South Dakota farmers don't see Summit carbon dioxide pipeline as a public utility worthy of eminent domain
A group of farmers near Leola, South Dakota, and Aberdeen, South Dakota, say they are ethanol supporters but that the proposed Summit Carbon Solutions pipeline will cause them far more than what the company is paying for easements. They also say the lurking threat of eminent domain is inappropriate because the pipeline is not for a public utility. They think the long-term strategy of installing a pipeline to satisfy what may be of environmentally uncertain value is wrong, substituting their loss for likely a temporary gain for ethanol and pipeline investors.
LEOLA, South Dakota — They are all supporters of ethanol — they sell corn to Glacial Lakes Energy, an ethanol cooperative based in Watertown, South Dakota — but dozens of farmers in the Aberdeen and Leola areas of South Dakota are strong opponents the Summit Carbon Solutions plan to run a carbon dioxide pipeline through their land.
Summit Carbons Solutions has described its five-state, 2,000 mile carbon capture pipeline as being a $4.5 billion project. The "Midwest Carbon Express" would capture carbon emissions from 32 ethanol plants on its way to western North Dakota, where the carbon would be stored underground.
Mark Lapka farms with his wife, Holly, and his parents, Kevin and Kay. The farm has been in the family since Kevin's great grandfather, a Civil War veteran from New York, staked his claim in 1882. Mark and Holly are raising the sixth generation on the farm. They met with Agweek with Craig Shaunaman, 62, of Aberdeen, South Dakota, who also is dealing with the potential of the pipeline crossing his land.
The Lapkas are worried about impacts of the pipeline crossing on a one-mile-long stretch of native prairie sod, alfalfa and arable cropland.
Summit Carbon Solutions sent their first letter to the Lapkas and Shaunaman and hundreds of others on about Aug. 20, 2021. Summit said a pipeline could be coming through their area, but didn’t specify the purpose.
“It was pretty vague, from the get-go,” Mark said. No one had heard of a carbon dioxide pipeline — or anything other than oil or gas.
In the first place, Summit wanted permission to survey the land for an easement to begin the process of putting the pipeline in.
Summit held their initial landowner meetings in late fall 2021. Mark attended one in Aberdeen. Others were held in Sioux Falls and Redfield. The Lapkas helped organize a landowner meeting at Leola on Dec. 16, 2021. About 70 attended.
“Right off the bat the subject of eminent domain came up,” Mark recalls.
To be fair, Mark acknowledges Summit didn’t bring up eminent domain at the meetings but instead answered pointed questions, after initially dodging the topic.
“During a question-and-answer period, there was a gentleman that asked the question: ‘Are you going to be using all voluntarily-signed easements? Or you going to use eminent domain?'" he said. “And they wouldn’t answer, and he asked if they would commit to not using eminent domain? And they say, ‘No, there is a path to eminent domain, and we’ll use it if we have to.'"
If it wasn’t a threat, but it sounded threatening, Mark remembers. The meeting was supposed to be educational, but it was hard to listen after that.
Jim Pirolli, chief commercial officer for Summit Carbon Solutions, appeared on a panel about the pipeline at the Dakotafest farm show in Mitchell, South Dakota, on Aug. 16, 2022. In an interview after the presentation, Pirolli said that none of his company’s employees or any of its contractors would ever bring up the specter of eminent domain, in part because it would go against their own economic interests when they are attempting to reach agreements on voluntary easements.
Pirolli flatly told Agweek that if anyone representing them would bring up the concept, they would be fired.
A different view
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Despite Summit's public declarations, Mark says he is aware of “many circumstances” where land agents told landowners that, “You’d just as well sign up. Over 80% of your neighbors already have, too. You’d just as well, too, because if you don’t we’re going to take it by eminent domain.” (He wasn’t immediately able to provide a name.)
“That never happened to me personally, but I’ve spoke to many people that did have that did happen to,” he added.
Mark and Kevin, both lifelong Republicans, emphasize the pipeline issue is not partisan. They say they have 22 friends and relatives who are being sued by Summit after they declined to allow a survey for the pipeline easement.
Mark said, “It’s not a question of if they’re going to use eminent domain. They already are.”
Mark said members of the group have contacted South Dakota Gov. Kristi Noem, the Republican incumbent running for re-election in November. Noem responded she doesn’t have jurisdiction and referred them to South Dakota Public Utilities Commission. PUC Chairman Chris Nelson, also a Republican running for re-election, in a news interview, said PUC has “absolutely nothing to do with eminent domain.”
A pipeline siting guide on the PUC website explains that eminent domain is handled in the circuit court system . The PUC's responsibility is in permitting pipelines.
The Lapkas farm as Lapka Farms Inc. The coteau hill range is to the northwest, where they have some good grassland. Much of the Lapka farm is down on the “flat.” That’s where Summit Carbon would put its 8-inch pipeline through a 240-acre tract of native sod.
The pipeline would pay them for a 50-foot permanent easement over the pipe itself, and a temporary construction easement of about 25 feet on both sides — 100 feet total. Construction would take three to four months. Summit Carbon said it will employ local area soil experts to ensure reclamation and a return to full productivity, but Mark is skeptical.
Some parts of the flat have high amounts of alkaline and sodic soils, which would be difficult to repair. Mark said a road construction project in the 1970s disturbed soil and natural salts are still coming up from below, harming production.
Summit provides an annual payment for construction, based on 100% of crop loss in the first year, followed by 80% for the second year and 60% for the third year — all paid up-front. This is figured on income, based on each crop. And the one-time payment is 115% of the property value — not for the whole property, but just for that 50-foot-wide strip.
Mark said pasture land in this area recently has been selling for $1,200 to $1,800 per acre. The farmable ground brings $3,500 to $4,000 an acre. Does he think an easement payment can compensate for lost productivity?
“I don’t know, I would never take one,” Mark said, flatly.
Thinking about it
Craig Shaunaman, 62, farms with his brother, Kirk, in CK Farm near Aberdeen, South Dakota. They farm with two employees just west of Aberdeen, South Dakota. It is a cow-calf crop farm that’s been in their family for 123 years. He thinks the Summit project could adversely affect his family’s use of some of its the land.
Summit wants to access 3½ miles of property on the farm owns and another half-mile he rents from an 82-year-old woman, who is set against the project, saying there are too many pipelines in the country.
“I always said, ‘We’ll entertain an offer,’” Shaunaman said. But he said he wanted to learn more about the project and get a dialogue going. He has a pre-existing 42-inch Northern Border natural gas pipeline crossing eight quarters of his land. He has fiber optic lines.
He doesn’t think this proposed carbon dioxide pipeline is a utility.
Shaunaman did not give “permission” or an “easement” to survey his property.
“I didn’t know enough about a CO2 pipeline,” he said. Certainly he would not allow a survey without being “compensated,” he said. “They said that was the ‘industry standard’ and that they would not pay for surveying the property and felt they could do it (without permission) anyway.”
The pipeline would be a 4- to 8-inch “feeder,” coming out of the Aberdeen plant. It would cross their land and then go west to get to a 24-inch main line at Mina, South Dakota, where Glacial Lakes owns another ethanol plant. The Shaunaman farm is just south of U.S. Highway 12, with the Glacial Lakes Energy ethanol plant just across the highway to the north.
Much of CK Farm is within a mile or two of the plant, and the Shaunamans sell corn to the plant.
Shaunaman doesn’t think the project has the same authority as standard public utilities, such as electrical power or gas and oil pipelines.
“I guess that’s where we’re going to probably draw the line,” he said. “I don’t think any of this project warrants it. While the public may benefit, it’s not a public utility. The right of eminent domain for surveying, or the right of eminent domain for the taking of the property, for placing it (the pipeline) I don’t think is relevant in this particular project.”
The question is whether it benefits the “entire public” as would a natural gas pipeline.
“There’s no public use in this pipeline," he said. "That’s the difference.”
Shaunaman has supported ethanol for more than 30 years and is arguably one of the state’s champions for the industry.
A Democrat, he served in the South Dakota House of Representatives from 1989 to 1998. As ethanol plants took off, he backed legislation to support it.
What is now the Glacial Lakes plant in Aberdeen was built by the then-South Dakota Wheat Growers co-op (now Agtegra) and Farmland Industries, another co-op. In about 2000, Farmland Industries wanted out of the partnership. Shaunaman chaired Heartland Producers, a group of about 300 investors who bought out the Farmland Industries share.
“We sold that to Advanced Bioenergy, which later sold it to Glacial Lakes," he said.
Shaunaman was appointed state executive director for the Farm Service Agency in the Obama administration, but says the carbon dioxide pipeline is not a partisan issue. It’s a property rights issue.
One of the land agents visiting his farm told Shaunaman that there was enough storage capacity west of Bismarck, North Dakota, to store carbon dioxide “forever."
“I asked the young man if he knew how long ‘forever’ was,” Shaunaman said. “He said, ‘No.’ And I said, 'Then, I don’t know we can store it forever.'”
He worries about unintended consequences. “We used to dump pollutants in the river, but — 30 years later — we found that wasn’t the right thing to do.”
“I still get back to, is it the right thing to do in lowering our carbon intensity scores?” he said. “Summit officials reference California Air Resource Board (CARB) in how to gain the extra 10 cents a gallon for ethanol sold into California, the West Coast and into Canada markets. I sometimes think it’s a moving target. So, we’re going to spend a lot of money presumably giving a lot of tax credits out there, for something we don’t know the final answer on.”
Shaunaman thinks the only way to truly “decarbonize” the ethanol process (lower it, not eliminate it) is to do something in the process to eliminate carbon dioxide, or to do something with the carbon dioxide. He thinks if there were no tax credits involved, the pipeline wouldn’t be happening. And he thinks the fuel markets should be giving farmers and ethanol plants greater carbon credits for use of carbon dioxide by growing corn and soybean crops.
“If we weren’t having these tax credits be here, this pipeline wouldn’t even be a level of discussion,” Shaunaman said, adding that the rationale is for taxes and economic development. “My argument is, each one of us farmers creates an economic engine when we start that (tractor) engine every morning.”
The first proposal was about $3,500 per acre. Unsolicited, Summit sent their latest offer, dated March 22, in the mail in May 2022. Now the amount had increased to $4,300 an acre, on just under three acres for the permanent easement.
Shaunaman said he’ll probably decline easement offers and wait for eminent domain.
The way he figures it, with farmland in the area renting for $150 per acre, the land should be worth $5,000 to $7,500 an acre.
That’s what they’d have to pay in “raw agricultural value” in his opinion.
In June and July 2022, Summit started serving landowners (including Shaunaman) 30-day notice that they intended to survey property. They made it clear they owe no compensation to conduct the survey, which could include a soil survey and cultural survey.
In August 2022, landowners in McPherson County, including the Lapkas, filed for an injunction, arguing that this is an eminent domain “taking” of their landowner rights. Later, Brown County farmers did the same. An initial hearing at Leola at the courthouse has been set Sept. 8, 2022.
“No matter what the ruling, either side is going to appeal,” Shaunaman predicted.