On Thursday, South Dakota’s governor enacted a law prohibiting the use of eminent domain for constructing carbon dioxide pipelines, creating an obstacle for a large Midwest pipeline network that ethanol producers view as essential for future development.
The legislation complicates efforts for Summit Carbon Solutions, which is planning an extensive $8.9 billion, 2,500-mile pipeline. This project had already gained endorsements in three other states.
Republican Governor Larry Rhoden assured that the restriction on eminent domain does not terminate Summit’s project, and urged the company to see it as a chance to reevaluate its approach.
“My choice was made after thoughtful deliberation over facts, policy debates, legislative background, personal perspectives, and what I believe serves South Dakota best,” Rhoden explained.
Summit responded in an announcement, claiming South Dakota “changed the rules in the middle of the game.” The company is continuing to seek regulatory approval in South Dakota for its pipeline route.
“This type of regulatory instability poses significant hurdles — not only for our endeavor, but also for the ethanol facilities in South Dakota, which now face competitive challenges compared to those in nearby states,” Summit stated. “These barriers are present, yet our project advances in states that embrace investment and innovation. More developments will follow shortly.”
The proposed pipeline plans to carry emissions from multiple ethanol production sites across five states, ultimately storing them underground in North Dakota.
This initiative has sparked substantial opposition from property owners concerned about land acquisition for the pipeline and the threat of leaks.
Property rights stir strong feelings in South Dakota, evidenced by voters declining a suite of regulations last year. Critics argued these regulations would limit local control over such projects, consolidating power with state regulators. Proponents dubbed it a “landowner bill of rights.”
The new law declares, “Notwithstanding the provisions of any other law, a person may not exercise the right of eminent domain to acquire right-of-way for, construct, or operate a pipeline for the preponderant purpose of transporting carbon oxide.”
Eminent domain involves taking private property while compensating the owner.
Though Summit has secured route approvals in Iowa, North Dakota, and Minnesota, with plans for underground storage, South Dakota regulators dismissed their permit request earlier in 2023. New proceedings are now active.
The pathway forward for Summit without the ability to construct in South Dakota remains uncertain.
Proponents view carbon capture initiatives like Summit’s as potential solutions to combat climate change and bolster the ethanol sector. However, critics question large-scale efficacy and argue they perpetuate fossil fuel reliance.
Carbon capture projects attract substantial federal tax incentives, designed to promote cleaner ethanol production and potentially transform corn-based ethanol into aviation fuel.
Republican Representative Karla Lems, an adversary of Summit, expressed approval for the new law, criticizing Summit for its forceful tactics against landowners, and stated the project is predominantly about tax benefits.
Monte Shaw, Executive Director of the Iowa Renewable Fuels Association, deemed South Dakota’s decision unfortunate for surrounding states, describing it as “an unnecessary roadblock” between “Midwest corn farmers and valuable new markets.”
“The global demand for ultra-low carbon ethanol is extensive, and ultimately, no single state will stop the ethanol industry from tapping into that market,” Shaw affirmed.
Opponents counter that the reduction in greenhouse gases achieved through these processes is minor and could encourage increased corn production despite associated environmental concerns.