A unanimous decision by the South Dakota Supreme Court this week cast doubt on whether a carbon dioxide pipeline company is eligible to use eminent domain to build a pipeline in that state.

The ruling focused on Summit Carbon Solutions’ ability to survey land against the wishes of landowners, but the justices said Summit’s multistate project might not qualify as a “common carrier,” a requirement for eminent domain.

Summit intends to build a 2,500-mile pipeline network in five states, including Iowa, to transport captured carbon dioxide from ethanol producers to North Dakota to be pumped deep underground. The project would make the company and the ethanol plants eligible for generous federal tax credits that reward carbon sequestration and the production of low-carbon fuels.

The use of eminent domain — a government mechanism that allows the company to force unwilling landowners to host its pipeline — is a primary source of opposition to the project.

Summit requested eminent domain for about a quarter of its initial 690-mile route in Iowa, where state regulators have approved its use.

The South Dakota justices also questioned whether Summit would be transporting a commodity. Other pipelines transport gas and oil, for example, which are sold to fuel appliances and vehicles.

The South Dakota court, in its consideration of an early, lower court ruling, said Summit has not yet provided enough evidence that it is “holding itself out to the general public as transporting a commodity for hire.”

“It is thus premature to conclude that (Summit) is a common carrier, especially where the record before us suggests that CO2 is being shipped and sequestered underground with no apparent productive use,” the Supreme Court ruling stated.

The justices reversed the decisions of two circuit courts and directed them to resume the litigation over whether Summit is a common carrier that can conduct pre-condemnation land surveys.

State rules differ

Summit has long maintained that the carbon dioxide it transports will go underground as a means to deplete the amount of the greenhouse gas in the atmosphere.

Some of those who oppose the project have suspected the carbon dioxide would eventually be used to extract more oil from depleted reservoirs, which Summit has rebuffed.

But that type of use might make it qualify as a commodity. The gas also can be used for other commercial purposes, such as the production of dry ice or methanol fuel.

“We are evaluating the South Dakota Supreme Court’s decision and look forward to providing the information requested to the district court that reaffirms our role as a common carrier, and that CO2 is a commodity,” said Sabrina Zenor, a Summit spokesperson.

Summit was successful in arguing it is a common carrier in Iowa, which has different standards for the classification.

When the Iowa Utilities Commission approved the project in June, it said, in part: “All that is required for a pipeline to be vested with the right of eminent domain is that the pipeline company reserve 10 percent of its capacity for walk-up shippers.”

Minnesota does not allow eminent domain for carbon dioxide pipelines.

South Dakota is a crucial state for the Summit project. It has the second-most ethanol producers of the five states — 15 of them — and is a conduit between Iowa and North Dakota. Iowa has 30 ethanol producers that have agreements to be part of the project.

Summit has said its project isn’t feasible without approval in South Dakota.

South Dakota utility regulators denied Summit’s first request for a pipeline permit about a year ago because its route violated county zoning ordinances. The company has said it will reapply with a different route but has not disclosed when.

Opponents of the project cheered the South Dakota decision. The Sierra Club of Iowa, a leading organizer of that opposition, noted: “Without eminent domain powers, Summit’s path forward is insurmountable.”

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