Make your voice heard: South Dakota citizens will vote on an issue affecting local control and pipeline payments

South Dakota’s bill SB 201 will be on the ballot this November.

Jim Eschenbaum, a Hand County commissioner who led the referendum effort, said the South Dakota Secretary of State’s office informed him on Wednesday, July 10, 2024, that signature collectors had submitted enough signatures to warrant referring the matter to South Dakota voters.

Eschenbaum said the state told him that 92 percent of the roughly 31,000 signatures were valid and that such a high percentage of usable signatures was “unheard of.”

He praised the signature collectors for their diligence in collecting valid signatures from real South Dakota voters.

From now until November, advocates of property rights and local control must educate South Dakota voters on the issue.

Eschenbaum said a media campaign is needed, noting that if each petition signer donated $30, the total would be nearly $1 million. He estimates that the Property Rights Coalition currently has about $11,000 in its account.

“We have to fight the falsehoods. They’ll say this is a landowner’s bill of rights. We have legislators saying the pipeline is going to be built anyway, so the landowners might as well get their 50 cents and the county gets its 50 cents,” he said, referring to a provision in the law that gives counties the right to charge pipeline companies $1 per linear foot as long as the pipeline company claims the 45Q tax credits. The county can then pass half of that dollar on to the affected landowner, who can use it for property tax relief.

The bill, which was passed by the House and signed by Governor Noem, was called a “landowners’ bill of rights” by its supporters, including two Republicans, Senator Casey Crabtree of Madison and Representative Will Mortenson of Fort Pierre.

However, numerous producer associations such as the South Dakota Stockgrowers Association, the South Dakota Farmers Union and individual landowners opposed the bill on the grounds that it did not provide the protections demanded by landowners, but rather deprived counties and municipalities of local control.

Walt Bones, a diversified agricultural producer from Parker, South Dakota, is chairman of Protect South Dakota’s Ag Future (PSDAF), a coalition that supports the concept of carbon capture pipelines and SB 201.

Bones, a former South Dakota Secretary of Agriculture, runs a corn, soybean, cow/calf and beef cattle operation with his two brothers, brother-in-law and three nephews. They co-own a dairy and raise dairy cows on their building lot.

PSDAF, a group that includes the South Dakota Farm Bureau, the South Dakota Cattlemen’s Association, corn and soybean associations, many ethanol and other value-added corn processors and producers and others, says a carbon capture pipeline like the one Summit Carbon Solutions wants to build would bring great benefits to the ethanol industry.

According to PSDAF, medium-sized ethanol plants in South Dakota would receive $5 million annually in 45Q tax credits through carbon capture.

Bones believes carbon sequestration will increase the value of South Dakota corn by about 25 to 30 cents per bushel because lower-carbon ethanol will be worth more in coastal markets.

Bones himself does not believe that carbon dioxide is “destroying our environment,” but he says many people do and are willing to pay for “these low-carbon, high-quality” products.

“I think it would be irresponsible of us as farmers and members of the agricultural industry, our state’s largest industry, not to try to take advantage of this marketing opportunity,” he said.

Bones also believes the pipeline will be important to the success of GEVO, a corn processing plant in Lake Preston, South Dakota, that aims to produce sustainable aviation fuel. About 10,000 acres of corn are already earmarked for the project and farmers are working to reduce their carbon footprint, making the corn more valuable, he said. The value of the corn will increase even further if a carbon capture pipeline could remove the CO2 from the area, making the fuel more valuable.

The Nebraska Examiner reported that GEVO donated $167,000 to PSDAF and the funds will be used to educate voters about the benefits of SB 201.

While he respects the fact that some landowners do not want to grant easements for the pipeline to run across their property, Bones believes that one or more landowners should not be allowed to obstruct the construction of the pipeline.

Bones said the pipeline would run across his property, and while he has not yet signed an easement, he is grateful that SB 201 addresses some of his concerns. It holds the pipeline company liable for problems that arise, including problems with drainage pipes, limits the easement to a maximum duration of 99 years and requires the line to be buried 4 feet underground. The Bones family has submitted a counteroffer to Summit’s easement, asking that the line be buried 6 feet underground.

Bones said Summit Carbon Solutions surveyed his property with permission and caused no problems.

He said the carbon capture pipeline could bring significant financial benefits to farmers and that the economies of rural communities would also benefit. For him, that was reason enough to support the use of expropriation law to force landowners to sign easements.

However, Bones wants to make sure all South Dakota voters understand that the vote is not about a permit for the carbon capture pipeline, but rather a vote on SB 201, which sets some rules for carbon pipelines and takes away the right of counties and municipalities to set larger setbacks than those set by the South Dakota Public Utilities Commission. So far, the Public Utilities Commission has not issued a permit and thus has not set setbacks.

The Iowa Utilities Board has granted a permit to Summit Carbon Solutions, but it is contingent on South Dakota and North Dakota also granting similar permits, which have not yet happened.

Summit Carbon Solutions is a private company with several foreign investors that wants to build a carbon sequestration pipeline that runs through Iowa, Nebraska and eastern South Dakota, transporting carbon dioxide from ethanol plants to North Dakota to deposit it near Beulah. Proponents of the pipeline say removing the CO2 from the ethanol plants would increase the value of the ethanol by making it more environmentally friendly. Opponents say a company building a carbon sequestration pipeline should not be allowed to force landowners to sign easements through expropriation because the line is privately owned. The pipeline could potentially receive millions in 45Q tax credits, valued at $85 to $180 per ton of carbon removed.

During the legislative session, a Summit lobbyist said his company did not believe construction of the pipeline would be possible if counties were given control over distancing rules.

Brett Koenecke of Custer, South Dakota, a lawyer who lobbys for Summit, said during a meeting of the House Commerce and Energy Committee, “I’m here this year because local governments are assuming authority they don’t have. We’re not going to have a project if the discretion of local governments or the PUC in their ordinances is left untouched. I’m sorry to tell you this, but it’s true. The discretion in the hands of local districts is why I’m here.”

Eschenbaum said that those who had accepted the construction of the pipeline were “putting the cart before the horse.”

“If SB 201 is rejected in November, we’ll be back where we were. It was rejected the first time. And counties will still have the power to do setbacks,” he said.

South Dakota Senator Karla Lems of Canton told TSLN that the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration wrote a letter in September responding to questions it had received about state and county jurisdiction in “the siting, planning, construction, operation and maintenance of carbon dioxide pipelines.”

In the letter, the PHMSA administrator explains: “Therefore, the responsibility for siting new carbon dioxide pipelines rests largely with the individual states and counties through which the pipelines pass and is subject to state and local laws.”

Lems said this clearly gives counties and states the authority to set setback limits and other requirements for carbon pipelines.

However, Bones said the federal government, not state or county governments, has authority over pipeline spacing. Senator David Wheeler also testified during the legislative session, saying courts have interpreted the Pipeline Safety Act (as it relates to oil pipelines) broadly and federal law prevails in this area. Chief Judge of the Southern District of Iowa Stephanie Rose issued permanent injunctions to prevent Shelby and Story counties from enforcing ordinances that would set minimum spacing between the pipelines and cities, homes, schools and other locations, according to the Iowa Capital Dispatch.

SB 201 can be found here. https://sdlegislature.gov/Session/Bill/25010/267346