Ethanol plant operators are heavily funding a campaign to protect a new South Dakota law they believe will ease the construction of a carbon dioxide pipeline across the state.
Tuesday's ballot measure, Referred Law 21, will preserve or nullify the new law allowing counties to require a $1 per foot surcharge on carbon dioxide pipelines for any tax year the operator receives a credit. Revenue is dispersed as tax relief to property owners in the county.
The law also includes requirements for pipeline construction, like setting a minimum depth. Additionally, under the law, operators are responsible for damages to drain tile and the surface owner caused by the project as well as leaks or failures in the pipeline.
The measure comes as Summit Carbon Solutions has continued to fight legal and regulatory battles over the last several years to proceed with its plans to build a 2,500 mile pipeline through five states including South Dakota. The project would collect carbon from 57 ethanol plants and move it to a storage site in North Dakota.
But the company has struggled to earn approvals from landowners and state agencies.
In 2023, the state utility regulators denied Summit’s first permit application, citing state and county ordinances the company would need to overcome before proceeding. Later in August of this year, the state Supreme Court sided with landowners in ruling that Summit had not demonstrated it is a common carrier, which could muddy further efforts to get a permit.
The ballot measure has attracted high funding levels, particularly from ethanol plants that will rely on Summit’s pipeline to achieve a low carbon footprint.
Vote Yes for a Strong South Dakota, a political committee that campaigns in favor of RL 21, has raised $2.175 million as of Oct. 21, according to state campaign finance reports. It’s spent nearly $1.25 million on advertising.
Ethanol industry giant POET LLC was the biggest donor with a $1 million contribution. The biofuel company has a partnership with Summit Carbon Solutions and would have five plants along the pipeline in South Dakota and an additional 12 in Iowa.
The biofuel company Gevo donated $200,000 to the committee. Summit Carbon Solutions plans to capture emissions from Gevo’s Net-Zero 1 plant in South Dakota. The facility, set to start production in 2025, is expected to generate about 60 million gallons of sustainable aviation fuel and recently received a nearly $1.5 billion loan guarantee from the federal government.
Gevo CEO Patrick Gruber has said that the Summit Carbon pipeline will be critical for zero-carbon fuel.
Glacial Lakes Energy, a cooperative that owns four ethanol plants, has also contributed $800,000 to the pro-SB 201 effort.
Campaign signs in South Dakota supporting the ballot measureThe outcome of the RL 21 vote won’t directly pave the way for Summit to obtain permits, but it’s a “small part of a long battle,” said Brian Jorde, who represents over 1,000 landowners across multiple states.
Jorde said RL 21 is a “direct attack on democracy” and the foundations of local control.
A “no” vote is essential if residents want to maintain any sense of control and input in what happens within their community, he said. For example, it would limit a community’s ability to raise revenue or change the location on hazardous infrastructure projects, Jorde said. It would also lower the bar for potential approvals.
The law, if enacted, could set a precedent for future projects and the level of coordination and payments for landowners, said Doug Sombke, president of South Dakota Farmers Union. He said the payment per foot included in the law is too low and infringes on county control.
“They call it the landowners' rights bill, and it’s anything but,” Sombke said.
But the South Dakota Corn Growers Association backs Summit’s pipeline and has therefore rallied in support of the new law, Senate Bill 201, which sets positive guidelines for future projects, said DaNita Murray, executive director of the organization.
“We think there’s a really strong argument to be made that if you can make something in the United States, we should do it,” Murray said. “This low-carbon fuel is going to get made somewhere in the United States, we just think it might as well be South Dakota.”
Even if the ballot measure fails, she said Summit can still apply for another permit at which point it is up to the state regulators to make a decision that won’t necessarily include the guardrails and requirements included in SB 201. If the ballot measure passes and the law goes into effect, it also doesn’t mean Summit can automatically proceed. The company still needs to earn approval from the PUC.
“It’s no free pass, meaning if a county comes forward with credible information on really any topic pertaining to the pipeline, I mean PUC is going to have to deal with it,” Murray said.
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