FEBRUARY 9, 2023:
(South Dakota Broadcasters Association)– It was a rare foray into science, economics, and property rights yesterday (Feb. 9, 2023) in the South Dakota House. The chamber passed a bill limiting carbon dioxide pipelines from being able to use eminent domain proceedings against landowners who do not want the line to go across their property.
At its simplest, HB 1133 says carbon dioxide– the bubbles in our soda water– is a commodity when someone is willing to pay for it and not a commodity when it is going to be placed in a deep hole. The distinction is essential, as the measure would allow the use of eminent domain if CO2 from the lines is used in other industrial processes. It would not allow the companies shipping the odorless, colorless gas that the state’s ethanol plants produce to use condemnation if the gas is just stored geologically with no likelihood of later use. Throw in property rights arguments and federal tax credits to get rid of the greenhouse gas to add to the complexity–and passion surrounding the debate.
Bill sponsor Republican Rep. Karla Lems from Canton said regardless of the definition of carbon dioxide as a commodity, nothing in the bill prohibits the planned carbon dioxide pipelines from being built. She also noted that protecting property owners’ rights to exclude others from using their property involuntarily is protected under the South Dakota constitution.
However, bill opponent Republican Roger Chase from Huron said that clearly, CO2 is a commodity– which gives it common carrier privileges to use eminent domain because there is a market for it. He said it is used on soda pop, beer brewing and in many of the processes at the Dakota Provisions turkey plant in his hometown of Huron.
The problem is that there is just too much of it to be absorbed in industrial uses.
“There’s only one way to get rid of CO2, and that is to transport it to a safe place,” Rep. Chase said. “The safest way is by using a pipeline.”
He also warned that passing the bill court hurt one of the state’s biggest agricultural industries, the production of ethanol and other plant-based fuels.
One bill supporter, Republican Rep. Jon Hansen of Dell Rapids, said an important principle was at stake.
“When we want to use something, we ask,” Rep. Hansen said. “We ask, and we give permission. That should be the case here.”
Rep. Hansen said using eminent domain in this case “will only benefit a few companies.”
The doctrine of eminent domain was first only used for governmental takings, such as roads and bridges. Through the years, it has been extended to activities that provide a public good, such as utilities, petroleum pipelines, and power lines.
Two companies have proposed multistate pipelines that would run across South Dakota, taking away CO2 from many of the state’s ethanol plants. Carbon dioxide is a by-product of the ethanol production process. The two companies are Summit Carbon Solutions and Navigator CO2 Ventures.
Some legislators said their constituents were heavily for the ban on the use of eminent domain for carbon pipelines. Others said their voters were for it and “had no trepidation” about the pipelines.
Another bill supporter, Republican Rep. Will Mortenson from Pierre, said, “We keep expanding eminent domain. Now it would be for a project that has the most tenuous grasp for eminent domain.”
Republican Rep Greg Jamison, an opponent, said that passage of the bill changes the rules the carbon dioxide pipelines have relied upon. He said that the bill also sends the wrong message to other companies that may want to do business in South Dakota.
After about 40 minutes of debate, the House passed the bill on a 40 to 28 vote. It now heads to a Senate committee for further consideration.
FEBRUARY 6, 2023, UPDATE:
A House committee killed two more bills yesterday (Feb. 6, 2023) that would have given landowners more rights when dealing with carbon dioxide sequestration pipeline companies.
The House State Affairs Committee took about two hours of testimony Monday afternoon after having four hours of testimony and consideration on other eminent domain bills yesterday morning.
House Bill 1178 would have established a timeline for an application to construct a carbon dioxide transmission facility. Supporters said it would give the federal regulators additional time to implement regulations on carbon dioxide pipelines. They said the South Dakota Public Utilities Commission would have the latest information on permitting the pipelines.
On the other side, opponents said federal rule-making is always ongoing and that the bill would delay and discourage carbon dioxide pipelines.
The committee killed the bill 7 to 5, sending it to the 41st legislative day.
The other bill, HB 1089, would have given landowners $500 for carbon pipelines to conduct surveys on their property. It would also require service of process to the landowner that the company would be conducting a survey.
Proponents said disallowing people on their property is a “sacred right.” Landowners, they said, should be compensated for the trespass.
Opponents said that serving a landowner with formal notice of a survey would likely aggravate a difficult situation.
The committee turned the measure away on a 9 to 3 vote, also sending it to the 41st day.
In the morning committee session, the body passed two landowner-supported eminent domain issues and killed two others. The surviving bills move on to the House.
FEBRUARY 6, 2023:
(South Dakota Broadcasters Association) — After four hours of testimony and consideration, the House State Affairs Committee this morning (Feb. 6, 2023) passed two bills giving landowners more rights in eminent domain condemnations for some pipelines. These bills, and two more the committee will hear this afternoon, arise from landowner complaints about the proposed Summit Carbon Solutions and Navigator CO2 carbon dioxide sequestration pipelines.
Landowners complained to the committee that both companies were using the state’s current eminent domain laws to leverage one-sided right-of-way agreements to place the carbon pipelines on their land.
The two carbon dioxide pipelines and representatives from investor-owned utilities and other business groups say the current process is fair and “works.” They also said that using eminent domain by a pipeline company is a last resort, and they prefer working out the easements with farmers and ranchers instead.
The Summit pipeline would be 2,000 miles long, stopping off at ethanol plants– including Ringneck Energy at Onida– that would put CO2 from their distilling process into the line. The pipeline would cross through North Dakota, South Dakota, Nebraska, Iowa, and Minnesota. The line would then terminate north of Bismarck, North Dakota, where the CO2 would be sequestered below ground.
The proposed Navigator line is 1,300 miles in length. It would travel across parts of South Dakota, Iowa, Minnesota, Nebraska, and Illinois. That line would terminate in south central Illinois, also into a geological formation.
According to the Congressional Research Service, there are already 6,000 miles of carbon dioxide pipelines in the United States. The CRS says the expected demand for carbon dioxide sequestration could require 66,000 miles of pipelines. The same CRS report says there has been one leak of a carbon dioxide pipeline, causing no deaths, but it sent 45 people to the hospital in Mississippi in 2020.
The main bill, HB 1133, would not allow the use of eminent domain in the case of a “non-commodity”- -i.e., something that has no value and is placed in the ground. It will also deny the use of eminent domain if the pipeline receives federal tax credits.
Bill supporters say that shows the pipeline is not hauling something of value. However, opponents said carbon dioxide is a commodity, as it is used to make dry ice, to carbonate drinks and is used in some cattle feeds. The pipelines and ethanol plant operators say carbon sequestration is essential, as many businesses and governments will only buy fuels that have a low carbon footprint. They say this would reduce the carbon footprint of South Dakota ethanol plants by about 50%.
The pro-pipeline supporters say carbon dioxide will become a valuable resource in the future in making plastics and other items and processes, including jet fuel.
HB 1133 passed 8 to 5.
The other bill that passed, HB 1230, would change when a private entity pipeline that hauls a “commodity” must file its “final offer” with the court in an eminent domain lawsuit. Current law says that must be filed before a condemnation trial begins. The bill moves that deadline back to when the action is filed with the court.
Proponents say that will encourage the pipelines to compromise with landowners sooner. They also say it will not stop further settlement negotiations and the filing is necessary because if the jury returns with a verdict 20% more than the “final offer,” the defendant– the landowner– can also receive attorneys fees and costs.
Landowners say it will encourage the pipelines to give their best offer for the easement sooner, thus possibly avoiding more litigation. The pipelines and other opponents say the current system works.
HB 1230 passed 10 to 2.
Both HB 1133 and 1230 now go to the House for consideration.
The House State Affairs Committee did kill two other eminent domain bills.
HB 1188 would have given landowners more rights to keep surveyors off their property. That bill died on an 11 to 1 vote to send it to the 41st legislative day.
The committee also killed HB 1224. That bill would have required a pipeline to acquire 90% of landowners along the proposed route voluntarily agreeing to an easement before the company could use eminent domain.
Supporters said if the pipelines are interested in getting landowners’ approvals, it shouldn’t be difficult and will result in less litigation. They cited that Summit says they already have about 60% landowner agreement and are working on getting more.
Opponents said getting anyone to agree on 90% of anything is impossible. Opponents also testified that this is a “kill bill” that would stop any future projects in the state.
The House State Affairs killed the bill on a 10 to 0 vote, sending it to the 41st legislative day.
Sometime this afternoon, after the House adjourns, the committee will consider two more eminent domain bills.
HB 1178 would establish a timeline and conditions for constructing a carbon dioxide transmission facility. The other bill, HB 1089, would require notice and compensation before entry upon private land for a survey.
District 24 republican Representative Will Mortenson of Pierre chairs the House State Affairs Committee.
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