Referred pipeline law puts company's permit quest in limbo
The permit process and ballot referral highlight the emergence of carbon pipelines and landowner rights as political flashpoints in South Dakota.
An Iowa company seeking regulatory approval to run a carbon dioxide pipeline through South Dakota and four other states said a delay in its plan to re-apply for a permit has nothing to do with a November vote on the project.
After Summit Carbon Solutions gained approval from the Iowa Utilities Board in June, chief executive officer Lee Blank said that “the momentum will continue as we prepare to file our South Dakota permit application in early July.”
That did not happen.
And the South Dakota Public Utilities Commission has not received a timetable on when the application might come, which is common so staff can prepare for public meetings.
A spokesperson for Summit Carbon Solutions told News Watch that the delay is not tied to a citizen-led referral of Senate Bill 201, passed during the 2024 session as part of a legislative package known as the “Landowner Bill of Rights.”
Sponsors of the law trumpeted a series of landowner protections for potential pipeline negotiations. Opponents said the legislation paved the way for PUC approval of the pipeline by usurping the regulatory authority of counties.
Sabrina Zenor, Summit Carbon’s director of corporate communications, told News Watch that the law being referred to voters is not impacting the company's permit application.
“We are committed to working with landowners to have a successful pipeline route in South Dakota, and we will file that application soon," she said.
Giving voters say in pipeline policy
The timing of the application and the fact voters will have a direct say in pipeline policy highlights the emergence of carbon capture, ethanol advancement and “landowner rights” as political flashpoints in South Dakota and neighboring states.
Summit Carbon Solutions is pushing for a $5.5 billion, 2,500-mile pipeline that would carry liquified carbon dioxide gas from more than 50 ethanol plants in Iowa, Minnesota, Nebraska, North Dakota and South Dakota to be stored deep underground in North Dakota.
The pipeline would address federal environmental standards for tax credits and is seen as crucial for a potential aviation fuel market for the Midwest-based ethanol industry, which buys roughly one-third of the nation's corn crop.
A group called the South Dakota Property Rights and Local Control Alliance gathered enough valid signatures to place Referred Law 21 on the Nov. 5 ballot, giving voters a chance to either keep or kill Senate Bill 201.
The law, signed March 7 by Gov. Kristi Noem, mandated payments from carbon pipeline companies at the county level per linear foot. It also codified minimum depth requirements, liability on pipeline operators for damages and disclosures of pipelines’ plume models, which analyze how carbon dioxide might spread in case of a rupture.
In February 2020, a 24-inch carbon pipeline ruptured in Satartia, Mississippi, causing a "green gas" with a "rotten egg smell" to be emitted. No residents or responders died, but about 300 people were evacuated and nearly four dozen people were treated at local hospitals.
"I think everybody in this state firmly believes that if this pipeline is coming, we want protections in place, and we want real annual benefits to counties and landowners," said Republican House Majority Leader Will Mortenson, who co-sponsored the legislation.
"If this pipeline comes, I understand that it would be good for ethanol, but that’s not enough. We need to make sure this is a good thing for every single farmer from the beginning of the route to the end of the route. And that's what Referred Law 21 does."
Law's potential impact on eminent domain
Jim Eschenbaum, who chairs the property rights group, contends that Referred Law 21 provides a basis for land to be accessed involuntarily through “eminent domain,” though the law does not address that issue.
Eminent domain involves taking private property for public use while requiring just compensation.
Eschenbaum's reasoning is that terms set forth in the law between pipeline companies and landowners make it easier for the three-member PUC as a state entity to supersede county zoning ordinances and setbacks, or for a judge to conclude that such action is within PUC authority.
“It will affect eminent domain if it goes into the court system,” said Eschenbaum, a semi-retired farmer from Miller, South Dakota, who serves on the Hand County Commission.
“It will be looked at as if negotiations have already been taken care of, which will help them to use eminent domain. In my opinion, legislators overstepped their bounds in negotiating monetary terms on people’s private property.”
Blank, Summit's CEO, has said that the goal is to obtain 100% of the land it needs in South Dakota through voluntary easements, paying landowners in return. The company said it was at about 80% during its permit application hearing last year.
The alternative to voluntary easements is where things get sticky. The process involves using eminent domain to get a court order to force landowners to allow access to the property in return for just compensation.
'Activists sort of latched on to it'
Eschenbaum said that even though he personally opposes the pipeline, he won't block Summit Carbon's efforts as a county commissioner if the company uses voluntary easements to obtain land needed for the project.
"I think this pipeline is a bunch of foolishness," he told News Watch.
"I think the hysteria around climate change is a bunch of foolishness. But if they negotiate their way through freely and without the use of eminent domain, then my job as a county commissioner is to step out of the way and let this pipeline go through. But I will dig in my heels for that very last landowner that doesn't want this on their property."
Eminent domain shifted the pipeline discussion into the realm of landowner rights, presenting a stark contrast between limited-government populism and pro-business pragmatism within the South Dakota Republican Party.
The libertarian Freedom Caucus and groups such as Dakota First PAC wielded the pipeline controversy as political leverage in the June 4 GOP primary. Of the 38 Republican legislative incumbents who ran to keep the same position, 11 were defeated, foiled in many cases by the property rights debate and their voting record on SB 201.
"I think the activists sort of latched on to it and formed an opinion before they read the bill," Mortenson said of the anti-pipeline rhetoric and outreach surrounding what is now known as Referred Law 21.
Summit pipeline faces same legal landscape
The Secretary of State’s office announced July 10 that 31,432 of the signatures submitted by Eschenbaum’s group were deemed valid and that Referred Law 21 would appear on the ballot. A “yes” vote will allow SB 201 to become law, while a “no” vote will reject it.
Even if voters approve it, the legislation won’t take effect until July 1, 2025. That means any Summit Carbon PUC application in the meantime will occur under the same legal landscape in which its bid was denied on the advice of a staff attorney in September 2023.
"We're not waiting on any parameters," PUC Commissioner Chris Nelson told News Watch. "The law today is what the law is. If any company applies for any permit, whether it's a carbon pipeline or a wind farm, we will process that based on the law that is on the books, just like we always do."
Bart Pfankuch
Mortenson denied that SB 201 was an attempt to shift the balance in favor of the PUC being able to approve the permit the next time around. He noted that the commission – consisting of elected Republicans Nelson, Gary Hanson and Kristie Fiegen – holds the regulatory approval authority in either case.
Fiegen, who is up for re-election in November, recused herself from Summit Carbon's initial application process because the pipeline would cross some of her family's land. She was replaced by state Treasurer Josh Haeder.
“Right now the PUC is the entity that calls balls and strikes on which county ordinances have to be followed as part of the linear project siting," Mortenson told News Watch. "That’s the same as the bill that we passed."
Eschenbaum countered by saying that Summit Carbon has put off applying for the permit now that the new provisions are in limbo. He said it's instructive to observe who was supportive of the "Landowner Bill of Rights" and who opposed it.
"I feel like the legislators just stuck a title on there to make it smell all rosy and pretty," said Eschenbaum. "I don't think it's intended to be for the landowners in any way, shape or form. Why did the landowners go to Pierre and fight against it? Why did Summit Carbon go to Pierre and fight for it?"
Pipeline permit process 'fully consuming'
The South Dakota PUC voted 3-0 to deny Summit Carbon’s application in 2023 based on a staff attorney's assessment that the project couldn't proceed without overriding county setbacks and violating state law in the process.
Setbacks are minimum separation distances between the pipeline and structures, property boundaries or specific land uses. Distances set forth in Brown, McPherson, Minnehaha and Spink counties were deemed unresolvable.
“You've made crystal clear in your pre-filed testimony that various county ordinances make this an impossible project at this time,” Haeder told company representatives at the hearing.
Commissioner Nelson made a motion to postpone the hearing but was overruled, putting Summit in the position of having to re-file its application if it wants the project approved.
Bart Pfankuch
Nelson said he was surprised by the amount of time and resources occupied by applications from Summit Carbon and Navigator CO2 Ventures. Navigator's application was also denied last fall and the company has since scrapped plans for its pipeline project.
“Last year those applications were fully consuming for PUC staff and commissioners,” said Nelson, a former secretary of state who has served on the PUC since 2011.
“We had 418 intervenors (on the Summit docket), which I believe is a record number and shows the level of interest in folks wanting to be involved. I would anticipate that if another application is filed, it will be fully consuming again for the 12-month time period that statute gives us to process the application.”
Governor: 'I'm not a dictator'
The pipeline issue presents a quandary for South Dakota politicians who see the economic advantages of ethanol but don’t want to be viewed as supporting government encroachment of private property against the will of citizens.
Adding to the political quagmire is the fact that carbon pipelines are the result of climate-conscious guidelines to reduce global warming, an approach that runs counter to conservative South Dakota Republican doctrine.
Noem has found herself at the center of the storm, with libertarian groups challenging her to do more to support landowners and push back against Summit Carbon, which was a platinum sponsor of her 2023 inauguration events.
The governor addressed the issue in March during a town hall in Mitchell, South Dakota, distancing herself from the "Landowner Bill of Rights" legislative process and suggesting that action in Pierre amounted to public support of the bills.
“There’s been a lot of signs and advertising around the state saying, ‘The Governor has to do something,’” Noem said in the Mitchell High School library.
“Well, guess what? I’m not a dictator. I don't have a role in this process at all as governor. What happens during the session is that these legislators are sent to represent their districts and to debate and take in facts and then give me a bill that I look at to see if it's constitutional or not. It was signed into law because the people voted for it and they voted overwhelmingly based on the hearings and the committees that we had."
'The biggest red herring with this'
Regardless of what happens with the Referred Law 21 vote in November, the pipeline issue and landowner rights are certain to carry over into the 2025 legislative session beginning in January.
Eschenbaum said he has spoken to Republican lawmakers who ran on the issue in the primary and intend to bring legislation that is "not anti-pipeline but true landowner rights legislation that will address eminent domain."
That's familiar ground for Mortenson, who helped craft a bill during the 2023 session that would have restricted the use of eminent domain for carbon pipelines because CO2 in that context doesn't qualify as a commodity.
The bill passed through a House committee before being shot down in the Senate.
In 2024, gauging similar resistance in the Senate, Mortenson worked with Senate Majority Leader Casey Crabtree to push through a package of bills – the Landowner Bill of Rights – that addressed compensation for surveying and siting, easement standards, leak liability protections and drain tile repair.
SB 201 was part of that package and is now being referred to voters, setting the stage for what comes next for state legislators on the pipeline issue.
"The vote is going to be critically important because it will let us know what the people think on this topic," said Mortenson. "And I think that the legislature's pretty duty-bound to honor the will of the voters."
Still, the process is a source of frustration for legislative leaders because the central complaint of the opposition – the use of eminent domain to access land for carbon pipelines – is not specifically addressed in the law.
"I think (Eschenbaum's group) did this because they don’t like eminent domain, and this has absolutely no impact on eminent domain – up, down, or sideways," Mortenson said. "That's the biggest red herring I see with this."
The Associated Press contributed to this story, which was produced by South Dakota News Watch, a nonpartisan, nonprofit news organization. Read more in-depth stories at sdnewswatch.org and sign up for an email every few days to get stories as soon as they're published. Contact Stu Whitney at stu.whitney@sdnewswatch.org.
