Home | News & Events | Not Just Roads – Infrastructure Act Offers Opportunities and Funding for Carbon Capture, Oil and Gas Infrastructure, Critical Minerals, and Mining Communities

Legal Alerts | November 22, 2021 Not Just Roads – Infrastructure Act Offers Opportunities and Funding for Carbon Capture, Oil and Gas Infrastructure, Critical Minerals, and Mining Communities

On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act, Public Law No: 117-58, a piece of bipartisan legislation known for months as the “Infrastructure Bill” (“Infrastructure Act”). The Infrastructure Act appropriates $1 trillion to improve and modernize the United States’ infrastructure. Among its many legislative priorities, the Infrastructure Act contains provisions relating to carbon capture, utilization, storage, and transportation infrastructure, conventional oil and gas development, critical minerals, and existing mining communities.

Carbon Capture, Utilization, Storage, and Transportation Infrastructure – Division D, Title III, Subtitle A

The Infrastructure Act includes numerous provisions related to carbon capture, utilization, storage, and transportation infrastructure; Division D, Title III, Subtitle A is entirely devoted to these issues.

In the Infrastructure Act, Congress makes several policy findings to support funding for carbon capture projects, including:

  • “carbon capture and storage technologies are necessary to reduce hard-to-abate emissions from the industrial sector,” § 40301(2);
  • “carbon removal and storage technologies, including direct air capture, must be deployed at large-scale in the coming decades to remove carbon dioxide directly from the atmosphere,” § 40301(3); and
  • “carbon dioxide transport infrastructure and permanent geological storage are proven and safe technologies with existing Federal and State regulatory frameworks,” § 40301(6).

Congress also suggests that, with respect to new carbon dioxide transportation infrastructure, each state should consider treating the infrastructure as pollution control devices under state law and establishing a waiver of ad valorem and property taxes for the infrastructure for at least 10 years. §40301(8).

Class VI Permitting

Section 40306(b) authorizes appropriations of $5,000,000 per year from 2022-2026 for permitting of Class VI wells for the injection of carbon dioxide for the purpose of geologic sequestration in accordance with the requirements of the Safe Drinking Water Act. This section also establishes State permitting program grants to grant funding to States to “defray the expenses of the State related to the establishment and operation of a State underground injection control program.” § 40306(c)(2). A total of $50,000,000 per year from 2022-2026 is appropriated for the State grant program.

Geologic Carbon Sequestration on the Outer Continental Shelf

Section 40307 amends the Outer Continental Shelf Lands Act (“OCSLA”), 43 U.S.C. § 1337(p)(1), to authorize the Secretary of the Interior to grant a lease, easement, or right-of-way on the outer Continental Shelf for activities that “provide for, support, or are directly related to the injection of a carbon dioxide stream into sub-seabed geologic formations for the purpose of long-term carbon sequestration.” Section 40307 also amends OCSLA, 43 U.S.C. § 1331, to incorporate definitions of “carbon dioxide stream” and “carbon sequestration.”

Elsewhere in the Infrastructure Act, Section 40343 amends OCSLA, 43 U.S.C. 1337(p)(1)(C), to authorize the Secretary of the Interior to grant a lease, easement, or right-of-way on the Outer Continental Shelf for activities that produce or support “storage” of energy from sources other than oil and gas.

Section 40307(d) directs the Secretary of the Interior to develop regulations to implement the amendments to the OCSLA related to carbon sequestration.

Carbon Utilization Program

Section 40302 amends Section 969A of the Energy Policy Act of 2005 (“EPAct”), 42 U.S.C. § 16298a, and directs the Secretary of Energy to develop a program to provide grants to states, local governments, and public utilities and agencies to procure and use commercial or industrial products that (i) use or are derived from anthropogenic carbon oxides; and (ii) demonstrate significant net reductions in lifecycle greenhouse gas emissions compared to incumbent technologies, processes, and products.

Carbon Storage Validation and Testing

Section 40305 amends EPAct, 42 U.S.C. § 16293, to direct the Secretary of Energy to establish a large-scale carbon storage commercialization program. Under this program, the Secretary would provide funding for the development of new or expanded commercial large-scale carbon sequestration projects and associated carbon dioxide transport infrastructure, including funding for the feasibility, site characterization, permitting, and construction stages of project development.

The Secretary must establish an application process for projects at any stage of development to receive funding. In selecting projects for funding, the Secretary must give priority to projects with substantial carbon dioxide storage capacity or projects that will store carbon dioxide from multiple carbon capture facilities. Section 40305 appropriates $2.5 billion for this program.

Carbon Dioxide Transportation Infrastructure Finance and Innovation Program

Section 40304 amends EPAct, 42 U.S.C. § 16181 et seq., to establish the Carbon Dioxide Transportation Infrastructure Finance and Innovation program or “CIFIA program” under EPAct. § 40304(a). The Infrastructure Act directs the Secretary of Energy to establish a transportation infrastructure finance and innovation program to provide grants or federal credit instruments to private entities for pipelines, shipping, rail, or other infrastructure to transport carbon dioxide captured from anthropogenic sources or air.

Projects are eligible for financing under the CIFIA program if: (1) the entity planning a project submits a letter of interest prior to submission of its application; and (2) the project meets the statute’s criteria. § 40304 (§ 999B). The project proponent must be creditworthy and have a reasonable prospect of repaying any Federal credit instrument. § 40304 (§ 999B(b)(1)). A project is eligible to seek funding under this program if the eligible project costs are reasonably anticipated to equal or exceed $100 million. § 40304 (§ 999B(b)(4)). In addition, to be eligible under the CIFIA program, an applicant must show a “reasonable expectation that the contracting process for construction of the project can commence by not later than 90 days after the date on which the Federal credit instrument or grant is obligated for the project under the CIFIA program.” § 40304 (§ 999B(b)(8)). Further, financing is available only for projects that exclusively use iron, steel, and manufactured goods produced in the United States. § 40304 (§ 999B(e)).

The Secretary is directed to give priority in selecting projects to receive credit assistance to projects that: (A) are large-capacity, common carrier infrastructure, (B) have demonstrated demand for use of the infrastructure by associated projects that capture carbon dioxide; (C) enable geographic diversity in associated projects that capture carbon dioxide; and (D) are sited within, or are adjacent to, existing pipeline or other linear infrastructure corridors to minimize environmental disturbance and other siting concerns. § 40304 (§ 999B(c)(2)).

Federal credit assistance under the CIFIA program is only available for projects that received a decision or categorical exclusion under the National Environmental Policy Act (NEPA). § 40304 (§ 999B(d)(2)). Provision of credit assistance under the CIFIA program also does not relieve an applicant of any state and local legal requirements. § 40304 (§ 999F).

Carbon Removal

Section 40308 amends EPAct, 42 U.S.C. § 16298d, to direct the Secretary of Energy to establish a program to fund direct air capture projects that will contribute to the development of four “regional direct air capture hubs.” Such hubs will be networks of direct air capture projects, potential carbon dioxide utilization off-takers, connective carbon dioxide transport infrastructure, subsurface resources, and sequestration infrastructure located within a region, which have capacity to capture and sequester, utilize, or sequester and utilize at least 1 million metric tons of carbon dioxide from the atmosphere annually.

The Secretary will select projects in regions with existing or recently retired “carbon-intensive fuel production or industrial capacity.” Two regional direct air capture hubs must be located in “economically distressed communities in the regions of the United States with high levels of coal, oil, or natural gas resources.” Priority will be given to projects that are likely to create opportunities for skilled training and long-term employment to the greatest number of residents of the region.

Within 180 days of enactment of the Infrastructure Act, the Secretary of Energy must solicit applications for funding of eligible direct air capture projects and must make selections based on these applications within three years. The Secretary may make grants, or enter into cooperative agreements or contracts, with selected projects to accelerate commercialization of, and demonstrate the removal, processing, transport, sequestration, and utilization of, carbon dioxide captured from the atmosphere.

Carbon Capture Technology Program

Section 40303 amends Section 962 of EPAct, 42 U.S.C. § 16292, to expand a carbon capture technology program to include a “front-end engineering and design program for carbon dioxide transport infrastructure necessary to enable deployment of carbon capture, utilization, and storage technologies.” Congress allocated $100,000,000 for 2022-2026 to fund this program.

Conventional Oil and Gas Development

The Infrastructure Act establishes a categorical exclusion under NEPA for gathering lines on federal and Indian lands. The Infrastructure Act also prioritizes the plugging and abandonment of orphaned oil and gas wells on both federal and nonfederal lands. Further, it calls for a study of the impacts on President Biden’s decision to revoke the permit for the Keystone XL Pipeline.

Statutory Categorical Exclusion for Gathering Lines on Federal and Indian Lands – Division A, Title I, Subtitle C

Section 11318 creates a categorical exclusion under NEPA for certain gathering lines on federal or Indian land. This categorical exclusion is aimed at reducing flaring of natural gas from oil and gas wells on federal and Indian lands resulting from lack of infrastructure.

Section 11318 provides that issuance of a sundry notice or right-of-way for a gathering line located on federal or Indian land and services oil or gas wells may be considered “to be an action that is categorically excluded . . . for the purposes of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.).” § 11318(b)(1). Notably, Section 11318 defines “federal land” as any land owned by the United States but that is not part of the National Park System, the National Wildlife Refuge System, the National Wilderness Preservation System, or a wilderness study area within the National Forest System or Indian land. § 11318(1).

A gathering line must meet certain criteria to be eligible for the categorical exclusion. First, the gathering line and associated field compression or pumping unit must be located within federal or Indian land for which an approved land us plan or environmental document prepared pursuant to NEPA “analyzed transportation of oil, natural gas, or produced water from 1 or more oil or gas wells” in that land as a reasonably foreseeable activity. § 11318(b)(1)(A). Second, the gathering line must be located near or within an existing corridor for a right-of-way or existing disturbed area. § 11318(b)(1)(B). Finally, the gathering line must reduce the amount of methane flared, vented, or unintentionally emitted from the land or reduce the vehicle traffic that would otherwise service the land. § 11318(b)(1)(C).

Orphaned and Idled Wells on Federal, Tribal, State, and Private Lands – Division D, Title VI

The Infrastructure Act amends the current program for orphaned well site plugging, remediation, and restoration in Section 349 of EPAct, 42 U.S.C. § 15907. Compared to EPAct, Section 40601 expands this program’s responsibilities and addresses environmental and public health concerns related to orphaned wells. Congress views this program as part of methane reduction efforts.

Section 40601 defines an “orphaned well” on federal or Tribal land as a well (1) “that is not used for an authorized purpose, such as production, injection, or monitoring” and (2) for which an operator cannot be located, the operator is unable to plug the well and to remediate and reclaim the well site, or that is within the National Petroleum Reserve—Alaska. On state or private lands, an “orphaned well” has the meaning defined by the particular state or whatever term the state uses to describe a well eligible for plugging, remediation, and reclamation.

Section 40601 calls for the establishment of a federal program to address orphaned wells on lands managed by the Department of the Interior and Forest Service. Section 40601 directs the Secretary of the Interior to establish a program to plug, remediate and reclaim orphaned wells on federal lands within 60 days of the Infrastructure Act’s enactment date. The program must:

  • Institute a method for identifying orphaned wells and associated pipelines, facilities, and infrastructure on federal land, § 40601(b)(2)(A)(i);
  • Rank those wells for priority based on public health and safety, potential environmental harm, and other subsurface impacts, § 40601(b)(2)(A)(ii);
  • Distribute funding for plugging, remediating, and reclaiming the orphaned wells, associated facilities, and surrounding environment, § 40601(b)(2)(B);
  • Attempt to identify persons responsible for the orphaned well and obtain reimbursement for the associated remediation and reclamation, § 40601(b)(2)(D);
  • Measure, estimate, and track the emissions of methane and contamination of groundwater or surface water associated with the orphaned wells, § 40601(b)(2)(E); and
  • Address the disproportionate burden of adverse health or environmental effects of orphaned wells on communities of color, low-income communities, and Tribal and indigenous communities, § 40601 (b)(2)(F).

Similarly, Section 40601 requires the Secretary of Interior to establish a program to allocate grants to Indian Tribes for plugging, remediating, and reclaiming orphaned wells on Tribal land. § 40601(d)(1). Alternatively, a Tribe may request that the Secretary administer and carry out plugging, remediation, and reclamation activities in lieu of a grant. § 40601(d)(1).

With respect to orphaned wells on state and private lands, Section 40601 directs the Secretary of Interior to offer states grants as large as $5 million to fund plugging, remediation, and reclamation of orphaned wells. § 40601(c)(1) and (c)(3). These grants may be used to track methane emissions and contaminated ground or surface water associated with the orphaned wells, remediate and restore the surrounding habitat, address any adverse health or environmental effects of orphaned wells, and publish information related to the state’s use of the funds on a public website. § 40601(c)(2)(A). States have one year from the date of receipt to use such funds. § 40601(c)(3)(C).

Importantly, Section 40601 does not absolve the owner or operator of an orphaned well of any potential liability. Sec. 40601(g)(3).

Finally, Section 40601 directs the Secretary of Interior to submit a report annually to select Committees at the Senate and the House of Representatives describing the inventory of orphaned wells and wells at risk of being orphaned on Federal, Tribal, and State land, the methane and other gasses emitted from orphaned wells, and the emissions reduced as a result of plugging and reclaiming the wells. § 40601(f). The report shall include the number of jobs created and saved due to this Section and the acreage of land restored. § 40601(f).

Section 40601 also directs the Secretary of the Interior to periodically review all idled wells on federal land and to reduce the inventory of idled wells on federal land. § 40601(b)(3)(B). Notably, Section 40601 defines “idled well” as a well “that has been nonoperational for not fewer than four years” and “for which there is no anticipated beneficial future use.” With this definition, Congress escalated the timeframe in which a well is considered “idled.” In EPAct, Congress had defined an idled well as one that has been nonoperational for at least seven years. See 42 U.S.C. § 15907(e)(1) (2020).

Keystone XL Pipeline – Division D, Title IV, Subtitle C

Section 40434 addresses the impacts of President Biden’s decision in Executive Order No. 13,990 (Jan. 20, 2021) to revoke the Keystone XL Pipeline permit. Section 40434 directs the Secretary of Energy to conduct a study to review the total number of jobs lost, and the impact on consumer energy costs projected to result, as a direct or indirect result of Executive Order No. 13990 . This study shall address the projected impacts over a ten-year period, beginning on January 20, 2021 (the date the Executive Order was issued). § 40434. The Secretary of Energy is required to submit the results of this study to Congress no later than 90 days after the date of enactment of the Infrastructure Act. § 40434.

Critical Minerals and Mining Community Resilience

The Infrastructure Act includes provisions related to critical minerals and the mining sector in general, as well as the rehabilitation of abandoned mine lands and the use of former mining sites to promote renewable energy development. The Infrastructure Act adds new provisions to various statutes that govern energy and mining, as well as public lands and public lands agencies, reflecting the United States’ growing understanding of the importance and intersectionality of issues related to economic opportunity for historic mining communities, the energy transition and securing critical mineral supply chains, which broadly implicate national security.

The bulk of the provisions of the Infrastructure Act concerning minerals or mining reside in Division D – Energy, with the most notable provisions found in in Title II (Supply Chains for Clean Energy Technologies), Title III (Fuels and Technology Infrastructure Investments), and Title VII (Abandoned Mine Land Reclamation). Corresponding funding appropriations are in Division J – Appropriations.

Critical Minerals and Supply Chains

The Infrastructure Act contains a number of provisions aimed at increasing domestic production of rare earth elements and critical minerals to promote domestic supply chains and to alleviate the economic and national security concerns associated with the United States’ dependence on foreign suppliers.

On the technical side, Section 40201 allocates $320 million to the U.S. Geological Survey (USGS) for the Earth Mapping Resources Initiative (Earth MRI), a program designed to support above- and underground mapping of mineral resources across the United States, including the identification of abandoned mine land and mine waste, which is thought to be an important potential source of critical minerals. The results of Earth MRI will be made available to the public.

Section 40205 allocates an additional $167 million to USGS to establish an Energy and Minerals Research Facility in partnership with an academic institution. Funding of $140 million has been allocated to support the design, construction, and build-out of a Rare Earth Demonstration Facility, which will endeavor to demonstrate the commercial feasibility of extracting rare earth elements from acid mine drainage, mine waste, and “other deleterious material,” which could theoretically include coal ash.

Additionally, Sections 40207 and 40208 contain provisions designed to support the development of a domestic battery supply chain by allocating: $3 billion to fund grants for advanced battery material processing demonstration and production projects; $3 billion to fund grants for advanced battery manufacturing and recycling projects; $125 million to fund federal, state, and retail seller grants to support recycling and critical mineral recovery from smaller rechargeable (less than 5 kg) and non-rechargeable (less than 2 kg) batteries; and $200 million to fund grants related to recycling and finding “second use” applications for electric vehicle batteries. Section 40210 also creates grant programs within the National Science Foundation to support basic research on domestic critical minerals mining and recycling, with an “end to end” life cycle approach, examining the entire production and supply chain for critical minerals.

On the policy side, Section 40210(c) establishes a Critical Minerals Subcommittee of the National Science and Technology Council to advise the federal government on appropriate policies and procedures, and identify opportunities, relating to the exploration for, and production and recycling of, critical minerals, emphasizing solutions that can be implemented domestically or in cooperation with allies and trading partners. The Critical Minerals Subcommittee will also examine workforce issues associated with the critical minerals supply chain.

Other provisions of the Infrastructure Act aim to address obstacles to the development of U.S. critical mineral supply chains by improving the federal permitting process for mining projects on federal public lands. Earlier this year, large scale mining was added as an eligible sector for the FAST-41 permit streamlining program, but given the administration’s policy positions toward major mining projects to date, it is questionable whether any mining projects will actually be granted access to the FAST-41 program. In addition, because most critical minerals are co-located with, or byproducts of, more major mineral commodities, FAST-41 is perhaps too blunt of an instrument to try to prioritize critical minerals projects specifically.

Section 40206 embodies many of the same principles as FAST-41, mandating the Bureau of Land Management (BLM) and the U.S. Forest Service (USFS) to conduct a thorough self-assessment of their minerals permitting procedures; engage in more timely collaboration with government, tribal, and private stakeholders, with concurrent, rather than sequential, consultation processes; develop best practices for communication and dissemination of information to the public; and develop firmer timelines and quantifiable performance metrics to assess adherence to each agency’s performance goals. Within one year of the Infrastructure Act’s passing, the Secretary of the Interior and the Secretary of Agriculture must report to Congress on what additional measures would increase the timeliness of critical minerals project permitting, including, possibly, the institution of cost recovery paid by permit applicants as a means to offset the costs of additional training for personnel involved in the permitting process.

Promoting Renewable Energy Development and Resilient Mining Communities

Other sections of the Infrastructure Act are geared toward revitalizing mining communities and finding new uses for historic mine sites. Section 40701 allocates funding of nearly $11.3 billion for states and Indian tribes to reclaim abandoned coal mines through the Abandoned Mine Reclamation Fund. Priority will be given to programs that employ current and former employees of the coal industry. As a concession to the coal industry, the Abandoned Mine Reclamation Fee payable by miners on tons of coal produced has been reduced by 20%, while the authorization to continue collecting the fee has been extended to 2034. § 40702. Section 40704 establishes a new $3 billion fund to support reclamation of abandoned hardrock mining sites on federal, state, tribal, local, and private land. Funds awarded under the hardrock program cannot be used to satisfy obligations under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”).

Adding to efforts to address physical conditions at mine sites, and the impacts on surrounding communities, Section 40342 provides for the establishment of up to five “clean energy” demonstration projects on current and former coal and hardrock mining sites, two of which must be solar projects. “Clean energy” is defined broadly to include the following technologies: solar; micro-grids; geothermal; direct air capture; fossil-fueled electricity generation with carbon capture, utilization, and sequestration; energy storage, including pumped storage hydropower and compressed air storage; and advanced nuclear technologies. The primary factors to be considered in evaluating project candidates: are job creation at the project site (particularly in economically distressed areas and with respect to dislocated workers who were previously employed in manufacturing, coal power plants, or coal mining) and throughout the supply chain, reducing carbon intensity and greenhouse gas emissions, technological innovation and commercial deployment potential, reducing the cost of generated or stored energy, and reducing the project time from permitting to completion. $500 million has been allocated to support the demonstration projects.

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