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[Federal Register Volume 79, Number 139 (Monday, July 21, 2014)]
[Notices]
[Pages 42361-42373]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16864]

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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

[Docket No. BOEM-2014-0029; MMAA104000]

Atlantic Wind Lease Sale 5 (ATLW5) for Commercial Leasing for 
Wind Power on the Outer Continental Shelf Offshore New Jersey--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 New Jersey.

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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 New Jersey, pursuant to BOEM's regulations at 30 CFR 585.216. 
BOEM proposes to offer for sale two leases. The total area comprising 
the two lease areas is smaller than that described in the Call for 
Information and Nominations (Call) (77 FR 22130) that was published in 
April 2011. An explanation for the reduction of the area and detailed 
information regarding the areas is provided in this notice in the 
section entitled ``Areas Offered for Leasing.'' 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 on these items 
during a 60-day comment period following this notice. The issuance of 
the proposed leases resulting from this sale would not constitute an 
approval of project-specific plans to develop offshore wind energy. 
Such plans, expected to be submitted by successful lessees, will be 
subject to subsequent environmental and public review prior to a 
decision to proceed with development.

DATES: Comments should be submitted electronically or postmarked no 
later than September 19, 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 September 19, 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-2014-0029 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 New Jersey 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 Will Waskes, BOEM Office of Renewable Energy 
Programs, 381 Elden Street, HM 1328, Herndon, Virginia 20170, (703) 
787-1320, or Will.Waskes@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: Will Waskes, BOEM Office of Renewable

[[Page 42362]]

Energy Programs, 381 Elden Street, HM 1328, Herndon, Virginia 20170, 
(703) 787-1320 or Will.Waskes@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

Environmental Reviews

    On February 3, 2012, BOEM published the Notice of Availability 
(NOA) (77 FR 5560) for the final Environmental Assessment (EA) and 
Finding of No Significant Impact (FONSI) for commercial wind lease 
issuance and site assessment activities on the Atlantic OCS offshore 
New Jersey, Delaware, and Virginia, pursuant to the National 
Environmental Policy Act. Consultations ran concurrently with the 
preparation of the EA and included consultation under the Endangered 
Species Act (ESA), Magnuson-Stevens Fishery Conservation and Management 
Act (MSFCMA), section 106 of the National Historic Preservation Act 
(NHPA), and the Coastal Zone Management Act (CZMA). The proposed lease 
areas identified in this PSN have been reduced from the lease areas 
described in the Call and the New Jersey Wind Energy Area (WEA) 
described in the EA. An explanation regarding the reduction in the area 
is provided in the section entitled ``Area Offered for Leasing.'' The 
Commercial Wind Lease Issuance and Site Characterization Activities on 
the Atlantic Outer Continental Shelf Offshore New Jersey, Delaware, and 
Virginia Final Environmental Assessment can be found at: http://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/Mid-Atlantic_Final_EA_012012.pdf.
    On October 19, 2012, BOEM initiated consultation with the National 
Marine Fisheries Service under the ESA for geological and geophysical 
(G&G) activities in support of renewable energy development offshore 
New Jersey, New York, Massachusetts, and Rhode Island. Formal 
consultation concluded on April 10, 2013, with receipt of a Biological 
Opinion that, along with the previous informal consultation, informed 
the development of the New Jersey commercial wind lease package. 
Additional environmental reviews will be prepared upon receipt of the 
Lessees' proposed project plans, such as a Site Assessment Plan (SAP) 
or Construction and Operations Plan (COP).

Other Activities Under BOEM's Jurisdiction

    Potential bidders should be aware of an unsolicited request for a 
right-of-way grant (ROW) under consideration by BOEM, situated within 
or near the New Jersey WEA and two limited leases issued by BOEM within 
the New Jersey WEA.
    Atlantic Grid Holdings LLC Right-of-Way Grant Request: On March 31, 
2011, Atlantic Grid Holdings LLC submitted an unsolicited application 
for a ROW grant. Following publication of a notice to determine 
competitive interest in the grant area and a 60-day public comment 
period, BOEM published a determination of no competitive interest on 
May 15, 2012 (77 FR 28620). The nomination and associated notices can 
be found at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Regional-Proposals.aspx. On May 1, 2013, Atlantic Grid 
Holdings LLC submitted a supplement to their application which can 
found at the web address above. BOEM anticipates that the New Jersey 
lease sale will occur prior to a decision regarding the granting of a 
ROW to Atlantic Grid Holdings LLC, as a result of the required 
environmental compliance documentation that is still needed. BOEM does 
not foresee the activities under the ROW grant interfering with 
Lessee's ability to develop the lease areas.
    Interim Policy Leases: On November 1, 2009, BOEM executed two 
Interim Policy leases within the New Jersey WEA authorizing the 
construction, installation, and operation of meteorological towers or 
buoys for a term of five years, to two developers offshore New Jersey. 
The location of each lease, the name of lease holder and the lease 
number are listed below.

----------------------------------------------------------------------------------------------------------------
            Lease No.                    Lessee          Protraction No.       Block No.          Sub-Block
----------------------------------------------------------------------------------------------------------------
OCS-A 0472......................  Deepwater Wind LLC.  Wilmington NJ18-02.            7033  All
OCS-A 0473......................  Fishermen's Energy   Wilmington NJ18-02.            6931  H,K,L,N,O,P
                                   LLC.
----------------------------------------------------------------------------------------------------------------

    These leases do not confer a right to develop a commercial offshore 
wind project. Rather, the leases grant the exclusive right to conduct 
the activities described in each lease, which are limited to installing 
and operating facilities to characterize wind and environmental 
resources. Interim Policy lease holder's rights are preserved until the 
leases expire on November 1, 2014. Electronic copies of the executed 
lease can be found at: http://www.boem.gov/Renewable-Energy-Program/Interim-Policy.aspx. BOEM anticipates the New Jersey lease sale to 
occur after the Interim Policy leases have expired.
    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 this sale. These are 
organized into various stages: (1) The PSN comment period; (2) from end 
of PSN comment period to publication of the FSN; (3) the FSN waiting 
period; (4) conducting the Auction; and (5) from the Auction 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 comment 
period. This includes materials sufficient to establish a company's 
legal, technical and financial qualifications.
     Select and Invite Panelist: BOEM will appoint a panel of 
three BOEM employees for the purpose of reviewing the non-monetary 
packages and verifying the results of the lease sale.
2. End of PSN Comment Period to FSN Publication
     Review Comments: BOEM will review all comments submitted 
in response to the PSN during the comment period.
     Finalize Qualifications Reviews: BOEM will complete any 
outstanding qualifications reviews using materials that were submitted 
during the PSN comment period and requested by BOEM prior to the FSN. 
The final list of eligible bidders will be published in the FSN.

[[Page 42363]]

     Prepare the FSN: BOEM will prepare the FSN by updating the 
PSN where appropriate.
     Brief and Update the BOEM New Jersey Task Force: BOEM may 
schedule a meeting or teleconference of the BOEM New Jersey 
Intergovernmental Task Force to discuss the FSN.
     Publish FSN: BOEM will publish the FSN in the Federal 
Register.
3. FSN Waiting Period
     Bidders Financial Form (BFF): No later than 14 days after 
the 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 doesn't 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 the 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 the 
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. Conduct 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 time frames 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. BOEM proposes that 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 the 
Department of Justice (DOJ) 30 days in which to conduct an antitrust 
review of the auction, pursuant to 43 U.S.C 1337(c), which reads, in 
relevant part:
    Antitrust review of lease sales. Following each notice of a 
proposed lease sale and before the acceptance of bids and the issuance 
of leases based on such bids, the Secretary [of the Interior] shall 
allow the Attorney General, in consultation with the Federal Trade 
Commission, 30 calendar days to review the results of such lease sale, 
except that the Attorney General, after consultation with the Federal 
Trade Commission, may agree to a shorter review period.
     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 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 the Lessee that will be fully 
described in each lease, and the financial assurance requirements that 
will be associated with each lease.

Rent

    The first year's rent payment of $3 per acre for the entire lease 
area 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 lease area into acreage 
that is ``generating'' and acreage that is ``non-generating,'' the 
fraction of the lease accruing rent is based on the fraction of the 
total nameplate capacity of the project that is not yet in operation. 
The fraction is the 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 leased 
area at the rental rate of $3 per acre to obtain the annual rent due 
for a given year.
    For example, for a lease the size of 343,833 acres (the size of the 
entire PSN Area), the amount of rent payment will be $1,031,499 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 project size of 1000 MW, the rent payment will 
be $515,750. For the above example, this would be calculated as 
follows: 500MW/1000MW x ($3/acre x 343,833 acres) = $515,750.
    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 additional acreage required, the 
Lessee must also pay the greater of $5.00 per acre per year or $450.00 
per year.

Operating Fee

    For purposes of calculating the initial annual operating fee 
payment, an operating fee rate is applied to a proxy for the wholesale 
market value of the electricity expected to be generated from the 
project during its first 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

[[Page 42364]]

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), 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 a 40% capacity with a 
regional wholesale power price of $40/MWh under an operating fee rate 
of 0.02 would be calculated as follows:
[GRAPHIC] [TIFF OMITTED] TN21JY14.000

    Operating Fee Rate: The operating fee rate is set at 0.02 (i.e., 
2%) during the entire life of commercial operations. BOEM requests 
comments and supporting information on whether BOEM should modify the 
operating fee rate.
    Nameplate Capacity: Nameplate capacity is the maximum rated 
electric output, expressed in MW, that the turbines of the wind 
facility under commercial operations can produce at their rated wind 
speed designated by the turbine's manufacturer. The nameplate capacity 
at the start of each year of commercial operations on the lease will be 
specified in the COP. For example, if the Lessee has 20 turbines under 
commercial operations rated by the design manufacturer at 5 MW of 
output each, the nameplate capacity of the wind facility at the rated 
wind speed of the turbines would be 100 MW.
    Capacity Factor: The capacity factor relates the amount of energy 
delivered to the grid during a period of time to the amount of energy 
the wind facility would have produced at full capacity. 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 represents the share of anticipated generation 
of the wind facility that is delivered to the interconnection grid 
(i.e., where the Lessee's facility interconnects with the electric 
grid) relative to the wind facility's generation at continuous full 
power operation at nameplate capacity, expressed as a decimal between 
zero and one. The capacity factor for the year in which the Commercial 
Operation Date occurs and for the first six full years of commercial 
operations on the lease is set to 0.4 (i.e., 40%) to allow for one year 
of installation and testing followed by five years at full 
availability. At the end of the sixth year, the capacity factor may be 
adjusted to reflect the performance over the previous five years based 
upon the actual metered electricity generation at the delivery point to 
the electrical grid. Similar adjustments to the capacity factor may be 
made once every five years thereafter. The maximum change in the 
capacity factor from one period to the next will be limited to plus or 
minus 10 percent of the previous period's value.
    Wholesale Power Price Index: The wholesale power price, expressed 
in dollars per MW hour, is determined at the time each annual operating 
fee payment is due, based on the weighted average of the inflation-
adjusted peak and off-peak spot price indices for the Northwest--PJM 
West power market for the most recent year of data available as 
reported by the Federal Energy Regulatory Commission (FERC) as part of 
its annual State of the Markets Report with specific reference to the 
summary entitled, ``Electric Market Overview: Regional Spot Prices.'' 
The wholesale power price is adjusted for inflation from the year 
associated with the published spot price indices to the year in which 
the operating fee is to be due based on the Lease Anniversary using 
annual implicit price deflators as reported by the U.S. Department of 
Commerce Bureau of Economic Analysis.

Financial Assurance

    Within 10 business days after receiving the lease copies, the 
winner must provide an initial lease-specific bond or other approved 
means of meeting the Lessor's initial financial assurance requirements, 
in the amount of $100,000. BOEM will base the amount of all SAP, COP, 
and decommissioning financial assurance requirements on estimates of 
cost to meet all accrued lease obligations. The amount of supplemental 
and decommissioning financial assurance requirements will be determined 
on a case-by-case basis.
    The financial terms can be found in Addendum ``B'' of the proposed 
leases, which BOEM has made available with this notice on its Web site 
at: http://www.boem.gov/State-Activities-New-Jersey/.
    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. The time and place of the seminar will be announced by BOEM 
and published on the BOEM Web site at http://www.boem.gov/State-Activities-New-Jersey/. No registration or RSVP is 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 this 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 to participate in the auction. No later than the deadline provided 
in the FSN, each bidder must submit a bid deposit of $450,000 per unit 
of desired initial eligibility. Each lease is worth one unit of bid 
eligibility in the auction. The required bid deposit for any 
participant intending to bid on both leases in the first round of the 
auction will be $900,000. Any participant intending to bid on only one 
of the leases during the auction must submit a bid deposit of $450,000. 
Any bidder that fails to submit the bid deposit by the

[[Page 42365]]

deadline described herein 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 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://www.boem.gov/State-Activities-New-Jersey/. This form requests that each 
bidder designate an email address that 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 160,480 acres would be 
offered for sale as Lease OCS-A 0498 and approximately 183,353 acres 
would be offered for sale as Lease OCS-A 0499. BOEM proposes a minimum 
bid of $2.00 per acre for this lease sale. Therefore, the minimum 
acceptable bid will be $320,960 for Lease OCS-A 0498 and $366,706 for 
Lease OCS-A 0499.
    Areas Offered for Leasing: The area available for sale will be 
auctioned as two leases, Lease OCS-A 0498 [South Lease Area (South LA)] 
and Lease OCS-A 0499 [North Lease Area (North LA)]. South LA consists 
of 160,480 acres and North LA consists of 183,353 acres. The total area 
is approximately 343,833 acres. If there are adequate bids, two leases 
will be issued pursuant to this lease sale. A description of the lease 
areas can be found in Addendum ``A'' of the proposed leases, which BOEM 
has made available with this notice on its Web site at: http://www.boem.gov/State-Activities-New-Jersey/. 
    A map of the North and South LAs, GIS spatial files, 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/State-Activities-New-Jersey/.
    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.

Delineation of the Leasing Areas

Reduction of Call Area Due to Vessel Traffic Concerns

    The area that was published in the Call comprises 62.25 whole OCS 
blocks encompassing approximately 143,424 hectares (354,407 acres). The 
area offered for leasing in this PSN has been reduced compared to the 
area described in the Call notice. The primary reason for this 
reduction is the navigation concerns raised by the U.S. Coast Guard 
(USCG) at the December 18, 2012, BOEM New Jersey Renewable Energy Task 
Force meeting. The USCG presentation provided its analysis of vessel 
traffic transits through the NJ WEA and described the implication of 
allowing offshore wind development in the area. The USCG explained that 
these OCS blocks are located directly south of the Ambrose to Barnegat 
traffic lane, creating a navigational obstacle. After discussion by the 
Task Force, BOEM decided that it would be appropriate to remove OCS 
Blocks Wilmington NJ18-02 Block 6740 and Block 6790 (A, B, C, D, E, F, 
G, H, I, J, K, M, N) and Block 6840 (A) to alleviate navigational 
safety concerns resulting from vessel transits out of the New York 
Harbor. The USCG presentation can be found at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/USCG.aspx.

Analysis Conducted by National Renewable Energy Laboratory and Rutgers 
University

    BOEM commissioned the Department of Energy's National Renewable 
Energy Laboratory (NREL) to conduct an analysis to inform BOEM's 
identification and delineation of leasing areas within the New Jersey 
WEA prior to identifying areas to propose for leasing in the PSN. 
NREL's final report, ``Assessment of Offshore Wind Energy Leasing Areas 
for the BOEM New Jersey Area,'' was published in October 2013 and is 
available on the BOEM Web site at: http://www.boem.gov/State-Activities-New-Jersey/. In this final report, NREL analyzed development 
scenarios for the following New Jersey WEA leasing options: Two leasing 
areas, three leasing areas and four leasing areas.
    The New Jersey Board of Public Utilities (NJ BPU) through a 
contract with Rutgers University's Institute of Marine and Coastal 
Science conducted a similar analysis to assess the offshore wind 
potential of the New Jersey Coast. In addition to conducting its 
analysis at the mesoscale, Rutgers also conducted a microscale analysis 
which incorporates the unique oceanographic and atmospheric 
characteristics found offshore New Jersey (i.e., sea breeze, coastal 
upwelling, coast line orientation, coastal topographic features, 
coastal storms, etc.). Rutgers' final report, ``An Advanced Atmospheric 
Ocean Assessment Program Designed to Reduce the `Risks' Associated with 
Offshore Wind Energy Applications,'' was completed in April 2013 and is 
available at: http://rei.rutgers.edu/index.php?option=com_content&task=view&id=202&Itemid=29.

Rationale for Proposal To Offer New Jersey WEA as Two Leasing Areas

    In 2010, Governor Chris Christie signed the New Jersey Offshore 
Wind Economic Development Act (OWEDA) N.J.S.A 48:3-87.1, directing the 
NJ BPU to develop an Offshore Renewable Energy Certificate (OREC) 
program to require that a percentage of electricity sold in the State 
be from offshore wind energy. While the percentage was not mandated by 
OWEDA, at a minimum, the percentage adopted by the NJ BPU must support 
at least 1,100 MW of generation from ``qualified'' offshore wind 
projects. For a project to be qualified, it must pass the ``net 
benefits test'' required by OWEDA. Any project application that fails 
to meet the net benefits test is not eligible to receive an OREC. The 
codified rules adopted by the NJ BPU (N.J.A.C. 14:8-6) do not 
specifically dictate how the BPU is to determine whether a particular 
project meets the ``net benefits test.'' However, it is BOEM's 
understanding that one of the primary factors affecting the 
determination will be whether a project is of sufficient size to bring 
manufacturing, and thus jobs to New Jersey.
    BOEM aims to provide an optimal opportunity for each project to be 
of sufficient size to pass the ``net benefits test.'' Based on input 
from the State that is supported by feedback from the offshore wind 
development community, BOEM is of the understanding that an offshore 
wind project of at least 1,000-1,100 MW would be needed to entice a 
turbine manufacturer or foundation supplier to set up manufacturing in 
New Jersey. Based on analysis of wind capacities by NREL and Rutgers 
University (referenced above), BOEM believes a two lease scenario 
maximizes the number of leases, consistent with providing lease areas 
large enough to potentially satisfy the ``net benefits test.''
    BOEM requests comments on these assumptions and the number of lease 
areas that should be auctioned during

[[Page 42366]]

this notice's comment period and will consider all comments received 
prior to publishing a FSN and holding a sale.

Potential Future Restrictions To Ensure Navigational Safety

    Potential bidders should note that all or portions of certain sub-
blocks in the North and South LAs may not be available for future 
development (i.e., installation of wind facilities) because of 
navigational safety concerns.
    At the New Jersey Intergovernmental Task Force on December 18, 
2012, the USCG presented an analysis of tug, towing and barge traffic 
that currently transit through the New Jersey WEA. Their presentation 
discussed potential safety implications and possible changes in traffic 
patterns as mariners reroute around the New Jersey WEA once development 
occurs. The impacts in vessel patterns may require that BOEM mitigate 
offshore wind development in a portion of the North or South LAs to 
ensure navigational safety through site-specific stipulations. Any 
reductions or limitations to the North or South LAs will be determined 
at the COP stage when the Lessee's site specific navigational risk 
assessment is available to inform BOEM's decision-making. In 
particular, USCG has identified the OCS Blocks listed in Table 1 as 
blocks of highest concern. These blocks represent 6.8% of the South LA.
    Maps identifying these blocks and sub-blocks are available on 
BOEM's Web site at: http://www.boem.gov/State-Activities-New-Jersey/. 
BOEM welcomes comments on navigational safety during this notice's 
comment period and will consider all comments received prior to 
publishing a FSN and holding a sale.

                         Table 1--South Leasing Area: Blocks With Potential Restrictions
----------------------------------------------------------------------------------------------------------------
        Protraction name          Protraction No.      Block No.                      Sub-block
----------------------------------------------------------------------------------------------------------------
Wilmington.....................           NJ18-02              7080  All Sub-Blocks.
Wilmington.....................           NJ18-02              7030  B,C,D,E,F,G,H,I,J,K,L,M,N,O,P.
----------------------------------------------------------------------------------------------------------------

Potential Future Restrictions To Minimize Conflicts With Active 
Undersea Cables

    Potential bidders should note that all or portions of certain sub-
blocks in the North LA may not be available for future development 
(i.e., installation of wind facilities) because of the presence of 
active subsea cables.
    The Department of State has provided BOEM with information 
identifying four active subsea cables that are present in the North LA. 
The degree to which subsea cables will interfere with offshore wind 
facility or the associated infrastructure has not been determined at 
this time. BOEM will determine if any site-specific mitigation is 
needed at the COP stage when more detailed information and analysis is 
available to inform BOEM's decision-making. Table 2 lists the sub-
blocks where the active cables are present. These sub-blocks represent 
6.41% of the North LA. Maps identifying these whole blocks and sub-
blocks are available on BOEM's Web site at: http://www.boem.gov/State-Activities-New-Jersey/.
    BOEM welcomes comments on potential conflicts and mitigation 
strategies to ensure compatibility between subsea cables and wind 
facility infrastructure during this notice's comment period and will 
consider all comments received prior to publishing a FSN and holding a 
sale.

                   Table 2--North Leasing Area: Blocks Where Active Subsea Cables Are Present
----------------------------------------------------------------------------------------------------------------
        Protraction name          Protraction No.      Block No.                      Sub-block
----------------------------------------------------------------------------------------------------------------
Wilmington.....................           NJ18-02              6438  O.
Wilmington.....................           NJ18-02              6488  C, D.
Wilmington.....................           NJ18-02              6489  A,B,C,D.
Wilmington.....................           NJ18-02              6588  A,B,C,D,F,G,H.
Wilmington.....................           NJ18-02              6539  I,J,K,M,N,O,P.
Wilmington.....................           NJ18-02              6589  A,B,C,D,E,F,G,H,I,J,K,L.
----------------------------------------------------------------------------------------------------------------

    Withdrawal of Blocks: Interested parties should note that BOEM 
reserves the right to withdraw areas from this lease sale prior to its 
execution of a lease based upon comments received in response to this 
notice 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 New Jersey PSN Area. BOEM reserves the right to add additional 
terms and conditions to any approval of a SAP, or COP. The proposed 
leases, including Addendum ``C'', are available on BOEM's Web site at: 
http://www.boem.gov/State-Activities-New-Jersey/. 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 or approval with modifications.
    After considering comments on the PSN and the proposed leases, BOEM 
will publish final lease terms and conditions in the FSN.
    The most recent version of the lease form is available 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 12 months of lease issuance. If the leaseholder intends to 
continue its commercial lease with an operations term, the leaseholder 
must submit a

[[Page 42367]]

COP at least 6 months before the end of the site assessment term.
    Qualifications--Who May Bid: Any potential bidder that has not 
already submitted a complete set of qualification 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 any 
electronic media device 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. 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.

Auction Procedures

Summary of Auction Format

    For the sale of Lease OCS-A 0498 and Lease OCS-A 0499, BOEM will 
use a multiple-factor auction format, with a multiple-factor bidding 
system. Under this system, BOEM may consider a combination of monetary 
and nonmonetary factors, or ``variables,'' in determining the outcome 
of the auction. BOEM will appoint a panel of three BOEM employees for 
the purposes of reviewing the non-monetary packages and verifying the 
results of the lease sale. BOEM reserves the right to change the 
composition of this panel prior to the date of the lease sale. The 
panel will determine whether any bidder has earned a non-monetary 
credit to be used during the auction (i.e., if a bidder holds a Power 
Purchase Agreement (PPA), or a Qualified Application for a OREC that 
has been approved or conditionally approved by the NJ BPU as defined 
herein), and, if one or more bidders has earned such a credit, the 
percentage the credit will be worth. The auction will balance 
consideration of two variables: (1) A cash bid, and (2) a non-monetary 
credit. In sum, these two variables comprise the multi-factor bid or 
``As-Bid'' auction price, as reflected either in a bidder meeting 
BOEM's asking price or the bidder offering its own Intra-Round Bid 
prices subject to certain conditions, as described more fully in the 
following section. A multiple-factor auction, wherein both monetary and 
nonmonetary bid variables are considered, is provided under BOEM's 
regulations at 30 CFR Sec. Sec.  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 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 ensure receipt of a fair return under 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) 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. This auction will be 
conducted in a series of rounds. At the start of each round, BOEM will 
state an asking price for the North LA and an asking price for the 
South LA. The asking price for a bid on both LAs is the sum of the 
asking prices for the North LA and the South LA. Each bidder will 
indicate whether it is willing to meet the asking price for one or both 
LAs. A bid submitted at the full asking price for one or both LAs in a 
particular round is referred to as a ``live bid.'' A bidder must submit 
a live bid for at least one of the LAs in each round to participate in 
the next round of the auction. As long as there is at least one LA that 
is included in two or more live bids, the auction continues, and the 
next round is held.
    A bidder's As-Bid price must meet the asking price for it to be 
considered a live bid. A bidder may meet the asking price by submitting 
a monetary bid equal to the asking price, or, if it has earned a 
credit, by submitting a multiple-factor bid--that is, a live bid that 
consists of a monetary element and a non-monetary element, the sum of 
which equals the asking price. A multiple-factor bid would consist of 
the sum of a cash portion and any credit portion which the bidder has 
earned.
    An uncontested bid is a live bid that does not overlap with other 
live bids in that round. For example, a bid for both the North and the 
South LAs is considered contested if any LA included in that bid is 
included in another bid--a bid cannot be ``partially uncontested.'' An 
uncontested bid represents the only apparent interest in that bid's 
LA(s) at the asking price for that round. If a bidder submits an 
uncontested bid consisting of one LA, and the auction continues for 
another round, BOEM automatically carries that same live bid forward as 
a live bid into the next round, and BOEM's asking price for the LA 
contained in the uncontested bid would remain unchanged from the 
previous round. If the price on the LA in that bid rises later in the 
auction because another bidder places a live bid on that LA, BOEM will 
stop automatically carrying forward the previously uncontested bid. 
Once the asking price goes up, the bidder that placed the previously 
carried-forward bid is free to bid on either lease area at the new 
asking prices.

[[Page 42368]]

    Following each round in which either LA is contained in more than 
one live bid, BOEM will raise the asking price for that LA by an 
increment determined by BOEM. The auction concludes when neither the 
North LA nor the South LA is included in more than one live bid. The 
series of rounds and the rising asking prices set by BOEM will 
facilitate consideration of the first variable--the cash portion of the 
bid.
    The second variable--a credit of up to 25% of a monetary bid for 
holding a PPA, or a New Jersey OREC Order--will be applied throughout 
the auction rounds as a form of imputed payment against the asking 
price for the highest priced LA in a bidder's multiple-factor bid. This 
credit serves to supplement the amount of a cash bid proposal made by a 
particular bidder in each round. In the case of a bidder holding a 
credit and bidding on more than one LA, the credit will be applied only 
on the LA with the highest asking price. More details on the non-
monetary factors are found in the ``Credit Factors'' section herein.
    The panel will evaluate non-monetary packages consisting of any 
purported PPA, or qualified New Jersey OREC Order, to determine whether 
it meets the criteria provided in the FSN, and therefore whether it 
will qualify for a credit for its holder. It is possible that the panel 
could determine that no bidder qualifies for a non-monetary credit 
during the auction, in which case the auction would otherwise proceed 
as described in the FSN. The panel will determine the winning bids for 
each LA on the basis of the procedures described in the FSN.

Details of the Auction Process

Bidding--Live Bids
    Each bidder is allowed to submit a live bid for one LA (North or 
South), or both LAs based on its ``eligibility'' at the opening of each 
round. A bidder's eligibility is either two, one, or zero LAs, and it 
corresponds to the maximum number of LAs that a bidder may include in a 
live bid during a single round of the auction. A bidder's initial 
eligibility is determined based on the amount of the bid deposit 
submitted by the bidder prior to the auction. To be eligible to offer a 
bid on one LA at the start of the auction, a bidder must submit a bid 
deposit of $450,000. To be eligible to offer a bid on both the North 
and South LAs in the first round of the auction, the bidder must submit 
a bid deposit of $900,000. A bidder's bid deposit will be used by BOEM 
as a down payment on any monetary obligations incurred by the bidder 
should it be awarded a lease.
    As the auction proceeds, a bidder's eligibility is determined by 
the number of LAs included in its live bid submitted in the round prior 
to the current round. That is, if a bidder submitted a live bid on one 
LA in the previous round, that bidder may submit a bid that includes at 
most one LA in the current round. If a bidder submitted a live bid 
comprised of both LAs in the previous round, that bidder may submit a 
live bid that also includes these two LAs in the current round. Unless 
a bidder has an uncontested bid that is carried forward into the next 
round, a bidder that submitted a live bid for both LAs may choose to 
submit a live bid for one LA. Thus, eligibility in successive rounds 
may stay the same or go down, but it can never go up.
    In the first round of the auction, bidders have the following 
options: A bidder with an initial eligibility of one (that is, a bidder 
who submitted a bid deposit of $450,000) may:
     Submit a live bid on the North LA or the South LA, or
     Submit nothing, and drop out of the auction.
    A bidder with an initial eligibility of two (that is, a bidder who 
submitted a bid deposit of $900,000) may:
     Submit a live bid for both the North and South LAs,
     Submit a live bid for either the North LA or the South LA, 
or
     Submit nothing, and drop out of the auction.
    Before each subsequent round of the auction, BOEM will raise the 
asking price for any LA that was contained in more than one live bid in 
the previous round. BOEM will not raise the asking price for a LA that 
was in only one or no live bids in the previous round.
    Asking price increments will be determined by BOEM, in its sole 
discretion. BOEM will base asking price increments on a number of 
factors, including:
     Making the increments sufficiently large that the auction 
will not take an unduly long time to conclude; and
     Decreasing the increments as the asking price of a LA 
nears its apparent final price.
    BOEM reserves the right during the auction to increase or decrease 
increments if it determines, in its sole discretion, that a different 
increment is warranted to enhance the efficiency of the auction 
process. Asking prices for the LAs included in multiple live bids in 
the previous round will be raised and rounded to the nearest whole 
dollar amount to obtain the asking prices in the current round.
    A bidder must submit a live bid in each round of the auction (or 
have an uncontested live bid automatically carried forward by BOEM) for 
it to remain active and continue bidding in future rounds. All of the 
live bids submitted in any round of the auction will be preserved and 
considered binding until determination of the winning bids is made. 
Therefore, the bidders are responsible for payment of the bids they 
submit and can be held accountable for up to the maximum amount of 
those bids determined to be winning bids during the final award 
procedures.
    Between rounds, BOEM will release the following information:
     The level of demand for each LA in the previous round of 
the auction (i.e., the number of live bids that included the LA); and
     The asking price for each LA in the upcoming round of the 
auction.
    In any subsequent round of the auction, if a bidder's previous 
round bid was uncontested, and the auction continues for another round, 
then BOEM will automatically carry forward that bid as a live bid in 
the next round. A bidder whose bid is being carried forward will not 
have an opportunity to modify or drop its bid until some other bidder 
submits a live bid that overlaps with the LA in the carried forward 
bid. In particular, for rounds in which a bidder finds its uncontested 
bid is carried forward, the bidder will be unable to do the following:
     Switch to the other LA;
     Submit an Intra-Round Bid (see herein for discussion of 
Intra-Round Bids); or
     Drop out of the auction.

A bidder may be bound by that bid or, indeed, by any other bid which 
BOEM determines is a winning bid in the award stage. Hence, a bidder 
cannot drop an uncontested bid. In no scenario can a bidder be relieved 
of any of its bids from previous or future rounds until a determination 
is made in the award stage about the LAs won by the bidder.
    If a bidder's bid is not being carried forward by BOEM (i.e. a 
contested bid), a bidder with an eligibility of one (that is, a bidder 
who submitted a live bid for either the North LA or the South LA in the 
previous round) may:
     Submit a live bid for either the North LA or the South LA;
     Submit an Intra-Round Bid for the same LA for which the 
bidder submitted a live bid in the previous round, and exit the 
auction; or
     Submit nothing, and drop out of the auction.

Additionally, if a bidder's bid is not being carried forward by BOEM 
(i.e. a

[[Page 42369]]

contested bid), a bidder with an eligibility of two (that is, a bidder 
who submitted a live bid for both North and South in the previous 
round) may:
     Submit a live bid for both the North and South LAs;
     Submit a live bid for either the North LA or the South LA;
     Submit an Intra-Round Bid for both the North and South 
LAs, and a live bid for either the North LA or the South LA;
     Submit an Intra-Round Bid for both the North and South 
LAs, no live bids, and exit the auction; or
     Submit nothing, and drop out of the auction.
    Subsequent auction rounds occur in this sale as long as either the 
North LA or the South LA is contested. The auction concludes at the end 
of the round in which neither the North LA nor the South LA is included 
in the live bid of more than one bidder, i.e., all live bids are 
uncontested.
Bidding--Intra-Round Bids
    All asking prices and asking price increments will be determined by 
the BOEM Auction Manager, in their sole discretion. Intra-round bidding 
allows bidders to more precisely express the maximum price they are 
willing to offer for the North, South, or both LAs while also 
minimizing the chance of ties. An intra-round bid must consist of a 
single offer price for exactly the same LA(s) included in the bidder's 
live bid in the previous round.
    When submitting an intra-round bid, the bidder is indicating that 
it is not willing to meet the current round's asking price, but it is 
willing to pay more than the previous round's asking price. In 
particular, in an intra-round bid, the bidder specifies the maximum 
(higher than the previous round's asking price and less than the 
current round's asking price) that it is willing to offer for the 
specific LA(s) in its previous round's live bid.
    Although an intra-round bid is not a live bid, in the round in 
which a valid intra-round bid is submitted for both LAs, the bidder's 
eligibility for a live bid in that same round and future rounds is 
permanently reduced from including two LAs to one LA. In other words, 
once an intra-round bid is submitted, the bidder will never again have 
the opportunity to submit a live bid on as many LAs as it has bid in 
previous rounds.
    BOEM will not consider intra-round bids for the purpose of 
determining whether to increase the asking price for a particular LA or 
to end the auction. Also, BOEM will not count 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 both LAs are awarded to bidders in Stage 1, the 
second award stage is not necessary. If the North LA or the South LA 
received a bid but was not awarded in Stage 1 because no live bids were 
received in the final round of the auction, BOEM will proceed to Stage 
2 to award the leases.
    Following the auction, all winning bidders must pay the price 
associated with their winning bids, which may consist of cash and non-
monetary credits or just cash.
     Stage 2
    All bids are either Qualified Bids or Contingent Bids. Contingent 
bids are all live bids received before the final round, and any Intra-
Round Bids received during the auction. In Stage 2, BOEM will consider 
Contingent Bids to see if the unawarded LA(s) can be awarded without 
interfering with Stage 1 awards. BOEM will award leases in Stage 2 to 
the bid(s) that maximize(s) the total As-Bid prices.
    Any Contingent Bids that conflict with Qualified Bids will not be 
considered. There is one notable exception to this rule. This exception 
allows BOEM to accept a Contingent Bid for both LAs notwithstanding the 
existence of a Qualified Bid for one LA by the same bidder, provided 
the acceptance of the Contingent Bid for both LAs results in higher 
overall As-Bid prices than acceptance of only the Qualified Bid for a 
single LA.
    In this scenario, a bidder would be awarded both LAs and would be 
required to pay its Intra-Round Bid price associated with its Intra-
Round Bid for both LAs, even though it submitted a Qualified Bid that 
assured it of winning only one of the LAs.
    This exception represents the only situation in which BOEM will 
consider for award a Contingent Bid which overlaps a Qualified Bid. In 
contrast, there is no situation in which one bidder's Contingent Bid 
will be considered for award if it overlaps with any LA that is 
included in another bidder's Qualified Bid.
    Under certain circumstances, different combinations of contingent 
bids may result in the same total As-Bid price. In such cases, BOEM 
will resolve the resulting tie with a random drawing.
    In the event a bidder submits a bid for a LA that the panel and 
BOEM determine to be a winning bid, the bidder will be expected to sign 
the applicable lease documents in a timely manner and submit the full 
cash payment due, pursuant to 30 CFR 585.224. If a bidder fails to 
timely sign and pay for the lease, then BOEM will not issue the lease 
to that bidder, and the bidder will forfeit its bid deposit. BOEM may 
consider failure of a bidder to timely pay the full amount due an 
indication that the bidder is no longer financially qualified to 
participate in other lease sales under BOEM's regulations at 30 CFR 
585.106 and 585.107.

Credit Factors

    Prior to the auction, BOEM will convene a panel (pursuant to 30 CFR 
585.222(d)) 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 LAs in each round of the auction, as described below. In order to 
receive the PPA or New Jersey OREC credit a bidder must be legally, 
technically, and financially qualified to acquire a commercial OCS wind 
lease, and must not be affiliated with any

[[Page 42370]]

other bidding entity also seeking credit for the same PPA or qualified 
application for a New Jersey OREC that has been approved or 
conditionally approved by the New Jersey Board of Public Utilities. Any 
single PPA or OREC cannot be used by more than one bidder in the 
auction.
    The percentage credit that will be applicable to each bidder 
throughout the auction and award process is determined based on the 
panel's evaluation of required documentation submitted by the bidders 
as of 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 higher priced LA in a 
bid for both LAs. For an Intra-Round Bid containing both LAs, the 
higher priced LA will be determined using the previous round's asking 
prices. In each round, the auction system will display to each bidder, 
information showing how their As-Bid auction prices are affected by the 
credit imputed to their bid to determine their net monetary payment due 
to BOEM, should their bids prevail as winning bids in the award stages. 
Application of the credit percentage to the appropriate As-Bid auction 
price will be rounded to the nearest whole dollar amount.
    The bidder's credit percentage is limited to 25% for a New Jersey 
OREC Order, or 25% for a PPA (for at least 250 MW). If a bidder is 
eligible for two credits, BOEM will only apply one credit in the 
auction. 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 both LAs, the credit will apply only to 
the higher priced LA, but the applicable price for calculating the 
credit will be based on the previous round's asking prices, not on any 
additional amount above the previous round's asking prices as reflected 
in the incremental amount associated with its Intra-Round Bid.
    The panel will review the non-monetary package submitted by each 
bidder, and based on the criteria of a PPA, or New Jersey OREC Order, 
as provided in the FSN, determine whether bidders have established that 
they are qualified to receive a credit, and the percentage at which 
that credit will apply. If the panel determines that no bidder has 
qualified for a non-monetary factor, the auction will proceed with each 
bidder registered with no imputed credit.

Credit Factor Definitions

    The definitions below will apply to the factors for which bidders 
may earn a credit.
    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 the equivalent. The PPA must state that the Generator 
will sell to the Buyer and the Buyer will buy from the Generator 
capacity, energy, and/or environmental attribute products from the 
project, as defined in the terms and conditions set forth in the PPA. 
Energy products to be supplied by the Generator and the details of the 
firm cost recovery mechanism approved by the State's public utility 
commission or other applicable authority used to recover expenditures 
incurred as a result of the PPA must be specified in the PPA. To 
qualify, a PPA must contain the following terms or supporting 
documentation:
    (i) A complete description of the proposed project;
    (ii) Identification of both the electricity Generator and Buyer 
that will enter into a long term contract;
    (iii) A timeline for permitting, licensing, and construction;
    (iv) Pricing projected under the long term contract being sought, 
including prices for all market products that would be sold under the 
proposed long term contract;
    (v) A schedule of quantities of each product to be delivered and 
projected electrical energy production profiles;
    (vi) The term for the long term contract;
    (vii) Citations to all filings related to the PPA that have been 
made with state and Federal agencies, and identification of all such 
filings that are necessary to be made; and
    (viii) Copies of or citations to interconnection filings related to 
the PPA.
    If the panel determines a bidder has executed a PPA for at least 
250MW, it will be eligible for the entire 25% credit. If the panel 
determines a bidder has executed a PPA for an amount less than 250MW, 
the bidder may still be eligible for a non-monetary credit proportional 
to the PPA's fraction of 250MW. The smaller percentage for a partial 
credit will be calculated according to the following formula:
[GRAPHIC] [TIFF OMITTED] TN21JY14.001

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

    New Jersey OREC Order is a qualified application for an OREC that 
has been approved or conditionally approved by the NJ BPU.

Where:

 An Offshore Renewable Energy Certificate (OREC) is a 
certificate issued by the NJ BPU or its designee, representing the 
environmental attributes of one megawatt hour of electric generation 
from a qualified offshore wind project.
 A qualified offshore wind project is a wind turbine 
electric generation facility in the Atlantic Ocean and connected to 
the electrical transmission systems in New Jersey, and includes the 
associated transmission-related interconnection facilities and 
equipment.

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

[[Page 42371]]

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

Monetary Auction Times

    Specific information regarding when bidder 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 do so according to the procedures 
described in the Auction System Technical Supplement, and as practiced 
at the Mock Auction. No information about the round is available until 
the round has closed and results have been posted, so there should be 
no strategic advantage to placing bids early or late in the round.

Alternate Bidding Procedures

    Any bidder who is unable to place a bid using the online auction 
and would be interested in placing a bid using the alternative bidding 
procedures must call 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 Alternative Bidding Procedure. 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 that 
bid, even if the bidder 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 for a single LA in 
an earlier round, or if they stopped bidding during the auction.
    Acceptance, Rejection or Return of Bids: BOEM reserves the right 
and authority to reject any and all bids. In any case, 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 not considered for acceptance.
    Process for Issuing the Leases: If BOEM proceeds with issuing the 
leases, it will issue three unsigned copies of the lease form to the 
winning bidders. 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/State-Activities-New-Jersey/.
    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.
    In the event that the 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

[[Page 42372]]

procedures in this section for the new winner(s).
    BOEM will not execute a lease until (1) the three requirements 
above have been satisfied, (2) BOEM has accepted the winning bidder's 
financial assurance, and (3) BOEM has processed the winning bidder's 
payment. The winning bidder may meet financial assurance requirements 
by posting a surety bond or by setting up an escrow account with a 
trust agreement giving BOEM the right to withdraw the money held in the 
account on demand by BOEM. BOEM may accept other forms of financial 
assurance on a case-by-case basis in accordance with its regulations. 
BOEM encourages provisionally winning bidders to discuss the financial 
assurance requirement with BOEM as soon as possible after the auction 
has concluded.
    Within 45 days of the date that the Lessee receives the lease 
copies, the Lessee must pay the first year's rent using the pay.gov 
Renewable Energy Initial Rental Payment form available at: https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=27797604.
    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 
Lease Area;
     An agreement among bidders not to bid against each other; 
and
     Other agreements among bidders that have the effect of 
limiting the final auction price.
    BOEM may decline to award a lease if, pursuant to the Act (43 
U.S.C. 1337(c)), it is determined by the Attorney General in 
consultation with the Federal Trade Commission doing so would be 
inconsistent with the antitrust laws (e.g., heavily concentrated 
market, etc.).
    For more information on whether specific communications or 
agreements could constitute a violation of Federal antitrust law, 
please see: 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/State-Activities-New-Jersey/. 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 New Jersey sale areas. 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, and 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 final decisions with respect to lease 
sales are described in 30 CFR 585.118(c).

Protection of Privileged or Confidential Information

    BOEM will protect privileged or confidential information that you 
submit as required by the Freedom of Information Act (FOIA). Exemption 
4 of FOIA applies to trade secrets and commercial or financial 
information that you submit that is privileged or confidential. If you 
wish to protect the confidentiality of such information, clearly mark 
it and request that BOEM treat it as confidential. BOEM will not 
disclose such information, 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 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. Sec.  
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 and 
provide the reasons why BOEM should do so.

[[Page 42373]]

    Dated: June 9, 2014.
Walter D. Cruickshank,
Acting Director, Bureau of Ocean Energy Management.
[FR Doc. 2014-16864 Filed 7-18-14; 8:45 am]
BILLING CODE 4310-MR-P
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