Atlantic Wind Lease Sale 3 (ATLW3) Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore Maryland-Final Sale Notice MMAA104000, 38060-38070 [2014-15759]

Agencies

• DEPARTMENT OF THE INTERIOR
• Bureau of Ocean Energy Management

[Federal Register Volume 79, Number 128 (Thursday, July 3, 2014)]
[Notices]
[Pages 38060-38070]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15759]



[[Page 38060]]

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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

[Docket No. BOEM-2014-0038]


Atlantic Wind Lease Sale 3 (ATLW3) Commercial Leasing for Wind 
Power on the Outer Continental Shelf Offshore Maryland--Final Sale 
Notice MMAA104000

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

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

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SUMMARY: This document is the Final Sale Notice (FSN) for the sale of 
two commercial wind energy leases on the Outer Continental Shelf (OCS) 
offshore Maryland, pursuant to BOEM's regulations at 30 CFR 585.216. 
BOEM is offering Lease OCS-A 0489 (North Lease Area) and Lease OCS-A 
0490 (South Lease Area) for sale using a multiple factor auction 
format. The two lease areas (LAs) together comprise the Maryland 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 LAs) (77 FR 5552). The two LAs 
are identical to those announced in the Proposed Sale Notice (PSN) for 
Commercial Leasing for Wind Power on the Outer Continental Shelf (OCS) 
Offshore Maryland, which was published on December 18, 2013, in the 
Federal Register with a 60-day public comment period (78 FR 76643). 
This FSN contains information pertaining to the areas available for 
leasing, lease provisions and conditions, auction details, the lease 
form, criteria for evaluating competing bids, award procedures, appeal 
procedures, and lease execution. The issuance of the leases resulting 
from this lease sale would not constitute an approval of project-
specific plans to develop offshore wind energy. Such plans, expected to 
be submitted by successful lessees, will be subject to subsequent 
environmental and public review prior to a decision to proceed with 
development.

DATES: BOEM will hold a mock auction for the eligible bidders on August 
12, 2014. The monetary auction will be held online and will begin at 
8:30 a.m. Eastern Daylight Time (EDT) on August 19, 2014. 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, Maryland 
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 two LAs offered in this FSN are the same areas BOEM 
announced in the PSN on December 18, 2013 (78 FR 76643). BOEM received 
20 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/State-Activities-Maryland/. BOEM also has 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. The document entitled, 
Response to Comments and Explanation of Changes can be found at the 
following URL: https://www.boem.gov/State-Activities-Maryland/.
    On February 3, 2012, BOEM published a 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 two LAs identified in this FSN together comprise the Maryland 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/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/Mid-Atlantic_Final_EA_012012.pdf.
    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 on July 19, 2013, with 
receipt of a Biological Opinion that, along with the previous informal 
consultation, informed the development of the Maryland commercial wind 
lease packages.
    Additional environmental reviews will be conducted upon receipt of 
the lessees' proposed project-specific plans, such as a Site Assessment 
Plan (SAP) or Construction and Operations Plan (COP).

Relevant Information for Potential Bidders

    Potential bidders should be aware of the following items under 
consideration by BOEM relevant to or situated near the Maryland 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. On May 1, 2013, Atlantic Grid 
Holdings LLC submitted a supplement to its application, which can be 
found at the web address above. BOEM anticipates that the Maryland 
lease sale will occur prior to a decision regarding the granting of a 
ROW to Atlantic Grid Holdings LLC, as a result of the required 
environmental compliance documentation that is still needed. BOEM does 
not foresee the activities under the ROW grant interfering with the 
lessee's ability to develop the lease areas.
    Final Rule: Timing Requirements for the Submission of a SAP or 
General Activities Plan (GAP) for a Renewable Energy Project on the 
Outer Continental Shelf: On April 17, 2014, BOEM published its Final 
Rule to extend timing requirements for submitting a SAP and a GAP 
pursuant to its renewable energy regulations. Effective May 19, 2014, 
all OCS renewable energy lessees and grantees will have 12 months from 
lease or grant issuance to submit a SAP or GAP. Previously, BOEM 
regulations required lessees and grantees to submit a SAP or a GAP

[[Page 38061]]

either 60 days after BOEM determined there was no competitive interest 
in the lease or grant, or six months after the lease or grant was 
issued competitively. Leases OCS-A 0489 and OCS-A 0490 have been 
updated to conform to the Final Rule. The Final Rule can be found at: 
https://www.boem.gov/FR-79-21617/.
    Potential Future Restrictions--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 (TSS)

    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 it 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://www.boem.gov/State-Activities-Maryland/.

                         Table 1--North Leasing Area: Blocks With Potential Restrictions
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           Protraction name                 Protraction No.          Block No.                Sub block
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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.
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                         Table 2--South Leasing Area: Blocks With Potential Restrictions
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           Protraction name                 Protraction No.          Block No.                Sub block
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Salisbury............................  NJ18-05.................               6726  J,K,O,P.
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.
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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 
leasing two smaller LA configurations. This letter can be found on 
BOEM's Web site at: https://www.boem.gov/State-Activities-Maryland/.
    BOEM gathered input regarding the area to lease 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://www.boem.gov/State-Activities-Maryland/.
    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 offered in this FSN. BOEM 
will receive additional vessel traffic data and analysis in the future, 
which will better inform BOEM's decisions whether to approve, 
disapprove, or approve with conditions a lessee's COP, particularly 
with regard to 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). 
Further discussion on this topic is provided in the Response to 
Comments and Explanation of Changes, which can be found at the 
following URL:https://www.boem.gov/State-Activities-Maryland/.
    List of Eligible Bidders: BOEM has determined that the following 
companies are legally, technically, and

[[Page 38062]]

financially qualified, pursuant to 30 CFR 585.106 and 107, to hold a 
commercial wind lease offshore Maryland, and are therefore eligible to 
participate in this lease sale as bidders.

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                                                                 Company
                         Company name                              No.
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Apex Offshore Maryland, LLC...................................     15048
Bluewater Wind Maryland LLC...................................     15018
Convalt Energy LLC............................................     15051
Dominion Wind Development, LLC................................     15049
EDF Renewable Development, Inc................................     15028
Energy Management, Inc........................................     15015
Fishermen's Energy, LLC.......................................     15005
Green Sail Energy LLC.........................................     15045
IBERDROLA RENEWABLES, Inc.....................................     15019
Maryland Offshore Wind LLC....................................     15016
Orisol Energy US, Inc.........................................     15020
RES America Developments Inc..................................     15021
SCS Maryland Energy LLC.......................................     15050
Sea Breeze Energy LLC.........................................     15044
Seawind Renewable Energy Corporation LLC......................     15017
US Wind Inc...................................................     15023
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    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 (BFF): Each eligible bidder must 
submit a BFF to BOEM by July 17, 2014. The BFF is available at: https://www.boem.gov/State-Activities-Maryland/. Once this information has been 
processed by BOEM, bidders may log into pay.gov and leave bid deposits. 
BOEM may disallow any bidder who fails to submit the BFF by this 
deadline from participating in the auction.
     Bid Deposits: Each bidder must submit an adequate bid 
deposit by August 1, 2014, as described in the ``Bid Deposits'' 
section. BOEM may disallow any bidder who fails to submit the bid 
deposit by this deadline from participating in the auction.
     Non-Monetary Package: Each bidder must submit a non-
monetary package, if it is applying for a credit, by August 8, 2014.
     Mock Auction: BOEM will hold a Mock Auction on August 12, 
2014. The Mock Auction will be held online. BOEM will contact each 
eligible bidder and provide instructions for participation. Only 
bidders eligible to participate in this auction will be permitted to 
participate in the Mock Auction.
     Panel Convenes to Evaluate Non-Monetary Packages: On 
August 15, 2014, the panel described in the ``Auction Procedures'' 
section will convene to consider non-monetary packages. The panel will 
send determinations of eligibility to BOEM, who will inform each bidder 
by email of the panel's determination of their status.
     Monetary Auction: On August 19, 2014, BOEM, through its 
contractor, will hold the monetary stage of the auction. The auction 
will start at 8:30 a.m. EDT. The auction will proceed electronically 
according to a schedule to be distributed by the BOEM Auction Manager 
at the time of the auction. BOEM anticipates that the auction may 
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.
     Reconvene the Panel: The panel will reconvene to verify 
auction results.
     Refund Non-Winners: BOEM will return the bid deposits of 
any bidders who did not win a lease.
     Department of Justice (DOJ) Review: BOEM will afford DOJ 
30 days to conduct an antitrust review of the auction, pursuant to 43 
USC 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.
     Deliver the Leases: BOEM will send three lease copies to 
each winner, with instructions on how to accept and execute the lease. 
The first year's rent payment is due 45 days after the winner receives 
the lease for execution.
     Return the Leases: 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 the Leases: 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.
    Areas Offered for Leasing: The North and South LAs described for 
leasing in this FSN are the same areas described in the Maryland PSN 
(78 FR 76643, December 18, 2013). The North and South LAs together 
contain 9 whole OCS blocks and 80 sub-blocks, or approximately 79,707 
acres. The North LA consists of 32,737 acres and the South LA consists 
of 46,970 acres. If there are adequate bids, two leases will be issued 
pursuant to this lease sale. A description of the LAs and lease 
activities can be found in Addendum ``A'' of each lease, which BOEM has 
made available with this notice on its Web site at: https://www.boem.gov/State-Activities-Maryland/.
    Map of the Area Offered for Leasing: A map of the North and South 
LAs can be found at the following URL: https://www.boem.gov/State-Activities-Maryland/.
    A large scale map 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.
    Withdrawal of Blocks: Interested parties should note that BOEM 
reserves the right to withdraw portions of the LAs prior to its 
execution of a lease based upon relevant information provided to the 
Bureau.
    Lease Terms and Conditions: BOEM has included specific terms, 
conditions, and stipulations for the OCS commercial wind leases in the 
Maryland WEA within Addendum ``C'' of each lease. BOEM reserves the 
right to apply additional terms and conditions to activities conducted 
on the lease incident to any future approval or approval with 
modifications of a SAP and/or COP. Each lease, including Addendum 
``C'', is available on BOEM's Web site at: https://www.boem.gov/State-Activities-Maryland/. Each lease consists of an instrument with 20 
sections and the following seven 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

[[Page 38063]]

be completed at the time of COP approval.
    Plans: Pursuant to 30 CFR 585.601, the lessee must submit a SAP 
within the 1 year Preliminary Term. If the lessee intends to continue 
its commercial lease with an operations term, the lessee must submit a 
COP at least 6 months before the end of the site assessment term.
    Financial Terms and Conditions: This section provides an overview 
of the basic annual payments that the Lessee must pay under the lease 
terms, and the financial assurance requirements that will be associated 
with each lease.
    Rent: The first year's rent payment of $3 per acre for the entire 
leased area is due within 45 days of the date the winning bidder 
receives the lease for execution. 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 LA 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 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 32,737 acres (the size of the 
Maryland North LA), the amount of rent payment will be $98,211 per year 
if the entire leased area is not yet authorized for commercial 
operations. If the lessee has 250 megawatts (MW) authorized under 
commercial operations and its most recent approved COP specifies a 
maximum project size of 500 MW, the rent payment will be $49,106 
(reflecting that rental payments are rounded up to the nearest whole 
dollar).
    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: For the purposes of calculating the initial annual 
operating fee payment, an operating fee rate is applied to a proxy for 
the wholesale market value of the electricity expected to be generated 
from the project during its first 12 months of operations. This initial 
payment is prorated to reflect the period between the commencement of 
commercial operations and the Lease Anniversary. The initial annual 
operating fee payment 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 subsequent annual operating fee payments are 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. For example, an annual operating fee for a 100 MW wind 
facility operating at 40% capacity (decimal equivalent is 0.4) with a 
regional wholesale power price of $40/MWh under an operating fee rate 
of 2% (decimal equivalent is 0.02) would be calculated to be $277,440 
as follows: Annual operating fee = 100 MW x 8,670 hours/year x 0.4 x 
$40/MWh power price x 0.02.
    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 the 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: The capacity factor relates to the amount of 
energy delivered to the grid during a period of time compared to the 
amount of energy the wind facility would have produced at full capacity 
during that same period of time. This factor is represented as a 
decimal between zero and one. There are several reasons why the amount 
of power delivered is less than the theoretical 100% of capacity. For a 
wind facility, the capacity factor is mostly determined by the 
availability of wind. Transmission line loss and down time for 
maintenance or other purposes also affect the capacity factor.
    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.
    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://

[[Page 38064]]

www.boem.gov/State-Activities-Maryland/.
    BID Deposit: A bid deposit is an advance cash deposit submitted to 
BOEM in order to participate in the auction. No later than August 1, 
2014, each bidder must have submitted a bid deposit of $450,000 per 
unit of desired initial eligibility. Each lease is worth one unit of 
bid eligibility in the auction. The required bid deposit for any 
participant intending to bid on both leases in the first round of the 
auction will be $900,000. Any participant intending to bid on only one 
of the leases during the auction must submit a bid deposit of $450,000. 
Any bidder that fails to submit the bid deposit by August 1, 2014, 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://www.boem.gov/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 a 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 (North Lease Area), and 
approximately 46,970 acres will be offered for sale as Lease OCS-A 0490 
(South Lease Area). The minimum bid is $2 per acre for each LA. 
Therefore, the minimum acceptable bid will be $65,474 for the North 
Lease Area and $93,940 for the South Lease Area.

Auction Procedures

Summary

    For the sale of Lease OCS-A 0489 (North Lease Area) and Lease OCS-A 
0490 (South Lease Area), BOEM will use a multiple-factor auction format 
with a multiple-factor bidding system. Under this system, BOEM may 
consider a combination of monetary and nonmonetary factors, or 
``variables,'' in determining the outcome of the auction. BOEM has 
appointed a panel of three BOEM employees for the purposes of reviewing 
the non-monetary packages and verifying the results of the lease sale. 
BOEM reserves the right to change the composition of this panel prior 
to the date of the lease sale. The panel will meet to consider non-
monetary packages on August 15, 2014. The panel will determine whether 
any bidder has earned a non-monetary credit to be used during the 
auction, and, if one or more bidders have earned such a credit, the 
percentage the credit will be worth.
    The auction will balance consideration of two variables: (1) a cash 
bid, and (2) a non-monetary credit, i.e., if a bidder holds a Power 
Purchase Agreement (PPA), or a Maryland Public Service Commission (PSC) 
issued Offshore Renewable Energy Credit (OREC), as described herein. 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, can be submitted by the bidder at 
BOEM's asking price or as an Intra-Round Bid price subject to certain 
conditions, as described more fully herein. BOEM's regulations at 30 
CFR 585.220(a)(4) and 585.221(a)(6) provide for multiple-factor 
auctions, wherein both monetary and nonmonetary bid variables may be 
considered.

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 a combination of 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. A 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 has chosen to do this through an auction format 
that considers a non-monetary factor along with ascending bidding over 
multiple rounds, sharing certain useful information with bidders at the 
end of each auction round (e.g., the number of live bids associated 
with each LA), and ensuring that a bidder's live bid submitted in the 
final round of the auction will win the LAs included in that bid. This 
auction format enhances competition and reduces bidder uncertainty more 
effectively than other auction types that BOEM considered because the 
multiple-factor format provides for sharing relevant information and 
allowing bidders to respond in subsequent rounds as that information is 
revealed.
    BOEM's regulations at 30 CFR 585.220(a)(4) provide for a multi-
round auction in which each bidder may submit only one proposal per LA 
or for a set of LAs in each round of the auction. This formulation 
presents an administratively efficient auction process. It also takes 
advantage of the flexibility built into the regulations by enabling 
BOEM to benefit from both the consideration of more than one bidding 
factor and the price discovery involved in successive rounds of 
bidding.
    The auction will be conducted in a series of rounds. At the start 
of each round, BOEM will state an asking price for the North LA and an 
asking price for the South LA. The asking price for a bid on both LAs 
is the sum of the asking prices for the North LA and the South LA. Each 
bidder will indicate whether it is willing to meet the asking price for 
one or both LAs. A bid submitted at the full asking price for one or 
both LAs in a particular round is referred to as a ``live bid.'' A 
bidder must submit a live bid for at least one of the LAs in each round 
to participate in the next round of the auction. As long as there is at 
least one LA that is included in two or more live bids, the auction 
continues, and the next round is held.
    A bidder 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 that 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.'' 
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

[[Page 38065]]

asking price goes up, the bidder that placed the previously carried-
forward bid is free to bid on either LA 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 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. 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.
    Under BOEM's regulations at 30 CFR 585.222(d), a panel will weigh 
the variables and determine the winner(s) of the auction. The 
regulations state that BOEM ``will determine the winning bid for 
proposals submitted under the multiple-factor bidding format on the 
basis of selection by the panel. . .'' 30 CFR 585.224(h). The panel 
will evaluate each non-monetary package to determine whether it meets 
the criteria provided in this 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 in accordance with the procedures described in this 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 initial eligibility is determined based on the amount 
of the bid deposit submitted by the bidder by August 1, 2014. 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 continuing 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. Unless a bidder has an uncontested bid that is carried 
forward into the next round, a bidder that submitted a live bid for 
both LAs may choose to submit a live bid for one LA. 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 bidding.
    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 bidding.
    Before each subsequent round of the auction, BOEM will raise the 
asking price for any LA that received more than one live bid in the 
previous round. BOEM will not raise the asking price for a LA that 
received only one or no live bids in the previous round.
    BOEM, in its sole discretion, will determine asking price 
increments. 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. Note that in this sale, a carried-forward bid will always be for 
only one LA--if a live bid consisting of both North and South was 
uncontested, the auction would end. In particular, for rounds in which 
a bidder finds its uncontested bid is carried forward, the bidder will 
be unable to do the following:
     Switch to the other LA;
     Submit an Intra-Round Bid (see herein for discussion of 
Intra-Round Bids); or
     Drop out of the bidding.
    In this scenario, the bidder is effectively ``frozen'' through 
future auction rounds for as long as its bid for that LA remains 
uncontested. Moreover, the bidder may be bound by that bid or, indeed, 
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 any round 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 (i.e., a 
contested bid), a bidder with an eligibility of one (that is, a bidder 
who submitted a live bid for

[[Page 38066]]

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 bidding.

    Additionally, if a bid is not being carried forward by BOEM (i.e., 
a contested bid), a bidder with an eligibility of two (that is, a 
bidder who submitted a live bid for both North and South in the 
previous round) may:
     Submit a live bid for both the North and South LAs;
     Submit a live bid for either the North LA or the South LA;
     Submit an Intra-Round Bid for both the North and South 
LAs, and a live bid for either the North LA or the South LA;
     Submit an Intra-Round Bid for both the North and South 
LAs, no live bids, and exit the auction; or
     Submit nothing, and drop out of the bidding.
    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, e.g., 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 the presence of 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 be determined by the auction software, which 
will analyze the monetary and credit portion of the bids, determine 
provisional winners, find the LAs won by the provisional winners, and 
calculate 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. Live bids submitted before the final round and any Intra-Round 
Bids submitted in any round of the auction are Contingent 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 Contingent Bids. If both LAs receive live bids in the final 
round, they are awarded to bidders in Stage 1, and the second award 
stage is not necessary. If either the North LA or the South LA received 
a Contingent Bid but not a Qualified Bid, 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
    In Stage 2, BOEM will consider Contingent Bids to determine if the 
LA(s) not awarded in Stage 1 can be awarded in Stage 2. BOEM will award 
these LAs in Stage 2 based upon the Contingent Bids that maximize the 
total As-Bid prices in the auction. However, in order to preserve the 
award of Qualified Bids in Stage 1, the only circumstance in which a 
Contingent Bid may replace a Qualified Bid is when the Contingent Bid 
is submitted by the same bidder and includes the LA of the Qualified 
Bid it replaces. For example, suppose a particular bidder placed a live 
bid for the North LA in the final round of this auction and a live bid 
was not entered for the South LA in that round. In Stage 2, BOEM would 
then consider only awards in which this bidder receives the North LA 
and possibly also the South LA (e.g., as a result of a Contingent Bid 
for both the North LA and South LA). If the bidder's Qualified Bid is 
replaced by its Contingent Bid for the North and South LAs (represented 
either by an Intra-Round bid for both LAs or by a bid comprising both 
LAs in the previous round), the bidder would pay the price associated 
with its Contingent Bid for the LAs contained therein.
    Under certain circumstances, different combinations of Contingent 
Bids from two or more bidders 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 as 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 pursuant to 30 CFR 
585.222(d) to evaluate bidders' non-monetary packages to determine 
whether and to what extent each bidder

[[Page 38067]]

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. In order to receive a credit for a PPA or Maryland OREC Order, 
a bidder must be legally, technically and financially eligible to 
acquire a commercial OCS wind lease, and any single PPA or Maryland 
OREC Order cannot be used by more than one bidder in the auction.
    The percentage credit that will be applicable to each bidder 
throughout the auction and award process is determined based on the 
panel's evaluation of required documentation submitted by the bidders 
as of August 8, 2014. Bidders will be informed by email before the 
monetary auction about the percentage credit applicable to their bids. 
A bidder may not receive more than one credit, and the bid credit will 
be applicable to only one LA. Any non-monetary credit will be 
applicable only to the higher priced LA in a bid for both LAs. For an 
Intra-Round Bid containing both LAs, the higher priced LA will be 
determined using the previous round's asking prices. In each round, the 
auction system will display to each bidder 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 credit percentage is limited to the greater of 25% for 
a Maryland OREC Order, or up to 25% for a PPA. This credit percentage 
will be 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 a live bid for both LAs, the credit 
will apply only to the LA having the highest current round asking 
price. In the case of an Intra-Round Bid for both LAs, the credit will 
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, based on the criteria of a PPA or Maryland OREC Order as 
provided in this FSN, determine whether bidders have established that 
they are qualified to receive a credit and the percentage at which that 
credit will apply. 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 the equivalent. 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 timeline 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] TN03JY14.011

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 Public Utilities Article Sec.  7-704.1 of 
the Maryland Code Annotated. If the panel determines a bidder has been 
issued a Maryland OREC Order, it will be eligible for the entire 25% 
credit.

Additional Information Regarding the Auction

Non-Monetary Auction Procedures

    All bidders seeking a non-monetary auction credit are required to 
submit a non-monetary auction package. If a bidder seeks a non-monetary 
auction credit, this submission must contain information sufficient to 
establish the bidder's eligibility to receive a non-monetary credit in 
the monetary phase of the auction. Further information on this subject 
can be found in the section of this notice entitled, ``Credit Factor 
Definitions.'' If a bidder does not submit a non-monetary package by 
August 8, 2014, to BOEM, then BOEM will assume that bidder is not 
seeking a non-monetary auction credit and the panel will not consider 
that bidder for a non-monetary auction credit.

[[Page 38068]]

Bidder Authentication

    Prior to the auction, the Auction Manager will send several bidder 
authentication packages to the bidders 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.

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 Auction System Technical Supplement available on 
BOEM's Web site at: https://www.boem.gov/State-Activities-Maryland/. The 
Auction System Technical Supplement describes auction procedures that 
are incorporated by reference in this notice, except where the 
procedures described in the Auction System Technical Supplement 
directly contradict this notice.
    The monetary auction will begin at 8:30 a.m. EDT on August 19, 
2014. Bidders may log in as early as 6:30 a.m. on that day. We 
recommend that bidders log in no later than 7:30 a.m. on that day to 
ensure that any login issues are resolved prior to the start of the 
auction. 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 6:00 p.m. each day. BOEM anticipates the auction will last 
one or two business days, but bidders are advised to prepare to 
continue bidding for additional business days as necessary to resolve 
the auction.
    BOEM and the auction contractors will use the auction platform 
messaging service to keep bidders informed on issues of interest during 
the auction. For example, BOEM may change the schedule at any time, 
including during the auction. If BOEM changes the schedule during the 
auction, it will use the messaging feature to notify bidders that a 
revision has been made, and direct bidders to the relevant page. BOEM 
will also use the messaging system for other changes and items of 
particular note during the auction.
    Bidders may place bids at any time during the round. At the top of 
the bidding page, a countdown clock will show how much time remains in 
the round. Bidders have until the scheduled time to place bids. Bidders 
should do so according to the procedures described in the Auction 
System Technical Supplement and practiced at the Mock Auction. No 
information about the round is available until the round has closed and 
results have been posted, so there should be no strategic advantage to 
placing bids early or late in the round.

Alternate Bidding Procedures

    Any bidder who is unable to place a bid using the online auction 
and would be interested in placing a bid using the Alternate Bidding 
Procedures must:
     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. The bidder must explain to the BOEM Auction 
Manager the reasons for which he/she is forced to place a bid using the 
Alternate Bidding Procedures. BOEM may, in its sole discretion, permit 
or refuse to accept a request for the placement of a bid using the 
Alternate Bidding Procedures.
     The Alternate Bidding Procedures enable a bidder who is 
having difficulties accessing the Internet to submit its bid via an 
Alternate Bidding Form that can be faxed to the auction manager. 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 Procedures, 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. 
When using the Alternate Bidding Procedures, 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 Alternate Bidding Form before the round ends. 
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. If the bidder calls to enter a bid after results 
have been posted, BOEM will reject the bid.
    Except for bidders who have uncontested bids in the current round, 
failure to place a bid during a round will be interpreted as dropping 
out of the auction. It is possible that bids entered in prior rounds, 
before the bidder stopped bidding, may be awarded one or both LAs 
pursuant to BOEM's stage 2 procedures. Bidders are held accountable for 
all bids placed during the auction. This is true if they continued 
bidding in the last round, if they placed an 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, among others, those related 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

[[Page 38069]]

bid submitted that does not satisfy any of these requirements may be 
returned to the bidder submitting that bid by the Program Manager of 
BOEM's Office of Renewable Energy Programs and, 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 to each 
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 pay.gov, the Web site bidders used to submit bid 
deposits) 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/State-Activities-Maryland/.
    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.
    In the event that the provisional winner does not execute and 
return the leases according to the instructions in this notice, BOEM 
reserves the right to reconvene the panel to determine whether it is 
possible to identify a bid that would have won in the absence of the 
bid previously determined to be the winning bid. In the event that a 
new winning bid is selected by the panel, BOEM will follow the 
procedures in this section for the new winner(s).
    BOEM will not execute a lease until (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 year's rent using 
the pay.gov Renewable Energy Initial Rental Payment form available at: 
https://pay.gov/paygov/forms/formInstance.html?agencyFormId=27797604.
    Subsequent annual rent payments must be made following the detailed 
instructions contained in the ``Instructions for Making Electronic 
Payments'' available on BOEM's Web site at: https://www.boem.gov/State-Activities-Maryland/.
    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 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 pursuant to the Act at 43 U.S.C. 
1337(c) if it is determined by the Attorney General in consultation 
with the Federal Trade Commission that doing so would be 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 BFF, which can be found on BOEM's 
Web site: https://www.boem.gov/State-Activities-Maryland/. 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 parts 180 and 
1400 and agree to communicate the requirement to comply with these 
regulations to persons with whom the lessee does business as it relates 
to this lease, by including this term as a condition in their contracts 
and other transactions.
    Force Majeure: The Program Manager of BOEM's Office of Renewable 
Energy Programs has the discretion to change any date, time, and/or 
location specified in the FSN in case of a force majeure event that the 
Program Manager deems may interfere with a fair and proper lease sale 
process. Such events may include, but are not limited to: natural 
disasters (e.g., earthquakes, hurricanes, floods), wars, riots, acts of 
terrorism, fire, strikes, civil disorder or other events of a similar 
nature. In case of such events, bidders should call 703-787-1320 or 
access the BOEM Web site at: https://www.boem.gov/Renewable-Energy-Program/index.aspx.
    Appeals: The appeals procedures are provided in BOEM's regulations 
at 30 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 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

[[Page 38070]]

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: June 23, 2014.
Walter D. Cruickshank,
Acting Director, Bureau of Ocean Energy Management.
[FR Doc. 2014-15759 Filed 7-2-14; 8:45 am]
BILLING CODE 4310-MR-P