The meeting held December 17, 2022 in Hartley, Iowa to discuss the proposed Carbon Capture Pipelines (CCP) planned to go through O’Brien County shared an enormous amount of information. In our first two parts we shared the discussion at that meeting about the three CCP planned for Iowa, some discussion of the 45Q tax credit increased from $60 per ton of recovered carbon to $85 of recovered carbon, a little bit about the investors and the role of Iowa Utilities Board (IUB), the office of consumer advocate, an office within the Attorney General’s office, (now that there is a new Attorney General in Iowa it is unknown if the office will continue), new PHMSA (Pipeline Hazardous Materials Safety Administration) rules to be announced in 2024, tactics being employed to obtain signatures on easements, strategies to not be bothered or harassed by land agents, and a host of other issues.
In our final report to the people about the discussion of CCP concerns addressed we will discuss income tax concerns, safety, and how to follow and/or comment on any of the proposed pipeline projects.
Brian Mills spoke briefly to the issue of how persons signing an easement might be taxed for the income. The first thing to note is that these easements are perpetual, meaning they last forever. In exchange for the easement, there is a one-time payment to the landowner. That amount varies and can be negotiated between developer and landowner. What Mills pointed out is that there are three different kinds of payments: permanent easement, temporary easement (access) and crop damage. Although how each kind of payment should be discussed with your tax preparer, Mills advised, he did give some insight into how each type of payment might be treated for tax purposes. Payment for the permanent easement is treated as if the owner sold the land. A basis will be established and the proceeds from the permanent easement will be taxed as capital gains. It was noted that if the easement is an amount that would result in a capital loss, the landowner cannot recognize the loss. The temporary easement (during the construction period) is treated as rental income or ordinary income. It is subject to self-employment tax if you are an active farmer. Crop damage tax implications were unclear. Some said it was taxed as ordinary income, another attendee said his tax advisor said it was not taxable. Mills did not make a definitive answer. If you have or plan to sign any easement, check with your tax advisor for each kind of payment.
Safety concerns about the pipeline abound. Questions are not getting clear answers. Carbon Dioxide is an asphyxiate. Carbon dioxide is heavier than air. It will sink. It will remove oxygen from the air. A fact pointed out about the risk proposed by everyday use of CO2 was the 90 reported deaths per year from CO2 tanks used in food service.
Several distances from homes, livestock buildings, wells and other human resource structures were noted from the current PHMSA standards. From a house the current standard is 50 feet. The fear from speakers at the December 10 meeting was that the Summit or Navigator pipeline would get permitted before the adoption of new regulations and grandfathered in.
The organizers reported some math to determine how much CO2 might be released. At 2000 pounds per square inch in a 20 inch pipeline for up to 20 miles between shut offs would be 86,000 gallons. If there is an accident, the amount of carbon released was staggering. With an attempt at humor it was noted that the CO2 released would be somewhere between a carbonated beverage and the CO2 used to euthanize animals. The fear is that if a rupture occurred near a community such as Hartley, “it would look like a chemical attack.”
Vehicles under a plume will not run. The CO2 removes oxygen from the air. In the event of an accident, rescuers would not be able to get to the site until after a plume dissipates. Living beings under a plume may not be able to get out. It was noted that Summit Pipeline lawyers would not give IUB safety response and protocol, saying safety was a duty of the federal government (PHMSA). The safety of a CO2 pipeline is not known. One example of a CCP rupture can be found in Satartia, Mississippi.
If you are seeking assistance with your interactions with pipeline representatives you can find an attorney or join a group like iowaeasement.org or Sierra Club’s weekly online webinars.
If you are interested in following the case you can keep informed you can follow comments and meeting schedules at iub.iowa.gov. The docket number to search for Summit Pipeline is HLP-2021-0001. For Navigator Heartland Greenway Pipeline search for docket number HLP-2021-0003. You can read the comments of everyone who has submitted a comment or you can submit your own comment. Using this system is the only way your comment will be considered. It was reported at this meeting that objections to the use of Eminent Domain had been received by IUB from 44 out of 56 Iowa counties affected by the pipelines, 17 cities, 3 school districts and 8 local entities.