Carbon Pipeline Battle in Congress

John Hult, South Dakota Searchlight

A provision to let pipeline companies bypass state permitters is expected to be stripped from the "One Big, Beautiful Bill" federal budget reconciliation bill, but anti-pipeline activists want Congress to kill a carbon tax credit program before they pass the bill along to President Donald Trump.

That was the message from a group of South Dakota carbon dioxide pipeline opponents during a virtual press conference Monday. Representatives from Dakota Rural Action, the South Dakota Property Rights and Local Control Alliance, and the South Dakota Stockgrowers Association joined the call.

Last week, groups in the anti-carbon pipeline camp raised alarms about the reconciliation bill over a provision tucked within its 1,100 pages. It would have given the Federal Energy Regulatory Commission exclusive authority to issue licenses for pipelines carrying natural gas, carbon dioxide, hydrogen, oil or other energy products and byproducts.

The state permitting process has been a political minefield for a proposed carbon pipeline from Summit Carbon Solutions that would traverse parts of Iowa, Nebraska, Minnesota and South Dakota, collecting carbon from ethanol plants on its way to a North Dakota sequestration site. The South Dakota Public Utilities Commission has rejected the project twice.

South Dakota Republican Gov. Larry Rhoden signed a bill into law in March banning the use of eminent domain by carbon pipeline companies, stripping Summit of the potential use of state court condemnation actions to build beneath land owned by project opponents.

ANTICIPATED REMOVAL OF FEDERAL PROVISION TO PREEMPT STATE REGULATORS

Critics said the federal permitting provision in the reconciliation bill would've allowed Summit to preempt state-level regulations.

The bill passed through a House committee Sunday night. President Trump has called it a "big, beautiful bill" chock full of tax breaks and cuts to wasteful spending; opponents have decried it as a plan to carve large swaths of the citizenry out of entitlement programs such as Medicaid. The complex budget reconciliation process allows the majority party to pass legislation with simple majorities in both chambers, avoiding the U.S. Senate's usual 60-vote requirement.

The federal pipeline preemption provision will be removed in the House Rules Committee on Wednesday morning, according to Kristen Blakely, who works for U.S. Rep. Dusty Johnson, R-S.D.

Opponents of the Summit project celebrated that news on the Monday press call.

"It was good to see that they removed the federal siting authority," said Republican state Sen. Joy Hohn of Hartford.

Pipeline opponents remain concerned about one other provision that remains in the bill. It would let pipeline companies pay the federal government $10 million for an "expedited environmental review" lasting one year, with a possible extension of up to six months. The current federal review process can take years. Under the provision, an expedited review's results would not be appealable.

Summit doesn't need that level of environmental review, though other pipelines -- like the controversial Dakota Access crude oil pipeline that Hohn fought to prevent nearly a decade ago -- do need them.

Blakely told Searchlight that the expedited environmental review no longer applies to any carbon pipelines, as it was tied to the now-scuttled preemption provision for permits.

ANTI-PIPELINE GROUPS PUSH FOR 45Q ELIMINATION

Hohn was elected on a landowner rights platform and helped shepherd the eminent domain ban through the statehouse.

Summit's business model hinges on the company's intended collection of billions in 45Q tax credits for companies that sequester carbon, keeping it from contributing to climate change.

Hohn and the others on hand for Monday's press conference want to see Rep. Johnson push for the elimination of that program, which has existed for decades and was beefed up through former President Joe Biden's Infrastructure Investment and Jobs Act.

"We are calling for Rep. Johnson to die on this hill," said Chase Jensen of Dakota Rural Action, who called the notion of 45Q credits surviving in a U.S. Capitol transfixed by talk of wasteful spending "insane."

Ed Fischbach, a board member of Dakota Rural Action, called the 45Q program "nothing but corporate welfare."

Dennis Fieckert of the South Dakota Property Rights and Local Control Alliance suggested Johnson's potential entry into the 2026 South Dakota gubernatorial contest would start off on the wrong foot without a push to end 45Q.

Hohn was one of several state lawmakers who earned their office last year through opposition to eminent domain for carbon pipelines. In that same election, South Dakota voters shot down a law passed by state lawmakers in 2024 that would have granted landowners additional rights but also cleared a path for permitting by Summit.

Rep. Johnson "knows what's going on here in South Dakota," Feickert said, adding, "He needs to step up."

Blakely, Johnson's spokeswoman, pointed out that the reconciliation bill would alter the tax credit program by limiting access to companies that begin construction within two years of the bill's enactment. The bill also restricts access to credits by taxpaying companies that are "specified foreign entities" like Chinese defense companies, or taxpaying companies influenced by those entities.

As far as the notion of eliminating 45Q, a statement from Johnson said he's still working with his colleagues to make the "big, beautiful bill" a "more conservative" piece of legislation.

"I've been on the frontlines to help eliminate ridiculous portions of the Inflation Reduction Act, like EV chargers and other Green New Deal policies," Johnson said.

Jensen, of Dakota Rural Action, said the credits in 45Q didn't originate with the Green New Deal, the name attached to a set of policies promoted by some of Congress' more liberal members. The tax credits originated under a bill signed by President George W. Bush in 2008 and were expanded by President Trump during his first term in office before President Biden's infrastructure bill expanded them further.

"Our congressman continues to make it sound like this is about getting rid of the Green New Deal, and that this is Biden's fault, but in reality, this is a bipartisan agenda that we are trying to get rid of," Jensen said.

South Dakota Searchlight is part of States Newsroom, the nation's largest state-focused nonprofit news organization.

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