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[Federal Register Volume 79, Number 117 (Wednesday, June 18, 2014)]
[Notices]
[Pages 34771-34781]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14116]

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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

[Docket No. BOEM-2014-0034; MMAA104000]

Atlantic Wind Lease Sale 4 (ATLW4) Commercial Leasing for Wind 
Power on the Outer Continental Shelf Offshore 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 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 Massachusetts, pursuant to BOEM's regulations at 30 CFR 
585.216. BOEM proposes to offer for sale four leases: Lease OCS-A 0500, 
Lease OCS-A 0501, Lease OCS-A 0502, and Lease OCS-A 0503. BOEM proposes 
to use a multiple-factor auction format for the lease sale. In this 
PSN, you will find information pertaining to the areas available for 
leasing, proposed lease provisions and conditions, auction details, the 
lease form, criteria for evaluating competing bids, award procedures, 
appeal procedures, and lease execution. BOEM invites comments during a 
60-day comment period following publication of this notice. The 
issuance of the leases that would result from this proposed sale would 
not constitute approval of project-specific plans to develop offshore 
wind energy. Such plans, expected to be submitted by successful 
lessees, will be subject to subsequent environmental and public review 
prior to a decision to proceed with development.

DATES: Comments should be submitted electronically or postmarked no 
later than August 18, 2014. All comments received or postmarked during 
the comment period will be made available to the public and considered 
prior to publication of the Final Sale Notice (FSN).
    All bidders interested in participating in the lease sale who have 
not previously been qualified by BOEM to participate in this lease sale 
must submit the required qualification materials by the end of the 60-
day comment period for this notice. All qualification materials must be 
postmarked no later than August 18, 2014.

ADDRESSES: Potential auction participants, Federal, state, and local 
government agencies, tribal governments, and other interested parties 
are requested to submit their written comments on the PSN in one of the 
following ways:
    1. Electronically: http://www.regulations.gov. In the entry 
entitled, ``Enter Keyword or ID,'' enter BOEM-2014-0034 then click 
``search.'' Follow the instructions to submit public comments.
    2. Written Comments: In written form, delivered by hand or by mail, 
enclosed in an envelope labeled ``Comments on Massachusetts PSN'' to: 
Office of Renewable Energy Programs, Bureau of Ocean Energy Management, 
381 Elden Street, HM 1328, Herndon, Virginia 20170.
    3. Qualifications Materials: Those submitting qualifications 
materials should contact Jessica Stromberg, BOEM Office of Renewable 
Energy Programs, 381 Elden Street, HM 1328, Herndon, Virginia 20170, 
(703) 787-1320, or jessica.stromberg@boem.gov.
    If you wish to protect the confidentiality of your comments or 
qualification materials, clearly mark the relevant sections and request 
that BOEM treat them as confidential. Please label privileged or 
confidential information with the caption ``Contains Confidential 
Information'' and consider submitting such information as a separate 
attachment. Treatment of confidential information is addressed in the 
section of this PSN entitled ``Protection of Privileged or Confidential 
Information.'' Information that is not labeled as privileged or 
confidential will be regarded by BOEM as suitable for public release.

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

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

    Background: The area described for leasing in this PSN is the same 
as the Wind Energy Area (WEA) that BOEM announced on May 30, 2012, (see 
Area Identification announcement available at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Massachusetts.aspx). Detailed 
information regarding the lease areas is provided in the section 
entitled, ``Areas Offered for Leasing.''
    On November 2, 2012, BOEM published a Notice of Availability (NOA) 
for the Commercial Wind Lease Issuance and Site Assessment Activities 
on the Atlantic Outer Continental Shelf (OCS) Offshore Massachusetts 
Environmental Assessment (EA) (77 FR 66185) with a 30-day public 
comment period. BOEM received 25 comments, which are available at: 
http://www.boem.gov/Renewable-Energy-Program/State-Activities/MA/Commercial-Wind-Leasing-Offshore-Massachusetts.aspx. BOEM has concluded 
consultations under the Endangered Species Act (ESA) and Magnuson-
Stevens Fishery Conservation and Management Act (MSFCMA). BOEM will 
initiate consultations under the Coastal Zone Management Act (CZMA) 
concurrent with the publication of a revised EA. BOEM has prepared and 
executed a programmatic agreement (PA) to guide its consultations under 
Section 106 of the National Historic Preservation Act (NHPA). The PA 
provides for consultations to continue through BOEM's decision-making 
process regarding the approval, approval with modification, or 
disapproval of a lessee's Site Assessment Plan (SAP), and allows for 
phased identification and evaluation of historic properties.
    Based on the public comments received in response to the EA, the 
conclusion of required consultations, and public outreach and 
information meetings, BOEM decided to make certain revisions to the EA 
originally published in November 2012. As a result of the analysis in 
the revised EA, BOEM is issuing a Finding of No Significant Impact 
(FONSI). The Commercial Wind Lease Issuance and

[[Page 34772]]

Site Assessment Activities on the Atlantic Outer Continental Shelf 
(OCS) Offshore Massachusetts Revised Environmental Assessment (EA) and 
the FONSI can be found at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/MA/Commercial-Wind-Leasing-Offshore-Massachusetts.aspx.
    Additional environmental reviews will be conducted upon receipt of 
a successful Lessee's proposed project-specific plans, such as a SAP or 
Construction and Operations Plan (COP).
    Deadlines and Milestones for Bidders: This section describes the 
major deadlines and milestones in the auction process from publication 
of this PSN to execution of leases pursuant to the sale. These are 
organized into various stages: (1) The PSN comment period; (2) from the 
end of PSN comment period to publication of the FSN; (3) the FSN 
waiting period; (4) conducting the Auction; and (5) from the Auction 
Stage to Lease Execution.

1. The PSN Comment Period

     Submit Comments: The public is invited to submit comments 
during this 60-day period.
     Public Seminar: BOEM will host a public seminar to discuss 
the lease sale process and the auction format.
     Receive Qualifications Materials: All qualifications 
materials must be received by BOEM by the end of the 60-day PSN comment 
period. This includes materials sufficient to establish a company's 
legal, technical and financial qualifications.

2. End of PSN Comment Period to FSN Publication

     Review Comments: BOEM will review all comments submitted 
in response to the PSN during the comment period.
     Finalize Qualifications Reviews: BOEM will complete any 
outstanding qualifications reviews using materials that were submitted 
during the PSN comment period and requested by BOEM prior to the 
publication of the FSN. The final list of eligible bidders will be 
published in the FSN.
     Prepare the FSN: BOEM will prepare the FSN by updating the 
PSN where appropriate.
     Select and Invite Panelists: BOEM will appoint a panel of 
three BOEM employees for the purposes of reviewing the non-monetary 
packages and verifying the results of the lease sale.
     Publish FSN: BOEM will publish the FSN in the Federal 
Register.

3. FSN Waiting Period

     Bidder's Financial Form (BFF): No later than 14 days after 
publication of the FSN in the Federal Register, eligible bidders must 
submit a complete and signed BFF to BOEM. Once this information has 
been processed by BOEM, bidders may log into pay.gov and leave bid 
deposits. If BOEM does not receive the BFF by the date mentioned in the 
Federal Register, a company may be disqualified from participating in 
the auction.
     Bid Deposits: No later than 30 days after publication of 
the FSN in the Federal Register, bidders must submit a bid deposit 
meeting the requirements listed in the FSN. Any bidder that fails to 
submit the bid deposit by the deadline included in the FSN may be 
disqualified from participating in the auction.
     Non-Monetary Package: No later than 30 days after 
publication of the FSN in the Federal Register, bidders seeking a non-
monetary credit must submit a non-monetary package meeting the 
requirements listed in the FSN.
     Mock Auction: BOEM will hold a Mock Auction, open to 
qualified sale bidders only. The Mock Auction will take place 
approximately one week before the lease sale. Final details of the Mock 
Auction will be provided in the FSN.

4. Conducting the Auction

    BOEM, through its contractor, will hold an auction as described in 
this notice. The auction will take place no sooner than 30 days 
following publication of the FSN in the Federal Register. The estimated 
timeframes described in this notice assume an auction date 
approximately 45 days after publication of the FSN.
     Convene Panel: The panel will convene to consider non-
monetary packages submitted by qualified bidders. The panel will send 
determinations of credit eligibility to BOEM, and BOEM will inform 
eligible bidders. Bidders will not be informed of the non-monetary 
credit eligibility of other bidders before the auction.
     Monetary Auction: The monetary auction will be conducted 
on the date specified in the FSN.
     Announce Provisional Winners: BOEM will announce the 
provisional winners of the lease sale after the auction ends.
     Reconvene the Panel: The panel will reconvene to verify 
auction results.

5. From Auction to Lease Execution

     Refund Non-Winners: BOEM will return the bid deposit of 
any bidder that did not win a lease in the lease sale. BOEM will 
provide a written explanation of why the bidder did not win.
     Department of Justice (DOJ) Review: BOEM will allow DOJ 30 
days in which to conduct an antitrust review of the auction, pursuant 
to 43 U.S.C. 1337(c), which reads, in relevant part:
    Antitrust review of lease sales. Following each notice of a 
proposed lease sale and before the acceptance of bids and the issuance 
of leases based on such bids, the Secretary of the Department of the 
Interior shall allow the Attorney General, in consultation with the 
Federal Trade Commission, 30 days to review the results of such lease 
sale, except that the Attorney General, after consultation with the 
Federal Trade Commission, may agree to a shorter review period.
     Delivery of Leases: BOEM will send three lease copies to 
each winner, with instructions on how to execute the leases. The first 
year's rent payment is due 45 days after the winner receives the lease 
copies for execution.
     Return the Leases: The auction winners will have 10 
business days from receiving the lease copies in which to file 
financial assurance, pay any outstanding balance of their bonus bids, 
and return the three executed lease copies.
     Execution of Leases: Once BOEM has received the signed 
lease copies and verified that all required materials have been 
received, BOEM will make a final determination regarding its execution 
of the leases and will execute the leases if appropriate.
    Financial Terms and Conditions: This section provides an overview 
of the basic annual payments required of a Lessee that will be fully 
described in each lease, and the financial assurance requirements that 
will be associated with each lease.
    BOEM has proposed these financial terms and conditions in this PSN 
and in the four commercial leases that accompany the PSN. However, BOEM 
recognizes that there may be concerns related to the potential costs 
associated with development of commercial wind energy projects in the 
water depths associated with the Massachusetts WEA. Therefore, BOEM is 
requesting comments in order to evaluate whether the following 
modifications to said terms and conditions are warranted: (1) Reduction 
of the annual rent to less than $3 per acre; (2) reduction of the 
annual rent for any project easement associated with the lease; and (3) 
reduction of the annual operating fee rate to less than 0.02 (i.e., 
2%). If a potential bidder is interested in obtaining a lease that

[[Page 34773]]

reflects the adjustments to the financial terms and conditions 
described above, then that party should submit their qualifications 
package during the comment period of this PSN, in addition to 
submitting comments and proposed revisions to the financial terms and 
conditions.

Rent

    The first year's rent payment of $3 per acre for the entire Lease 
Area (LA) is due within 45 days of the date the Lessee 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 remaining 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 (as defined herein), which is not yet authorized 
for commercial operations at the time payment is due, divided by the 
maximum nameplate capacity after full installation of the project, as 
defined in the COP. This fraction is then multiplied by the amount of 
rent that would be due for the Lessee's entire LA 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 742,978 acres (the size of the 
entire Massachusetts WEA), the amount of rent payment would be 
$2,228,934 per year if no portion of the leased area is authorized for 
commercial operations. If 500 megawatts (MW) of a project's nameplate 
capacity is operating (or authorized for operation), and its most 
recent approved COP specifies a maximum nameplate capacity of 1000 MW, 
the rent payment would be $1,114,467. For the above example, this would 
be calculated as follows: 500 MW/1000 MW x ($3/acre x 742,978 acres) = 
$1,114,467.
    The Lessee also must pay rent for any project easement associated 
with the lease commencing on the date that BOEM approves the COP (or 
COP modification) that describes the project easement. Annual rent for 
a project easement 200-feet wide and centered on the transmission cable 
is $70.00 per statute mile. For any additional acreage required, the 
Lessee must also pay the greater of $5.00 per acre per year or $450.00 
per year.
    BOEM is requesting comments and supporting information to determine 
whether it should modify rent payments for the commercial leases to be 
executed for the Massachusetts WEA.

Operating Fee

    For the purposes of calculating the initial annual proposed 
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 twelve 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 
commencement 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 
an operating fee rate by the imputed wholesale market value of the 
projected annual electric power production. For the purposes of this 
calculation, the imputed market value is the product of the project's 
annual nameplate capacity, the total number of hours in the year 
(8,760), a capacity utilization factor, and the annual average price of 
electricity derived from a historical regional wholesale power price 
index. For example, an annual operating fee for a 100 MW wind facility 
operating at 40% capacity with a regional wholesale power price of $40/
MWh under an operating fee rate of 0.02 (i.e., 2%) would be calculated 
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: BOEM is proposing a fixed operating fee rate of 
0.02 (i.e., 2%) during the project's entire life of commercial 
operations. BOEM is requesting comments and supporting information to 
determine whether it should modify the proposed operating fee rate for 
the commercial lease agreements to be executed for the Massachusetts 
WEA.
    Nameplate Capacity: Nameplate capacity is the maximum rated 
electric output, expressed in MW, which the turbines of the wind 
facility under commercial operations can produce at their rated wind 
speed as designated by the turbine's manufacturer. The nameplate 
capacity at the start of each year of commercial operations on the 
lease will be specified in the COP. For example, if a Lessee has 20 
turbines under commercial operations rated by the design manufacturer 
at 5 MW of output each, the nameplate capacity of the wind facility at 
the rated wind speed of the turbines would be 100 MW.
    Capacity Factor: 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--
Massachusetts Hub power market for the most recent year of data 
available as reported by the Federal Energy Regulatory Commission 
(FERC) as part of its annual State of the Markets Report with specific 
reference to the summary entitled, ``Electric Market Overview: Regional 
Spot Prices.'' The wholesale power price is adjusted for inflation from 
the year associated with the published spot price indices to the year 
in which the operating fee is to be due based on the Lease Anniversary 
using annual implicit price deflators as reported by the U.S. 
Department of Commerce, Bureau of Economic Analysis.

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

[[Page 34774]]

initial financial assurance requirements, in the amount of $100,000. 
BOEM will base the amount of all SAP, COP, and decommissioning 
financial assurance requirements on estimates of cost to meet all 
accrued lease obligations. The amount of supplemental and 
decommissioning financial assurance requirements will be determined on 
a case-by-case basis.
    The financial terms can be found in Addendum ``B'' of the proposed 
leases, which BOEM has made available with this notice on its Web site 
at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Massachusetts.aspx.
    Place and Time: The auction will be held online. The time that the 
auction will be held will be published in the FSN. The date has not 
been finalized, but will be no earlier than 30 days after publication 
of the FSN in the Federal Register.
    Public Seminar: BOEM will host a public seminar to introduce 
potential bidders and other stakeholders to the auction format provided 
in the PSN, explain the auction rules, and demonstrate the auction 
process. The time and place of the seminar will be announced by BOEM 
and published on the BOEM Web site. No registration or RSVP will be 
required to attend.
    Mock Auction: BOEM will host a Mock Auction to educate qualified 
bidders about the procedures to be employed during the auction and to 
answer questions. The Mock Auction will take place between the 
publication of the FSN in the Federal Register and the date of the 
auction. Following publication of the FSN in the Federal Register, 
details of the Mock Auction will be distributed to those eligible to 
participate in the auction. All qualified bidders that intend to 
participate in the auction are strongly encouraged to participate in 
the Mock Auction. Bidders will be eligible to participate in the Mock 
Auction if they have been legally, technically and financially 
qualified to participate in the lease sale, and have submitted an 
adequate bid deposit as discussed herein.
    Bid Deposit: A bid deposit is an advance cash deposit submitted to 
BOEM in order to participate in the auction. No later than the deadline 
provided in the FSN, each bidder must have submitted a bid deposit of 
$450,000 per unit of desired initial eligibility. Each lease is worth 
one unit of bid eligibility in the auction. Any participant intending 
to bid on only one of the leases during the auction must submit a bid 
deposit of $450,000. The required bid deposit for any participant 
intending to bid on multiple leases in the first round of the auction 
will be the number of leases the bidder intends to bid on multiplied by 
$450,000. For example, the required bid deposit for any participant 
intending to bid on three leases in the first round of the auction will 
be $1,350,000. Any bidder that fails to submit the bid deposit by the 
deadline described in the FSN may be disqualified from participating in 
the auction. Bid deposits will be accepted online via pay.gov. 
Following publication of the FSN, each bidder must fill out the BFF 
included in the FSN. BOEM has made a copy of the proposed BFF available 
with this notice on its Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Massachusetts.aspx. 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 187,523 acres will be 
offered for sale as Lease OCS-A 0500, approximately 166,886 acres will 
be offered for sale as Lease OCS-A 0501, approximately 248,015 acres 
will be offered for sale as Lease OCS-A 0502, and approximately 140,554 
acres will be offered for sale as Lease OCS-A 0503. BOEM proposes for 
this lease sale a minimum bid of $2 per acre for each LA. Therefore, 
the minimum acceptable bid will be $375,046 for Lease OCS-A 0500, 
$333,772 for Lease OCS-A 0501, $496,030 for Lease OCS-A 0502, and 
$281,108 for Lease OCS-A 0503.
    Area Offered for Leasing: The area described for leasing in this 
PSN is the same as the Massachusetts WEA described as the proposed 
action and preferred alternative in the EA. The area proposed to be 
available for sale will be auctioned as four leases: Lease OCS-A 0500, 
Lease OCS-A 0501, Lease OCS-A 0502, and Lease OCS-A 0503. Lease OCS-A 
0500 consists of 187,523 acres, Lease OCS-A 0501 consists of 166,886 
acres, Lease OCS-A 0502 consists of 248,015 acres, and Lease OCS-A 0503 
consists of 140,554 acres. The total area is approximately 742,978 
acres. If there are adequate bids, four leases will be issued pursuant 
to this lease sale. A description of the LAs can be found in Addendum 
``A'' of the proposed leases, which BOEM has made available with this 
notice on its Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Massachusetts.aspx.

Map of the Area Offered for Leasing

    A map of the four proposed LAs and a table of the boundary 
coordinates in X, Y (eastings, northings) UTM Zone 18, NAD83 Datum and 
geographic X, Y (longitude, latitude), NAD83 Datum can be found at the 
following URL: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Massachusetts.aspx.
    A large scale map of these areas showing boundaries of the area 
with numbered blocks is available from BOEM at the following address: 
Bureau of Ocean Energy Management, Office of Renewable Energy Programs, 
381 Elden Street, HM 1328, Herndon, Virginia 20170, Phone: (703) 787-
1320, Fax: (703) 787-1708.

Delineation of the Leasing Areas

    BOEM commissioned the Department of Energy's National Renewable 
Energy Laboratory (NREL) to develop a methodology for delineation of 
the Massachusetts WEA into non-overlapping LAs for BOEM to consider for 
inclusion in this PSN. NREL obtained relevant information related to 
the Massachusetts WEA, such as bathymetry and wind speed information, 
and calculated gross capacity and annual energy production using 
different wind turbine generator spacing and layout scenarios. BOEM 
provided NREL with the industry nominations received in response to 
previously published notices associated with BOEM's Massachusetts 
offshore wind planning process to inform this analysis. Additionally, 
NREL conducted wake effects analysis with the goal of minimizing wake 
effects between LAs. NREL also provided draft reports and presented the 
draft and final findings to the BOEM Massachusetts Intergovernmental 
Renewable Energy Task Force. NREL's final report, entitled ``Assessment 
of Offshore Wind Energy Leasing Areas for the BOEM Massachusetts Wind 
Energy Area,'' was released on December 20, 2013, and is available on 
BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Massachusetts.aspx.
    In the final report, NREL presented three alternatives for BOEM's 
consideration for delineation of the Massachusetts WEA: Alternative 1 
consists of four LAs divided along diagonal lines parallel to the 
prevailing wind direction (southwest to northeast)

[[Page 34775]]

and perpendicular to the bathymetry; Alternative 2 consists of five LAs 
divided along diagonal lines parallel to the prevailing wind direction 
and perpendicular to the bathymetry; and Alternative 3 consists of five 
LAs, four divided along diagonal lines parallel to the prevailing wind 
direction and perpendicular to the bathymetry, and the fifth comprised 
mostly of water depths greater than 50 meters. In the final report, 
NREL indicated that their preferred delineation option is Alternative 2 
because it would maximize the development potential of the 
Massachusetts WEA. After sharing the results of NREL's analysis with 
the BOEM Massachusetts Intergovernmental Task Force, BOEM received one 
comment from the Commonwealth of Massachusetts indicating that their 
preferred delineation would be Alternative 1 because it would allow 
individual lessees the maximum flexibility in designing projects.
    In this PSN, BOEM is proposing to auction the Massachusetts WEA as 
four leasing areas as described in Alternative 1 of NREL's final 
report. However, potential bidders should note that BOEM may choose to 
offer for sale the LAs outlined in Alternative 2 or 3 of NREL's final 
report, after considering the comments submitted in response to the 
PSN. BOEM will announce its final decision as to the Massachusetts WEA 
leasing areas that will be offered for sale in the FSN.
    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 comments received in response to this 
PSN and other relevant information provided to the Bureau.
    Lease Terms and Conditions: The proposed leases contain proposed 
lease terms, conditions and stipulations for OCS commercial wind leases 
in the Massachusetts WEA. BOEM reserves the right to add additional 
terms and conditions to any approval or approval with modifications of 
a SAP and/or COP. The proposed leases, including Addendum ``C'', are 
available on BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Massachusetts.aspx. Each proposed lease 
includes 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 be completed 
at the time of COP approval.
    After considering comments on the PSN and proposed leases, BOEM 
will publish final lease terms and conditions in the FSN.

Required Plans for Potential Development of Executed Leases

    Pursuant to 30 CFR 585.601, the leaseholder must submit a SAP 
within 12 months of lease issuance. If the leaseholder intends to 
continue its commercial lease with an operations term, the leaseholder 
must submit a COP at least 6 months before the end of the site 
assessment term.
    The commercial wind leasing areas proposed for sale in this PSN are 
among the largest delineated by BOEM to date. In light of this, BOEM is 
soliciting comments on the concept of executing commercial leases for 
the Massachusetts WEA with an operations term greater than the 25 years 
proposed in this PSN. If a potential bidder is interested in obtaining 
a lease that reflects the adjustments to the operations term described 
above, then that party should submit their comments and qualifications 
package during the comment period of this PSN. The decision whether to 
execute leases with an operations term greater than 25 years will be 
made in accordance with 30 CFR 585.235.
    Qualifications--Who May Bid: Any potential bidder that has not 
already submitted a complete set of qualifications materials must do so 
by the end of the 60-day comment period of this PSN. To be eligible to 
participate in the auction, each potential bidder must have been found 
by BOEM to be legally, technically and financially qualified under 
BOEM's regulations at 30 CFR 585.106-107 by the time the FSN for this 
sale is published. Please note that technical and financial 
qualifications are lease-specific; it is not sufficient to have been 
technically and financially qualified to pursue a project offshore 
another state.
    Guidance and examples of the appropriate documentation 
demonstrating the required legal qualifications can be found in Chapter 
2 and Appendix B of Guidelines for the Minerals Management Service 
Renewable Energy Framework, available on BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/Regulatory-Information/Index.aspx. Guidance regarding how bidders may demonstrate their 
technical and financial qualifications is provided in Qualification 
Guidelines to Acquire and Hold Renewable Energy Leases and Grants and 
Alternate Use Grants on the U.S. Outer Continental Shelf, available on 
BOEM's Web site at: http://boem.gov/Renewable-Energy-Program/Regulatory-Information/QualificationGuidelines-pdf.aspx. BOEM strongly 
recommends that bidders refer to this guidance before submitting their 
qualification materials, as the guidance is updated periodically.
    Bidders must submit documentation necessary to demonstrate their 
legal, technical, and financial qualifications to BOEM in both paper 
and electronic formats. BOEM considers an Adobe PDF file stored on a 
compact disc (CD) to be an acceptable format for submitting an 
electronic copy. In their qualification materials, bidders must provide 
a general description of the project that they would like to construct 
on the LA sought in this sale, including estimates of the project area 
and total nameplate capacity of the proposed facilities.
    Please note that it may take a number of weeks for bidders to 
establish their legal, technical, and financial qualifications. BOEM 
advises potential bidders planning to participate in a sale to 
establish their qualifications promptly. It is not uncommon for BOEM to 
request additional materials establishing qualifications following an 
initial review of the qualifications package. Any potential bidder 
whose qualification package is incomplete at the time the FSN for this 
sale is published in the Federal Register will be found to have failed 
to establish its qualifications and will be unable to participate in 
the sale.
    Finally, potentially interested parties should note that BOEM may 
decide to move forward with one of the other two LA alternatives 
outlined in NREL's final report, based upon comments received in 
response to this PSN and other relevant information provided to the 
Bureau. Potentially interested parties should also note that BOEM is 
considering (1) lowering certain payment requirements, and (2) 
lengthening the operations terms associated with the proposed 
commercial leases, as described earlier in this PSN. If a potential 
bidder is interested in obtaining a lease included in any of the the 
leasing alternatives outlined in NREL's final report and/or is 
interested in obtaining a lease with the adjustments to the financial 
terms and

[[Page 34776]]

conditions and/or operations term described in this PSN, then that 
party should submit their qualifications package during the comment 
period of this PSN.

Auction Procedures

Summary

    For the sale of Lease OCS-A 0500, Lease OCS-A 0501, Lease OCS-A 
0502, and Lease OCS-A 0503, 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 non-monetary factors, or 
``variables,'' in determining the outcome of the auction. BOEM will 
appoint a panel of three BOEM employees for the purposes of reviewing 
the non-monetary packages and verifying the results of the lease sale. 
BOEM reserves the right to change the composition of this panel prior 
to the date of the lease sale. The panel will determine whether any 
bidder has earned a non-monetary credit to be used during the auction 
(i.e., if a bidder holds a Community Benefits Agreement (CBA) or a 
Power Purchase Agreement (PPA)), and if one or more bidders have earned 
such a credit, the percentage that the credit will be worth. The 
auction will balance consideration of two variables: (1) A cash bid, 
and (2) a non-monetary credit. In sum, these two variables comprise the 
multi-factor bid or ``As-Bid'' auction price. A bidder's As-Bid price, 
which is the sum of its cash bid and any credit portion earned, will 
either meet BOEM's asking price or be reflected in the bidder's own 
Intra-Round Bid price subject to certain conditions, as described more 
fully herein. A multiple-factor auction, wherein both monetary and 
nonmonetary bid variables are considered, is provided under BOEM's 
regulations at 30 CFR 585.220(a)(4) and 585.221(a)(6).

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

    Under a multiple-factor bidding format, as set forth at 30 CFR 
585.220(a)(4), BOEM may consider 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. This multiple-factor format is intended to 
allow BOEM flexibility in administering the auction and in balancing 
the variables presented. The regulations leave to BOEM the 
determination of how to administer the multiple-factor auction format 
to ensure the receipt of a fair return under the Act, 43 U.S.C. 
1337(p)(2)(A).
    BOEM's regulations at 30 CFR 585.220(a)(4) allow for a multi-round 
auction in which each bidder may submit only one proposal per LA or for 
a set of LAs in each round of the auction. The auction will be 
conducted in a series of rounds. At the start of each round, BOEM will 
state an asking price for each LA offered. The asking price for a bid 
on more than one LA is the sum of the asking prices for each LA in the 
bid. Each bidder will indicate whether it is willing to meet the asking 
price for one or more LAs. A bid submitted at the full asking price for 
one or more LAs in a particular round is referred to as a ``live bid.'' 
A bidder must submit a live bid for at least one of the LAs in each 
round to participate in the next round of the auction. As long as there 
is at least one LA that is included in two or more live bids, the 
auction continues, and the next round is held.
    A bidder's As-Bid price must meet the asking price in order for it 
to be considered a live bid. A bidder may meet the asking price by 
submitting a monetary bid equal to the asking price or, if it has 
earned a credit, by submitting a multiple-factor bid--that is, a live 
bid that consists of a monetary element and a non-monetary element, the 
sum of which equals the asking price. A multiple-factor bid would 
consist of the sum of a cash portion and any credit portion which the 
bidder has earned.
    An uncontested bid is a live bid that does not overlap with other 
live bids in that round. For example, a bid for two LAs is considered 
contested if any LA included in that bid is included in another bid--a 
bid cannot be ``partially uncontested.'' An uncontested bid represents 
the only apparent interest in that bid's LA(s) at the asking price for 
that round. If a bidder submits an uncontested bid consisting of one or 
more LAs, 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(s) contained in the 
uncontested bid would remain unchanged from the previous round. If the 
price on any LAs in that bid rises later in the auction because another 
bidder places a live bid on one or more of those LAs, BOEM will stop 
automatically carrying forward the previously uncontested bid. Once the 
asking price(s) goes up, the bidder that placed the previously carried-
forward bid is free to bid on either LA at the new asking price(s).
    Following each round in which a 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 each LA is included in 
no 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 5% of a monetary bid for holding a 
CBA or a credit of up to 25% of a monetary bid for holding a PPA--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.
    The panel will evaluate non-monetary packages consisting of any CBA 
or PPA to determine whether it meets the criteria provided in the FSN, 
and therefore whether it will qualify for a credit for its holder. It 
is possible that the panel could determine that no bidder qualifies for 
a non-monetary credit during the auction, in which case the auction 
would otherwise proceed as described in the FSN. The panel will 
determine the winning bids for each LA on the basis of the procedures 
described in the FSN.

Details of the Auction Process

Bidding--Live Bids

    Each bidder is allowed to submit a live bid for any number of LAs 
based on its ``eligibility'' at the opening of each round. A bidder's 
eligibility is either four, three, two, one, or zero LAs, and it 
corresponds to the maximum number of LAs that a bidder may include in a 
live bid during a single round of the auction. A bidder's initial 
eligibility is determined based on the amount of the bid deposit 
submitted by the bidder prior to the auction. To be eligible to offer a 
bid on one LA at the start of the auction, a bidder must submit a bid 
deposit of $450,000. To be eligible to offer a bid on two LAs in the 
first round of the auction, the bidder must submit a bid deposit of 
$900,000; for three LAs, the bid deposit is $1,350,000; for four LAs, 
the bid deposit is $1,800,000. A bidder's bid deposit will be used by 
BOEM as a down payment on any monetary obligations incurred by the 
bidder should it be awarded a lease.
    As the auction proceeds, a bidder's eligibility is determined by 
the number

[[Page 34777]]

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 two or more LAs in the previous round, that bidder may submit a live 
bid that also includes that number of 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 one or more LAs also may 
choose to submit a live bid with fewer LAs than the maximum number it 
is eligible to include in its bid. Thus, eligibility in successive 
rounds may stay the same or go down, but it can never go up.
    In the first round of the auction, bidders have the following 
options:
    A bidder with an initial eligibility of one (that is, a bidder who 
submitted a bid deposit of $450,000) may:
     Submit a live bid on any of the four LAs, or
     Submit nothing, and drop out of the auction.

A bidder with an initial eligibility of more than one (that is, a 
bidder who submitted a bid deposit of $900,000 up to $1,800,000) may:
     Submit a live bid for any number of LAs up to its bid 
eligibility, or
     Submit nothing, and drop out of the auction.
    There is no requirement that the LAs contained in a live bid be 
contiguous. A bidder who has included multiple LAs in a live bid can 
include any combination of LAs up to the bidder's bid eligibility. 
Before each subsequent round of the auction, BOEM will raise the asking 
price for any LA that was contained in more than one live bid in the 
previous round. BOEM will not raise the asking price for a LA that was 
in only one or no live bids in the previous round.
    Asking price increments will be determined by BOEM, in its sole 
discretion. BOEM will base asking price increments on a number of 
factors, including:
     Making the increments sufficiently large that the auction 
will not take an unduly long time to conclude; and
     Decreasing the increments as the asking price of a LA 
nears its apparent final price.
    BOEM reserves the right during the auction to increase or decrease 
increments if it determines, in its sole discretion, that a different 
increment is warranted to enhance the efficiency of the auction 
process. Asking prices for the LAs included in multiple live bids in 
the previous round will be raised and rounded to the nearest whole 
dollar amount to obtain the asking prices in the current round.
    A bidder must submit a live bid in each round of the auction (or 
have an uncontested live bid automatically carried forward by BOEM) for 
it to remain active and continue bidding in future rounds. All of the 
live bids submitted in any round of the auction will be preserved and 
considered binding until determination of the winning bids is made. 
Therefore, the bidders are responsible for payment of the bids they 
submit and can be held accountable for up to the maximum amount of 
those bids determined to be winning bids during the final award 
procedures.
    Between rounds, BOEM will release the following information to the 
bidders:
     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(s) in the carried forward 
bid. In particular, for rounds in which a bidder finds its uncontested 
bid is carried forward, the bidder will be unable to do the following:
     Switch to any other LAs;
     Submit an Intra-Round Bid (see herein for discussion of 
Intra-Round Bids); or
     Drop out of the auction.
    A bidder may be bound by that bid or, indeed, by any other bid 
which BOEM determines is a winning bid in the award stage. Hence, a 
bidder cannot drop an uncontested bid. In no scenario can a bidder be 
relieved of any of its bids from previous or future rounds until a 
determination is made in the award stage about the LAs won by the 
bidder.
    Except when a bidder's bid is being carried forward by BOEM (i.e., 
an uncontested bid), a bidder with an eligibility of one (that is, a 
bidder who submitted a live bid for one LA in the previous round) may:
     Submit a live bid for any of the four LAs;
     Submit an Intra-Round Bid for the same LA for which the 
bidder submitted a live in the previous round, and exit the auction; or
     Submit nothing, and drop out of the auction.
    A bidder with an eligibility of two or more (that is, a bidder who 
submitted a live bid for two or more LAs in the previous round) may:
     Submit a live bid for any number of LAs up to its 
eligibility;
     Submit an Intra-Round Bid for the specific combination of 
LAs in that bidder's previous-round bid, and a live bid for any number 
of LAs fewer than the number of LAs in that bidder's previous-round 
bid;
     Submit an Intra-Round Bid for the specific combination of 
LAs in that bidder's previous-round bid, no live bids, and exit the 
auction; or
     Submit nothing, and drop out of the auction.
    Subsequent auction rounds occur in this sale as long as one of the 
four LAs is contested. The auction concludes at the end of the round in 
which none of the LAs is included in the live bid of more than one 
bidder, i.e., all live bids are uncontested.

Bidding--Intra-Round Bids

    All asking prices and asking price increments will be determined by 
the BOEM Auction Manager, as described previously in this PSN. Intra-
Round Bidding allows bidders to more precisely express the maximum 
price they are willing to offer for a single LA or for a combination of 
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 any number of LAs, the 
bidder's eligibility for a live bid in that same round and future 
rounds is permanently reduced from including the amount of LAs in the 
previous round to one less than that. 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.

[[Page 34778]]

    BOEM will not consider Intra-Round Bids for the purpose of 
determining whether to increase the asking price for a particular LA or 
to end the auction. Also, BOEM will not count nor share with bidders 
between rounds the number of Intra-Round Bids received for each LA.
    All of the Intra-Round Bids submitted during the auction will be 
preserved, and may be determined to be winning bids. Therefore, bidders 
are responsible for payment of the bids they submit and may be held 
accountable for up to the maximum amount of any Intra-Round Bids or 
live bids determined to be winning bids during the final award 
procedures.

Determining Provisional Winners

    After the bidding ends, BOEM will determine the provisionally 
winning bids in accordance with the process described in this section. 
This process consists of two stages: Stage 1 and Stage 2, which are 
described herein. Once the auction itself ends, nothing further is 
required of bidders within or between Stages 1 and 2. In practice, the 
stages of the process will take place as part of the solution algorithm 
for analyzing the monetary and credit portion of the bids, determining 
provisional winners, finding the LAs won by the provisional winners, 
and calculating the applicable bid prices to be paid by the winners for 
the LAs they won. This evaluation will be reviewed, checked, and 
validated by the panel. The determination of provisional winners, in 
both stages, will be based on the two auction variables, as well as on 
a bidder's adherence to the rules of the auction, and the absence of 
conduct detrimental to the integrity of the competitive auction.
     Stage 1
    Live bids submitted in the final round of the auction are Qualified 
Bids. In Stage 1, a bidder with a Qualified Bid is provisionally 
assured of winning the LA(s) included in its final round bid, 
regardless of any other prior-to-final round live bids or Intra-Round 
Bids in any round. If all LAs are awarded to bidders in Stage 1, the 
second award stage is not necessary. If any LA received a bid but was 
not awarded in Stage 1 because no live bids were received in the final 
round of the auction, BOEM will proceed to Stage 2 to award the leases.
    Following the auction, all winning bidders must pay the price 
associated with their winning bids, which may consist of cash and non-
monetary credits or just cash.
     Stage 2
    All bids are either Qualified Bids or Contingent Bids. Contingent 
bids are all live bids received before the final round, and any Intra-
Round Bids received during the auction. In Stage 2, BOEM will consider 
Contingent Bids to see if the non-awarded LA(s) can be awarded without 
interfering with Stage 1 awards. BOEM will award leases in Stage 2 to 
the bid(s) that maximize(s) the total As-Bid prices.
    Any Contingent Bids that conflict with Qualified Bids will not be 
considered. There is one notable exception to this rule. This exception 
allows BOEM to accept a Contingent Bid for a combination of LAs 
notwithstanding the existence of a Qualified Bid, provided the 
acceptance of the Contingent Bid for these LAs results in higher 
overall As-Bid prices than acceptance of only the Qualified Bid. In 
this scenario, a bidder would be awarded the LAs included in the 
Contingent Bid and would be required to pay its live bid price or its 
Intra-Round Bid price for those LAs included in the Contingent Bid.
    This exception represents the only situation in which BOEM will 
consider for award a Contingent Bid which overlaps a Qualified Bid. In 
contrast, there is no situation in which one bidder's Contingent Bid 
will be considered for award if it overlaps with any LA that is 
included in another bidder's Qualified Bid.
    Under certain circumstances, different combinations of Contingent 
Bids may result in the same total As-Bid price. In such cases, BOEM 
will resolve the resulting tie with a random drawing.
    In the event a bidder submits a bid for a LA that the panel and 
BOEM determine to be a winning bid, the bidder will be expected to sign 
the applicable lease documents in a timely manner and submit the full 
cash payment due, pursuant to 30 CFR 585.224. If a bidder fails to 
timely sign and pay for the lease, then BOEM will not issue the lease 
to that bidder, and the bidder will forfeit its bid deposit. BOEM may 
consider failure of a bidder to timely pay the full amount due an 
indication that the bidder is no longer financially qualified to 
participate in other lease sales under BOEM's regulations at 30 CFR 
585.106 and 585.107.

Credit Factors

    Shortly before the auction, BOEM will convene a panel (as provided 
in BOEM's regulations, discussed above) to evaluate bidders' non-
monetary packages to determine whether and to what extent each bidder 
is eligible for a non-monetary credit applicable to the As-Bid auction 
price for one of the LAs in each round of the auction, as described 
herein. In order to receive a credit for a PPA or a CBA, a bidder must 
be legally, technically and financially eligible to acquire a 
commercial OCS wind lease, and must not be affiliated with any other 
bidding entity also seeking credit for the same PPA or CBA.
    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 the deadline specified in the FSN. 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 bid 
credit, and the bid credit will be applicable to only one LA. Any non-
monetary credit would only be applicable to the highest priced LA in a 
bid for multiple LAs. For an Intra-Round Bid containing multiple LAs, 
the highest 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 5% for 
a CBA 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. In the case of an Intra-Round Bid for multiple LAs, the 
credit will apply only to the highest-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 provided in the FSN for a CBA and 
PPA, 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.

[[Page 34779]]

    Community Benefits Agreements (CBA). BOEM proposes a 5% credit in 
the monetary phase of the auction to any bidder that can demonstrate 
that it has executed a CBA, as defined in this section. BOEM is 
proposing this non-monetary factor and credit in response to comments 
requesting CBAs be recognized in the multiple-factor auction format 
received in response to notices associated with the Massachusetts 
planning and environmental review process. BOEM received comments 
recommending that a non-monetary factor for CBAs be given a larger 
percent credit than 5%. BOEM, however, believes that the 5% credit 
fairly represents the value associated with CBAs that meet the criteria 
described in this notice. In particular, these criteria, while 
recognizing the contribution a CBA may provide to the ultimate success 
of a project, may not require substantial financial consideration in 
support of the project. For this reason, BOEM has not proposed a larger 
percentage credit for this non-monetary factor.
    In order for a non-monetary package to qualify for a 5% credit in 
this auction, the BOEM-appointed panel must answer yes to the following 
questions:
    1. Is there a legally binding contract?
    2. Is the contract between:
    a. A bidder; and
    b. One or more community-based organizations (CBO)?
    3. Has the bidder committed to provide specified community 
benefits?
    4. Has the CBO committed in specific ways to support the project in 
the governmental approval process?
    A community-based organization (CBO) is defined as: A legally 
incorporated organization whose membership includes residents or 
property owners of a community within the potentially affected region, 
the local government of the community, or an entity created or managed 
by the local government(s) of the community or communities.
    Bidders seeking non-monetary credit for a CBA will be required to 
submit the CBA as part of their non-monetary package by the date 
specified in the FSN. In addition, bidders must include a description 
of how the CBA meets the requirements outlined in the FSN. For 
protection of confidential business information, please see the section 
entitled ``Protection of Privileged or Confidential Information'' in 
this notice.
    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 state that the Generator will sell to the 
Buyer and the Buyer will buy from the Generator capacity, energy, and/
or the environmental attributes generated by the project, as defined in 
the terms and conditions set forth in the PPA. Energy products to be 
supplied by the Generator and the details of the firm cost recovery 
mechanism approved by the state's public utility commission or other 
applicable authority used to recover expenditures incurred as a result 
of the PPA must be specified in the PPA. To qualify, a PPA must contain 
the following terms or supporting documentation:
    (i) A complete description of the proposed project;
    (ii) Identification of both the electricity Generator and Buyer 
that will enter into a long term contract;
    (iii) A time line for permitting, licensing, and construction;
    (iv) Pricing projected under the long term contract being sought, 
including prices for all market products that would be sold under the 
proposed long term contract;
    (v) A schedule of quantities of each product to be delivered and 
projected electrical energy production profiles;
    (vi) The term for the long-term contract;
    (vii) Citations to all filings related to the PPA that have been 
made with state and Federal agencies, and identification of all such 
filings that are necessary to be made; and
    (viii) Copies of or citations to interconnection filings related to 
the PPA.
    If the panel determines a bidder has executed a PPA for at least 
250 MW, it will be eligible for the entire 25% credit. If the panel 
determines a bidder has executed a PPA for an amount less than 250 MW, 
the bidder may still be eligible for a non-monetary credit proportional 
to the PPA's fraction of 250 MW. The smaller percentage for a partial 
credit will be calculated according to the formula below:
[GRAPHIC] [TIFF OMITTED] TN18JN14.000

    Where:

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

Additional Information Regarding the Auction Format

Non-Monetary Auction Procedures

    All bidders seeking a non-monetary auction credit will be required 
to submit a non-monetary auction package prior to the auction. 
Instructions and deadlines for submittal will be provided in the FSN. 
If a bidder does not submit a non-monetary package by the date 
specified in the FSN, then BOEM will assume that bidder is not seeking 
a non-monetary auction credit and the panel will not consider that 
bidder for a non-monetary auction credit.

Bidder Authentication

    Prior to the auction, the Auction Manager will send several bidder 
authentication packages to each bidder shortly after BOEM has processed 
the BFFs. One package will contain tokens for each authorized 
individual. Tokens are digital authentication devices. The tokens will 
be mailed to the Primary Point of Contact indicated on the BFF. This 
individual is responsible for distributing the tokens to the 
individuals authorized to bid for that company. Bidders are to ensure 
that each token is returned within three business days following the 
auction. An addressed, stamped envelope will be provided to facilitate 
this process. In the event that a bidder fails to submit a BFF or 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,

[[Page 34780]]

along with the tokens, will be tested during the Mock Auction.

Monetary Auction Times

    Specific information regarding when the bidders can enter the 
auction system and the auction start time will be provided in the FSN. 
Additional information will be made available in an Auction System 
Technical Supplement, which will be posted on BOEM's Web site prior to 
the auction.
    BOEM and the auction contractors will use the auction platform 
messaging service to keep bidders informed on issues of interest during 
the auction. For example, BOEM may change the schedule at any time, 
including during the auction. If BOEM changes the schedule during the 
auction, it will use the messaging feature to notify bidders that a 
revision has been made, and direct bidders to the relevant page. BOEM 
will also use the messaging system for other changes and items of 
particular note during the auction. The auction schedule and asking 
price increments are in BOEM's discretion, and are subject to change at 
any time before or during the auction.
    During the auction, bidders may place bids at any time during the 
round. At the top of the bidding page, a countdown clock will show how 
much time remains in the round. Bidders have until the scheduled time 
to place bids. Bidders should place bids according to the procedures 
described in the Auction System Technical Supplement, and as practiced 
at the Mock Auction. No information about the round is available until 
the round has closed and results have been posted, so there should be 
no strategic advantage to placing bids early or late in the round.

Alternate Bidding Procedures

    Any bidder who is unable to place a bid using the online auction 
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 System Technical Supplement before 
the end of the round. BOEM will authenticate the caller to ensure he/
she is authorized to bid on behalf of the company. 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 Procedure. At that 
time, BOEM may, in its sole discretion, permit or refuse to accept a 
request for the placement of a bid using the Alternative Bidding 
Procedure.
    The Alternative Bidding Procedure enables a bidder who is having 
difficulties accessing the Internet to submit its bid via an 
Alternative Bidding Form that must be faxed to the Auction Manager. If 
the bidder has not placed a bid, but calls BOEM before the end of the 
round and notifies BOEM that it is preparing a bid using the Alternate 
Bidding Procedure, and submits the Alternate Bidding Form by fax before 
the round ends, BOEM will likely accept the bid, though acceptance or 
rejection of the bid is within BOEM's sole discretion. If the bidder 
calls during the round, but does not submit the bid until after the 
round ends (but before the round is posted), BOEM may or may not accept 
the bid, in part based on how much time remains in the recess. Bidders 
are strongly encouraged to submit the Alternative Bidding Form before 
the round ends. 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. Bids in all rounds are preserved for consideration 
in Stage 2 of the award process. Bidders are held accountable for all 
bids placed during the auction. This is true if they continued bidding 
in the last round, if they placed an Intra-Round Bid in an earlier 
round, or if they stopped bidding during the auction.
    Acceptance, Rejection, or Return of Bids: BOEM reserves the right 
and authority to reject any and all bids. No leases will be awarded to 
any bidders and no bids will be accepted, unless (1) the bidder has 
complied with all requirements of the FSN, applicable regulations and 
statutes, including, 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 bid submitted 
that does not satisfy these requirements may be returned to the bidder 
by the Program Manager of BOEM's Office of Renewable Energy Programs 
and, in that case, would not be considered for acceptance.
    Process for Issuing the Leases: If BOEM proceeds with lease 
issuance, it will issue three unsigned copies of the lease form to each 
winning bidder. Within 10 business days after receiving the lease 
copies, a winning bidder must:
    1. Execute the lease on the bidder's behalf;
    2. File financial assurance as required under 30 CFR 585.515-537; 
and
    3. Pay by electronic funds transfer (EFT) the balance of the bonus 
bid (bid amount less the bid deposit). BOEM requires bidders to use EFT 
procedures (not to include pay.gov) for payment of the balance of the 
bonus bid, following the detailed instructions contained in the 
``Instructions for Making Electronic Payments'' available on BOEM's Web 
site at: http://www.boem.gov/Renewable- Energy-Program/State-
Activities/Massachusetts.aspx.
    If a winning bidder does not meet these three requirements within 
10 business days of receiving the lease copies as described herein, or 
if a winning bidder otherwise fails to comply with applicable 
regulations or the terms of the FSN, the winning bidder will forfeit 
its bid deposit. BOEM may extend this 10 business-day time period if it 
determines the delay was caused by events beyond the winning bidder's 
control.
    In the event that the provisional winner does not execute and 
return the leases according to the instructions in the FSN, BOEM 
reserves the right to reconvene the panel to determine whether it is 
possible to identify a bid that would have won in the absence of the 
bid previously determined to be the winning bid. In the event that a 
new winning bid is selected by the panel, BOEM will follow the 
procedures in this section for the new winner(s).
    BOEM will not execute a lease until (1) the three requirements 
above have been satisfied, (2) BOEM has accepted the winning bidder's 
financial assurance, and (3) BOEM has processed the winning bidder's 
payment. The winning bidder may meet financial assurance requirements 
by posting a surety bond or by setting up an escrow account with a 
trust agreement giving BOEM the right to withdraw the money held in the 
account on demand. 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.

[[Page 34781]]

    Anti-Competitive Behavior: In addition to the auction rules 
described in this notice, bidding behavior is governed by Federal 
antitrust laws designed to prevent anticompetitive behavior in the 
marketplace. Compliance with BOEM's auction procedures will not 
insulate a party from enforcement of antitrust laws.
    In accordance with the Act at 43 U.S.C. 1337(c), following the 
auction, and before the acceptance of bids and the issuance of leases, 
BOEM will ``allow the Attorney General, in consultation with the 
Federal Trade Commission, thirty days to review the results of the 
lease sale.'' If a bidder is found to have engaged in anti-competitive 
behavior or otherwise violated BOEM's rules in connection with its 
participation in the competitive bidding process, BOEM may reject the 
high bid.
    Anti-competitive behavior determinations are fact specific. 
However, such behavior may manifest itself in several different ways, 
including, but not limited to:
     An agreement, either express or tacit, among bidders to 
not bid in an auction, or to bid a particular price;
     An agreement among bidders not to bid for a particular LA;
     An agreement among bidders not to bid against each other; 
and
     Other agreements among bidders that have the effect of 
limiting the final auction price.
    BOEM may decline to award a lease if, pursuant to the Act (43 
U.S.C. 1337(c)), it is determined by the Attorney General in 
consultation with the Federal Trade Commission that doing so would be 
inconsistent with 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.
    Bidder's Financial Form Certification: Each bidder is required to 
sign the self-certification, in accordance with 18 U.S.C. 1001 (Fraud 
and False Statements) in the Bidder's Financial Form, which can be 
found on BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Massachusetts.aspx. The form must be filled 
out and returned to BOEM in accordance with the ``Deadlines and 
Milestones for Bidders'' section of this notice.
    Non-Procurement Debarment and Suspension Regulations: Pursuant to 
regulations at 43 CFR Part 42, Subpart C, an OCS renewable energy 
Lessee must comply with the U.S. Department of the Interior's non-
procurement debarment and suspension regulations at 2 CFR 180 and 1400 
and agree to communicate the requirement to comply with these 
regulations to persons with whom the Lessee does business as it relates 
to this lease by including this term as a condition in their contracts 
and other transactions.
    Final Sale Notice: BOEM will consider comments received or 
postmarked during the PSN comment period in preparing a FSN that will 
provide the final details concerning the offering and issuance of OCS 
commercial wind energy leases in the 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.
    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). BOEM 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 is 
submitted as required by the Freedom of Information Act (FOIA). 
Exemption 4 of FOIA applies to trade secrets and commercial or 
financial information that is privileged or confidential. If you wish 
to protect the confidentiality of such information, clearly mark it and 
request that BOEM treat it as confidential. BOEM will not disclose such 
information, except as required by FOIA. Please label privileged or 
confidential information ``Contains Confidential Information'' and 
consider submitting such information as a separate attachment.
    However, BOEM will not treat as confidential any aggregate 
summaries of such information or comments not containing such 
information. Additionally, BOEM may not treat as confidential the legal 
title of the commenting entity (e.g., the name of a company). 
Information that is not labeled as privileged or confidential will be 
regarded by BOEM as suitable for public release.

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

    BOEM is required, after consultation with the Secretary of the 
Department 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 
and provide the reasons why BOEM should do so.

    Dated: May 30, 2014.
Walter D. Cruickshank,
Acting Director, Bureau of Ocean Energy Management.
[FR Doc. 2014-14116 Filed 6-17-14; 8:45 am]
BILLING CODE 4310-MR-P
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