BETTY JEAN STROM TRUST, RITA BROWN, and CRAIG AND LISA BASLER FAMILY TRUST v. SCS CARBON TRANSPORT, LLC, a Delaware Limited Liability Company, a/k/a SUMMIT CARBON SOLUTIONS; PATRICIA K. DEEG TRUST v. SCS CARBON TRANSPORT, LLC, a Delaware Limited Liability Company, a/k/a SUMMIT CARBON SOLUTIONS; PETER HELFENSTEIN, JR., et al. v. SCS CARBON TRANSPORT, LLC, a/k/a SUMMIT CARBON SOLUTIONS; SCS CARBON TRANSPORT, LLC v. GERALDINE H. SAYLER JORDRE, et al.; BRAUN FAMILY TRUST 2020, et al. v. SCS CARBON TRANSPORT, LLC, a Delaware Limited Liability Company, a/k/a SUMMIT CARBON SOLUTIONS; JARED BOSSLY, et al. v. SCS CARBON TRANSPORT, LLC, a Delaware Limited Liability Company, a/k/a SUMMIT CARBON SOLUTIONS; DELORES SCHUMACHER REVOCABLE TRUST, and JOHN AND STEPHANIE JUNG v. SCS CARBON TRANSPORT, LLC, a/k/a SUMMIT CARBON SOLUTIONS
#30317, #30338-r-JMK
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
August 21, 2024
2024 S.D. 48
THE HONORABLE PATRICK T. PARDY, Judge; THE HONORABLE RICHARD A. SOMMERS, Judge
APPEAL FROM THE
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THE HONORABLE PATRICK T. PARDY Judge
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ARGUED MARCH 19, 2024 OPINION FILED 08/21/24
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#30338
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APPEAL FROM THE CIRCUIT COURT OF THE FIFTH JUDICIAL CIRCUIT MCPHERSON COUNTY, SPINK COUNTY BROWN COUNTY, AND EDMUNDS COUNTY, SOUTH DAKOTA
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THE HONORABLE RICHARD A. SOMMERS Judge
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BRIAN E. JORDE of Domina Law Group Omaha, Nebraska
NICHOLAS G. MOSER of Marlow, Woodward & Huff Yankton, South Dakota
CHRIS HEALY Vermillion, South Dakota Attorneys for appellants.
BRET A. DUBLINSKE of Fredrikson & Byron, P.A. Des Moines, Iowa
BRETT KOENECKE JUSTIN L. BELL CASH E. ANDERSON CODY L. HONEYWELL of May Adam Gerdes & Thompson Pierre, South Dakota
BRIAN D. BOONE MICHAEL R. HOERNLEIN MATTHEW P. HOOKER of Alson & Bird LLP Charlotte, North Carolina Attorneys for appellees.
KERN, Justice
[¶1.] SCS Carbon Transport, LLC (SCS) is planning to develop a pipeline network to transport carbon dioxide (CO2) through South Dakota. Several landowners (Landowners) along the proposed route refused to allow SCS pre-condemnation survey access, which SCS claims is authorized by
[¶2.] All cases except for Jordre—where SCS was the plaintiff and sought declaratory relief permitting survey access—involved similar claims challenging the constitutionality of
[¶3.] We reverse the circuit courts’ grants of summary judgment on the common carrier issues. SCS‘s ability to conduct pre-condemnation surveys depends on whether it is a common carrier vested with the power of eminent domain. However, in this early phase of the litigation, the record does not demonstrate that SCS is holding itself out to the general public as transporting a commodity for hire.
It is thus premature to conclude that SCS is a common carrier, especially where the record before us suggests that CO2 is being shipped and sequestered underground with no apparent productive use. In addition, the circuit courts abused their discretion in denying Landowners’ request for further discovery. The record demonstrates that SCS resisted Landowners’ efforts to obtain depositions and documents that are of fundamental importance to the issues in this case. Within the scope of
[¶4.] On remand, in the event SCS is determined to be a common carrier, we also analyze the scope and constitutionality of
[¶5.] We reverse and remand for further proceedings consistent with this opinion.
Factual and Procedural Background
[¶6.] SCS is in the process of developing an underground pipeline network to transport CO2. The network will include more than 2,000 miles of pipeline in five states: South Dakota, North Dakota, Iowa, Minnesota, and Nebraska. In South Dakota, the pipeline will travel through eighteen counties: Beadle, Brown, Clark, Codington, Edmunds, Hamlin, Hand, Hyde, Kingsbury, Lake, Lincoln, McCook, McPherson, Miner, Minnehaha, Spink, Sully, and Turner. Once completed, the pipeline will be able to transport up to 12 million metric tons per annum of captured CO2 to an underground storage location in North Dakota. The CO2 will then be sequestered underground indefinitely. To date, more than 34 third-party facilities, including ethanol plants, have signed contracts or letters of intent with SCS for the transportation of CO2.1 The pipeline project is anticipated to disturb approximately 6,550 acres within South Dakota, comprising mostly agricultural properties used for crop production or pastureland.
[¶7.] On February 7, 2022, SCS submitted a siting permit application to the South Dakota Public Utilities Commission (PUC). This application was denied without prejudice on September 13, 2023, because the proposed pipeline route
violated various county ordinances. In the meantime, beginning in June 2022, SCS began notifying landowners of its intent to conduct pre-condemnation surveys pursuant to
[¶8.] According to SCS, three different types of surveys would be conducted along the pipeline route. The most common would be “minimally invasive, non-destructive inquiries to assess the land... involv[ing]
[¶9.] Finally, “deep dig” surveys would be necessary for properties located within a floodplain to search for archaeological sites of cultural significance. These “involve the use of a backhoe to dig trenches typically 7 to 10 feet in length, 2 to 3 feet in width, and 6 to 10 feet deep.” SCS committed that “[o]nce this deep testing survey work is completed, any trenches will be backfilled and the ground will be graded to near existing conditions.” For all three survey types, SCS assured
landowners that resulting property damage would be repaired or reimbursed. To this end, SCS obtained a $1 million performance bond, which was later increased to $5 million.2
[¶10.] Landowners refused to consent to the surveys and sued SCS in both the Third and Fifth Circuits. Two cases—Strom and Deeg—were brought in the Third Circuit, seeking declaratory and injunctive relief to prohibit SCS from conducting the surveys. The plaintiff Landowners in these cases alleged that
[¶11.] During discovery, Landowners moved to compel production of any offtake agreements between SCS and third-party entities for the transportation of CO2. Landowners argued that these agreements were “critically important to the question of whether SCS is a common carrier” and thus entitled to exercise eminent domain power under
the basis that the agreements contained “extraordinarily confidential” terms and pricing information that if publicized would put SCS at a competitive disadvantage.
[¶12.] The Third Circuit conducted an in-camera review of the agreements and granted SCS a protective order.3 In granting the protection order, the circuit court entered a memorandum decision on December 28, 2022, finding sua sponte that CO2 was a commodity “regardless of the form of compensation, terms of payment, or transfer of value.” In addition, the court concluded that the agreements “establish that SCS is shipping carbon dioxide, belonging to the ethanol plants, for a fee.” The court also noted that the agreements were not relevant to the “primary” legal
[¶13.] In January 2023, SCS moved for summary judgment on all claims and counterclaims in the Third Circuit cases. Landowners resisted this motion and moved to compel additional discovery and for a continuance of the motion for summary judgment to conduct additional discovery under
[¶14.] Meanwhile, four cases—Helfenstein, Braun, Schumacher, and Bossly—were brought in the Fifth Circuit and consolidated. These plaintiff Landowners also
sought declaratory and injunctive relief based on grounds almost identical to those asserted by Landowners in their consolidated amended complaint filed in the Third Circuit. However, in a fifth case—Jordre—SCS sued Landowners for declaratory and injunctive relief for survey access. In Jordre, the defendant Landowners did not amend their counterclaim to match that of the other four cases. But Landowners filed a motion to compel, and SCS filed a motion for a protective order. The Fifth Circuit denied Landowners’ motion to compel and granted SCS‘s motion for a protective order. SCS moved for summary judgment on all claims and counterclaims in February 2023, while Landowners sought a continuance under
[¶15.] After a hearing, the Fifth Circuit denied the Rule 56(f) continuance and granted SCS‘s motion on all issues except for SCS‘s common carrier status. The court took this issue under advisement and ordered further briefing. After consideration of the parties’ arguments the court ultimately concluded that SCS is a common carrier and adopted the reasoning of the Third Circuit court on this issue. Accordingly, the court granted summary judgment to SCS on all issues and authorized SCS to conduct the proposed surveys. Landowners appealed both the Third and Fifth Circuit rulings, and this Court granted Landowners’ motion to consolidate the cases on appeal.4 Landowners raise six issues, which we restate and reorder as follows:
- Whether the circuit courts erred by entering summary judgment concluding SCS was a common carrier vested with the power of eminent domain.
- Whether the circuit courts erred by denying Landowners’ motion to continue summary judgment for discovery purposes.
- Whether the circuit courts erred by finding
SDCL 21-35-31 authorized subsurface exploratory activities. - Whether the circuit courts erred by finding
SDCL 21-35-31 is not a taking within the meaning of the Fifth Amendment to the United States Constitution and the South Dakota Constitution article VI, § 13. - Whether the circuit courts erred as a matter of law by concluding
SDCL 21-35-31 provided adequate procedural due process. -
Whether the circuit courts erred by finding SCS complied with the requirements of SDCL 21-35-31 .
Analysis
[¶16.] On March 11, 2024, SCS filed a motion to continue oral argument, suggesting that this appeal was moot because the Legislature amended the challenged provisions of
[¶17.] Nor do we perceive mootness associated with the bare fact that
the previous version of the statute was used as authority by SCS to conduct pre-condemnation surveys. In fact, both the Third and Fifth Circuits enforced the earlier version of
[¶18.] However, our analysis of
[¶19.] Turning to the merits, we combine the first two issues because SCS can only exercise eminent domain authority pursuant to
I. Whether the circuit courts erred by denying Landowners’ motions to continue and by entering summary judgment concluding SCS was a common carrier vested with the power of eminent domain.
[¶20.] SCS claims eminent domain authority pursuant to
(Emphasis added.) The Third Circuit determined, sua sponte, that SCS met this definition of common carrier. Landowners argue that the court erred because SCS‘s proposed pipeline will not truly be “for hire” and because CO2 is not a commodity. Accordingly, in Landowners’ view, SCS cannot properly claim eminent domain authority. In the second issue statement above, Landowners also argue that the Third and Fifth Circuits erred in denying their motions to continue summary judgment for further discovery on the common carrier issues.
A. Summary judgment on the common carrier and commodity issues.
[¶21.] “We review grants of summary judgment under the de novo standard of review.” Bialota v. Lakota Lakes, LLC, 2024 S.D. 7, ¶ 15, 3 N.W.3d 454, 459 (citation omitted). “Summary judgment is only appropriate when the court determines that the pleadings, depositions, answers to interrogatories, and admissions
[¶22.] Landowners assert that the definition of common carrier in
transfer of value is not relevant or determinative of the fact that a fee exists.” Landowners also point out that under the terms of the offtake agreements in the record, SCS will take title to the CO2 as it enters the pipeline. According to Landowners, SCS cannot be classified as transporting CO2 for hire if it is transporting its own CO2. In addition, Landowners claim that because it is being disposed of as waste, the CO2 featured in this case is not a commodity.
[¶23.] Landowners also suggest that this Court apply the test used by the Texas Supreme Court to determine common carrier status:
[F]or a person intending to build a CO2 pipeline to qualify as a common carrier under Section 111.002(6), a reasonable probability must exist that the pipeline will at some point after construction serve the public by transporting gas for one or more customers who will either retain ownership of their gas or sell it to parties other than the carrier.
Texas Rice Land Partners, Ltd. v. Denbury Green Pipeline-Texas, LLC, 363 S.W.3d 192, 202 (Tex. 2012). Section 111.002(6) provides that an entity is a common carrier if it “owns, operates, or manages, wholly or partially, pipelines for the transportation of carbon dioxide or hydrogen in whatever form to or for the public for hire.”
[¶24.] As this Court has previously stated, “[t]he power to take privately owned property and put it to public use is ‘an inherent right vested in a sovereign state as a necessary attribute thereof.‘” Montana-Dakota Utils. Co. v. Parkshill Farms, LLC, 2017 S.D. 88, ¶ 7, 905 N.W.2d 334, 337 (quoting Darnall v. State, 79 S.D. 59, 63, 108 N.W.2d 201, 203 (1961)). The Legislature can delegate the power of
eminent domain to non-public corporations, such as utilities or pipelines, but the essential requirement of public use remains. Without it, a private enterprise could exercise the austere power of the State purely for its own private interests in contravention of federal and state constitutional takings clauses. See Hawaii Hous. Auth. v. Midkiff, 467 U.S. 229, 245, 104 S. Ct. 2321, 2331, 81 L. Ed. 2d 186 (1984) (“A purely private taking could not withstand the scrutiny of the public use requirement; it would serve no legitimate purpose of government and would thus be void.“)
[¶25.] Consequently, the Legislature‘s decision to delegate the power of eminent domain to pipeline companies in
[¶26.] But a pipeline cannot become a common carrier simply by declaring itself to be one. See Denbury Green Pipeline-Tex., LLC v. Tex. Rice Land Partners, Ltd., 510 S.W.3d 909, 916 (Tex. 2017). Rather, as the Texas Supreme Court explained, to be a common carrier, the pipeline must serve the public, meaning “a reasonable probability must exist that the pipeline will at some point after construction serve the public by transporting gas for one or more customers who will either retain ownership of their gas or sell it to parties other than the carrier.” Texas Rice Land Partners, 363 S.W.3d at 202.
[¶27.] According to Landowners, SCS cannot meet this test because there is no evidence that SCS is being paid to transport CO2. Landowners persuasively suggest that SCS‘s business model is akin to that of a private carrier, where SCS ships its own CO2 through its own transportation network to an underground storage facility.5 Indeed, the redacted pricing terms are crucial to the summary judgment analysis regarding whether the CO2 is being shipped to or for the general public. The record is not adequately developed concerning the details of the transactions and prices between SCS and the ethanol plants to affirm as a matter of law that SCS is “holding [itself] out to the general public as engaged in the business of transporting commodities for hire[.]” See
[¶28.] SCS responds with four factual claims intended to establish its identity as a common carrier as a matter of law. First, SCS advertised its transportation services for hire to the general public and reached out directly to potential customers. Second, SCS expressed an intent to hold an open season where the general public can execute binding commitments for SCS‘s services. Third, SCS is reserving a portion of its pipeline capacity for future shippers. Fourth, SCS represented to the State of North Dakota that it will carry on business as a common carrier.
[¶29.] SCS is correct that “the concept of ‘common carrier’ must be flexible enough to accommodate reasonable commercial practice.” N.Y. Susquehanna & W. Ry. Corp. v. Jackson, 500 F.3d 238, 251 (3d Cir. 2007). However, none of the facts
alleged above, even if true, would provide undisputed evidence of a “reasonable probability . . . that the pipeline will at some point after construction serve the public by transporting gas for one or more customers who will either retain ownership of their gas or sell it to parties other than the carrier.” See Texas Rice Land Partners, 363 S.W.3d at 202. Here, there remain factual disputes regarding whether ethanol plants contracting with SCS will retain ownership of their CO2 or sell it to parties other than SCS. Indeed, the unredacted offtake agreements may very well reveal that SCS is ultimately purchasing and taking ownership of the CO2. In addition, it is undisputed that instead of being sold to parties other than the carrier, the CO2 will be sequestered underground in North Dakota.
[¶30.] Based on the record before us, SCS has also failed to establish that the CO2 featured in this case is a commodity. SCS notes that the federal government and several states, including Louisiana,
[¶31.] However, it is not at all apparent that CO2, as featured in this case, meets the definition of a commodity: “[a]n article of trade or commerce” or “[a]n
economic good, esp. a raw material or an agricultural product.” Commodity, Black‘s Law Dictionary (11th ed. 2019). Although CO2 is used as a raw material in the manufacturing of numerous products,6 Landowners correctly point out that the CO2 at issue here is being transported for storage underground, with no other apparent use. As SCS‘s counsel acknowledged before this Court at oral argument, the classification of CO2 as a commodity when it is being transported and sequestered underground is a novel question of first impression. Here, the record is simply devoid of any indication that CO2 is being used in this context as an “article of trade or commerce” or being sold as an “economic good.” Instead, it appears from our review of the record that the economic item of value at play here may be the tax credit generated by the sequestration of the CO2, a determination which is driven by federal energy policies.
[¶32.] In states where CO2 is classified as a commodity, the legislatures have made a policy decision that CO2 is a commodity due to its potential industrial applications, including the recovery of oil, gas, and other minerals. See
not demonstrated, as a matter of law in these summary judgment proceedings, a reasonable probability that the CO2 being transported and sequestered in the case will be put to any productive use.
[¶33.] Because the record, viewed most favorably to the Landowners, does not demonstrate that SCS is transporting a commodity for hire to or for the general public, the circuit courts erred in concluding that SCS is a common carrier pipeline authorized to exercise eminent domain authority. We reverse the grant of summary judgment and remand for further proceedings.
B. Landowners’ Motion for Further Discovery.
[¶34.] Having reversed the circuit courts’ orders for summary judgment determining that SCS qualified as a common carrier, it is necessary to address the issue of Landowners’ motion for further discovery. On December 28, 2022, the Third Circuit issued a memorandum decision granting SCS‘s motion for a protective order
[¶35.] First, we must consider SCS‘s argument that the sua sponte common carrier determination is not properly before the Court. According to SCS, the notice of appeal only included the Third Circuit‘s March 8, 2023 memorandum opinion granting summary judgment to SCS and not its earlier December 28, 2022 order, in
which the circuit court found that SCS was a common carrier. As a result, according to SCS, the sua sponte issue is not properly before this Court. However, in the March 8 opinion, the circuit court specifically referenced its reasoning in the December 28 order and, on this basis, disposed of the common carrier issues. We conclude that this matter is properly before us.7
[¶36.] Regarding discovery, Landowners sought to conduct Rule 30(b)(6) depositions of SCS corporate designees and CEOs of SCS‘s affiliated ethanol plants. Since the inception of this litigation, Landowners have served SCS with five subpoenas and notices of depositions, beginning on September 22, 2022. See
[¶37.] On February 14, 2023, Landowners moved to compel discovery. Specifically, Landowners asked the Third Circuit to “enter[] an order compelling SCS to designate appropriate agents with knowledge regarding Landowner‘s noticed deposition topics . . . , directing SCS to make persons available for deposition on February 24, 2023 at 9:30 a.m. until fully answered, and an order compelling SCS to dutifully cooperate with South Dakota‘s discovery rules.” Landowners argued to the court that these depositions would yield information relevant to SCS‘s common carrier status, compliance with
- The general background and ownership of SCS Carbon Transport, LLC, and nature and type of business services you offer and desire to provide within South Dakota and your overall business plan.
- The final version of any prospectus, private placement memorandum, proformas or similar that in any way describes your business model or business plan.
- The contents and meaning of any executed agreement, contract, or letter of intent of any kind [ ] between you or any of your related entities and/or and carbon dioxide emitter, including but not limited to “offtake agreement“, located in the State of South Dakota who produces any carbon dioxide that you intend to transport via pipeline within South Dakota.
-
The ownership of the carbon dioxide you intend to transport through your proposed pipeline within South Dakota at each stage from initial emissions to final placement or use and how the carbon dioxide you propose to transport within South Dakota is to be used or permanently sequestered and by whom. - The kind nature and type of examinations, surveys, and maps thereof you believe you are allowed to conduct upon, in, or under any of the land at issue in these consolidated proceedings and whether or not the land of each and every landowner in these consolidated cases that you seek to survey, examine, and/or map is required by you for public use and if so, how so and why.
- Your procedures and criteria for determining damages to all landowners in these consolidated cases should injury to their property be caused by you or your agents in their attempt or pursuit of examining, surveying, or mapping such properties.
- Your “new” Survey Permit Performance Bond.
- The facts supporting your claims that you are a “common carrier” in South Dakota and the facts supporting your claims that your proposed hazardous pipeline is for public use within South Dakota.
- Your paragraphs 1 through 12 of your Counterclaim and the facts you rely upon to make said claims.
- Your summary judgment evidence.
[¶38.] In a separate brief resisting summary judgment, also dated February 14, 2023, Landowners renewed their previous requests for “full unredacted versions of all documents produced to date.” According to Landowners, the redacted portions “are believed to contain material information.” However, on March 15, 2023, the Third Circuit granted SCS‘s motion for summary judgment and denied Landowners’ request for further discovery. Shortly thereafter, the Fifth Circuit granted SCS‘s motion for summary judgment and denied a similar motion to continue from Landowners.
[¶39.] “Sua sponte orders of summary judgment will be upheld only when the party against whom judgment will be entered was given sufficient notice and an adequate opportunity to demonstrate why summary judgment should not be granted.” Brown v. Hanson, 2007 S.D. 134, ¶ 19, 743 N.W.2d 677, 682. ”
[¶40.] “Under [
[¶41.] In their
- Deposition Topics #1, 2, 3, 4 and 8 would uncover specific facts about SCS‘s pricing scheme, whether their service or operation is available for the public to freely use or is exclusively meant to serve private entities, how their operation conducts business with the public, how carbon is being used, for what purpose it is being transported, who is benefiting from the use of SCS‘s service or operation, and who owns the carbon dioxide at every stage of its use. I believe these facts would refute SCS‘s Motion for Summary Judgment on the claims of whether SCS qualifies as a common carrier and whether carbon dioxide qualifies as a commodity.
- Deposition Topics #5, 6, and 7 would uncover specific facts about SCS‘s intentions with land owned by Landowners, what extent SCS‘s surveys and related activities will damage the Landowners’ property, why these activities are needed, why SCS wants to conduct these activities when they are not required for permitting, why SCS does not want to comply with
SDCL Chapter 21-35 in their pursuit to condemn Landowners’ lands, whether there is a means reasonably and rationally calculated to determining the appropriate compensation for SCS‘s damage to Landowner‘s property, whether SCS‘s survey bond is sufficient to compensate all of the Landowners who experience damage to their land, whether this process is fair, how Landowners can appeal SCS‘s assessed damage value, and when Landowners can expect compensation for their [assessed] damage to their land. I believe these facts would refute SCS‘s Motion for Summary Judgment on the claims of whether SCS has performed a taking and if SCS‘s compensation scheme appropriately aligns with due process requirements, whether their survey actions exceed that which is statutorily authorized, whether SCS is violating Landowners’ constitutional rights, and whether SCS qualifies as a common carrier. - Deposition Topics #9 and 10 would uncover specific facts about whether SCS has meritorious arguments and evidence supporting their counter claims and their Motion for Summary Judgment. . . .
[¶42.] These assertions are sufficient for purposes of a continuance to engage in discovery under
II. The Scope and Constitutionality of SDCL 21-35-31 .
[¶43.] Our decision to reverse entry of summary judgment on the common carrier issues resolves a threshold issue in this appeal, but we conclude that it is appropriate to address the questions concerning the scope and constitutionality of
[¶44.] To be clear, we make no judgment as to SCS‘s ultimate common carrier status, and only address the following issues to provide clarity on remand.
A. Whether the circuit courts erred by finding SDCL 21-35-31 authorized subsurface exploratory activities.
[¶45.] “We review issues of statutory interpretation de novo.” State v. Long Soldier, 2023 S.D. 37, ¶ 11, 994 N.W.2d 212, 217. “The rules of statutory interpretation are well settled.” Id. (citation omitted). “The purpose of statutory interpretation is to discover legislative intent.” Id. (citation omitted). “[T]he starting point when interpreting a statute must always be the language itself.” Id. (alteration in original) (citation omitted). “When the language in a statute is clear, certain, and unambiguous, there is no reason for construction, and the Court‘s only function is to declare the meaning of the statute as clearly expressed.” Id. (citation omitted). “In conducting statutory interpretation, we give words their plain meaning and effect, and read statutes as a whole.” Id. (citation omitted).
[¶46.]
The provisions of this section only apply to a project which requires a siting permit pursuant to chapter 49-41B. Each person vested with authority to take private property for public use may cause an examination and survey to be made as necessary for its proposed facilities. The person or person‘s agents and officers may enter the private property for the purpose of the examination and survey. Any person seeking to cause an examination or survey, where permission for examination or survey has been denied, shall:
- Have filed a siting permit application with the Public Utilities Commission pursuant to § 49-41B-11;
- Give thirty days written notice, including the filing and expected dates of entry, to the owner and any tenant in possession of the private property; and
- Make a payment to the owner, or provide sufficient security for the
payment, for any actual damage done to the property by the entry. This section does not apply to the state or its political divisions. This section is in addition to and not in derogation of other existing law.8
[¶47.] Landowners assert that SCS‘s proposed survey activities, including the use of hand tools, mounted drilling rigs, and backhoes, go beyond this statutory authorization. SCS responds that the “ordinary meaning” of “examination” and “survey” includes both “visual” and “physical” examination. SCS points to a recent decision of the North Dakota Supreme Court, which held that “[t]he definition of ‘examination’ is not strictly limited to a visual examination.” In re 2015 Application for Permit to Enter Land, 883 N.W.2d 844, 849 (N.D. 2016) (relying on the definition of “examination” from the Webster‘s New World Dictionary (2d coll. ed. 1980)).
[¶48.] However, any such interpretative proposition must be weighed against the fundamental principle—espoused by the vast majority of states—that eminent domain statutes are strictly construed in favor of the property owner. See Clarke Cnty. Reservoir Comm‘n v. Robins, 862 N.W.2d 166, 171 (Iowa 2015) (“Statutes that delegate the power of eminent domain should be strictly construed and restricted to their expression and intention.“); see also Dana Berliner, Am. Law Inst. Continuing Legal Ed., Strict Construction in Eminent Domain Statutes, SZ005 ALI-CLE 287 (Jan. 2018) (excerpting state jurisprudence concerning the interpretation of eminent domain statutes). As this Court previously stated, “[p]roceedings to take private property by condemnation are special in character and must be conducted in strict accordance with governing statutes.” Ehlers v. Jones, 81 S.D. 351, 353, 135 N.W.2d 22, 23 (1965).
[¶49.] Now, “[c]ourts have typically defined a survey as the measurement of land.” 9 Nichols on Eminent Domain § G32.06. For example, in Missouri Highway and Transportation Commission v. Eilers, the Missouri Court of Appeals explained that “[a] survey is ‘an actual examination of the surface of the ground[,]’ ” and “merely evidence of location and boundary.” 729 S.W.2d 471, 473 (Mo. Ct. App. 1987) (citation omitted). Thus, a “soil survey“—involving the use of a three-inch auger to remove soil for testing—would go beyond the strict meaning of “survey.” Id. at 472. Similarly, in Mackie v. Town of Elkton, a Maryland court defined survey entries as those that “are innocuous and temporary effecting only minimal incidental damage and little, if any, disturbance.” 290 A.2d 500, 505 (Md. 1972). As a result, the court held that the use of a backhoe to conduct geological investigations did not fall within this definition. Id. See also Nat‘l Compressed Steel Corp. v. Unified Gov‘t of Wyandotte Cnty., 38 P.3d 723, 735 (Kan. 2002) (holding that “subsoil testing is beyond the scope of the examination authorized” by a Kansas pre-condemnation survey provision); Indiana State Highway Comm‘n v. Ziliak, 428 N.E.2d 275, 279 (Ind. Ct. App. 1981) (concluding that the “right to enter private
[¶50.] Nevertheless, SCS proposes that “survey” and “examination” should be understood as “[t]he measuring of a tract of land and its boundaries and contents.” Survey, Black‘s Law Dictionary (11th ed. 2019) (emphasis added). But even this definition is somewhat ambiguous as “contents” could very well refer to aboveground, as opposed to subsurface, features of the property. In any event, SCS‘s reading of the statute would authorize any number of invasive activities directly at odds with the owner‘s right to possess their property. In light of the near-universal consensus in favor of strict construction, we decline to adopt such a broad interpretation of
[¶51.] Furthermore, if fairly possible, we will adopt a construction of the statute that avoids constitutional infirmities. Steinkruger v. Miller, 2000 S.D. 83, ¶ 8, 612 N.W.2d 591, 595. For the reasons previously expressed, SCS‘s proposed “geotech” and “deep dig” surveys would constitute takings under both the federal and state constitutions, rendering
[¶52.] Instead, we conclude that “survey” and “examination,” in the context of
B. Whether the circuit courts erred by finding SDCL 21-35-31 is not a taking within the meaning of the Fifth Amendment to the United States Constitution and the South Dakota Constitution article VI, § 13.
[¶53.] “[T]his Court reviews de novo issues of constitutional interpretation.” Dakota Constructors, Inc. v. Hanson Cnty. Bd. of Adjustment, 2023 S.D. 38, ¶ 12, 994 N.W.2d 222, 227. “When interpreting constitutional text, the goal is to discern the most likely public understanding of a particular provision at the time it was adopted.” McDonald v. City of Chicago, 561 U.S. 742, 828, 130 S. Ct. 3020, 3072, 177 L. Ed. 2d 894 (2010) (Thomas, J., concurring in part). When the original meaning is unclear, it can be discerned from “[t]he historical context of a constitutional provision,” including constitutional debates and case law. Doe v. Nelson, 2004 S.D. 62, ¶ 10, 680 N.W.2d 302, 305-06.
[¶54.] Landowners argue that
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in
the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall any person be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
(Emphasis added.)
Private property shall not be taken for public use, or damaged, without just compensation, which will be determined according to legal procedure established by the Legislature and according to § 6 of this article. No benefit which may accrue to the owner as the result of an improvement made by any private corporation shall be considered in fixing the compensation for property taken or damaged. The fee of land taken for railroad tracks or other highways shall remain in such owners, subject to the use for which it is taken.
[¶55.] We have determined that the South Dakota provision “provides greater protection . . . than the United States Constitution because our Constitution requires that the government compensate a property owner not only when a taking has occurred, but also when private property has been damaged.” State ex rel. Dep‘t of Transp. v. Miller, 2016 S.D. 88, ¶ 39, 889 N.W.2d 141, 153 (internal quotation marks omitted). To preserve this distinction, we analyze both constitutional provisions separately.
The Federal Takings Clause
[¶56.] According to Landowners,
[¶57.] SCS responds that “longstanding restrictions on property rights—like the right to survey access—are not takings.” SCS points out that, in Cedar Point, the Supreme Court specifically stated that “many government-authorized physical invasions will not amount to takings because they are consistent with longstanding background restrictions on property rights.” Id. at 160, 141 S. Ct. at 2079. Nevertheless, Landowners contend that pre-condemnation surveys are not part of South Dakota‘s legal tradition or common law and thus do not fall within this exception.
[¶58.] To analyze these competing arguments, we turn first to Cedar Point. In that case, the Supreme Court was confronted with a statute that “grant[ed] union organizers a right to physically enter and occupy [agricultural employers‘] land for three hours per day, 120 days per year.” Id. at 149, 141 S. Ct. at 2072. The Court held that “[t]he access regulation appropriates a right to invade the growers’ property and therefore constitutes a per se physical taking.” Id. Central to this holding, the Court concluded that “physical invasions constitute takings even if they are intermittent as opposed to continuous.” Id. at 153, 141 S. Ct. at 2075. However, the Court qualified its reasoning with three exceptions: 1) “Isolated physical invasions, not undertaken pursuant to a granted right of access“; 2) Government-authorized physical invasions consistent with longstanding background restrictions on property rights; and 3) Property rights ceded as a condition of receiving government benefits. Id. at 159-61, 141 S. Ct. at 2078-79.
[¶59.] Here,
[¶60.] As an initial matter, it is evident that only the second exception could apply to
[¶61.] However, even through this lens, pre-condemnation “standard surveys” are firmly established in the legal tradition of South Dakota in a variety of contexts. For at least a century, South Dakota statutes have granted condemnors the right to conduct pre-condemnation surveys. See
[¶62.] However, in 1916, this Court held that surveys made “prior to or pending condemnation proceedings . . . certainly did not amount to taking possession of the tract.” Fairmont & V. Ry. Co. v. Bethke, 37 S.D. 446, 449-50, 159 N.W. 56, 58 (1916). In addition, a jurist previously serving in the Second Circuit court recently recognized a South Dakota common law survey right incident to eminent domain. See Dakota Access, LLC v. Schumaker, No. 49CIV15-000941, Mem. Op. at 16-17 (S.D. Cir. Ct. Mar. 24, 2016). This is evident because “the right of eminent domain is virtually useless to an entity without the right to survey” prior to condemnation. Id. at 17 (quoting State v. Crouch, 621 S.W.2d 47, 48 (Mo. 1981)).
[¶63.] SCS also directs our attention to several relevant secondary sources. The Restatement of Torts explains that,
[t]he privilege of entry for the purpose of performance or exercise of such duty or authority may be specifically given, as where an employee of a public utility is in terms authorized to enter upon privately owned land for the purpose of making surveys preliminary to instituting a proceeding for taking by eminent domain.
The owner shall not obstruct a condemnor from entering upon his land prior to filing a declaration of taking for the purpose of surveying the land or making a specified inspection of same, provided that, the condemnor shall compensate the owner for any virtual damages that may result from his entrance upon the land.
10 Nichols Appendix D-2 § 308. Even more on point, Nichols on Eminent Domain states that “[e]ntry by a government agency for purposes of conducting a [standard survey] generally does not constitute a taking, under either the common law or under applicable statutory guidelines.” 2A Nichols on Eminent Domain § 6.01(16)(b) (2022).
[¶64.] Other states have also adopted similar interpretations. As noted by an Illinois Appellate Court, the “vast majority of jurisdictions have held that a prior condemnation suit is not a prerequisite to an entry on the lands of another for preliminary exploration and survey purposes.” Kane Cnty., 443 N.E.2d at 1153. “These courts have recognized a basic conceptual difference between a preliminary entry and a constitutionally compensable taking or damaging of property and have held that because the former is not a variety of the latter, it does not require adherence to condemnation procedures and constitutional provisions for just compensation.” Id. (citing Orange Water and Sewer v. Est. of Armstrong, 237 S.E.2d 486, 487 (N.C. Ct. App. 1977); San Luis Obispo v. Ranchita Cattle Co., 94 Cal. Rptr. 73 (Cal. Ct. App. 1971); Litchfield v. Bond, 78 N.E. 719, 732 (N.Y. 1906); Carlisle v. Dep‘t of Pub. Utils., 234 N.E.2d 752 (Mass. 1968)).
[¶65.] We thus conclude that the right to conduct pre-condemnation surveys is a longstanding background restriction on property rights. However, the scope of such surveys is limited. Indeed, we must “pause” when the proposed survey activities contemplate “a more invasive impact on individual property rights.” Dakota Access, No. 49CIV15-000941, Mem. Op. at 14. In Missouri Highway, the soil survey was a taking because it “subvert[ed] [the landowner‘s] right to use and enjoy his property in fee simple absolute.” 729 S.W.2d at 473. As an Illinois Appellate Court reasoned, “the right of entry does not include the right to make a permanent appropriation or cause more than minimal or incidental damage to property[.]” Kane Cnty., 443 N.E.2d at 1154.
[¶66.] We agree with these holdings and conclude that the circuit courts partially erred in their takings analyses. Here, SCS seeks to conduct not just superficial measurements, but also invasive geotech and deep-dig surveys. These latter activities will involve the use of heavy equipment and substantial disturbance of the Landowners’ property. In the case of geotech surveys, the resulting holes will be filled with “drill cuttings or with a cement/bentonite grout mixture” resulting in a permanent physical occupation of a portion of Landowners’ property, which undeniably constitutes a taking. See Loretto, 458 U.S. at 427, 102 S. Ct. at 3171. Geotech and deep-dig surveys—and other similarly invasive activities—thus do not fall into the second Cedar Point exception and constitute takings under the federal constitution.
[¶67.] Importantly, however, because we have previously concluded that the definition of “survey” and “examination” in
The State Takings Clause
[¶68.] Turning to our state constitution,
[¶69.] As we have already discussed, limited superficial surveys prior to condemnation are a longstanding background restriction on property. In other words, owners take real property subject to a historical understanding that government may access the property for survey purposes incidental to the power of eminent domain. Thus, surveys conducted pursuant to
[¶70.] Landowners also argue that
Municipal and other corporations and individuals invested with the privilege of taking property for public use shall make just compensation for property taken, injured or destroyed, by the construction or enlargement of their works, highways or improvements, which compensation shall be paid or secured before such taking, injury or destruction. The Legislature is hereby prohibited from depriving any person of an appeal from any preliminary assessment of damages against such corporation or individuals made by viewers or otherwise; and the amount of such damages in all cases of appeal shall, on the demand of either part, be determined by a jury as in other civil cases.
This section is directly applicable because SCS claims to be a corporation vested with the power of eminent domain.
[¶71.] Read together, these constitutional provisions require condemnors to provide “just compensation” for any damage or injury to property that
[¶72.] In addition,
[¶73.] Nevertheless,
C. Whether the circuit courts erred as a matter of law by concluding SDCL 21-35-31 provided adequate procedural due process.
[¶74.] Landowners next argue that
D. Whether the circuit courts erred by finding SCS complied with the requirements of SDCL 21-35-31 .
[¶75.] Because summary judgment was not appropriate in this case and given the limited opportunity for discovery, we decline to address whether SCS complied with the requirements of
Conclusion
[¶76.] We hold that on this record the circuit courts erred in granting summary judgment because SCS has not demonstrated that it is a common carrier holding itself out to the general public as transporting a commodity for hire. The circuit courts also erred in denying Landowners’ motions to continue because further discovery was central to Landowners’ ability to resist summary judgment. Landowners
[¶77.] In order to provide clarity on remand, we also determine that
[¶78.] We reverse the grant of summary judgment and remand for further proceedings consistent with this opinion.
[¶79.] JENSEN, Chief Justice, and SALTER and MYREN, Justices, and WIPF PFEIFLE, Retired Circuit Court Judge, concur.
[¶80.] WIPF PFEIFLE, Retired Circuit Court Judge, sitting for DEVANEY, Justice, who deemed herself disqualified and did not participate.