Governor Noem signs bill to eliminate local control of carbon pipeline setbacks, allow for county funding

South Dakota Governor Kristi Noem signed SB 201 into law on March 7, 2024, cementing a prohibition on county or township control over the location of pipelines in the state.  

The bill includes a provision that allows counties to charge pipeline companies up to $1 per foot as long as the tax credit (for the pipeline company) remains available. In the final version of the bill, the counties are able to give half of their $1 to the landowner to help offset property taxes.

The bill includes a host of other guidelines for pipeline conduct in relation to landowners.

“I stand with South Dakota landowners and always will,” said Governor Kristi Noem. “I am looking forward to signing a Landowner Bill of Rights that will provide new protections for landowners and allow for economic growth to move forward through a transparent process,” was the official comment to come out of the Governor’s office.

But Rep. Karla Lems, Canton, says this isn’t something landowners wanted, and it doesn’t address the issues they’ve voiced for the last two years as the carbon pipeline battle has raged on.

More than one legislator called SB 201 the most impactful bill they had ever seen travel through the halls of the South Dakota capitol.

The final language of the bill, after many amendments, calls for the state permit to “supercede” any county, township, municipality or other government unit rule regarding “safety” standards for pipelines. Some counties, including Brown County, have established setback rules – 1,500 feet in Brown County’s case – to ensure the pipeline isn’t built too close to residences or businesses. The new law requires the state PUC commission’s permit (if or when it is issued) to supercede and pre-empt local government rules.

Conference Committee members included the bill sponsor Senator Casey Crabtree (Madison, District 8), as well as the sponsor of the “companion bills” HB 1185 and 1186, Rep. Will Mortenson (Ft. Pierre, District 24), and also Rep. Loren Lesmeister (Parade, District 28A), Rep. Scott Moore (Ipswich, District 23), Senator David Johnson (Rapid City, District 33) and Senator David Wheeler (Huron, District 22).

Moore was the lone dissenting vote in the Conference Committee.

Moore expressed several concerns. What happens if and when the tax credits are no longer available? Should the state be negotiating prices of property taxes? What safety issues might arise from the pipeline? He says the “landowner rights” in the bill are probably little comfort to the people who might be forced into easements via eminent domain.

“I think the pipeline can get built without all of this. This is dividing neighbors against neighbors,” he said.

Following is section six of the 15 section bill:

“A permit for the construction of a transmission facility within a designated area supersedes and preempts any county, township, municipal, or any other governmental unit land use, zoning, or building rule, regulation, or ordinance. Any local land use, zoning, or building rule, regulation, or ordinance preempted or superseded under this section is not an applicable rule or law under subdivision 49-41B-22(1). A route or transmission facility permitted by the commission under this chapter is not subject to any local land use, zoning, or building rule, regulation, or ordinance, unless the commission requires compliance with any generally applicable rule, regulation, or ordinance as a condition of the permit issued. The enforcement of any county, municipal, township, or other governmental unit rule, regulation, or ordinance for a transmission facility permitted under this chapter must be done pursuant to the order of the commission granting the permit.”

After many hours of testimony on both the House and Senate sides, the supporters and opponents had become quite clear. Although the bill was touted as a “landowner rights bill,” with the bill sponsor, Senator Casey Crabtree of Madison going so far as to say that it provided the “strongest landowner protections in the country,” hundreds if not thousands of citizens attended committee meetings and floor hearings to show their opposition to the bill.

“I’ve been in the legislature for quite some time and I’ve never seen anything this serious,” said Representative Elizabeth May in a Facebook post.

In her house floor testimony, May reminded her fellow house members that the pipeline is being built to garner federal tax subsidies. May said with the continued astronomical growth of the federal deficit, she doesn’t believe harvesting these tax dollars is sustainable, nor is a wise path for our state or country to take.

May also said that, regarding other issues, her fellow legislators tend to be mostly staunch supporters of local control, and that they are reversing their positions in order to support SB 201.

Summit Carbon Solutions, the company seeking a permit to build a carbon sequestration pipeline testified during several hearings. Brett Koenecke, Custer, South Dakota, a lawyer serving as a lobbyist for Summit, said during the House Commerce and Energy Committee meeting, “I’m here this year because local governments have assumed authority they do not have. We won’t have a project if local government discretion or PUC discretion as to their ordinances is left intact. I regret telling you that, but it’s true. Discretion in the hands of local counties is why I’m here.”

Rep. Lems didn’t support the bill.

She shared some of her thoughts in a Facebook post shortly after the House vote on the bill.

“Private property is the foundation that freedom is built upon. Freedom feeds true prosperity. Our Founding Fathers understood this concept, but in recent history our government has encroached more and more into areas that should be protected. Our South Dakota Constitution reads: ‘Inherent rights. All men are born equally free and independent, and have certain inherent rights, among which are those of enjoying and defending life and liberty, of acquiring and protecting property and the pursuit of happiness. To secure these rights governments are instituted among men, deriving their just powers from the consent of the governed.’ If we do not protect the right of the people to acquire and protect property, you will pull the incentive to work hard and buy property, which is often tied to business, and throw it out the window. Investment and future plans will be curtailed. This will crumble the foundation that our state was built upon.

“In a nutshell, we had twelve bills surrounding the issue of property rights this year. Guess what? Nine of those bills died, and only three remain. These three are the bills that leadership in both chambers say are the compromise bills, the ‘landowner rights’ bills. In my opinion, we had some very good bills die that would have provided common sense protections for landowners. These committee rooms were often filled with concerned citizens who came to watch and testify. The opponents to property protections rarely if ever had a farmer or landowner testify. Testifying against many of the bills that would have had real safeguards were GEVO, Summit Carbon Solutions, South Dakota Farm Bureau, South Dakota Ethanol Producers Association, South Dakota Chamber of Commerce and Industry, Glacial Lakes Energy, Greater Sioux Falls Chamber, SD Retailers, and some of the utility companies as well. I am not against any of these groups and happen to be a member of more than one of them. However, I am very concerned with the fact that organizations who have depended on property owners and farmers, and who in the past have stood up for what is right, are now openly coming down on the side of economic development. I will leave it up to concerned citizens to look at the campaign finance reports of committee members who voted consistently with some of those who testified.”

“I am fearful of what will come out of there. It may be the worst bill for South Dakota in years—maybe ever,” Lems said.