WASHINGTON, Sept 13 (Reuters) - The U.S. Environmental

Protection Agency has found that Archer-Daniels-Midland ( ADM )

violated federal safe drinking water rules and its underground

injection permit with a leak at the first major U.S. underground

carbon sequestration facility in Illinois, the agribusiness

company confirmed on Friday.

The Illinois Industrial Carbon Capture and Sequestration

(CCS) Project is meant to demonstrate the ability of carbon

dioxide to be stored safely underground.

The Biden administration's Inflation Reduction Act expanded

tax credits for CCS projects from $50 a tonne to $85, generating

more interest in these projects.

In an Aug. 14 letter to ADM, the EPA said a July inspection

of the site found that carbon dioxide injected into the

subsurface flowed into "unauthorized zones," and that the

company failed to follow an emergency response and remediation

plan and or to monitor the well in accordance with its permit.

Leaks from fractures in the rock layers or from injection

could contaminate both the soil and groundwater in the area

surrounding the storage site.

ADM responded to the EPA's notice on Aug. 22 and said that

it had detected some corrosion in one of its two deep monitoring

wells and subsequently plugged it and reported it to the agency,

according to a copy of the letter seen by Reuters.

"At no time was there any impact to the surface or

groundwater sources or any threat to public health," ADM

spokesperson Jackie Anderson said in a statement.

"We continue to be confident in the safety, security and

effectiveness of CCS as a greenhouse gas mitigation technology

and its potential to bring new industries and economic

opportunities to the entire state of Illinois."

The trade group for the carbon capture industry said the

incident showed that the monitoring system for CO2 injections

was working.

"We look forward to learning more about best practices that

ADM and EPA identify from this incident," said Carbon Capture

Coalition executive director Jessie Stolark.

Food & Water Watch Policy Director Jim Walsh said the

underscores concerns by local communities about the safety of

the practice.