PIERRE, S.D. -- Gov. Bill Janklow said Energy Transportation Systems Inc. has decided to cancel its coal slurry pipeline project, a move that will cost South Dakota $1.4 billion over the next 50 years.
Janklow said he received a telephone call from ETSI officials Wednesday.
'I received notice from the ETSI board of directors that at their meeting yesterday they made a decision to cancel the ETSI contract,' he said. 'They have terminated the entire project.'
Janklow added, 'In their notification to me they said that the delays that have been brought about by individuals, a small group of people and companies that have been dedicated to defeat the project, have dragged it out to the point where it is just not worth going forward any longer and wasting money.'
The governor blamed a suit filed by Nebraska, Iowa and Missouri for failure of the project.
'I think it's a very sad, sad thing these downstream states and some others have all gotten together to make sure South Dakota did not have the chance for water development,' he said.
Janklow said the development would affect South Dakota's relationship with downstream states. 'I think it affects our ability to work with some of these people in the future,' he said.
ETSI contracted with South Dakota in 1982 to purchase 50,000 acre feet of water annually from the Oahe Reservoir on the Missouri River. It initially planned to use 20,000 acre feet of water to ship pulverized coal from Wyoming's Powder River Basin to southern generating plants via the pipeline.
The water for the slurry line was to be carried in an aqueduct from the reservoir to Wyoming, with parched western South Dakota landowners able to tap in along the way. In recent months, ETSI also said it planned to extend the pipeline to southeadstern Montana.
South Dakota had been paid $5 million under the contract, but after a series of legal challenges ETSI gave South Dakota notice of intent to cancel last February. Its next water payment to the state would have been due Aug. 8.
Nebraska, Missouri and Iowa filed suit against the federal government challenging approval of the water permit. And U.S. District Judge Warren Urbom ruled in May the wrong federal agency granted the permit.
'I had a feeeling it was coming,' Jankow said. 'It was hurdle after hurdle after hurdle.'
But Janklow said instead of just cancelling the water deal ETSI decided to give up on the entire project.
'It's incredibly unfortunate,' he said. 'We have now lost the opportunity to get $9 million a year more for the next 50 years.'
Jankow said the breakdown of the project was typical of what was happening in America.
'One of the reasons things get more expensive in America is we build barriers to make things more expensive,' he said.
