Atlantic Wind Lease Sale 1 (ATLW1) Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore Virginia-Final Sale Notice, 44150-44156 [2013-17663]

Agencies

• DEPARTMENT OF THE INTERIOR
• Bureau of Ocean Energy Management

[Federal Register Volume 78, Number 141 (Tuesday, July 23, 2013)]
[Notices]
[Pages 44150-44156]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-17663]


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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

[Docket No. BOEM-2013-0019]


Atlantic Wind Lease Sale 1 (ATLW1) Commercial Leasing for Wind 
Power on the Outer Continental Shelf Offshore Virginia--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 Virginia.

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SUMMARY: This document is the Final Sale Notice (FSN) for the sale of a 
commercial wind energy lease on the Outer Continental Shelf (OCS) 
offshore Virginia, pursuant to BOEM's regulations at 30 CFR 585.216. 
BOEM is offering Lease OCS-A 0483 for sale using an ascending clock 
auction format. The lease area comprises the Virginia Wind Energy Area 
(WEA) described in the Call for Information and Nominations (Call) 
published on February 3, 2012 (see ``Area Offered for Leasing'' below 
for a description of the WEA and lease area) (77 FR 5545). The lease 
area is identical to that announced in the Proposed Sale Notice (PSN) 
for Commercial Leasing for Wind Power on the Outer Continental Shelf 
(OCS) Offshore Virginia, which was published on December 3, 2012, in 
the Federal Register with a 60-day public comment period (77 FR 71621). 
In this FSN, you will find information pertaining to the area 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 lease 
resulting from this announcement would not constitute an approval of 
project-specific plans to develop offshore wind energy. Such plans, 
expected to be submitted by the lessee, 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 August 
28, 2013. The monetary auction will be held online and will begin at 
10:30 a.m. on September 4, 2013. Additional details are provided in the 
section entitled, ``Deadlines and Milestones for Bidders.''

FOR FURTHER INFORMATION CONTACT: Erin C. Trager, BOEM Office of 
Renewable Energy Programs, 381 Elden Street, HM 1328, Herndon, Virginia 
20170, (703) 787-1320 or erin.trager@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 lease area offered in this FSN is the same area as BOEM 
announced in the PSN on December 3, 2012 (77 FR 71621). BOEM received 
15 comment submissions in response to the PSN, which are available in 
the Federal Register docket for this notice through BOEM's Web site at: 
https://www.boem.gov/Renewable-Energy-Program/State-Activities/Virginia.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. This Response to Comments and Explanation of Changes can be 
found at the following URL: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Virginia.aspx.
    On February 3, 2012, BOEM published the Notice of Availability 
(NOA) (77 FR 5560) for the final Environmental Assessment (EA) and 
Finding of No Significant Impact (FONSI) for commercial wind lease 
issuance and site assessment activities on the Atlantic OCS offshore 
New Jersey, Delaware, Maryland, and Virginia, pursuant to the National 
Environmental Policy Act (NEPA). Consultations ran concurrently with 
the preparation of the EA and included consultation under the 
Endangered Species Act (ESA), Magnuson-Stevens Fishery Conservation and 
Management Act (MSFCMA), section 106 of the National Historic 
Preservation Act (NHPA), and the Coastal Zone Management Act (CZMA). 
The proposed lease area identified in this PSN matches the Virginia 
Wind Energy Area (WEA) described in the preferred alternative in the 
Commercial Wind Lease Issuance and Site Assessment Activities on the 
Atlantic Outer Continental Shelf Offshore New Jersey, Delaware, 
Maryland, and Virginia Final Environmental Assessment (Regional EA), 
which can be found at: https://www.boem.gov/Renewable-Energy-Program/Smart-from-the-Start/Index.aspx.
    On May 29, 2012, BOEM initiated consultation with the National 
Marine Fisheries Service under the ESA for geological and geophysical 
(G&G) activities in support of oil and gas exploration and development,

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renewable energy, and marine minerals in the Mid and South Atlantic 
Planning Areas. Formal consultation concluded on May 24, 2013, with 
receipt of a Biological Opinion that, along with the previous informal 
consultation, informed the development of the Virginia commercial wind 
lease package.
    Additional environmental reviews will be conducted upon receipt of 
the Lessee's proposed project-specific plans, such as a Site Assessment 
Plan (SAP) or Construction and Operations Plan (COP).
    Potential bidders should be aware of the following three 
unsolicited nominations under consideration by BOEM, situated within or 
near the Virginia WEA.
    Atlantic Grid Holdings LLC Right of Way (ROW) Grant Request: On 
March 31, 2011, Atlantic Grid Holdings LLC submitted an unsolicited 
application for a ROW grant. Following publication of a notice to 
determine competitive interest in the grant area and a 60-day public 
comment period, BOEM published its determination of no competitive 
interest on May 15, 2012 (77 FR 28620). The nomination and associated 
notices can be found at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Regional-Proposals.aspx.
    Virginia Department of Mines, Minerals and Energy (DMME) Research 
Lease Request #1: On June 1, 2012, the Commonwealth of Virginia, DMME, 
submitted an unsolicited nomination for a research lease under 30 CFR 
585.238 for the siting of two meteorological ocean and environmental 
monitoring platforms. BOEM announced the availability of a Request for 
Competitive Interest: Research Lease for Renewable Energy on the Outer 
Continental Shelf Offshore Virginia in the Federal Register for a 30-
day public comment on December 21, 2012 (77 FR 75656). No indications 
of competitive interest were submitted in response to the request, and 
a Notice of a Determination of No Competitive Interest was published 
March 15, 2013 (78 FR 16529).
    Virginia DMME Research Lease Request #2: On February 8, 2013, the 
Commonwealth of Virginia, DMME, submitted an unsolicited nomination for 
a research lease under 30 CFR 585.238 for the siting of two 6-megawatt 
(MW) wind turbines for demonstration and research purposes. The 
research lease request nominates six sub-blocks to the west of the 
Virginia WEA for this purpose, in OCS Blocks 6061 and 6111. The 
nomination is under BOEM review.
    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.

------------------------------------------------------------------------
                                                                Company
                         Company name                             No.
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Apex Virginia Offshore Wind, LLC.............................      15040
Virginia Electric and Power Company dba Dominion Virginia          15042
 Power.......................................................
Energy Management, Inc.......................................      15015
EDF Renewable Development, Inc...............................      15027
Fishermen's Energy, LLC......................................      15005
IBERDROLA RENEWABLES, Inc....................................      15019
Sea Breeze Energy LLC........................................      15044
Orisol Energy US, Inc........................................      15020
------------------------------------------------------------------------

    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 a lease pursuant to this sale.
     Bidder's Financial Form: Each eligible bidder must submit 
a Bidder's Financial Form to BOEM by August 6, 2013. Once this 
information has been processed by BOEM, bidders may log into pay.gov 
and leave bid deposits. Any bidder that fails to submit the Bidder's 
Financial Form by this deadline may be prevented by BOEM from 
participating in the auction.
     Bid Deposits: Each bidder must submit an adequate bid 
deposit by August 22, 2013. Any bidder that fails to submit the bid 
deposit by this deadline may be prevented by BOEM from participating in 
the auction.
     Mock Auction: BOEM will hold a Mock Auction on August 28, 
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.
     Monetary Auction: On September 4, 2013, BOEM, 
through its contractor, will hold the monetary auction. The auction 
will start at 10:30 a.m. The auction will proceed according to a 
schedule to be distributed by the BOEM Auction Manager during 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 Winner: BOEM will announce 
the provisional winner of the lease sale after the auction ends.
     Refund Non-Winners: BOEM will return the bid deposits of 
any bidders that did not win the lease.
     Department of Justice (DOJ) Review: BOEM will afford DOJ 
30 calendar 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. (1) 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, 30 calendar 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.
     Send Lease: BOEM will send three copies of the lease to 
the winner, with instructions on how to accept and execute the lease. 
The first 6-months of the first year's rent payment is due 45 calendar 
days after the winner receives the lease for execution.
     Return the Lease: The auction winner will have 10 business 
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.
     Execute Lease: Once BOEM has received the lease copies and 
verified that all required materials have been received, BOEM will make 
a final determination regarding its execution of the lease and execute 
if appropriate.
     Reject Unsuccessful Bids: Once the lease has been 
executed, BOEM will provide unsuccessful bidders a written statement of 
the reasons their bids were rejected.
    Area Offered for Leasing: The lease area offshore Virginia contains 
19 whole OCS blocks and 13 sub-blocks. The western edge of the proposed 
lease area is approximately 23.5 nautical miles (nmi) from the Virginia 
Beach coastline, and the lease area extends to an eastern edge that is 
approximately 36.5 nmi from the same location. The longest north/south 
portion is approximately 10.5 nmi in length and the longest east/west 
portion is approximately 13 nmi in length. The entire area is 
approximately 112,799 acres, or 45,648 hectares. A description of the 
lease area and lease activities can be found in Addendum ``A'' of the 
lease, which BOEM has made available with this notice on its Web site 
at: https://boem.gov/Renewable-Energy-Program/State-Activities/Virginia.aspx.
    Map of the Area Offered for Leasing: A map of the area and a table 
of the boundary coordinates in X, Y (eastings,

[[Page 44152]]

northings) UTM Zone 18, NAD83 Datum and geographic X, Y (longitude, 
latitude), NAD83 Datum can be found at the following URL: https://boem.gov/Renewable-Energy-Program/State-Activities/Virginia.aspx.
    A large scale map of this area 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) 787-1300, 
Fax: (703) 787-1708.
    Area Offered As A Single Lease: The area available for sale will be 
auctioned as a single lease. One lease will be issued pursuant to this 
lease sale.
    BOEM has decided to auction the area as a single zone resulting in 
a single lease in order, among other things, to take advantage of the 
simplicity of this type of sale, the importance of which was 
highlighted by comments received in response to the Auction Format 
Information Request (76 FR 76174). Further discussion about this 
decision is provided in the Response to Comments and Explanation of 
Changes.
    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 the OCS commercial wind lease in the 
Virginia WEA within Addendum ``C'' of the 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. This lease, including Addendum 
``C'', is available on BOEM's Web site at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Virginia.aspx. The 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);
    Appendix A to Addendum ``C'' (Incident Report: Protected Species 
Injury or Mortality); and
    Appendix B to Addendum ``C'' (Required Data Elements for Protected 
Species Observer Reports).
    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 585.605-613 for the full 
commercial lease area.
    Financial Terms and Conditions: This section provides an overview 
of the basic annual payments required of the Lessee, which will be 
fully described in the 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 by 
the first day of the seventh month 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 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 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. 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 112,799 acres (the size of the 
Virginia WEA), the amount of rent payment will be $338,397 per year if 
the entire leased area is not yet 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 $169,198.
    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 that is 200-feet wide and centered on the transmission 
cable would be $70 per statute mile. For any additional acreage 
required, the Lessee must also pay the greater of $5 per acre per year 
or $450 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 MW, which 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 the Lessee has 20 
turbines

[[Page 44153]]

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 may 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 may 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--PJM 
West 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's Bureau of Economic Analysis (BEA).
    Financial Assurance: Within 10 business 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 the cost to meet all accrued 
lease obligations. BOEM will determine the amount of supplemental and 
decommissioning financial assurance requirements on a case-by-case 
basis.
    The financial terms can be found in Addendum ``B'' of the lease, 
which BOEM has made available with this notice on its Web site at: 
https://boem.gov/Renewable-Energy-Program/State-Activities/Virginia.aspx.
    Bid Deposit and Minimum Bid: A bid deposit is an advance cash 
deposit submitted to BOEM by a potential bidder to enable participation 
in the auction. No later than August 22, 2013, each bidder must have 
submitted 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.
    Each BOEM lease sale requires a separate bid deposit. Therefore, to 
be eligible to participate in this auction, a bidder may not rely on a 
bid submitted for another lease sale. If a bidder intends to 
participate in both this lease sale and another lease sale, for example 
ATLW-2 for leasing offshore Rhode Island and Massachusetts, that bidder 
must submit two separate bid deposits corresponding to the two lease 
sales. In addition, BOEM cannot guarantee the return of one bid deposit 
in time for those funds to be applied to another lease sale.
    Approximately 112,799 acres are offered for sale as Lease OCS-A 
0483 in this auction. The minimum bid is $2 per acre for the lease 
area. Therefore, the minimum acceptable bid, i.e., the opening asking 
price, will be $225,598.
    Each bidder must complete the Bidder's Financial Form that BOEM has 
made available with this notice on its Web site at: https://boem.gov/Renewable-Energy-Program/State-Activities/Virginia.aspx. This form must 
be submitted by August 6, 2013, to BOEM, pursuant to the instructions 
posted with the form. 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 submit 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, BOEM will refund the 
balance of the bid deposit to the bidder. BOEM will also refund the bid 
deposit to unsuccessful bidders.

Auction Procedures

Summary

    The sale is being conducted using an online bidding system and 
follows an ``ascending clock'' auction format. In this format, BOEM 
sets an initial asking price for Lease OCS-A 0483 and increases that 
price incrementally based on the number of active bidders in each round 
until no more than a single active bidder remains in the auction. A bid 
submitted at the full asking price for the lease area in a particular 
round is referred to as a ``live bid''. During each round, active 
bidders may take one of the following actions: (1) Submit a live bid 
indicating that they are interested in acquiring the lease area at the 
current round's stated asking price, or (2) submit an Exit Bid (see 
below for discussion of Exit Bids), or (3) exit the auction.
    A bidder remains active in the auction as long as it continues to 
meet BOEM's asking price in each round. If more than one live bid is 
received in a round, BOEM increases the asking price incrementally and 
conducts another auction round. BOEM plans to raise the asking price 
following any round in which two or more bidders submitted live bids. 
The auction concludes at the end of the round in which the number of 
live bids received falls to one or zero.
    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 the lease 
area nears its final price.
    The number of bids in the most recent round will be used as an 
indication of how close the lease area's asking price is to its final 
price. Accordingly, BOEM plans to use higher increments when there are 
many live bids, and reduce the increments as the auction progresses. 
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.
    Between rounds, BOEM will release the following information:
     The number of live bids in the previous round of the 
auction.
     The asking price in the upcoming round of the auction.


[[Page 44154]]


Additional auction rounds occur as long as two or more bidders continue 
to submit a live bid.

    It is possible that multiple bidders will be willing to meet the 
previous round's asking price, while no bidders will be willing to meet 
the current round's asking price. Due to this scenario, bidders exiting 
the auction are allowed to submit an Exit Bid at an offer price greater 
than the asking price in the previous round and less than the asking 
price in the current round. Exit bidding allows bidders to express 
precisely the maximum price they are willing to offer while also 
minimizing the chance of ties. If a bidder exits the auction by placing 
an Exit Bid or choosing not to submit a live bid in the current round, 
it will no longer be allowed to submit bids in any subsequent round. If 
a bidder leaves the auction without submitting an Exit Bid, BOEM will 
treat the previous round's asking price as the bidder's Exit Bid in the 
current round. Exit Bids are not considered to be live bids for purpose 
of determining whether to conclude the auction.
    The winning bid is the highest bid, whether that bid is a live bid 
or an Exit Bid. If there is a tie, the winning bidder is chosen by a 
random draw. If a winning bidder does not execute a lease pursuant to 
the lease sale, BOEM reserves the right to determine which bid would 
have won in the absence of the winning bidder, and to offer a lease 
pursuant to this ``next highest'' bid.

Additional Information Regarding the Auction

Auction System Technical Supplement and Auction Manual

    BOEM has created an Auction System Technical Supplement (ASTS) to 
complement the procedures described in this notice by providing further 
details about the auction system. This document is available on BOEM's 
Web site at https://www.boem.gov/Renewable-Energy-Program/State-Activities/Virginia.aspx.
    Moreover, bidders will be provided with an Auction Manual shortly 
before the auction date. This document contains further instructions on 
using the auction system, as well as certain information that BOEM is 
not making available to the public for security reasons, including the 
Auction Manager phone number and URL where the auction will be hosted.

Bidder Authentication

    The Auction Manager will send several bidder authentication 
packages to each bidder shortly after BOEM processes the Bidder's 
Financial Forms. One package will contain a token for each authorized 
individual as noted on the Bidder's Financial Form. 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 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 Manual 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 
auction will take place. This information will be elaborated on and 
clarified in the Mock Auction to be held on August 28, 2013.
    The auction will begin at 10:30 a.m. on September 4, 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 bidding begins;
     Bidders enter their bids;
     Round bidding ends and the Recess begins;
     Sometime during the Recess, previous Round results are 
posted;
     Bidders review the previous Round results and prepare 
their next Round bids;
     Next Round 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 
tentative. Bidders should consult the auction schedule on the bidding 
Web site during the auction for updated times. Bidding will continue 
until about 5:00 p.m. each day. BOEM anticipates the auction will last 
one or two days, but bidders are advised to prepare to continue bidding 
for additional business days as necessary to resolve 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 
materials 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 Manual 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

[[Page 44155]]

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.
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 Exit Bid, 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 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 to the 
winning bidder. Within 10 business days after receiving the lease 
copies, the 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 electronic funds transfer (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://boem.gov/Renewable-Energy-Program/State-Activities/Virginia.aspx.
    If the winning bidder does not meet these three requirements within 
10 business days of receiving the lease copies as described above, or 
if the 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.
    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/Virginia.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 the 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 the 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.
    Bidder's Financial Form Self-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/Virginia.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 Department of the Interior's non-
procurement debarment and suspension regulations at 2 CFR 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

[[Page 44156]]

at: https://www.boem.gov/Renewable-Energy-Program/index.aspx.
    Appeals: The appeals procedures are provided in BOEM's regulations 
at 30 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: July 1, 2013.
Tommy P. Beaudreau,
Director, Bureau of Ocean Energy Management.
[FR Doc. 2013-17663 Filed 7-22-13; 8:45 am]
BILLING CODE 4310-MR-P