PIERRE — In a unanimous decision, the three-member South Dakota Public Utilities Commission on Wednesday rejected Navigator CO2’s application for a permit to construct the Heartland Greenway carbon capture pipeline across South Dakota, including Brookings County. 

The commission also unanimously refused the company’s request to preempt county pipeline setback ordinances. The ordinances mandate minimum distances between pipelines and dwellings, schools and other places. 

In public comments during Wednesday’s meeting,  Commissioner Kristie Fiegen listed a number of reasons for denying the permit, including what she described as a failure by the company to adequately disclose carbon dioxide plume modeling, and a failure to provide timely notices to some of the landowners along the proposed route. The commission conducted a hearing on the permit application from July 25 to Aug. 8.

“The burden of proof is on the applicant,” Fiegen said Wednesday. 

That burden, she added, includes ensuring the project will not negatively impact the social, environmental and economic well-being of the public. Fiegen made the motion, which was supported by the other two commissioners, to deny the permit. The commission’s staff will now prepare a formal written order.

Navigator, which is based in Omaha, issued a statement after the meeting.

“While we are disappointed with the recent decision to deny our permit application in South Dakota, our company remains committed to responsible infrastructure development,” the statement said. “We will evaluate the written decision of the Public Utilities Commission once issued and determine our course of action in South Dakota thereafter.”

South Dakota’s denial of a permit for Navigator follows North Dakota’s recent denial of a permit for another carbon pipeline project, proposed by Summit Carbon Solutions, which would also cross into South Dakota. Summit has already altered its North Dakota route and is seeking reconsideration of that decision. Summit’s South Dakota permit hearing is scheduled to begin Monday, and a weeks-long hearing on Summit’s proposed route in Iowa is in progress.

Navigator has not yet pursued eminent domain to obtain land access from unwilling landowners in South Dakota, while Summit has already filed dozens of eminent domain court cases in the state.

When asked by South Dakota Searchlight if Navigator will seek reconsideration of the commission’s decision, Navigator spokesperson Elizabeth Burns-Thompson replied by text message that the company “will determine that once we have the chance to review the final written order on Sept. 26.”

Rick Bonander, whose rural Valley Springs land would be crossed by the pipeline, told South Dakota Searchlight on Wednesday that he is “extremely happy.”

“I was about 50-50 on what I thought would happen today,” he said. “Wow. Just, wow.” 

Brian Jorde, an attorney representing landowners, apologized during Wednesday’s meeting for earlier comments he made that suggested a lack of faith in the commission to conduct a fair hearing. 

“I was wrong,” Jorde said. “The parties had a fair process.”

Navigator applied for its state permit in September 2022, outlining plans for a $3 billion, 1,300-mile pipeline to transport carbon dioxide in liquid form from 21 ethanol and fertilizer plants across five states to an underground sequestration site in Illinois. In eastern South Dakota, the project would cover 111.9 miles in Brookings, Moody, Minnehaha, Lincoln and Turner counties.

When Navigator announced its plans in March 2021, it listed Valero Energy Corp. and BlackRock Real Assets as partners. Valero is an international gasoline, diesel and ethanol producer. BlackRock is a global asset management company.

Part of the project’s attraction is its eligibility for annual federal tax credits of $85 per metric ton of sequestered carbon. The federal government offers the credit as an incentive to remove heat-trapping carbon dioxide from the atmosphere and sequester it, as a means of combating climate change.

Public Utilities Commissioners Gary Hanson and Chris Nelson said Wednesday that Navigator did a poor job of minimizing the public’s concerns about the project.

“I would note, not a single South Dakota farmer testified in favor of this project,” Nelson said.

Yet Nelson also said some of the public’s concerns about the safety of the project are misinformed and exaggerated. The safety concerns involve the potential for a leak, which could release a toxic carbon dioxide plume. A 2020 carbon pipeline leak in Mississippi caused the evacuation of 200 people, including 45 who sought hospital treatment. Federal regulators are now reviewing carbon pipeline safety regulations for potential changes.

Safety concerns figured into ordinances adopted in Minnehaha and Moody counties in South Dakota requiring minimum setback distances for pipelines. 

In June, Navigator filed a motion to preempt local county setback ordinances, citing a state law that allows the Public Utilities Commission to supersede local rules if they are found to be “unreasonably restrictive.”

Minnehaha County attorney Alex Hagen said Wednesday the attempt to overrule county ordinances was “an attack on local government.”

“The fact that you have that authority does not mean you need to exercise it,” he told the public utilities commissioners.

The commissioners determined the ordinances are not unreasonably restrictive, given that a company representative acknowledged previously during a hearing that although it would be more difficult, Navigator could still complete the project while obeying Moody County’s setbacks.

About South Dakota Searchlight: We use our journalistic searchlight to illuminate critical issues facing South Dakota, dissect the decisions made by state leaders, and explain the consequences of their policies and the role of politics on South Dakotans. South Dakota Searchlight launched in 2022. We’re an affiliate of States Newsroom, a national 501(c)(3) nonprofit supported by grants and a coalition of donors and readers. The staff of the Searchlight retains full editorial independence.