Kristi Noem's decision to reject girls' sports bill faces new scrutiny amid questions of lobbyist's influence

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South Dakota Gov. Kristi Noem is encountering heightened scrutiny over decision to reject women's sports legislation, with many questioning the influence of a longtime advisor – Matt McCaulley – who also has ties to the state's top employer.

A top speaker at CPAC this year, she's earned accolades for her refusal to implement certain restrictions during the pandemic. The atmosphere around Noem shifted, however, when she used a "style-and-form" veto to alter Republicans' version of the women's sports bill. 

Women's sports legislation has popped up in several states and become somewhat of a litmus test in conservative media. South Dakota's legislation specified that "[a] team or sport designated as being female is available only to participants who are female, based on their biological sex."

Since Noem's veto, her conservative credentials have come under scrutiny, including from National Review. The conservative outlet published an article last week that raised legislators' concerns with McCaulley and highlighted the $40 million that his client, Sanford Health, directed towards its sports complex on the same day that Noem announced her veto.

Noem's office has maintained the governor makes her own decisions. It also pointed Fox News to Noem's executive orders directing both the Board of Regents and Department of Education to protect women's sports. While some have questioned their efficacy, Noem is using the orders as stopgap measures until she can pursue a bill in the next legislative session. 

Still, many have raised questions about McCaulley's influence given that South Dakota's initial bill could prompt retaliation and drive away tournaments that Sanford Sports might host.

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"It’s a well-known secret in South Dakota that Matt McCaulley has a seat at the Governor’s policy table while simultaneously representing the interests of Sanford Health as one of their key lobbyists," a person with first-hand knowledge told Fox News.

"During the Women’s Sports debate, we clearly saw this conflict of interest when the Governor came out with a style-and-form veto on the same day that Sanford Health announced their $40M donation to expand a sports complex. McCaulley not only influenced Governor Noem’s decision to derail the women’s sports bill, but he also helped write the press release and worked on the messaging."

Noem spokesperson Ian Fury told Fox News maintained that the "buck stops" with the governor, but didn't deny the allegation about McCaulley's influence on external communications. 

"Anyone who knows or has worked with Governor Noem knows that the buck stops with her," Fury said Wednesday. 

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"Nobody is making decisions for her. As an example, I promise you that the state's medical establishment, including doctors at Sanford Health, has not always loved the Governor’s freedom-first approach to the COVID pandemic … Governor Noem has been friends with Matt McCaulley since 2007. Their professional relationship dates back to the run-up to her original election to Congress in 2010. That timeline is important, because their working relationship far pre-dates his work for Sanford Health. All of Matt’s potential conflicts are declared, and he never lobbies the Governor on behalf of his clients."

McCaulley did not respond to Fox News' request for comment. 

"Our relationship with Matt McCaulley began in 2016, before Kristi Noem announced she would run for governor," a Sanford spokesperson told Fox News. "We hired Matt to support Sanford’s advocacy efforts at the state legislature because of his expertise and established relationships with South Dakota state legislators."

Noem famously tweeted her support for HB 1217, but later requested changes she said were necessary to avoid frivolous lawsuits. Still, her decision provoked backlash from Alliance Defending Freedom, a conservative mainstay that accused her of "gut[ting]" the legislation.

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Some have suggested that Noem's policy decisions were made under heavy influence of McCaulley. 

National Review reported on an anonymous state legislator saying that McCaulley is "the most consistent and probably the only one that stayed with [Noem] other than her husband, as far as an adviser, throughout her career."

"So he’s as close as an adviser can be, and I think he’s probably in on every major policy decision that she makes."

Sanford's spokesperson told Fox News: "Sanford Health did not engage in or take a position on HB 1217, the transgender women’s sports bill."  

They added: "Earlier this year and unrelated to the topic, Sanford Health announced a $40 million philanthropic gift from our benefactor, Denny Sanford, to promote community health and improve access to sports opportunities for all youth. This premier, highly versatile sports facility is an important investment in the community that will help families lead healthier and more active lifestyles and spur significant economic development."

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Fury has maintained that Noem protected women's sports through her executive orders.

She also intends to pursue legislation codifying those orders – although it's unclear whether that will satisfy conservatives like those at ADF.