SECTION 3. REQUEST FOR

COMMENTS

The Treasury Department and the IRS request comments on issues arising from the BBA amendments to § 45Q that should be addressed in regulations and other guidance. In addition to general comments, the Treasury Department and the IRS request comments that address the following specific issues:

.01 IRS Form 8933, Carbon Oxide Sequestration Credit, defines “Secure Geological Storage” as requiring approval by the EPA of a Monitoring, Reporting and Verification Plan (MRV Plan) submitted

May 20, 2019 1188 Bulletin No. 2019–21

by the operator of the storage facility or tertiary injection project. Thus, meeting the Form 8933 conditions would be achieved by either receiving a Class II UIC permit plus an approved MRV Plan, or receiving a Class VI UIC permit plus an approved MRV Plan.

UIC permits are required for all injection well operators. Class VI UIC operators must also get an EPA-approved MRV plan as required under the Greenhouse Gas Reporting Program (GHGRP), set forth in 40 CFR Part 98. However, IRS Form 8933 adds regulatory requirements for Class II UIC permit holders (enhanced oil recovery operations) who are not currently required to get an EPA-approved MRV plan. As noted below, IRS is seeking comment on whether there are alternatives to this approach.

IRS Form 8933 also clarifies that the annual amount of carbon oxide claimed for the credit must be reconciled with amounts reported to the EPA under its GHGRP, subpart RR. See the EPA website at www.epa.gov and Notice 2009-83, 2009-44 I.R.B. 588, for more information on secure geological storage.

• Are there technical criteria different from or in addition to those provided in the EPA’s GHGRP that should be used to demonstrate secure geological storage? Are there existing guidelines, standards, or regulations that could be used to demonstrate secure geological storage such as those developed by the International Organization for Standardization (ISO)?

• Should EPA’s GHGRP rules continue to be the reporting requirements for purposes of § 45Q, and should an approved MRV Plan from the EPA be received before any § 45Q credit can be claimed? Are there any viable alternatives to the subpart RR reporting requirements, such as third party, Department of Energy, or State certification? . 02 Pursuant to § 45Q(f)(4), taxpayers must recapture the benefit of any credit allowable under § 45Q(a) with respect to any qualified carbon oxide that ceases to be captured, disposed of, or used as a tertiary injectant in a manner consistent with the requirements of § 45Q. What should the standard be for triggering and measuring recapture? How should the recapture of the benefit of the credits relate to the

requirements of § 45Q and the issues contemplated in this request for comments, in particular the rules for secure geological storage involving the disposal or use of carbon oxide as a tertiary injectant?

.03 Is guidance needed to further clarify terms and definitions appearing in

§ 45Q, such as carbon capture equipment, qualified carbon oxide, direct air capture facility, qualified facility, tertiary injectant utilization, or lifecycle greenhouse gas emissions?

.04 Is guidance required in defining what types of utilization qualify as “fixation of qualified carbon oxide through photosynthesis or chemosysnthesis, such as through the growing of algae or bacteria” as described in § 45Q(f)(5)(A)?

.05 Is guidance required to establish the boundaries for lifecycle emissions for carbon oxide utilization to determine the amount of qualified carbon oxide that is “displaced from being emitted into the atmosphere” as described in in § 45Q(f)(5) (B)?

.06 Under § 45Q(f)(3)(A), the credit is attributable to the person that captures and physically or contractually ensures the disposal, utilization, or use of the qualified carbon oxide as a tertiary injectant. The Treasury Department and the IRS seek comments on the types of contractual arrangements that investors anticipate with parties who capture or dispose or utilize qualified CO. What are common terms of contracts ensuring the disposal, utilization, or use of qualified CO as a tertiary injectant? What should result if such terms are determined to be insufficient?

.07 What factors should be considered in determining the time and manner of the election under § 45Q(f)(3)(B) to transfer the § 45Q credit to a person that disposes of the qualified carbon oxide, utilizes the qualified carbon oxide, or uses the qualified carbon oxide as a tertiary injectant? If such an election is made, what issues should be considered regarding the transfer of the § 45Q credit?

.08 What constitutes the beginning of construction for purposes of § 45Q(d)?

.09 Is guidance needed concerning structures in which project developers and participating investors would be respected as partners in a partnership generating a

§ 45Q credit? Further, is guidance needed on allocating the credit and recap

ture of the credit among the partners in a partnership?

.10 What issues may arise when determining the amount of metric tons of qualified carbon oxide utilized by the taxpayer under § 45Q(a)(2)(B)(ii) or

§ 45Q(a)(4)(B)(ii), based upon an analysis of lifecycle greenhouse emissions and subject to such requirements as the Secretary, in consultation with the Secretary of Energy and Administrator of the EPA, determines appropriate, were (i) captured and permanently isolated from the atmosphere, or (ii) displaced from being emitted into the atmosphere, through use of a process described in § 45Q(f)(5)(A)?