New group aims to refer carbon pipeline law to voters

March 16, 2024

Joshua Haiar (SD Searchlight)

Voters could be asked to reject a new state law regulating carbon dioxide pipelines.

The law was passed during the recently concluded legislative session and signed by Gov. Kristi Noem. Supporters said it will implement new protections for landowners while providing a path forward for the pipeline project.

Opponents view it as a capitulation to the pipeline company. Some of those opponents announced Friday that they’ve organized an effort to refer the law to voters.

“What we’re really concerned about here is the loss of the rights we are guaranteed in the U.S. Constitution as well as the state constitution,” said Rick Bonander, whose property in rural Valley Springs would be crossed by the pipeline.

The bill came in response to an $8 billion pipeline proposed by Summit Carbon Solutions, which is headquartered in Iowa. The pipeline would collect carbon dioxide from 57 ethanol plants in South Dakota and neighboring states and pipe it to North Dakota for underground storage.

The project would take advantage of up to $18 billion in federal tax credits that incentivize the removal of heat-trapping carbon dioxide from the atmosphere. Some ethanol backers have said the project is needed to reduce carbon emissions from ethanol production and keep the corn-based fuel viable in a future where governments and consumers are demanding lower climate impacts.

Summit plans to apply again for a permit in South Dakota after its initial application was denied by the Public Utilities Commission. The denial was partly due to conflicts with county ordinances that require minimum distances known as “setbacks” between pipelines and other features.

The project has faced opposition from some landowners concerned about property rights and safety, including health risks associated with potential leaks.

Bonander and others recently founded the South Dakota Property Rights and Local Control Alliance to seek a repeal of the recently adopted law. The alliance needs petition signatures from 17,508 registered South Dakota voters by May 7 to refer the law to the Nov. 5 general election.

The law is the result of this past legislative session’s Senate Bill 201. Bonander said the bill undermines local control by preempting local regulations. Additionally, he alleges the bill encompasses multiple subjects, violating a single-subject rule.

House Majority Leader Will Mortenson, R-Fort Pierre, was the prime sponsor of the bill in the House. He said the legislation sticks to a single subject: pipeline regulations. He added that if opponents read the bill, they’ll discover there’s no “bogeyman” in it.

“There are just solid landowner protections and some extra money for the counties and farmers,” Mortenson said.

Senate Bill 201 allows counties to collect a pipeline surcharge of up to $1 per linear foot, with at least half of the surcharge allocated for property tax relief for affected landowners. The remaining funds could be used at the county’s discretion. Companies also must submit an agricultural impact mitigation plan and bury pipelines at least 4 feet deep.

The bill mandates public disclosure of modeling to gauge the impact of a pipeline rupture and ensures the pipeline companies, rather than landowners, are liable for damages caused by the projects.

In response to controversy about out-of-state contractors working for the pipeline company, the bills says a land agent must be a pipeline facility employee, a resident of the state, or a real estate agent licensed in the state.

The most controversial part of the new law is its perceived effect on the Public Utilities Commission and local setback laws. Prior state law allowed the commission to overrule counties’ pipeline setbacks, although the commission has so far declined to do that.

The bill was amended several times. An early version would have taken setback authority away from counties and given it solely to the state. A later version left authority with counties but said the Public Utilities Commission “must,” rather than “may” overrule any overly burdensome setbacks.

“It handcuffs the PUC,” Bonander alleged. “It replaces the words like ‘may,’ with ‘must.’”

The final, approved version of the legislation says the commission’s permitting process overrules local setbacks and other local rules regarding pipelines, unless the commission requires compliance with any of those local regulations. That means local rulemaking still exists, and the decision to make a carbon pipeline company comply with those setbacks still rests with the Public Utilities Commission.

Finally, the bill codifies a “Landowner Bill of Rights” that includes references to rights in other state laws, including two other pipeline-related laws passed during the most recent legislative session.

The multi-year carbon pipeline debate has spawned a complex array of alliances and groups.

One group is the South Dakota Ag Alliance. Its co-founders, Rob Skjonsberg and Jason Glodt, are prominent figures in South Dakota politics.

The two lobbied for Senate Bill 201’s passage during the recent legislative session. Soon after the South Dakota Property Rights and Local Control Alliance announced its intent to refer the law to voters, South Dakota Ag Alliance shared a press release calling the group an “ill-advised campaign committee.”

“Senate Bill 201 is a major victory for landowners, but if a referendum is successful the landowners will ultimately lose and Summit Carbon will still win because pipelines already preempt county ordinances,” Glodt said.

If the law is referred to voters, it would join two measures already on the ballot and up to eight others that petitioners are circulating.