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On August 14, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (the IRS), in consultation with the Administrator of the Environmental Protection Agency (the EPA), the Secretary of Energy, and the Secretary of the Interior, released Notice 2026-50 (the Updated Notice), which modifies and amplifies guidance under Section 45Q of the Internal Revenue Code of 1986, as amended (the Code), that was introduced in December under Notice 2026-1. The Updated Notice (i) expands the Subpart RR reporting safe harbor (the Reporting Safe Harbor) and related certification safe harbor (the Certification Safe Harbor) made available for the 2025 reporting year under Notice 2026-1 to qualified carbon oxide that is used as a tertiary injectant in certain qualified enhanced oil or natural gas recovery projects, (ii) extends the applicability date of those safe harbors beyond the 2025 reporting year, and (iii) provides a method for determining the amount of qualified carbon oxide subject to recapture (the Recapture Safe Harbor and, together with the Reporting Safe Harbor and the Certification Safe Harbor, the Updated Safe Harbors). The Updated Safe Harbors are available for reporting years for which the EPA does not launch the electronic Greenhouse Gas Reporting Tool (the e-GGRT) by March 31 of the calendar year immediately following the relevant reporting year.
Background
In December 2025, Treasury and the IRS released Notice 2026-1 in response to the EPA’s proposal to eliminate the Subpart RR reporting requirements under the Greenhouse Gas Reporting Program (the Subpart RR Requirements). Notice 2026-1 provided safe harbors under which a taxpayer will be considered to have satisfied the Subpart RR Requirements and the related certification requirements (the Certification Requirements) for purposes of determining eligibility for the 45Q Credit for qualified carbon oxide that is captured and disposed of in secure geological storage and not used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project during calendar year 2025. Notice 2026-1 did not address eligibility for qualified carbon oxide that is used as a tertiary injectant in a qualified enhanced oil or natural gas recovery project or otherwise beyond the 2025 reporting year.
Additional details regarding the Notice 2026-1 safe harbors can be found in our previous client alert. Except as discussed below, the requirements to satisfy the Subpart RR Requirements and Certification Requirements under the Updated Safe Harbors generally remain the same.
What’s New Under the Updated Notice
The Updated Notice expands the Notice 2026-1 safe harbors to (i) qualified carbon oxide that is stored (a) at a qualified enhanced oil or natural gas recovery project for which the taxpayer received an EPA-approved Monitoring, Reporting, and Verification Plan, and (b) in compliance with the applicable requirements of Subpart RR as in effect on December 31, 2025, and (ii) the determination of the amount of qualified carbon oxide securely stored, and the amount of qualified carbon oxide that has leaked into the atmosphere, for purposes of satisfying the applicable recapture reporting requirements (the Recapture Requirements).
A taxpayer will be considered to have satisfied the Recapture Requirements if the relevant annual report for reporting year 2025 or later, certified by a qualified independent engineer or geologist in the manner specified in the Updated Notice, includes the following determinations pursuant to the applicable requirements of Subpart RR as in effect on December 31, 2025: (i) the quantity of qualified carbon oxide that is securely stored for the calendar year and (ii) the quantity, if any, in metric tons of qualified carbon oxide that has leaked into the atmosphere in such reporting year.
The Updated Notice also extends the applicability date of the Notice 2026-1 safe harbors, which were only made available with respect to the 2025 reporting year. The Updated Notice makes the Updated Safe Harbors available for reporting years for which the EPA does not launch the e-GGRT by March 31 of the calendar year immediately following the relevant reporting year.
Request for Comments
Treasury and the IRS have requested comments on the appropriate standard to be used in place of Subpart RR to demonstrate compliance with Code Section 45Q for secure geological storage, particularly regarding whether the International Organization for Standardization’s standard 27914:2026—Carbon dioxide capture, transportation and storage—Geological storage (Ed. 2, 2026), could be used as an alternative, including the verification methods set forth therein. Comments are also requested on whether there are other processes or methodologies that could serve as suitable alternatives to Subpart RR in the event the EPA finalizes its regulations as proposed. Written comments should be submitted by October 30, 2026.
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