PIERRE, S.D. - A seven-member task force that was created by the South Dakota Legislature to study underground pipelines was told Thursday that the state cannot regulate the construction and operation of interstate pipelines.

State lawyer John Smith, who is lead counsel for the Public Utilities Commission, said the state could ask the federal government for that authority, but it's extremely unlikely to get it. States that have tried to regulate interstate pipelines have been reversed in courts around the nation, he said.

While the PUC had authority to decide the Trans-Canada Keystone Pipeline route, Smith said it doesn't have the power to regulate the design and construction of the crude oil pipeline through eastern South Dakota.

The pipeline originates in Canada and will slice through 10 South Dakota counties.

PUC Chairman Gary Hanson, who is chairing the task force, said the commission stretched its authority by adding dozens of conditions on TransCanada after a lengthy hearing in December. Had the company objected to some of the conditions, the state may not have prevailed, he said.

"We got what we could get legally," Hanson said.

The task force is studying the adequacy of state laws and regulations on pipelines used to transport water, natural gas, crude oil, ethanol, gasoline and diesel fuel.

It must make a report by Dec. 1 to Gov. Mike Rounds, who appointed the task force members.

Other task force members are Dennis Davis of the South Dakota Association of Rural Water Systems, Gordon Woods of South Dakota Intrastate Pipeline Company, Daniel Holli of Plains Pipeline LP, Pete Bullene of Glacial Lakes Energy, Troy Styer of NuStar Energy, and Mark Anderson of the state AFL-CIO.

Kim McIntosh of the state Environment Department said a 1988 state fund that was established to clean up pollution from petroleum products and agricultural chemicals contains $2.6 million. The fund is tapped to quickly respond to pollution, but those who cause spills or leaks are ultimately responsible for the cost of cleaning them up, she said.

The state fund also is used when polluters refuse to pay or are unable to pay, McIntosh said. Most of those who cause spills or leaks have shouldered the responsibility to pay for them, she added.

Hanson worried that the fund is too small to handle an expensive cleanup operation.

"It doesn't seem like much, especially with hundreds of miles of pipelines that are going to be coming through the state with crude oil," he said.

The task force directed its staffer to check on the amounts of money in similar funds in other states.

Smith said South Dakota has a pipeline safety program for natural gas and propane, but no such program for liquids such as gasoline that's shipped through intrastate pipelines. The task force will decide if it should recommend that liquids be included in the pipeline safety program.

While many people have voiced concerns about potential leaks or breaks in the TransCanada pipeline, Smith said crude oil is far less polluting than refined gasoline products such as gasoline and diesel fuel.

The Keystone Pipeline will run 2,148 miles from oil fields in Alberta, Canada to refineries in Illinois, Missouri and Oklahoma.