The Infrastructure Investments and Jobs Act (the “Act”), which was passed into law on November 15, 2021, included key amendments to the Outer Continental Shelf Lands Act (“OCSLA”) that pave the way for carbon sequestration in offshore federal waters.

Prior to the Act’s passage, OCSLA (as amended by the Energy Policy Act of 2005) authorized the United States Department of Interior to issue leases in federal waters for certain types of renewable energy projects. However, these provisions did not directly address leasing for carbon sequestration. The Act amended OCSLA to expressly authorize Interior to issue lease, easements, and rights-of-way 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.” The Act defines “carbon sequestration” as “the act of storing carbon dioxide that has been removed from the atmosphere or captured through physical, chemical, or biological processes that can prevent the carbon dioxide from reaching the atmosphere.”

These amendments come months after the Council on Environmental Quality issued a Report to Congress that addressed steps to advance the orderly development of carbon capture. The Report noted the need to clarify the process for offshore storage leasing and project implementation.

The Act requires that Interior promulgate regulations to carry out the amendments within one year of passage of the Act. Interior will likely engage with industry as it attempts to issue regulations that address the various technical and environmental issues associated with leasing and permitting carbon sequestration projects. Companies interested in such projects should closely monitor this rulemaking process.