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[Federal Register Volume 77, Number 232 (Monday, December 3, 2012)]
[Notices]
[Pages 71612-71621]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-29096]

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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

[Docket No. BOEM-2012-0095]

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

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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 Rhode Island and Massachusetts, pursuant to BOEM's regulations 
at 30 CFR 585.216. BOEM proposes to offer for sale, using a multi-
factor auction format, two leases that together encompass the Rhode 
Island and Massachusetts Wind Energy Area (WEA) that was identified on 
February 24, 2012 (see ``Areas Offered for Leasing'' below for a 
description of the WEA and lease areas). 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 this notice. The issuance of the proposed 
leases resulting from this announcement would not constitute an 
approval of

[[Page 71613]]

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 1, 2013. 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).
    The end of the comment period is also the deadline for potential 
bidders to submit qualification materials. All bidders interested in 
participating in the 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 1, 
2013.

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: http://www.regulations.gov. In the entry 
entitled, ``Enter Keyword or ID,'' enter BOEM-2012-0095 and then click 
``search.'' Follow the instructions to submit public comments.
    2. Written Comments: In written form, delivered by hand or by mail, 
enclose comments in an envelope labeled ``Comments on Rhode Island and 
Massachusetts PSN'' to: Office of Renewable Energy Programs, Bureau of 
Ocean Energy Management, 381 Elden Street, HM 1328, Herndon, Virginia 
20170.
    3. Qualification Materials: Those submitting qualification 
materials should contact Jessica Bradley, BOEM Office of Renewable 
Energy Programs, at 381 Elden Street, HM 1328, Herndon, Virginia 20170, 
(703) 787-1320, or jessica.bradley@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 subject to 
public release.

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

    Authority: This 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 585.216.

    Background: The proposed lease areas are the same as the WEA that 
BOEM announced on February 24, 2012, (see Area Identification 
announcement available at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx). BOEM published the Notice 
of Availability (NOA) for the Commercial Wind Lease Issuance and Site 
Assessment Activities on the Atlantic Outer Continental Shelf (OCS) 
Offshore Rhode Island and Massachusetts Environmental Assessment (EA) 
(77 FR 39508) on July 3, 2012. The EA may be found at: http://www.boem.gov/Renewable-Energy-Program/Smart-from-the-Start/Index.aspx. 
BOEM is currently considering the comments on the EA and possible 
revisions.
    Ongoing consultations concurrent with the preparation of the EA 
include consultations 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). Once BOEM has completed the EA, and if the EA 
concludes that the proposed action will not cause significant 
environmental impacts, BOEM will publish a Finding of No Significant 
Impact (FONSI).
    The proposed lease areas identified in this PSN match the Rhode 
Island and Massachusetts WEA described as the proposed action and 
preferred alternative in the EA. In the event that BOEM decides to 
substantially revise the terms and conditions outlined within this PSN 
as a result of the completion of the environmental review and 
consultation process, which will not occur until after the publication 
of this PSN, BOEM will publish a second PSN that includes the revised 
terms and conditions and publish it in the Federal Register for a 60-
day public comment period before moving forward with publication of a 
Final Sale Notice (FSN). 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).
    This PSN was developed in consultation with the joint Rhode Island 
and Massachusetts Renewable Energy Task Force. BOEM received comments 
from several Task Force members during the development of this PSN, 
including from the Rhode Island State Energy Office, the City of New 
Bedford Economic Development Commission, a Task Force member from the 
Town of Aquinnah, and the National Oceanic and Atmospheric 
Administration's National Marine Fisheries Service (NMFS). In addition, 
the Rhode Island Coastal Resources Management Council forwarded to BOEM 
comments on the draft PSN and EA that it had received from members of 
the Habitat Advisory Board established by the State. The Rhode Island 
State Energy Office requested that BOEM consider non-monetary factors 
in the multiple auction format and recommended that the Joint 
Development Agreement (JDA) executed by the State of Rhode Island be 
awarded a minimum 25 percent discount in the auction. Additional 
information on the JDA can be found in this notice in the section 
entitled, ``Multiple Factor Definitions.'' A member of the Rhode Island 
Habitat Advisory Board expressed concern about publication of the PSN 
before a FONSI determination has been made; reiterated concerns about 
areas within the WEA where glacial moraines are located; proposed 
additional requirements for protection of endangered species, in 
particular the North Atlantic Right Whale; and requested that BOEM 
consider implementing a discount for non-monetary values in the auction 
format. The additional measures proposed for North Atlantic Right Whale 
protection are similar to those previously developed by a consortium of 
nongovernmental organizations and wind industry representatives and 
presented to BOEM for consideration in issuing commercial wind leases 
off New Jersey, Delaware, Maryland, and Virginia. A Task Force member 
from the Town of Aquinnah suggested that BOEM consider proposals that 
provide community benefits in the auction format and expressed concern 
with the requirements for protection of North Atlantic Right Whales. 
The City of New Bedford Economic Development Commission expressed 
concern regarding the inclusion of a discount in the auction format for 
the State of Rhode Island's preferred developer. NMFS

[[Page 71614]]

provided recommendations for language to be clarified in the PSN, as 
well as in Addendum C of the proposed lease.
    Financial Terms and Conditions: This section provides an overview 
of the basic annual payments required of the Lessee, which will be 
fully described in the lease.
    Rent: The first year's rent payment for the entire leased area is 
due within 45 calendar days of the date the winning bidder receives the 
lease for execution. Thereafter, annual rent payments are due on the 
anniversary of the lease Effective Date until commercial operations on 
the lease commence, i.e., when the generation of electricity begins. 
The annual rental rate will be $3.00 per acre, and this rate will be 
applicable to the entire leased area. For example, for a lease the size 
of 164,750 acres (the size of the entire WEA), the amount of rent 
payment will be $494,250 per year. The Lessee also must pay rent for 
any project easement associated with the lease commencing on the date 
that BOEM approves the COP (or modification) that describes the project 
easement. Annual rent for a project easement, 200-feet wide and 
centered on the transmission cable, is $70.00 per statute mile. For any 
such 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 initial annual operating fee is prorated and due 
within 45 calendar days after the commencement of commercial operations 
on the lease, and subsequent payments are due on or before each Lease 
Anniversary annually thereafter. The annual operating fee payment is 
calculated by multiplying an operating fee rate by the imputed 
wholesale market value of the projected 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), an annual capacity factor, and the 
historical, annual average regional wholesale power price index.
    Operating Fee Rate: The operating fee rate is 0.02 through the 
eighth year of commercial operations on the lease. Starting in the 
ninth year of commercial operations, the operating fee rate is 0.04 
through the remaining term of the lease.
    Nameplate Capacity: The nameplate capacity at the start of each 
year of commercial operations on the lease as specified in the COP will 
be used to allow for installation schedules or repowering, recognizing 
that a project's designed capacity may not be fully available in every 
year. Using the capacity at the beginning of each year, as specified in 
the COP, adjusts the nameplate capacity for these schedules.
    Capacity Factor: The capacity factor for the first six full years 
of commercial operations on the lease is set to 0.4 to allow for one 
year of installation and testing followed by five years at full 
availability. At the end of the sixth full year, the capacity factor 
will be adjusted to reflect the performance over the previous five 
years based upon the actual metered electricity generation at the 
delivery point to the electrical grid. Similar adjustments to the 
capacity factor will be made once every five years thereafter. The 
maximum change in the capacity factor from one period to the next will 
be limited to plus or minus 10 percent of the previous period's value.
    Wholesale Power Price Index: The wholesale power price is 
determined at the time each annual operating fee payment is due. The 
wholesale power price will be based on the weighted average of the 
inflation-adjusted peak and off-peak spot price indices for the 
Northeast--Mass Hub power market for the most recent year of data 
available as reported by the Federal Energy Regulatory Commission 
(FERC) as part of its annual State of the Markets Report with specific 
reference to the summary entitled ``Electric Market Overview: Regional 
Spot Prices.''
    Financial Assurance: BOEM will base the amounts of all SAP, COP, 
and decommissioning financial assurance requirements on estimates of 
the 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 amount of financial 
assurance required to meet all lease obligations includes:
     The projected amount of rent and other payments due to the 
Federal Government over the next 12 months;
     Any past due rent and other payments;
     Other monetary obligations (e.g., fines, liens); and
     The estimated cost of facility decommissioning.
    Prior to lease issuance the Lessee must provide: (1) An initial 
lease-specific bond or other approved means of meeting the Lessor's 
initial financial assurance requirements in the amount of $100,000; and 
(2) a supplemental bond or other approved means of meeting the Lessor's 
supplemental financial assurance requirements in the amount of $292,494 
for Lease OCS A-0486, and $201,756 for Lease OCS A-0487, to guarantee 
lease obligations from rental payments due to the Government over the 
first 12 months of the lease. Additional financial assurances will be 
required to address decommissioning, operating fee, and other 
obligations as the lease progresses.
    The financial terms can be found in Addendum ``B'' of the proposed 
lease, which BOEM has made available with this notice on its Web site 
at: http://boem.gov/Renewable-Energy-Program/State-Activities/Rhode 
Island.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 at this time, 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 through meaningful examples. 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 in order 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, as discussed below.
    Bid Deposit and Minimum Bid: A bid deposit is an advance cash 
deposit submitted to BOEM. No later than 14 calendar days following 
publication of the FSN, each bidder must have submitted a bid deposit 
(equal to a minimum cash bid) of at least $5.00 per acre, or fraction 
thereof, offered for sale. Approximately 97,498 acres would be offered 
for sale as Lease OCS-A 0486 (North Zone), and approximately 67,252 
acres would be offered as Lease OCS-A 0487 (South Zone) in this 
auction. The bid deposit amount of $5.00 per acre represents the 
minimum bid that BOEM proposes for this lease sale. Therefore, the 
minimum acceptable bid will be $487,490 for Lease OCS-A 0486 (North 
Zone), and $336,260 for Lease OCS-A 0487 (South Zone). The required bid 
deposit for any participant intending to

[[Page 71615]]

bid on both leases will be $5.00 per acre for the combined total 
acreage being offered, which equals $823,750. Any participant intending 
to bid on only one of the leases must submit a bid deposit of no less 
than $5.00 per acre for the larger area being offered (Lease OCS-A 0486 
(North Zone)), which equals $487,490. Any bidder that fails to submit 
the bid deposit by the deadline described herein may be prevented by 
BOEM from participating in the auction. Bid deposits will be accepted 
online via pay.gov.
    Following publication of the FSN, each bidder must complete the 
Bidder's Financial Form included in the FSN. BOEM has made a copy of 
the proposed form available with this notice on its Web site at: http://boem.gov/Renewable-Energy-Program/State-Activities/Rhode Island. This 
form requests that each bidder designate an email address, which the 
bidder should use to create an account in pay.gov. After establishing 
the pay.gov account, bidders may use the Bid Deposit Form on the 
pay.gov Web site to submit a deposit.
    Following the auction, bid deposits will be applied against any 
bonus bids or other obligations a successful bidder owes to BOEM. If 
the bid deposit exceeds the bidder's total financial obligation, the 
balance of the bid deposit will be refunded to the bidder. BOEM will 
refund the bid deposit to unsuccessful bidders.
    Areas Offered for Leasing: The proposed lease area was identified 
as the Rhode Island and Massachusetts Wind Energy Area (WEA) on 
February 24, 2012 (see Area Identification announcement available at: 
http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx). The proposed lease area offshore Rhode Island and 
Massachusetts comprises 13 whole OCS blocks and 26 sub-blocks 
encompassing 164,750 acres. The area available for sale will be 
auctioned as two leases, Lease OCS-A 0486 (North Zone) and Lease OCS-A 
0487 (South Zone). The North Zone consists of 97,498 acres, and the 
South Zone consists of 67,252 acres. If there are adequate bids, two 
leases will be issued pursuant to this lease sale. A description of the 
lease areas and lease activities can be found in Addendum ``A'' of the 
proposed leases, which BOEM has made available with this notice on its 
Web site at: http://boem.gov/Renewable-Energy-Program/State-Activities/Rhode Island.aspx.
    The two areas that will be offered for leased within the Rhode 
Island/Massachusetts WEA are the North Zone and the South Zone, which 
are separated by an exclusion area surrounding Cox Ledge. This division 
into two Zones is based on the consideration of a number of factors, 
including: the prevailing winds as demonstrated in the RI Ocean Special 
Area Management Plan, which is available at: http://www.crmc.ri.gov/samp_ocean/finalapproved/RI_Ocean_SAMP.pdf; the project scale 
requirements under state laws and regulations (including Rhode Island 
General Laws, Chapter 39-26.1); the JDA executed by the State of Rhode 
Island; developer responses to the August 2011 Call for Information and 
Nominations; allowance for buffer zones between projects; and proximity 
to onshore infrastructure and markets.
    Each zone is expected to be capable of supporting a project of at 
least 350 MW in nameplate capacity. The North Zone may be capable of 
supporting over 1,000 MW and is expected to have the advantage of 
closer proximity to onshore infrastructure. However, the South Zone 
could potentially support a project of 1,000 MW and is expected to be 
attractive due to its expansion opportunities to the south and east in 
potential future lease sales.
    Map of the Area Offered for Leasing: A map of the areas and a table 
of the boundary coordinates in X, Y (eastings, northings) UTM Zone 18, 
NAD83 Datum and geographic X, Y (longitude, latitude), NAD83 Datum can 
be found at the following URL: http://boem.gov/Renewable-Energy-Program/State-Activities/Rhode Island.aspx.
    A large scale map of these areas, showing boundaries of the area 
with numbered blocks, is available from BOEM at the following address: 
Bureau of Ocean Energy Management, Office of Renewable Energy Programs, 
381 Elden Street, HM 1328, Herndon, Virginia 20170, Phone: (703) 787-
1300, Fax: (703) 787-1708.
    Withdrawal of Blocks: BOEM reserves the right to withdraw areas 
from this lease sale prior to the execution of a lease.
    Lease Terms and Conditions: BOEM has included proposed lease terms 
and conditions for OCS commercial wind leases in the Rhode Island and 
Massachusetts WEA in Addendum ``C'' of the proposed lease. BOEM 
reserves the right to apply additional terms and conditions that are 
consistent with the terms of the lease to activities conducted on the 
lease incident to any future approval or approval with modifications of 
a SAP and/or COP. The proposed lease, including Addendum ``C'', is 
available on BOEM's Web site at: http://boem.gov/Renewable-Energy-Program/State-Activities/Rhode Island.aspx. The proposed lease consists 
of an instrument with 18 sections and the following six attachments:
    Addendum ``A'' (Description of Leased Area and Lease Activities);
    Addendum ``B'' (Lease Term and Financial Schedule);
    Addendum ``C'' (Lease Specific Terms, Conditions, and 
Stipulations);
    Addendum ``D'' (Project Easement);
    Addendum ``E'' (Rent Schedule); and
    Appendix A (High Resolution Geophysical Surveys and Analysis for 
the Identification or Reporting of Archaeological Resources).
    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 a 
FSN.
    The lease form included as part of this proposed lease has been 
updated since its publication on February 3, 2012. A discussion of 
specific changes to the lease form is available separately on BOEM's 
Web site at: http://www.boem.gov/Renewable-Energy-Program/Regulatory-Information/Index.aspx#Lease_Forms.
    Plans: Pursuant to 30 CFR 585.601, the leaseholder must submit a 
SAP within six 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 six months before the end of the site 
assessment term.
    Pursuant to 30 CFR 585.629, a leaseholder may include in its COP a 
request to develop its commercial lease in phases. If a leaseholder 
requests and BOEM approves phased development, this approval will not 
affect the length of the preliminary, site assessment, or commercial 
terms offered under the lease. The COP must describe in sufficient 
detail the activities proposed for all phases of commercial 
development, including a schedule detailing the proposed timelines for 
phased development. Further, the COP must include the results of all 
site characterization surveys, as described in 30 CFR 585.626(a), 
necessary to support each phase of commercial development. The 
requirements of the SAP remain the same as they would under a non-
phased development scenario, and must meet the requirements set forth 
in the regulatory provisions in 30 CFR 585.605-613 for the full 
commercial lease area.
    Qualifications--Who May Bid: Any potential bidder that has not 
already

[[Page 71616]]

submitted a complete set of qualification materials must do so by the 
end of the comment period of this PSN. To be eligible to participate in 
the auction, each potential bidder must 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 your 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: http://www.boem.gov/Renewable-Energy-Program/Regulatory-Information/Index.aspx. Guidance 
regarding how you may demonstrate your technical and financial 
qualifications is provided in a document entitled, Qualification 
Guidelines to Acquire and Hold Renewable Energy Leases and Grants and 
Alternate Use Grants on the U.S. Outer Continental Shelf: (http://boem.gov/Renewable-Energy-Program/Regulatory-Information/QualificationGuidelines-pdf.aspx). BOEM strongly recommends that you 
refer to this guidance before submitting your qualification materials, 
as the guidance has been updated recently. You must submit the 
documentation necessary to demonstrate your 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 your 
qualification materials, provide a general description of the project 
you 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 you to establish 
your legal, technical, and financial qualifications. We advise 
potential bidders planning to participate in this 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. BOEM will find any potential 
bidder whose qualification package is incomplete at the time the FSN 
for this sale is published in the Federal Register to have failed to 
establish its qualifications to participate in the sale, and, 
therefore, will be unable to participate in the sale.

Auction Procedures

Summary

    For the sale of these leases, BOEM will use a multi-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. There will be 
two such variables considered by BOEM in this auction--(1) a cash bid, 
and (2) a credit if a bidder holds a Joint Development Agreement (JDA) 
or a Power Purchase Agreement (PPA), as defined below. A multi-factor 
auction, wherein both monetary and nonmonetary bid variables are 
considered, is provided for under BOEM's regulations at 30 CFR 
585.220(a)(4) and 585.221(a)(6).
    Under a multiple-factor bidding format, as set forth at 30 CFR 
585.220(a)(4), BOEM may consider many factors as part of a bid. The 
regulation states that one bid proposal per bidder will be accepted, 
but does not further specify the procedures to be followed in the 
multiple-factor format. This multiple-factor format is intended to 
allow BOEM flexibility in administering the auction and in balancing 
the variables presented. The regulation leaves to BOEM the 
determination of how to administer the multiple-factor auction format 
in order to try to best achieve BOEM's goals of encouraging bidding, 
enhancing price discovery, and ensuring that BOEM receives a fair 
return for the leases auctioned, as required by the Outer Continental 
Shelf Lands Act, (OCSLA), 43 U.S.C. 1337(p)(2)(A).
    BOEM's regulations at 30 CFR 585.220(a)(4) permit a multi-round 
auction provided only one cash bid proposal per zone or set of zones 
per bidder, per round of the auction, is accepted. This regulation 
presents an administratively efficient auction process. It also takes 
advantage of the flexibility built into the regulation by enabling BOEM 
to benefit from both the consideration of more than one 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 each zone being 
offered. In each round, each bidder will have the opportunity to submit 
one cash bid per zone at the asking price. A bid submitted at the 
asking price in a particular round is referred to as a ``live bid'' and 
a live bid signifies that the bidder is willing to pay that auction 
round's asking price for a particular zone. A bidder must submit a live 
bid on at least one of the zones in each round to remain ``active'' 
into the next round of the auction. As long as at least two live bids 
are submitted at the asking price on any zone in a particular round, 
the auction continues, and the next round is held. If there is only one 
live bid for a zone, and that bidder is not bidding on the other zone, 
BOEM automatically carries that bid forward into the next round. If 
BOEM carries a bid forward, the bid will be considered the equivalent 
of a live bid for the purpose of determining bidder eligibility. If 
there is more than one live bid for a zone, the stated price for that 
zone is raised in each subsequent round until there is only one live 
bid or no live bids for that zone. The auction concludes when there are 
one or zero live bids for each zone.
    The series of rounds and the escalating asking prices set by BOEM 
will allow consideration of the first variable--the cash bid. BOEM will 
set one asking price per zone in each round. Each bidder will either 
place a live bid at this asking price or not, but no bidder will be 
permitted more than one bid per zone in any one round. Thus, bidders 
will not be outbidding each other in each round, but will be limited to 
one bid per zone per round, at the asking price, (or at a price subject 
to a credit due to the second variable, as explained below).
    The second variable--a credit for holding a JDA or PPA of at least 
350 megawatts each--will be applied throughout the auction rounds as a 
form of imputed credit against the amount of a cash bid proposal made 
by a particular bidder in a particular round. A bidder holding only a 
qualified JDA will receive a credit of 15%, a bidder holding only a 
qualified PPA will receive a credit of 25 percent, and a bidder that 
holds both will receive the larger of the two possible credit amounts, 
i.e. 25 percent. The total percentage credit is limited to 25 percent 
in the auction to address concerns about creating too large an 
advantage to certain bidders in the auction, as discussed in BOEM's 
Auction Format Information Request (76 FR 76174). BOEM considered the 
overall impact and relative strength of the JDA compared to that of a 
PPA in enabling a lessee to install a viable project on the OCS in 
setting the JDA credit at 15 percent. In the case of a bidder holding a 
credit and bidding on more than one zone, the credit will be applied 
only to the zone being offered at the higher asking price. By way of

[[Page 71617]]

example, a bidder holding a qualified JDA and bidding on two zones, one 
with an asking price of $1,000,000 and one with an asking price of 
$2,000,000, will receive a 15 percent credit against the higher priced 
$2,000,000 bid in that round, obligating the bidder to a payment of 
$1,700,000, or 15 percent less than the asking price for that zone, and 
$1,000,000 for the other zone, equal to the asking price for that other 
zone. Each bid in each round will thus be considered based on both 
factors--the amount of the cash bid proposed and the amount of a 
potential credit for holding a qualified JDA or PPA.
    BOEM's regulations concerning multi-factor bidding require the use 
of a panel 30 CFR 585.222 (d), whose members are selected by the 
agency, to help weigh the variables considered in such an 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 any purported JDA or PPA proffered by a bidder to 
determine whether it is acceptable to BOEM, and therefore whether it 
will qualify for a credit for its holder. The panel will determine the 
winning bids for each zone on the basis of the Stage 1 and Stage 2 
rules set forth herein.

Details of the Auction Process

Bidding--Live Bids
    Each bidder is allowed to submit live bids on one or more zones 
based on its eligibility at the opening of each round. A bidder's 
initial eligibility to bid on either one or both zones in the opening 
round of the auction is determined based on the amount of the bid 
deposit submitted by the bidder prior to the auction. The required 
deposit for bidding on one zone is equal to the minimum bid of the zone 
with the most acreage. If a bidder wants to bid on both zones, the 
bidder is required to submit a deposit equal to the sum of the minimum 
bids for both zones. As the auction continues, a bidder's eligibility 
is determined by the number of live bids submitted in the round prior 
to the current round.
    Before each round of the auction, BOEM raises the asking price for 
each zone that received more than one live bid in the previous round, 
while the asking price for zones that received one or no live bids in 
the previous round remains the same. Bidders must submit a live bid in 
each round of the auction (or have a bid automatically carried forward 
by BOEM) to remain active and continue bidding in future rounds. 
Between rounds, all bidders who are still active are informed, with 
respect to each zone, of the asking price for the upcoming round and 
the number of live bids submitted in the previous round. In cases where 
one of the zones which a bidder has bid on in the previous round has 
competition, i.e., the zone received two or more live bids, the bidder 
must independently submit bids identifying which zones it continues to 
be interested in acquiring in the current round. In cases where the 
bidder has bid on only one zone in the previous round and there is no 
competition for that zone, i.e., only that bidder has submitted a live 
bid, BOEM will automatically carry forward the bid for that bidder by 
recording that the bidder ``submitted'' a live bid in the current round 
on that zone at the previous round's asking price. In these latter 
cases i.e., when the bidder has bid on only one zone and BOEM has 
carried that bid forward, switching bids to other zones or submitting 
an intra-round bid are prohibited, as is reducing the number of zones 
on which the bidder has bid. Additional auction rounds occur as long as 
at least one of the zones offered receives two or more live bids in the 
previous round. The auction concludes at the end of the round in which 
the number of live bids received on each zone falls to one or zero.
    A bidder may not increase the number of zones it bids on from one 
round to a subsequent round. Provided one or more live bids were 
received on at least one of the zones that the bidder itself has bid on 
in the previous round, a bidder may voluntarily reduce the number of 
the zones it bids on from one round to the next, switch its bids from 
one zone to another, or submit an ``intra-round'' bid in conjunction 
with reducing its eligibility as to the number of zones on which it can 
bid in future rounds. (Intra-round bids are discussed below.) 
Otherwise, in general, if there are no other bidders on any of the 
zones on which the bidder has bid in the previous round, the bidder 
must maintain its existing bids and BOEM will automatically record the 
bidder as having ``submitted'' its standing live bids at the previous 
round's asking price. For this two-zone sale, however, this situation 
can only occur for the case of one zone, because if there had been only 
a single live bid on each zone in the previous round, the auction would 
have closed.
    Thus, if a bidder placed a live bid for both zones in the previous 
round, it can submit live bids for both zones in the current round. The 
bidder also has the option of submitting a live bid for only one of the 
zones or none of the zones in the current round.
    If a bidder placed a live bid on only the South Zone in the 
previous round, and there was at least one other competing bid for that 
zone, then the bidder can submit a live bid on either the North or 
South Zone in the current round, or not bid on either zone, but it 
cannot bid on both zones. If there are no competing bids on the South 
Zone, the bidder cannot switch its bid to the North Zone or reduce its 
eligibility by not bidding on either zone. Once a bidder fails to 
submit a live bid for any zone (or have a bid carried forward by BOEM), 
it must depart the auction and will no longer be allowed to submit bids 
for any zone in any subsequent round.
Bidding--Intra-Round Bids
    Subject to certain conditions, bidders are allowed to submit an 
``intra-round'' bid in any round after the first round. Intra-round 
bids are similar to what were termed ``exit bids'' in BOEM's Auction 
Format Information Request (76 FR 76174). In contrast to exit bids, 
however, intra-round bids do not necessarily require that the bidder 
exit the auction--only that the number of live bids that the bidder is 
eligible to submit must be reduced.
    An intra-round bid consists of a single offer price for exactly the 
same zone or set of zones that the bidder placed live bids on in the 
previous round. The single offer price must be greater than the sum of 
the asking prices for the zones bid on in the previous round and less 
than the sum of the asking prices for these zones in the current round. 
A bidder may not submit an intra-round bid for a single zone or set of 
zones in the current round when this bidder was the only bidder placing 
a live bid for all of these zone(s) in the previous round, i.e., an 
intra-round bid is prohibited in the current round when the asking 
price does not increase from the previous round on all of the zones on 
which the bidder bid (or was credited with bidding on) in the previous 
round. This situation can only arise in this two-zone sale for a bid on 
a single zone, because the auction would have closed in the previous 
round if both zones had only a single live bid.
    A bidder may submit both live bids and an intra-round bid in the 
same round, as long as the bidder reduces the number of live bids by at 
least one zone in the current round compared to the previous round. The 
zones on which the live bids are submitted may coincide with some of 
the zones included in the intra-round bid. In the specific case of this 
two-zone sale, this situation can arise only if the bidder has 
submitted

[[Page 71618]]

live bids on both zones in the previous round, chooses to submit an 
intra-round bid in the current round (consisting of both zones as 
required in this example), and also submits a live bid at the current 
round's asking price on one of the zones in the bidder's intra-round 
bid.
    A bidder may submit additional intra-round bids in subsequent 
rounds, following the same rules as applied to the first intra-round 
bid. A bidder now eligible to bid on one zone may submit an intra-round 
bid on one zone, but cannot also submit any live bids, because its 
eligibility to submit live bids from having submitted this intra-round 
bid is reduced from one to zero zones.
    Intra-round bids are not considered to be live bids for the purpose 
of determining whether to conclude the auction or for determining 
whether to increase the asking price for a particular zone. When a 
bidder submits an intra-round bid on one zone, the bidder's bid 
eligibility is reduced to zero, and this bid represents the bidder's 
best-and-final offer prior to leaving the auction. In contrast, a 
bidder's intra-round bid for both zones represents a best-and-final 
offer for both zones and reduces a bidder's eligibility in the auction 
to one or zero zones, based on the number of live bids submitted in the 
round. In this manner, bidders are able to express their maximum bid 
amount for both zones and an individual zone prior to reducing their 
eligibility.
    For example, consider the case of a bidder who has bid on both 
zones in previous rounds, and hence is eligible to continue bidding on 
both zones in the current round. Suppose the asking prices for the 
North and South Zones were $750,000 and $600,000 in the previous round 
and are now $800,000 and $600,000 in the current round, respectively. 
These results reflect that in the previous round the bidder had 
competition for the North Zone (because the asking price was increased 
in the current round), but not for the South Zone. The bidder may only 
enter a single, intra-round bid for both zones that it bid on in the 
previous round. This single offer price must be more than $1,350,000 
and less than $1,400,000, and the bidder must simultaneously reduce its 
eligibility to submit live bids from two zones to one or zero zones. 
The bidder can satisfy this requirement by choosing to submit (along 
with its intra-round bid) a single live bid of $800,000 for the North 
Zone or $600,000 for the South Zone, or choose not to submit any live 
bids and hence exit the auction.
    If the bidder had only bid on one zone in the previous round, it 
may be eligible to submit an intra-round bid during the current round. 
If its previous round's bid was for the North Zone, the bidder could 
submit an intra-round bid for that zone of more than $750,000 and less 
than $800,000, reduce its live bid eligibility to zero, and hence exit 
the auction. Alternatively, if the bidder's previous round's bid was on 
the South Zone, it cannot submit an intra-round bid, because the 
current round's asking price is unchanged from the asking price in the 
previous round, as there were no other competitive bids. In this case, 
since the bidder had no competition for the South Zone, its sole bid of 
$600,000 from the previous round is automatically recorded by BOEM as a 
submitted live bid of the same amount in the current round.
Stages--Stage 1
    After the bidding ends, a panel will determine the winning bids in 
two stages. This determination, 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 on confirmation of the absence of conduct 
detrimental to the integrity of the competitive auction.
    In Stage 1, a zone is awarded to the bidder with a live bid in the 
final round of the auction. A bidder who submits a final round live bid 
for a zone is guaranteed to be the winning bidder for that zone. A 
bidder who is awarded a zone only as a result of a final round live bid 
is obligated to pay the cash bid amount for that zone (i.e., the asking 
price of that zone in the final round less any credit earned).
    If both zones are awarded to bidders in Stage 1, the second award 
stage would not be necessary. If at least one zone is not awarded in 
Stage 1, which received either an intra-round bid within any round or a 
live bid in a prior-to-final round, then a second award stage would be 
conducted.
Stages--Stage 2
    In Stage 2, all of the remaining prior-to-final round live bids and 
any intra-round bids received during the auction are considered 
alongside one another to award any remaining unsold zones. 
Determination of the winning Stage 2 bids is based on the principle of 
maximization of gross auction revenue subject to the award of zones in 
Stage 1.
    Live bids from previous rounds are considered in the same way as 
intra-round bids received within any round, i.e., at a single aggregate 
price per round per bidder based on the sum of the asking prices for 
each zone in the round the bid was received. For example, if a bidder 
placed live bids in a previous round for both the North and South Zones 
and the asking prices in that round for each zone were $600,000 and 
$750,000, respectively, the bid would be evaluated at $1,350,000 for 
award purposes.
    Thus, in Stage 2, bids from bidders in each applicable round are 
considered as unique packages of intra-round bids and live bids. A 
bidder is able to win bids submitted from only a single round, which 
will consist of either all of the zones in an intra-round bid or all of 
the zones on which it submitted live bids in the winning round for that 
bidder. A bidder cannot win only some of the zones on which it 
submitted live bids in a round. Rather, a bidder wins all of the zones 
or none of them from one round based on its live bids. Further, a 
bidder may only win one intra-round bid and may not win a set of live 
bids and an intra-round bid--it wins one or the other based on auction 
revenue maximization subject to the Stage 1 awards.
    In particular, any intra-round bids or sets of prior-to-final round 
live bids from one bidder, which include a zone awarded in Stage 1 to 
another bidder, are eliminated from consideration. Thus, if Bidder A 
was awarded the South Zone in Stage 1, and Bidder B submitted either an 
intra-round bid or set of live bids for both the North Zone and South 
Zone in one or more previous rounds, those bids of Bidder B would be 
eliminated because they overlap with a zone that has already been 
awarded to Bidder A in Stage 1.
    Also, any intra-round bids or sets of prior-to-final round live 
bids from a bidder who itself was awarded one or more zones in Stage 1 
are eliminated unless such bids represent a superset of the zones 
(i.e., in this sale, both zones) won by the bidder in Stage 1, i.e., 
those bids must contain all the zones won by this bidder in Stage 1 to 
be considered in Stage 2. For example, if a bidder was already awarded 
the North Zone in Stage 1, any previous rounds' bids by that bidder for 
just the South Zone would be eliminated from consideration, whereas 
that bidder's previous rounds' bids for both zones would be considered 
for award in Stage 2.
    Acceptance of a bidder's superset bid over the final round bid 
would depend on whether the superset bid was consistent with maximizing 
gross auction revenue. To demonstrate, suppose only the North Zone 
received a final round live bid, equal to $1,000,000, and the same 
bidder submitted the highest previous round's set of live bids or an 
intra-round bid for

[[Page 71619]]

both the North and South Zones with a gross auction price of 
$1,400,000. In this case, the bidder's superset bid of $1,400,000 for 
both zones would replace the final round live bid from this same bidder 
for only the North Zone of $1,000,000.
    In summary, unsold zones following the Stage 1 evaluations are 
considered for award to the bidders in Stage 2 for eligible intra-round 
bids and sets of live bids in a manner that would yield the highest 
gross auction revenue to BOEM given the Stage 1 awards. If more than 
one combination of remaining previous-round live and intra-round bids 
exist that would yield the same highest gross auction revenue to the 
seller, while preserving the zones awarded in Stage 1, the resulting 
tie is settled by a random draw.
    All zone awards are based on the bids submitted during the auction 
at their asking and intra-round bid (i.e., ``as-bid'') prices. For each 
bidder, the as-bid price will be considered to have a cash component 
and an imputed credit component, if applicable, as described in the 
following section. The amount each bidder is obligated to pay at the 
conclusion of the auction will be equal to the cash component of the 
as-bid auction price (i.e., the as-bid auction price less the imputed 
amounts associated with the credits, as described in the following 
section).
    Factor Two Credits: Prior to the auction, BOEM will convene a panel 
(as provided in BOEM's regulations, discussed above) to evaluate 
whether and to what extent each bidder is eligible for a credit 
applicable to the as-bid auction price for one of the zones in each 
round of the auction, as described below. In order to receive the JDA 
or PPA credit a bidder must be legally, technically, and financially 
qualified to acquire a commercial OCS wind lease, and must not be 
affiliated with any other bidding entity also seeking credit for the 
same JDA or PPA.
    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 Final Sale Notice. Bidders will be informed prior to 
the first round of the auction about the percentage credit applicable 
to their bid for a single zone. Then, in subsequent rounds, bidders 
will be provided information showing how their as-bid auction prices 
are affected by the credit imputed to their bid to determine their net 
payment due to BOEM, should their bids prevail as winning bids in the 
award stages. This process is conceptually similar to one in which the 
multiple bid factors are combined into an aggregate score for the 
purpose of awarding zones, but is more transparent to bidders and 
facilitates the bidding process in a dynamic, multi-factor, multiple 
round auction process, such as we propose to use for this sale.
    The percentage amount of credit imputed will be based on the 
greater of the following two conditions associated with the development 
activities within the Rhode Island lease sale area:
     A bidder having entered into one or more qualified joint 
development agreements (JDAs) supporting 350 MW or more of total 
capacity will receive a credit of 15 percent; or
     A bidder having entered into one or more qualified Power 
Purchase Agreements (PPAs) supporting 350 MW or more of total capacity 
under contract will receive a credit of 25 percent.
    The panel will determine whether a proffered JDA or PPA is 
qualified to receive a credit, based on the definitional information 
provided below.
    A bidder with both a qualified JDA and a qualified PPA is eligible 
to receive the larger of the two credits. For example, if a bidder's 
winning bid for its highest-priced zone is $1,000,000 and the bidder 
has entered into a JDA for 400 MW and a PPA for 570 MW, the bidder 
would qualify for a credit of 15 percent for the JDA and 25 percent for 
the PPA, and be eligible for an award equal to the larger of the two 
credit amounts, in this case 25 percent. Accordingly, the bidder would 
have an imputed credit of $250,000 for its winning bid and would pay 
BOEM the cash component of its bid, which would be $750,000.
    In another example, if the bidder entered a JDA for 400 MW and a 
PPA for 170 MW, then under the first condition, the bidder with a 
qualified JDA would receive a credit of 15 percent, while under the 
second condition, the bidder would not receive any credit since the 
capacity under the PPA contract falls below the 350 MW threshold level. 
The bidder would be eligible for an award equal to 15 percent, and 
hence would have an imputed credit of $150,000 and pay BOEM $850,000 
(the cash component of its bid) for its winning gross auction priced 
zone of $1,000,000.
    The bidding software interface will be tailored to each bidder 
based on the percentage credit awarded to the bidder. In each round of 
the auction, the bidder will be provided with the gross and net stated 
auction prices for each zone, along with the aggregate bid price the 
bidder would be obligated to pay if the zones were to be awarded to 
them based on that round's bids, both with and without the bidder's 
credit. For a bid on both zones in a given round, the software 
interface would highlight the zone with the highest stated auction 
price among the zones selected by the bidder to which the credit would 
be applied in each round. For example, suppose a bidder is eligible for 
a 15 percent credit, and the gross stated auction prices for the North 
and South Zones in the current round are $1,000,000 and $800,000 
respectively. The potential net payment to be made by the bidder for 
its live bids for both zones would be shown as a net bid of $850,000 
for the higher-priced North Zone, and a gross bid of $800,000 for the 
lower-priced South Zone.
    The same principle is applied when an intra-round bid, rather than 
a live bid, is offered. If an intra-round bid includes only one zone, 
the percent credit will be applied to the zone's asking price in the 
previous round. Note that the credit does not apply to the full amount 
of the intra-round bid, i.e., it does not apply to the increment above 
the asking price in the previous round. For example, say the stated 
auction price for the North Zone was $800,000 in the previous round and 
$1,000,000 in the current round and a bidder who was awarded a 15 
percent credit submits an intra-round bid price of $900,000 for the 
zone. The bidder would be obligated to pay $780,000 if its bid is 
successful. This amount would reflect an imputed $120,000 credit to its 
$900,000 bid price which would be calculated by applying its 15 percent 
credit to the previous-round's asking price of $800,000, and then 
subtracting the amount of that calculation $120,000 from its bid of 
$900,000.
    In the case of an intra-round bid for both zones, the highest 
priced zone will be determined based on the asking prices of both zones 
in the round previous to the submission of the intra-round bid. 
Continuing with the previous example, assume the stated auction price 
for the South Zone is $500,000 in both the previous and current rounds, 
and for the North Zone the stated auction prices are the same as 
before, i.e., $800,000 in the previous round and $1,000,000 in the 
current round. Suppose the bidder offers an intra-round bid price of 
$1,400,000 for both zones. In this instance, the price of the North 
Zone ($800,000) is greater than the South Zone ($500,000) in the 
previous round, and the dollar value of the credit is calculated to be 
15 percent of $800,000, equal to $120,000 as before. So, the bidder 
would be obligated to pay $1,280,000 for its intra-round bid if 
successful.
    BOEM considered alternative specifications of these conditions,

[[Page 71620]]

including options to have the maximum credit for the JDA and PPA be 10 
percent and 15 percent, respectively, and where the total credit would 
then be the sum of two conditions. BOEM also considered the option to 
provide a pro-rated credit for JDAs and PPAs involving less than the 
350 MW level anticipated to be needed to support a viable project. BOEM 
recognizes that few if any developers will have entered into PPA at the 
time of the proposed lease sale, but has elected to include the 
discussion of PPA and the alternative specifications in this PSN to 
obtain comment that will be considered for both this and future lease 
sales.
    Factor Two Definitions: The definitions below will apply to the 
factors for which bidders may earn a credit.
    Joint development agreement (JDA) is a binding agreement between a 
State and a legal entity that proposes to develop renewable (wind) 
energy, which sets forth the rights, obligations, and certain economic 
development activities of the parties in connection with the 
development of an offshore wind project. The legal entity named in a 
JDA must be selected through a competitive selection process, such as a 
request for proposals (RFP), that is conducted by a state adjacent to 
the wind energy area issuing and entering into the JDA agreement, where 
the subsequent submitted proposals are evaluated by a State agency, 
committee, or public utility board. The JDA will qualify if the panel 
determines that the agreement includes the following identifiable 
factors: (1) Sufficient specificity to the size, timing, and location 
of the proposed project on the OCS; (2) the financial commitment of the 
State, the identified legal entity, and/or a third party (buyer of 
power), if applicable, included in the agreement; (3) the 
developmental, financial, and/or regulatory processes through which the 
State will support the identified legal entity that proposes to develop 
renewable (wind) energy; (4) significant project milestones; (5) the 
ramifications for not meeting said milestones; and (6) any exclusionary 
rights awarded to said identified legal entity.
    Power purchase agreement (PPA) is any legally enforceable contract 
negotiated between an electricity generator (Generator) and a power 
purchaser (Buyer) that identifies, defines, and stipulates the rights 
and obligations of one party to produce, and the other party to 
purchase, energy from an offshore wind project to be located in the 
lease sale area. The PPA must have been approved by a public utility 
commission or similar legal authority. The PPA must state that the 
Generator will sell to the Buyer and the Buyer will buy from the 
Generator capacity, energy, and/or environmental attribute products 
from the project, as defined in the terms and conditions set forth in 
the PPA. Energy products to be supplied by the Generator and the 
details of the firm cost recovery mechanism approved by the State's 
public utility commission or other applicable authority used to recover 
expenditures incurred as a result of the PPA must be specified in the 
PPA. In order to qualify, a PPA must contain the following terms or 
supporting documentation:
    (i) A complete description of the proposed project;
    (ii) Identification of both the electricity Generator and (Buyer) 
that will enter into a long term contract;
    (iii) A time line for permitting, licensing, and construction;
    (iv) Pricing projected under the long term contract being sought, 
including prices for all market products that would be sold under the 
proposed long term contract;
    (v) A schedule of quantities of each product to be delivered and 
projected electrical energy production profiles;
    (vi) The term for the long term contract;
    (vii) Citations to all filings related to the PPA that have been 
made with state and Federal agencies, and identification of all such 
filings that are necessary to be made; and
    (viii) Copies of or citations to interconnection filings related to 
the PPA.

Additional Information Regarding the Auction Format

    Specific details about certain administrative aspects of the 
auction sale process will be described in the FSN. These aspects 
include how much the asking price will increase in various stages of 
the auction, the duration of each bidding round, the amount of time 
provided between rounds, the number of rounds expected per day, and the 
days on which the auction process will continue, if necessary, beyond 
the first day. Bidders may expect multiple rounds per day to occur 
during normal business hours. The amount of time allowed for bidders to 
enter bids and the time between rounds may be reduced as the auction 
progresses based on the patterns of bidding, to increase the pace of 
the auction. At the start of each day, bidders will be notified of the 
round schedule for that day.
    Acceptance, Rejection or Return of Bids: BOEM reserves the right 
and authority to reject any and all bids. In any case, no lease will be 
awarded to any bidder, and no bid will be accepted, unless (1) the 
bidder has complied with all requirements of the FSN, applicable 
regulations and statutes, including, but not limited to, bidder 
qualifications, bid deposits, and adherence to the integrity of the 
competitive bidding process, (2) the bid conforms with the requirements 
and rules of the auction, and (3) the amount of the bid has been 
determined to be adequate by the authorized officer. Any bid submitted 
that does not satisfy any of these requirements may be returned to the 
bidder submitting that bid by the Program Manager of BOEM's Office of 
Renewable Energy Programs and not considered for acceptance.
    Process for Issuing the Lease: If BOEM proceeds with lease 
issuance, it will issue three unsigned copies of the lease form to each 
winning bidder. Within 10 business days after receiving the lease 
copies, each winning bidder must:
    1. Execute the lease on the bidder's behalf;
    2. File financial assurance, as required under 30 CFR 585.515-537; 
and
    3. Pay the balance of the bonus bid (bid amount less the bid 
deposit).
    If a winning bidder does not meet these three requirements within 
10 business days of receiving the lease copies as described above, or 
if a winning bidder otherwise fails to comply with applicable 
regulations or the terms of the FSN, the winning bidder will forfeit 
its bid deposit. BOEM may extend this 10 business-day time period if it 
determines the delay was caused by events beyond the winning bidder's 
control.
    BOEM will not execute a lease until the three requirements above 
have been satisfied, BOEM has accepted the winning bidder's financial 
assurance, and BOEM has processed the winning bidder's payment. Please 
note the required timelines for providing financial assurance. 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 
winning bidders to discuss the financial assurance requirement with 
BOEM as soon as possible after the auction has concluded.
    Within 45 calendar days of the date that the lessee receives the 
lease copies, the lessee must pay the first year's rent.
    Anti-Competitive Behavior: In addition to the auction rules 
described in this notice, bidding behavior is governed by Federal 
antitrust laws

[[Page 71621]]

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, 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 
pursuant to its regulations at 30 CFR 585.222(a)(2).
    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 in a particular 
location;
     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: http://www.justice.gov/atr/public/business-resources.html, 
or consult counsel.
    Post-Auction Certification: In addition to the steps described in 
the section entitled, ``Process for Issuing the Lease,'' following the 
lease sale, each winning bidder will be required to certify the 
following, in accordance with 18 U.S.C. 1001 (Fraud and False 
Statements):

    I certify that [name of qualified bidder] did not engage in 
anticompetitive bidding behavior in violation of Federal law, BOEM's 
regulations, or auction procedures.
    I certify that this bid is made in a good faith effort to win a 
lease to engage in the development of renewable energy resources.

    Non-Procurement Debarment and Suspension Regulations: Pursuant to 
regulations at 43 CFR Part 42, Subpart C, an OCS renewable energy 
Lessee must comply with the U.S. Department of the Interior's non-
procurement debarment and suspension regulations at 2 CFR parts 180 and 
1400 and agree to communicate the requirement to comply with these 
regulations to persons with whom the Lessee does business as it relates 
to this lease, by including this term as a condition in their contracts 
and other transactions.
    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 an 
OCS commercial wind energy lease in the Rhode Island and Massachusetts 
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. The possibility also exists that there could be a 
second PSN, with another 60-day public comment period, prior to 
issuance of the FSN.
    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 703-787-1300 or 
access the BOEM Web site at: http://www.boem.gov/Renewable-Energy-Program/index.aspx.
    Appeals: The appeals procedures are provided in BOEM's regulations 
at 30 CFR 585.225 and 585.118(c). Pursuant to 30 CFR 585.225:
    (a) If BOEM rejects your bid, BOEM will provide a written statement 
of the reasons, and refund any money deposited with your bid, without 
interest.
    (b) You will then be able to ask the BOEM Director for 
reconsideration, in writing, within 15 business days of bid rejection, 
under 30 CFR 585.118(c)(1). We will send you a written response either 
affirming or reversing the rejection.
    The procedures for appealing adverse final decisions with respect 
to lease sales are described in 30 CFR 585.118(c).
    Protection of Privileged or Confidential Information:
    Freedom of Information Act: BOEM will protect privileged or 
confidential information that you submit as required by the Freedom of 
Information Act (FOIA). Exemption 4 of FOIA applies to trade secrets 
and commercial or financial information that you submit that is 
privileged or confidential. If you wish to protect the confidentiality 
of such information, clearly mark it and request that BOEM treat it as 
confidential. BOEM will not disclose such information, subject to the 
requirements of FOIA. Please label privileged or confidential 
information ``Contains Confidential Information'' and consider 
submitting such information as a separate attachment.
    However, BOEM will not treat as confidential any aggregate 
summaries of such information or comments not containing such 
information. Additionally, BOEM may not treat as confidential the legal 
title of the commenting entity (e.g., the name of your company). 
Information that is not labeled as privileged or confidential will be 
regarded by BOEM as suitable for public release.
    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 27, 2012.
Tommy P. Beaudreau,
Director, Bureau of Ocean Energy Management.
[FR Doc. 2012-29096 Filed 11-30-12; 8:45 am]
BILLING CODE 4310-MR-P
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