Land, Ethanol and Property Rights

What we can do and why

Marginalizing the “Vocal Minority”

Most of us think of property only as land. Not houses, cars or the endless stuff we buy, and we certainly don’t think about our ideas or personal data as property, even though Intellectual Property (IP) is very valuable.

If you aren’t in the path of the CO2 pipeline, all of this fuss about property rights may seem like someone else’s problem. In the city, the cable company marches through your backyard, or the gas company runs a pipe 50 feet from your house without even a phone call to warn you what’s going on. But let’s look closer at what you don’t realize you are giving up. 

Owning things outright is foundational in a free society and creates distinction between us as individuals, and makes our form of government distinct from other forms of governments like dictatorships or totalitarian regimes. It creates a healthy economy where people invest in their future, and importantly, where people invest in caring for that property. When property doesn’t belong to someone it belongs to no one, and chaos ensues:

In 1974 the general public got a graphic illustration of the “tragedy of the commons” in satellite photos of the earth. Pictures of northern Africa showed an irregular dark patch, 390 square miles in area. Ground-level investigation revealed a fenced area inside of which there was plenty of grass. Outside, the ground cover had been devastated….

The explanation was simple. The fenced area was private property, subdivided into five portions. Each year the owners moved their animals to a new section. Fallow periods of four years gave the pastures time to recover from the grazing. The owners did this because they had an incentive to take care of their land. But no one owned the land outside the ranch. It was open to nomads and their herds….

• The Tragedy of the Commons, by Garret Hardin, from the Concise Encyclopedia of Economics

Let’s pretend for a minute that you devote your family’s time and income to open a restaurant with amazing food that people drive for miles to enjoy. You carefully guard the secret recipes that are the Intellectual Property that brings customers, and you and your family work 80 hour weeks for decades to keep your restaurant going, hoping to achieve enough success to pass it to your kids.  

Now let’s pretend that the government decides your restaurant and recipes are so good, they should be for public use. So, they pay a private company to condemn part of your restaurant and take some of your recipes for their own use and profit. And even though that private company takes one of the secret ingredients that made your restaurant successful and disposes of it as waste, you have no say in the matter. In disbelief, you hire an attorney to defend your restaurant and secret recipes from the private company, and your life and savings are turned upside down. The company says, “How sad for you, but you are standing in the way of progress for the rest of us.” 

It’s unthinkable - because after all, you are an American, and you have God-given rights to stuff you own, protected by the U.S. Constitution, right?

Now imagine that your restaurant and recipes are actually a family farm. Because farms are not just land, buildings and livestock, but have IP baked into every square foot. Every year, every decision, every inch a trove of IP that builds up the land decade after decade. And then, one day you wake up to the unthinkable. A private company, backed by Government money, condemns your land to take control. Time to lawyer up!

If you have ever been robbed or hacked, you know the feeling that farmers and landowners are having right now. To say it is devastating and hopeless to them is not even close. Why me? Why was I singled out? Sorry though, because the sheriff isn’t here to help, and neither is our state leadership. 

As it turns out, the South Dakota Public Utilities Commission is currently the biggest champion of property rights at the state level. Not the Governor despite some big lip service, not most of the legislature, not most of the county commissioners, and the list goes on. Authorities that could take a stand, instead cower in fear of being mocked or sued. Those that do take a stand are attacked as a “small vocal minority.” 

You’ve undoubtedly seen ads from one of the shill organizations that Summit Carbon Solutions set up. There are billions of dollars at stake, and a healthy amount of that is being funneled into advertising, PR and campaign contributions. An army of paid mercenaries has descended upon ethanol plants, politicians and citizens, and they are relentless in spreading fear.

They are also less than honest in their dealings. Emboldened by weak legislation and even weaker leadership, they served legal condemnation papers on about 160 landowners in our state, forcing them to hire attorneys to defend their property rights. And, all of that was before they even had permission to put a pipeline in the ground. Thanks to the South Dakota PUC, they still do not have one, but they are still persecuting some landowners with condemnation proceedings.

When their fear tactics don’t work, they trot out their flawed economic studies, and because few have the energy to read them, they skate past otherwise well-intentioned but incurious leaders in our state. Why bother fact-checking when there’s a pot of gold over that rainbow? By their own admission, Summit’s study literally used double counting and data provided by Summit! Clearly in the documents, we are told to not use these studies for decision-making purposes. You can’t make this up, but you can read it for yourself.

But should that even matter? Why is our state so gullible and willing to buy into what clear-thinking people recognize as government funded grift? Most legislators in South Dakota don’t buy into the Green New Deal, and even Summit doesn’t believe in carbon sequestration. That’s why they use language like, “Whether we agree with this direction or not…” They are just unfortunate victims of Federal Funding, and there doesn’t seem to be a cure. 

Even the Ethanol Industry doesn’t agree with Summit. Here’s what they have to say:

“Meanwhile, some D.C. ethanol lobbyists are irritated by Summit’s claim (link: https://agupdate.com/tristateneighbor/news/state-and-regional/co2-pipeline-debate-has-resulted-in-divisions-among-ethanol-proponents/article_0853fcf8-a122-11ee-9c9b-3fa1ed8b4b4b.html) that the industry faces a bleak future without its carbon-capture project. 

“The ethanol industry isn’t going anywhere,” said David Hallberg, an ethanol lobbyist and founder of the Renewable Fuels Association. “They (Summit) should stop saying that.”

Fellow ethanol lobbyist Doug Durante said the industry is aware of how electric vehicles and greater fuel efficiency will eat into demand for ethanol, but it has another pathway for keeping demand up. 

“If the pipeline can add some value, that’s great, but we’ve also got an opportunity right now,” Durante said. “And it’s higher blends.”

Hallberg agreed. 

Like Doug Sombke, Durante and Hallberg said more ethanol in the nation’s fuel supply would maintain its demand, even if liquid fuel consumption was halved. 

“We have an immediate market opportunity that requires no federal subsidies,” Hallberg said.

All three leaders want to see E30 (30% ethanol, 70% gasoline) at as many gas pumps as there are currently pumping E15 (15% ethanol, 85% gasoline).”

Seems simple enough - higher blends will save ethanol, so why are our property rights violated for a private company that stands to make billions of dollars, while our farmers and taxpayers get the crumbs? 

It's easy to see what money can buy in our State, and it is at the expense of all of our Property Rights, not just the “vocal minority.”

Stop the power grab

The first and most important task to defend private property rights is to defeat Senate Bill 201.  SB 201 is characterized as the “power grab bill” as it would do the most damage to weakening the ability of counties to protect their constituents.  

It borrows from North Dakota’s statute that creates more of a power struggle where the PSC is basically forced to override the local counties - whereas existing statute prefers county ordinances and local control in the process.  

The neighborly thing to do in the fight over the CO2 pipeline is to not try to take power away from local governments, and the officials elected locally to represent their neighbors

Leadership bills that need beefing up

House Bill 1185 adds requirements necessary in order for a private company to access land to do survey work.  

House Bill 1186 states that “carbon pipeline easements” shall be treated the same as all other easements.  One critical provision of the bill is that quote: 

“Any carbon pipeline easement runs with the land benefited and burdened and terminates upon the conditions stated in the easement, except that the term of any such easement may not exceed fifty years. Any carbon pipeline easement is void if no transportation of carbon dioxide associated with the easement has occurred within five years after the effective date of the easement.”

These limits partially address some concerns about “perpetual” or “99 year” easements being bought and sold as a commodity itself.

The bill also creates an annual payment/royalty for landowners: 

“Payments associated with the granting or continuance of any carbon pipeline easement must be made on an annual basis to the owner of record of the real property and must include a payment of at least one dollar per linear foot of carbon pipeline on the property, payable each year the pipeline is engaged in actual transportation of carbon dioxide. “

Provisions that need to be taken seriously

House Bill 1190 addresses a very important issue and specifically states that:

“An economic development effort or other undertaking, which is designed to increase the tax base, increase tax revenues, increase employment, or improve general economic well-being, is not sufficient to constitute a public use, unless the effort or undertaking also meets one of the requirements set forth in this section.”

House Bill 1193 requires fully approved permits to be issued by the Public Utilities Commission prior to survey or examination work beginning.

House Bill 1203 requires that the landowner attorney fees and expert witness costs be reimbursed if the court declares the condemning party must pay at least 20 percent more than the original offer for an easement to a landowner.

House Bill 1219 outright prohibits the use of eminent domain for the support and construction of a carbon dioxide pipeline.

House Bill 1243 allows any party eligible to extend deadlines for Public Utility Commission actions.

House Bill 1231 seeks to prohibit any foreign state-controlled entity from buying or holding agricultural land in South Dakota, and require the land be forfeited if violated.

House Bill 1256 requires a minimum of 90 percent voluntary landowner involvement for a pipeline to transport any commodity.

Senate Bill 218 declares that only a company recognized as a public utility qualifies for the use of eminent domain.

I’ll paraphrase something I read from the Cato institute: It is no accident that a nation conceived in liberty and dedicated to justice for all, protects property rights. Property is the foundation of every right we have, including the right to be free. Every right claim, after all, is a claim to something — either a defensive claim to keep what you have, or an offensive claim to take something someone else has. 

All of our rights can be reduced to property. That enables us to separate genuine rights —  the things to which we hold title — from specious “rights” — things to which other people hold title, but which we may want to take from them. Property is what separates one individual from another; and individuals are only free to the extent that they have sole or exclusive dominion over their property. Indeed, Americans go to work every day to acquire property just so they can be independent and free.

That freedom doesn’t mean much if you are unlucky enough to wake up one morning and find a private company has the “specious right” to take your land. 

The Constitution protects property rights through the Fifth and Fourteenth Amendments’ Due Process Clauses and, more directly, through the Fifth Amendment’s Takings Clause: which states “nor shall private property be taken for public use without just compensation.”

What is just compensation? Easements are forever, even if pipelines are not. Which is particularly important when your responsibility is legislating the future of property rights. 

Personally, I hate the idea of farm ground turning into housing developments. Hate it - anytime we lose farm ground it makes us less secure as a nation. But are we a nation if we violate our neighbor’s property rights for the 19¢ a bushel promised by the pipeline companies? 

Agribusiness is fighting the wrong fight. If we concede that CO2 needs to be sequestered, we concede to the lie that ethanol is bad and must be replaced. If you are pro-ethanol, and I am, you should understand that CO2 pipelines are shortsighted and we should instead be investing billions in finding a replacement for the corn crop carbon capture will destroy. I’m sure Bruce Rastetter, CEO of Summit has hedged his bets with his ethanol plants in Brazil. If these pipelines go through, he will have a monopoly on CC and the price of our corn. 

Alan K. Mayberry Associate Administrator for Pipeline Safety at PHMSA stated in his September 2023 letters to the pipeline companies:

Congress has vested PHMSA with authority to regulate the design, construction, operation, and maintenance of pipeline systems, including carbon dioxide pipelines, and to protect life, property, and the environment from hazards associated with pipeline operations. While the Federal Energy Regulatory Commission has exclusive authority to regulate the siting of interstate gas transmission pipelines, there is no equivalent federal agency that determines siting of all other pipelines, such as carbon dioxide pipelines. Therefore, the responsibility for siting new carbon dioxide pipelines rests largely with the individual states and counties through which the pipelines will operate and is governed by state and local law.

Our local and state governments must protect our property rights and prosperity from predatory corporations. Once gone, our rights to our own property are gone forever. Act now, contact your elected officials and legislators.

Contact patriotrippleeffect@gmail.com