The smartest Democrat in Pierre (I know, small pool, but you can’t be a knucklehead and win elections as a Democrat in South Dakota, so I’d contend that the Democratic caucus averages 12 IQ points more than the Republican caucus that needs no brains to win elections, so I’m offering this Democrat a high compliment before I criticize him) disappoints by taking a narrow economist’s view rather than a creative politician’s view of carbon dioxide, pipelines, and eminent domain.
House Bill 1133 sought to prohibit the use of eminent domain to acquire land for carbon dioxide sequestration pipelines by redefining “commodity” to exclude products that are buried as waste or used to qualify for the federal carbon oxide sequestration tax credits extended and expanded by President Biden’s Inflation Reduction Act. That definitional restriction would prevent CO2 sequestration pipelines from qualifying as “common carriers” who can use eminent domain to acquire easements and force their pipelines through uncooperative landowners’ property. The House passed this proposal (though by slim margins), and lots of South Dakota landowners concerned that private companies can force them to surrender their property rights for the construction of another pipeline showed up to tell Senate Commerce and Energy yesterday to do the same.
But Senate Commerce and Energy listened instead to the rich Republicans from Iowa and the ethanol planters from South Dakota who want to violate South Dakotans’ property rights and cash in on Biden bucks by piping CO2 to North Dakota for burial. The committee voted unanimously, 9–0, to kill HB 1133. Among the killers was Augustana economist and Senate Minority Leader Reynold Nesiba (D-15/Sioux Falls), who said the Legislature can’t define carbon dioxide out of commodity status:
“CO2 is a commodity and me trying to say different doesn’t make it so,” Nesiba said [Rae Yost, “CO2 Bill Dies in Committee,” KELO-TV, 2023.02.16].
The smartest Republican in Pierre, Senate President Pro-Tempore Lee Schoenbeck (R-5/Lake Kampeska) said the courts back up Nesiba’s redefinitional resistance:
Schoenbeck said a circuit court judge in South Dakota has already ruled that the CO2 transported in the planned pipelines is a commodity.
“It is a commodity,” Schoenbeck said as he pointed out that landowners initiated that lawsuit and lost [Yost, 2023.02.16].
Horsehockey, the both of you!
Nesiba is thinking like an economist in the everyday world, viewing commodities as tangible goods, usually raw materials, bought and sold or swapped by many market players. But even economists could argue that commodities are inputs in the production of goods and services, not waste products buried to get tax credits.
Whatever 4 out of 5 economists might recommend, the Legislature is free to define commodity for statutory purposes whatever way it wants. Even if Nesiba thinks its ridiculous to say carbon dioxide is not a commodity, we can certainly have a statute saying that we will only allow pipelines and other methods of transporting commodities to use eminent domain if their commodities are being used to make valuable, useful products. We can have a statute saying shippers of certain waste products labeled as commodities don’t get to use the courts to force landowners to surrender their land if the shippers are already cashing in on another government favor, like federal tax credits.
I don’t know what court case Schoenbeck is citing, but the circuit court’s declaration that CO2 is a commodity did not cite a constitutional definition of commodity, because there isn’t one. If landowners argued in court that CO2 isn’t a commodity, the court likely deferred to statute and Legislative intent. Sure, South Dakota law right now does not exclude CO2 from commodities, but there is no constitutional principle that prohibits the Legislature from saying that, in the specific instance of allowing private entities to use eminent domain, waste CO2 destined for underground disposal is not a commodity qualifying a company for that legal privilege.
Neither a constitutional nor an economic definition can cloak the real basis for the committee’s killing of House Bill 1133. Schoenbeck, Nesiba, and the rest of Senate Commerce and Energy are subordinating private property rights to the subsidy-seeking of the ag-industrial complex:
“I started out as an opponent of the (planned CO2 project…(thinking) the whole green thing was stupid,” Schoenbeck said. “I’ve evolved.”
As he learned more from ethanol officials, he changed his mind, because the ethanol industry needs to work within the structure as it exists, Schoenbeck said, even if the rules may still seem stupid. The ethanol industry needs to lower its carbon footprint to stay economically viable, he said. Plants with access to CO2 pipelines will be able to sell ethanol in states like California and those that don’t have access will not be economically viable, he said.
Nesiba said he believes there is a need to lower carbon footprints and for green energy. The state needs to protect domestic energy. “South Dakota is poised to be a leader in green energy,” he said. A vote to send the bill was a vote in favor of corn producers and the ethanol industry, he said [Yost, 2023.02.16].
I did say South Dakota’s elected Democrats need to be exceptionally smart, and economist Nesiba is the smartest of them. I guess the smartest Democrats figure they can’t oppose South Dakota’s ethanol industry and hope to win another election.