Nancy Dugan lives in Altoona, Iowa and has worked as an online editor for the past 12 years.

North Dakota officials were pulling no punches during an informational session held in Bismarck last month, highlighting the importance of the Summit Carbon pipeline to both the sustainable aviation fuel market and enhanced oil recovery efforts in the Bakken.

During a December 20, 2023, BEK TV special report that broadcast a Friends of Ag and Energy public information session on the Summit Carbon pipeline, held at Bismarck State College’s National Energy Center of Excellence, Governor Doug Burgum said, “Sustainable aviation fuel, if you want to call it the Saudi Arabia of sustainable aviation fuel, it’s going to happen somewhere between North Dakota and Iowa and in between, the corn belt.”

Kathleen Neset, a geologist and owner of Neset Consulting Service Inc. who moderated the panel, spoke after Burgum, stating the following at the outset:

We’re also going to talk about CCUS: carbon capture utilization and storage. And the utilization part of it is – typically, we look to the future. As the technology comes forward, we will use the CO2 for enhanced oil recovery. And how we built that legacy fund, and how we elevated all of us here in North Dakota, was through the production of oil. Now if we can do that, and as the governor was talking about, raising a billion barrels, one more percent, two more percent, five more percent of that oil produced safely, then we elevate all of North Dakotans.

Those comments appear to be at odds with previous statements by Summit Carbon chief operating officer James “Jimmy” Powell in rebuttal testimony submitted to the Iowa Utilities Board on August 21, 2023 (p. 6):

Q. Certain Intervenors have mentioned the use of CO2 for enhanced oil recovery (“EOR”). Does Summit intend to ship CO2 for use in EOR?

A. No. Summit does not intend to ship CO2 for use in EOR. At present, all parties intending to ship on Summit’s pipeline system intend to permanently sequester the CO2 being shipped.

Additionally, little is known about the critical issue of water use associated with increased ethanol production, CO2 capture and transport, enhanced oil recovery in the Bakken, and sustainable aviation fuel production, four distinct processes that require water, often in astronomical amounts. As documented in a November 30, 2023, New York Times article, the push to produce sustainable aviation fuel from ethanol carries significant risks to groundwater:

“We’re on track to massively increase water usage without any real sense of how sensitive our aquifers are,” said Jeffrey Broberg, who is concerned about groundwater in Minnesota, a major corn state, where he is a water-use consultant and founder of the Minnesota Well Owners Organization.

John Harju, vice president for strategic partnerships at the University of North Dakota’s Energy & Environmental Research Center, spoke after Neset. Referencing the fact that the Bakken region now produces 15 to 20 percent less oil than it did at its peak, Harju stated the following:

I expect that number to go down precipitously over time unless we have adequate CO2 move into that Bakken resource. And by my estimations, we need three to five times the CO2 that we currently produce from fixed sources in the state – namely, our power facilities – to actually realize and make a real strong go of perpetuating that Bakken resource for another two generations.

BRAZIL: THE ELEPHANT IN THE ROOM

The fact that Brazil is the U.S.’s strongest competitor in terms of both ethanol production and sustainable aviation fuel was highlighted by Ryan Carter, chief operating officer of the Tharaldson ethanol plant in Casselton, during the BEK TV broadcast. “Today, we cannot supply feedstock into the sustainable aviation fuel [market]. Brazil can. So again, do we want to see foreign fuels come back into our markets just like oil has? So that is how it’s important to the ethanol industry, and again, to the corn farmer.”

Scott Hennen, who identified himself as a spokesperson for Friends of Ag and Energy and helped guide the program, responded to this comment by addressing Drew Courtney, secretary/treasurer of the North Dakota Corn Growers Association. “Drew, I want you to win, not Brazil. And, I mean, we’ve got to realize that’s what we’re up against right now, right?”

Lost in the discussion – the proverbial elephant in the room – are Summit Agricultural Group’s three FS corn ethanol plants in Brazil, the first of which began operations in 2017. These plants are likely the fiercest competitors of U.S.-based ethanol producers. Brazilian corn exports represent yet another fierce competitor, surpassing U.S. corn exports in 2023 under a new supply agreement with China according to a December 21, 2023, Business Mirror article. As Reuters reported in 2019, Summit’s partner in Brazil, Tapajós Participações S.A., is majority-owned by China-based Hunan Dakang.

Additionally, Summit Ag and Honeywell International Inc. announced plans to build the world’s largest sustainable aviation fuel plant at an undisclosed location along the U.S. Gulf Coast in May 2023. According to a May 15, 2023, AgWeb article, “Summit Ag has the largest corn-based ethanol plant in Brazil and is planning to use biofuel from that facility to feed the U.S. SAF factory, along with supplies from Midwest plants that have signed on to its carbon pipeline project.”

Anna Ryon, who represents Kerry Mulvania Hirth in the Summit Carbon proceedings, was the sole attorney to raise antitrust and anti-competition issues in her December 29, 2023, Initial Post-Hearing Brief of Kerry Mulvania Hirth. The brief described the proposed pipeline as part of a “vertically integrated anticompetitive monopsony,” and argued in part:

Summit Ag boasts that Summit Brazil Renewables produces the “lowest cost, most sustainable gallon of ethanol in the world.” Summit Ag also boasts that Summit Next Gen is developing “the world’s largest ethanol to jet sustainable aviation fuel facility.” Summit Ag has even bragged about the anticompetitive nature of its overall corporate enterprise, posting an article on its website that explains: “Summit Ag and its related entities are building what could be described as a closed loop low carbon fuel supply chain. They own farmland, grow the corn, turn it into ethanol, reduce the ethanol carbon score through CO2 sequestration, and then turn that fuel into sustainable aviation fuel. There is a big stage here that has been set up that requires vision for people to see.”

In its resistance to a motion to subpoena Bruce Rastetter by Ryon, Summit Ag stated, “As described in Mr. Pirolli’s testimony, Summit Ag is not a parent company or holding company of Summit Carbon Solutions. (See Id.) Summit Ag and Summit Carbon Solutions are separate and distinct business entities.”

Why Summit Ag attributed this statement to the testimony of James Pirolli, who formerly served as chief commercial officer for Summit Carbon, is unknown. In a December 14 YouTube interview with the Commstock Channel, Rastetter stated the following: “One thing, we’ve learned a lot about it. And Summit Carbon Solutions, our portfolio company, has not been perfect on – on going about this.” (starting at the 1:00 mark)

Rastetter and Justin Kirchhoff, CEO of Summit Ag, are the only board members of Summit Carbon cited in an SEC filing as both executive officers and directors. Summit Ag employee Jonathan Probst also serves as an executive officer on the Summit Carbon board. All other board members are identified as directors. Under “Clarification of Response (if Necessary),” Rastetter is further identified as “Chief Executive Officer, Managing Member and President of SCSMM, LLC (‘Managing Member’) of Issuer, Director of Issuer.”

This author submitted a screenshot of the Summit Carbon Solutions website to the Iowa Utilities Board on June 21, 2023 (p. 37). The website text stated in part, “Summit Carbon Solutions is an affiliate of Summit Agricultural Group.” Shortly after that filing, the language was removed from the Summit Carbon website. According to the Securities Law Blog, the Securities Act defines an affiliate as follows: “[A]n affiliate of, or person affiliated with, a specified person, is a person that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified.”

Summit’s FS ethanol facilities in Brazil use biomass in the form of eucalyptus to fuel their ethanol plants as opposed to other energy sources used by U.S. plants, which reduces their carbon score. At the end of the day, if these plants also capture their carbon, through whatever means, it is possible that FS will still have a smaller carbon footprint than U.S. ethanol plants.

It is not known if any plans are underway to produce sustainable aviation fuel using spent CO2, a known water-intensive process according to a July 24, 2023, Carbon Credits article. This process would appear to be more consistent with the goal embraced by some to use waste streams as feedstocks to produce sustainable aviation fuel.

Wade Boeshans, executive vice president of Summit Carbon Solutions, fielded questions regarding North Dakota Constitution, Article 1, Section 16 regarding “takings” and the use of eminent domain and private property pipeline routes.

While declining to answer the constitutional question about takings, Boeshans responded to the issue of eminent domain and private property rights with a well-worn Summit argument: “The most difficult landowner to negotiate or person to come to an agreement with is somebody who simply won’t talk to you. So I would just encourage you and welcome you to just come have a conversation with us.”

That argument ignores the grave difficulties some landowners along the route have encountered with Summit Carbon land agents during negotiations, as Crawford County landowner Bonnie Ewoldt previously noted at Bleeding Heartland.  

WATER USE REMAINS A WILD CARD

Responding to questions regarding water needed to compress the captured CO2 at ethanol facilities, Carter said the water needed at the Tharaldson plant for the CO2 facility alone would average “100 gallons a minute.” Carter also stated that at present, the Tharaldson plant uses “roughly 1.2 million gallons a day” for ethanol production, although he emphasized that at the Casselton facility, this is in the form of storm water provided to the plant by the city of Fargo. “We recycle that back through our facility,” he explained. “The only thing that is leaving that facility is the cooling tower evaporation. So we send roughly 18 gallons a minute back to the city of Fargo.”

Carter also said the plant is working with Summit’s engineers to determine whether recycled water could be used by the CO2 compressor facility. He subsequently clarified via email that the plant uses treated wastewater provided by the city of Fargo, and that the amount of water sent back to the city declines in cold weather.

It is important to note that 1.2 million gallons per day divided by 1,440 (the number of minutes in a day) is roughly 833 gallons per minute. Minus the 18 gallons a minute sent back to the city of Fargo, that’s 815 gallons of water per minute for ethanol production alone at the Tharaldson plant.

Harju claimed during the December 20 broadcast that with respect to the carbon capture and storage components at an ethanol facility, “it’s actually a net positive in terms of water production, because there is some water imbibed in the carbon dioxide that comes off the fermentation process, and there’s a dehydration process that occurs prior to piping and subsequently storing the CO2.” This stands in stark contrast to the September 5, 2023, evidentiary hearing testimony of Summit’s Powell, who stated that water use for carbon capture at ethanol facilities would “range from 20 gallons a minute to 120 gallons a minute.”

Toward the end of the broadcast, moderator Hennen asked the following of Boeshans:

I want to just reiterate that I’ve heard from Summit officials directly that enhanced oil recovery, when the, you know, technology is ready is part of the business model, right? I mean, you’ve got a commodity here, and obviously, you’re going to – at this point, because the federal government is saying go sequestration, you’re going to start there, but enhanced oil recovery will ultimately be available from this, and Summit’s part of that, right?

Boeshans responded by stating that Summit Carbon is building a “common carrier pipeline” that will deliver CO2. “Today, we don’t have any shippers who want to ship CO2 for EOR. When that changes, we will likely move it for that purpose, because we are a common carrier pipeline providing that service.”

At least three of the initial post-hearing briefs, all filed with the Iowa Utilities Board on December 29, 2023, argue that Summit Carbon Solutions is not a common carrier and, as a result, should not be granted eminent domain. See Sierra Club’s Post-Hearing Brief; Initial Post-Hearing Brief of the Counties (Shelby, Kossuth, Floyd, Emmet, Dickinson, Wright, and Woodbury); and Jorde Landowners’ Post-Hearing Opening Brief. One key factor in these arguments is that under the Offtake Agreements with all of the partner ethanol plants, Summit retains ownership of the carbon dioxide.

On its face, Boeshans’ claim is difficult to take in. That is because Summit Carbon’s thirteen partner ethanol plants in Iowa are the only identified suppliers of carbon dioxide to date (Sierra Club brief, p. 4), Summit Carbon will take ownership of the CO2 under the existing Offtake Agreements with ethanol plants (Jorde landowners’ brief, p. 115, paragraph g), and North Dakota officials have now made clear their intent to use this CO2 for enhanced oil recovery. Further, as explained in the Jorde Landowners’ Post-Hearing Brief (p. 34):

What also is not being explained is that if the CO2 is used for fracking then that qualifies as sequestering CO2 because the CO2 is injected into the subsurface formations to allow more production of oil and/or natural gas, so industry then argues the CO2 injected is technically sequestered all the while producing more carbon intense fuels and destroying all alleged environmental benefits of Summit’s proposal.

A pivotal document in the arguments put forward by the Sierra Club, the counties, and Jorde landowners appears to be the Deposition of James Pirolli, taken by the Sierra Club on July 7, 2023. The level of complexity of the Offtake Agreements is brought to light as Pirolli is questioned by Timothy Whipple, attorney for the counties. One particularly salient passage can be found on pages 62 to 66 of the deposition.

SUMMIT’S CLAIM OF COMMON CARRIER STATUS KEY

“The common carrier issue is hugely important,” explained Wally Taylor, legal chair of the Sierra Club Iowa chapter. “The only way Summit can get eminent domain is if it is a common carrier. That is what the Iowa Supreme Court said in the Dakota Access case. That is why Summit’s attorney completely ignores the Dakota Access decision on that point in his brief.” Taylor was referring to the Iowa Supreme Court’s 2019 decision in Puntenney v. Iowa Utilities Board, which was extensively cited in several Summit Carbon post-hearing briefs.

The Sierra Club’s Post-Hearing Brief argued in part (pp. 10-11):

Based on the Iowa Supreme Court decision in Puntenney, Summit can be granted eminent domain authority under the Iowa and United States Constitutions only if it is a common carrier. The Puntenney court’s position was based on Justice O’Connor’s dissenting opinion in Kelo v. City of New London, 545 U.S. 469, 125 S.Ct. 2655 (2005). As the Puntenney court described Justice O’Connor’s dissent:

In her view, a secondary benefit alone was not enough for a governmental transfer of property from one private entity to another to qualify as a taking for a public purpose. . . . She reasoned that almost any lawful use of private property will generate some secondary benefit and, thus, if “positive side effects” are sufficient to classify a transfer from one private party to another as “for public use,” those constitutional words would not “realistically exclude any takings.”

The Initial Post-Hearing Brief of the Counties argued in part (p. 71):

As explained in more detail above, Iowa Code § 6A.22 prohibits the exercise of eminent domain solely for private use: “the authority of an acquiring agency to condemn any private property through eminent domain may only be exercised for a public purpose, public use, or public improvement.” Iowa Code § 6A.22(1). ““Public use”, “public purpose”, or “public improvement” means… the acquisition of any interest in property necessary to the function of a common carrier…” Iowa Code § 6A.22(2)(a)(2). However, as the court held in Mid-Am. Pipeline Co., and not reversed in Puntenney, a pipeline that “intends to handle only its own products” is “not a common carrier of such products.” Mid-Am. Pipeline Co. v. Iowa State Com. Comm’n, 114 N.W.2d 622, 624 (Iowa 1962).

The Jorde Landowners’ Post-Hearing Opening Brief argued in part (pp. 120-121):

Summit will own title to the capture, transportation, and sequestration infrastructure and earn revenue from its undivided interest in the combined operations of all of this infrastructure. The ethanol “partners” will also earn revenue from all project operations and bear their share of operational costs, including presumably maintenance of Summit’s infrastructure. As such, the ethanol “partners” will have an equitable interest in operation of the capture facilities, pipelines, and sequestration sites. Thus, the Offtake Agreements are not transportation agreements and do not create a carrier-shipper relationship between Summit and its ethanol plant partners. Instead, the Offtake Agreements create joint venture relationships between and among Summit and each of its ethanol plant “partners.”

In contrast, in a common carrier transportation agreement, the shipper owns the product shipped, the carrier owns the means of transporting the product, and the shipper pays the carrier for transportation services. According to evidence adduced from Mr. Pirolli’s deposition and public testimony, the Offtake Agreements do not create such a relationship.

The Initial Post-Hearing Brief of Summit Carbon Solutions, LLC, filed with the Board on December 22, 2023, argued in part (pp. 31-32):

The Iowa Supreme Court has explained that the distinctive characteristic of a common carrier is that it holds itself out as ready to engage in the transportation of goods or persons for hire, and that it need not serve all the public all the time:

Iowa law has defined a common carrier as “one who undertakes to transport, indiscriminately, persons and property for hire.” Employers Mut. Cas. Co. v. Chicago & North Western Transp. Co., 521 N.W.2d 692, 693 (Iowa 1994). We have ruled that the distinctive characteristic of a common carrier is that it holds itself out as ready to engage in the transportation of goods or persons for hire, as public employment, and not as a casual occupation. Kvalheim v. Horace Mann Life Ins. Co., 219 N.W.2d 533, 535 (Iowa 1974). A common carrier holds itself out to the public as a carrier of all goods and persons for hire. We, however, have also recognized that a common carrier need not serve all the public all the time.

Post-hearing reply briefs were due with the Iowa Utilities Board on January 19. The board will now decide whether to “grant the permit, grant the permit with modifications, or deny the permit” according to its website, with no set deadline to “issue its final decision.”

Top image: Carbon capture and storage concept is by 3rdtimeluckystudio, available via Shutterstock.