to trespass in a posted emergency area.

Gov. Dennis Daugaard signed a package of bills which allow the sale of surplus lands owned by the state. The measures include lands and properties on the STAR Academy, State Veterans Home, and State Training School campuses.

“Though stewardship efforts such as these may seem run-of-the-mill during a busy legislative session, they are important,” Gov. Daugaard said. “We owe it to the taxpayers to keep the state’s footprint to a minimum, to avoid spending tax dollars on maintenance of unneeded facilities and to return these properties to the tax rolls when possible. It may be an unglamorous undertaking, but it’s a necessary one.”

The following surplus land bills were signed today:

· House Bill 1205 allows for the sale of unused property formerly belonging to Western Dakota Tech in Rapid City.

· House Bill 1206 allows for the sale of the former State Training School campus near Plankinton.

· House Bill 1207 authorizes the transfer of several vacant buildings and adjoining lands from the South Dakota Developmental Center to the city of Redfield.

· House Bill 1208 allows for the sale of underutilized buildings and land on the State Veterans Home campus in Hot Springs.

· House Bill 1209 allows for the sale of STAR Academy property near Custer.

· House Bill 1210 allows for the sale of South Dakota School for the Deaf property in Sioux Falls.

The bills do not require any sale, and provide for an appraisal process to ensure the state receives fair value for the property.

The proceeds from the sale of STAR Academy and Aurora Plains would be deposited in the DOC training school trust fund to support juvenile services. Proceeds from the Veterans Home and Western Dakota Tech land sales would go to the general fund. The bill pertaining to the South Dakota Developmental Center directs any profit to the SDDC trust fund. Proceeds from the sale of the School for the Deaf property would be deposited in a trust fund for the benefit of School for the Deaf programming.