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Summit Carbon has paid out $200M to landowners anticipating pipeline approval

by Jared Strong

One of three companies that plans to build a carbon dioxide pipeline in Iowa has paid landowners about $200 million to build on their properties, and the company won’t get that money back if the plan fails.

“We write them 100% of that contract, and that is theirs,” said Lee Blank, the chief executive of Summit Carbon Solutions. “And in the event that it doesn’t — the project doesn’t come to fruition — that money was just a cost of trying to do the business. And that’s different than our competition.”

It’s an enticement that has helped the company ink land easements for half of its proposed route through Iowa, Nebraska, Minnesota, South Dakota, and North Dakota, Blank said. About 680 miles of the route is in Iowa, in 29 western and northern counties.

The plan is to install equipment at more than 30 ethanol plants to capture carbon dioxide and pump it deep into the ground in North Dakota. The plants benefit through federal tax credits for carbon sequestration and by being able to sell their fuels for a premium in low-carbon fuel markets.

Blank said Summit has agreements with the plants to take a cut of their increased revenue, but he declined to reveal the percentage.

The project was launched by Bruce Rastetter, an influential agricultural entrepreneur and chief executive of Summit Agricultural Group in Alden. Blank said there are a handful of other major investors, including two private equity funds, an Oklahoma oil and gas company and a South Korean conglomerate.

Summit is the furthest along in the state’s hazardous liquid pipeline permit process. It petitioned the Iowa Utilities Board for a permit in January, and the board is poised to meet Dec. 13 to help finalize a procedural schedule, including a public hearing date.

That hearing might last for weeks, and Summit wants it to be set for March. The company seeks final approval from the board in June and plans to start construction in August or September of 2023, Blank said.

Other companies

Navigator CO2 Ventures filed its permit petition in late October. The Navigator pipeline would occupy more space in Iowa — about 810 miles — and would transport carbon dioxide from ethanol and fertilizer plants in Iowa, Illinois, Minnesota, Nebraska, and South Dakota.

The carbon dioxide will either be sequestered in the ground in Illinois or will be used for unspecified commercial or industrial purposes, according to Navigator’s petition.

Andy Bates, a spokesperson for Navigator, declined to reveal the amount of voluntary easements Navigator has signed for the project. Landowners get 20% of their total compensation when they sign and the rest before construction starts.

“Land agents were dispatched to start working through offers about three months ago, which also happened to overlap significantly with harvest, so there are many folks that still haven’t had the opportunity to visit with a member of our team about the details of the compensation package and the specifics of the easement contract,” Bates said.

A third company, Wolf Carbon Solutions, was recently forced to restart its permit process because it didn’t give sufficient notification to all landowners who might be affected by its proposed pipeline in eastern Iowa. The pipeline would go about 90 miles through Cedar, Clinton, Linn and Scott counties.

Wolf did not immediately respond to a request to disclose what percentage of the compensation landowners get when they sign easements.

Potential holdups

Summit has not yet finalized its list of parcels for which it will seek eminent domain, according to a recent IUB order.
That is required before the board can set a final permit hearing date. The IUB noted that Summit’s list — which the company has been modifying for weeks — had more than 1,500 parcels at its peak.

“The number of parcels … requires a significant amount of board staff time to review, in addition to reviewing of other parts of the petition, petition exhibits, and testimony,” the board wrote.

The state’s Office of Consumer Advocate opposes Summit’s proposed schedule for the permit process, citing the unfinalized list, a pending dispute about whether Summit must provide an emergency response plan to the board, and potential new federal safety guidelines for carbon dioxide pipelines, according to an IUB filing.

Consumer Advocate Jennifer Easler noted that a deadline for companies to qualify for the federal carbon capture tax credits has been extended and lessens the need to proceed by Summit’s preferred schedule.

“With seven additional years to begin construction, there is no reason for the board to rush to set a schedule,” Easler wrote.

There is also pending litigation about whether the pipeline companies can survey private property after notifying the landowners, which is allowed by state law. Summit and Navigator sued a total of seven groups of Iowa landowners to get access to their properties, and the companies’ requests for injunctions are set to be decided early next year.

The landowners argue that the state law violates their property rights, and they seek injunctions to prevent the companies from going onto their land. One of Summit’s land surveyors was charged with trespassing in August for attempting to survey farmland east of Spirit Lake. His trial is set for December.

Blank said he is not worried about the surveys delaying the project and said the work has been done for nearly 90% of Summit’s total pipeline route. The companies use the surveys to help determine the paths and depths of the pipelines.

The pipelines also face considerable opposition from environmental groups and others, who have taken their concerns to state lawmakers.

“In my 16 years in the Iowa House, I have never heard more concerns from constituents related to a single issue than the CO2 pipeline project currently proposed for our area,” wrote State Rep. Pat Grassley, a New Hartford Republican who is the speaker of the Iowa House.

That comment was part of a letter Grassley filed with the IUB to oppose Navigator’s request to limit its soil sampling and tilling requirements. Navigator abandoned the request, in part, because “it has received feedback that many are interpreting Navigator’s proposal as a request to avoid all responsibilities to restore the land.”

The company had argued that its proposal would have led to better land restoration at a lesser cost.

At least two counties have adopted ordinances that restrict where pipelines can be placed, and Summit sued one of them in federal court on Monday.

A group called Buffalo Rebellion held a protest in Des Moines last week that sought to join racial and indigenous minorities against the pipeline proposals.

“It is important for us to always acknowledge that we could not be here without the blood and forced labor of Black Iowans and the love of natives who tended to the land long before we all existed on it,” said Jalesha Johnson, of the Des Moines Black Liberation Movement.

Iowa Capital Dispatch is part of the States Newsroom, a network of similar news bureaus supported by grants and a coalition of donors as a 501c(3) public charity.

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