Nancy Dugan lives in Altoona, Iowa and has worked as an online editor for the past 12 years.
Last week, North Dakota Attorney General Drew Wrigley denied a request from three counties in the state to investigate Summit Carbon Solutions’ investors. A new statute in North Dakota, which went into effect on August 1, tightens restrictions on foreign ownership of land in that state, among other measures.
But Summit Carbon Solutions, LLC as it exists today was formed in Delaware in 2021, according to the Iowa Secretary of State’s database of business entities. (That database shows the Summit Carbon Solutions, LLC created in Iowa in 2020 as “inactive.”) Wrigley explained in a recent letter to county commissioners that the effective date of the new legislation means “this office is unable to conduct a civil review of the company.”
Wrigley’s argument underscores one of the more disturbing aspects of the Summit Carbon matter, which is the false premise that state and local governments are powerless to regulate a Delaware LLC whose ownership structure remains largely a mystery, and whose own legal arguments identify the pipeline it proposes to build as a security threat.
SPARRING OVER PUBLIC SAFETY
In its August 16 Notice of Appeal from Decision of Presiding Officer and Request for Stay Pending Appeal, Summit argued against Administrative Law Judge Toby J. Gordon’s August 14 order to compel production of dispersion modeling results. “The Presiding Officer’s ruling ignores both state and federal law and, most importantly, ignores the underlying public-safety reasons for protecting information that could give a roadmap to someone intent on harming the pipeline and—more importantly—Iowans,” argued Summit, stating further,
Because the dispersion modeling results are (a) not relevant to any issue before the Board (as federal law preempts the Board from considering them) and (b) constitute highly sensitive security information about critical infrastructure, Summit timely objected to Sierra Club’s request.
Seven Iowa counties—Shelby, Kossuth, Floyd, Emmet, Dickinson, Wright, and Woodbury—filed a Response to Summit’s Notice of Appeal with the Iowa Utilities Board on August 24. In that filing, attorney Timothy Whipple broadsides Summit’s argument that the board cannot consider dispersion modeling results and other safety issues. The entire response is well worth the read; here is one salient excerpt.
By the plain terms of the statute, the only issue delegated exclusively to federal jurisdiction are “safety standards” designated in the statute. Nowhere in the statute does it provide that the entire general concept of safety must be ignored by state and local authorities when considering a pipeline route. It would be absurd to claim, as Summit does, that state and local authorities are prohibited from any consideration of public safety and welfare when analyzing the location or routing of a pipeline simply because “safety standards” are set at the federal level. PHMSA itself has unequivocally affirmed that “[d]espite Federal preemption of pipeline safety regulation, the role and powers of local authorities to affect pipeline safety is critical.”
PHMSA stands for the federal Pipeline and Hazardous Materials Safety Administration, which is part of the U.S. Department of Transportation.
The counties’ response went on to state,
Additionally, Summit’s hypothetical concern about “someone with ill intentions” creating a “severe disruption” ignores the very real need to raise public awareness about the risks posed by the pipeline, thereby grotesquely contorting a statute meant to protect public welfare into one that undermines it.
Bleeding Heartland’s review of the docket indicates the Iowa Utilities Board has yet to rule on Summit Carbon’s appeal of Gordon’s order. UPDATE/CORRECTION: The board issued an order on September 5 affirming and modifying the August 14 order by requiring the following: “Summit Carbon Solutions, LLC, shall provide the dispersion modeling results to the parties subject to this discovery dispute under the category of ‘Highly Confidential – Attorneys’ Eyes Only,’ consistent with the protective order issued by the presiding officer, within two days of this order.”
Why is this relevant to the North Dakota attorney general’s decision? Because the states involved in this matter appear to have decided to allow an LLC they know little about to advance a plan to build the largest CO2 pipeline in the world. It’s tantamount to a good-faith agreement with the Wizard of Oz. Pay no attention to the man behind the curtain.
Summit Carbon argues that all safety issues are in the hands of the federal government. Only they aren’t. The states decide the route, and the states decide if the company and its business plan pose risks to the safety and well-being of their citizens and communities that are too great to assume. To argue otherwise is to argue that no entity is responsible for these critical issues. That’s unacceptable.
POTENTIAL CONFLICTS OF INTEREST
Scott Bents, a utility regulation engineer with the Office of Consumer Advocate in Iowa, testified at the Fort Dodge evidentiary hearing on September 13 as the sole witness on behalf of the office. Attorney General Brenna Bird now has the power to hire and fire staff in that office, thanks to Senate File 514, which Governor Kim Reynolds signed into law in April.
During his testimony, Bents revealed that his office—which is charged with representing Iowa consumers and the public interest in matters before the Iowa Utilities Board—knew nothing about water usage associated with Summit’s capture facilities until recently.
The water usage issue is one that I believe we just learned about last week at the hearing. We had not found out about that in any of the filings. And so we are, we’re still considering that issue. But I think it can be relevant to the board’s consideration of public convenience and necessity.
Bents and his colleagues may not be at fault here. The state government reorganization greatly increased the attorney general’s control over the Office of Consumer Advocate, which previously had more independence. It’s worth noting that Bird served as counsel for the LS2 Group until her election last November. LS2 is a Summit Agricultural Group partner and a Summit Carbon lobbyist. It may well be a Summit Carbon investor. We simply don’t know, because that, too, is a secret.
North Dakota’s attorney general Wrigley may also be conflicted. He serves on the powerful three-member North Dakota Industrial Commission, along with governor Doug Burgum and agriculture commissioner Doug Goehring. They are supporters of both Summit Carbon and Continental Resources, the latter of which is a major Summit investor and the largest leaseholder and producer in the Bakken oil field. In an unusual move last Friday, North Dakota’s Public Service Commission (the state’s utilities regulator) granted Summit’s request to reconsider its August 4 denial of the company’s pipeline permit application.
Imagine that an oversight board in Iowa comprised of elected, not politically appointed, members required Summit to provide comprehensive information up front, years ago, before its financial backers had spent what likely amounts to hundreds of millions of dollars advancing the project. Such a body might have considered:
- A Delaware LLC that looks like an investment vehicle, with no pipeline experience, wants to build the largest CO2 pipeline in the world.
- The South Korean parent company of one major investor, SK E&S, has faced criminal and civil charges in the U.S. in recent years.
- The project will use a ton of water, which Iowa can’t spare because the state supports tens of millions of hogs and other livestock, in addition to the water-guzzling ethanol industry, and Iowa is highly vulnerable to drought.
- A CO2 pipeline rupture could cause a mass poisoning, as happened in Satartia, Mississippi in 2020.
- Many landowners resist the use of eminent domain to benefit a private entity.
Instead, years later, we are here, and the sunk costs are so great that the Summit Carbon project will likely move forward in Iowa.
FEDERAL AGENCY CONFIRMS LOCAL GOVERNMENTS CAN REGULATE LAND USE
On September 21, the Iowa Farm Bureau Federation filed a Motion for Official Notice with the Iowa Utilities Board and accompanying Attachment A, which is a September 15 letter from the U.S. Department of Transportation Pipeline and Hazardous Materials Safety Administration addressed to Lee Blank, chief executive officer of Summit Carbon Solutions.
The four-page letter responds to inquiries “regarding the ability of federal, state, and local governments to affect the siting, design, construction, operation, and maintenance of carbon dioxide pipelines.” The letter emphasizes PHMSA’s preeminent role in the development of nationwide pipeline safety standards and outlines the extensive role of PHMSA-certified state partners, “who employ roughly 70 percent of all pipeline inspectors and whose jurisdiction covers more than 80 percent of regulated pipelines.”
Regarding the role of local government, the letter states the following:
Local governments have traditionally exercised broad powers to regulate land use, including setback distances and property development that includes development in the vicinity of pipelines. Nothing in the federal pipeline safety law impinges on these traditional prerogatives of local – or state – government, so long as officials do not attempt to regulate the field of pipeline safety preempted by federal law.
In July, Chief Judge Stephanie Rose, in the U.S. District Court for the Southern District of Iowa, granted Summit Carbon’s request for a temporary injunction to block a Shelby County ordinance that would have restricted placement of the proposed carbon pipeline. According to Jared Strong’s reporting for Iowa Capital Dispatch at the time,
Rose also said the ordinance’s requirements for pipeline companies to submit safety plans to the county and to notify the county when use of a pipeline is discontinued conflict with federal rules.
“State and local agencies cannot regulate safety matters,” Rose wrote.
It is not clear how the September 15 PHMSA letter may influence federal or state court rulings in the Summit Carbon matter. That letter does clarify, “Sharing appropriate information with state or local governments and emergency planners, which may include dispersion models or emergency response plans, may help stakeholders make risk-informed decisions.”
The federal agency’s assessment appears to contradict testimony James “Jimmy” Powell, Summit Carbon’s chief operating officer, provided during the Iowa Utilities Board’s September 5 evidentiary hearing. While acknowledging that PHMSA requires pipeline companies such as Summit Carbon to perform dispersion modeling to determine the potential impacts to “high-consequence” areas in a worst-case release scenario, Powell defended the company’s decision not to voluntarily provide dispersion modeling results to the board, saying,
The federal government thinks it’s a bad idea to release that. If you’re going to build a home, you may be able do it without a blueprint, but you could probably do a better job with a blueprint. So, PHMSA and the federal government don’t think it’s a good idea to release that information, and someone with criminal intent could use it to impact public safety.
It is not known whether Summit Carbon’s Board of Directors, which as of the company’s most recent SEC filing includes at least one SK E&S representative, has access to the company’s dispersion modeling results.