Judge rules against Summit over deals with ethanol plants

The specific terms of a pipeline company’s contracts with ethanol plants in Iowa are key to a decision about whether it deserves a permit to build, an administrative law judge has decided.

As such, the judge said last week that Summit Carbon Solutions should be required to provide that information to the Iowa Farm Bureau Federation and the Sierra Club of Iowa, which have sought the information for more than a year.

Summit has challenged the proposed order with the Iowa Utilities Board, which is poised to begin a final evidentiary hearing on the company’s hazardous liquid pipeline permit request in less than two weeks. It’s unclear when the board will make a decision about the order.

Summit has provided redacted versions of the contracts under a protective agreement that limits their disclosure to only attorneys representing the groups, according to board documents. Those attorneys must keep the information confidential.

The company argues that specific details of its arrangements with ethanol plants are not germane to its permit process and that it doesn’t trust certain attorneys to keep them secret.

But Toby Gordon, an administrative law judge for the Iowa Department of Inspections and Appeals who was tasked by the board to decide the dispute, said the contract details are necessary to verify the economic benefits of the project. Summit’s witness testimony includes claims that ethanol plants will generate 10 to 35 cents of additional revenue per gallon if they connect to Summit’s proposed pipeline system.

The company has indicated it would connect to at least 13 ethanol facilities in Iowa that would be eligible for generous federal tax credits that reward them for capturing their carbon dioxide emissions or for producing low-carbon fuels. It would also enable the producers to sell their ethanol in low-carbon markets.

Summit says its $5.5 billion project — which would span more than 700 miles in Iowa — would help ensure the long-term viability of ethanol production in the state and would benefit the state’s agriculture. More than half of Iowa’s corn is used to produce ethanol.

“It is these economic benefits that have been promoted as a basis for the assertion that the pipeline project ‘promotes the public convenience and necessity,’” Gordon wrote, citing a state requirement for permit approval. “This is the question the IUB must determine following a hearing on the merits.”

Companies that have proposed two other carbon dioxide pipelines in Iowa have indicated they will be paid by ethanol plants based on the amount of carbon dioxide they transport away from them.

Summit’s arrangements with the facilities are different: The company will be paid a portion of their additional revenues. The company has declined to publicly reveal what percentage it will take.

“Failure to provide the information will lead to the conclusion that Summit is withholding the information because the alleged economic benefits of the pipeline to the agricultural community are overstated and cannot be verified,” Christina Gruenhagen, an attorney for Farm Bureau, wrote to Summit in reaction to its redactions.

Summit resists

Summit says the contract redactions are consistent with the information it submitted for its permit application in South Dakota. It further says the information is shielded by trade-secret protections and that it is not likely to be used as evidence in the Iowa permit proceedings.

Summit asserts the information might be leaked by attorneys who get access to it despite the protective agreement. It alleges the Sierra Club “cannot be trusted to respect the extreme sensitivity of the redacted portions” and that attorney Brian Jorde, who represents landowners who oppose the project, is an “anti-pipeline warrior.”

Judge Gordon wasn’t swayed: “There is not sufficient evidence presented by Summit that either Mr. Jorde or Sierra Club will violate a lawfully imposed protective order. Indeed, there is no evidence that Mr. Jorde or Sierra Club have previously violated the present protective agreement, or any prior protective orders issued in other jurisdictions.”

In its appeal, Summit noted that the judge did not privately review the redacted information and asked the board to do so. Summit wants the board to reverse the judge’s decision ordering the company to provide unredacted documents or, as an alternative, allow it to redact unspecified “non-financial, time-sensitive terms.”

The board has asked those involved in the dispute to submit responses to the appeal by Friday, according to documents. The board also said Summit should submit unredacted documents to it by Friday.

The company has indicated it wants a decision on its Iowa permit by the end of the year and might start construction of its pipeline system next year. However, it was dealt a setback last week in North Dakota, where state regulators rejected its proposed route. The company said it will modify its request and reapply for a permit.

North Dakota is a key part of Summit’s project because the company plans to sequester carbon dioxide underground there.

This article first appeared in the Iowa Capital Dispatch.