SD regulators deny Navigator's carbon capture pipeline application, possibly impacting Iowa plans

PIERRE, S.D. ― South Dakota's Public Utilities Commission has unanimously denied an application by Navigator Heartland Greenway LLC to build a portion of its controversial carbon capture pipeline system in that state — the same pipeline that is slated to pass through Iowa.

Navigator received the thumbs-down Wednesday in a 3-0 vote by the board. It was not immediately clear how the South Dakota denial would affect Navigator's plans for Iowa.

The South Dakota commission also unanimously denied Navigator's motion to preempt local ordinances as a means of circumventing what the company considers overly restrictive setback requirements for the pipeline.

Navigator has the ability to reapply for a permit. It expressed disappointment that the permit was denied and said it was weighing its options going forward.

"Our commitment to environmental stewardship and safety remains unwavering, and we will continue to pursue our permitting processes in the other regions we operate in,” the company said in a statement.

PUC Chair Kristie Fiegen, in her motion Wednesday to deny the permit application, said Omaha, Nebraska-based Navigator did not meet the burden of proof under a South Dakota law laying out four standards a proposed project must meet.

The law requires that pipeline builders comply with applicable laws and rules; not pose a threat of serious injury to the environment or the social and economic conditions of affected landowners; not substantially impair the health, safety or welfare of residents; and not unduly interfere with future development by municipalities.

Fiegen and Commissioner Gary Hanson both also pointed to challenges PUC staff faced in receiving responses from Navigator to questions about the project.

Fiegen said she was concerned the company's lack of prompt response and its objections to several staff questions and discovery attempts foreshadowed issues with its willingness and ability to comply with applicable laws and rules in the future.

"They were not prompt, and they even struggled with administrative tasks of notifying landowners to routes and public input meetings," Fiegen said. "Two hundred and four landowners were not notified of the public input (meetings), and 92 of those landowners were not notified to the route."

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The panel's third member, Commissioner Chris Nelson, supported Fiegen and Hanson's motion to deny the permit, but he said it was more of a "close call" than he expected.

Nelson disagreed with Fiegen's contention that Navigator had failed to give prompt notice to landowners of the pipeline route. He also disagreed with landowner arguments that CO2 pipelines would reduce housing, property or farmland values, adding that he believed Navigator's permit would not cause undue harm to the socioeconomic health of landowners along the route.

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South Dakota is the second state to deny permission to build within its borders a carbon capture pipeline that also would cross a portion of Iowa.

North Dakota's Public Service Commission last month denied a permit to Summit Carbon Solutions to build its pipeline there ― a potentially critical blow because Ames-based Summit intends to sequester the carbon dioxide it captures from ethanol plants across five states, including Iowa, at a deep subterranean site in North Dakota.

The Navigator pipeline is slated to use a site in Illinois for that purpose.

Summit has made alterations to its pipeline plan and applied to North Dakota for reconsideration. Meanwhile, the Iowa Public Utilities Commission has gone ahead with a potentially monthslong hearing in Fort Dodge on whether to issue a permit for the pipeline in Iowa.

Navigator also is seeking an Iowa permit, and Minnesota is making preparations for consideration of the Summit pipeline.

More: How safe can carbon pipelines in South Dakota be? Inside the debate between Navigator, landowners

The $3.2 billion pipeline system was slated to cross 111.9 miles of eastern South Dakota farmland through Brookings, Lincoln, Minnehaha, Moody and Turner counties, connecting to five ethanol plants in the state.

Overall, the company proposes to build more than 1,300 miles of pipeline through Iowa, Illinois, Minnesota, Nebraska and South Dakota for the purposes of sequestering the greenhouse gas, a project that would qualify for billions of dollars in federal support. It would be one of the largest pipeline systems in the U.S., second only the Summit pipeline.

More: Company trying to build carbon-capture pipeline in Iowa plans to provide CO2 for fuel

Navigator's best case 'just wasn't good enough,' landowner attorney says

In opening comments Wednesday, Navigator officials appealed to the commission, saying the company's has a record of operating in good faith with South Dakota farmers.

James Moore, Navigator's lawyer, reminded the commissioners the company has so far deferred to affected landowners especially opposed to the pipeline, avoiding carrying out surveys for the project on their land, despite being legally permitted to do so. Moore added that Navigator also has not filed any lawsuits seeking to use eminent domain to secure easements from reluctant landowners.

More: Iowa Poll: Strong majority opposes using eminent domain for carbon-capture pipelines

Summit, by contrast, has filed eminent domain lawsuits and performed surveys on land belonging to South Dakotans opposed to the pipeline.

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Moore also acknowledged the vocal opposition against Navigator's project but argued, "I don't think there's evidence in the record that more people oppose this project than support it."

Brian Jorde, an attorney representing landowners opposed to carbon dioxide pipelines, including in Iowa, began his opening comments by crediting Navigator for presenting its best possible case, then added that its "best case just wasn't good enough."

"They could've gotten out in front of a lot of this and they didn't … it's simply not sufficient to grant them a permit," Jorde said. "This isn't a 'feel-sorry-for-Navigator' case. That's not enough. Their evidence simply doesn't get them over the four factors … of why Navigator can't get where it needs to be for approval."

PUC: Navigator's preemption arguments don't pertain to South Dakotans

Another attorney, Alex Hagen, representing Minnehaha County, argued against Navigator's position that federal laws about pipeline setbacks pre-empt more stringent local ordinances. He said the company's motion to have the commission declare that the federal laws take precedence was an attempt to lead the board into the uncomfortable position of making a "historically unprecedented" decision.

More: Attorney argues against 'destruction' of South Dakota way of life in Navigator pipeline hearings

Hagen also argued the company has not met the burden of proof that Minnehaha County's pipeline ordinance creates an undue obstruction to the project.

"I think those … buffer zones actually represent our people [and] where they live, farmers, schoolteachers, public servants, young and old people with real concerns about what is going to happen in Minnehaha County today, a year from now and 20 years from now," Hagen said.

The Associated Press contributed to this article.

This article originally appeared on Sioux Falls Argus Leader: South Dakota regulators deny Navigator's CO2 pipeline application