Atlantic Wind Lease Sale 2 (ATLW2) Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore Rhode Island and Massachusetts-Final Sale Notice, 33897-33908 [2013-13197]

Agencies

• DEPARTMENT OF THE INTERIOR
• Bureau of Ocean Energy Management

[Federal Register Volume 78, Number 108 (Wednesday, June 5, 2013)]
[Notices]
[Pages 33897-33908]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-13197]



[[Page 33897]]

Vol. 78

Wednesday,

No. 108

June 5, 2013

Part II





Department of the Interior





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Bureau of Ocean Energy Management





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Atlantic Wind Lease Sale 2 (ATLW2) Commercial Leasing for Wind Power on 
the Outer Continental Shelf Offshore Rhode Island and Massachusetts--
Final Sale Notice and Commercial Wind Lease Issuance and Site 
Assessment Activities on the Atlantic Outer Continental Shelf (OCS) 
Offshore Rhode Island and Massachusetts; Notices

Federal Register / Vol. 78 , No. 108 / Wednesday, June 5, 2013 / 
Notices

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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

[Docket No. BOEM-2013-0014; MMAA104000]


Atlantic Wind Lease Sale 2 (ATLW2) Commercial Leasing for Wind 
Power on the Outer Continental Shelf Offshore Rhode Island and 
Massachusetts--Final Sale Notice

AGENCY: Bureau of Ocean Energy Management (BOEM), Interior.

ACTION: Final Sale Notice for Commercial Leasing for Wind Power on the 
Outer Continental Shelf Offshore Rhode Island and Massachusetts.

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SUMMARY: This document is the Final Sale Notice (FSN) for the sale of 
two commercial wind energy leases on the Outer Continental Shelf (OCS) 
offshore Rhode Island and Massachusetts, pursuant to BOEM's regulations 
at 30 CFR 585.216. BOEM is offering Lease OCS-A 0486 (North Lease Area) 
and Lease OCS-A 0487 (South Lease Area) for sale simultaneously using a 
multiple factor auction format. The two lease areas together comprise 
the Rhode Island and Massachusetts Wind Energy Area (WEA) announced on 
February 24, 2012, (see ``Areas Offered for Leasing'' below for a 
description of the WEA and lease areas). The two lease areas are 
identical to those announced in the Proposed Sale Notice (PSN) for 
Commercial Leasing for Wind Power on the Outer Continental Shelf (OCS) 
Offshore Rhode Island and Massachusetts, which was published on 
December 3, 2012, in the Federal Register with a 60-day public comment 
period (77 FR 71612). This FSN contains information pertaining to the 
areas available for leasing, lease provisions and conditions, auction 
details, the lease form, criteria for evaluating competing bids, award 
procedures, appeal procedures, and lease execution. The issuance of the 
leases resulting from this lease sale would not constitute an approval 
of project-specific plans to develop offshore wind energy. Such plans, 
expected to be submitted by successful lessees, will be subject to 
subsequent environmental and public review prior to a decision to 
proceed with development.

DATES: BOEM will hold a mock auction for the eligible bidders on July 
24, 2013. The nonmonetary phase of the auction will begin on July 29, 
2013. The monetary phase of the auction will be held online and will 
begin at 10:30 a.m. on July 31, 2013. Additional details are provided 
in the section entitled, ``Deadlines and Milestones for Bidders.''

FOR FURTHER INFORMATION CONTACT: Jessica Bradley, BOEM Office of 
Renewable Energy Programs, 381 Elden Street, HM 1328, Herndon, Virginia 
20170, (703) 787-1320 or jessica.bradley@boem.gov.

    Authority: This FSN is published pursuant to subsection 8(p) of 
the OCS Lands Act (43 U.S.C. 1337(p)) (``the Act''), as amended by 
section 388 of the Energy Policy Act of 2005 (EPAct), and the 
implementing regulations at 30 CFR Part 585, including 30 CFR 
585.211 and 585.216.

    Background: The two lease areas offered in this FSN are the same 
areas as BOEM announced in the PSN on December 3, 2012 (77 FR 71612). 
BOEM received 82 comments in response to the PSN, which are available 
on BOEM's Web site at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. BOEM has also posted a document 
containing responses to comments submitted during the PSN comment 
period and listing other changes that BOEM has implemented for this 
lease sale since publication of the PSN.
    On July 3, 2012, BOEM published a Notice of Availability (NOA) (77 
FR 39508) of an Environmental Assessment (EA) for commercial wind lease 
issuance and site assessment activities on the Atlantic OCS Offshore 
Rhode Island and Massachusetts with a 30-day public comment period. 
BOEM received 32 comments, which are available at https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. BOEM has 
also concluded consultations under the Endangered Species Act (ESA), 
the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA), 
Section 106 of the National Historic Preservation Act (NHPA), and the 
Coastal Zone Management Act (CZMA).
    Based on the public comments in response to the EA, the conclusion 
of required consultations, and public outreach and information 
meetings, BOEM decided to make certain revisions to the EA originally 
published in July 2012. Concurrent with this notice, BOEM is publishing 
a NOA for the revised EA and Finding of No Significant Impact (FONSI). 
The Commercial Wind Lease Issuance and Site Assessment Activities on 
the Atlantic Outer Continental Shelf (OCS) Offshore Rhode Island and 
Massachusetts Revised Environmental Assessment (EA) can be found at 
https://www.boem.gov/Renewable-Energy-Program/Smart-from-the-Start/Index.aspx.
    The two lease areas offered in Atlantic Wind Lease Sale 2 (ATLW2) 
comprise the Rhode Island and Massachusetts WEA described as the 
proposed action and preferred alternative in the EA. Additional 
environmental reviews will be conducted upon receipt of the lessees' 
proposed project-specific plans, such as a Site Assessment Plan (SAP) 
or Construction and Operations Plan (COP).
    List of Eligible Bidders: BOEM has determined that the following 
companies are legally, technically and financially qualified pursuant 
to 30 CFR 585.106 and 107, and are therefore eligible to participate in 
this lease sale as bidders.

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                                                                Company
                         Company name                             No.
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Deepwater Wind New England, LLC..............................      15012
EDF Renewable Development, Inc...............................      15027
Energy Management, Inc.......................................      15015
Fishermen's Energy, LLC......................................      15005
IBERDROLA RENEWABLES, Inc....................................      15019
Neptune Wind LLC.............................................      15011
Sea Breeze Energy LLC........................................      15044
US Mainstream Renewable Power (Offshore) Inc.................      15029
US Wind Inc..................................................      15023
------------------------------------------------------------------------

    Deadlines and Milestones for Bidders: This section describes the 
major deadlines and milestones in the auction process from publication 
of this FSN to execution of leases pursuant to this sale.
     Bidders Financial Form (BFF): Each eligible bidder must 
submit a BFF to BOEM by June 12, 2013. Please note that the BFF has 
been updated since publication of the PSN. The updated BFF is available 
at https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. Once this information has been processed by BOEM, bidders 
may log into pay.gov and leave bid deposits.
     Bid Deposits: Each bidder must submit an adequate bid 
deposit by July 17, 2013.
     Non-Monetary Package: Each bidder must submit a non-
monetary package, if it is applying for a credit, by July 17, 2013.
     Mock Auction: BOEM will hold a Mock Auction on July 24, 
2013. The Mock Auction is not an ``in-person'' event. BOEM will contact 
each eligible bidder and provide instructions for participation. Only 
bidders eligible to participate in this auction will be permitted to 
participate in the Mock Auction.
     Panel Convenes to Evaluate Non-Monetary Packages: On July 
29, 2013, the panel described in the ``Auction

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Procedures'' section will convene to consider non-monetary packages. 
The panel will send determinations of eligibility to BOEM, who will 
inform each bidder by email of the panel's determination with respect 
to them.
     Monetary Auction: On July 31, 2013, BOEM, through its 
contractor, will hold the monetary stage of the auction. The auction 
will start at 10:30 a.m. The auction will proceed electronically 
according to a schedule to be distributed by the BOEM Auction Manager 
at the time of the auction. BOEM anticipates that the auction will 
continue on consecutive business days, as necessary, until the auction 
ends according to the procedures described in the Auction Format 
section of this notice.
     Announce Provisional Winners: BOEM will announce the 
provisional winners of the lease sale after the auction ends.
     Reconvene the Panel: The panel will reconvene to verify 
auction results.
     Department of Justice (DOJ) Review: BOEM will afford the 
Department of Justice (DOJ) 30 days to conduct an antitrust review of 
the auction, pursuant to 43 U.S.C. 1337(c), which reads, in relevant 
part:
    Antitrust review of lease sales. Following each notice of a 
proposed lease sale and before the acceptance of bids and the issuance 
of leases based on such bids, the Secretary [of the Interior] shall 
allow the Attorney General, in consultation with the Federal Trade 
Commission, thirty days to review the results of such lease sale, 
except that the Attorney General, after consultation with the Federal 
Trade Commission, may agree to a shorter review period.
     Delivery of Leases: BOEM will send three lease copies to 
each winner, with instructions on how to accept and execute the leases. 
The first 6-months of the first year's rent payment is due 45 days 
after the winner receives the lease for execution.
     Return the Leases: The auction winners will have ten days 
from receiving the lease copies in which to post financial assurance, 
pay any outstanding balance of their bonus bids, and sign and return 
the three copies.
     Refund Non-Winners: BOEM will return the bid deposits of 
any bidders that did not win leases in the lease sale with a written 
explanation of why the bidder did not win.
     Execution of Leases: Once BOEM has received the signed 
lease copies and verified that all required materials have been 
received, BOEM will make a final determination regarding its execution 
of the leases, and execute if appropriate.
    Areas Offered For Leasing: The North and South Lease Areas offshore 
Rhode Island and Massachusetts comprise 13 whole OCS blocks and 26 sub-
blocks encompassing 164,750 acres. The North Lease Area consists of 
97,498 acres, and the South Lease Area consists of 67,252 acres. If 
there are adequate bids, two leases will be issued pursuant to this 
lease sale. A description of the lease areas and lease activities can 
be found in Addendum ``A'' of each lease, which BOEM has made available 
with this notice on its Web site at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.
    BOEM commissioned the Department of Energy's National Renewable 
Energy Laboratory (NREL) to evaluate BOEM's delineation of the lease 
areas that was published in the PSN. The final technical evaluation 
report is available on BOEM's Web site at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. One 
conclusion of the report is that the North and South Lease Areas have 
significantly dissimilar attributes and that ``together these differing 
attributes tend to indicate that the North Lease area is a more 
competitive and cost effective area for near term commercial 
development.'' Still, the report concludes, ``the current RI/MA WEA 
delineation is logical in terms of providing two distinct developable 
leasing areas . . .''
    Ascending bidding over the course of the auction will ensure that 
the relative values of the lease areas will determine the amount 
bidders will pay. BOEM has determined that the differences highlighted 
in the NREL report justify adjusting the minimum bids for the two lease 
areas. Accordingly, the minimum bid for the South Lease Area will be $1 
per acre, or $67,252. The minimum bid for the North Lease Area will be 
$2 per acre, or $194,996.
    Map of the Area Offered for Leasing: A map of the North and South 
Lease Areas and a table of the boundary coordinates in X, Y (eastings, 
northings) UTM Zone 18, NAD83 Datum and geographic X, Y (longitude, 
latitude), NAD83 Datum can be found at the following URL: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.
    A large scale map of these areas, showing boundaries of the area 
with numbered blocks, is available from BOEM at the following address: 
Bureau of Ocean Energy Management, Office of Renewable Energy Programs, 
381 Elden Street, HM 1328, Herndon, Virginia 20170, Phone: (703) 787-
1320, Fax: (703) 787-1708.
    Withdrawal of Blocks: BOEM reserves the right to withdraw areas 
from this lease sale prior to its execution of a lease.
    Lease Terms and Conditions: BOEM has included specific terms, 
conditions, and stipulations for OCS commercial wind leases in the 
Rhode Island and Massachusetts WEA within Addendum ``C'' of each lease. 
BOEM reserves the right to apply additional terms and conditions to 
activities conducted on the lease incident to any future approval or 
approval with modifications of a SAP and/or COP. Each lease, including 
Addendum ``C'', is available on BOEM's Web site at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. Each lease consists of an instrument with 18 sections and 
the following six attachments:
    Addendum ``A'' (Description of Leased Area and Lease Activities);
    Addendum ``B'' (Lease Term and Financial Schedule);
    Addendum ``C'' (Lease Specific Terms, Conditions, and 
Stipulations);
    Addendum ``D'' (Project Easement)
    Addendum ``E'' (Rent Schedule); and
    Appendix A to Addendum C (Incident Report: Protected Species Injury 
or Mortality).
    Addenda ``A'', ``B'', and ``C'' provide detailed descriptions of 
lease terms and conditions.
    Addenda ``D'' and ``E'' will be completed at the time of COP 
approval.
    Plans: Pursuant to 30 CFR 585.601, the leaseholder must submit a 
SAP within 6 months of lease issuance. If the leaseholder intends to 
continue its commercial lease with an operations term, the leaseholder 
must submit a COP at least 6 months before the end of the site 
assessment term.
    Pursuant to 30 CFR 585.629, a leaseholder may include in its COP a 
request to develop its commercial lease in phases. If a leaseholder 
requests and BOEM approves phased development, this approval will not 
affect the length of the preliminary, site assessment, or commercial 
terms offered under the lease. The COP must describe in sufficient 
detail the activities proposed for all phases of commercial 
development, including a schedule detailing the proposed timelines for 
phased development. Further, the COP must include the results of all 
site characterization surveys, as described in 30 CFR 585.626(a), 
necessary to support each phase of commercial development. The 
requirements of the SAP remain the same as they would under a non-
phased development scenario, and must meet the requirements set forth 
in the regulatory provisions in 30 CFR 585.605-585.613 for the full 
commercial lease area.

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    Financial Terms and Conditions: This section provides an overview 
of the basic annual payments required of the Lessee, which will be 
fully described in each lease.
    Rent: The first year's rent payment of $3 per acre for the entire 
lease area will be separated into two 6-month payments. The first 6-
month payment is due within 45 calendar days of the date the Lessee 
receives the lease for execution. The second 6-month payment is due 6 
months after the Effective Date of the lease. Thereafter, annual rent 
payments are due on the anniversary of the Effective Date of the lease, 
i.e., the Lease Anniversary. Once the first commercial operations under 
the lease begin, rent will be charged on the remaining part of the 
lease not authorized for Commercial Operations, i.e., not generating 
electricity. However, instead of geographically dividing the lease area 
into acreage that is ``generating'' and acreage that is ``non-
generating,'' the fraction of the lease accruing rent is based on the 
fraction of the total nameplate capacity of the project that is not yet 
in operation. The fraction is the ratio of the actual nameplate 
capacity (as defined below) not yet authorized for commercial 
operations at the time payment is due divided by the maximum nameplate 
capacity authorized in the Lessee's most recent approved COP in any 
year of commercial operations on the lease. This fraction is then 
multiplied by the amount of rent that would be due for the Lessee's 
entire leased area at the rental rate of $3 per acre to obtain the 
annual rent due for a given year.
    For example, for a lease the size of 164,750 acres (the size of the 
entire WEA), the amount of rent payment will be $494,250 per year if 
the entire leased area is not authorized for commercial operations. If 
the Lessee has 500 MW authorized under commercial operations and its 
most recent approved COP specifies a maximum project size of 1000 MW on 
the entire leased area in any year of commercial operations, the rent 
payment will be $247,125.
    The Lessee also must pay rent for any project easement associated 
with the lease commencing on the date that BOEM approves the COP (or 
modification) that describes the project easement. Annual rent for a 
project easement, 200-feet wide and centered on the transmission cable, 
is $70.00 per statute mile. For any additional acreage required, the 
Lessee must also pay the greater of $5.00 per acre per year or $450.00 
per year.
    Operating Fee: The annual operating fee reflects a 2% operating fee 
rate applied to a proxy for the wholesale market value of electricity 
production. The initial payment is prorated to reflect the period 
between the start of commercial operations and the Lease Anniversary, 
and is due within 45 days of the start of commercial operations; 
thereafter, subsequent annual operating fee payments are due on or 
before each Lease Anniversary. The annual operating fee payment is 
calculated by multiplying the operating fee rate by the imputed 
wholesale market value of the projected annual electric power 
production. For the purposes of this calculation, the imputed market 
value is the product of the project's nameplate capacity, the total 
number of hours in the year (8,760), a capacity utilization factor, and 
the annual average price of electricity derived from a historical 
regional wholesale power price index.
    Operating Fee Rate: The operating fee rate is set at 0.02 (i.e., 
2%) during the entire life of commercial operations.
    Nameplate Capacity: Nameplate capacity is the maximum rated 
electric output, expressed in megawatts (MW), that the turbines of the 
wind farm facility under commercial operations can produce at their 
rated wind speed as designated by the turbine's manufacturer. The 
nameplate capacity at the start of each year of commercial operations 
on the lease will be specified in the COP. For example, if a Lessee has 
20 turbines under commercial operations rated by the design 
manufacturer at 5 MW of output each, the nameplate capacity of the wind 
farm facility at the rated wind speed of the turbines would be 100 MW.
    Capacity Factor: Capacity factor represents the share of 
anticipated generation of the wind farm facility that is delivered to 
the interconnection grid (i.e., where the Lessee's facility 
interconnects with the electric grid) relative to the wind farm 
facility's generation at continuous full power operation at nameplate 
capacity, expressed as a decimal between zero and one. The capacity 
factor for the year in which the Commercial Operation Date occurs and 
for the first six full years of commercial operations on the lease is 
set to 0.4 (i.e., 40%) to allow for one year of installation and 
testing followed by five years at full availability. At the end of the 
sixth year, the capacity factor will be adjusted to reflect the 
performance over the previous five years based upon the actual metered 
electricity generation at the delivery point to the electrical grid. 
Similar adjustments to the capacity factor will be made once every five 
years thereafter. The maximum change in the capacity factor from one 
period to the next will be limited to plus or minus 10 percent of the 
previous period's value.
    Wholesale Power Price Index: The wholesale power price, expressed 
in dollars per MW hour, is determined at the time each annual operating 
fee payment is due, based on the weighted average of the inflation-
adjusted peak and off-peak spot price indices for the Northeast--Mass 
Hub power market for the most recent year of data available as reported 
by the Federal Energy Regulatory Commission (FERC) as part of its 
annual State of the Markets Report with specific reference to the 
summary entitled, ``Electric Market Overview: Regional Spot Prices.'' 
The wholesale power price is adjusted for inflation from the year 
associated with the published spot price indices to the year in which 
the operating fee is to be due based on the Lease Anniversary using 
annual implicit price deflators as reported by the U.S. Department of 
Commerce Bureau of Economic Analysis (BEA).
    Financial Assurance: Within ten days after receiving the lease 
copies, the provisional winner must provide an initial lease-specific 
bond or other approved means of meeting the Lessor's initial financial 
assurance requirements in the amount of $100,000. BOEM will base the 
amount of all SAP, COP, and decommissioning financial assurance 
requirements on estimates of cost to meet all accrued lease 
obligations. The amount of supplemental and decommissioning financial 
assurance requirements will be determined on a case-by-case basis.
    The financial terms can be found in Addendum ``B'' of the proposed 
lease, which BOEM has made available with this notice on its Web site 
at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.
    Bid Deposit and Minimum Bid: A bid deposit is an advance cash 
deposit submitted to BOEM in order to participate in the auction. No 
later than July 17, 2013, each bidder must have submitted a bid deposit 
of $450,000 per unit of desired initial eligibility. Each lease is 
worth one unit of bid eligibility in the auction. The required bid 
deposit for any participant intending to bid on both leases in the 
first round of the auction will be $900,000. Any participant intending 
to bid on only one of the leases during the auction must submit a bid 
deposit of $450,000. Any bidder that fails to submit the bid deposit by 
the deadline described herein may be prevented by BOEM from 
participating in the auction. Bid deposits will be accepted online via 
pay.gov.

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    Approximately 97,498 acres are offered for sale as Lease OCS-A 0486 
(North Lease Area), and approximately 67,252 acres are offered as Lease 
OCS-A 0487 (South Lease Area) in this auction. The minimum bid is $1 
per acre for the South Lease Area and $2 per acre for the North Lease 
Area. Therefore, the minimum acceptable bid, i.e., the opening asking 
price for the South Lease Area, will be $67,252, and for the North 
Lease Area, will be $194,996.
    Each bidder must complete the Bidder's Financial Form that BOEM has 
made available with this notice on its Web site at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. This form must be submitted by June 12, 2013, to BOEM, 
pursuant to the instructions posted with the form. Please note that the 
BFF has been updated since publication of the PSN. This form requests 
that each bidder designate an email address, which the bidder should 
use to create an account in pay.gov. After establishing the pay.gov 
account, bidders may use the Bid Deposit Form on the pay.gov Web site 
to leave a deposit.
    Following the auction, bid deposits will be applied against any 
bonus bids or other obligations owed to BOEM. If the bid deposit 
exceeds the bidder's total financial obligation, the balance of the bid 
deposit will be refunded to the bidder. BOEM will refund the bid 
deposit to unsuccessful bidders.

Auction Procedures

Summary

    For the sale of Lease OCS-A 0486 (``North'') and Lease OCS-A0487 
(``South''), BOEM will use a multiple-factor auction format, with a 
multiple-factor bidding system. Under this system, BOEM may consider a 
combination of monetary and nonmonetary factors, or ``variables,'' in 
determining the outcome of the auction. BOEM has appointed a panel of 
three BOEM employees for the purposes of reviewing the non-monetary 
packages and verifying the results of the lease sale. BOEM reserves the 
right to change the composition of this panel prior to the date of the 
lease sale. The panel will meet to consider non-monetary packages on 
July 29, 2013. The panel will determine whether any bidder has earned a 
non-monetary credit to be used during the auction, and, if one or more 
bidders have earned such a credit, the percentage the credit will be 
worth. The monetary auction will take place on July 31, 2013. The 
auction will balance consideration of two variables--(1) a cash bid, 
and (2) a non-monetary credit, i.e., if a bidder holds a Power Purchase 
Agreement (PPA), or a Joint Development Agreement (JDA). In sum, these 
two variables comprise the ``As-Bid'' auction price, as reflected 
either in a bidder meeting BOEM's asking price or the bidder offering 
its own Intra-Round Bid price subject to certain conditions, as 
described more fully below. A multiple-factor auction, wherein both 
monetary and non-monetary bid variables are considered, is provided for 
under BOEM's regulations at 30 CFR 585.220(a)(4) and 585.221(a)(6).

Overview of the Multiple-Factor Bidding Format Proposed for this Sale

    Under a multiple-factor bidding format, as set forth at 30 CFR 
585.220(a)(4), BOEM may consider many factors as part of a bid. The 
regulation states that one bid proposal per bidder will be accepted, 
but does not further specify the procedures to be followed in the 
multiple-factor format. This multiple-factor format is intended to 
allow BOEM flexibility in administering the auction and in balancing 
the variables presented. The regulation leaves to BOEM the 
determination of how to administer the multiple-factor auction format 
in order to ensure receipt of a fair return under the Act, 43 U.S.C. 
1337(p)(2)(A). BOEM has chosen to do this through an auction format 
that considers a non-monetary factor along with ascending bidding over 
multiple rounds, sharing certain useful information with bidders at the 
end of each auction round, such as the number of live bids associated 
with each Lease Area (LA), and ensuring that a bidder's live bid 
submitted in the final round of the auction will win the LAs included 
in that bid. This auction format enhances competition and reduces 
bidder uncertainty more effectively than other auction types that BOEM 
considered.
    BOEM's regulations at 30 CFR 585.220(a)(4) provides for a multi-
round auction in which each bidder may submit only one proposal per LA 
or for a set of LAs in each round of the auction. This formulation 
presents an administratively efficient auction process. It also takes 
advantage of the flexibility built into the regulations by enabling 
BOEM to benefit from both the consideration of more than one bidding 
factor and the price discovery involved in successive rounds of 
bidding.
    The auction will be conducted in a series of rounds. At the start 
of each round, BOEM will state an asking price for the North LA and an 
asking price for the South LA. The asking price for a bid on both LAs 
is the sum of the asking prices for the North LA and the South LA. Each 
bidder will indicate whether it is willing to meet the asking price for 
one or both LAs. A bid submitted at the full asking price for one or 
both LAs in a particular round is referred to as a ``live bid.'' A 
bidder must submit a live bid for at least one of the LAs in each round 
to participate in the next round of the auction. As long as there is at 
least one LA that is included in two or more live bids, the auction 
continues, and the next round is held.
    A bidder's As-Bid price must meet the asking price in order for it 
to be considered a live bid. A bidder may meet the asking price by 
submitting a monetary bid equal to the asking price, or, if it has 
earned a credit, by submitting a multiple-factor bid--that is, a live 
bid that consists of a monetary element and a non-monetary element, the 
sum of which equals the asking price. In particular, the multiple-
factor bid would consist of the sum of a cash portion and any credit 
portion which the bidder has earned.
    An uncontested bid is a live bid that does not overlap with other 
live bids in that round. For example, a bid for both the North and the 
South LAs is considered contested if any LA included in that bid is 
included in another bid--a bid cannot be ``partially uncontested.'' An 
uncontested bid represents the only apparent interest in that bid's 
LA(s) at the asking price for that round. If a bidder submits an 
uncontested bid consisting of one LA, and the auction continues for 
another round, BOEM automatically carries that same live bid forward as 
a live bid into the next round, and BOEM's asking price for the LA 
contained in the uncontested bid would remain unchanged from the 
previous round. In other words, BOEM assumes that the bidder is willing 
to pay that same price for the LA in that bid in the next round as it 
revealed it was willing to pay for it in the current round. If the 
price on the LA in that bid rises later in the auction because another 
bidder places a live bid on that LA, BOEM will stop automatically 
carrying forward the previously uncontested bid. Once the asking price 
goes up, the bidder that placed the previously carried-forward bid is 
free to bid on either lease area at the new asking prices.
    Following each round in which either LA is contained in more than 
one live bid, BOEM will raise the asking price for that LA by an 
increment determined by BOEM. The auction concludes when neither the 
North nor the South LA is included in more than one live bid. The 
series of rounds and the rising asking prices set by BOEM will 
facilitate

[[Page 33902]]

consideration of the first variable--the cash portion of the bid.
    The second variable--a credit of up to 25% of a monetary bid for 
holding a PPA or JDA--will be applied throughout the auction rounds as 
a form of imputed payment against the asking price for the highest 
priced LA in a bidder's multiple-factor bid. This credit serves to 
supplement the amount of a cash bid proposal made by a particular 
bidder in each round. A bidder holding a qualified PPA will receive a 
credit of up to 25%. A bidder holding a qualified JDA will receive a 
credit of 20%. The total percentage credit for each bidder is limited 
to 25% on a single LA in the auction to address concerns about creating 
too large an advantage to certain bidders in the auction, as discussed 
in BOEM's Auction Format Information Request (76 FR 76174). BOEM has 
considered the overall impact on competition and the relative strength 
of a PPA and JDA in enabling a lessee to install a viable project on 
the OCS in setting the credits. In the case of a bidder holding a 
credit and bidding on more than one LA, the credit will be applied only 
on the LA with the highest asking price. More details on the non-
monetary factors are found in the ``Credit Factors'' section below.
    By way of example, assume a bidder holds a qualified PPA for the 
sale of 400 MW, and its live bid consists of both the North and South 
LAs in the current round: the South LA having an asking price of 
$1,000,000 and the North LA having an asking price of $2,000,000. 
Suppose the bidder receives a 25% credit, which applies only against 
the North LA, the higher priced LA in that round, at $2,000,000. A live 
bid for these two LAs would require the bidder to submit an As-Bid 
price of $3,000,000 which would consist of a monetary payment of 
$1,500,000 for North, (25% less than the asking price), and $1,000,000 
for South. Hence, the monetary portion of the live bid would be 
$2,500,000, and the credit portion would be $500,000. Each bid in each 
round will thus be considered based on both factors--the amount of the 
cash bid proposed and the amount of a potential credit for holding a 
qualified PPA or JDA.
    BOEM's regulations at 30 CFR 585.222(d) require the use of a panel 
to weigh the variables and to determine the winner(s) of the auction. 
The regulations state that BOEM ``will determine the winning bid for 
proposals submitted under the multiple-factor bidding format on the 
basis of selection by the panel . . .'' 30 CFR 585.224(h). The panel 
will evaluate non-monetary packages consisting of any purported PPA or 
qualified JDA to determine whether it is acceptable to BOEM, and 
therefore whether it will qualify for a credit for its holder. It is 
possible that the panel will determine that no bidder qualifies for a 
non-monetary credit during the auction, in which case the auction will 
otherwise proceed as described in the FSN. The panel will determine the 
winning bids for each LA in accordance with the procedures described 
below.

Details of the Auction Process

Bidding--Live Bids

    Each bidder is allowed to submit a live bid for one LA (North or 
South), or both LAs based on its ``eligibility'' at the opening of each 
round. A bidder's eligibility is either two, one, or zero LAs, and it 
corresponds to the maximum number of LAs that a bidder may include in a 
live bid during a single round of the auction. A bidder's initial 
eligibility is determined based on the amount of the bid deposit 
submitted by the bidder prior to the auction. To be eligible to offer a 
bid on one LA at the start of the auction, a bidder must submit a bid 
deposit of $450,000. To be eligible to offer a bid on both North and 
South in the first round of the auction, the bidder must submit a bid 
deposit of $900,000. A bidder's bid deposit will be used by BOEM as a 
down payment on any monetary obligations incurred by the bidder should 
it be awarded a lease.
    As the auction proceeds, a bidder's eligibility is determined by 
the number of LAs included in its live bid submitted in the round prior 
to the current round. That is, if a bidder submitted a live bid on one 
LA in the previous round, that bidder may submit a bid that includes at 
most one LA in the current round. If a bidder submitted a live bid 
comprised of both LAs in the previous round, that bidder may submit a 
live bid that also includes these two LAs in the current round. In both 
cases, unless a bidder has an uncontested bid that is carried forward 
into the next round, the bidder also may choose to submit a live bid 
with fewer LAs than the maximum number it is eligible to include in its 
bid. Thus, eligibility in successive rounds may stay the same or go 
down, but it can never go up.
    In the first round of the auction, bidders have the following 
options: A bidder with an initial eligibility of one (that is, a bidder 
who submitted a bid deposit of $450,000) may:
     Submit a live bid on the North LA or the South LA, or
     Submit nothing, and drop out of the auction.
    A bidder with an initial eligibility of two (that is, a bidder who 
submitted a bid deposit of $900,000) may:
     Submit a live bid for both the North and South LAs,
     Submit a live bid for the North LA or the South LA, or
     Submit nothing, and drop out of the auction.
    Before each subsequent round of the auction, BOEM will raise the 
asking price for any LA that was contained in more than one live bid in 
the previous round. BOEM will not raise the asking price for a LA that 
was in one or no live bids in the previous round.
    Asking price increments will be determined by BOEM, in its sole 
discretion. BOEM will base asking price increments on a number of 
factors, including:
     Making the increments sufficiently large that the auction 
will not take an unduly long time to conclude;
     Decreasing the increments as the asking price of a LA 
nears its final price. Because the final price for a LA is not known 
until the entire auction has ended, the number of bids that have 
included the same LA in the most recent round may be used as an 
imperfect indicator of how close a LA's asking price is to its final 
price.
    BOEM has reduced the minimum bids for both LAs in this auction 
compared to the minimum bids announced in the PSN. Because the minimum 
bids have been significantly reduced, BOEM believes that it would be 
appropriate to raise asking prices by greater bid increments in early 
rounds of the auction than originally suggested. BOEM intends to use 
bid increments in the range of 20% to 50% in early rounds of the 
auction. At some point, BOEM intends to reduce the bid increments to 
the 5% to 20% range. BOEM reserves the right during the auction to 
increase or decrease increments if it determines, in its sole 
discretion, that a different increment is warranted to enhance the 
efficiency of the auction process. Asking prices for the LAs included 
in multiple live bids in the previous round will be raised and rounded 
to the nearest whole dollar amount to obtain the asking prices in the 
current round.
    A bidder must submit a live bid in each round of the auction (or 
have an uncontested live bid automatically carried forward by BOEM) for 
it to remain active and continue bidding in future rounds. All of the 
live bids submitted in any round of the auction will be preserved and 
considered binding until determination of the winning bids is made. 
Therefore, the bidders are responsible for payment of the bids they 
submit and can be held

[[Page 33903]]

accountable for up to the maximum amount of those bids determined to be 
winning bids during the final award procedures.
    Between rounds, BOEM will release the following information:
     The level of demand for each LA in the previous round of 
the auction. The level of demand for a given LA is defined as the 
number of live bids that included the LA.
     The asking price for each LA in the upcoming round of the 
auction.
    In any subsequent round of the auction, if a bidder's previous 
round bid was uncontested, and the auction continues for another round, 
then BOEM will automatically carry forward that bid as a live bid in 
the next round. A bidder whose bid is being carried forward will not 
have an opportunity to modify or drop its bid until some other bidder 
submits a live bid that overlaps with the LA in the carried forward 
bid. Note that in this sale a carried forward bid will always be for 
only one LA--if a live bid consisting of both North and South was 
uncontested, the auction would end. In particular, for rounds in which 
a bidder finds its uncontested bid is carried forward, the bidder will 
be unable to do the following:
     Switch to the other LA;
     Submit an Intra-Round Bid (see below for discussion of 
Intra-Round Bids); or
     Drop out of the auction.
    In this scenario the bidder is effectively ``frozen'' through 
future auction rounds for as long as its bid for that LA remains 
uncontested. Moreover, the bidder may be bound by that bid or, indeed, 
for any other bid which BOEM determines is a winning bid in the award 
stage. Hence, the bidder cannot drop an uncontested bid, and in no 
scenario can the bidder be relieved of any of its bids from previous or 
future rounds until a determination is made in the award stage about 
the LAs won by the bidder.
    If a bidder's bid is not being carried forward by BOEM, a bidder 
with an eligibility of one (that is, a bidder who submitted a live bid 
for either the North LA or the South LA in the previous round) may:
     Submit a live bid for either the North LA or the South LA,
     Submit an Intra-Round Bid for the same LA that the bidder 
submitted a live bid for in the previous round and exit the auction: Or
     Submit nothing, and drop out of the auction.
    A bidder with an eligibility of two (that is, a bidder who 
submitted a live bid for both North and South in the previous round) 
may:
     Submit a live bid for both the North and South LAs,
     Submit a live bid for either the North LA or the South LA,
     Submit an Intra-Round Bid for both the North and South 
LAs, and a live bid for either the North LA or the South LA,
     Submit an Intra-Round Bid for both the North and South 
LAs, no live bids, and exit the auction; or
     Submit nothing, and drop out of the auction.
    Subsequent auction rounds occur in this sale as long as either the 
North LA or the South LA is contested. The auction concludes at the end 
of the round in which neither the North LA nor the South LA is included 
in the live bid of more than one bidder, i.e., all live bids are 
uncontested.

Bidding--Intra-Round Bids

    All asking prices and asking price increments will be determined by 
the BOEM Auction Manager. It is possible that multiple bidders will be 
willing to meet the previous round's asking price for a LA, while no 
bidders will be willing to meet the next round's asking price. Without 
some mechanism to resolve this situation, the auction could result in a 
tie for this LA.
    Intra-Round Bidding is a mechanism to minimize the chance of ties. 
It also allows bidders to more precisely express the maximum price they 
are willing to offer for the North, South, or both LAs.
    When submitting a live bid, a bidder simply indicates willingness 
or unwillingness to pay the asking price for each LA offered in the 
auction. The bidder's response is either yes or no. In contrast, when 
submitting an Intra-Round Bid, the bidder is indicating that it is not 
willing to meet the current round's asking price, but it is willing to 
pay more than the previous round's asking price. In particular, in an 
Intra-Round Bid, the bidder specifies the maximum (higher than the 
previous round's asking price and less than the current round's asking 
price) that it is willing to offer for the specific LA(s) in its 
previous round's live bid.
    Because an Intra-Round Bid must consist of a single offer price for 
exactly the same LA(s) included in the bidder's live bid in the 
previous round, a bidder cannot submit a live bid on the North LA in 
the previous round and then offer an Intra-Round Bid on the South LA in 
the current round (or vice versa). Rather, an Intra-Round Bid from this 
bidder in the current round must be for the North. In the same way, if 
the bidder submitted a live bid which includes both the North and South 
LAs in the previous round, then an Intra-Round Bid in the current round 
must include both the North and South LAs.
    The number of LAs in a bidder's live bid will determine that 
bidder's eligibility in the next round. If a bidder includes two LAs in 
a bid in round 1, that bidder can include up to two LAs in a live bid 
in round 2, if the bidder chooses not to submit an Intra-Round Bid. 
However, if the bidder does choose to submit an Intra-Round Bid in 
round 2, which must be for both LAs included in the bidder's previous 
round's live bid, any accompanying live bid must be for only one of the 
two LAs. Otherwise, the bidder would be duplicating its carried forward 
live bid at a different price. Accordingly, although an Intra-Round Bid 
is not a live bid, in the round in which a valid Intra-Round Bid is 
submitted for both LAs, the bidder's eligibility for a live bid in that 
same round and future rounds is permanently reduced from including two 
LAs to one LA. In other words, once an Intra-Round Bid is submitted, 
the bidder will never again have the opportunity to submit a live bid 
on as many LAs as it has bid in previous rounds.
    Because Intra-Round Bids are not live bids, and since BOEM only 
raises asking prices on LAs that are included in multiple live bids, 
BOEM will not consider Intra-Round Bids for the purpose of determining 
either to increase the asking price for a particular LA or to end the 
auction. Also, BOEM will not count nor share with bidders between 
rounds the number of Intra-Round Bids received for each LA.
    All of the Intra-Round Bids submitted during the auction will be 
preserved, and may be determined to be winning bids. Therefore, bidders 
are responsible for payment of the bids they submit and may be held 
accountable for up to the maximum amount of any Intra-Round Bids or 
live bids determined to be winning bids during the final award 
procedures.

Determining Provisional Winners

    After the bidding ends, BOEM will determine provisionally winning 
bids in accordance with the process described in this section. This 
process consists of two stages: Stage 1 and Stage 2, which are 
described below. Once the auction itself ends, nothing further is 
required of bidders within or between Stages 1 and 2. In practice, the 
stages of the process will take place as part of the solution algorithm 
for analyzing the monetary and credit portion of the bids, determining 
provisional winners, finding the LAs won by the provisional winners, 
and calculating the applicable bid prices to be paid by the winners for 
the LAs they won. This evaluation will

[[Page 33904]]

be reviewed, checked and validated by the panel. The determination of 
provisional winners, in both stages, will be based on the two auction 
variables, as well as on a bidder's adherence to the rules of the 
auction, and the absence of conduct detrimental to the integrity of the 
competitive auction.

Stage 1

    Live bids submitted in the final round of the auction are Qualified 
Bids. In Stage 1, a bidder with a Qualified Bid is provisionally 
guaranteed of winning the LA(s) included in its final round bid, 
regardless of any other prior-to-final round live bids or Intra-Round 
Bids in any round. This guarantee provides bidders assurance that as 
long as they stay active in the bidding for a LA until the last round 
when the auction closes, they cannot be outbid on that LA or 
unexpectedly lose that LA. Not only does this provision strengthen 
competition and fairness in the auction, it also limits opportunities 
for anti-competitive tactics.
    If both LAs are awarded to bidders in Stage 1, the second award 
stage is not necessary. If the North LA or the South LA received a bid 
but was not awarded in Stage 1, BOEM will proceed to Stage 2 to award 
remaining leases.
    Following the auction, all winning bidders must pay the price 
associated with their winning bids, which may consist of cash and non-
monetary credits or just cash.

Stage 2

    All bids are either Qualified Bids or Contingent Bids. Contingent 
bids include all of the live bids received before the final round, and 
any Intra-Round Bids received during the auction. In Stage 2, BOEM will 
consider Contingent Bids, to see if the unawarded LA(s) can be awarded 
without interfering with Stage 1 awards. BOEM will make Stage 2 awards 
to the bid(s) that maximize(s) the total As-Bid prices.
    Any Contingent Bids that conflict with Qualified Bids will not be 
considered. That is, if there was a Qualified Bid for the North LA 
(i.e., a live bid in the final round for the North LA), BOEM will not 
consider any Contingent Bid that contains the North LA. Only one bid 
per bidder may win. Accordingly, BOEM will not consider a Contingent 
Bid from any bidder that received a Stage 1 award for submitting a 
Qualified Bid.
    There is one notable exception to the rule described in the 
preceding paragraph. This exception allows BOEM to accept a Contingent 
Bid for both LAs notwithstanding the existence of a Qualified Bid by 
the same bidder, provided the acceptance of the Contingent Bid results 
in higher overall As-Bid prices than acceptance of only the Qualified 
Bid. Suppose, for example, that a bidder submitted an Intra-Round Bid 
for the North and South LAs, and a live bid in the same round for the 
South LA. Suppose as well that the live bid turned out to be the only 
live bid submitted in that round, i.e., it is a Qualified Bid because 
the auction closes at the conclusion of that round. Without the 
exception, the Intra-Round Bid for both the North and South LAs would 
not win, because the Qualified Bid (for the South LA) overlaps with 
part of the Contingent Intra-Round Bid (for the North and South LAs), 
so BOEM would award the bidder only the South LA based on its Qualified 
Bid as provisionally awarded in Stage 1. In cases such as this, and 
related ones where the same bidder's Contingent Bid occurs in other 
than the final auction round where it has submitted an overlapping 
Qualified Bid, there are sound reasons to prefer the Contingent Bid to 
the Qualified Bid if the Contingent Bid results in higher As-Bid 
prices.
    Based on the bids received, if the bidder values the Contingent Bid 
on both LAs more than the Qualified Bid on one LA:
     Awarding the Qualified Bid could discourage bidders from 
submitting live bids that compete with their own Intra-Round Bids, and
     Awarding the Qualified Bid could result in undersell, if 
one of the LAs would otherwise not be awarded in Stage 2.
    The exception discussed here would prevent these adverse results.
    In the example, the Intra-Round Contingent Bid could prevail, in 
which case the bidder would win both the North and South LAs. Note that 
all winning bidders must pay the As-Bid price associated with the 
winning bid, which may consist of cash and non-monetary credits or just 
cash. This means that the bidder would be required to pay its Intra-
Round Bid price associated with its Intra-Round Bid, even though it 
submitted a Qualified Bid that guaranteed the South LA would be 
provisionally awarded to that bidder. In other words, the guarantee 
(that the bidder that submitted a Qualified Bid will be awarded the 
LA(s) associated with that bid) does not extend to the price the bidder 
might have to pay for the South LA if that LA is ultimately awarded 
through a Stage 2 evaluation in which the South LA was a subset of the 
North and South LAs awarded provisionally to that bidder in Stage 2.
    This exception represents the only situation in which BOEM will 
consider for award a Contingent Bid which overlaps a Qualified Bid, 
i.e., when a bidder's Contingent Bid overlaps its own Qualified Bid. In 
contrast, there is no situation in which one bidder's Contingent Bid 
will be considered for award if it overlaps with any LA that is 
included in another bidder's Qualified Bid.
    If more than one combination of Contingent Bids exist that would 
yield the same highest As-Bid price total, while preserving the LAs 
originally awarded in Stage 1, the resulting tie in the allocation of 
these LAs would be settled by a random draw.
    In the event a bidder submits a bid for a LA that the panel and 
BOEM determine to be a winning bid, the bidder is expected to timely 
sign the applicable lease documents and submit the full cash payment 
due. If the bidder fails to timely sign and pay for the lease, then 
BOEM will not issue the lease to that bidder, and the bidder will 
forfeit its bid deposit. BOEM may consider failure of the bidder to 
timely pay the full amount due an indication that a bidder is no longer 
financially qualified to participate in other lease sales under BOEM's 
regulations at 30 CFR 585.106 and 585.107.

Credit Factors

    Prior to the auction, BOEM will convene a panel to evaluate 
bidders' non-monetary packages to determine whether and to what extent 
each bidder is eligible for a non-monetary credit applicable to the As-
Bid auction price for one of the LAs in each round of the auction, as 
described below. Any single JDA or PPA cannot be used by more than one 
bidder in the auction.
    The percentage credit is determined based on the panel's evaluation 
of required documentation submitted by the bidders as of July 17, 2013. 
Bidders will be informed by email before the monetary auction about the 
percentage credit applicable to their bids. The bid credit will be 
applicable to only one LA. Any non-monetary credit would only be 
applicable to the higher priced LA in a bid for both LAs. For an Intra-
Round Bid containing both LAs, the higher priced LA will be determined 
using the previous round's asking prices. In each round, the auction 
system will display information showing how their As-Bid auction prices 
are affected by the credit imputed to their bid to determine their net 
monetary payment due to BOEM, should their bids prevail as winning bids 
in the award stages. Application of the credit percentage to the 
appropriate As-Bid auction price will be rounded to

[[Page 33905]]

the nearest whole dollar amount. This entire process is conceptually 
similar to one in which the multiple bid factors are combined into an 
aggregate score for the purpose of awarding LAs, but is more 
transparent to bidders and facilitates the bidding process in a 
dynamic, multiple-factor, multiple round auction process.
    The bidder's imputed credit throughout the auction and award 
process is limited to the greater of 25% for a PPA or 20% for a JDA, 
applied to the highest priced LA related to the bidder's latest live 
bid or Intra-Round Bid. During each round, bidders are informed by the 
BOEM Auction Manager how the credit applies to their live bid and any 
Intra-Round Bid. In the case of a live bid for both LAs, the credit 
will apply only to the LA having the highest current round asking 
price. In the case of an Intra-Round Bid for both LAs, the credit will 
also apply only to the higher-priced LA, but the applicable price for 
calculating the credit will be based on the previous round's asking 
prices, not on any additional amount above the previous round's asking 
prices as reflected in the incremental amount associated with its 
Intra-Round Bid.
    The reason for using the previous round asking price in this 
situation is the difficulty of determining the precise LA As-Bid price 
attributable to each individual LA in an Intra-Round Bid that contains 
both LAs. The amount of the Intra-Round Bid attributable to each LA is 
not directly available when the bidder makes an Intra-Round Bid on both 
LAs. The individual LA bid amounts are available at the previous round 
asking prices. For this reason, the imputed credit is calculated based 
on the highest asking price of a LA included in the Intra-Round Bid 
submitted in the round preceding the round in which the Intra-Round Bid 
was made.
    The panel will review the non-monetary package submitted by each 
bidder, and determine whether bidders have established that they are 
qualified to receive a credit, and the percentage at which that credit 
will apply, based on the definitional information regarding the PPA and 
JDA. If the panel determines that no bidder has qualified for a non-
monetary factor, the auction will proceed with each bidder registered 
with no imputed credit.
    Credit Factor Definitions: The definitions below will apply to the 
factors for which bidders may earn a credit.
    Power purchase agreement (PPA) is any legally enforceable long term 
contract negotiated between an electricity generator (Generator) and a 
power purchaser (Buyer) that identifies, defines, and stipulates the 
rights and obligations of one party to produce, and the other party to 
purchase, energy from an offshore wind project to be located in the 
lease sale area. The PPA must have been approved by a public utility 
commission or similar legal authority. The PPA must state that the 
Generator will sell to the Buyer and the Buyer will buy from the 
Generator capacity, energy, and/or environmental attribute products 
from the project, as defined in the terms and conditions set forth in 
the PPA. Energy products to be supplied by the Generator and the 
details of the firm cost recovery mechanism approved by the State's 
public utility commission or other applicable authority used to recover 
expenditures incurred as a result of the PPA must be specified in the 
PPA. In order to qualify, a PPA must contain the following terms or 
supporting documentation:
    (i) A complete description of the proposed project;
    (ii) Identification of both the electricity Generator and Buyer 
that will enter into a long term contract;
    (iii) A time line for permitting, licensing, and construction;
    (iv) Pricing projected under the long term contract being sought, 
including prices for all market products that would be sold under the 
proposed long term contract;
    (v) A schedule of quantities of each product to be delivered and 
projected electrical energy production profiles;
    (vi) The term for the long term contract;
    (vii) Citations to all filings related to the PPA that have been 
made with state and Federal agencies, and identification of all such 
filings that are necessary to be made; and
    (viii) Copies of or citations to interconnection filings related to 
the PPA.
    The panel will assign a 25% non-monetary credit to any bidder that 
establishes in its non-monetary package that it meets the criteria 
described above for a PPA for the sale of 350 MW of power. The panel 
will assign a smaller percentage credit to any bidder that establishes 
in its non-monetary package that it meets the criteria described above 
for a PPA for the sale of less than 350 MW of power. The smaller 
percentage credit will be calculated according to the formula below:
[GRAPHIC] [TIFF OMITTED] TN05JN13.000


Where:

     Partial Credit = Percent credit for which a smaller PPA 
is eligible.
     Full PPA = 350 MW
     Full Credit = 25%
     Partial PPA = amount (less than 350 MW) of power under 
contract

    Joint Development Agreement (JDA) is a binding agreement between a 
state and a legal entity that proposes to develop renewable (wind) 
energy, which sets forth the rights, obligations, and certain economic 
development activities of the parties in connection with the 
development of an offshore wind project. The legal entity named in a 
JDA must be selected through a competitive selection process, such as a 
request for proposals that is conducted by a state adjacent to the wind 
energy area issuing and entering into the JDA, where the subsequent 
submitted proposals are evaluated by a state agency, committee or 
public utility board. To apply for a non-monetary credit, the bidder 
must send the agreement to BOEM by July 17, 2013, in its non-monetary 
package. The JDA will qualify if the panel determines that the 
agreement includes the following identifiable factors: (1) Sufficient 
specificity to the size, timing, and location of the proposed project 
on the OCS; (2) the financial commitment of the state, the identified 
legal entity, and/or a third party (buyer of power), if applicable, 
included in the agreement; (3) the developmental, financial, and/or 
regulatory processes through which the state will support the 
identified legal entity that proposes to develop renewable (wind) 
energy; (4) significant project milestones; (5) the ramifications for 
not meeting said milestones; and (6) any exclusionary rights awarded to 
said identified legal entity. Please clearly designate all information 
that BOEM should treat as business confidential. The panel will assign 
each holder of a qualifying JDA a credit of 20%.

[[Page 33906]]

Additional Information Regarding the Auction

Non-Monetary Auction Procedures

    All bidders seeking a non-monetary auction credit are required to 
submit a non-monetary auction package. If a bidder seeks a non-monetary 
auction credit, this submission must contain information sufficient to 
establish the bidder's eligibility to receive a non-monetary credit in 
the monetary phase of the auction. Further information on this subject 
can be found in the section of this notice entitled, ``Credit Factor 
Definitions.'' If a bidder does not submit a non-monetary package by 
July 17, 2013, to BOEM, then BOEM will assume that bidder is not 
seeking a non-monetary auction credit and the panel will not consider 
that bidder for a non-monetary auction credit.

Bidder Authentication

    The Auction Manager will send several bidder authentication 
packages to each bidder shortly after BOEM has processed the Bidder 
Financial Forms. One package will contain tokens for each authorized 
individual. Tokens are digital authentication devices. The tokens will 
be mailed to the address of record that BOEM has on file for each 
company, care of the Primary Point of Contact indicated on the Bidder's 
Financial Form. This individual is responsible for distributing the 
tokens to the individuals authorized to bid for that company. Bidders 
are to ensure that each token is returned within three business days 
following the auction. An addressed, stamped envelope will be provided 
to facilitate this process.
    The second package contains login credentials for authorized 
bidders. The login credentials will be mailed to the address provided 
in the Bidder's Financial Form for each authorized individual. Bidders 
can confirm these addresses by calling 703-787-1320. This package will 
contain user login information and instructions for accessing the 
Auction System Technical Supplement and Alternative Bidding Form. The 
login information, along with the tokens, will be tested during the 
mock auction.

Monetary Auction Times

    This section will describe, from a bidder's perspective, how the 
monetary phase of the auction will take place. This information will be 
elaborated on and clarified in the Mock Auction to be held on July 24, 
2013, and an Auction System Technical Supplement that will be made 
publicly available on BOEM's Web site at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. The 
Auction System Technical Supplement describes auction procedures that 
are incorporated by reference in this notice, except where the 
procedures described in the Auction System Technical Supplement 
directly contradict this notice.
    The monetary auction will begin at 10:30 a.m. on July 31, 2013. 
Bidders may log in as early as 8:30 a.m. on that day. We recommend that 
bidders log in no later than 9:30 a.m. on that day to ensure that any 
login issues have been resolved in time. Once bidders have logged in, 
they should review the auction schedule, which lists the start times, 
end times, and recess times of each round in the auction. Each round is 
structured as follows:
     Round 1 Bidding Begins;
     Bidders enter their bids;
     Round 1 Bidding Ends and the first Recess begins;
     Sometime during the first Recess, Round 1 results are 
posted;
     Bidders review the Round 1 results and prepare their Round 
2 bids;
     Round 2 Bidding Begins * * *
    The first round will last about 30 minutes, though subsequent 
rounds may be closer to 20 minutes in length. Recesses are anticipated 
to last approximately 10 minutes. The descriptions of the auction 
schedule and asking price increments included with this FSN are for 
informational purposes only. Bidders should consult the auction 
schedule on the bidding Web site for updated times. Bidding will 
continue until about 5 p.m. each day. BOEM anticipates the auction will 
last one or two business days, but bidders are advised to prepare to 
continue bidding for additional business days as necessary to resolve 
the auction.
    The schedule and asking price increments are in BOEM's discretion, 
and are subject to change at any time before or during the auction.
    BOEM and the auction contractors will use the auction platform 
messaging service to keep bidders informed on issues of interest during 
the auction. For example, BOEM may change the schedule at any time, 
including during the auction. If BOEM changes the schedule during the 
auction, it will use the messaging feature to notify bidders that a 
revision has been made, and direct bidders to the relevant page. BOEM 
will also use the messaging system for other changes and items of 
particular note during the auction.
    Bidders may place bids at any time during the round. At the top of 
the bidding page, a countdown clock will show how much time remains in 
the round. Bidders have until the scheduled time to place bids. Bidders 
should do so according to the procedures described in the Auction 
System Technical Supplement, and practiced at the Mock Auction. No 
information about the round is available until the round has closed and 
results have been posted, so there should be no strategic advantage to 
placing bids early or late in the round.

Alternate Bidding Procedures

    Any bidder who is unable to place a bid using the online auction 
should follow these instructions:
     Call BOEM/the BOEM Auction Manager at the help desk number 
that is listed in the Auction System Technical Supplement before the 
end of the round.
     BOEM will authenticate the caller to ensure he/she is 
authorized to bid on behalf of the company.
     Explain the problem.
     BOEM may, in its sole discretion, accept a bid using the 
Alternative Bidding Procedure.
     The Alternative Bidding Procedure enables a bidder who is 
having difficulties accessing the Internet to submit its bid via an 
Alternative Bidding Form that can be faxed to the auction manager.
    [cir] If the bidder has not placed a bid, but calls BOEM before the 
end of the round and notifies BOEM that it is preparing a bid using the 
Alternate Bidding Procedure, and submits the Alternate Bidding Form by 
fax before the round ends, BOEM will likely accept the bid, though 
acceptance or rejection of the bid is within BOEM's sole discretion.
    [cir] If the bidder calls during the round, but does not submit the 
bid until after the round ends (but before the round is posted), BOEM 
may or may not accept the bid, in part based on how much time remains 
in the recess. Bidders are strongly encouraged to submit the 
Alternative Bidding Form before the round ends.
    [cir] If the bidder calls during the recess following the round, 
but before the previous round's results have been posted, BOEM will 
likely reject its bid, even if it has otherwise complied with all of 
BOEM's Alternate Bidding Procedures.
    [cir] If the bidder calls to enter a bid after results have been 
posted, BOEM will reject the bid.
    Except for bidders who have uncontested bids in the current round, 
failure to place a bid during a round will be interpreted as dropping 
out of the auction. It is possible that bids entered before the bidder 
stopped entering bids may be awarded one or

[[Page 33907]]

both LAs pursuant to BOEM's stage 2 procedures. Bidders are held 
accountable for all bids placed during the auction. This is true if 
they continued bidding in the last round, if they placed an Intra-Round 
Bid for a single LA in an earlier round, or if they stopped bidding 
during the auction.
    Acceptance, Rejection or Return of Bids: BOEM reserves the right 
and authority to reject any and all bids. In any case, no lease will be 
awarded to any bidder, and no bid will be accepted, unless (1) The 
bidder has complied with all requirements of the FSN, applicable 
regulations and statutes, including, but not limited to, bidder 
qualifications, bid deposits, and adherence to the integrity of the 
competitive bidding process, (2) the bid conforms with the requirements 
and rules of the auction, and (3) the amount of the bid has been 
determined to be adequate by the authorized officer. Any bid submitted 
that does not satisfy any of these requirements may be returned to the 
bidder submitting that bid by the Program Manager of BOEM's Office of 
Renewable Energy Programs and not considered for acceptance.
    Process for Issuing the Lease: If BOEM proceeds with lease 
issuance, it will issue three unsigned copies of the lease form to each 
winning bidder. Within 10 business days after receiving the lease 
copies, each winning bidder must:
    1. Execute the lease on the bidder's behalf;
    2. File financial assurance, as required under 30 CFR 585.515-537; 
and
    3. Pay by EFT the balance of the bonus bid (bid amount less the bid 
deposit). BOEM requires bidders to use EFT procedures (not to include 
pay.gov) for payment of the balance of the bonus bid, following the 
detailed instructions contained in the ``Instructions for Making 
Electronic Payments'' available on BOEM's Web site at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.
    If a winning bidder does not meet these three requirements within 
10 business days of receiving the lease copies as described above, or 
if a winning bidder otherwise fails to comply with applicable 
regulations or the terms of the FSN, the winning bidder will forfeit 
its bid deposit. BOEM may extend this 10 business-day time period if it 
determines the delay was caused by events beyond the winning bidder's 
control.
    In the event that the provisional winner does not execute and 
return the leases according to the instructions in this notice, BOEM 
reserves the right to reconvene the panel to determine whether it is 
possible to identify a bid that would have won in the absence of the 
bid previously determined to be the winning bid. In the event that a 
new winning bid is selected by the panel, BOEM will follow the 
procedures in this section for the new winner(s).
    BOEM will not execute a lease until the three requirements above 
have been satisfied, BOEM has accepted the winning bidder's financial 
assurance, and BOEM has processed the winning bidder's payment. The 
winning bidder may meet financial assurance requirements by posting a 
surety bond or by setting up an escrow account with a trust agreement 
giving BOEM the right to withdraw the money held in the account on 
demand by BOEM. BOEM may accept other forms of financial assurance on a 
case-by-case basis in accordance with its regulations. BOEM encourages 
provisionally winning bidders to discuss the financial assurance 
requirement with BOEM as soon as possible after the auction has 
concluded.
    Within 45 calendar days of the date that the Lessee receives the 
lease copies, the Lessee must pay the first 6-months' rent using the 
pay.gov Renewable Energy Initial Rental Payment Form available at: 
https://pay.gov/paygov/forms/formInstance.html?agencyFormId=27797604. 
The Lessee must pay the remaining 6-months' rent by the first day of 
the seventh month following the effective date of the lease, following 
the detailed instructions contained in the ``Instructions for Making 
Electronic Payments'' available on BOEM's Web site at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.
    Anti-Competitive Behavior: In addition to the auction rules 
described in this notice, bidding behavior is governed by Federal 
antitrust laws designed to prevent anticompetitive behavior in the 
marketplace. Compliance with BOEM's auction procedures will not 
insulate a party from enforcement of the antitrust laws.
    In accordance with the Act at 43 U.S.C. 1337(c), following the 
auction, and before the acceptance of bids and the issuance of leases, 
BOEM will ``allow the Attorney General, in consultation with the 
Federal Trade Commission, 30 days to review the results of the lease 
sale.''
    If a bidder is found to have engaged in anti-competitive behavior 
or otherwise violated BOEM's rules in connection with its participation 
in the competitive bidding process, BOEM may reject the high bid.
    Anti-competitive behavior determinations are fact specific. 
However, such behavior may manifest itself in several different ways, 
including, but not limited to:
     An agreement, either express or tacit, among bidders to 
not bid in an auction, or to bid a particular price;
     An agreement among bidders not to bid for a particular 
Lease Area;
     An agreement among bidders not to bid against each other; 
and
     Other agreements among bidders that have the effect of 
limiting the final auction price.
    BOEM may decline to award a lease if doing so would otherwise 
create a situation inconsistent with the antitrust laws (e.g., heavily 
concentrated market, etc.).
    For more information on whether specific communications or 
agreements could constitute a violation of Federal antitrust law, 
please see: https://www.justice.gov/atr/public/business-resources.html, 
or consult counsel.
    Post-Auction Certification: Each bidder is required to sign the 
self-certification, in accordance with 18 U.S.C. 1001 (Fraud and False 
Statements) in the Bidder's Financial Form, which can be found on 
BOEM's Web site: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. The form must be filled out and returned 
to BOEM in accordance with the ``Deadlines and Milestones for Bidders'' 
section of this notice.
    Non-Procurement Debarment and Suspension Regulations: Pursuant to 
regulations at 43 CFR Part 42, Subpart C, an OCS renewable energy 
Lessee must comply with the U.S. Department of the Interior's non-
procurement debarment and suspension regulations at 2 CFR parts 180 and 
1400 and agree to communicate the requirement to comply with these 
regulations to persons with whom the Lessee does business as it relates 
to this lease, by including this term as a condition in their contracts 
and other transactions.
    Force Majeure: The Program Manager of BOEM's Office of Renewable 
Energy Programs has the discretion to change any date, time, and/or 
location specified in the FSN in case of a force majeure event that the 
Program Manager deems may interfere with a fair and proper lease sale 
process. Such events may include, but are not limited to, natural 
disasters (e.g., earthquakes, hurricanes, floods), wars, riots, acts of 
terrorism, fire, strikes, civil disorder or other events of a similar 
nature. In case of such events, bidders should call 703-787-1320 or 
access the BOEM Web site at: https://www.boem.gov/Renewable-Energy-Program/index.aspx.
    Appeals: The appeals procedures are provided in BOEM's regulations 
at 30

[[Page 33908]]

CFR 585.225 and 585.118(c). Pursuant to 30 CFR 585.225:
    (a) If BOEM rejects your bid, BOEM will provide a written statement 
of the reasons, and refund any money deposited with your bid, without 
interest.
    (b) You will then be able to ask the BOEM Director for 
reconsideration, in writing, within 15 business days of bid rejection, 
under 30 CFR 585.118(c)(1). We will send you a written response either 
affirming or reversing the rejection.
    The procedures for appealing adverse final decisions with respect 
to lease sales are described in 30 CFR 585.118(c).
    Protection of Privileged or Confidential Information: BOEM will 
protect privileged or confidential information that you submit as 
required by the Freedom of Information Act (FOIA). Exemption 4 of FOIA 
applies to trade secrets and commercial or financial information that 
you submit that is privileged or confidential. If you wish to protect 
the confidentiality of such information, clearly mark it and request 
that BOEM treat it as confidential. BOEM will not disclose such 
information, subject to the requirements of FOIA. Please label 
privileged or confidential information ``Contains Confidential 
Information'' and consider submitting such information as a separate 
attachment.
    However, BOEM will not treat as confidential any aggregate 
summaries of such information or comments not containing such 
information. Additionally, BOEM may not treat as confidential the legal 
title of the commenting entity (e.g., the name of your company). 
Information that is not labeled as privileged or confidential will be 
regarded by BOEM as suitable for public release.

    Dated: May 24, 2013.
Tommy P. Beaudreau,
Director, Bureau of Ocean Energy Management.
[FR Doc. 2013-13197 Filed 6-4-13; 8:45 am]
BILLING CODE 4310-MR-P