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Nesiba Cloaks Support for Eminent Domain for CO2 Pipelines with Argument on Definition of Commodities

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.

25 Comments

  1. Kathy Tyler 2023-02-17

    So very disappointing. The little guy loses again.

  2. O 2023-02-17

    The one sympathetic to business element of this discussion for me is that we are discussing this in a landscape that exists that is tilted profoundly in business’ favor and has captured initial investment from business because of that tilt. Business has been playing by the rules (again tilted remarkably in their favor) so far, and now, mid-game, are having those rules changed. This game was won years ago in regulation, but that realization is only fully coming to fruition now. The pro-business, regulation/deregulation game has been a long-play. It is very well entrenched, and Hail Mary plays at the last minute will not change that basic structure. It’s easy to be cheerleaders for the pro-business sloganeers until it is you that has to pay the price for profitability with your land or air quality or quality of life issues to fuel those profits for others.

  3. Richard Schriever 2023-02-17

    I wonder – is trash a commodity? How about sewage? CAFO Manure?

  4. Richard Schriever 2023-02-17

    But, FWIW, CO2 actually is a commodity – bought, sold, transported and CONSUMED daily by the vast majority of Americans in the form of carbonated beverages. There are also examples where-in CO2 is used as a refrigerant (and additional experiments in progress to enable an expanded improved use of same for that purpose). Using CO2 as a refrigerant would/could eliminate the use of more toxic substances for that purpose. Sorry folks, it’s not simply economics that informs the professor. It is also physical science and the consumption MARKET. The fact these folks want to buy a commodity and bury it, vs. sell/use it does not make it not a commodity.

  5. Edwin Arndt 2023-02-17

    CAFO manure is used extensively as a fertilizer so in that respect
    it is a commodity.

  6. All Mammal 2023-02-17

    Why make it in the first place if you’re not intending to use it? Oh, because you’re a slippery eel and want to greedily suckle from Uncle Joe’s green tit.

  7. Scott Ehrisman 2023-02-17

    Once most autos sold in this country are electric may the ruse of Ethanol finally be over and we can once again use farmland to FEED PEOPLE.

  8. Donald Pay 2023-02-17

    Richard, Yes, trash is a commodity. There are a number of Supreme Court decisions on this, particularly on the interstate commerce aspects of garbage disposal. Trash can still be regulated, but it can’t be banned from commerce or interstate commerce. Regulation of transportation and disposal for garbage, their operation, location, size and engineering can be required for environmental protection measures at landfills are allowed. South Dakota has such regulation, and citizens passed a ballot measure to regulate the size of landfills based on environmental risk and economic efficiency. But you can’t exclude wastes from out of state.

  9. Jeff Barth 2023-02-17

    I am also disappointed by the Senate action. The real commodity here is Federal tax credits which will pipe directly into the pipeline company pockets. With the same cash we could give every Ethanol plant on the route $100,000,000 ($5,000 borrowed from every South Dakotan).

    Yes CO2 has uses but it is also dangerous. Cyanide has uses too but do you want a 20 in diameter pipe with cyanide going across your property at 2000 PSI? Hey cyanide is a commodity. Think about the train derailment in Ohio, now think about a 3000mile train full of gas.

    Ok, but with this pipeline we can sell ethanol to California. Last I looked they don’t want liquid fueled vehicles in California. And they don’t want alcohol fuel that evaporates in hot weather.

    At least pumping the stuff to North Dakota they can use it in Fracking so we can burn more fossil fuel. There won’t be any carbon cost to mining the ore, smelting the steel, fabricating the pipe and construction machinery for the thousands of miles they plan. Farmers will also get paid more for their corn. Really?

    Nikki Haley (Republican candidate for President) says we can mechanically extract CO2 from the air , as Occidental Petroleum does in Texas, without the pipeline. She says we can plant more trees.

    Ralph Nader said that the difference between Republicans and Democrats is that Republicans help Big business while Democrats help big business.

    With 18 pipeline Lobbyists in Pierre I guess Reynold got the memo.

  10. All Mammal 2023-02-17

    I don’t think it would hurt for intensive industries to take a break every now and then and give the good earth a dang breather. Most concentrated earth extractions (pumping, sucking, reaping, drilling, burning, combusting, pluming, blowing, dripping, ripping, pulling, abusing, using, taxing, birthing, take, take, taking) could stand a bout of rest so what has been commoditized can replenish and our planet won’t be so rode hard and wrung out. Just another childishly common sense concept that wouldn’t allow land, air, water rapers to profit without reprieve every once or twice a decade off killing something that never was theirs in the first place. Ie: gently demand ol Petey Lien and Sons to spend a year or two putting back what they have been ceaselessly mining for at least 30 years. You know, plant a few trees and whatnot.

  11. e platypus onion 2023-02-17

    FYI…Obama administration wanted trains outfitted with newer brakes to help prevent derailments and drumpf removed that policy. magats always side with industry’s whines improvements cost too much. Look what you get.,

    This guy, from my neck f the woods gave a news outlet an interview saying that as a farmer he was in favor of carbon pipeline. He has a bit more at stake than just being a corn producer, I’d say.

    https://iowarenewablefuelssummit.org/kelly-nieuwenhuis/

  12. e platypus onion 2023-02-17

    Way off topic…Obrien County iowa is looking for a county engineer. Salary in the $125k-$145k range. Current engineer leaves in July. Contact Obrien County supervisors in Primghar, iowa. Don’t tell them I sent you, please.

  13. Mark Anderson 2023-02-17

    Hey, you don’t really Own your own land. It’s for the good of all. “As I was wakin’ – I saw a sign there And that sign said “No trespassin” But on the other side…It didn’t say nothin! Now that side was made for you and me!”
    South Dakota is a socialist state isn’t it?

  14. Jake 2023-02-17

    Greed, especially capitalistic, business greed for more $$$ knows NO LIMITS!!! And all the more so, when one can count on federal subsidies to ease the “start-up” costs. Start-up costs in most instances, are costs born of “the dreamer”, the risk taker, the entrepreneur who steps out ahead on an idea, hence a risk.

    The GOP, always a big benevolent brother to business (esp. in SD!), in this case being so powerful in our legislature will always turn a “blind eye” to the rights of landowners in favor of corporate power of “eminent domain” backed by state law. \

    If it had been one of theirs (or friends) “McMansion’s” that lay in the way of said CO2 pipeline, instead of heirloom farm/ranch land of 100’s of years-you would have seen this legislature vote differently for sure…

  15. Charlie Johnson 2023-02-17

    The judicial ruling cited by the opponents stems from a lawsuit filed in Beadle and Lake County and in Judge Pardy’s court . That lawsuit has yet to have a formal hearing let alone a ruling issued by judge Pardy .

  16. 96Tears 2023-02-17

    What’s most disappointing is the unanswered question, “what happens next year when another corporation takes advantage of South Dakota’s loose laws governing the abuse of eminent domain?” Those landowners should not have left Pierre without getting a bill/hoghouse filed to protect any of us from this kind of abuse in the future. All those blue suits from Iowa don’t have a dog in that fight. After all the dumb things that are passing in this legislature that hurt people, why not pass reforms that will do South Dakotans some good?

  17. e platypus onion 2023-02-17

    96Tears, I suspect some South Duhkotans will profit handsomely from eminent domain and carbon pipelines.. Just not amyone you’d know personally.

  18. Jeff Barth 2023-02-17

    e platypus onion,
    Some like Senator Arch Beal already have been paid. The idea of recusing yourself from voting on an issue which will stuff cash in you pocket is foreign to our State.

  19. 96Tears 2023-02-17

    Palms needing to be greased. Many palms.

  20. larry kurtz 2023-02-17

    FAAFO, as the kids say nowadays. That giant sucking sound is humanity circling the drain and taking every living thing with us.

  21. Richard Schriever 2023-02-17

    Mark, you are correct. You don’t own your land. No one does. The state (in one form or other) owns it all. The title is a transferable non-time-limited lease. Pay your rent fee (taxes) and follow the landlord’s rules and you can occupy and use the land. Don’t do either one – and you’re out.

  22. Mark Anderson 2023-02-17

    I know that Richard, our property isn’t deed restricted which is rare enough, but that could be changed on a whim too. Relying on the good will of people isn’t a long term strategy in the authoritarian state of Florida. It’s crazy time with a Republican party that loves Putin more than Biden. Although Kristi just attacked DeSantis and Kari Lake did too. Trump just came up with a term I was going g to use against the boy, meatball. It’s going to be so much fun watching the pubs destroy themselves isn’t it?

  23. Ed 2023-02-18

    All four Democratic members in the house from Sioux Falls, Nelson, Duba, Healy, and Wittman, as well as Democratic senator Nesiba in committee, voted against landowner protection from eminent domain by an out of state private corporation and in favor of the lobbyists. It’s no wonder the Democratic Party is in trouble in this state if this is the kind of representation we are getting out of Sioux Falls. Only the reservation, native legislators sided with landowners and against eminent domain for private gain. By giving the middle finger to the Native American and rural Democratic landowners, the big city Sioux Falls contingent in the legislature just drove the last of us rural Democrats out of the party, and blew any chance of the party gaining any ground in the state. I hope they are proud of themselves.

  24. grudznick 2023-02-18

    Nesiba laughing. Nesiba laughing.

  25. Richard Schriever 2023-02-19

    Ed, “drove the last of us rural Democrats out of the party.” The where one must ask? The Pubbies sure haven’t got your interests at heart (how could the heartless?). “Independence”? So, then who will you depend on? Go ask Carlos.

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