Final week of SD legislative session brings CO2 pipeline bills to the forefront
March 4, 2024
Johsua Haiar (SD Searchlight)
PIERRE — With most of this year’s legislative session in the rearview mirror, some lawmakers are making a final push on a trio of bills they describe as an effort to balance the interests of both opponents and proponents of a carbon dioxide pipeline.
In Republican-dominated South Dakota, the bills have pitted the party’s traditional support for economic expansion and lower regulatory burdens against its commitment to property rights and local governance. The issue becomes even more complex and contentious when Republican views on federal spending to combat climate change are factored in.
Those complex motivations led some Republicans to file and support bills that would block or significantly hinder carbon pipelines. That legislation failed. House Majority Leader Will Mortenson, R-Fort Pierre, said if lawmakers don’t pivot to support the remaining bills — which would bolster protections for landowners, without blocking projects — they risk accomplishing nothing on the issue this session.
“All this opposition can lead us to a place where we get nothing done for farmers, nothing done for ethanol, that we get nothing done for counties, nothing done for regulatory certainty,” Mortenson said Thursday during a leadership press conference. “If we want to kill everything, that’s where we’re headed.”
Mortenson is a prime sponsor on the three remaining bills, along with Senate Majority Leader Casey Crabtree, R-Madison.
One of their bills, Senate Bill 201, was sent to a conference committee Thursday that will work to reconcile the House and Senate differences, while the other two bills in the package underwent amendments in the Senate Commerce and Energy Committee. That leaves all three bills pending with just one week left in the legislative session, aside from a day later in March to consider vetoes.
All the bills are related to a multi-billion-dollar pipeline proposed by Summit Carbon Solutions, which is headquartered in Iowa. It would collect carbon dioxide from ethanol plants in South Dakota and some neighboring states and pipe it to North Dakota for underground storage. The project would take advantage of billions in available federal tax credits that incentivize the removal of heat-trapping carbon dioxide from the atmosphere.
Summit plans to apply again for a permit in South Dakota after its initial application was denied by utility regulators, in part due to conflicts with county ordinances that require minimum distances known as “setbacks” between pipelines and other features.
The project has also faced opposition from landowners concerned about safety, including risks associated with potential leaks, and property rights. Summit could go to court and use the power of eminent domain to gain access to land from unwilling South Dakota landowners. Bills to prevent Summit from using eminent domain have failed each of the past two legislative sessions.
As currently written, Senate Bill 201 would force the state’s Public Utilities Commission (PUC) to overrule counties if their pipeline rules are too burdensome. The commission of three elected officials is responsible for pipeline permitting in the state.
The House of Representatives approved its version of the bill 40-30 on Wednesday after a nearly two-hour debate.
Current law says the PUC “may” overrule counties’ setbacks. The legislation says the commission “must” overrule setbacks if they “are unreasonably restrictive in the view of existing technology, factors of cost, or economics, or needs of parties,” or if the county actions are preempted by federal law.
As originally introduced, the bill would have removed counties’ power to impose setbacks on projects including carbon pipelines. The bill was amended by a House committee.
The bill also allows counties to impose a surcharge on pipeline companies of $1 per linear foot.
Proponents say the bill balances economic development with property rights. Opponents fear it undermines those rights and local control.
Predicting a bumpy road ahead for the bill, Rep. Chris Karr, R-Sioux Falls, said during the House floor debate, “I can about imagine what’s going to happen to this thing when it goes to conference.”
Three bills considered Thursday by the Senate Commerce and Energy Committee would add protections for private property owners when pipeline companies conduct surveying, ensure better terms for landowners in agreements with pipeline companies, and add financial protections for landowners subjected to eminent domain.
Two of the bills were amended and one was defeated.
One bill that passed the committee 8-1 would amend the state’s laws regarding land surveys on private property for public utility projects.
The bill stipulates that any person or entity looking to conduct an examination or survey on private property must have a pending or approved siting permit application with the state.
Secondly, the bill mandates a 30-day written notice to the property owner. The notice must include a detailed description of the property areas to be examined, the anticipated date and time of entry, the duration of presence on the property, the types of surveys and examinations to be conducted, and the contact information of the person or agent responsible for the entry.
Furthermore, the bill introduces financial compensation for landowners. As originally introduced, any utility seeking to enter private property for surveys would have to make a one-time payment of $500 to the property owner, in addition to covering any damage caused during the examination. The bill was amended Thursday to say the $500 requirement would only apply to carbon pipelines.
Property owners would also be given the right to challenge the survey or examination by filing an action in circuit court within 30 days of receiving the written notice. Additionally, upon request, the results of the survey or examination would have to be shared with the property owner.
The legislation excludes the state or its political subdivisions from the requirements, focusing instead on private entities.
Another bill that passed 7-2 specifies how carbon pipeline easements are to be granted, recorded and terminated. An easement is an agreement to access private land. Summit says it has easements with about 75% of the landowners on its route in South Dakota.
As originally written, the bill said carbon pipeline agreements would not be allowed to exceed 50 years and would automatically terminate if not used for the transportation of carbon dioxide within five years from their effective date. Plus, landowners would be entitled to annual compensation for granting the easement, set at a minimum of $1 per foot of pipeline each year the pipeline is active.
However, both the 50-year easement cap and the minimum $1 per-foot compensation were removed by the committee.
Sen. Casey Crabtree, R-Madison, said “we know the lifetime of this is 50 years, easily,” and therefore a more reasonable cap should be determined at a later date. He said the $1 per linear foot surcharge for counties in Senate Bill 201 would translate to $42 million for all impacted counties “that can be used to offset property taxes” for landowners.
Pipeline opponents felt the changes were unfair, with Chase Jensen of Dakota Rural Action calling the amended legislation “lip service bills” that do not accomplish a true compromise between pipeline opponents and proponents.
Another bill was defeated 6-3. It would have required entities using eminent domain to cover some legal costs for landowners.
Comments on the House floor Wednesday showed how far apart some Republicans are on the legislation and the broader issues in play.
Rep. Scott Odenbach, R-Spearfish, said proponents of Senate Bill 201 are “rolling over for Biden’s Green New Deal.” He said the pipeline and carbon sequestration are part of “an effort to define carbon as a building block of life and to be able to regulate everything we do.”
Mortenson later reminded fellow lawmakers that “we’re not setting federal climate policy today.” He said during Thursday’s leadership press conference that if what comes out of a conference committee is not an authentic compromise that helps landowners, he will back out of the deal.
“If there’s not real benefit in this for the farmers, then I’m out,” he said. “There’s definitely a line in the sand for me.”
