Atlantic Wind Lease Sale 3 (ATLW3) Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore Maryland-Proposed Sale Notice, 76643-76653 [2013-29977]

Agencies

• DEPARTMENT OF THE INTERIOR
• Bureau of Ocean Energy Management

[Federal Register Volume 78, Number 243 (Wednesday, December 18, 2013)]
[Notices]
[Pages 76643-76653]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29977]


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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

[Docket No. BOEM-2013-0002; MMAA104000]


Atlantic Wind Lease Sale 3 (ATLW3) Commercial Leasing for Wind 
Power on the Outer Continental Shelf Offshore Maryland--Proposed Sale 
Notice

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

ACTION: Proposed Sale Notice for Commercial Leasing for Wind Power on 
the Outer Continental Shelf Offshore Maryland.

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SUMMARY: This document is the Proposed Sale Notice (PSN) for the sale 
of commercial wind energy leases on the Outer Continental Shelf (OCS) 
offshore Maryland, pursuant to BOEM's regulations at 30 CFR 585.216. 
BOEM proposes to offer for sale two leases, Lease OCS-A 0489 and Lease 
OCS-A 0490. BOEM will use a multiple-factor auction for the lease sale. 
In this PSN, you will find information pertaining to the areas 
available for leasing, proposed lease provisions and conditions, 
auction details, the lease form, criteria for evaluating competing 
bids, award procedures, appeal procedures, and lease execution. BOEM 
invites comments during a 60-day comment period following publication 
of this notice. The issuance of the proposed leases resulting from this 
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: Comments should be submitted electronically or postmarked no 
later than February 18, 2014. All comments received or postmarked 
during the comment period will be made available to the public and 
considered prior to publication of the Final Sale Notice (FSN).
    All bidders interested in participating in the lease sale who have 
not previously been qualified by BOEM to participate in this lease sale 
must submit the required qualification materials by the end of the 60-
day comment period for this notice. All qualification materials must be 
postmarked no later than February 18, 2014.

ADDRESSES: Potential auction participants, Federal, state, and local 
government agencies, tribal governments, and other interested parties 
are requested to submit their written comments on the PSN in one of the 
following ways:
    1. Electronically: https://www.regulations.gov. In the entry 
entitled, ``Enter Keyword or ID,'' enter BOEM-2013-0002 then click 
``search.'' Follow the instructions to submit public comments.
    2. Written Comments: In written form, delivered by hand or by mail, 
enclosed in an envelope labeled ``Comments on Maryland PSN'' to: Office 
of Renewable Energy Programs, Bureau of Ocean Energy Management, 381 
Elden Street, HM 1328, Herndon, Virginia 20170.
    3. Qualifications Materials: Those submitting qualifications 
materials should 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.
    If you wish to protect the confidentiality of your comments or 
qualification materials, clearly mark the relevant sections and request 
that BOEM treat them as confidential. Please label privileged or 
confidential information with the caption, ``Contains Confidential 
Information'' and consider submitting such information as a separate 
attachment. Treatment of confidential information is addressed in the 
section of this PSN entitled ``Protection of Privileged or Confidential 
Information''. Information that is not labeled as privileged or 
confidential will be regarded by BOEM as suitable for public release.

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 PSN 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 30 CFR 585.216.
    Background: The area described for leasing in this PSN is the same 
as the area described in the Maryland Call for Information and 
Nominations (Call) (77 FR 5552, Feb. 3, 2012). Detailed information 
regarding the lease areas is provided in the section entitled, ``Areas 
Offered for Leasing.''

    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. Consultations ran concurrently with the 
preparation of the EA and included consultation 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). 
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 (Mid-Atlantic EA) 
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, 
renewable energy, and marine minerals in the Mid- and South Atlantic 
Planning Areas. Formal consultation concluded with receipt of a 
Biological Opinion dated July 19, 2013. The Biological Opinion, along 
with the previous informal consultation, informed the development of 
this proposed sale of commercial wind leases offshore Maryland.
    Additional environmental reviews will be prepared upon receipt of a 
Lessee's proposed project-specific plans, such as a Site Assessment 
Plan (SAP) or Construction and Operations Plan (COP).
    Atlantic Grid Holdings LLC (ROW) Grant Request: On March 31, 2011, 
Atlantic Grid Holdings LLC submitted an unsolicited application for a 
Right-of-Way grant on the OCS. Potential bidders should be aware that 
the unsolicited application is under consideration by BOEM, and that a 
portion of the project

[[Page 76644]]

is proposed to be situated within the Maryland Wind Energy Area (WEA). 
Following publication of a notice for a 60-day comment period to 
determine interest in the grant, BOEM published its determination of no 
competitive interest (77 FR 28620, May 5, 2012). The nomination and 
associated notices can be found at: https://www.boem.gov/Renewable-Energy-Program/State-Activities/Regional-Proposals.aspx.
    Deadlines and Milestones For Bidders: This section describes the 
major deadlines and milestones in the auction process from publication 
of this PSN to execution of leases pursuant to the sale. These are 
organized into various stages: (1) The PSN comment period; (2) from the 
end of PSN comment period to publication of the FSN; (3) the FSN 
waiting period; (4) conducting the Auction; and (5) from the Auction 
Stage to Lease Execution.
    1. The PSN Comment Period:
     Submit Comments: The public is invited to submit comments 
during this 60-day period.
     Public Seminar: BOEM will host a public seminar to discuss 
the lease sale process and the auction format.
     Receive Qualifications Materials: All qualifications 
materials must be received by BOEM by the end of the 60-day PSN comment 
period. This includes materials sufficient to establish a company's 
legal, technical and financial qualifications.
     Select and Invite Panelists: BOEM will appoint a panel of 
three BOEM employees for the purposes of reviewing the non-monetary 
packages and verifying the results of the lease sale.
    2. End of PSN Comment Period to FSN Publication
     Review Comments: BOEM will review all comments submitted 
in response to the PSN during the comment period.
     Finalize Qualifications Reviews: BOEM will complete any 
outstanding qualifications reviews using materials that were submitted 
during the PSN comment period and requested by BOEM prior to the FSN. 
The final list of eligible bidders will be published in the FSN.
     Prepare the FSN: BOEM will prepare the FSN by updating the 
PSN where appropriate.
     Brief and Update the BOEM Maryland Intergovernmental Task 
Force: BOEM will schedule a meeting or webinar of the BOEM Maryland 
Intergovernmental Task Force to discuss the FSN.
    3. FSN Waiting Period
     Publish FSN: BOEM will publish the FSN in the Federal 
Register.
     Bidder's Financial Form (BFF): Within 14 days of 
publication of the FSN in the Federal Register, eligible bidders must 
submit a complete and signed BFF to BOEM. Once this information has 
been processed by BOEM, bidders may log into pay.gov and leave bid 
deposits. If BOEM does not receive the BFF by the date mentioned in the 
Federal Register, a company may be disqualified from participating in 
the auction.
     Bid Deposits: Within 30 days of publication of the FSN in 
the Federal Register, bidders must submit a bid deposit meeting the 
requirements listed in the FSN. Any bidder that fails to submit the bid 
deposit by the deadline included in the FSN may be disqualified from 
participating in the auction.
     Non-Monetary Package: Within 30 days of publication of the 
FSN in the Federal Register, bidders seeking a non-monetary credit must 
submit a non-monetary package meeting the requirements listed in the 
FSN.
     Mock Auction: BOEM will hold a Mock Auction open to 
qualified sale bidders only. The Mock Auction will take place 
approximately one week before the lease sale. Final details of the Mock 
Auction will be provided in the FSN.
    4. Conducting the Auction: BOEM, through its contractor, will hold 
an auction as described in this notice. The auction will take place no 
sooner than 30 days following publication of the FSN in the Federal 
Register. The estimated timeframes described in this notice assume an 
auction date approximately 45 days after publication of the FSN.
     Convene Panel: The panel will convene to consider non-
monetary packages submitted by qualified bidders. The panel will send 
determinations of credit eligibility to BOEM, and BOEM will inform 
eligible bidders. Bidders will not be informed of the non-monetary 
credit eligibility of other bidders before the auction.
     Monetary Auction: The monetary auction will be conducted 
on the date specified in the FSN.
     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.
    5. From Auction to Lease Execution
     Refund Non-Winners: BOEM will return the bid deposit of 
any bidder that did not win a lease in the lease sale. BOEM will 
provide a written explanation of why the bidder did not win.
     Department of Justice (DOJ) Review: BOEM will allow DOJ 30 
days in which 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, 30 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 execute the leases. The first 
6-months of the first year's rent payment is due 45 days after the 
winner receives the lease copies for execution.
     Return the Leases: The auction winners will have 10 
business days from receiving the lease copies in which to file 
financial assurance, pay any outstanding balance of their bonus bids, 
and return the three executed lease copies.
     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 will execute the leases if appropriate.
    Financial Terms and Conditions: This section provides an overview 
of the basic annual payments required of a Lessee that 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 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 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

[[Page 76645]]

fraction is the nameplate capacity (as defined herein) at the time 
payment is due, which is not yet authorized for commercial operations, 
divided by the maximum nameplate capacity after full installation of 
the project, as defined in the 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 79,707 acres (the size of the 
entire Maryland WEA), the amount of rent payment will be $239,121 per 
year if no portion of the leased area is authorized for commercial 
operations. If 500 megawatts (MW) of a project's nameplate capacity is 
operating (or authorized for operation), and its most recent approved 
COP specifies a maximum nameplate capacity of 1000 MW, the rent payment 
would be $119,560.50.
    The Lessee also must pay rent for any project easement associated 
with the lease commencing on the date that BOEM approves the COP (or 
COP 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 an 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 annual 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 
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 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 facility that is delivered to the 
interconnection grid (i.e., where the Lessee's facility interconnects 
with the electric grid) relative to the wind 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, Bureau of Economic Analysis.

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 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 
leases, which BOEM has made available with this notice on its Web site 
at: https://boem.gov/Renewable-Energy-Program/State-Activities/Maryland.aspx.
    Place And Time: The auction will be held online. The time that the 
auction will be held will be published in the FSN. The date has not 
been finalized, but will be no earlier than 30 days after publication 
of the FSN in the Federal Register.
    Public Seminar: BOEM will host a public seminar to introduce 
potential bidders and other stakeholders to the auction format provided 
in the PSN, explain the auction rules, and demonstrate the auction 
process. The time and place of the seminar will be announced by BOEM 
and published on the BOEM Web site. No registration or RSVP will be 
required to attend.
    Mock Auction: BOEM will host a Mock Auction to educate qualified 
bidders about the procedures to be employed during the auction and to 
answer questions. The Mock Auction will take place between the 
publication of the FSN in the Federal Register and the date of the 
auction. Following publication of the FSN in the Federal Register, 
details of the Mock Auction will be distributed to those eligible to 
participate in the auction. All qualified bidders that intend to 
participate in the auction are strongly encouraged to participate in 
the Mock Auction. Bidders will be eligible to participate in the Mock 
Auction if they have been legally, technically and financially 
qualified to participate in the lease sale, and have submitted an 
adequate bid deposit as discussed herein.
    Bid Deposit: A bid deposit is an advance cash deposit submitted to 
BOEM in order to participate in the auction. No later than the deadline 
provided in the FSN, each bidder must have submitted a bid deposit of 
$450,000 per unit of desired initial eligibility. Each lease is worth 
one unit

[[Page 76646]]

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 in the FSN may be disqualified from participating in the 
auction. Bid deposits will be accepted online via pay.gov. Following 
publication of the FSN, each bidder must fill out the BFF included in 
the FSN. BOEM has made a copy of the proposed BFF available with this 
notice on its Web site at: https://boem.gov/Renewable-Energy-Program/State-Activities/Maryland. 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 bid deposits 
to unsuccessful bidders.
    Minimum Bid: In this auction, approximately 32,737 acres will be 
offered for sale as Lease OCS-A 0489, and approximately 46,970 acres 
will be offered for sale as Lease OCS-A 0490. BOEM proposes for this 
lease sale a minimum bid of $2 per acre for each lease area. Therefore, 
the minimum acceptable bid will be $65,474 for Lease OCS-A 0489, and 
$93,940 for Lease OCS-A 0490.
    Area Offered For Leasing: The area described for leasing in this 
PSN is the same as the area included in the Maryland Call (77 FR 5552, 
Feb. 3, 2012). The area proposed to be available for sale will be 
auctioned as two leases, Lease OCS-A 0489 [North Lease Area (North LA)] 
and Lease OCS-A 0490 [South Lease Area (South LA)]. The North LA 
consists of 32,737 acres and the South LA consists of 46,970 acres. The 
total area is approximately 79,707 acres. If there are adequate bids, 
two leases will be issued pursuant to this lease sale. A description of 
the lease areas can be found in Addendum ``A'' of the proposed leases, 
which BOEM has made available with this notice on its Web site at: 
https://boem.gov/Renewable-Energy-Program/State-Activities/Maryland.aspx.

Map of the Area Offered for Leasing

    A map of the North and South LAs 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://boem.gov/Renewable-Energy-Program/State-Activities/Maryland.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.

Delineation of the Leasing Areas

    BOEM commissioned the Department of Energy's National Renewable 
Energy Laboratory (NREL) to conduct an analysis to inform BOEM's 
identification and delineation of leasing areas within the Maryland WEA 
prior to identifying areas to propose for leasing in the PSN. NREL's 
final report for the Maryland WEA, ``Assessment of Offshore Wind Energy 
Leasing Areas for the BOEM Maryland Wind Energy Area,'' was released on 
June 26, 2013, and is available on BOEM's Web site at: https://boem.gov/Renewable-Energy-Program/State-Activities/Maryland.aspx.
    BOEM delineated the WEA so that the South LA is slightly larger 
than the North LA, utilizing the results of the NREL report to inform 
the identification of these LAs. This delineation serves two purposes. 
First, it helps to offset technological challenges to development 
caused by deeper waters in the southeastern portion of the South LA, an 
issue emphasized in NREL's final report. Second, it helps to offset 
certain restrictions to development in the South LA that BOEM may 
impose in the future, if necessary, to alleviate navigational safety 
concerns. BOEM believes it would be preferable to give each lessee 
equal footing to help prevent one lessee from being unduly burdened by 
any future development restrictions, which are known to be more likely 
in the South LA.

Potential Future Restrictions To Ensure Navigational Safety

    Potential bidders should note that portions of certain sub-blocks 
in both the North and South LAs may not be available for future 
development (i.e., installation of wind facilities) due to navigational 
safety concerns, as discussed below.

Proximity to Delaware Bay Traffic Separation Scheme

    During discussions with the Maryland Intergovernmental Task Force 
on June 24, 2011, the U.S. Coast Guard (USCG) recommended that BOEM not 
approve the installation of wind facilities within 1 nautical mile of a 
TSS to help ensure navigational safety. This recommendation was 
reiterated at subsequent Task Force meetings. Moreover, the USCG has 
expressed that they may determine in the future that a larger setback 
is necessary under certain circumstances. Tables 1 and 2 list 
potentially affected blocks and assume a 1 nautical mile setback from 
an extended Delaware Bay TSS. Maps identifying these sub-blocks are 
available on BOEM's Web site at: https://boem.gov/Renewable-Energy-Program/State-Activities/Maryland.aspx.

                         Table 1--North Leasing Area: Blocks With Potential Restrictions
----------------------------------------------------------------------------------------------------------------
             Protraction name                Protraction No.      Block No.                 Sub Block
----------------------------------------------------------------------------------------------------------------
Salisbury.................................           NJ18-05              6624  D,H
Salisbury.................................           NJ18-05              6625  E,I,N
Salisbury.................................           NJ18-05              6675  B,C,G,H,L,P
Salisbury.................................           NJ18-05              6676  M
Salisbury.................................           NJ18-05              6726  A,B,F
----------------------------------------------------------------------------------------------------------------


                         Table 2--South Leasing Area: Blocks With Potential Restrictions
----------------------------------------------------------------------------------------------------------------
             Protraction name                Protraction No.      Block No.                 Sub Block
----------------------------------------------------------------------------------------------------------------
Salisbury.................................           NJ18-05              6726  J,K,O,P

[[Page 76647]]

 
Salisbury.................................           NJ18-05              6776  D,H
Salisbury.................................           NJ18-05              6777  E,I,J,N
Salisbury.................................           NJ18-05              6827  C,G,H,L
Salisbury.................................           NJ18-05              6828  M
----------------------------------------------------------------------------------------------------------------

Traditional Tug, Towing, and Barge Traffic Route

    On April 22, 2013, BOEM received a letter from the USCG providing 
analysis of tug, towing, and barge traffic that currently transits 
through the MD WEA. The letter discussed potential safety implications 
of allowing offshore wind development in the area, particularly in the 
southeastern corner of the WEA, and requested that BOEM consider 
including two smaller LA configurations in this PSN. This letter can be 
found on BOEM's Web site at: https://boem.gov/Renewable-Energy-Program/State-Activities/Maryland.aspx.
    BOEM gathered input regarding the area to include in this PSN from 
the members of BOEM's Maryland Intergovernmental Task Force during a 
Task Force webinar held on June 27, 2013, and received additional 
comments and correspondence from relevant stakeholders since that time. 
This includes correspondence received on August 29, 2013, from the 
American Waterways Operators (AWO), an organization representing the 
U.S. tugboat, towboat, and barge industry. In its August letter, AWO 
expressed concern with the Maryland WEA and its potential to disrupt 
traditional transit routes through the southeastern corner of the WEA. 
AWO stated that if full build-out were to occur in the Maryland WEA, 
this development could cause tugboats to navigate further east or west 
from their current north-south routes, which, in certain weather 
conditions, could put these vessels at greater risk and jeopardize safe 
transit due to different sea state conditions farther offshore and 
greater congestion closer inshore. This letter can be found on BOEM's 
Web site at: https://boem.gov/Renewable-Energy-Program/State-Activities/Maryland.aspx.
    In a letter to BOEM dated September 4, 2013, the Business Network 
for Maryland Offshore Wind requested that BOEM refrain from making any 
reductions to the Maryland WEA prior to leasing. They provide responses 
to the points in USCG's April 22, 2013, letter and suggest that 
reducing the area now prior to receipt of a COP and an associated 
navigational risk assessment would be premature. The letter suggests 
that any reduction of the area due to potential navigational safety 
risk and any associated costs of rerouting traffic would be best 
addressed during review of each lessee's COP in the context of a 
comprehensive Environmental Impact Statement (EIS).
    After considering the issues raised by the USCG and other relevant 
parties and evaluating all information available to date pertaining to 
tug, towing, and barge traffic through the Maryland WEA, BOEM has 
decided not to reduce the size of the MD WEA in this PSN. BOEM will 
receive additional vessel traffic data and analysis in the future, 
which will better inform a decision regarding site-specific 
restrictions or mitigations to alleviate navigational concerns. 
Additional information that BOEM expects to have available to inform 
its decision would include the final navigational safety risk 
assessment that will be submitted with each lessee's COP, and the 
results of two ongoing studies: 1) the U.S. Coast Guard's Atlantic 
Coast Port Access Route Study (ACPARS), and 2) a BOEM-funded study, 
``Marine Vessel Traffic and Wind Energy Development Infrastructure on 
the OCS--Risk Analysis,'' being conducted by the Department of Energy's 
Pacific Northwest National Laboratory (PNNL).
    BOEM welcomes comments on navigational safety during this notice's 
comment period and will consider all comments received prior to 
publishing a Final Sale Notice and holding a sale.
    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 proposed lease terms, 
conditions and stipulations for OCS commercial wind leases in the 
Maryland WEA in Addendum ``C'' of the proposed leases. BOEM reserves 
the right to add additional terms and conditions to any approval or 
approval with modifications of a SAP and/or COP. The proposed leases, 
including Addendum ``C'', are available on BOEM's Web site at: https://boem.gov/Renewable-Energy-Program/State-Activities/Maryland.aspx. Each 
proposed lease includes 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).
     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.
    After considering comments on the PSN and these proposed 
provisions, BOEM will publish final lease terms and conditions in the 
FSN.

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.
    Qualifications--Who May Bid: Any potential bidder that has not 
already submitted a complete set of qualifications materials must do so 
by the end of the 60-day comment period of this PSN. To be eligible to 
participate in the auction, each potential bidder must have been found 
by BOEM to be legally, technically and financially qualified under 
BOEM's regulations at 30 CFR 585.106-107 by the time the FSN for this 
sale is published. Please note that technical and financial 
qualifications are lease-specific; it is not sufficient to have been 
technically and financially qualified to pursue a project offshore 
another state.
    Guidance and examples of the appropriate documentation 
demonstrating the required legal qualifications can be found in Chapter 
2 and Appendix B of Guidelines for the Minerals Management Service 
Renewable Energy Framework, available on BOEM's Web site at: https://
www.boem.gov/Renewable-Energy-

[[Page 76648]]

Program/Regulatory-Information/Index.aspx. Guidance regarding how 
bidders may demonstrate their technical and financial qualifications is 
provided in Qualification Guidelines to Acquire and Hold Renewable 
Energy Leases and Grants and Alternate Use Grants on the U.S. Outer 
Continental Shelf, available on BOEM's Web site at: https://boem.gov/Renewable-Energy-Program/Regulatory-Information/QualificationGuidelines-pdf.aspx. BOEM strongly recommends that bidders 
refer to this guidance before submitting their qualification materials, 
as the guidance is updated periodically.
    Bidders must submit documentation necessary to demonstrate their 
legal, technical, and financial qualifications to BOEM in both paper 
and electronic formats. BOEM considers an Adobe PDF file stored on a 
compact disc (CD) to be an acceptable format for submitting an 
electronic copy. In their qualification materials, bidders must provide 
a general description of the project that they would like to construct 
on the lease area sought in this sale, including estimates of the 
project area and total nameplate capacity of the proposed facilities.
    Please note that it may take a number of weeks for bidders to 
establish their legal, technical, and financial qualifications. BOEM 
advises potential bidders planning to participate in a sale to 
establish their qualifications promptly. It is not uncommon for BOEM to 
request additional materials establishing qualifications following an 
initial review of the qualifications package. Any potential bidder 
whose qualification package is incomplete at the time the FSN for this 
sale is published in the Federal Register will be found to have failed 
to establish its qualifications and will be unable to participate in 
the sale.
    Finally, potentially interested parties should note that BOEM has 
the discretion to contract one or both LAs based upon comments received 
in response to this notice and other relevant information provided to 
the bureau. If a potential bidder is interested in leasing either or 
both LAs, whether full or partial, then that party should submit their 
qualifications package during the comment period of this PSN.

Auction Procedures

Summary

    For the sale of Lease OCS-A 0489 and Lease OCS-A 0490, 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 will appoint 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 determine whether any bidder has earned a non-monetary 
credit to be used during the auction (i.e., if a bidder holds a Power 
Purchase Agreement (PPA) or a Maryland Public Service Commission (PSC)-
issued Offshore Renewable Energy Certificate (OREC) Order, as defined 
herein), and if one or more bidders have earned such a credit, the 
percentage that the credit will be worth. The auction will balance 
consideration of two variables: (1) a cash bid, and (2) a non-monetary 
credit. In sum, these two variables comprise the multi-factor bid or 
``As-Bid'' auction price. A bidder's As-Bid price, which is the sum of 
its cash bid and any credit portion earned, will either meet BOEM's 
asking price or be reflected in the bidder's own Intra-Round Bid price 
subject to certain conditions, as described more fully herein. A 
multiple-factor auction, wherein both monetary and nonmonetary bid 
variables are considered, is allowed 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 
regulations state that one bid proposal per bidder will be accepted, 
but do 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 regulations leave to BOEM the 
determination of how to administer the multiple-factor auction format 
to ensure the receipt of a fair return under the Act, 43 U.S.C. 
1337(p)(2)(A).
    BOEM's regulations at 30 CFR 585.220(a)(4) allow 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. 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. A 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. 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 LA 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 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 a Maryland OREC Order--will be applied throughout the 
auction

[[Page 76649]]

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 or OREC Order 
will receive a credit of up to 25%. 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 herein.
    The panel will evaluate non-monetary packages consisting of any 
purported PPA or qualified OREC Order to determine whether it meets the 
criteria provided in the FSN, and therefore whether it will qualify for 
a credit for its holder. It is possible that the panel could determine 
that no bidder qualifies for a non-monetary credit during the auction, 
in which case the auction would otherwise proceed as described in the 
FSN. The panel will determine the winning bids for each LA on the basis 
of the procedures described in the FSN.

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 the North 
and South LAs 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 either 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 only 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; and
     Decreasing the increments as the asking price of a LA 
nears its apparent final price.
    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 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 (i.e., the number of live bids that included the LA); and
     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. 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 herein for discussion of 
Intra-Round Bids); or
     Drop out of the auction.

A bidder may be bound by that bid or, indeed, by any other bid which 
BOEM determines is a winning bid in the award stage. Hence, a bidder 
cannot drop an uncontested bid. In no scenario can a 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 for which the 
bidder submitted a live 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

[[Page 76650]]

     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. Intra-round bidding allows bidders to more 
precisely express the maximum price they are willing to offer for the 
North, South, or both LAs while also minimizing the chance of ties. 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.
    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.
    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.
    BOEM will not consider intra-round bids for the purpose of 
determining whether to increase the asking price for a particular LA or 
to end the auction. Also, BOEM will not count or 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 the 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 herein. 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 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 
assured 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. 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 because no live bids were 
received in the final round of the auction, BOEM will proceed to Stage 
2 to award the 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 are all 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 award leases in Stage 2 to 
the bid(s) that maximize(s) the total As-Bid prices.
    Any Contingent Bids that conflict with Qualified Bids will not be 
considered. There is one notable exception to this rule. 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 for both LAs results in higher overall 
As-Bid prices than acceptance of only the Qualified Bid for a single 
LA.
    In this scenario, a bidder would be awarded both LAs and would be 
required to pay its Intra-Round Bid price associated with its Intra-
Round Bid for both LAs, even though it submitted a Qualified Bid that 
guaranteed only one of the LAs.
    This exception represents the only situation in which BOEM will 
consider for award a Contingent Bid which overlaps a 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.
    Under certain circumstances, different combinations of contingent 
bids may result in the same total As-Bid price. In such cases, BOEM 
will resolve the resulting tie with a random drawing.
    In the event a bidder submits a bid for a LA that the panel and 
BOEM determine to be a winning bid, the bidder will be expected to sign 
the applicable lease documents in a timely manner and submit the full 
cash payment due, pursuant to 30 CFR 585.224. If a 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 a bidder to timely pay the full amount due an 
indication that the 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 herein. Any single PPA or Maryland OREC Order 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 the deadline 
specified in the FSN. 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

[[Page 76651]]

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 the nearest whole dollar amount.
    The bidder's imputed credit throughout the auction and award 
process is limited to the greater of 25% for a Maryland OREC Order, or 
up to 25% for a PPA (for at least 250 MW), 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 System how 
the credit applies to their live bid and any Intra-Round Bid. In the 
case of an Intra-Round Bid for both LAs, the credit will 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 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 of a PPA and an OREC 
application, as described herein. 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 herein 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. 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.
    If the panel determines a bidder has executed a PPA for at least 
250 MW, it will be eligible for the entire 25% credit. If the panel 
determines a bidder has executed a PPA for an amount less than 250 MW, 
the bidder may still be eligible for a non-monetary credit proportional 
to the PPA's fraction of 250 MW. The smaller percentage for a partial 
credit will be calculated according to the formula below:
[GRAPHIC] [TIFF OMITTED] TN18DE13.000


Where:

 Partial Credit = Percent credit for which a smaller PPA is 
eligible.
 Full PPA = 250 MW
 Full Credit = 25%
 Partial PPA = amount (less than 250 MW) of power under 
contract

    Maryland OREC Order is an order issued by the Maryland PSC 
approving a qualifying offshore wind project and establishing an OREC 
pricing schedule, pursuant to Md. Public Utilities Code Ann. Sec.  7-
704.1.

Additional Information Regarding the Auction Format

Non-Monetary Auction Procedures
    All bidders seeking a non-monetary auction credit will be required 
to submit a non-monetary auction package prior to the auction. 
Instructions and deadlines for submittal will be provided in the FSN. 
If a bidder does not submit a non-monetary package by the date 
specified in the FSN, 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
    Prior to the auction, the Auction Manager will send several bidder 
authentication packages to each bidder shortly after BOEM has processed 
the BFFs. One package will contain tokens for each authorized 
individual. Tokens are digital authentication devices. The tokens will 
be mailed to the Primary Point of Contact indicated on the BFF. 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. In the event that a bidder fails to submit a BFF, a bid 
deposit, or does not participate in the auction, BOEM will de-activate 
that bidder's token and login information, and the bidder will be asked 
to return its tokens.
    The second package contains login credentials for authorized 
bidders. The login credentials will be mailed to the address provided 
in the BFF 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.

[[Page 76652]]

Monetary Auction Times
    This information will be elaborated on in the FSN and further 
clarified at the Mock Auction to be held prior to the lease sale. 
Additional information will be made available in an Auction System 
Technical Supplement, which will be posted on BOEM's Web site prior to 
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. The auction schedule and asking 
price increments are in BOEM's discretion, and are subject to change at 
any time before or during the auction.
    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 as 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 must 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. Bids in all rounds are preserved for consideration 
in Stage 2 of the award process. 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. No leases will be awarded to 
any bidders and no bids 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 these requirements may be returned to the bidder by the Program 
Manager of BOEM's Office of Renewable Energy Programs and, in that 
case, would not be considered for acceptance.
    Process for Issuing the Leases: 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, a 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://www.boem.gov/Renewable-Energy-Program/State-Activities/Maryland.aspx.
    If a winning bidder does not meet these three requirements within 
10 business days of receiving the lease copies as described herein, 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 the FSN, 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 (1) the three requirements 
above have been satisfied, (2) BOEM has accepted the winning bidder's 
financial assurance, and (3) 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 days of the date that the winning bidder receives the 
lease copies, the winning bidder 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

[[Page 76653]]

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/Maryland.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 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, thirty 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 LA;
     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 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 at: https://boem.gov/Renewable-Energy-Program/State-Activities/Maryland.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 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.
    Final Sale Notice: BOEM will consider comments received or 
postmarked during the PSN comment period in preparing a FSN that will 
provide the final details concerning the offering and issuance of OCS 
commercial wind energy leases in the Maryland WEA. The FSN will be 
published in the Federal Register at least 30 days before the lease 
sale is conducted and will provide the date and time of the auction.
    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 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). BOEM 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 is 
submitted as required by the Freedom of Information Act (FOIA). 
Exemption 4 of FOIA applies to trade secrets and commercial or 
financial information 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, except as required by 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 a company). 
Information that is not labeled as privileged or confidential will be 
regarded by BOEM as suitable for public release.

Section 304 of the National Historic Preservation Act (16 U.S.C. 470w-
3(a))

    BOEM is required, after consultation with the Secretary of the 
Interior, to withhold the location, character, or ownership of historic 
resources if it determines that disclosure may, among other things, 
cause a significant invasion of privacy, risk harm to the historic 
resources or impede the use of a traditional religious site by 
practitioners. Tribal entities and other interested parties should 
designate information that they wish to be held as confidential.

    Dated: November 30, 2013.
Tommy P. Beaudreau,
Director, Bureau of Ocean Energy Management.
[FR Doc. 2013-29977 Filed 12-17-13; 8:45 am]
BILLING CODE 4310-MR-P