South Dakota's governor signed a bill into law Thursday that bans the taking of private property for building carbon dioxide pipelines, a blow to a sprawling Midwest pipeline network that ethanol producers see as key for their future.
The new law muddies the waters for Summit Carbon Solutions and its planned $8.9 billion, 2,500-mile (4,023-kilometer) pipeline that already has approvals in three other states.
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Republican Gov. Larry Rhoden said the measure restricting eminent domain “does not kill” Summit's project, and he encouraged the company to view the law as “an opportunity to reset.”
“I made my decision based on my own consideration of the facts, the policy arguments, legislative history, my own opinions and experience and my judgment about what is best for South Dakota,” Rhoden said.
In a statement, Summit said South Dakota has “changed the rules in the middle of the game.” The company is seeking approval from South Dakota regulators for its proposed route in the state.
“This kind of regulatory uncertainty creates real challenges — not just for our project, but for the ethanol plants in South Dakota that now face a competitive disadvantage compared to their counterparts in neighboring states," the company said. “While this presents obstacles, our project moves forward in states that support investment and innovation, and we will have more news on that soon.”
The company's pipeline would transport planet-warming emissions from dozens of ethanol plants in five states for burial deep underground in North Dakota.
The project has drawn intense opposition from landowners who fear a taking of their land for the pipeline and the dangers of a potential pipeline leak.
Property rights are a passionate issue in South Dakota, where voters last year rejected a suite of regulations that opponents said would deny local control over such projects and consolidate authority with state regulators. Supporters called it a “landowner bill of rights.”
The new law states: “Notwithstanding the provisions of any other law, a person may not exercise the right of eminent domain to acquire right-of-way for, construct, or operate a pipeline for the preponderant purpose of transporting carbon oxide."
Eminent domain is the taking of private property with compensation to the owner.
Summit has approvals for routes in Iowa and North Dakota, a leg in Minnesota and the underground storage. In 2023, South Dakota regulators rejected Summit's permit application. New proceedings are underway.
It isn't clear how Summit would move forward with its project if it could not build in South Dakota.
Supporters see carbon capture projects such as Summit's pipeline as a way to fight climate change and to help the ethanol industry. Opponents question carbon capture's effectiveness at large scale and say it allows the fossil fuels industry to continue unchanged.
Carbon capture projects are eligible for lucrative federal tax credits intended to encourage cleaner-burning ethanol and potentially result in corn-based ethanol being refined into jet fuel.
Bill sponsor Republican Rep. Karla Lems, a Summit opponent, welcomed the signing and criticized Summit's “heavy hand” toward landowners. She said its project is all about tax credits.
South Dakota's action is unfortunate for neighboring states and “an unnecessary roadblock" between "Midwest corn farmers and much needed new markets,” said Iowa Renewable Fuels Association Executive Director Monte Shaw.
“The demand for ultra-low carbon ethanol around the globe is so massive that, at the end of the day, no one state will be able to stop the ethanol industry from accessing that market,” Shaw said in a statement.
Some opponents argue the amount of greenhouse gases sequestered through the process would make little difference and could lead farmers to grow more corn despite environmental concerns about the crop.
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Dura reported from Bismarck, North Dakota.