The South Dakota House of Representatives has passed a bill by a vote of 49-19, prohibiting the use of eminent domain for carbon dioxide pipelines. This legislation will now move to the state Senate for further consideration. The measure aims to protect private property rights and prevent forced acquisition of land for carbon pipeline projects. Proponents argue that these pipelines do not meet the public-use criteria traditionally required for eminent domain. Opponents warn that such restrictions could have negative economic impacts on industries like ethanol production.
Legislative Action Reflects Growing Concern Over Property Rights
The South Dakota House's decision highlights a growing concern over the balance between industrial development and individual property rights. Lawmakers who support the bill emphasize that it does not prohibit carbon pipelines but restricts the government’s power to forcibly acquire land for such projects. Representative Karla Lems, who proposed the legislation, owns land near a proposed $9 billion Summit Carbon Solutions pipeline route. She argued that this measure prevents companies from imposing their projects on unwilling landowners. Supporters also point out that carbon pipelines pose potential hazards if they leak, making them unsuitable for eminent domain considerations.
This legislative action comes after years of debate and grassroots efforts aimed at influencing elected officials. Previous attempts to limit eminent domain for carbon pipelines were unsuccessful, but supporters gained momentum through strategic political campaigning. They managed to elect candidates sympathetic to their cause, leading to increased chances of passing this year's legislation. The bill's passage sends a clear message that South Dakota prioritizes property rights over corporate interests in certain cases. However, some legislators worry about the broader implications for national energy policies and the ethanol industry. Representative Greg Jamison expressed concerns that this decision could discourage investment and send a negative signal to the country.
Economic and Environmental Implications of the Legislation
The bill's passage raises questions about its impact on both the environment and the economy. Supporters argue that restricting eminent domain for carbon pipelines aligns with voter sentiment and environmental safety concerns. They believe that carbon pipelines do not serve a genuine public purpose and should not be eligible for the same legal privileges as traditional infrastructure projects. The Summit Carbon Solutions pipeline, which would transport CO2 from ethanol plants across five states to North Dakota for storage, exemplifies the type of project affected by this legislation. Despite having voluntary agreements with some landowners, the company relies on eminent domain to secure access from reluctant parties.
Opponents of the bill, including representatives from the ethanol industry, fear that limiting eminent domain could stifle economic growth and innovation. Representative Drew Peterson suggested that this legislation might hinder President Trump's energy independence goals, particularly regarding biofuels. He emphasized that while South Dakota cannot directly influence federal policy, supporting carbon pipelines could contribute to broader national objectives. On the other hand, proponents like Majority Leader Scott Odenbach contend that the bill reflects voter preferences expressed in recent elections. They also highlight the potential risks associated with carbon pipeline leaks and stress the importance of clarifying the legal status of eminent domain authority for these projects. Governor Larry Rhoden has yet to indicate his stance on the bill, leaving its ultimate fate uncertain.
On December 21, 2024, the U.S. Congress enacted and President Biden signed the American Relief Act of 2025, extending the 2018 Farm Bill into 2025. This extension means farmers will once again choose between Price Loss Coverage (PLC) and Agricultural Risk Coverage (ARC) for commodity support. The decision deadline has been extended to April 15, providing farmers with an additional month to evaluate their options.
The revised farmdoc 2025 Farm Bill What-If Tool offers valuable insights for these critical decisions. Generally, ARC at the county level (ARC-CO) appears to be the most advantageous option for corn, soybean, and wheat base acres, offering higher payments in most scenarios. However, PLC becomes more favorable at very low prices, especially for corn and wheat. Understanding these nuances is essential for maximizing support under the new legislation.
Farmers must decide on a program for each Farm Service Agency (FSA) unit, allowing flexibility to mix and match PLC and ARC-CO based on specific commodities. The effective reference prices for 2025 have been set using a unique formula that considers the statutory reference price or 85% of the Olympic average of prices from 2019 to 2023. For instance, corn's effective reference price is $4.26 per bushel, while soybeans' is $9.66 and wheat's is $5.56. These prices are crucial for determining potential payments under both PLC and ARC programs.
The ARC benchmark prices for 2025 are notably higher than previous years due to recent marketing year averages and the use of effective reference prices as minimums. For corn, the benchmark price is $5.03; for soybeans, it's $12.17; and for wheat, it's $6.72. At 86% of these benchmarks, ARC-CO guarantees payments when actual revenue falls short, making it generally more beneficial than PLC across various yield and price combinations. However, PLC remains a safer choice at extremely low market prices.
This extension provides farmers with enhanced flexibility and potentially higher support payments. While ARC-CO seems to offer better prospects in most cases, PLC can still be the optimal choice under certain conditions, particularly for managing risk at very low prices. Delaying the decision deadline until April 15 allows producers to gather more information, aiding in making informed choices that best suit their operations. The updated tools and resources available ensure farmers can navigate these complex decisions with confidence, ultimately supporting agricultural resilience and stability.
A coalition of agriculture and energy companies has urged the Kansas House to approve a $5 million annual state tax credit aimed at encouraging gas station operators to expand the distribution of E15 fuel. This initiative seeks to benefit farmers, consumers, and rural economies by promoting higher ethanol blends. Currently, only 7% of fuel stations in Kansas offer E15, despite its approval for use in vehicles manufactured since 2001. The proposed tax incentive would provide retailers with a 5¢ credit per gallon of E15 sold between 2026 and 2031, potentially leading to increased infrastructure investments and broader consumer access to this alternative fuel.
Economic Benefits for Farmers and Consumers
The introduction of E15 fuel could have significant economic implications for both farmers and consumers. By expanding the availability of higher ethanol blends, this initiative aims to boost demand for locally grown crops like corn and sorghum. Rep. Ken Rahjes emphasized that such incentives would not only support renewable fuel production but also enhance market opportunities for agricultural producers. Additionally, consumers stand to benefit from potentially lower fuel costs due to the expanded availability of E15.
In recent years, approximately one-third of Kansas' corn production has been used in ethanol manufacturing. A modest increase in ethanol content within fuel blends could result in an additional 16 million gallons of ethanol consumption annually, sourced from nearly 5.7 million bushels of corn or sorghum. While precise price impacts are difficult to predict, increased demand for these commodities is expected to positively influence farmer prosperity, especially during periods of depressed agricultural prices. For instance, a 25¢ increase per bushel could yield a $25,000 premium for a producer harvesting 100,000 bushels of corn.
Addressing Industry Skepticism and Expanding Biodiesel Support
Despite the potential benefits, some lawmakers expressed concerns about targeting specific industries with tax incentives. Rep. Francis Awerkamp questioned whether such policies were justified when numerous sectors claim to benefit the state economy. However, advocates argue that Kansas must catch up with neighboring states that have already embraced similar strategies to promote E15 sales. Steve Seabrook from POET Ethanol Products highlighted the need for market development and consumer choice as key drivers behind the proposed tax credits.
During the committee hearing, representatives from the soybean and biodiesel industries also sought support for a companion bill aimed at enhancing biodiesel production and sales. This legislation would introduce a $5 million annual income tax credit for biodiesel blends of 10% or higher. Both bills propose capping the total annual tax credit at $5 million per industry and allowing unused credits to be carried forward for up to five years. These measures aim to stimulate investment in renewable fuels while fostering economic growth across rural communities.