CO2 Regulatory Certainty Act

II 116TH CONGRESS 1ST SESSION S. 2263 To amend the Internal Revenue Code of 1986 to enhance the requirements for secure geological storage of carbon oxide for purposes of the carbon oxide sequestration credit, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 25, 2019 Mr. HOEVEN (for himself, Mr. DAINES, Mrs. HYDE-SMITH, Mr. WICKER, and Mr. CRAMER) introduced the following bill; which was read twice and re- ferred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to enhance the requirements for secure geological storage of carbon oxide for purposes of the carbon oxide sequestration cred- it, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘CO2 Regulatory Cer- 4 tainty Act’’. 5 VerDate Sep 11 2014 03:58 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2263.IS S2263 kjohnson on DSK79L0C42 with BILLS 2 •S 2263 IS SEC. 2. SECURE GEOLOGICAL STORAGE OF CARBON OXIDE. 1 (a) IN GENERAL.—Paragraph (2) of section 45Q(f) 2 of the Internal Revenue Code of 1986 is amended to read 3 as follows: 4 ‘‘(2) SECURE GEOLOGICAL STORAGE.— 5 ‘‘(A) IN GENERAL.—The Secretary, in con- 6 sultation with the Administrator of the Envi- 7 ronmental Protection Agency, the Secretary of 8 Energy, and the Secretary of the Interior, shall 9 establish regulations for determining adequate 10 security measures for the geological storage of 11 carbon oxide under subsection (a) such that the 12 carbon oxide does not escape into the atmos- 13 phere. Such term shall include storage at deep 14 saline formations, oil and gas reservoirs (includ- 15 ing storage associated with qualified enhanced 16 oil or natural gas recovery projects), and 17 unminable coal seams under such conditions as 18 the Secretary may determine under such regu- 19 lations. 20 ‘‘(B) REQUIREMENTS.—The regulations 21 established pursuant to subparagraph (A) shall 22 provide that— 23 ‘‘(i) for purposes of paragraph (1)(B) 24 or (3)(B) of subsection (a), carbon oxide 25 shall be considered disposed of in secure 26 VerDate Sep 11 2014 03:58 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2263.IS S2263 kjohnson on DSK79L0C42 with BILLS 3 •S 2263 IS geological storage if such carbon oxide is 1 stored in compliance with rules promul- 2 gated by the Environmental Protection 3 Agency under subpart RR of part 98 of 4 title 40, Code of Federal Regulations (as 5 in effect on the date of the enactment of 6 this paragraph), under the Clean Air Act 7 (42 U.S.C. 7401 et seq.) and rules under 8 the Safe Drinking Water Act (42 U.S.C. 9 300f et seq.) which are applicable to car- 10 bon oxide disposed of in secure geological 11 storage and not used as a tertiary 12 injectant in a qualified enhanced oil or nat- 13 ural gas recovery project, and 14 ‘‘(ii) for purposes of paragraph 15 (2)(B)(i) or (4)(B)(i) of subsection (a), 16 carbon oxide shall be considered disposed 17 of in secure geological storage at a quali- 18 fied enhanced oil or natural gas recovery 19 project if— 20 ‘‘(I) such carbon oxide is injected 21 in compliance with rules promulgated 22 by the Environmental Protection 23 Agency which are applicable to carbon 24 oxide used as a tertiary injectant in a 25 VerDate Sep 11 2014 03:58 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2263.IS S2263 kjohnson on DSK79L0C42 with BILLS 4 •S 2263 IS qualified enhanced oil or natural gas 1 recovery project under subpart C of 2 part 146 of title 40, Code of Federal 3 Regulations (as in effect on the date 4 of the enactment of this paragraph), 5 under the Safe Drinking Water Act, 6 to the extent such rules are applicable 7 to Class II wells, 8 ‘‘(II) the injection of such carbon 9 oxide at such project is reported in 10 compliance with subpart UU of part 11 98 of title 40, Code of Federal Regu- 12 lations (as in effect on the date of the 13 enactment of this paragraph), under 14 the Clean Air Act, 15 ‘‘(III) the supply of such carbon 16 oxide to such project is reported in 17 compliance with subpart PP of part 18 98 of title 40, Code of Federal Regu- 19 lations (as in effect on the date of the 20 enactment of this paragraph), under 21 the Clean Air Act, 22 ‘‘(IV) the atmospheric emission 23 of such carbon oxide from such 24 project is reported in compliance with 25 VerDate Sep 11 2014 03:58 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2263.IS S2263 kjohnson on DSK79L0C42 with BILLS 5 •S 2263 IS subparts C and W of part 98 of title 1 40, Code of Federal Regulations (as 2 in effect on the date of the enactment 3 of this paragraph), under the Clean 4 Air Act, to the extent such subparts 5 are applicable to such project, and 6 ‘‘(V) the demonstration and doc- 7 umentation of the containment, moni- 8 toring and quantification of such car- 9 bon oxide conforms to ISO 10 27916:2019 (entitled ‘Carbon dioxide 11 capture, transportation and geological 12 storage - Carbon dioxide storage using 13 enhanced oil recovery (CO2-EOR)’) or 14 the equivalent standard of the Amer- 15 ican National Standards Institute.’’. 16 (b) QUALIFIED ENHANCED OIL OR NATURAL GAS 17 RECOVERY PROJECT.—Paragraph (2) of section 45Q(e) 18 of the Internal Revenue Code of 1986 is amended— 19 (1) by striking ‘‘by substituting’’ and inserting 20 ‘‘determined— 21 ‘‘(A) by substituting—’’, 22 (2) by striking the period and inserting ‘‘, 23 and’’, and 24 (3) by inserting at the end the following: 25 VerDate Sep 11 2014 03:58 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2263.IS S2263 kjohnson on DSK79L0C42 with BILLS 6 •S 2263 IS ‘‘(B) without regard to subparagraph 1 (A)(iii) thereof.’’. 2 Æ VerDate Sep 11 2014 03:58 Jul 27, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S2263.IS S2263 kjohnson on DSK79L0C42 with BILLS