Summit suffers another setback as South Dakota regulators reject CO2 pipeline

South Dakota regulators rejected a permit application Monday for a proposed carbon dioxide pipeline through the state, dealing a fresh setback to the company behind the project — which involves several states including Iowa — 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 route in the state, part of an intended $5.5 billion, 2,000-mile pipeline network through five states.

The decision complicates an already complex process for Iowa-based Summit Carbon Solutions as it seeks similar authorization in other states amid opposition from landowners and environmental groups. Evidentiary hearings are now going on for the 687 miles of Summit’s proposed route in Iowa.

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 rejection, 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 after a motion made Friday by commission staff. They said Summit's proposed route would violate county ordinances involving setback distances that dictate how close to houses and other facilities the underground pipelines could come. The panel was to have begun Monday a weekslong evidentiary 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.

Last week, Summit abandoned a move for South Dakota regulators to preempt the local county ordinances — regulations that company attorney Brett Koenecke wrote “have the intended or unintended effect of hampering projects like this one." In dropping the objection, he cited the panel's unanimous decision last Wednesday to deny a similar request by Navigator CO2 Ventures for its proposed pipeline route in the state. The commission also denied a construction permit for Navigator.

Commission Vice Chair Gary Hanson said a permit could not be legally issued if the evidenced showed the applicant currently is 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.

Koenecke had asked the commission to delay its hearings for him to propose a new scheduling order in the near future, but the board failed to approve a postponement.

Summit Chief Executive Officer Lee Blank later 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.”

Omaha-based attorney Brian Jorde, who represents hundreds of people Summit has sued in South Dakota to force them into selling easements, said Summit's proposed pipeline 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. It is also seeking eminent domain powers in Iowa to force unwilling landowners to sell it easements.

North Dakota regulators last month denied Summit a siting permit for its 320-mile 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 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.

Navigator CO2 Ventures — also denied by South Dakota regulators — seeks to build 810 miles of its 1,300-mile CO2 pipeline in Iowa. Besides Iowa and South Dakota, Navigator proposed its route cut through Nebraska, Minnesota and Illinois. The Iowa Utilities Board has not yet set a schedule for beginning evidentiary hearings for Navigator.

Jared Strong of the Iowa Capital Dispatch contributed to this report.