South Dakota panel denies application for CO2 pipeline; Summit to refile for permit

South Dakota regulators on Monday rejected a permit application for a proposed carbon dioxide pipeline through the state, dealing a fresh setback to the company behind the multistate project after North Dakota refused a siting permit for another leg there.

The South Dakota Public Utilities Commission voted unanimously to turn down Summit Carbon Solutions’ application to build a 469-mile (755-kilometer) in-state route — part of an intended $5.5 billion, 2,000-mile (3,220-kilometer) pipeline network through five states.

The decision complicates an already complex process for Summit Carbon Solutions as it seeks similar authorization in other states amid opposition from landowners and environmental groups. The proposed network would carry planet-warming carbon dioxide emissions from more than 30 ethanol plants in Iowa, Minnesota, Nebraska, North Dakota and South Dakota for permanent underground storage in central North Dakota.

After the South Dakota vote, Summit announced it intends “to refine its proposal and reapply for a permit in a timely manner.”

The project would use carbon capture technology, what supporters see as a combatant of climate change, though opponents criticize its effectiveness at scale and the need for potentially huge investments over cheaper renewable energy sources.New federal tax incentives and billions of dollars from Congress toward carbon capture efforts have made such projects lucrative.

The South Dakota panel’s vote came on a motion made Friday by commission staff. They said Summit’s proposed route would violate county ordinances involving setback distances. The panel on Monday was to have begun a weekslong hearing for Summit’s proposal, but the hearing was adjourned and will not continue.

“It makes little sense to go through the motions of a three-week evidentiary hearing and all that would follow without a compliant route that can be permitted,” Commission Staff Attorney Kristen Edwards said.

Summit on Thursday had dropped a motion for preempting county ordinances, regulations which attorney Brett Koenecke wrote “have the intended or unintended effect of hampering projects like this one.” He cited the panel’s unanimous decision Wednesday to deny a similar request by Navigator CO2 Ventures for its proposed pipeline, to which the commission also denied a construction permit.

Commission Vice Chair Gary Hanson said a permit could not be legally issued if the evidenced showed the applicant is currently unable to comply with existing statutes and regulations, adding “that’s the challenge that we’re having here.”

“I believe that the applicant will be able to come back with, eventually, a clean application, and when they do, that is when it is proper to examine it,” Hanson said.

Summit CEO Lee Blank said in a statement, “We respect this initial ruling and remain committed to South Dakota and deeply appreciative of the overwhelming support we have received from landowners and community members. We are hopeful that through collaborative engagement with these counties we can forge a path forward to benefit South Dakota and its citizens.”

Much of Monday’s hearing focused on how the panel would proceed depending on the panel’s action on the motion to deny. The commission also defeated a substitute motion that would have essentially deferred the hearing indefinitely.

Koenecke had asked the commission to delay the proceedings for him to propose a new scheduling order in the near future.

Omaha-based attorney Brian Jorde, who represents hundreds of people Summit has sued in South Dakota to take their land for its pipeline, said Summit’s proposed route in the state presented an “impossibility” to the panel, with a route that “cannot be constructed.”

The decision Monday comes as other states continue to weigh Summit’s project.

The Iowa Utilities Board began its Summit hearing last month, expected to last weeks. The hearing is scheduled to resume Tuesday with Summit witnesses.

North Dakota regulators last month denied Summit a siting permit for its 320-mile (515-kilometer) proposed route through the state. Summit subsequently asked that state’s Public Service Commission to reconsider. The panel held a work session Friday on the request, with a decision yet to come.

Minnesota regulators voted last month to proceed with an environmental review for a small part of the overall project, a 28-mile (45-kilometer) segment in Minnesota that would connect an ethanol plant in Fergus Falls to the North Dakota line, where it would connect with Summit’s broader network.