South Dakota lawmakers have passed a trio of bills designed to smooth the path of a carbon pipeline that the ethanol industry considers crucial to its future but some farmers and other landowners don’t want on their land.
The legislation follows the September denial of a permit request by the state’s Public Utilities Commission, which said Summit Carbon Solutions’ proposed route through the state did not comply with setbacks required by county ordinances.
In a big win for Summit, the state legislation would preempt county or municipal ordinances. Another provision would allow counties to charge $1 per linear foot of pipeline each year in which the company receives the federal tax credit for carbon sequestration, which can be up to $85 per ton of carbon captured and stored underground.
The company said it was pleased with the legislation, dubbed “the landowner bill of rights,” saying it will provide “regulatory certainty” and help promote “the future of the ethanol industry in South Dakota.”
The company is trying to build a 1,600-plus-mile pipeline through Iowa, Nebraska, Minnesota, and the Dakotas with a sequestration site in North Dakota. It recently expanded its planned reach by adding eight Valero ethanol plants to the route, just weeks after adding 17 POET plants. The number of ethanol plants signed on with Summit to hook up to the pipeline now totals 57.
No state has yet approved the project. North Dakota’s Public Service Commission last month said state law supersedes county ordinances, which set the stage for another, as-yet-unscheduled public hearing on the pipeline route.
In Iowa, the Iowa Utilities Board is reviewing Summit's docket record from a hearing that spanned last summer and fall and says it "will base its final decision on Iowa law and the evidence, testimony, exhibits, and comments filed in Summit's initial 2021 docket."
The IUB noted that "new requests for public informational meetings were filed in 14 dockets with the IUB by SCS Carbon Transport LLC, a subsidiary of Summit, on March 4, as more ethanol plants are being requested to be added to the project. The IUB will review each docket separately [and] does not have a deadline to issue a decision in Summit's initial docket. SCS Carbon Transport cannot file a petition in any of the [new] dockets until at least 30 days after an informational meeting has been held in the affected county or counties."
Summit says it has signed up a significant number of landowners. The percentages by state, according to the company, are: Iowa, where “75% of landowners along our Phase I route have signed voluntary easement agreements”; South Dakota, where “75% of the landowners along our previous route have signed voluntary easement agreements”; North Dakota, with 80% of landowners along the pipeline route, and more than 90% of the landowners at the sequestration site; and Minnesota, where “nearly 90% of landowners have signed voluntary easement agreements for the route we are currently permitting”; and Nebraska, where 72% of landowners along the current route have signed agreements.
Summit is planning for 2026 operations.
Tom Buis, American Carbon AllianceThe South Dakota development also had the backing of the American Carbon Alliance. Its CEO, Tom Buis, said “creating an economic environment in the state to allow carbon capture and sequestration projects such as the Summit Pipeline is essential in creating new demand for corn.”
Buis said that capturing carbon at ethanol plants and then storing it permanently “will result in ethanol qualifying as a low carbon fuel — a requirement for next-generation fuels at the pump and Sustainable Aviation Fuels. The potential economic impact for South Dakota farmers, the ethanol industry, rural communities and the agriculture industry as a whole, is something that rarely comes along.”
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Walt Wendland, president of the South Dakota Ethanol Producers Association, called the legislation “pro-landowner, pro-business, pro-farmer, and pro-ethanol. It’s a win-win for all South Dakotans.”
But not everyone is on board.
In a statement, the South Dakota Farmers Union criticized the legislature’s failure “to address the use of eminent domain for private gain — allowing private for-profit companies to trample landowner rights in the name of private shareholder gain.”
SDFU lobbyist Mitch Richter continued, saying the bill package “did provide some certainty of service, one-time payment for access, some easement limitations and authorization of court challenges.” One of the bills, Senate Bill 201, “provides some minimum standards for safety, clarifies the role of the Public Utilities Commission and provides for a county surcharge.”
Among some of the requirements are the preparation of an agricultural mitigation plan, indemnification of farmers for any damage, and repair of drain tiles along the length of the pipeline.
Nevertheless, SDFU said it believes that passage of the legislation “opens the door for other industries to use these new laws to further disregard the rights of fourth- and fifth-generation farmers in South Dakota. We urge the legislature to provide a different pathway for eminent domain for private gain.”
SDFU President Doug Sombke said the main bill in the package, SB 201, is vulnerable to a constitutional challenge because it addresses more than one topic. He criticized the legislature for not addressing eminent domain, which he called the “elephant in the room.”
Some lawmakers also protested SB 201, the principal bill in the three-bill package.
In a letter of dissent published in South Dakota's legislative journal, they said the state’s constitution provides that "[p]rivate property shall not be taken for public use, or damaged, without just compensation, which will be determined according to legal procedure established by the Legislature.”
However, “while SB 201 provides for the citation of several sections as the ‘Landowner Bill of Rights,’ it endows landowners with no rights beyond those already found in the constitution.”
State Rep. Karla Lems, a Republican from the southeast part of the state, said the legislation was “an attempt to fix something that is not broken. What you have before you will take away discretion from the PUC [and] it will impede the counties’ ability to do what they feel is best for their people, their development and their future plan.”
In an interview, Richter said the legislation removes authority from counties and gives it to the PUC. SB 201 says “a route or transmission facility permitted by the commission … is not subject to any local land use, zoning, or building rule, regulation, or ordinance, unless the commission requires compliance with any generally applicable rule, regulation, or ordinance as a condition of the permit issued.”
“The Public Utilities Commission can override any local control that the county may have, whether it's setbacks on the pipelines or depths that the pipe needs to be buried,” Richter said.
Richter scoffed at the authority given to counties to charge $1 per linear foot, 50 cents of which must be returned to property owners in the counties.
“Honestly, you know, how much is that?” Richter asked. “Fifty cents a foot for property tax? Really? I mean, it’s just kind of a joke, actually.”
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This article has been corrected to note that the Iowa Utilities Board decision has not been delayed and amended with additional information from IUB.
