Regulation of Pipelines

Introduction to the South Dakota Public Utilities Commission and Pipeline Oversight

The South Dakota Public Utilities Commission (PUC) is the state agency responsible for regulating public utilities, including natural gas, electricity, telecommunications, and certain pipelines. Established under South Dakota law, the PUC ensures safe, reliable, and affordable utility services while balancing economic development, environmental protection, and public interest. In the context of pipelines, the PUC's authority primarily covers safety inspections for intrastate gas pipelines and permitting for larger energy transmission facilities, including liquid and gas pipelines that meet specific thresholds. This regulatory framework draws from both state statutes and federal standards, reflecting South Dakota's role in energy infrastructure.

Pipelines in South Dakota are classified based on their purpose: natural gas pipelines (for distribution and transmission), hazardous liquid pipelines (like crude oil), and CO2 pipelines for carbon capture and storage. The PUC focuses on intrastate operations—those entirely within the state—while interstate pipelines fall under federal oversight by the Pipeline and Hazardous Materials Safety Administration (PHMSA). However, the PUC acts as a certified agent for PHMSA in enforcing federal safety rules for intrastate gas pipelines. Key laws include Chapter 49-34B for pipeline safety and Chapter 49-41B for facility permitting, with recent amendments addressing landowner rights and local control.

Pipeline Safety Regulations Under SDCL Chapter 49-34B

SDCL Chapter 49-34B, known as the Pipeline Safety Act, empowers the PUC to regulate the safety of intrastate gas pipelines, including natural gas distribution and transmission systems, jurisdictional propane systems, and liquefied natural gas facilities. This chapter does not cover hazardous liquid pipelines, which are federally regulated, but it adopts federal minimum safety standards from the Code of Federal Regulations Title 49, Parts 191 (reporting requirements), 192 (gas transportation standards), 193 (liquefied natural gas), and 199 (drug and alcohol testing).

Key definitions in the chapter include "gas" as natural gas or other flammable gases, "pipeline" as facilities for transporting gas, and "intrastate" operations limited to within South Dakota. The PUC requires pipeline operators to submit plans for inspection and maintenance of facilities. If a plan is deemed inadequate, the PUC can order revisions after a hearing.

Enforcement involves regular inspections by PUC staff, including physical testing, record reviews, and operator training evaluations. The program oversees approximately 304 miles of transmission and 5,367 miles of distribution pipelines serving over 224,000 customers. Violations can result in civil penalties or criminal charges; for instance, knowingly disposing of or altering a pipeline involved in an emergency release is a Class 5 felony. Operators must also notify the PUC within 30 days of ownership changes.

This framework emphasizes prevention through compliance with federal standards, incident reporting, and public awareness programs, ensuring pipelines do not pose undue risks to communities or the environment.

Permitting Process for Pipelines Under SDCL Chapter 49-41B

For larger pipelines, the Energy Conversion and Transmission Facility Siting Act, requires a permit from the PUC before construction. This applies to "transmission facilities," defined as gas or liquid transmission lines exceeding certain capacities—such as pipelines carrying 250,000 barrels per day or more—or those extending beyond specified lengths. Examples include crude oil pipelines like the Keystone XL and Dakota Access.

The permitting process begins with a notification of intent filed at least six months before the application. The applicant must submit detailed plans, including environmental impact assessments, route maps, and proof of financial capability, accompanied by application fees and deposits for review costs. Public input is integral: the PUC holds hearings, allowing parties like affected landowners, local governments, and environmental groups to participate.

To grant a permit, the PUC must find that the project complies with all laws and rules; poses no serious threat to the environment or inhabitants; does not impair health, safety, or welfare; and does not interfere with regional development. Decisions must be made within one year of application receipt. Permits can include conditions, such as remediation responsibilities for leaks or damage to property (e.g., as seen in Keystone Pipeline conditions). Violations of permit terms are misdemeanors with civil penalties.

The PUC monitors construction compliance but does not oversee ongoing operations for liquid pipelines, which fall under federal jurisdiction. For trans-state facilities, legislative approval may also be required.

Distinctions Between Gas, Liquid, and CO2 Pipelines

Gas pipelines (natural gas) are regulated for both safety and permitting if they qualify as transmission facilities. Liquid pipelines, like crude oil, primarily require siting permits with safety under federal rules. CO2 pipelines follow the same permitting process but have faced additional scrutiny due to environmental and landowner concerns.

Operators are liable for damages from leaks, including remediation and compensation. Pipelines deemed common carriers may access private land via easements, but recent laws limit this.

Recent Developments and Amendments

South Dakota's pipeline laws have evolved amid debates over CO2 projects, such as Summit Carbon Solutions' proposed pipeline. In 2024, House Bill 1185 established procedures for pipeline companies to enter private property for surveys, requiring 30-day notice and a $500 one-time payment for common carrier projects. House Bill 1186 defined requirements for CO2 pipeline easements, capping them at 99 years, voiding them if operations do not start within five years, and allowing expiration after five years of non-use.

Senate Bill 201, which would have allowed PUC permits to preempt local ordinances, imposed county surcharges on CO2 pipelines, and created a “landowner bill of rights” (including burial depth requirements and drain tile repairs), was referred to voters as Referred Law 21 and rejected in the November 2024 election (60% against). 

In 2025, House Bill 1052, signed into law on March 6, 2025, by Governor Larry Rhoden, prohibits the use of eminent domain for CO2 pipelines, requiring companies to secure voluntary easements from all landowners. This bill, passing the House and Senate amid strong landowner advocacy, aims to protect private property rights.

These changes reflect a shift toward stronger landowner protections, influenced by public referendums and legislative turnover, while maintaining the PUC's core role in safety and permitting.

Conclusion

South Dakota's laws on PUC regulation of pipelines prioritize safety, environmental stewardship, and public welfare through a structured framework of inspections, permitting, and enforcement. Chapters 49-34B and 49-41B form the backbone, integrating federal standards with state-specific processes. Recent reforms, driven by CO2 pipeline controversies, emphasize voluntary agreements and limit governmental overrides, ensuring regulations adapt to emerging energy technologies. For the latest updates or specific projects, consult the PUC website or SDCL directly, as laws may evolve with legislative sessions.