Iowa politics, ag heavyweight Bruce Rastetter sets sights on $4.5 billion carbon capture pipeline

Source: By Donnelle Eller, Des Moines Register • Posted: Thursday, March 31, 2022

Bruce Rastetter, an Iowa agricultural heavyweight and the force behind a proposed $4.5 billion carbon capture pipeline, says the massive project could spark a renaissance for the renewable fuel industry.

“We have an opportunity to do a world-class project” that “gives biofuels a future that’s desperately needed in a world demanding more sustainability,” Rastetter recently told investors in an event at a North Dakota ethanol plant.

Rastetter is betting that renewable fuels can be part of the climate change solution at a time when electric vehicles are eclipsing gas- and ethanol-burning engines as the future of transportation. The CEO of Summit Agricultural Group near Alden has a record of tackling ambitious challenges, building a farming empire in Iowa and Brazil.

At 65, Rastetter proposes construction of a 2,000-mile pipeline across Iowa and four other Midwestern states that he says will make it possible to slash carbon emissions from nearly three dozen ethanol plants, keeping competitive the renewable fuel industry that consumes half of Iowa’s annual corn crop.

Rastetter proposes capturing carbon dioxide emissions from the plants, liquefying the gas under pressure and transporting it through the pipeline to North Dakota, where it would be sequestered a mile underground.

It’s the largest of three such projects and the furthest along: Ames-based Summit Carbon Solutions has applied for a permit and amassed $600 million in capital from an array of investors.

But Rastetter’s plan also has gained a diverse coalition of critics, from property owners concerned about potential damage to their land to environmentalists who say it’s the wrong approach to a roblem that demands wind- and solar-based solutions. They staged a rally in the Iowa Capitol rotunda Tuesday, pushing the Legislature to take strong measures against Summit’s potential use of eminent domain to amass the needed land.

More:Iowans at Capitol push for stronger restrictions on eminent domain for carbon capture pipelines

Who is the man behind the hotly contested pipeline, which has sparked both excitement and trepidation? Rastetter, who declined to be interviewed for this story, is:

  • One of Iowa’s largest political donors, contributing $2.2 million to candidates over two dozen years, according to OpenSecrets, a nonprofit research group that tracks money in U.S. elections. Most of his donations have gone to Republicans, including former Gov. Terry Branstad, who’s now a Summit senior adviser.
  • An Iowa farm kid who’s made and lost fortunes raising hogs, producing ethanol and reviving Iowa’s largest beef processing plant. Summit Agricultural Group now manages $2 billion in assets, including 14,000 corn and soybean acres in Iowa, large cattle and hog operations, and massive Brazilian ethanol and farming businesses. Some investors lost out when he sold off his hog business amid mounting losses and took his ethanol company into bankruptcy. But since then, his personal fortune has soared.
  • No stranger to controversy. Most notably, Rastetter as president of the Iowa Board of Regents in 2011 tapped Iowa State University to help develop a plan to farm 800,000 acres in Tanzania — a proposal, later abandoned, that critics said would have displaced thousands of refugees who settled there. And in business, as an early adopter of large-scale hog confinement operations, he has been accused of failing to live up to promises about how they would be managed to limit impacts on neighbors, and about how local farmers would benefit.

Jesse Mazour, an Iowa Chapter of the Sierra Club organizer, said the Summit project’s likely use of eminent domain to force the sale of pipeline easements is similar to Rastetter’s alleged “land grab” in Africa.

“He’s taking land to enhance his own personal wealth,” Mazour said.

But Jack Friedman, former CEO of Innovative Ag Services in Monticello, sees Rastetter as kind and thoughtful, with an uncanny eye for opportunity. “He’s really a visionary,” said Friedman, who plans to invest in the pipeline.

Rastetter: Carbon capture pipeline a ‘reasonable solution’ in quest to cut emissions

Justin Kirchhoff, president of Summit Ag Investors, said Rastetter likes taking an idea and turning it into a business that packs a punch for investors and Iowa agriculture. The carbon capture pipeline fits the bill, he said.

“It’s a big lift. But we’ve always been involved in ag, and this could be transformational,” adding 20 to 30 years to ethanol’s life, Kirchhoff said.

At the North Dakota event, led by Gov. Doug Burgum, Rastetter said the pipeline could cut “the ethanol carbon score in half” and provide “a reasonable solution” as the nation transitions from combustible engines to electric vehicles in an effort to cut net greenhouse emissions in half by 2030.

Following Rastetter to the microphone, Oklahoma oil tycoon Harold Hamm announced his company, Continental Resources, would pour $250 million into Summit’s pipeline.

“They’re like us — real people who know what they’re doing,” said Hamm, who spent a day at Summit in Ames with his team, examining the proposal.

More:As gas prices rise, Ernst and Grassley pitch biofuels to fill gap created by Russian oil ban

Other corporate investors include Deere & Co., the giant Quad Cities-based farm and construction equipment manufacturer, and Tiger Infrastructure Partners, a $2.2 billion New York investment firm.

Altogether, Summit has attracted about 400 investors, Kirchhoff said, around 60% of them Iowans: farmers, ethanol plants and their shareholders, and business owners.

Kirchhoff said Summit expects to raise an additional $400 million in the coming months. Investors see the project as having a “positive, long-term impact in the state,” he said.

Landowner says she’s ‘followed by a dark Bruce Rastetter cloud’

For all its high-dollar support, the project has plenty of opponents. The Iowa Utilities Board has received hundreds of objections from farmers, landowners, and county and state leaders.

Most center on Summit’s plans under state law to wield eminent domain powers, which would enable it to force landowners to sell right-of-way access for the project. State legislators are considering a bill that would delay eminent domain’s use for a year.

Ed Greiman, a north central Iowa cattle producer, said he’s talking with Summit about an easement needed to cross his farm near Garner.

He said he doesn’t have a problem with Rastetter or the pipeline. But “the threat of eminent domain scares me,” especially since Summit or a successor firm would retain the easement for decades, Greiman said. “That the easement can be sold is concerning.”

In North Dakota, Rastetter told investors the pipeline is crossing land he owns. “I’m signing the same easement as everyone else,” he said.

Summit has said it hopes to get most of the easements voluntarily, and is close to having agreements for 170 miles of the 680 miles that would run through Iowa.

Greiman said he would be willing to sign an easement if the company reaches voluntary agreements with 80% or 90% of landowners.

“They’re going to make a lot of money from the federal tax credits, and they need our land to do it,” he said.

Indeed, the potential for Rastetter to profit from the pipeline is enormous, assuming it can be built for the planned amount.

Summit and two other carbon capture pipelines proposed in Iowa could earn $50 for each ton of sequestered carbon. With the potential to sequester up to 12 million tons annually, Summit could see up to $600 million annually over 12 years for a total of $7.2 billion. And Congress is considering increasing the amount and paying it directly to companies, instead of providing credits that must be used against a tax bill.

But some Iowa environmentalists say the carbon capture project is a false climate solution, and the federal tax money would be better invested building more wind, solar and other renewable energy sources.

More:Federal disaster declaration awaits evaluation of Iowa tornado damage, but help available for farmers

Kathy Carter and her husband, Lou, have no plans to give Summit easements to cross 40 acres of timber she owns near Rockford, in north central Iowa.

She said the couple recently decided to move 60 miles north to her hometown last year, after struggling for years with odor from Rastetter’s large cattle and hog operations near his rural Alden headquarters. “We couldn’t open a window because of the smell,” she said.

Carter said the land is the last remaining acreage of her family’s farm. “I feel I’m being followed by a dark Bruce Rastetter cloud,” Carter said.

Farmers on Dakota Access route fear Rastetter’s pipeline could be similar experience

In North Dakota, Rastetter said Summit is invested in the project “for the long term,” adding that he’s assured ethanol boards he’s talked with that “we weren’t going to just sign contracts and sell the company.”

Summit, he said, will “see it through the duration.”

That promise extends, Rastetter said, to farmers concerned about damage to underground tiles, an expensive investment growers make to move excess water from cropland.

“We understand farming,” he said. “We have respect for people’s property and land.”

More:Iowa Democrats in fifth bid to block construction of large livestock feeding operations

Farmers in the path of Dakota Access, an oil pipeline cutting across Iowa that’s expanding to move 1.1 million barrels daily, say they struggle to get damaged tiles repaired and fear a similar experience with Summit and other proposed carbon capture pipelines.

“We know how important tiles are,” Rastetter said. “We’ll long-term assure that we will fix tiles (for) the life of the pipeline. Not just three years” while the pipeline is being built, he said. “So farmers don’t have to worry about who they have to call.”

Others are concerned about the pipeline’s maintenance, especially when it comes to safety. The project requires a hazardous liquid pipeline permit because carbon dioxide in high concentrations can cause illness and asphyxiation.

Despite Rastetter’s assurances, Kirchhoff, when asked how long Summit would hold the pipeline, wouldn’t say. “Our plan is to build and ensure the company is an enduring asset,” he said in an email.

“Iowa has over 42,000 miles of pipelines with various ownership structures and sales over time, with the key being they get built correctly with a strong business model to support it,” he wrote.

Rastetter startups have had successes — and failures

Raised on a small farm in Buckeye, Rastetter graduated from the University of Iowa and then started law school at Drake University before dropping out to return home and sell feed.

Amid the 1980s farm crisis, he decided to diversify, and invested in the then-emerging practice of building large-scale hog confinement operations that have since transformed Iowa’s pork industry.

With money raised from investors, he founded Heartland Pork in 1994, raising up to 1.2 million pigs annually in Iowa, Illinois and Indiana and becoming the nation’s 12th-largest pork producer.

More:Some Iowa-tied companies leaving Russian market; others staying despite Ukraine invasion

Rastetter sold the company to Minnesota’s Christensen Farms in 2004 after the pork industry hit financial headwinds. Heartland suffered heavy losses in three of the last five years it operated.

He began Hawkeye Renewables in 2003, eventually building ethanol plants in Iowa Falls, Fairbank, Menlo and Shell Rock, making about 560 million gallons of fuel annually and becoming the state’s largest producer.

Six years later and with $1 billion in debt, Rastetter’s company filed for Chapter 11 bankruptcy in Delaware and handed ownership of the Iowa Falls and Fairbank plants to lenders. Today, South Dakota-based Poet, the country’s largest ethanol producer, owns all four plants after buying them from Flint Hills Resources, a Koch Industries company, last June.

In 2014, Rastetter and other investors that included wholesale food distributor Sysco invested nearly $50 million to reopen Iowa Premium, a beef packing plant in Tama that had been closed for roughly a decade. In 2019, National Beef Co., the nation’s fourth-largest meat processor, bought the operation.

Though there have been ownership changes, Kirchhoff said all the companies Rastetter started continue to operate — raising pigs, making ethanol and processing cattle. The ethanol plants “continue to buy millions of bushels of corn from Iowa farmers” and supply distillers grain, a high-protein ethanol byproduct that’s fed to Iowa livestock, he said.

In December, National Beef said it plans to spend $562 million rebuilding the Tama plant, doubling capacity to process 14,000 cattle each week. And the 850-employee workforce will grow to 1,250, the company told the Iowa Economic Development Authority.

Kirchhoff said Iowa Premium buys about 500,000 head of cattle annually from Iowa producers, a number that will climb. Greiman, who raises cattle and runs Upper Iowa Beef, a processing plant in the northeast Iowa town of Lime Springs, said the added capacity would be good for the industry.

Another developer also proposes to build a $450 million beef processing plant near Council Bluffs.

“We’re going to have to increase the number of head we have on feed,” said Greiman, who believes the added meatpacking capacity will help boost cattle prices.

Rastetter a heavyweight political donor — especially to Terry Branstad, Kim Reynolds

Rastetter’s ventures aren’t limited to business. He has earned a reputation as a GOP kingmaker, with the majority of his $2.2 million in political donations going to Republicans, the party and political action committees, according to OpenSecrets.

Rastetter has donated about $251,600 to the Iowa Republican Party since 2002, and has given Branstad, Iowa’s longest-serving governor, nearly $250,000 since 2009, data from OpenSecrets shows.

Gov. Kim Reynolds, Branstad’s former lieutenant governor, has received nearly $125,000 from Rastetter since 2015, the data shows. Reynolds became the state’s first female governor in 2017, when then-President Donald Trump named Branstad the U.S. ambassador to China.

Nebraska Gov. Pete Ricketts, who leads one of the states the pipeline would run through, has received $35,000 from Rastetter.

Iowa Democrats also have received a share of Rastetter cash, albeit smaller. For example, he gave $25,000 to Gov. Chet Culver, an ethanol champion who served from 2007 to 2011, and $15,250 to Culver’s predecessor as governor, Tom Vilsack, now the U.S. agriculture secretary. The Iowa Democratic Party has netted $34,000 from Rastetter, OpenSecrets data shows.

As governor, Branstad appointed two of the three members of the Iowa Utilities Board, which holds sway over pipeline permits. Pipeline critics, citing Branstad’s role as a senior policy adviser to Summit, have urged the two members he appointed to recuse themselves.

Rastetter has hired other politically connected Iowans for the Summit Carbon team, including attorney Jess Vilsack, Tom Vilsack’s son, and Jake Ketzner, who worked as Reynolds’ chief of staff and as a Branstad aide and is now Summit’s vice president of government and public affairs.

Another prominent Iowa Republican, Gary Kirke, a Des Moines real estate, insurance and casino entrepreneur, said he got to know Rastetter through their shared love of politics, University of Iowa athletics and the Iowa State Fair.

They were among the Iowans who traveled in 2011 to New Jersey in an unsuccessful effort to persuade then-Gov. Chris Christie, a Republican, to make a presidential run.

In 2015, as Christie made a bid for the 2016 GOP nomination, Rastetter grilled him and eight other Republican presidential candidates in Des Moines during a nearly seven-hour summit on ethanol, trade and immigration, among other agricultural issues.

“He’s an overall good guy,” said Kirke, who is weighing a seven-figure investment in the pipeline. “I’ve admired his success over the years.”

Despite opposition, some farmers see value in Rastetter’s plan

Despite farmers’ concerns about the pipeline’s possible effects on their land, Rastetter’s project has some strong supporters among them. One is Kelly Nieuwenhuis, a northwest Iowa farmer and Siouxland Energy board member.

Nieuwenhuis said the Sioux Center ethanol plant helps supply California’s low carbon fuel standard market. The state buys about 1.2 billion gallons of ethanol annually, most of it coming from the Midwest.

“It’s competitive, and there are a lot of ethanol plants that are lowering” their carbon emissions score, said Nieuwenhuis, who will sell an easement across his farm for the pipeline.

“The ones with the lowest scores get the sales,” he said. “It’s a race to net zero.”

Northeast Iowa farmer Tim Burrack said he had to travel to California and Louisiana to truly understand the nation’s drive to reduce carbon emissions.

He said he talked with a California Air Resources Board official about the state’s decades-long efforts to clear smog from its skies and now tackle climate change with its fuel standard. And he toured Louisiana’s Diamond Green Diesel plant, a multibillion-dollar investment that will make 1.2 billion gallons of renewable fuel from recycled animal fats, used cooking oil and inedible corn oil once its latest expansion is completed next year.

“Whether you believe in climate change or not, the world is on a path to decarbonize,” said the 70-year-old who grows corn and soybeans on 2,500 acres near Arlington.

Now a firm believer in Rastetter’s vision of the future, Burrack plans to invest in the pipeline, saying companies across the world are trying to reduce their carbon footprints. That will reach farmers, affecting everything from the carbon emissions generated by their tractors to the fertilizers they use.

“The world is changing, whether we like it or not,” Burrack said.

Rastetter, speaking to the Des Moines Register in 2015, said that embracing change in agriculture is vital and that Iowa has not always been quick to do so.

“One of the things that has always been a challenge for Iowa is being accepting of change. And also embracing success and encouraging people to try,” he said.

This article has been updated to correct the amount of money Summit Carbon Solutions expects to raise for the carbon capture pipeline. It’s raised $600 million and expect to raise $400 million more in the months ahead. 

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457

 

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