Make your voice heard: South Dakotans will vote on issue affecting local control, pipeline payments

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

Jim Eschenbaum, a Hand County Commissioner who chaired the referendum effort, said that the South Dakota Secretary of State’s office alerted him Wednesday, July 10, 2024, that the petition gatherers had turned in enough signatures to warrant referring the issue to South Dakota voters.

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

He credited the signature gatherers for their diligence in obtaining legitimate signatures from true South Dakota voters.

Between now and November, property rights advocates and local control supporters need to educate South Dakota voters about the issue.

Eschenbaum said a media campaign will be needed, and pointed out that if every person who signed the petition would donate $30, it would total nearly a $1 million. He believes the property rights coalition currently has about $11,000 in its account.

“We will have to fight the mistruths. They’ll say this is a landowner bill of rights. We have legislators saying that the pipeline is going to be built anyway so the landowners might as well get their $.50 and the county get their $.50,” he said, referring to one provision in the bill giving counties the ability to collect $1 per linear foot from pipeline companies as long as the pipeline company accesses the 45Q tax credits. The county can then turn over half of the $1 to the affected landowner, who can use it for property tax relief.

The bill, which the legislature approved and Governor Noem signed, was called a “landowner bill of rights” by proponents, including bill sponsors Senator Casey Crabtree, Madison and Representative Will Mortenson, Ft. Pierre, both republicans.

However, many ag producer groups such as the South Dakota Stockgrowers Association, South Dakota Farmers Union, individual landowners and more, opposed the bill, saying it did not provide the protections landowners requested, but rather stripped away local control for counties and townships.

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

A former South Dakota secretary of agriculture, Bones and his 2 brothers, brother-in-law and three nephews operate a corn, soybean, cow/calf and cattle feeding operation. They are a part owner in a dairy and develop dairy heifers in their development lot.

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

PSDAF said average-sized South Dakota ethanol plants would earn $5 million in 45Q tax credits annually from carbon capture.

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

Bones himself doesn’t believe carbon dioxide is “ruining our environment,” but he said a lot of folks believe that way and are offering to pay for “these low carbon, high value” products.

“I think as farmers and members of the ag industry, our state’s largest industry, it would be irresponsible of us not to try and capitalize on that 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 plans to turn out sustainable aviation fuel. Around 10,000 acres of corn are committed to the project already and the farmers are working on lowering their carbon footprint, which makes the corn more valuable, he said. The corn’s value will increase even more if a carbon capture pipeline could remove the CO2 from the area, thus, making the fuel more valuable.

Nebraska Examiner reported that GEVO contributed $167,000 to PSDAF, and the funds are being used to inform voters about the benefits of SB 201.

And while he respects the fact that some landowners don’t want to sign easements for the pipeline to cross their property, Bones believes one or a few shouldn’t be able to hamper progress of the pipeline.

Bones said the pipeline is proposed to cross his property and although he hasn’t yet signed an easement, he appreciates SB 201 for addressing some of his concerns including placing liability on the pipeline company for problems that arise including issues with drain tile, restricting easements to a maximum length of 99 years, and requiring the line be placed 4 feet below ground. The Bones family has submitted a counter-offer to Summit’s easement, and has asked that the pipe be buried 6 feet below ground.

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

He said that because the carbon capture pipeline could bring a significant financial benefit to farmers, the economies of rural communities will benefit, which is enough for him to support the use of eminent domain to force landowners to sign easements.

But Bones wants to be sure all South Dakota voters realize that the issue on the ballot is not an up or down vote on a permit for the carbon capture pipeline, but rather an up or down vote on SB 201, which establishes some rules for carbon pipelines and also removes the county or townships’ right to establish setbacks larger than South Dakota Public Utilities Commission setbacks. At this time, the Public Utilities Commission has not issued a permit and thus has not established setbacks.

The Iowa Utilities Board did issue Summit Carbon Solutions a permit, contingent on South Dakota and North Dakota approving permits, which as of now has not happened.

Summit Carbon Solutions is a privately owned company with multiple foreign investors that seeks to build a carbon sequestration pipeline that would traverse Iowa, Nebraska, and eastern South Dakota, carrying carbon dioxide away from ethanol plants and into North Dakota to be deposited near Beulah.  Pipeline proponents say the removal of the CO2 from the ethanol plants would increase the value of the ethanol by making it more environmentally friendly. Opponents say a carbon sequestration pipeline company should not be allowed to use eminent domain to force landowners to sign easements because the line is privately owned. The pipeline would potentially be eligible for millions of 45Q tax credits, valued at $85-$180/ton of carbon removed.

During legislative session, a Summit lobbyist said his company doesn’t believe the pipeline will be possible if counties are allowed control over setback rules.

Brett Koenecke, Custer, South Dakota, a lawyer serving as a lobbyist for Summit, said during a 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.”

Eschenbaum said those who have resigned to the pipeline being built are “putting the cart before the horse.”

“If SB 201 is voted down in November, we go back to where we were. It was denied the first time. And counties will still have the authority to put setbacks in place,” he said.

South Dakota Senator Karla Lems, Canton, told TSLN that the US Department of Transportation Pipeline and Hazardous Materials Safety Administration wrote a letter in September in response to questions it had received about state and county authority over “the siting, design, construction, operation, and maintenance of carbon dioxide pipelines.”

In the letter, the PHMSA administrator says, “Therefore, the responsibility for siting new carbon dioxide pipelines rests largely with the individual states and counties through which the pipelines will operate and is governed by state and local law.”

Lems said this clearly gives authority to counties as well as states for setbacks and other requirements for carbon pipelines.

But Bones said the federal government, not state or county government, has authority over pipeline setbacks. Senator David Wheeler also testified to this during the legislative session, saying the courts have interpreted the pipeline safety act broadly, (referencing oil pipelines) and federal law has pre-empted that area. Chief Judge Stephanie Rose, of the federal Southern District of Iowa issued permanent injunctions to block Shelby and Story counties from enforcing ordinances that would have set minimum distances to locate the pipelines away from cities, homes, schools and other sites, according to the Iowa Capital Dispatch.

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