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Proposed carbon pipeline adds more ethanol plants as lawmakers debate regulations

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Proposed carbon pipeline adds more ethanol plants as lawmakers debate regulations

Mar 04, 2024 | 8:03 pm ET
By Joshua Haiar
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Proposed carbon pipeline adds more ethanol plants as lawmakers debate regulations
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An ethanol plant near Aberdeen. (Joshua Haiar/South Dakota Searchlight)

A company hoping to build a carbon dioxide pipeline added eight more ethanol plants as partners Monday, while South Dakota legislators took action on bills that could affect the project.

Summit Carbon Solutions announced a new partnership with Valero Energy. Valero is headquartered in Texas and operates 15 oil refineries in the United States, Canada and the United Kingdom. It’s also the world’s second-largest corn ethanol producer.

The $8 billion pipeline project is poised to be the world’s largest carbon capture and storage endeavor and could qualify for up to $18 billion in federal tax credits. The federal government has made those credits available for entities pulling the heat-trapping greenhouse gas, carbon dioxide, out of the atmosphere. The gas is emitted when ethanol is made.

Valero will integrate plants located in Iowa, Nebraska, Minnesota and South Dakota into Summit’s project, which will now encompass 57 ethanol plants across the upper Midwest. The pipeline would transport liquefied carbon dioxide from the plants to an underground sequestration site in North Dakota.

The decision comes after Valero’s former partner, Navigator CO2 Ventures, failed to obtain a permit in South Dakota and withdrew its pipeline project. That project aimed to transport carbon to a storage site in Illinois.

The Summit project has faced regulatory challenges and opposition from some landowners, and has suffered permit rejections in North Dakota and South Dakota. A permit decision is imminent in Iowa. The company has said it is working to refine its proposal to meet South Dakota requirements and plans to resubmit an application

Legislative action on pipelines

A bill introducing more stringent requirements for companies seeking access to private land passed the state Senate on a 29-4 vote Monday. The bill now goes back to the House for consideration of amendments.

Under the proposed legislation, any person or entity must have a pending or approved siting permit application with the state before conducting examinations or surveys. The bill also requires a 30-day advance written notice to property owners, detailing the scope of the survey, anticipated entry date and duration, survey types, and contact information for the responsible party.

In addition, the legislation proposes financial compensation for landowners, mandating a one-time $500 payment by carbon pipeline companies to property owners for entry onto private land, along with compensation for any damages incurred. Property owners would have the right to contest the survey or examination by filing a lawsuit in circuit court within 30 days of receiving notice, and could later request the survey results.

Another bill, which passed the Senate 24-9 and is also headed back to the House for consideration of amendments, specifies how carbon pipeline easements are to be granted, recorded and terminated. An easement is an agreement to access private land. Summit says it has easements with about 75% of the landowners on its route in South Dakota.

The bill says carbon pipeline easements would automatically terminate if no permit has been granted by the Public Utilities Commission within five years from their effective date.

Opposition to pipeline could derail landowner protections, House leader warns

Lastly, Senate Bill 201 is awaiting action by a committee of lawmakers to reconcile different House and Senate versions of the legislation.

The conference committee, appointed Monday, includes Senators Casey Crabtree of Madison, David Wheeler of Huron, and David Johnson of Rapid City, and Representatives Will Mortenson of Fort Pierre, Oren Lesmeister of Parade, and Scott Moore of Ipswich. 

The bill would force the state’s Public Utilities Commission to overrule counties if their pipeline rules are too burdensome. The commission of three elected officials is responsible for pipeline permitting in the state.

Current law says the PUC “may” overrule counties’ setbacks, which are mandatory minimum distances between pipelines and other features. The legislation says the commission “must” overrule setbacks if they “are unreasonably restrictive in the view of existing technology, factors of cost, or economics, or needs of parties,” or if the county actions are preempted by federal law.

Some senators feel the current version of the bill is too burdensome for the project. As originally introduced by the Senate, the bill would have removed counties’ power to impose setbacks on projects including carbon pipelines. The bill was amended by a House committee. 

The current bill also allows counties to impose a surcharge on pipeline companies of $1 per linear foot.