Fierce lobbying surrounds eminent domain restrictions for carbon pipelines
Some landowners have been “assaulting” lawmakers in pulling against the pipelines, one ethanol lobbyist said during a meeting in the South Dakota State Capitol.
PIERRE, S.D. — The House floor in the hours preceding a vote on eminent domain law was a fitting climax for a battle between some South Dakota landowners and two carbon pipeline companies promising a future for the state’s ethanol industry.
With most members in committee rooms or yet to arrive, only a handful of lawmakers were seated in the chamber around 9 a.m. on Thursday, Feb. 9, about four hours before the vote on House Bill 1133.
The bill would have the practical effect of ripping away the possibility of eminent domain from Summit Carbon Solutions and Navigator CO2 Ventures, two companies proposing a total of hundreds of miles of pipeline in South Dakota, which would carry emitted carbon from ethanol plants to sequestration sites in other states. Proponents say the pipeline would lower the carbon scores necessary to compete in the green economy created by regulations in California, Washington, Oregon, Canada and a growing number of other large energy markets.
Opponents say the carbon pipelines would be stretching the general understanding of state eminent domain law if they eventually took private land for the construction of the pipeline.
As Rep. Karla Lems, of Canton, the prime sponsor of the bill, argued, the company would still be free to continue signing voluntary agreements with landowners to build the pipeline, though proponents say the possibility of eminent domain is an important way to get landowners to the table and negotiate.
“Some folks just don't pick up the phone. They don't answer the door. And so at a certain point, you have to press that button to get the conversation moving,” Jake Ketzner, the vice president of government and public affairs with Summit Carbon, said. “At the end of the day, though, our farmers will get paid significantly higher through a voluntary agreement.”
The few lawmakers on the floor that morning were highly outnumbered by lobbyists both for and against the bill, some wearing the official plastic identification of registered lobbyists and others, all of them landowners in the state, wearing temporary stickers.
When one group was finished with a lawmaker, the other was close behind, alternating stories of the economic disaster that would follow an inability to construct these pipelines and the property rights — specifically the right to exclude — meant to protect family farm heirlooms.
“That was probably one of the hardest votes that I've had yet this session. From the outside, I think it would be very easy to look at this situation and see it as South Dakota landowners versus the big bad corporation,” Rep. Kadyn Wittman, a Democrat from Sioux Falls and one of the lawmakers on the floor at the time, said after her vote against the bill. “And to a certain extent, it certainly was. But there was so much nuance involved in how this will impact the economy, how it impacts our ethanol producers and then how it impacts our corn producers.”
When the dust settled on a lengthy floor debate that afternoon, House Bill 1133 was successful by a 40-28 vote, where it will head to a Senate more tilted to economic considerations.
“That’s going to be an uphill battle. We know that,” Lems said. “So I think our biggest issue is getting it out of committee. I think we have a better shot if we get it down to the floor. But that'll be the next step. We're taking it in incremental steps.”
Difference in styles characterizes overwhelming lobbying push
Though the push from both sides to bring lawmakers into the fold has been ongoing for months, an afternoon meeting on Wednesday, one day prior to the vote on House Bill 1133, best illustrates the concerted effort from Summit Carbon and Navigator to kill any legislation that would jeopardize their projects.
The meeting, housed in a committee room overlooking the House, brought together more than a dozen ethanol executives from the state, Summit Carbon CEO Lee Blank, several lobbyists and a small handful of legislators.
A contemporaneous House State Affairs committee hearing meant several of the top lawmakers on that side were unavailable, leading to mainly senators attending the information session.
Communicated at the meeting was the dire straits of the South Dakota corn industry were the pipeline to fail, as ethanol companies purchase more than half of the corn in the state.
“Without access to these [low-carbon] markets, we will slowly lose market share,” said Gary Schmidt, the chairman of the board with Glacial Lakes Energy, who was joined on the stand with the other eight members of the board. “This will affect profits, our ability to post a competitive corn bid and potentially be the demise of the ethanol industry in South Dakota as we know it today.”
But also made clear at the meeting was the feeling from some of around 20 registered lobbyists representing ethanol and the carbon pipelines that the other side of the coin, made up largely of active landowners, had broken standards of legislative decorum For several days throughout the session, these landowners had lobbied in the building and, among those unable to make the trip, sent countless emails.
“We’re just trying to sell the message or at least put a human face on this, versus an angry group of landowners that has been assaulting some of you guys on the [House] floor,” William Van Camp, a registered lobbyist for Ringneck Energy and Redfield Energy, two ethanol companies in the state signed onto the Summit Carbon pipeline, said during the meeting.
Matching the army of lobbyists from the pipeline and ethanol side — 14 from Summit Carbon, two from Navigator and five from the ethanol industry — are three lobbyists from Landowners for Eminent Domain Reform and a rotating cast of dozens of active landowners.
“We’ve been trying to do nothing but be respectful and kind and basically help them to understand our story and get our views across regarding this eminent domain issue,” Joy Hohn, who has met with lawmakers in the state capitol on several occasions including the day of the vote, said in response to Camp’s comments. "They're acting like bullies. When they don't get their way, they start name-calling."
She added that the deep ties to the land among the landowners she’s working with are the reason for their “passion” surrounding the issue.
Still, with 60% of South Dakota landowners along the 470 miles of the proposed Summit Carbon pipeline in the state signed onto the project, Rep. Stephanie Sauder, of Bryant, during her speech on the floor, said she sought out landowners in her district and found a different perspective from some.
“I talked to my constituents of District 4 which I represent,” she said. “Come to find out many of them see the long-term advantages of this and have already signed on to allow the pipeline to go through their land.”
The Commodity Question
Nestled inside this new chapter in an age-old debate of economic growth and property rights is one simple question: is carbon, when used in the manner in which Summit Carbon and Navigator plan to use it, a commodity?
Under current law, these pipelines would have access to eminent domain, as they would fall under the two important distinctions of a “common carrier” carrying a “commodity.”
Rep. Roger Chase, of Huron, who is in favor of the pipelines, thinks carbon does fall under this category, as it has myriad uses in the economy, though there currently is not enough demand for the production of carbon coming from ethanol plants.
“Someday I could envision along this pipeline, if it gets built, I could see an industry that finds a use for CO2, with the creation of fertilizer, mass-production of concrete and mass-production of plastic products,” he said.
For proponents of House Bill 1133, which carves out carbon headed for “geological storage” from this definition of a commodity, the common understanding of a commodity has the important context of sitting inside a market with buyers and sellers.
“When I thought about this project, I thought, ‘That’s not a commodity.’ It’s not going into commerce. No one's buying or selling this, it’s getting permanently sequestered, and it’s getting put in a hole in the ground,” House Majority Leader Will Mortenson, of Pierre, said during floor debate. “I think if you ask people walking up and down the street what is a commodity, they would say something people are buying or selling, something that is in the stream of commerce.”
Mortenson has been an outspoken advocate of House Bill 1133 and one other minor proposal that are both now through the House. The issue is partially personal — his grandfather, Clarence Mortenson, had part of his farm taken away through eminent domain several decades ago, and he spent a large part of his career thereafter as an appraiser working with landowners in eminent domain proceedings.
"When I wear [my grandfather's] jacket, it's a good reminder of where we come from and who we're here to represent," Mortenson said during a House State Affairs hearing earlier this week. "It's a reminder of our roots."
He has offered the eminent domain reformers a leadership that Rep. Karla Lems, of Canton, the prime sponsor of House Bill 1133, said has been invaluable.
“He helped us push it over the finish line in committee,” Lems said. “And he did it again today. He has been a great asset on this issue.”
In the Senate, where the proposal should be heard in committee next week, that luxury may not exist.
Jason Harward is a Report for America corps reporter who writes about state politics in South Dakota. Contact him at 605-301-0496 or email@example.com.