By Joshua Haiar, South Dakota Searchlight
August 22, 2024

Court ruling complicates carbon pipeline company’s push for land

by Joshua Haiar, South Dakota Searchlight
August 22, 2024

The company trying to build a carbon-capture pipeline through South Dakota has not yet proven it should be allowed to take private land for public use, according to a state Supreme Court ruling issued Thursday.

Landowners who opposed the project hailed the decision as a victory, but the company expressed confidence it could go back to lower courts and prove its case.

Summit Carbon Solutions, of Iowa, is developing an $8 billion pipeline project. It would capture carbon dioxide produced by 57 ethanol plants in multiple states and transport it to an underground storage site in North Dakota. The company hopes to capitalize on federal tax credits incentivizing the removal of heat-trapping carbon from the atmosphere.

The pipeline would pass through 18 counties in eastern South Dakota. Some landowners along the route sued to stop the company from conducting land surveys. 

Court decision explained

Summit says the surveys are justified because the company qualifies as a common carrier, and common carriers are allowed to use eminent domain.

A common carrier transports goods for the general public in exchange for a fee, such as electricity in a transmission line or oil in a pipeline. Common carriers are allowed to use eminent domain to gain land access from unwilling landowners, by going to court and asking a judge to determine fair payments. 

The state Supreme Court ruled Summit had not yet proven to lower courts that it’s “holding itself out to the general public as transporting a commodity for hire.” 

“It is thus premature to conclude that SCS is a common carrier, especially where the record before us suggests that CO2 is being shipped and sequestered underground with no apparent productive use,” the court ruled.

The Supreme Court sent the matter back to South Dakota’s lower courts for further proceedings, adding that the Supreme Court justices “make no judgment as to SCS’s ultimate common carrier status.”

Summit pledges to continue

Summit spokesperson Sabrina Zenor said in a statement that the company is confident it can provide additional information to lower courts proving its project qualifies as a common carrier.

“The economic impact of carbon capture, utilization, and storage on rural America is significant, and will greatly benefit agriculture and farmers,” Zenor said. “We are committed to ensuring that these benefits reach communities across our project footprint as we continue to be a valuable partner in this growing market.”

Meanwhile, attorney Brian Jorde, representing more than 1,000 landowners affected by the project, told South Dakota Searchlight the ruling validated what he and his clients have argued for three years. 

The project has approval from the Iowa Utilities Board, but that approval is conditioned on Summit gaining permits in North Dakota and South Dakota, which have not been granted. Jorde said the South Dakota Supreme Court decision means Summit is now “in a real bind.”

Jorde also alleged broader implications for Summit’s business model. He said the company might try to bolster its argument for being a common carrier by citing the possibility that carbon dioxide could be used for enhanced oil recovery. In that process, carbon dioxide is injected into aging oil wells to make crude oil less thick, help it flow better, and cause it to expand toward wells.

Jorde said that would undermine the project’s purported benefits for the climate. 

“So, what they’re now going to do is say they’re going to take that carbon and then produce more carbon-intensive fuels,” he said. “This is just total nonsense, this whole project.”

Lawmakers claim vindication

Multiple legislative attempts to ban the use of eminent domain for carbon pipelines failed during the past two legislative sessions in Pierre. 

One of the lawmakers who supported those bills, Rep. Karla Lems, R-Canton, said the Supreme Court decision is vindication.

Pipeline survey law, carbon as a public commodity argued at state Supreme Court

“The same arguments that were offered on the House floor are now upheld by the Supreme Court,” she said. 

House Majority Leader Will Mortenson, R-Fort Pierre, helped to pass legislation last winter that provides additional financial and legal protections for affected local governments and landowners while retaining the ability of pipeline companies to seek a state permit. 

Opponent lawmakers and landowners have since filed petition signatures to refer that legislation to voters in the Nov. 5 general election.

Mortenson said he also feels vindicated after saying last year that carbon sequestration pipelines aren’t common carriers, aren’t carrying commodities, and should not have the ability to use eminent domain.

“For the last two years, I’ve argued that the carbon pipeline is different from other pipelines and should be treated differently,” he said. “They haven’t yet proven they are a common carrier, or that carbon dumped in the ground is a commodity. Maybe they can prove that in the future, but with what we know now, they don’t have eminent domain authority and never have.”

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Joshua Haiar is a reporter based in Sioux Falls. Born and raised in Mitchell, he joined the Navy as a public affairs specialist after high school and then earned a degree from the University of South Dakota. Prior to joining South Dakota Searchlight, Joshua worked for five years as a multimedia specialist and journalist with South Dakota Public Broadcasting.

South Dakota Searchlight is part of States Newsroom, the nation’s largest state-focused nonprofit news organization.

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