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Will Mortenson
House Majority Leader Will Mortenson, R-Fort Pierre, speaking on the state House floor on Jan. 16, 2024, said his update to the bill regulating pipelines returns the right to regulate setbacks to counties.
Makenzie Huber/South Dakota Searchlight

Rulemaking back to counties – unless PUC says otherwise

PIERRE, S.D. – A state House panel updated a high-profile carbon pipeline bill to retain county rights to regulate pipeline locations.

But that change was accompanied by another that would force the state’s Public Utilities Commission to overrule counties if their pipeline rules are too burdensome.

It’s the latest twist for Senate Bill 201. The bill, which passed the full Senate last week, has been pitched as a compromise to protect landowners without letting locals shut down statewide pipeline projects.

The bill is one of a several related to a project proposed by Summit Carbon Solutions. It would collect carbon dioxide from ethanol plants in South Dakota and some of its neighbors and pipe it to North Dakota for underground storage. The project would take advantage of federal tax credits for carbon sequestration.

House Majority Leader Will Mortenson, R-Fort Pierre, brought his amendment to the House Commerce and Energy committee on Monday.

In its original form, SB 201 would have removed the right to require minimum setbacks between pipelines and property from counties altogether. Both that version and the Monday update would both offer per-foot annual payments to counties through which a pipeline runs and codify rules on pipeline depth and an operator’s responsibility to repair disrupted drain tile.

Mortenson’s update, added to the bill on a 7-6 vote by the committee, returns the right to regulate setbacks to counties. The big addition is the word “must,” Mortenson said, to a section on the authority of the Public Utilities Commission. In the past, those commissioners have had the right to strike local pipeline regulations if they deem those regulations unreasonable.

The amendment would take away their discretion. If the rules are “unreasonably restrictive in view of existing technology, factors of cost, or economics, or needs of parties,” or if those rules are preempted by federal law, the commissioners would have to overrule the counties.

“This approach is intended to present a clear path to permitting if (pipeline companies) meet all their requirements,” Mortenson said.

The same supporters who spoke on the bill’s behalf last week again asked lawmakers to advance the proposal on Monday. Nearly all of them, however, said they hope to see more changes in a conference committee if it passes the full House. Conference committees convene to reconcile differences between House- and Senate-passed versions of a bill.

Brett Koenecke, a lawyer and lobbyist for Summit Carbon Solutions, told the committee that the bill wouldn’t work for his clients in its amended form, but pointed to a conference committee as he expressed hope for a workable final bill.

Koenecke’s position is that a court decision from a federal judge in Iowa proves that counties and states do not and never have had the right to regulate pipeline safety, an umbrella under which he believes setbacks fall.

“We won’t have a project if local government discretion or PUC discretion is left intact,” Koenecke said.

He also said that Summit would win a legal challenge to state and county authority if it filed one in South Dakota.

One of his primary opponents on matters of pipelines and property rights disagreed.

Brian Jorde, a lawyer who represents landowners, said the notion that counties can’t regulate setbacks – and that setbacks themselves amount to safety regulations at all – is “completely and totally and utterly wrong.”

“The spin is that you can’t take away something they don’t have,” Jorde said. “That is a lie.”

Jorde was on the winning side of last fall’s PUC hearing for Navigator CO2 Ventures, a now-scuttled pipeline project that failed to earn a permit.

Senate Bill 201, he said, cannot fairly be called a pro-property rights measure that also offers certainty to economic development projects.

“This isn’t about certainty,” Jorde said. “This is about rolling a red carpet over the backs of landowners, property owners and business owners in this state and giving profit certainty.”

The amended bill passed 8-5 and heads to the House floor.

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