Company: REX
Filing Date: 2025-06-04
Form Type: 10-Q
Source: 0000930413-25-001941
Chunk: 99

Company: REX AMERICAN RESOURCES Corp
Filing Date: 2025-06-04
Form: 10-Q
Item: Part I, Item 2
Chunk 99
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 capture, dehydrate, and compress carbon dioxide
from the One Earth ethanol plant to a state suitable for sequestration. Testing has not yet been completed and we cannot begin
construction of the pipeline or sequestration well until further permits and approvals are received.

We have secured land easements from all
necessary landowners to allow the construction of a pipeline on their land to the first two injection wells. We also have landowner
subsurface easements for the first injection well with the capacity to allow for carbon sequestration for our One Earth plant
for 15 years. The Illinois General Assembly passed the Safety and Aid for the Environment in Carbon Capture and Sequestration
Act (Senate Bill 1289), which was signed by the Governor in July 2024. The new legislation imposes additional safety, environmental
and other requirements on obtaining permits and approvals for carbon capture and sequestration facilities in Illinois, including
CO2 pipelines. Further, the new legislation imposes a moratorium on the issuance of new certificates of authority for the construction
of CO2  pipelines until the earlier of the date federal CO2  pipeline safety standards are finalized by the federal
PHMSA or, subject to certain other conditions, July 1, 2026.

Although we have made meaningful progress
and significant investments in the carbon sequestration project at One Earth, we continue to work with the various government
agencies involved to obtain all required permits and approvals, with no assurance of the ultimate success or timing of the project.
Also see the discussion under “Trends and Uncertainties” of certain recently proposed legislation that, if enacted,
could impact our carbon sequestration project.

We also intend to concurrently expand the
One Earth ethanol plant. We received a construction permit from the EPA to increase production from 150 million gallons of ethanol
per year to 175 million gallons of ethanol per year. Once we achieve that level of production, we intend to apply for another
permit to increase production to 200 million gallons per year.

We continue to work to identify ways to
reduce our CI score at the One Earth plant with the intention of maximizing tax credits available under the IRA. The IRA created
a new Clean Fuel Production Credit, available for calendar years 2025 – 2027, which established a credit of approximately
$0.02 per ethanol gallon per CI point reduction below a 50 CI score threshold to incentivize further increases in plant efficiencies
within the industry. The U.S. Department of the