Regulators face major decision on CO2 line

Yahoo

07-04-2025

PIERRE, S.D. (KELO) — The company seeking a state permit for South Dakota's first-ever carbon-dioxide pipeline now wants regulators to put its request on hold indefinitely so there is more time to negotiate with reluctant landowners.
But attorneys for a group of landowners opposed to the project argue that Summit Carbon Solutions' permit application should be dismissed rather than delayed, because their clients have zero intention of letting the controversial line ever cross their properties.
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That's the dilemma facing the three members of the South Dakota Public Utilities Commission, who on Thursday will consider how to handle Summit's request.
It's the latest choke point in a years-long fight over South Dakota's tradition of landowner rights and the farmer-owned ethanol processors whose year-round purchases of locally-grown corn will increasingly depend in the future on finding some way to reduce releases of CO2 into the atmosphere.
What's created the current controversy was the South Dakota Legislature's decision this year to outlaw the use of eminent domain for CO2-carrying pipelines. House Bill 1052 was quickly signed into law by the state's new governor, Larry Rhoden, a rancher and former legislator who has never been a fan of letting big projects use the legal system to force their way through people's land.
In announcing his decision last month, Gov. Rhoden said it would give Summit the opportunity to negotiate with landowners for access. 'The ethanol industry will remain a crucial part of our state's economy and a key asset as we implement an all-of-the-above energy approach to restore American energy dominance,' he stated.
Summit filed its application for a state permit on November 19, 2024. State law requires the PUC reach a decision within one year. The commission had already scheduled an evidentiary hearing that would start on August 13 and continue through September 13, and had ruled on hundreds of intervention requests from landowners and others, when, just days after the governor signed HB 1052, various landowners began withdrawing as intervenors in the Summit permit proceeding.
Then on March 12, Summit asked the PUC to suspend the hearing schedule and grant the company an indefinite delay. Two weeks later, the landowners group asked the PUC to deny Summit's application altogether and filed formal declarations from 80 landowners spread along the proposed route that 'no survey of any kind and no easement agreement of any kind will be granted to Summit.'
On that same day of March 27, the PUC staff filed its response to Summit's request. The PUC staff supported Summit on suspending the hearing schedule but opposed Summit on doing so indefinitely. The PUC staff recommended that the commissioners place guardrails:
Summit must notify the commission of its intent to resume the process at least 1 monthin advance.
Summit must provide monthly status updates via letters filed into the docket and attendquarterly status hearings before the commission.
The commission should have 12 months to process the docket and issue a decisiononce Summit resumes the process.
All of this comes a year after the Legislature approved Senate Bill 201 that would have changed a key provision in state law. The law that was in effect gave the PUC the option of overriding local regulations when granting a permit. The final version of SB 201 would have required that any PUC permit override all local regulations.
A coalition of landowners and an alliance of other groups referred SB 201 to a statewide vote in the November 2024 general election. Voters rejected it in 65 of 66 counties. That defeat kept in place the old law giving the commission the option of whether to suppress local control.
The opponents of SB 201 also ran candidates against many of the senators and many of the representatives who had voted for 201 and knocked out a dozen incumbents in the June 2024 primary elections while also winning contests for open seats. Those results changed the Legislature's membership sufficiently that anti-201 majorities now control both chambers. That in turn led to passage this year of the legislation denying eminent domain for CO2 pipelines.
The alliance issued a statement after HB 1052 was signed into law: 'Governor Rhoden listened to the people and heard their message to ban eminent domain for CO2 pipeline projects.' The alliance's leader, Jim Eschenbaum of rural Miller, was elected by the South Dakota Republican Party central committee as its new chair.
On March 31 of this year, three of the anti-CO2 lawmakers — Republican Sen. Joy Hohn, Republican Sen. Mark Lapka and Republican Rep. Karla Lems — filed a request that the PUC allow them or their businesses to withdraw as intervenors from the Summit permit proceeding. Lems was prime sponsor of the new law outlawing eminent domain for CO2 lines; Lapka was its lead Senate sponsor.
On Friday, Summit's legal team filed its responses to the commission. Regarding the PUC staff's proposed safeguards, Summit stated, 'While Staff's suggested guardrails are not perfect, the Applicant can see its way clear to agree to the suggestions which Staff has made therein.'
As for the landowners group's request that the commission deny Summit's application altogether, Summit responded that the request was 'opportunistic.' Summit pointed out that the commission already has held public meetings and determined intervenors. (The meetings were along the proposed route in the communities of Sioux Falls, Mitchell, De Smet, Watertown, Redfield and Aberdeen.)
Summit's South Dakota application is part of a broader project that would collect CO2 from various ethanol producers in Minnesota, Iowa, Nebraska, South Dakota and North Dakota and ship it to central North Dakota for burial.
One of the proposed Summit line's potential customers is Gevo's proposed aircraft renewable-fuels plant at Lake Preston, South Dakota. Under South Dakota's previous governor, Kristi Noem, South Dakota made major financial commitments to the project. Both her husband, Bryon Noem, and then-Lt. Gov. Rhoden participated in the groundbreaking.
The governor-appointed state Board of Economic Development gave Gevo a sales-tax break potentially worth up to $12,294,059 on October 11, 2022, for the proposed Lake Preston facility. A month later, the board gave a related proposed facility, Dakota Renewable Hydrogen, also to be at Lake Preston, a sales-tax break potentially worth up to $3,351,400. In 2023, Gevo received approval for $187 million from the state livestock-nutrient management bond fund.
On the September 15, 2022, day of the groundbreaking, Noem didn't attend but described Gevo's project as 'the largest economic investment in South Dakota history. The announcement quoted Lt. Gov. Rhoden: 'Today, we get to celebrate South Dakota's continued growth. I'm excited about the long-term partnership that this facility will have with our farmers.'
One of the photos from the event distributed by Noem's office and posted on X showed Rhoden next to then-state Economic Development Commissioner Steve Westra, with Noem's husband a few men farther down, all throwing dirt from gold-painted shovels. Everyone there was smiling.
The next day, Noem used her weekly column to further promote Gevo's project.
'Companies like Gevo are also proving that government mandates aren't necessary for our energy industry to be environmentally responsible. They are taking the lead to 'go green,' and they're working with our farmers to do it,' her column said.
'The facility will use sustainable, regionally grown corn as its feedstock and will pay farmers a premium for sustainably grown corn. This is one area where the free market should – and is – taking the lead,' the column concluded. 'I'm proud of Gevo and all the innovative, hardworking businesses in South Dakota. They are helping make our state an example to the nation.'
The Gevo project and the related Dakota Renewable Hydrogen facility both received PUC approval in December to have Kingsbury Electric Cooperative assigned as their electricity provider. That came after settlements were reached.
But Gevo told South Dakota lawmakers last year it would put the project elsewhere if necessary. The backup plan became clear on February 25, 2025. Gevo announced acquisition of assets of an ethanol production plant and CO2 sequestration facility in western North Dakota. Summit has intended to bury COS from its multi-state line in the same general area.
A week later the South Dakota Senate gave final legislative approval to banning eminent domain for CO2 lines. Two days after that, Gov. Rhoden signed it into law. And six days later, Summit was asking the PUC to delay its request for a permit.
The PUC will consider the various arguments on Summit's request starting at 2:30 p.m. CT on Thursday in room 413 of the state Capitol in Pierre. Audio from the meeting will be available via Internet at www.sd.net. KELOLAND News plans to cover the meeting and report the results.
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