The South Dakota Public Utilities Commission will decide at this week whether it will overrule county zoning officials on behalf of a carbon pipeline company.

Aug. 25 marked the second day of a two-day hearing in Pierre on the question of county authority, brought by Navigator CO2 Ventures, the company behind one of two proposed carbon pipelines that might pass through South Dakota.

Navigator wants commissioners to shoot down county-level restrictions on pipeline construction its representatives say are untenable. On the first day, a Navigator official named Monica Howard said the rules in Minnehaha and Moody counties represent uniquely targeted attempts to scuttle pipeline projects that backers see as critical to the future of the Midwest’s ethanol industry. Howard testified that the county ordinances amount to 11th-hour rule changes to the permitting process.

Navigator’s Heartland Greenway project and a similar pipeline pitch from Summit Carbon Solutions would move pressurized carbon gas from ethanol plants for underground sequestration. That would allow for ethanol sales in states with low carbon requirements and open up billions in federal tax credits for the companies.

Commissioner Gary Hanson pushed Howard on the right of counties to manage their land use, and questioned her on how Navigator could characterize county zoning rules passed in 2023 as unexpected.

The pipelines have been controversial in South Dakota. Bills aiming to regulate carbon pipelines appeared in the Legislature and counties along the route have heard complaints about safety and land rights for more than a year.

“It’s extremely difficult to understand how a business the size of Navigator, with all the personnel that you say are involved, could possibly have not seen this (coming) when hundreds of people were turning out and demanding that some government entity pass some rules,” Hanson said.

Howard said counties dismissed her company’s suggestions based on “an established, vetted route” that complies with federal regulations and instead passed “arbitrary setbacks” for homes, schools, churches and cities.

“I’m not saying counties can’t or shouldn’t enact regulation, but not at this point,” Howard said.

Most of the day was taken up by testimony from county zoning officials from Minnehaha and Moody counties. Each testified that pipeline companies were offered ample opportunities to give feedback. In Moody County, Planning Director Kendra Eng said, the company had the same amount of time as anyone else at its pipeline ordinance meetings.

The PUC did not make a decision on the question of preempting county ordinances on Aug. 25.

The commission directed lawyers for both sides to prepare legal briefs on the issue, and to file them by Aug. 29. The PUC has pledged to make its decision on Navigator’s pipeline permit application, and on the preemption question, by Sept. 6.