The South Dakota Supreme Court has issued a landmark ruling in favor of landowners, who appealed two lower courts' decisions that allowed a pipeline developer to perform invasive surveys on their land against their will.
The judicial tribunal reversed a consolidated appeal from six lawsuits filed by South Dakota landowners and a seventh by Summit Carbon Solutions, an Iowa company proposing to build a multi-billion dollar carbon capture and sequestration pipeline, according to an opinion issued Thursday .
The civil lawsuits go back to June 2022, when Summit Carbon notified the landowners of its intent to conduct surveys on their property with or without their consent.
These landowners refused to consent to the surveys and later sued in the state's 3rd and 5th Circuit Courts.
Landowners argued that Summit Carbon does not qualify as a "common carrier" — a private or public entity that transports goods for a fee. The designation is particularly important for the pipeline developer, as it enables them to acquire private property through the process of eminent domain.
Fifth Circuit Judge Richard Sommers granted the company's motion for summary judgment to perform the surveys in a April 21 court order, according to previous Argus Leader reporting. The order permitted Summit Carbon to access land belonging to landowners opposed to the project in Brown, Edmunds, McPherson and Spink counties.
But in the landowners' successful appeal, South Dakota Justice Janine Kern wrote that the lower courts "erred in granting summary judgment because SCS has not demonstrated that it is a common carrier holding itself out to the general public as transporting a commodity for hire."
"The Legislature’s decision to delegate the power of eminent domain to pipeline companies in SDCL 49-7-13 must be understood to require a public use that actually serves the public," Kern wrote. "A pipeline cannot become a common carrier simply by declaring itself to be one."
Kern, Justices Mark Salter and Scott Myren, Chief Justice Steven Jensen and Jane Wipf Pfeifle, a retired 7th Circuit Court judge, all concurred in reversing the decision and sending the case back to the lower courts for further litigation.
"To be clear, we make no judgment as to SCS’s ultimate common carrier status, and only address the following issues to provide clarity on remand," Kern wrote.
An important determinant in Summit Carbon's status as a common carrier lies in its "offtake agreements" — carbon dioxide transportation contracts between the pipeline company and regional ethanol plants.
Biofuel companies, including POET, the largest bioethanol producer in the world, are planning to use Summit Carbon's pipeline project to siphon carbon dioxide byproducts from their ethanol facilities in order to produce cleaner biofuels, which also allows those companies to also benefit from federal tax credits.
Summit Carbon intends to sequester the pollutants collected from the ethanol plants into an underground site in North Dakota.
Summit Carbon has argued that those agreements are "extraordinarily confidential," since they contain pricing information that would put the company at a competitive disadvantage if publicized.
Prior to the summary judgment order, landowners asked the court to continue with the case, arguing that those agreements could determine whether Summit Carbon truly holding itself out to the "general public" as transporting a commodity for hire. The court determined those business agreements had no bearing on the issues in the case,
But Kern found that those unredacted offtake agreements are "crucial to determine whether SCS is shipping a commodity for hire to or for the general public."
Summit Carbon spokesperson Sabrina Zenor wrote in a statement to the Argus Leader that the company would "carefully evaluate" the Supreme Court's decision and that it is preparing to present information that "supports our role as a common carrier, and that CO2 is a commodity."
"The economic impact of carbon capture, utilization, and storage (CCUS) on rural America is significant, and will greatly benefit agriculture and farmers," Zenor wrote. "We are committed to ensuring that these benefits reach communities across our project footprint as we continue to be a valuable partner in this growing market."
This article originally appeared on Sioux Falls Argus Leader: South Dakota Supreme Court reverses orders granting Summit Carbon common carrier status
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