[Federal Register Volume 74, Number 81 (Wednesday, April 29, 2009)]
[Rules and Regulations]
[Pages 19638-19871]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-9462]



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Part II





Department of the Interior





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Minerals Management Service



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30 CFR Parts 250, 285, and 290



Renewable Energy and Alternate Uses of Existing Facilities on the Outer 
Continental Shelf; Final Rule

Federal Register / Vol. 74, No. 81 / Wednesday, April 29, 2009 / 
Rules and Regulations

[[Page 19638]]


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DEPARTMENT OF THE INTERIOR

Minerals Management Service

30 CFR Parts 250, 285, and 290

[Docket ID: MMS-2008-OMM-0012]
RIN 1010-AD30


Renewable Energy and Alternate Uses of Existing Facilities on the 
Outer Continental Shelf

AGENCY: Minerals Management Service (MMS), Interior.

ACTION: Final rule; Notice of Availability of the Final Environmental 
Assessment.

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SUMMARY: The MMS is publishing final regulations to establish a program 
to grant leases, easements, and rights-of-way (ROW) for renewable 
energy project activities on the Outer Continental Shelf (OCS), as well 
as certain previously unauthorized activities that involve the 
alternate use of existing facilities located on the OCS; and to 
establish the methods for sharing revenues generated by this program 
with nearby coastal States. These regulations will also ensure the 
orderly, safe, and environmentally responsible development of renewable 
energy sources on the OCS.
    The MMS prepared a Final Environmental Assessment (EA) analyzing 
this rule. The EA incorporates by reference the Programmatic 
Environmental Impact Statement Programmatic Environmental Impact 
Statement for Alternative Energy Development and Production and 
Alternate Use of Facilities on the Outer Continental Shelf, Final 
Environmental Impact Statement, October 2007. The EA was prepared to 
assess any impacts of this rule. The Final EA is available on the MMS 
Web site at: http://www.mms.gov/offshore/AlternativeEnergy/RegulatoryInformation.htm.

DATES: Effective Date: This final rule is effective on June 29, 2009. 
The incorporation by reference of the publication listed in the 
regulation is approved by the Director of the Federal Register as of 
June 29, 2009.

FOR FURTHER INFORMATION CONTACT: 
    Final rule: Maureen Bornholdt, Program Manager, Office of 
Alternative Energy Programs, at (703) 787-1300 or 
<a href="/cdn-cgi/l/email-protection#7e131f0b0c1b1b10501c110c101611121a0a3e13130d50191108"><span class="__cf_email__" data-cfemail="4924283c3b2c2c27672b263b272126252d3d0924243a672e263f">[email protected]</span></a>; or Amy C. White, Regulations and Standards 
Branch, at (703) 787-1665 or <a href="/cdn-cgi/l/email-protection#3e5f5347104956574a5b7e53534d10595148"><span class="__cf_email__" data-cfemail="b8d9d5c196cfd0d1ccddf8d5d5cb96dfd7ce">[email protected]</span></a>.
    Environmental Assessment: James F. Bennett, Chief, Branch of 
Environmental Assessment, at (703) 787-1660 or <a href="/cdn-cgi/l/email-protection#e9a388848c9ac7afc7ab8c87878c9d9da984849ac78e869f"><span class="__cf_email__" data-cfemail="cd87aca0a8bee38be38fa8a3a3a8b9b98da0a0bee3aaa2bb">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION: The MMS developed this program and final 
regulations under the authority granted to the Secretary of the 
Interior (Secretary) by the Energy Policy Act of 2005, which amended 
the Outer Continental Shelf Lands Act (OCS Lands Act). Under this new 
authority, the Secretary maintains discretionary authority to issue 
leases, easements, or ROWs on the OCS for previously unauthorized 
activities that: (i) Produce or support production, transportation, or 
transmission of energy from sources other than oil and gas; or (ii) 
use, for energy-related or other authorized marine-related purposes, 
facilities currently or previously used for activities authorized under 
the OCS Lands Act.

Background

Mandate of Energy Policy Act of 2005 (EPAct)

    The EPAct amended the OCS Lands Act to authorize the Secretary to 
issue leases, easements, or ROWs on the OCS for activities that:
    (i) Support exploration, development, production, or storage of oil 
or natural gas, except that a lease, easement, or right-of-way shall 
not be granted in an area in which oil and gas preleasing, leasing, and 
related activities are prohibited by a moratorium;
    (ii) Support transportation of oil or natural gas, excluding 
shipping activities;
    (iii) Produce or support production, transportation, or 
transmission of energy from sources other than oil and gas; or
    (iv) Use, for energy-related or other authorized marine-related 
purposes, facilities currently or previously used for activities 
authorized under the OCS Lands Act.
    This new authority does not apply to activities that are otherwise 
authorized by law, including those covered by the OCS Lands Act, the 
EPAct, the Deepwater Port Act of 1974, and the Ocean Thermal Energy 
Conversion Act of 1980. On March 20, 2006, the Secretary of the 
Interior delegated to the MMS the new authority that was conferred by 
the EPAct. Under this authority, MMS will regulate the generation of 
electricity or other forms of energy from sources other than oil and 
natural gas on OCS facilities and the transmission on project easements 
and ROWs issued under this part. The MMS will not regulate sales of 
electricity or other forms of energy. The MMS will not regulate the 
transmission of electricity or other forms of energy on State lands.
    In addition, the EPAct requires the Secretary to share with nearby 
coastal States a portion of the revenues received by the Federal 
Government from authorized renewable energy and alternate use projects 
on certain areas of the OCS. This final rule implements this mandate 
and describes the methods MMS will use for identifying what projects 
are covered by this requirement, determining which States are eligible 
to receive shares of the revenues, and--if two or more States are 
eligible to receive revenues from the same project--allocating the 
appropriate share to each eligible State.
    The EPAct included a requirement that the Secretary develop any 
necessary regulations to implement the new authority. This final rule 
applies to the activities described in (iii) and (iv) previously (i.e., 
those relating to production, transportation, or transmission of energy 
from sources other than oil and gas, and to the use of existing OCS 
facilities for energy-related or other authorized marine-related 
purposes). Regulations for activities described in (i) and (ii) 
previously (i.e., those relating to oil and gas) will be promulgated 
separately in appropriate parts of the existing MMS oil and gas 
regulations.
    While the MMS is the lead agency for authorizing OCS renewable 
energy and alternate use activities, we recognize that other Federal 
agencies have regulatory responsibility in such activities. The new 
authority does not expressly supersede or modify existing Federal laws, 
and all activities must comply fully with such laws. For instance, FERC 
has exclusive jurisdiction to issue licenses for hydrokinetic projects 
under Part I of the Federal Power Act and issue exemptions from 
licensing under Section 405 and 408 of the Public Utility Regulatory 
Policies Act of 1978 for the construction and operation of hydrokinetic 
projects on the OCS. However, no FERC license or exemption for a 
hydrokinetic project on the OCS shall be issued before MMS issues a 
lease, easement, or right-of-way. The MMS possesses the exclusive 
authority to issue leases, easements, and rights-of-way for renewable 
energy projects on the OCS.
    In addition to providing the authority to issue leases, easements, 
and ROWs, the EPAct included a requirement that any activity permitted 
under this authority be ``carried out in a manner that provides for--
    (A) Safety;
    (B) Protection of the environment;
    (C) Prevention of waste;
    (D) Conservation of the natural resources of the outer Continental 
Shelf;

[[Page 19639]]

    (E) Coordination with relevant Federal agencies;
    (F) Protection of national security interests of the United States;
    (G) Protection of correlative rights in the outer Continental 
Shelf;
    (H) A fair return to the United States for any lease, easement, or 
right-of-way under this subsection;
    (I) Prevention of interference with reasonable uses (as determined 
by the Secretary) of the exclusive economic zone, the high seas, and 
the territorial seas;
    (J) Consideration of--
    (i) The location of, and any schedule relating to, a lease, 
easement, or right-of-way for an area of the outer Continental Shelf; 
and
    (ii) Any other use of the sea or seabed, including use for a 
fishery, a sealane, a potential site of a deepwater port, or 
navigation;
    (K) Public notice and comment on any proposal submitted for a 
lease, easement, or right-of-way under this subsection; and
    (L) Oversight, inspection, research, monitoring, and enforcement 
relating to a lease, easement, or right-of-way under this subsection.''
    The MMS addresses these items, as appropriate, in this rulemaking.

MMS and Federal Energy Regulatory Commission (FERC) MOU

    Until March 2009, regulatory uncertainty existed regarding which 
Federal agencies had authority to regulate wave and current energy 
development on the outer Continental Shelf (OCS). Both MMS and the 
Federal Energy Regulatory Commission (FERC) claimed this authority 
based on differing interpretations of Part I of the Federal Power Act 
(FPA) and section 8(p) of OCSLA, as amended by EPAct. However, on March 
17, 2009, the Secretary of the Interior and the Acting Chairman of the 
Federal Energy Regulatory Commission issued a joint statement on the 
development of renewable energy resources on the OCS. In this joint 
statement, the Secretary and the Acting Commissioner requested that MMS 
and FERC staff prepare a Memorandum of Understanding (MOU) to describe 
the process by which authorizations related to renewable energy 
resources in offshore waters will be developed.
    The MMS and FERC finalized this MOU on April 9, 2009. This 
agreement clarifies jurisdictional understandings regarding renewable 
energy projects on the OCS in order to develop a cohesive, streamlined 
process that would help accelerate the development of wind, solar, and 
hydrokinetic energy projects. Specifically, the MOU recognizes that (1) 
MMS has exclusive jurisdiction with regard to the production, 
transportation, or transmission of energy from non-hydrokinetic 
alternative energy projects on the OCS, including renewable energy 
sources such as wind and solar; (2) MMS has exclusive jurisdiction to 
issue leases, easements, and rights-of-way regarding OCS lands for 
hydrokinetic projects; and (3) the Commission has exclusive 
jurisdiction to issue licenses and exemptions for hydrokinetic projects 
located on the OCS.
    Under this new agreement, those entities interested in operating a 
hydrokinetic project on the OCS must first obtain a lease from MMS. The 
MMS will issue a public notice to determine whether competitive 
interest exists in the area, and will proceed with either the 
competitive or noncompetitive lease issuance process depending on 
responses received to this public notice. The MMS will conduct the NEPA 
analysis necessary for the lease issuance and any site assessment 
activities that will occur on the lease. After an applicant acquires a 
lease from MMS, FERC may issue a license or exemption for the 
hydrokinetic project, and conduct any necessary NEPA analysis. After a 
license is issued, construction and operations of the project may begin 
as per the terms of the license. To facilitate efficient processing of 
the lease and license applications, it may be helpful for potential 
lessees to apprise both MMS and FERC of their interest in hydrokinetic 
development at the start of the process.
    Further, the MOU states that MMS and FERC will work together to the 
extent practicable to develop policies and regulations with respect to 
OCS hydrokinetic projects, and coordinate to ensure that hydrokinetic 
projects meet the public interest, including the adequate protection, 
mitigation, and enhancement of fish, wildlife, and marine resources and 
other beneficial public uses. The MOU ensures that the interests of 
both agencies are adequately represented and that the process of 
developing renewable energy on the OCS happens efficiently, in an 
environmentally responsible manner, and with appropriate benefit to the 
people of the United States.
    Importantly, the agreement addresses the issue of potential site-
banking by developers on the OCS by eliminating redundant regulatory 
processes for acquiring use of OCS lands. In addition, by eliminating 
dual regulatory processes, the agreement addresses the potential for 
granting conflicting awards of OCS sites to developers by the two 
agencies. Specifically, FERC has agreed not to issue preliminary 
permits for hydrokinetic activities on the OCS, and MMS has agreed that 
FERC will have the primary responsibility to issue licenses for these 
activities. The Federal Government has effectively eliminated the 
opportunity for abuse by entities seeking to reserve, block, or acquire 
for speculative purposes large portions of the OCS. These concerns were 
raised by many commenters on the REAU rulemaking. The DOI/FERC MOU 
creates a unified, coherent process for the authorization of 
hydrokinetic activities on the OCS, ensuring that U.S. resources on the 
OCS will not be subject to a ``land rush,'' and will be developed in 
the most efficient manner possible.

Regulatory Process

    On December 30, 2005, the MMS issued an Advance Notice of Proposed 
Rulemaking (ANPR) (70 FR 77345) requesting comments on the program 
requirements.
    The ANPR requested public comments on five major program areas:
    (1) Access to OCS lands and resources;
    (2) Environmental information, management, and compliance;
    (3) Operational activities;
    (4) Payments and revenues; and
    (5) Coordination and consultation.
    The MMS provided a summary of the comments received on the ANPR in 
the Notice of Proposed Rulemaking (NPR) (73 FR 39376) published on July 
9, 2008. The NPR is available on the Regulations.gov Web site.

Programmatic Environmental Impact Statement (PEIS) Summary

    The MMS prepared a final PEIS in support of the establishment of a 
program for authorizing renewable energy and alternate use activities 
on the OCS. The final PEIS examines the potential environmental effects 
of the program on the OCS and identifies policies and best management 
practices that may be adopted for the program. The PEIS examined three 
alternatives, as well as the no action alternative. The three 
alternatives were: (1) The proposed action which would establish the 
program; (2) a case-by-case alternative that would evaluate each 
project individually without the benefit of a comprehensive program; 
and (3) the preferred alternative, which consisted of a combination of 
the first two alternatives, thus allowing MMS to review projects during 
the interim while the program and regulations are being established.
    Given the rapidly evolving nature of this nascent industry, the MMS 
cannot reasonably anticipate and assess the

[[Page 19640]]

potential environmental impacts of all of the various technologies and 
potential OCS locations where these renewable energy and alternate use 
projects could someday be proposed. Accordingly, this PEIS is focused 
on renewable energy technologies and areas on the OCS that industry has 
expressed a potential interest in and ability to develop or evaluate 
from 2007 to 2014. The PEIS proposed policies and best management 
practices based on the analyses in the PEIS. As the program evolves and 
more is learned, the mitigation measures may be modified or new 
measures developed. Each project developed under this new program will 
be subject to environmental reviews under the National Environmental 
Policy Act (NEPA), and each project may have additional project-
specific mitigation measures.
    A Record of Decision (ROD) was published on January 10, 2008. The 
preferred alternative was selected as well as interim policies and best 
management practices that were recommended in the PEIS. The PEIS and 
ROD are available at: http://ocsenergy.anl.gov/.

Environmental Assessment

    The MMS prepared a Final EA analyzing this rule. The EA 
incorporates by reference the PEIS, Programmatic Environmental Impact 
Statement for Alternative Energy Development and Production and 
Alternate Use of Facilities on the Outer Continental Shelf, Final 
Environmental Impact Statement, October 2007. This EA was prepared to 
assess any impacts of this rule. The Final EA is available on the MMS 
Web site at: http://www.mms.gov/offshore/AlternativeEnergy/RegulatoryInformation.htm.

Notice of Proposed Rulemaking

Summary of Comments

    The MMS published a NPR (73 FR 39376) on July 9, 2008. The proposed 
rule was accompanied by a 60-day public comment period that ended 
September 8, 2008.
    In response to the request for comments, MMS received 280 letters 
from a range of entities, including, but not limited to, Non-
Governmental Organizations, State and local governments, industry, and 
the general public. A list of commenters is included at the end of the 
summary. The following table illustrates the segmentation of comment 
letter submissions received by organization type: 
[GRAPHIC] [TIFF OMITTED] TR29AP09.000

    No single issue dominated the comments, which were divergent and 
wide-ranging. In general, comments were supportive of renewable energy 
developments on the OCS and reuse of existing OCS facilities. 
Commenters advised MMS to provide as much certainty as possible in the 
final rule to support the burgeoning offshore renewable energy 
industry, while also providing flexibility to allow industry to meet 
the necessary requirements. The MMS was also urged to advocate for 
early and consistent stakeholder involvement in both the program and 
with individual project permitting.
    The most common topics addressed by commenters included: 
Aquaculture, State and local consultation, bonding, confidentiality, 
alternate-use liability transference, jurisdiction, revenue sharing, 
and environmental review processes. These topics and others are 
addressed further in the sections that follow.
Access to OCS Lands and Procedures for Leasing
    With regard to timeframes for activities required by the proposed 
rule, several commenters requested this rule provide clear and defined 
timelines for MMS's responsibilities. Some suggested that timelines 
should be set for the issuance of the public notice to determine 
developer interest. Others suggested that a timeline be set for the 
comment evaluation period following the deadline for public comments in 
response to a public notice. Some suggested that a timeline be set for 
the determination of competitive interest. Other commenters proposed a 
timeline be set for MMS action on lease-suspension requests.
    With regard to jurisdiction, one commenter raised the question 
about whether MMS has jurisdiction over the cables associated with a 
renewable energy project even if these cables were used for a 
nonrenewable energy project at the end of the original lease term.
    Some commenters requested that due-diligence requirements be 
established to ensure that the applicant is financially and technically 
sound when being considered as a potential leaseholder.
    Some comments suggested that additional clarification is needed on 
a number of elements in the rule, including on what constitutes 
competitive interest, the ROW and right-of-use and easement (RUE) grant 
process, and activity cessation and suspension orders and the 
activities that these orders affect.
    A large number of comments related to the process for renewing 
leases. Some of these comments requested that the renewal process begin 
earlier, and others asked that while a lease renewal request is 
pending, the rule make it clear that the lease term will be 
automatically extended until MMS makes a decision.

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    Some commenters expressed concern with the concept of lease area 
contractions, suggesting that MMS could contract leases capriciously. 
Other commenters suggested MMS should reconsider allowing for the 
scaling of projects to ensure fairness and ease of market entry. The 
MMS should also consider additional strategies beyond diligence 
requirements to ensure that individual developers could not tie up 
large areas of the OCS, thereby prohibiting other development interests 
and, potentially, other uses.
    Many commenters suggested that MMS should permit lessees of limited 
leases to have priority consideration when considering a commercial 
lease application. For instance, if a lessee is already operating on a 
limited lease in a given area, and that same area is opened up for a 
commercial lease sale, that lessee should be given priority over other 
competitors for that lease area.
    With regard to the issuance of limited leases for the purpose of 
research, some commenters supported the idea of having Department of 
Energy supported research access rights expanded to include State 
governments and academic institutions.
    Several comments urged MMS to consider and establish a multi-factor 
evaluation process when considering a project proposal in a competitive 
lease sale.
Environmental Information, Management, and Compliance Programs
    Several commenters suggested that the environmental review process 
proposed by MMS would be overly burdensome and redundant. Some 
commenters suggested that the NEPA process proposed by MMS goes far 
beyond what NEPA requires and what other agencies require to implement 
NEPA in order to demonstrate the extent of environmental impact. Some 
commenters suggested that the NEPA process is far too cumbersome as set 
out in the proposed rule. Having the Site Assessment Plan (SAP), 
Construction and Operations Plan (COP), and lease sale Environmental 
Impact Statement (EIS) undergo NEPA is burdensome and unnecessary.
    With regard to the environmental review process, several comments 
pertained to the division of cost burden, requesting clarification, or 
changes to the designation of responsible parties with regard to 
payment. Some commenters suggested that MMS should allow companies the 
option of developing the required environmental documents instead of 
having MMS staff and its contractors develop them for projects.
    With regard to the Coastal Zone Management Act (CZMA) review 
process, several commenters requested clarification on how the process 
would work. Some commenters suggested that it is unclear in the 
proposed rule regarding exactly what is required under a noncompetitive 
lease sale versus a competitive lease sale. Other commenters were 
unclear on what parts of CZMA applied to these types of lease sales.
    Many commenters expressed concern with minimizing the environmental 
impacts of leases, easements, and ROWs. With regard to cumulative 
impacts and monitoring, several commenters proposed that projects be 
closely monitored for their overall impacts on the environment, both 
beneficial and adverse. Some commenters suggested that the proposed 
rule did not adequately address the need for consideration of potential 
impacts on commercial fishing. Other commenters advocated that 
monitoring activities should not only encompass the proposed project 
area, but also those areas directly adjacent to projects. Some 
commenters suggested that the guidelines for monitoring should clarify 
that States reserve the right to impose additional requirements as 
needed. The MMS also received comments suggesting that cumulative 
effects should be required as part of an applicant's SAP, COP, and 
initial project proposal. The cumulative effects should also be 
considered as part of the lease-sale evaluation process.
    With regard to adaptive management, several commenters proposed 
that the requirements and process for adaptive management are unclear 
in the proposed rule and need to be clarified. Some suggested that the 
lease instrument should be site specific and clearly specify the scope 
of the adaptive management activities MMS might require. Some comments 
pointed to the approach employed by the U.S. Fish and Wildlife Service 
for specifying adaptive management, where the terms and obligations are 
negotiated upfront. Some suggest that adaptive management should be 
included as a standard component of the SAP, General Activities Plan 
(GAP), and COP.
    Several commenters advocate that MMS apply categorical exclusions 
for certain data gathering activities. Some comments suggest that 
categorical exclusions could apply to most, if not all, resource 
evaluation activities, the installation of monitoring devices, and 
activities conducted prior to the approval of plans while on a lease. 
Some comments point to the policy currently employed by the U.S. Bureau 
of Land Management (BLM) for granting these exclusions.
Facility Design, Fabrication, and Installation
    With regard to facility design and engineering, the majority of 
comments pertained to the proposed requirement that the lessee use a 
Certified Verification Agent (CVA). Many commenters suggested that the 
required use of a CVA is redundant, expensive, and not effective where 
such design, fabrication, installation, repairs, and modifications are 
done under the direction of a licensed engineer. Some commenters 
pointed out that because construction of offshore wind facilities 
consist of repeated installation of numerous, nearly identical units, 
requiring the CVA to verify, witness, survey, or check most, if not 
all, of a wind farm installation is burdensome and unnecessary.
    With regard to the engineering and design standards by which 
offshore renewable energy facilities are aligned, many commenters 
suggested it was unclear in the proposed rule to what standard(s) the 
CVA would compare individual projects, as there is no governing body 
approving such designs, nor does MMS state specific standards in the 
rule. Some commenters urged MMS to adopt internationally accepted 
standards wherever possible. Other commenters suggested that MMS 
consider a phased approach in the facility design, fabrication, and 
installation requirements, thereby proposing that MMS rely on existing 
standards while proceeding with the analysis of all standards to 
determine what modifications might be justified in a second phase of 
the program. In addition, because there are no set standards or 
governing body, some commenters proposed that MMS provide training to 
prospective CVAs to meet the safety requirements that MMS will impose.
Regulation of Operational and Decommissioning Activities
    With regard to site-assessment activities, some commenters 
expressed a desire to have the ability to conduct site-assessment 
activities before a lease has been issued. Other commenters suggested 
that the SAP and COP be combined into a single plan, while others 
recommended that MMS create a categorical exclusion for site-assessment 
activities.
    With regard to information requirements, many commenters requested 
additional clarification regarding various information requirements 
under the lease, including

[[Page 19642]]

those required during the application phase, within the plans, during 
the environmental reviews, and during the technical evaluation of a 
proposed project.
    A large number of comments addressed the topic of the proposed 
notification requirements. Some commenters suggested that the 3-day 
notification requirement, as explained in subpart H, should be restated 
to address equipment or failures that pose significant risk to the 
environment, personnel, or property. Some commenters suggested that the 
notification requirement may not be appropriate for routine repair 
work, and would be better suited to emergency repairs only or those 
that would require environmental documentation. As stated in the 
proposed rule, the notification requirements are unclear regarding what 
activities would require notification; because there are a range of 
activities that could take place, such as changing light bulbs, this 
provision needs to be better defined.
    Several comments addressed the topic of inspections. Some 
commenters pointed out that renewable energy facilities, like wind 
farms, will be unmanned and, as such, should not be subject to the same 
inspection requirements that the oil and gas industry are subject to. 
Certain commenters suggested that offshore wind turbines be classified 
as unmanned for safety purposes, as these facilities are unmanned 
during normal operations. Unscheduled inspections to the actual wind 
turbines or energy generating facilities would be better served with 
visits to the 24-hour shoreside monitoring station, where real-time 
information on the condition and operation of the facility would be 
available. Some commenters advocated unscheduled inspections should be 
coordinated with the developer to minimize possible safety risks to the 
inspector.
    A large number of comments pertained to the decommissioning 
obligations set out in the proposed rule. Some suggested that allowing 
structures to remain in place at the end of a lease makes more sense 
than removal, both from a financial perspective and from an 
environmental perspective. Facility components, such as a turbine 
foundation, scour protection equipment, and cabling could cause greater 
harm to the surrounding ecology during and after removal than if left 
in place. Some commenters suggested that these structures could benefit 
the local ecology by continuing to serve as artificial reefs. Some 
comments requested that MMS require CZMA review as part of the 
decommissioning application. Others advocated having decommissioning 
requirements be determined on a case-by-case basis in the COP, by 
considering site-specific characteristics. On the side of those that 
support removal of all structures, some commenters suggested that the 
final rule should include a requirement that the development site be 
returned to the ecological baseline that existed prior to the 
installation of the energy project. Other commenters suggested that the 
requirements incorporate a presumption that all facilities, cables, and 
other obstructions be removed, as submarine cables and other components 
can pose a long-term obstruction for much of the fishing gear used on 
the OCS.
    Some comments suggested that the specifics of the decommissioning 
requirements should be modified. Some suggested that the removal of 
structures to the seabed depth specified in the rule is unnecessary. 
Some pointed to requirements employed in Europe, where the common 
removal depth for a wind turbine foundation is no more than 2 meters or 
6 feet.
Payments, Royalties, Fees, and Bonds
    The majority of comments regarding payments and financial assurance 
requirements urged MMS to expand the range of financial assurance 
options available to the lessee, including allowing the use of a third-
party guaranty, audited financial statements, power purchase or other 
sale agreements, insurance, or other alternatives approved by MMS.
    Another point raised in a large volume of comments addressed the 
topic of decommissioning costs. Some commenters suggested MMS should 
separate financial assurance for decommissioning costs from financial 
assurance for other regulatory obligations, while others suggested that 
the rule be crafted in a way that ensured the final bonding costs will 
remain within reason and are reviewed carefully to cover only the 
necessary costs. A number of commenters suggested MMS should revise the 
provisions to provide more cost-effective protection against defaults 
on decommissioning obligations. Some commenters shared concern 
regarding MMS's ability to use bonding for cleanup and recovery 
activities once a lease term has ended. Some commenters suggested the 
decommissioning obligation under a limited lease, with a meteorological 
tower cited as an example, should not accrue--at a minimum--until after 
the development lease is awarded and MMS has approved the plan.
    At least one commenter mentioned the uncertainty in the 
requirements and in the process of granting and overseeing ROWs and 
RUEs will impact the feasibility for the developer to obtain financing.
    With regard to operating fees, many commenters recommended that 
operating fees under a commercial lease be deferred until the 
leaseholder is either generating energy or has begun construction on 
the lease. One suggestion was made to have the operating fees deferred 
until the CVA approves the COP.
    With regard to bidding, some commenters recommended MMS establish 
minimum bids and allow for the rejection of high bids in certain 
circumstances.
    Some commenters suggested the leasing fees, royalties, and rent in 
the proposed rule were set too low in light of the value of existing 
fisheries that could be displaced by renewable energy projects.
Coordination and Consultation
    Many commenters urged early and consistent consultation and 
coordination with relevant State and Federal agencies. A few commenters 
suggested the establishment of standing inter-agency advisory and 
planning committees to allow for continuous dialogue with multiple 
stakeholders during the lease issuance process. Some commenters 
requested they be specifically mentioned as a consulting entity in the 
rule.
    With regard to State competitions for offshore development, some 
commenters requested MMS recognize the results of State competitions 
and grants for renewable energy development offshore their States when 
considering potential lessees in Federal waters.
    With regard to consultation during specific stages in the lease 
issuance process, some commenters suggested the rule require applicants 
consult with affected State and local governments during the area 
identification stage and throughout the remaining SAP and COP review 
processes. Some suggested MMS work more closely with the Federal Energy 
Regulatory Commission to avoid duplication in coastal EAs and reviews, 
while others suggested MMS work just as closely with State agencies 
during the coastal zone management processes. Other comments from 
industry suggested that renewable energy developers should also confer 
with local oil and gas project planners to ensure compatibility. Some 
commenters advocated that MMS express, in the final rule, a process for 
MMS to

[[Page 19643]]

coordinate with States, tribes, and local governments in adjusting 
mitigation and monitoring requirements.
    A common thread running through the comments on coordination and 
consultation is the desire to establish and use planning and 
coordination mechanisms to facilitate appropriate siting of OCS 
renewable energy activity and to develop meaningful priorities. Some 
commenters recommended establishing new mechanisms, and others 
suggested working with existing means. The MMS believes that such 
approaches may be accommodated under the final rule, and we are 
committed to reaching out to stakeholders, and local, state, and 
Federal government agencies as we implement the rule.
    We began outreach to officials and organizations at the national, 
regional, state, and local levels when we began the rulemaking process, 
and we have received valuable input throughout the process. We have 
participated in existing regional planning mechanisms, such as the West 
Coast Governors Agreement and the Northeast Regional Ocean Council, 
which are working toward properly balanced uses of the ocean through a 
regionally coordinated approach to relevant issues, including renewable 
energy development. We recognize and support new efforts, such as the 
one under way jointly by the States of New York, New Jersey, Delaware, 
Maryland, and Virginia to convene a Mid-Atlantic Ocean Summit, as well 
as the U.S. Offshore Wind Collaborative's proposed New England and Mid-
Atlantic States Joint Planning Agreement. We also have been working 
with individual States, localities, and tribes in the implementation of 
the MMS interim policy on resource assessment and technology testing 
and hope to build on those efforts in the establishment of joint task 
forces addressing commercial renewable energy development opportunities 
as provided under the final rule.
    Two States--New Jersey and Rhode Island--are well along in planning 
efforts that will help to determine appropriate areas of the OCS for 
development, and MMS has been an active partner with those States. Such 
efforts--supported by MMS environmental study and technical research 
initiatives, as well as the Coordinated OCS Mapping Initiative mandated 
by EPAct--will contribute significantly as MMS implements this final 
rule.
    Section 388 of EPAct 2005 requires that any activity permitted 
under this authority be carried out in a manner that provides for, 
among other things, protection of the environment, conservation of the 
natural resources of the outer continental shelf; coordination with 
relevant Federal agencies; protection of national security interests of 
the United States, prevention of interference with reasonable uses and 
functions of the exclusive economic zone, the high seas, and the 
territorial seas, and consideration of any other use of the sea or 
seabed, including, but not limited to fisheries, protection of 
biodiversity and ecosystem function, sealanes, potential siting of 
deepwater ports, or navigation. Consistent with this statutory 
direction, MMS understands that this rule will be applied in 
conjunction with interagency-led planning activities that are 
undertaken to avoid conflicts among users and maximize the economic and 
ecological benefits of the OCS. These activities will include 
multifaceted spatial planning effort that will incorporate ecosystem 
based science and stewardship along with socioeconomics, research, and 
modeling in the context for demands for other ocean uses and functions. 
It is anticipated that the Council on Environmental Quality will help 
coordinate this interagency effort, with the National Oceanic and 
Atmospheric Administration (NOAA) playing a key role, along with MMS. 
Through this type of coordination and advance planning, we expect to be 
able to speed the process of developing renewable energy projects in 
the OCS.
    This final rule is designed to be implemented both within the 
existing federal framework of multi-agency management of ocean 
activities, as well as to adapt to alternative ocean governance regimes 
that could be developed in the future. MMS will coordinate closely with 
all relevant federal and state agencies both on the implementation of 
this rule, through actualization and operation to termination and 
decommissioning, as well as on the development of any broader 
governance structure to address the many competing demands and 
interests facing our oceans.
    The MMS is responsible for ensuring that the decisions made within 
this comprehensive regulatory structure are supported by environmental 
analysis, documents, and other decision support resources. We will 
ensure that environmental analysis for OCS renewable energy proposals 
is proportional to the scope and scale of each proposal, is effectively 
tiered to programmatic NEPA documents, and efficiently incorporates 
other publicly available information by reference. The MMS will ensure 
timely and efficient coordination of the development and review of 
environmental documents with all agencies that have jurisdiction or 
special expertise to provide the decisionmakers. We will ensure that 
mitigation and monitoring information informs future decisionmaking 
processes.
    Management of renewable energy activities by MMS under this rule is 
founded on many years of experience in administering OCS energy and 
mineral programs and will be supported by extensive investigation and 
information gathering under the MMS Environmental Studies and the 
Technology Assessment and Research Programs. Both of these programs 
will play a significant role to ensure the safe and environmentally-
responsible use of OCS renewable energy resources. Several initiatives 
examine real offshore renewable energy activity experiences in Europe 
that will provide useful information in considering similar activity in 
U.S. waters as well as opportunities to form close partnerships with 
and learn from international governments and developers possessing 
offshore renewable energy expertise. As we implement our regulatory 
framework to harness these new and exciting ocean renewable energy 
opportunities, we will draw on partnerships among the Federal, state, 
and local governments entities to share critical information, and 
agency expertise, and to foster better communication between different 
arms of the Federal Government
    The MMS believes that all of these efforts and others will be 
extremely helpful in deciding where and when to pursue development of 
renewable energy on the OCS. They will help government at all levels to 
commit resources appropriately and will provide developers with 
information to facilitate proper and efficient project proposals. Most 
importantly, MMS coordination and consultation with regional, state, 
and local planning mechanisms will give those entities that will be 
most affected by renewable energy activity a proper voice in the 
development of priorities.
Reuse of Existing Facilities
    The vast majority of comments pertaining to alternate use addressed 
the concern that MMS would authorize mariculture activities on the OCS 
in the absence of express Federal mariculture legislation (such as the 
National Offshore Aquaculture Act that has been debated in Congress but 
never passed). Several commenters argued that MMS did not have the 
legal authority under subsection 8(p) of the OCS Lands Act to authorize 
Alternate Use RUEs for

[[Page 19644]]

mariculture activities that involved the use of an existing OCS 
facility.
    Several commenters raised concerns regarding the apportionment of 
decommissioning liability between the holder of the alternate use 
right-of-use and easement (Alternate Use RUE) and the existing OCS 
lessee or operator. Most of these commenters argued that the Alternate 
Use RUE holder should assume liability for decommissioning the existing 
OCS facility, thereby allowing the existing lessee or operator to shed 
its decommissioning liabilities for that particular existing structure 
that is subject to the approved alternate use. Other commenters 
expressed concern that the alternate use provisions were too general in 
nature, and did not set forth specific grant terms, payment levels, or 
financial assurance commitments.
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Overview of the MMS Alternative Energy and Alternate Use Program

    To accommodate the regulations to support the Alternative Energy 
and Alternate Use Program, MMS will add a new part to subchapter B of 
title 30 of the Code of Federal Regulations (CFR). The new part 285 
will be titled Renewable Energy and Alternate Uses of Existing 
Facilities on the Outer Continental Shelf and will address the 
requirements of section 388(a) of the EPAct, which amended the OCS 
Lands Act by adding section 8(p) (43 U.S.C. 1337(p)). In the proposed 
rule the new part 285 was titled Alternative Energy and Alternate Uses 
of Existing Facilities on the Outer Continental Shelf. We are now using 
the term ``renewable energy'' instead of alternative energy because it 
is a more commonly used term and more easily understood by the industry 
and general public.

Approach to Rulemaking

    The MMS developed these regulations to provide a regulatory 
framework for leasing and managing OCS renewable energy project 
activities and authorizing activities that involve the alternate use of 
OCS Lands Act-permitted facilities. These regulations are also intended 
to encourage orderly, safe, and environmentally responsible development 
of renewable energy sources on the OCS. The MMS expects that renewable 
energy projects in the near term will involve the production of 
electricity from wind, wave, and ocean current. In the future, other 
types of renewable energy projects may be pursued on the OCS, including 
solar energy and hydrogen production projects. These regulations were 
developed to allow for a broad spectrum of renewable energy 
development, without specific requirements for each type of energy 
production.
    Following the publication of these regulations, MMS will publish a 
guidance document to support the regulations. This guidance document 
will provide more details on the program and will describe the type of 
information that we are looking for in various plan submittals. As we 
gain experience with renewable energy development on the OCS, we will 
update our regulations to include energy-resource-specific provisions 
and incorporate by reference appropriate documents.
    This final rule (30 CFR part 285) applies to all aspects of the 
Alternative Energy and Alternate Use Program except for the procedures 
applying to appeals of MMS decisions or orders, which are covered in 30 
CFR part 290, subpart A. The MMS is revising Sec.  290.2 to clarify our 
decisions on bids under this program that are exempt from the appeals 
process at 30 CFR part 290 and are covered under Sec.  285.118(c). This 
section describes the procedures for a bidder whose high bid was 
rejected to apply for reconsideration by the Director of MMS (Director) 
for renewable energy leases, ROW grants, RUE grants, or Alternate Use 
RUE.

[[Page 19647]]

Overview of the Project Development Process

General Overview

Types of Access Rights

    The MMS will issue lease access rights for commercial development 
and site assessment and technology testing. The ROW and RUE grants will 
be issued for the support of renewable energy activities. The MMS will 
use a special grant, the Alternate Use RUE, for activities that use an 
existing facility.

Commercial and Limited Leases

    The MMS will issue two types of leases: (1) Commercial or (2) 
limited. A commercial lease would convey the access and operational 
rights necessary to produce, sell, and deliver power through spot 
market transactions or a long-term power purchase agreement. A 
commercial lease provides the lessee full rights to apply for and 
receive the authorizations needed to assess, test, and produce 
renewable energy on a commercial scale over the long term 
(approximately 30 years). A commercial lease will include the right to 
a project easement, which will be issued to allow the lessee to install 
gathering, transmission, and distribution cables to transmit 
electricity; pipelines to transport other energy products (i.e., 
hydrogen); and appurtenances on the OCS, as necessary, for the full 
enjoyment of the lease. The project easement will be issued upon 
approval of the COP (for commercial leases) or GAP (for limited 
leases).
    A limited lease will convey access and operational rights for 
activities on the OCS that support the production of energy, but do not 
result in the production of electricity or other energy product for 
sale, distribution, or other commercial use exceeding a limit specified 
in the lease. In a change from the proposed rule, MMS has decided to 
permit limited leases that generate power during technology testing to 
sell that power within limits set in the lease instrument. For example, 
a limited lease could include in its terms and conditions the 
authorization to sell electricity produced during the testing of 
experimental ocean current turbine generators of up to 5 megawatts (MW) 
total installed capacity, thereby allowing the lessee to recoup some of 
the expenses entailed in its limited lease activities. Limited leases 
may be issued for site-assessment purposes only or for site assessment 
and development and testing of new or experimental renewable energy 
technology. Limited leases will be issued for a short term, 5 years. 
Under the provisions of these regulations, limited leases may be 
renewed, but they cannot be converted to commercial leases. If the 
holder of a limited lease wished to pursue commercial development on 
the OCS, the leaseholder will need to obtain a new commercial lease 
through the leasing process, as defined in these regulations.

RUE Grants and ROW Grants

    The MMS will issue RUE grants authorizing the use of a designated 
portion of the OCS to support renewable energy activities on a lease or 
other approval not issued under this part (e.g., on a State-issued 
lease).
    The MMS will issue ROW grants to allow for the construction and use 
of a cable or pipeline for the purpose of gathering, transmitting, 
distributing, or otherwise transporting electricity or other energy 
product generated or produced from renewable energy not generated on a 
lease issued under this part. An ROW grant could be used to transport 
electricity from a State lease to shore or from one State to another 
State through a transmission line that must cross the Federal OCS. An 
ROW is not the same as a project easement issued with a renewable 
energy lease under this part.

Alternate Use RUEs

    The MMS will issue an alternate use RUE for the energy- or marine-
related use of an existing OCS facility for activities not otherwise 
authorized by this subchapter or other applicable law. See preamble at 
subpart J, for more details regarding Alternate Use RUEs.

Obtaining Access Rights

    The EPAct requires MMS to award leases, ROW grants, and RUE grants 
competitively, unless we make a determination of no competitive 
interest. In conjunction with the competitive leasing process, we will 
prepare NEPA and other environmental compliance documents. The MMS will 
put forth a call for interest, designate the lease or grant area, and 
publish in the Federal Register all other notices and calls relating to 
the sale. If, after putting forth a call for interest, we determine 
that there is no competitive interest in that particular OCS area, we 
may proceed in issuing a lease or grant noncompetitively. Whether a 
company acquires a lease or grant competitively or noncompetitively, it 
must comply with all MMS lease stipulations or conditions in the grant.

Federal Compliance for the Leasing Process

    All activities permitted under this part must comply with all 
relevant Federal laws, regulations, and statutes, including, but not 
limited to, the following:
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National Environmental Policy Act Compliance

    The NEPA process helps public officials make decisions based on an 
understanding of environmental consequences and take actions that 
protect, restore, and enhance the environment. It provides the tools to 
carry out these goals by mandating that every Federal agency prepare an 
in-depth study of the impacts of ``major federal actions significantly 
affecting the quality of the human environment'' and alternatives to 
those actions, and by requiring that each agency make that information 
an integral part of its decisions. The NEPA also requires that agencies 
make a diligent effort to involve the interested and affected public 
before they make decisions affecting the environment.
    The MMS is the lead Federal agency for NEPA compliance for 
renewable energy and alternate use activities on the OCS. Some of the 
information we request under this part are in support of other Federal 
agencies' information requirements associated with compliance with the 
laws and regulations that they enforce. --

Coastal Zone Management Act Compliance

    Each coastal State has a federally-approved coastal management plan 
(CMP). In compliance with CZMA mandates found at section 307(c)(1), 
when MMS conducts a competitive lease sale for leases or grants under 
this part, MMS will determine if the sale activity is reasonably likely 
to affect any land or water use or natural resource of a State's 
coastal zone. If such effects are reasonably foreseeable, the MMS must 
submit a consistency determination (CD) to the affected State(s) at 
least 90 days before the lease sale. This CD will include a detailed 
description of the proposed activity, its expected coastal effects, and 
an evaluation of how the proposed activity is consistent with 
applicable enforceable policies in the State's CMP. If the affected 
State(s) agree with MMS's determination, MMS may proceed with the 
competitive sale. If the affected State(s) disagree, MMS will follow 
the procedures as outlined in 15 CFR part 930, subpart C.
    In their CMP, the State lists Federal licenses and permits which 
are reasonably likely to affect coastal uses or resources and requires 
a Federal consistency review. Listed activities must be conducted in a 
manner that is consistent with the enforceable policies of the State's 
CMP, and the applicant must submit a Federal consistency certification 
to the State and approving Federal agency. Also, the State may ask the 
NOAA ORCM for permission to review, for consistency, activities that 
are not listed in its CMP. If NOAA approves the request, the applicant 
is required to submit a consistency certification for the unlisted 
Federal license/permit. In compliance with CZMA mandates, MMS will not 
issue noncompetitive leases or approve noncompetitive grants or plans 
under this part if: (1) Consistency has not been conclusively presumed; 
or (2) the State objects to the applicant's consistency certification, 
and the Secretary of Commerce has not found that the permitted 
activities are consistent with the objectives of the CZMA or are 
otherwise necessary in the interest of national security. Table 1 
summarizes the NEPA and CZMA compliance requirements for leases and 
grants.

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Development Process

Developing Leases and Grants

    Once a company acquires a lease, ROW grant, or RUE grant, it must 
submit certain plans to MMS for development of the lease or grant. The 
various plans serve as a blueprint for site development, construction, 
operations, and decommissioning. The MMS has specific requirements for 
each phase of the lease, grant, and plan. The MMS will not allow 
development without proper plan submission and approval. Site 
assessment activities on a commercial lease will require the applicant 
to submit a SAP and receive MMS approval of that plan before beginning 
those activities. The SAP will undergo the appropriate NEPA reviews and 
may require either an Environmental Impact Statement (EIS) or an EA. 
The SAP must demonstrate how you will conduct the proposed activities 
to comply with relevant Federal statutes such as the CZMA, Endangered 
Species Act (ESA), Marine Mammal Protection Act (MMPA), and CWA.
    For a commercial lease, after you perform site assessment 
activities, you will be required to submit and receive MMS approval of 
a COP before you may begin any development and production activities on 
your lease. Like the SAP, the COP will undergo the appropriate NEPA 
reviews and may require either an EIS or an EA. Like the SAP, the COP 
must also comply with relevant Federal statutes.
    For limited leases, ROW grants, and RUE grants, you will be 
required to submit a GAP, which covers all activities on the lease or 
the grant including site assessment, development, operations, and 
decommissioning. Like the SAP and COP, the GAP will undergo the 
appropriate NEPA reviews and must comply with relevant Federal 
Statutes.

Revenue Sharing

    The new subsection 8(p)(2)(B) of the OCS Lands Act (43 U.S.C. 
1337(p)(2)(B)) requires payment to certain coastal States of 27 percent 
of the revenues received by the Federal Government from any projects 
under this section that are located wholly or partially within the area 
extending 3 nautical miles seaward of State submerged lands. (For ease 
of description, this 3-mile-wide area adjoining State submerged lands 
will be referred to in this preamble as the ``8(g) zone,'' a term 
widely used to refer to the identical 3-mile area described in 
subsection 8(g) of the OCS Lands Act (43 U.S.C. 1337(g)). In addition, 
when a project extends into the 8(g) zone of at least one State, 
subsection 8(p) extends eligibility for a share of the revenues to 
States with a coastline that is located within 15 miles of the 
geographic center of the project. The Secretary is required to 
establish a formula by rulemaking that provides for the equitable 
distribution of payments to eligible States based on the proximity of 
each State's coastline to the geographic center of the project.

Operations

    The regulations that address operations cover environmental 
management, safety management, inspections, facility assessments, and 
decommissioning. The regulations on operations are designed to ensure 
safety and prevent or minimize the likelihood of harm or damage to the 
marine and coastal environments. The structure of the regulations is 
based on adaptive management. The company will be required to monitor 
activities and demonstrate that its performance satisfies specified 
standards in its approved plans. In addition, the

[[Page 19653]]

company will be required to comply with regulations regarding air 
quality, safety, maintenance and shutdowns, equipment failure, adverse 
environmental effects, inspections, facility assessments, and incident 
reporting.

Alternate Use of Existing Facilities

    These regulations establish general requirements for how MMS will 
consider proposals for activities that involve the alternate use of 
existing OCS facilities. This includes general provisions that explain 
how we will approve and regulate such alternate use activities on the 
OCS. We will authorize such activities through the issuance of an 
Alternate Use RUE.
    These regulations explain how applicants can request an Alternate 
Use RUE; how MMS will decide whether to issue Alternate Use RUEs; how 
Alternate Use RUEs will be competitively issued (if we determine that 
competitive interest exists); the terms of such authorizations; 
required payments to MMS; necessary financial assurance; other 
administrative issues such as assignment, suspension, and termination; 
and decommissioning of approved alternate use structures.
    In addition to the provisions in subpart J, MMS will make 
associated revisions to our existing oil and gas decommissioning 
regulations found in 30 CFR part 250, subpart Q, to clarify the oil and 
gas platform owner's obligations for decommissioning in the event we 
approve alternate uses of the platform.

Subpart-by-Subpart Discussion

Part 285--Renewable Energy And Alternate Uses Of Existing Facilities On 
The Outer Continental Shelf

Subpart A--General Provisions
Subpart B--Issuance of OCS Renewable Energy Leases
Subpart C--Rights-of-Way Grants and Rights-of-Use and Easement 
Grants for Renewable Energy Activities
Subpart D--Lease and Grant Administration
Subpart E--Payments and Financial Assurance Requirements
Subpart F--Plans and Information Requirements
Subpart G--Facility Design, Fabrication, and Installation
Subpart H--Environmental and Safety Management, Inspections, and 
Facility Assessments for Activities Conducted Under SAPs, COPs and 
GAPs
Subpart I--Decommissioning
Subpart J--Rights of Use and Easements for Energy and Marine-Related 
Activities Using Existing OCS Facilities

Subpart A--General Provisions

Overview

    Subpart A establishes MMS's authority and the purpose for the 
regulations. It also addresses the general requirements that apply to 
all activities regulated under this part, for example, the 
qualifications for holding leases, ROW grants, and RUE grants on the 
OCS, and the appeals process. The definitions for these regulations are 
also in subpart A.

Approach

    The OCS Lands Act requires MMS to ensure that the activities 
permitted under these regulations are carried out in a manner that 
provides for safety, protection of the environment, oversight, and 
enforcement (43 U.S.C. 1337(p)(4)). This subpart lays the foundation 
for these responsibilities. The responsibilities of the lessee, 
applicant, operator, or holder of a ROW grant, RUE grant, or Alternate 
Use RUE grant are based on ensuring that projects under these 
regulations are designed and conducted in a safe and environmentally 
sound manner.
    Departures from the regulations were selected as a way of allowing 
MMS to maintain flexibility within the program and to be able to adapt 
to this new and changing industry. Requirements and qualifications for 
lessees and grant holders are based on section 8 of the OCS Lands Act 
and are designed to deter nuisance and speculative interference with 
the leasing process. Appeal rights are modeled after those established 
for offshore oil and gas operations.
    This subpart provides for participation of State and local 
governments in task forces or other joint planning agreements with MMS. 
The joint planning provision is modeled after Sec.  281.13 of this 
subchapter, which pertains to the use of task forces when considering 
leasing of minerals in the OCS other than oil, gas, and sulphur. We 
envision that such task forces could be useful and applicable to any 
phase of the OCS Alternative Energy Program, from preliminary studies 
and lease sale formulation, through site assessment and construction, 
to decommissioning. We may invite any affected State Governor or local 
government executive to join in establishing a task force or other 
joint planning or coordination agreement if we are considering to offer 
or issue leases (or grants) under this part. Participation in a task 
force will give the parties opportunities to contribute to the planning 
process and access to nonproprietary information. The task force or 
other such arrangements will be constituted and conducted, as agreed to 
by the participants, consistent with Federal law and these regulations. 
The task force may make recommendations and may be requested to conduct 
or oversee research, studies, or reports. However, MMS is not limited 
to using just task forces for coordination and consultation. Throughout 
the lease, grant issuance, and project development processes, MMS will 
work with affected State, local, and tribal governments and other 
planning and oversight organizations.

Section-by-Section Discussion of Subpart A

Authority (Sec.  285.100)

    This section restates MMS's authority to issue regulations and 
oversee access and development on the OCS for renewable energy and 
alternate use of existing facilities. The authority statement is 
included to inform the affected public and other interested parties of 
the basis for establishing these regulations. The authority for these 
regulations was granted to the Secretary of the Interior in amendments 
to subsection 8 of the OCS Lands Act (43 U.S.C. 1337), as set forth in 
section 388(a) of the EPAct (Pub. L. 109-58).
    With regard to hydrokinetic projects on the OCS, MMS possesses the 
exclusive authority to issue leases, easements, and rights-of-way for 
such projects, but will not duplicate the operational approvals granted 
by FERC when it issues licenses and exemptions for the construction and 
operation of hydrokinetic projects on the OCS.
    The MMS revised this section from the NPR to state that the 
Secretary of the Interior delegated to MMS the authority to regulate 
activities under section 388(a) of the EPAct. These regulations will 
address activities that: (a) Produce or support production, 
transportation, or transmission of energy from sources other than oil 
and gas; or (b) use, for energy-related purposes or for other 
authorized marine-related purposes, facilities currently or previously 
used for activities authorized under the EPAct.

What is the purpose of this part? (Sec.  285.101)

    This section describes MMS's objectives for this rule. Our 
objectives include: (1) Establishing procedures for issuance of leases, 
ROW grants, and RUE grants and for administration of operations for 
activities permitted under this part; (2) informing applicants and 
third parties of their obligations under this part; and (3) ensuring 
that these

[[Page 19654]]

activities are conducted in a safe and environmentally sound manner, in 
conformance with applicable laws and regulations, and the terms of the 
lease or grant. However, this part does not convey access rights for 
oil, gas, or other minerals.
    We did not make any changes to the section.

What are MMS's responsibilities under this part? (Sec.  285.102)

    This section describes MMS's responsibilities, which are derived 
from section 8(p)(4) of the OCS Lands Act (43 U.S.C. 1337(p)(4)). These 
responsibilities include ensuring activities are carried out in a 
manner that provides for:
    <bullet> Safety;
    <bullet> Protection of the environment;
    <bullet> Prevention of waste;
    <bullet> Conservation of the natural resources of the OCS;
    <bullet> Coordination with relevant Federal agencies;
    <bullet> Protection of national security interests of the United 
States;
    <bullet> Protection of the rights of other authorized users of the 
OCS;
    <bullet> A fair return to the United States;
    <bullet> Prevention of interference with reasonable uses (as 
determined by the Secretary or Director) of the exclusive economic 
zone, the high seas, and the territorial seas;
    <bullet> Consideration of the location of and any schedule relating 
to a lease or grant under this part for an area of the OCS, and any 
other use of the sea or seabed;
    <bullet> Public notice and comment on any proposal submitted for a 
lease or grant under this part; and
    <bullet> Oversight, inspection, research, monitoring, and 
enforcement of activities authorized by a lease or grant under this 
part.
    To enforce these responsibilities, MMS will require compliance with 
all applicable laws, regulations, other requirements, the terms of your 
lease or grant under this part, and approved plans. We will also 
establish practices and procedures to govern the collection of all 
payments due to the Federal Government, including any service recovery 
fees, rents, operating fees, and other fees or payments. We will 
coordinate and consult with the Governor of any affected State and 
executive of any affected local government or Indian tribe. As part of 
coordination and consultation with State and local governments, we may 
invite any affected State Governor, representative of an affected 
Indian tribe, and affected local government executive to join a task 
force or other joint planning or coordination agreement.
    Based on comments received on the NPR, we added affected Indian 
tribes to this section. In addition, we added text in paragraph (a)(5) 
to emphasize coordination with Federal agencies involved in planning 
activities that are undertaken to avoid conflicts among users and 
maximize the economic and ecological benefits of the OCS, including 
multifaceted spatial planning efforts.

When may MMS prescribe or approve departures from these regulations? 
(Sec.  285.103)

    This section establishes times when MMS may approve departures from 
the requirements established in the regulations. We will consider a 
departure when it is needed to:
    <bullet> Facilitate the proper development of a lease or grant 
under this part;
    <bullet> Conserve natural resources;
    <bullet> Protect life (including human and wildlife), property, or 
the marine, coastal, or human environment; or
    <bullet> Protect sites, structures, or objects of historical or 
archaeological significance.
    A departure must be consistent with subsection 8(p) of the OCS 
Lands Act and must protect the environment and safety to the same 
degree as if there was no approved departure from the regulations.
    We did not make any changes to the section.

Do I need an MMS lease or other authorization to produce or support the 
production of electricity or other energy product from a renewable 
energy resource on the OCS? (Sec.  285.104)

    This section explains that, except as otherwise authorized by law, 
it is unlawful for any person to construct, operate, or maintain any 
facility to produce, transport, or support the generation of 
electricity or other energy product derived from a renewable energy 
resource on any part of the OCS, except under and in accordance with 
the terms of a lease, easement, or ROW issued pursuant to the OCS Lands 
Act. If you intend to construct and operate a hydrokinetic facility on 
OCS lands, you will first need a lease from MMS and later be required 
to seek a license from FERC.
    It should be noted that with the final rule MMS is clarifying that 
authorization of geological and geophysical and related site assessment 
surveys will be the responsibility of the U.S. Army Corps of Engineers. 
In many instances these types of activities may be verified under the 
Corps' Nationwide Permit Program. We have revised the regulation at 
subpart F to remove MMS approval of these types of surveys and the 
requirement to describe the design of such surveys in relevant plans. 
Although MMS will not be the permitter for such surveys--either before 
or after issuance of a lease or grant--we strongly urge that those 
conducting surveys coordinate with MMS and the Corps to ensure that 
proposed activities meet both Corps permitting requirements and MMS 
information requirements described in subpart F relating to lease or 
grant issuance and plan approval.
    We did not make any changes to the section.

What are my responsibilities under this part? (Sec.  285.105)

    This section describes the general responsibilities of a lessee, 
applicant, operator, or holder of a ROW grant, RUE grant, or Alternate 
Use RUE grant under these regulations. These responsibilities include:
    <bullet> Designing projects and conducting operations in a safe 
manner to minimize adverse effects to the coastal and marine 
environments, including their physical, atmospheric, and biological 
components to the extent practicable, and taking measures to prevent 
the discharge of pollutants, including marine trash and debris;
    <bullet> Submitting requests, applications, plans, notices, 
modifications, and supplemental information as required by this part; 
following up any oral request or notification in writing within 3 
business days;
    <bullet> Complying with the terms and conditions of the 
applications, plans, notices, and modifications; making payments on 
time;
    <bullet> Complying with the Department of the Interior's (DOI) 
nonprocurement debarment regulations; including the requirement to 
comply with 2 CFR part 1400 in all contracts and transactions related 
to a lease or grant under this part; and
    <bullet> Responding to requests from the Director in a timely 
manner.
    We added measures to prevent the discharge of pollutants, including 
marine trash and debris, to this section to clarify that adverse 
effects to the environment include pollutants, trash, and debris. Also, 
while hydrokinetic projects will entail obligations and 
responsibilities relating to FERC regulation under licenses and 
exemptions, the holder of a hydrokinetic lease must comply with all 
terms and conditions set forth in the MMS-issued lease including MMS' 
right to access data and information for all activities conducted on 
leases issued under this part to meet our statutory responsibilities as 
lessor.

[[Page 19655]]

Who can hold a lease or grant under this part? (Sec.  285.106)

    This section details the qualifications of a lessee or grant 
holder. To qualify for a lease or grant, you must be either a citizen 
or a national of the United States; an alien lawfully admitted for 
permanent residence in the United States; a private, public, or 
municipal corporation organized under the laws of the United States, 
any of its States or territories, or the District of Columbia; or an 
association of any of the parties described previously. In addition, 
you may be excluded from becoming a lessee or grant holder if you are 
excluded or disqualified from participating in transactions covered by 
the Federal nonprocurement debarment and suspension system, you have 
failed to meet or exercise due diligence under any OCS lease or grant, 
or you remained in violation of the terms and conditions of any lease 
or grant issued under the OCS Lands Act for a period extending longer 
than 30 days after MMS directed you to comply.
    Based on comments received on the NPR, MMS added a requirement to 
this section that in order to qualify to become a lessee or a grant 
holder, the applicant must demonstrate the technical and financial 
capabilities to construct, operate, maintain, and terminate/
decommission projects for which you are requesting authorization. We 
also deleted Sec.  285.106(b)(4) because it was redundant with Sec.  
285.106(b)(2).
    The MMS also received comments requesting that we limit ownership 
of leases and grants to United States citizens and companies. The 
requirements for lease and grant holders limit ownership to United 
States citizens, lawfully admitted aliens, and United States companies. 
Another comment stated that it is not clear if private universities and 
research institutions are eligible to hold leases or grants under this 
part. Private universities and research institutions could be qualified 
to hold leases or grants under these regulations, under paragraph 
(a)(4), as an ``association''.
    In addition, we added Federal agencies to the list of entities 
qualified to hold a lease. After the proposed rule was published, MMS 
received inquiries from the U.S. Navy concerning the acquisition of 
areas of the OCS as set-asides for renewable energy development to meet 
requirements imposed by the Energy Independence and Security Act of 
2007 and EPAct that pertain to improved energy performance in the 
federal sector. By adding Federal agencies to the qualification list, 
MMS could issue a lease to the Navy or other Federal agency that would 
authorize OCS renewable energy development to provide electrical 
generation for its installations and facilities.
    As with hydrokinetic commercial leases issued to private entities, 
a Federal or state agency holding an MMS lease cannot construct or 
operate an hydrokinetic project without a FERC-approved license or 
exemption.

How do I show that I am qualified to be a lessee or grant holder? 
(Sec.  285.107)

    This section describes the evidence you must submit to MMS to 
establish qualification to hold a lease, ROW grant, or RUE grant. For 
an individual, this evidence includes documents that demonstrate 
citizenship or lawful admittance of permanent residence. For an 
association, the acceptable evidence includes a certified statement 
indicating the State in which it is registered and that it is 
authorized to hold leases and grants on the OCS, or an appropriate 
reference to statements or records previously submitted to an MMS OCS 
office. A corporation must submit a statement certified by the 
corporate Secretary or Assistant Secretary over the corporate seal 
showing the State in which it was incorporated, and that it is 
authorized to hold leases and grants on the OCS, or an appropriate 
reference to statements or records previously submitted to an MMS OCS 
office (including material submitted in compliance with prior 
regulations), and evidence of the authority of the persons signing to 
bind the corporation. If MMS has qualified you to hold a renewable 
energy lease, RUE, or ROW in one OCS Region, it is our intent that you 
will be qualified to hold a renewable energy lease, RUE, or ROW in the 
other OCS Regions. We will provide more information in the 
implementation guidance that we intend to issue after the final rule is 
approved.
    Based on comments received on the NPR and to conform with changes 
made to Sec.  285.106, we added a description of the documentation that 
you may provide to MMS to demonstrate the technical and financial 
capabilities to construct, operate, maintain, and terminate/
decommission projects for which you are requesting authorization.
    We also added some documentation requirements for local, state, and 
federal entities that are comparable to those for associations and 
corporations.

When must I notify MMS if an action has been filed alleging that I am 
insolvent or bankrupt? (Sec.  285.108)

    If any action is filed alleging that a company, operating under 
these regulations, is insolvent or bankrupt, the company must notify 
MMS within 3 days of learning of the action.
    We did not make any changes to the section.

When must I notify MMS of mergers, name changes, or changes of business 
form? (Sec.  285.109)

    This section requires you to notify MMS of any merger, name change, 
or change of business form. This must be done no later than 120 days 
after either the effective date or the date of filing the change or 
action with the Secretary of the State in the State of registry. You do 
not have to request an assignment under Sec. Sec.  285.408 through 
285.411 in these cases.
    We did not make any changes to the section.

How do I submit plans, applications, reports, or notices required by 
this part? (Sec.  285.110)

    You must submit all plans, applications, reports, or notices to MMS 
at the address provided in this section.
    We changed this section, requiring that, unless otherwise noted, 
applicants must submit one paper copy and one electronic copy of all 
plans, applications, reports, or notices required by this part.

When and how does MMS charge me processing fees on a case-by-case 
basis? (Sec.  285.111)

    This section provides that MMS may charge processing fees for 
applications or requests filed under this part, on a case-by-case 
basis. The MMS may charge processing fees if the preparation of a 
document or study is necessary for MMS to evaluate or process an 
application or request. For example, MMS may charge processing fees for 
the preparation of a project-specific study, EA, or EIS.
    The Independent Offices Appropriations Act (31 U.S.C. 9701), the 
Omnibus Appropriations Bill (Pub. L. 104-133, 110 Stat. 1321, April 26, 
1996), and the Office of Management and Budget (OMB) Circular A-25, 
authorize Federal agencies to recover the full cost of services that 
confer special benefits. Under the Department of the Interior's (DOI) 
implementing policy, the Minerals Management Service (MMS) is required 
to charge the full cost for services that provide special benefits or 
privileges to an identifiable non-Federal recipient above and beyond 
those that accrue to the public at large. An application or request 
filed under this regulation conveys special benefits to recipients 
beyond those accruing to the general public and are subject to service 
fees.

[[Page 19656]]

    There may be other authorities that MMS may use to recover costs 
depending on the particular circumstances of the project and the nature 
of the evaluation or processing needed. Such authorities may include 
the Regulations for Implementing the Procedural Provisions of the 
National Environmental Policy Act (40 CFR 1506.5), Public Law 99-591 
(title I, section 101), and Public Law 110-161 (division F, title I, 
section 121).
    The MMS intends to recover those costs that we incur following the 
decision that the document processing will have a unique processing 
cost. We will not charge for costs that MMS incurred before that 
decision was made. In cases where we may charge a case-by-case 
processing fee, we will provide the applicant with a written estimate 
of the processing costs that may include a standard overhead rate, or 
the closest estimate we have based on previous work, which is similar 
in nature. The case-by-case processing fees provided for in this rule 
relate to the documents that an applicant must submit to satisfy 
various statutory and regulatory requirements pertaining to actions 
authorized by this regulation. For example, MMS statutory 
responsibilities require that we independently review any analysis 
performed by an outside contractor. This review is necessary before a 
decision can be rendered on the application. Processing fees charged by 
MMS will include contract oversight and efforts to review and approve 
documents prepared by contractors, whether the contractors are paid 
directly by the applicant or through MMS. The applicant may comment on 
the proposed fee or request approval to directly pay a contractor for 
the document, study, or other activity. If warranted, based on 
information provided, we will re-estimate our reasonable processing 
costs following the procedure established in this section.
    The MMS made several edits to this section. We expanded and 
clarified this section regarding the following issues: (1) That if a 
study or other document such as an EA or EIS is not required, MMS will 
not charge a processing fee at this time, (2) that MMS document review 
and approval and contract oversight will be recoverable costs, (3) that 
processing costs will include a standard bureau overhead rate or an 
estimate that will take projected costs into account, and (4) that 
payment instructions and terms will be provided in the final cost 
estimate.
    Based on comments, we changed the citation for 43 CFR part 4, 
subpart J, to just 43 CFR part 4. The 43 CFR part 4, subpart J is 
``Special Rules Applicable to Appeals Concerning Federal Oil and Gas 
Royalties and Related Matters.'' The 43 CFR part 4 covers all DOI 
appeals.

Definitions (Sec.  285.112)

    This section provides definitions of terms used throughout the 30 
CFR part 285 regulations. Some of the definitions used in this part are 
definitions that were established in legislation or contained in other 
regulations (i.e., 30 CFR part 250). For example, the definition of 
archaeological resource is almost identical to the definition used by 
MMS for oil and gas operations in the 30 CFR part 250 regulations. This 
definition mirrors that in the Archaeological Resource Protection Act, 
and was adopted in response to comments from the Advisory Council on 
Historic Preservation and the Departmental Consulting Archaeologist on 
our original rule on archaeology. It is consistent with the definitions 
in other Federal laws and regulations.
    We received comments on various definitions in this section. We 
revised the following definitions to reflect the comments:
    Commercial activities--we added, ``for renewable energy leases and 
grants,'' to the definition to clarify that this does not apply to 
alternate use of existing OCS facilities.
    Eligible State--we revised this definition to conform with changes 
we made concerning revenue sharing. We clarified that eligible States 
must be no more than 15 miles from the geographic center of a qualified 
project area.
    Geographic center of a project--we made minor edits to the 
definition to conform with the final rule's revenue sharing provisions.
    Income--we made minor, grammatical edits to the definition; the 
original meaning of the term has not changed.
    Lease--we changed the definition from an ``authorization'' to an 
``agreement authorizing'' the use of a designated portion of the OCS 
for activities allowed under this part.
    Lessee--we clarified the definition.
    Natural resources-- we made minor edits to the definition.
    Person--we added ``Federal agency'' to the definition, since MMS 
may issue leases, RUEs, or ROWs to another Federal agency.
    Project--we clarified the definition.
    Project area--we clarified the definition.
    Qualified project--this definition was removed because the term is 
explained in the regulations for revenue sharing.
    Qualified project area--this definition was removed because the 
term is explained in the regulations for revenue sharing.
    Revenues--we changed the meaning of revenues to clarify that it 
does not include administrative fees.
    Right-of-use and easement (RUE) grant--we made minor edits to the 
definition.
    Right-of-way (ROW) grant--we made minor edits to the definition.
    Significant archeological resource--we made minor edits to the 
definition.
    Site assessment activities--we removed ``physical characterization 
studies'' and ``baseline collection studies'' as examples of the types 
of site assessment activities, and we added technology testing as a 
type of site assessment activity. We added ``involving the installation 
of bottom-founded facilities,'' since surveys can be performed using an 
ACOE permit.
    You and your--we made minor edits to the definition.
    We, us and our--we made minor edits to the definition.

How will data and information obtained by MMS under this part be 
disclosed to the public? (Sec.  285.113)

    This section describes how MMS will handle data and information 
submitted to the MMS, including public disclosure and nondisclosure. 
The MMS will follow the applicable requirements of the Freedom of 
Information Act (FOIA) (5 U.S.C. 552) and protect data and information 
to the extent allowed by law. In response to comments we received 
regarding the protection and release of proprietary data and 
information, we clarified how we will protect data and information 
under this part and when MMS will release that data and information.
    As set forth in Sec.  285.113, MMS will not release data and 
information that we have determined to be exempt under exemption 4 of 
FOIA. However, the passage of time may erode the protections offered by 
exemption 4 of FOIA. To accommodate for this possibility, MMS has set 
forth a schedule in this section that we will follow to review such 
data and information, and any objections by the submitter, to determine 
whether release at that time would result in substantial competitive 
harm or disclosure of trade secrets. If MMS determines that the release 
of such data and information will not result in substantial competitive 
harm or disclosure of trade secrets, then MMS will release it. If it is 
determined that release will result in substantial competitive harm or 
disclosure of trade secrets, then the data and information will not be 
released at that time, but will be subject to further

[[Page 19657]]

review every 3 years thereafter. Nothing in this section is intended to 
displace or supersede MMS's obligations under 43 CFR part 2.23.

Paperwork Reduction Act Statements--Information Collection (Sec.  
285.114)

    These provisions cover Paperwork Reduction Act statements and 
information collection requirements pertaining to this part. We revised 
the burden to appropriately reflect the changes due to comments.

Documents Incorporated by Reference (Sec.  285.115)

    This section lists the industry standard documents MMS will 
incorporate by reference into the 30 CFR part 285 regulations.
    We did not make any changes to the section. In the future, we will 
incorporate new documents after MMS has thoroughly reviewed them and 
determined that they are needed and appropriate.

Requests for Information on the State of the Offshore Renewable Energy 
Industry (Sec.  285.116)

    This section allows the MMS Director (1) to request information 
from industry and other relevant stakeholders (including State and 
local agencies), as necessary, to evaluate the state of the offshore 
renewable energy industry, including the identification of potential 
challenges or obstacles to its continued development, and (2) to 
require the applicant, lessee, or grant holder to respond to a request 
in a timely manner. These requests could relate to the identification 
of environmental, technical, or economic matters that promote or 
detract from continued development of renewable energy technologies on 
the OCS. The MMS would use the information received to evaluate 
potential refinements to the OCS Alternative Energy Program that 
promote development of the industry in a safe and environmentally 
responsible manner, and to ensure a fair value for use of the Nation's 
OCS. The MMS would publish these requests for information in the 
Federal Register.
    In response to comments, MMS edited this section to include 
``regulatory matters'' as an additional issue that such information 
requests may entail. We also deleted the last sentence in paragraph (a) 
of this section.

Reserved Section (Sec.  285.117)

    Section 285.117 is reserved.

What are my appeal rights? (Sec.  285.118)

    This section describes when a decision made by MMS under this part 
may be appealed and who may appeal. Most decisions made under this part 
may be appealed according to the regulations found in 30 CFR part 290, 
subpart A. A bidder whose bid is rejected may apply for reconsideration 
by the MMS Director. If your lease is issued in order to obtain a FERC 
license or exemption, you may only appeal those decisions made by MMS 
under the authority of this subpart.
    Based on comments, we changed the citation in Sec.  285.118(b) from 
43 CFR 4.21 to 43 CFR part 4, since multiple sections of 43 CFR part 4 
apply to appeals.

Subpart B--Issuance of OCS Renewable Energy Leases

Overview for Subpart B
    This subpart outlines a process for issuing renewable energy 
leases, both for commercial production activities and for assessment or 
technology testing activities. The process will be competitive, unless 
there is a determination that no competitive interest exists. In 
addition, this subpart describes how we will determine when to use a 
competitive process for issuing a renewable energy lease and identifies 
auction formats and bidding systems and variables that we may use when 
that determination is affirmative. Finally, this subpart discusses the 
terms under which we will issue renewable energy leases. To establish a 
framework, we begin with a discussion of various types of leases that a 
prospective renewable energy developer may consider.

Types of Leases

    Leases will be required for any type of renewable energy activity 
on the OCS. We will issue two types: (1) Commercial leases and (2) 
limited leases. Although we also will convey access to areas of the OCS 
for research under some form of negotiated lease agreement as provided 
in Sec.  285.238, this discussion of types of leases focuses on the 
commercial or limited leases that we will issue directly to lessees on 
a competitive or noncompetitive basis.
    A commercial lease will provide the access and operational rights, 
subject to necessary approvals, to produce, sell, and deliver power on 
a commercial scale through spot market transactions or a long-term 
power purchase agreement. A commercial lease will be issued over the 
long term (i.e., up to approximately 30 years, with possible renewals) 
and will convey preferential rights to project easements on the OCS for 
the purpose of installing transmission and distribution systems. A 
commercial lease will not include a limit on the amount of energy to be 
produced and sold.
    A limited lease will be issued for a shorter term (i.e., up to 5 
years, with possible renewals). It will provide the access rights 
necessary to conduct activities, such as site assessment and technology 
testing that support production of renewable energy, and may provide 
the right to produce and sell power within limits set by the terms and 
conditions of the lease. Limited leases are not intended to authorize 
long-term or large-scale commercial operations. As provided in the 
proposed rule, operations on a limited lease may interconnect to 
electricity or other power distribution systems for testing and 
information gathering purposes. In response to comments on the proposed 
rule recommending authorization of the sale of power generated from 
limited leases to offset site assessment and technology testing 
expenses, we have changed relevant definitions and text in the final 
rule to allow limited amounts of electricity to be sold from such 
leases. Also, since we anticipate only small amounts of power (e.g., 5 
MW) to be generated for a relatively short duration (less than 5 
years), we do not propose to charge an operating fee for the sale of 
power from limited leases. We will charge only rentals for limited 
leases.
    In issuing limited leases authorizing use of the OCS for 
hydrokinetic activity, it will be necessary to coordinate early with 
the FERC licensing process. For example, if MMS entertains a proposal 
for a limited lease a determination from FERC will be necessary as to 
whether an exemption or license is required. Should FERC determine that 
a license or exemption would not be required for such a proposal, MMS 
would proceed with the limited lease issuance. However, if FERC 
determines that a license or exemption would be required, MMS would not 
proceed with limited lease issuance but would instead proceed with 
commercial lease issuance.
    As originally proposed, a limited lease will not convey any 
preferential rights to obtain a commercial lease to develop the leased 
area. Several comments on the proposed rule recommended that limited 
leases be set up to allow conversion to commercial leases or at least 
to give the lessee some sort of preference in subsequently pursuing a 
commercial lease for the same leasehold. Although we have not changed 
the text of the rule to provide an express commercial right preference, 
we believe that there will be ways to recognize the limited lessee in 
the commercial sale process under the final

[[Page 19658]]

rule. For example, at the time a limited lease is offered, whether 
competitively or noncompetitively, MMS will be able to indicate in the 
lease terms and conditions that acquiring a particular limited lease 
will give weight to the lessee in any subsequent conveyance of 
commercial rights. Such details will be established through the leasing 
process and published in the associated public notices. Also, the level 
of NEPA analysis for such leases will have to be commensurate with the 
type and scope of potential activities entailed with the lease rights 
conveyed. We believe that this approach for limited lessees will be 
best accommodated under a multiple-factor competitive process, which 
the rule has been revised to include as an available approach.
    The MMS believes that by offering the two types of lease, 
commercial and limited, the rule provides a developer the flexibility 
to pursue a lease that will be best suited for its needs. If a 
developer testing a technology for demonstration purposes is uncertain 
as to whether full-scale commercial activities will ultimately be 
conducted on the lease, including long-term sale of power to the grid 
to generate revenues, then a commercial lease can be obtained instead 
of a limited lease to assure full and unlimited operational rights to 
produce, sell, and deliver power. In the event that the demonstration 
facility is not technically feasible for commercial operations, the 
lessee is not obligated for the full term of the lease and may 
relinquish the lease pursuant to Sec.  285.435.
    We continue to believe that offshore renewable energy companies 
generally will prefer to acquire commercial leases rather than limited 
leases. However, we believe that providing for the issuance of limited 
leases will give all companies, including smaller entities, an 
opportunity to pursue renewable energy activities without the 
commitments and expenses entailed by a long-term commercial lease. Even 
if the rule provided for limited leases to be issued with a preference 
for subsequent commercial rights, competition for those competitive 
rights still will be required under subsection 8(p) of the OCS Lands 
Act, as amended, and NEPA compliance could require some analysis of a 
commercial development scenario.
    The most important factor for an applicant to consider in deciding 
whether to pursue a commercial lease or a limited lease is the assured 
right to full-scale commercial development of the leased site, and such 
right is included only in a commercial lease under the final rule. 
Thus, if a renewable energy project applicant is interested in 
demonstrating a particular renewable energy technology, but is unsure 
that it will ultimately lead to commercial production, we encourage 
that applicant to pursue a commercial lease because it reserves the 
full right to commercially develop the OCS site. Technology testing can 
be conducted during the site assessment term of a commercial lease. 
Pursuing a commercial lease will not obligate the lessee to remain on a 
lease for the full term of the lease. As provided in subpart D, if the 
lessee no longer intends to commercially develop the leasehold (e.g., 
results of testing prove unsatisfactory), a commercial lease may be 
relinquished by the lessee.
    Alternatively, if a company obtained a limited lease to initiate 
technology testing activities and subsequently determined that full-
scale commercial development of the OCS area is possible, that company 
may receive some advantage in pursuing the right to develop that site 
commercially, for example as a consideration in a multi-factor 
competitive process, but the issuance of a commercial lease would be 
subject to the statutory requirements concerning competition. Thus, the 
subsequent full commercial lease right is not assured to a holder of a 
limited lease. For these reasons, we anticipate that most project 
applicants will pursue commercial leases to ensure that all necessary 
rights for future development are reserved should initial testing 
activities show that a commercial project could be viable.
    The types of leases and the activities authorized are intended to 
provide for both long-term, large scale commercial production of 
renewable energy and for short-term, smaller scale activities in 
support of renewable energy production, such as site assessment and 
technology testing activities, including the limited sale of power 
generated.
    One commenter recommended providing for issuance of combined 
limited and commercial leases to facilitate necessary site assessment 
and authorize such activities in advance of the issuance of commercial 
rights. We believe such an approach is possible under the rule. It will 
require a developer to simultaneously request both a limited lease 
(e.g., for a meteorological tower) and a commercial lease. We 
anticipate that the limited lease could be processed and issued in a 
relatively short time (perhaps 6 months), allowing construction and 
operation of the meteorological tower while the commercial lease is 
processed over a longer time (1-2 years). Some renewable energy 
interests, especially wind developers, view such a process as a more 
timely and efficient approach to leasing and development. We will work 
with project proponents and stakeholders to pursue this approach if 
requested, and we plan to describe it in detail in the guidance 
document we intend to issue after the rule is promulgated.

Issuing Leases

    It is the goal of MMS to issue renewable energy leases through a 
simple and straightforward process and in a fair and equitable manner. 
The OCS Lands Act requires that leases, easements, and ROWs be issued 
competitively, unless after publication, MMS determines that there is 
no competitive interest.
    We anticipate that initial leasing of renewable energy sites on the 
OCS may be driven by unsolicited applications from project proponents, 
rather than by an MMS-initiated request for interest in an area. A 
formal Request for Interest will be part of the process for confirming 
that there is no competitive interest in the area identified in the 
unsolicited application. The process for the issuance of OCS renewable 
energy leases when no competitive interest exists is based on the 
requirements of the OCS Lands Act and is patterned after the existing 
MMS process for issuing noncompetitive negotiated agreements for the 
conveyance of OCS sand and gravel.
    Any leasing process for OCS renewable energy activity must comply 
with the applicable requirements of NEPA and other Federal laws. Table 
1, which is presented in the discussion titled, OVERVEW OF THE PROJECT 
DEVELOPMENT PROCESS, under the Federal Compliance for the leasing 
process, describes the NEPA requirements for steps in the OCS renewable 
energy process, including the lease issuance step.
    The competitive sale process for renewable energy leases is similar 
to long-standing Federal and State processes for conveying mineral 
rights. It provides several opportunities for input from interested and 
affected parties--notably State and local governments and affected 
Indian tribes--to develop appropriate lease sale terms and conditions 
including mitigation measures. The process is outlined in the following 
sections.

Call for Information and Nominations (Call)

    Once MMS decides to initiate a competitive leasing process, which 
will usually occur following a Request for Interest, the first step in 
the sale process will be to publish in the Federal

[[Page 19659]]

Register a Call for Information and Nominations (Call). Comments are 
due 45 days after the Call. The Call informs the public of the area 
under consideration for leasing; it solicits comments from all 
interested parties on areas or subjects that should receive special 
attention and analysis; it invites potential bidders to indicate areas 
and levels of interest; and it invites public input regarding possible 
advantages and disadvantages of potential leasing and development to 
the region and the Nation.
    Along with the Call, MMS will announce how it plans to document 
compliance with the requirements of NEPA. We believe that at the outset 
of the OCS Alternative Energy Program, it is likely that an EIS will be 
required for a competitive lease sale. However, it is possible, 
especially as the program matures, that less-costly environmental 
documentation, an EA, may be appropriate.

Area Identification

    After the comment period for the Call closes, MMS will use the 
information received to develop, evaluate, and recommend options for 
continued environmental analysis and for consideration of leasing. This 
process step is known as Area Identification, and it determines the 
geographical area of the proposed action to be analyzed in an ensuing 
environmental analysis document (e.g., EIS, EA), any alternatives to 
the proposed action, and mitigation measures and other issues to be 
analyzed and considered further. The MMS will strive to resolve as many 
issues as possible at this step to prevent unnecessary conflicts 
throughout the remainder of the process. Early resolutions of such 
issues serve to reduce the level of public controversy and help 
industry and the Federal Government (and ultimately the taxpayer) focus 
on promising acreage and avoid needless expense.
    In identifying the area to be studied in the environmental 
analysis, consideration is given to the level of industry interest; 
comments from State and local governments, Federal agencies, affected 
Indian tribes, environmental groups, and other interested parties; 
geologic and geophysical information; environmental conditions and 
effects of development; and other economic and social considerations. 
At this stage, the area considered for leasing will be more closely 
identified based on relevant considerations such as use conflicts. 
Public notice of the area identified usually will be provided with a 
press release and a fact sheet that includes a map of the proposed sale 
area.

NEPA Documentation

    The MMS will prepare draft environmental documentation that 
includes, but is not limited to, a description of the lease sale 
proposal, including the renewable energy resource to be developed and a 
projection of the site assessment, construction, and generation 
activities that might occur; reasonable alternatives to the leasing 
proposal; a description of the existing environment; a detailed 
analysis of possible effects on the environment, including 
socioeconomic and cumulative effects; a description of the assumptions 
on which the analysis is based; potential mitigation measures; any 
unavoidable adverse environmental effects; the relationship between 
short-term uses and long-term productivity; any irreversible or 
irretrievable commitment of resources; and the records of consultation 
and coordination with others in preparation of the document. This 
document may also describe the technology assumed or deemed necessary 
for site assessment and commercial development and operations in the 
proposed lease sale area. Pertinent published and unpublished 
investigations from academic and other institutions and organizations 
and from other Federal and State agencies are reviewed during the 
preparation of the NEPA document. When the draft is complete, it is 
made available for public review. In the case of a draft EIS, the 
document is filed with the EPA and a Notice of Availability is 
published in the Federal Register, providing for a 60-day public 
comment period.
    No sooner than 30 days after publication of a draft EIS, but within 
the 60-day comment period, one or more public hearings will be held in 
the vicinity of the proposed lease area for the purpose of receiving 
comments on the draft EIS. The MMS will announce the time and location 
in the Federal Register at least 30 days before the public hearings.
    The comments and data received through the public hearings and the 
official review process are analyzed along with any newly acquired 
information and, when appropriate, are incorporated into the final EIS 
or EA. At this stage, new stipulations or other measures to protect 
sensitive areas, or biological or other types of resources, may be 
included after comments from affected States and affected Indian tribes 
are reviewed. In some cases, new deferral options are developed and 
incorporated into the final EIS. Under typical circumstances, 3 to 5 
months after the public hearing, a final EIS is filed with EPA and a 
Notice of Availability is published in the Federal Register.

Coastal Zone Management Consistency Determination

    Concurrent with the preparation of the final EIS or other NEPA 
documentation, a CZMA consistency review and subsequent Consistency 
Determination (CD) is completed by MMS relative to each affected 
State's federally approved coastal zone management plan. Each CD 
includes a review of each State plan, analyzes the potential impacts of 
the proposed lease sale in relation to program requirements, and makes 
an assessment of consistency with the enforceable policies of each 
State's plan.

Proposed Sale Notice

    The Proposed Sale Notice is the public announcement of the terms 
and conditions of a proposed competitive lease sale, including the 
proposed provisions of the lease(s) to be issued. Generally, the 
Proposed Sale Notice will be issued after (1) completion of the final 
NEPA documentation; (2) preparation of the CD; and, (3) preparation of 
various in-house analyses of proposed lease sale economic terms and 
conditions. Information from these completed documents and analyses is 
consolidated in an executive decision memorandum that summarizes all 
proposed lease sale issues that may relate to State, local government, 
and/or affected Indian tribe comments and recommendations; 
environmental concerns; coastal zone consistency conflicts; economic 
benefits and costs; operational or legal constraints; multiple-use 
conflicts; or any other subject of concern. This memorandum also 
evaluates any prelease mitigation measures that are available or 
appropriate to resolve conflicts, issues, and concerns. On the basis of 
this memorandum and all supporting materials, decisions are made on the 
proposed terms and conditions of the sale. An attempt is made to 
balance the various economic, social, and environmental factors 
including those raised by the affected States, local governments, and 
affected Indian tribes, as well as other Federal agencies and the 
general public. A Notice of Availability of the Proposed Sale Notice is 
published in the Federal Register approximately 4 to 6 months prior to 
the proposed sale date. The Notice of Availability informs the public 
where copies of the actual Proposed Sale Notice may be obtained.

[[Page 19660]]

    The proposed notice also assists in consultation with affected 
States, localities, and Indian tribes. Officials will be sent copies of 
the Proposed Sale Notice along with a letter explaining the rationale 
for the decisions made in determining the conditions of the proposed 
sale. The officials will have 60 days to submit comments on the 
proposed competitive lease sale. These comments will provide a 
framework for the discussion and resolution of concerns that the 
affected States, localities, or Indian tribes may have on a particular 
sale.

Final Sale Notice

    After the end of the period for comments on the Proposed Sale 
Notice, a final decision memorandum will be prepared for the Director. 
If the Director decides to proceed with the lease sale after 
consideration of the comments and any other new pertinent information, 
MMS would issue a Final Sale Notice. The Final Sale Notice would 
include the date, time, and place of the sale; blocks available for 
lease; stipulations and other mitigating measures; bidding systems and 
lease terms; and other pertinent information. The Final Sale Notice is 
published in the Federal Register at least 30 days before the sale 
date.

Bid Evaluation

    After the Final Sale Notice is published in the Federal Register, 
bids submitted by qualified bidders are received by MMS. The bids, 
including bid deposit if applicable, are checked for technical and 
legal adequacy as well as financial capability. They are also 
immediately evaluated to determine if the bidder has complied with all 
applicable regulations. The MMS reserves the right to reject any or all 
bids and the right to withdraw an offer to lease an area from the sale.

Issuance of a Lease

    When a high bid is deemed acceptable by MMS, the submitter is 
immediately notified of the decision and is provided a set of official 
lease forms for execution. The successful bidder must pay within 10 
days the remaining 80 percent of the bonus bid and file the required 
financial assurance. Upon receipt of the required payments and properly 
executed lease forms, a lease is issued to the successful bidder. 
Leases usually are effective the first day of the month following the 
date they are signed by an MMS official. Within 45 days after you 
receive the lease copies, you must pay the first 6 months rent.
    Under the lease, the Federal Government conveys certain exclusive 
rights to the lessee and reserves other rights to the Government. The 
lease further spells out requirements for surety bonds, operating fee 
payments, rent payments, and assignment or other transfers.
    Following the competitive process outlined previously, a lease sale 
for renewable energy activities may be held for one type of activity 
(e.g., wind) or for various activities (e.g., wind, wave, ocean 
current, etc.). We will determine the scope of competing renewable 
energy activities based on responses to initial public notices (Request 
for Information, Call for Information and Nominations, or other Federal 
notices) issued during the leasing process, and we will clearly state 
that scope (e.g., wind, wave, ocean current, etc.) early in that 
process and the subsequent Proposed and Final Sale Notices. If we 
decide to limit competition to one type of activity (e.g., ocean 
current), we will not consider bids for any other type of activity, and 
the lease will be limited to that activity. If we decide to open 
competition to more than one type of activity (e.g., wind, wave, ocean 
current, etc.), we will consider all bids for one or more of those 
activities, and the lease may authorize one or more of those 
activities.

Noncompetitive Lease Process

    The MMS will first determine competitive interest in processing an 
unsolicited request in order to decide whether to proceed with leasing 
under a competitive or noncompetitive process. If we find that there is 
competitive interest in the lease area, we will proceed with a 
competitive lease process. If we determine that there is no competitive 
interest, then we will issue a notice of such determination. This 
section also states that if MMS processes a proposed lease area on a 
competitive basis, no unsolicited requests for leasing in that area 
will be considered for as long as that process is pending. Thus, once 
an area is subject to a lease sale process, the only way to pursue a 
lease within that area is through that competitive process until that 
process concludes. After the process concludes, and if acreage within 
the area that had been considered for lease remains unleased, 
unsolicited requests will again be considered for that acreage.
    If we determine that there is a competitive interest, we will 
proceed with a competitive process and will apply your acquisition fee 
to any bid you submit. If you choose not to bid, we will not refund 
your acquisition fee. We believe retention of your fee in this case is 
appropriate in order to discourage all but serious requests and because 
of the costs associated with processing your original request. If you 
submit a qualified bid that does not win, we will refund your deposit, 
including the amount of the acquisition fee.
    Paragraph (d) describes how MMS will proceed if it determines there 
is no competitive interest. Within 60 days after we issue a finding 
that there is no competitive interest, the prospective lessee must 
submit either a SAP for a commercial lease or a GAP for a limited 
lease. We will review the plan and conduct NEPA and other required 
analyses before simultaneously issuing the lease or grant and approving 
the SAP or the GAP.

Lease Terms

    Provisions relating to the duration of leases are set forth in 
several sections of this subpart B as well as in subpart D. Sections 
285.235 and 285.236 set finite terms for both commercial and limited 
leases while providing for automatic extensions only if necessary for 
MMS review and approval of necessary plans. The term depends on the 
type of lease (commercial or limited) and the award process. For 
example, a competitive commercial lease would have 3 terms: A 6-month 
preliminary term, a 5-year site assessment term, and a 25-year 
operations term. Sections 285.415 through 285.421 discuss suspensions 
that extend the term of a lease, and Sec. Sec.  285.425 through 285.429 
address lease renewal.

Section-by-Section Discussion for Subpart B

General Lease Information

What rights are granted with a lease issued under this part? (Sec.  
285.200)

    We may issue OCS leases for any renewable energy source. Paragraph 
(a) of this section identifies the types of renewable energy leases 
that we will make available and describes the rights that come with a 
lease issued under these regulations. In general, a lease issued under 
this part conveys the right to install and operate facilities on a 
designated portion of the OCS for the purpose of conducting commercial 
(production) activities or limited (noncommercial) activities 
supporting the production of energy from renewable energy sources. All 
rights are subject to compliance with requirements to secure approvals 
of, and then comply with, applicable plans (i.e., SAP, COP, and GAP) 
that are set forth in subpart F.
    Paragraph (a) clarifies that an MMS lessee cannot construct or 
operate a hydrokinetic project without a FERC-

[[Page 19661]]

approved license or exemption. This revision was made to conform with 
provisions in the April 2009 MOU signed by the Department of the 
Interior and FERC. Under that MOU, construction and operations of 
hydrokinetic projects on the OCS cannot commence without a license or 
exemption from FERC, except in circumstances where FERC has notified 
MMS that a license or exemption is not required. OCS wind energy 
projects are not required to obtain a FERC license.
    Under paragraph (b) of this section, leases generally include the 
right to one or more project easements without further competition for 
the purpose of installing lines through the OCS (i.e., extending to the 
State/Federal boundary) for gathering, transmission, and distribution 
of electricity; as well as pipelines for transporting other energy 
products (i.e., hydrogen); and appurtenances on the OCS as necessary to 
conduct operations. These may include the OCS segment of cables, 
pipelines, and other structures necessary to transmit electricity or 
transport other energy products produced from the OCS to shore. The 
lessee will apply to MMS for the project easement as part of the COP or 
GAP. When we approve the proposed plan and project easement, an 
addendum covering the project easement will be incorporated in the 
lease. Additional project easements and revisions may be authorized 
through the plan revision process. One commenter recommended that 
easements be identified earlier in the process (i.e., in the lease or 
in the SAP). We believe such an approach would be premature at this 
stage in the process and impractical, but we will work with applicants 
and stakeholders as we implement the rule. Also, project easements that 
run through other leases or grants may be accommodated under the rule, 
and such situations will be addressed in the implementation guidance we 
intend to issue after the rule is approved.
    Ancillary activities that are not associated with an OCS renewable 
energy lease (e.g., a transmission line or support structure located in 
Federal waters to support a project in State waters or a commonly 
shared line supporting multiple leases) will be permitted and managed 
as a separate ROW grant or RUE grant under subpart C.
    Paragraph (c) of this section provides for phased lease 
development. The commercial lease framework will accommodate multi-
phase project development as is commonly used for onshore utility-scale 
wind projects (see Sec. Sec.  285.200(c) and 285.629). The lease 
applicant must inform us of its intent to develop a project in multiple 
phases and would need to lease from the outset all of the acreage 
necessary for the planned full build-out. If the applicant for a 
commercial lease phases in operations, the applicant must pay rent on 
the portion of the lease that is not generating electricity and 
operating fees on the portion of the lease that is generating 
electricity. We may waive the rent for the acreage on which activities 
are deferred, as provided by subpart E, on a case-by-case basis for any 
lease issued under this part. As additional acreage is developed, 
operating fees would be charged in place of rentals, as appropriate. If 
the lessee decides not to develop the additional acreage, it may 
relinquish that acreage, or MMS may contract the lease, as provided in 
Sec. Sec.  285.435 and 285.436. Multi-phased project development will 
have to comply with NEPA, CZMA, and other applicable laws.
    We did not make any changes to this section.

How will MMS issue leases? (Sec.  285.201)

    As required by subsection 8(p) of the OCS Lands Act, MMS must issue 
leases, easements, or ROWs for OCS renewable energy activities on a 
competitive basis unless we determine after public notice that there is 
no competitive interest. If we determine that there is competitive 
interest, we will conduct a fair and open competition process. When we 
receive an unsolicited request for a lease, we will make a 
determination if a competitive interest exists by first issuing a 
public notice of the proposed lease. In the public notice, we may offer 
additional areas for leasing. After considering the comments received 
on the notice, as required by the OCS Lands Act, section 8(p), we will 
issue a determination that there is, or is not, competitive interest in 
the proposed lease. If two or more project proponents express interest 
in leasing the same area of the OCS (overlapping partially or 
completely), we will conclude that competitive interest exists and 
conduct a competitive lease sale.
    We are aware that instances of partially overlapping interests may 
occur and requested comments on this issue. For example, if proposed 
Project A entails 10,000 acres for generation of 500 MW and Project B 
entails 2,000 acres for 100 MW, and there is an overlap of 1,000 acres, 
we will have to determine whether there is competitive interest in all 
or part of the acreage requested. The following six alternative 
approaches for addressing such a situation were offered for comment 
with the proposed rule.
    (1) Offer both the Project A and Project B areas and award a lease 
for one or the other to the high bidder. If a cash bonus is a bid 
variable, it could be based on either the total or the amount per acre, 
and if an operating fee is a bid variable, it could be based on the 
total or the amount per MW of proposed capacity.
    (2) Offer and award a lease through competition for only the 
overlapping 1,000-acre area and then follow with a noncompetitive lease 
issuance for the remaining 9,000 acres under Project A and 1,000 acres 
under Project B.
    (3) Offer to lease individual tracts covering the area of interest, 
designated as legal subdivisions of a standard OCS lease block of 9 
square miles. Bidders that value specific tracts most highly could win 
leases through a simultaneous tract offering, and subsequently propose 
operations on multiple \1/16\ legal subdivisions (a \1/4\\1/4\ of a 
lease block) to obtain possible synergies.
    (4) Offer the combined Project A and B areas as one lease and award 
the lease to the high bidder (the winning lessee could then relinquish 
excess acreage).
    (5) Offer standard block sizes or legal subdivisions of those block 
sizes and allow bidders to ``package'' those blocks in a bidding unit 
(package bidding). Identify the various features of the auction, e.g., 
bidder eligibility to compete and to remain active in various rounds, 
information to be released between rounds, rules for ending the 
auction, method for choosing the provisional high bidders, restrictions 
on bidding in subsequent rounds, etc.
    (6) Rely on coordination and consultation efforts with State and 
local governments to identify one preferable project area to be offered 
and awarded to the high bidder.
    The consensus of the comments we received is that all of these 
approaches are reasonable. Some commenters recommended an additional 
approach that would give the competing project proponents the 
opportunity to adjust their areas of interest to eliminate overlapping 
proposed lease areas. We have not adopted this recommendation due to 
potential adverse effects on competition.
    We also are aware that there will be other instances in which 
multiple projects could be proposed in the same general area with no 
actual geographic overlap, but the number of lease tracts may need to 
be limited based on regional or local needs and concerns. For example, 
a State or locality may identify a need for a certain amount of 
renewable energy generation from an OCS source. If the number of

[[Page 19662]]

prospective leases proposed for an area greatly exceeded the projected 
demand, we may limit the number of tracts that could be offered. Such a 
case could be addressed by proceeding with an intertract competition in 
which multiple tracts could be offered for lease in the auction formats 
described in the section-by-section summary (see Sec. Sec.  285.220 
through 285.223), but the number of tracts to be awarded would be 
limited. Although it would be our preference to use consultation--
notably with the affected States and local communities, as well as the 
applicants--to identify the appropriate tract or set of tracts to be 
offered for sale, we have decided to preserve the option for conducting 
intertract competitive auctions. Such an approach is authorized under 
the rule, so we have not changed the regulatory text.
    Generally, we believe that priority should be given to leasing 
tracts for commercial operations. We may consider only issuing limited 
leases in areas in which there is no interest in commercial leasing.
    Once we make the determination about competitive interest, we will 
proceed with issuing leases under the appropriate process described in 
this subpart. The competitive process is set forth in Sec. Sec.  
285.210 through 285.225, and the process for issuing leases when no 
competition exists is set forth in Sec. Sec.  285.230 and 285.231. The 
MMS will prepare an OCS renewable energy lease form and provide or 
reference such a lease form in a public notice. The approved lease form 
(or forms) for OCS renewable energy will be developed separately from 
the rulemaking and in consultation with interested and affected 
parties. This approach is designed to give us the flexibility to 
accommodate all possible renewable energy activities and adapt forms as 
necessary.

What types of leases will MMS issue? (Sec.  285.202)

    This section states that MMS may issue leases for one or more types 
of activity relating to assessment and production of renewable energy 
and may issue commercial or limited leases as discussed previously in 
the overview of this subpart. A single-purpose lease will authorize one 
type of activity (e.g., wind power generation), whereas a multi-purpose 
lease will authorize multiple types of activity (e.g., both wind and 
wave power generation). A lease issued for one type of renewable energy 
activity will not necessarily preclude subsequent leases for other 
types of activities in that same area. For example, we may conduct a 
lease sale for a wind energy project and then conduct a lease sale for 
a wave energy project in that same area. While the initial lessee in 
such a case would be restricted to a wind energy project development, 
we may authorize additional types of OCS renewable energy activities in 
the same OCS area to the extent that such activities are compatible and 
do not unreasonably impede the ability of the existing wind energy 
project to conduct operations. Unless the original lease authorizes 
more than one type of renewable energy activity, expanding the 
authorized activities to include other kinds of renewable energy would 
require the issuance of a new lease or leases. We will not issue access 
rights for oil, gas, or any other minerals under this part.
    We did not make any changes to this section.

With whom will MMS consult before issuance of a lease? (Sec.  285.203)

    As directed by subsections 8(p)(4) and (7) of the OCS Lands Act or 
by other relevant Federal statutory requirements (e.g., ESA and 
Magnuson-Stevens Fishery Conservation and Management Act (MSA)), MMS 
will coordinate and consult with relevant Federal agencies (including 
the Department of Defense and those agencies involved in planning 
activities that are undertaken to avoid conflicts among users and 
maximize the economic and ecological benefits of the OCS, including 
multifaceted spatial planning efforts), the Governor of any State, the 
executive of any local government that may be affected by a renewable 
energy lease, and affected Indian tribes. As provided in Sec.  
285.102(e), we may invite any Governor of an affected State or 
government executive of an affected local government to participate in 
a joint task force or other joint planning or coordination agreement if 
we are considering offering or issuing leases (or grants). 
Participation in a task force would give the parties opportunities to 
contribute to the planning process and access to nonproprietary 
information. This section has been revised to include affected Indian 
tribes. In response to comments, we have also revised this section to 
differentiate between general consultation and coordination under this 
rule and the consultations with Federal agencies that are mandated by 
other laws (e.g., ESA).
    We urge project proponents that plan to pursue renewable energy 
activities on the OCS to conduct preliminary outreach early in the 
process by contacting interested and affected parties about their 
proposals. We believe that it is particularly important for project 
proponents that plan to produce and deliver electricity to existing 
onshore distribution systems to consult with involved States and 
localities to establish power generation needs and to become aware of 
pertinent regulatory requirements before pursuing OCS commercial 
development and production rights. Early communication between project 
proponents and the States and localities that would be most affected by 
any project development and that would regulate associated onshore 
facilities, may ensure that the project will be compatible with and 
support any renewable portfolio standards, policies on the location of 
transmission and other support facilities, and any other relevant 
factors.

What areas are available for leasing consideration? (Sec.  285.204)

    We intend to consider offering for lease any area of the OCS that 
is appropriately platted, except areas prohibited from leasing. 
Subsection 8(p)(10) of the OCS Lands Act prohibits renewable energy 
leasing in any area of the OCS within the exterior boundaries of any 
unit of the National Park System, National Wildlife Refuge System, 
National Marine Sanctuary System, or any National Monument. In 
administering this program, the Secretary will take into account other 
uses and may decide not to offer portions of the OCS for leasing under 
this part or may restrict operations.
    The areas we actually make available for renewable energy leasing 
are likely to be determined through a process that assesses different 
types of renewable energy resources and potential environmental impacts 
and other relevant information on a national, regional, or more area-
specific basis. The assessment process will include coordination and 
consultation with Federal, State, and local governments; affected 
Indian tribes; and other interested and affected parties and may entail 
the establishment of task forces as discussed previously. The MMS will 
consider input from the task forces--as well as other national, 
regional, local, and tribal planning and coordination mechanisms--in 
determining appropriate siting of renewable energy projects and leasing 
priorities. Based on such assessments, we have the discretion when 
making the determination whether to offer areas for leasing. We intend 
to use our existing system of OCS regions, planning areas, official 
protraction diagrams, and lease blocks to designate, delineate, and 
describe areas of the OCS under the OCS Alternative Energy Program.

[[Page 19663]]

    We did not make any changes to this section.

How will leases be mapped? (Sec.  285.205)

    This section states that MMS will prepare and use necessary leasing 
maps and official protraction diagrams as it does for mineral leasing 
on the OCS (e.g., 30 CFR part 256.8)
    We did not make any changes to this section.

What is the lease size? (Sec.  285.206)

    We will determine the size for each lease on a case-by-case basis 
to ensure that it is an appropriate size to accommodate the anticipated 
activities. The lease size will accommodate buffers or setbacks as 
necessary. The process for the issuance of all leases will provide 
public notice of the lease size. We plan to delineate leases by using 
mapped OCS blocks, portions of such blocks, or aggregations of such 
blocks. For example, a limited lease supporting a small data gathering 
or technology testing facility might require only a small part of a 3-
mile by 3-mile OCS block. In such a case, the lessee could acquire (or 
retain after originally acquiring a larger area) an aliquot part as 
small as a quarter-quarter (i.e., \1/16\) of a block. On the other 
hand, it is likely that a typical commercial-scale renewable energy 
project would result in the issuance of one lease encompassing several 
contiguous OCS blocks.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.207 through 285.209)

    Sections 285.207 through 285.209 are reserved.

Competitive Lease Process

How does MMS initiate the competitive leasing process? (Sec.  285.210)

    This section establishes a process for us to solicit proposals to 
develop the renewable energy potential on the OCS. We may use a general 
Request for Interest to gauge interest in renewable energy leasing 
anywhere on the OCS or a specific Request for Interest to assess 
interest in specific areas after receiving an unsolicited leasing 
proposal. Any Request for Interest will be published in the Federal 
Register.
    Depending on the level and extent of interest and review of 
comments, we may formulate a nationwide or regional program schedule of 
lease sales, or we may initiate individual competitive lease sales on a 
case-by-case basis without an overarching program schedule. Once a 
determination is made to offer an area(s) for leasing, we would 
initiate a renewable energy lease sale process.
    We did not make any changes to this section.

What is the process for competitive issuance of leases? (Sec.  285.211)

    This section lays out the discrete steps we propose to follow in 
preparing for and holding a lease auction and issuing leases. These 
steps include a Call for Information and Nominations (Call), an Area 
Identification, a Proposed Sale Notice, and a Final Sale Notice as 
explained in the description of the competitive leasing process 
presented previously.
    We received several comments recommending that we provide for 
accepting the results of competitive processes conducted by States and 
utilities to select developers of offshore wind generation projects. 
Notably, during the time that MMS has been promulgating this rule, the 
States of Delaware, New Jersey, and Rhode Island have conducted 
competitive processes and have selected companies to develop wind 
resources on the OCS. We believe that the pre-existing State processes 
are relevant to the competitive processes that MMS is required to 
conduct following approval of this rule. We intend to do so by using a 
competitive process that considers, among other things, whether a 
prospective lessee has a power purchase agreement or is the certified 
winner of a competitive process conducted by an adjacent State. We also 
may consider a similar approach to recognize the winners of 
competitions held by States in the future. There is additional 
discussion of this issue in our explanation of multiple-factor bidding 
provided in the next section.
    In response to a comment pointing out a typographical omission from 
the proposed rule, we have revised Sec.  285.211(b)(2) to say, ``* * * 
human, marine, and coastal environments * * *''
    We have also added time periods for the steps in the competitive 
lease issuance process, and we have cited affected Indian tribes in 
paragraph (b).

What is the process MMS will follow if there is reason to believe that 
competitors have withdrawn before the Final Sale Notice is issued? 
(Sec.  285.212)

    This is a new section MMS added in response to comments that we 
clarify what will happen in the competitive sale process if competitors 
withdraw. If, before the Final Sale Notice is issued, MMS has reason to 
believe that competitors have withdrawn and competition no longer 
exists, we may decide to end the competitive process. We will issue a 
public notice of Request for Interest and consider comments received to 
confirm that there is no competitive interest. If, after we have issued 
the public notice, we determine that there is no competitive interest 
in the lease area, and one party wishes to acquire a lease, we will 
discontinue the competitive process and will proceed with the 
noncompetitive process set forth in Sec. Sec.  285.231(d) through (i), 
and the acquisition fee as specified in Sec.  285.502(a) must be 
submitted with the SAP or GAP. However, if MMS determines that 
competitive interest in the lease area continues to exist, we will 
continue with the competitive process set forth in Sec. Sec.  285.210 
through 285.225.

What must I submit in response to a Request for Interest or a Call for 
Information and Nominations? (Sec.  285.213)

    This section describes the type of information we seek from 
potential lessees in response to a Request for Interest or a Call. We 
may issue a broad request for interest to be used as a basis for 
developing a national or regional schedule of renewable energy lease 
sales, or we may issue a tract-specific request to be used to determine 
competitive interest in a particular area that has been proposed for 
leasing. We will issue a Call as the first step in a competitive lease 
sale process to elicit information from all interested and affected 
parties concerning proposed leasing activities and the existing 
conditions that may affect or be affected by those activities. In all 
cases--responding to a general or specific Request for Interest or a 
Call--we will require prospective lessees to submit the same types of 
information. That information will include: The area of interest for a 
possible lease; a general description of objectives and the facilities 
needed to achieve those objectives; a general schedule of proposed 
activities, including those leading to commercial production or other 
approved operations; available and pertinent data and information 
concerning renewable energy resources and environmental conditions in 
the area of interest, including energy and resource data and 
information used to evaluate the area of interest; devices and 
infrastructure involved; anticipated power production and likely 
purchasers; a statement that the proposed activity conforms with State 
and local energy planning requirements, initiatives or guidance, as 
appropriate; documentation showing that the applicant is qualified to 
hold a lease;

[[Page 19664]]

and any other information specifically requested in the Federal 
Register notice.
    We believe that this information is necessary for MMS in developing 
leasing schedules, determining competitive interest for unsolicited 
proposals, and proceeding with renewable energy lease sales. We also 
believe that such information should be readily available from 
prospective lessees and that this requirement poses no undue burden. In 
cases where a prospective lessee has already submitted the required 
information, we will not require it to be submitted subsequently. For 
example, if a project proponent responds to a broad or specific Request 
for Interest for an area that MMS subsequently decides to offer in a 
lease sale, that project proponent will not have to resubmit 
information in response to the Call for that sale. Only those that have 
not previously expressed interest and submitted information will be 
expected to provide the required information in response to the Call.
    In addition to the items listed, we believe that information 
relating to potential power markets that could be served, and proposed 
conventional and renewable energy projects that are located onshore and 
offshore and could serve those markets, is important. Also, 
environmental, technical, and economic information on similar projects 
elsewhere in the world that may be relevant to your proposed area(s) 
may be necessary for our deliberations.
    Some comments indicated that this section meant that MMS may 
require a response to a Request for Information or a Call. Clearly, MMS 
cannot mandate such responses, but we can specify the information we 
need from those who opt to respond and participate in the leasing 
process. We believe the respondents should recognize that it is also in 
their best interest to submit complete and accurate information about 
their leasing intentions to enable proper consideration by MMS.
    We have made two changes to this section. We added to Sec.  
285.213(d) a statement that we will withhold trade secrets and 
commercial or financial information that is privileged or confidential 
from public disclosure under exemption 4 of the FOIA. Also, we deleted 
Sec.  285.213(e) and renumbered subsequent sections because we can 
expect affected State(s), rather than the prospective lessee, to submit 
information communicating the State perspective on proposed projects 
and associated leasing.

What will MMS do with information from the Requests for Information or 
Calls for Information and Nominations? (Sec.  285.214)

    This section states that we will use the information we receive to 
identify lease areas, develop options for conducting environmental 
analysis and adopting lease provisions, and prepare documentation to 
satisfy relevant Federal requirements, such as NEPA, CZMA, ESA, and 
MSA.
    For purposes of Federal consistency, we will treat renewable energy 
competitive lease sales as Federal agency activities and follow the 
requirements of subsection 307(c)(1) of the CZMA. That means we must 
determine if the effects to any land or water use or natural resource 
of a State's coastal zone from the competitive lease offering are 
reasonably foreseeable and comply with the appropriate Federal 
consistency regulations in 15 CFR part 930, subpart C.
    We did not make any changes to this section.

What areas will MMS offer in a lease sale? (Sec.  285.215)

    Under this section, the areas we will offer for lease will be those 
identified pursuant to Sec.  285.211(b). However, the offered area 
could be subsequently reduced through the lease sale process. This 
section also states that no further nominations for a lease sale will 
be accepted after the Call for Information and Nominations closes. 
Comments on this provision asked for clarification that such areas will 
be available for nomination in subsequent nomination and leasing 
processes. We believe that, as written, this section should be 
understood to mean that nominations are required to be submitted during 
the comment period following a Call for a particular lease sale 
process. After that particular lease sale process concludes, parties 
may submit unsolicited nominations for areas that were within the scope 
of that sale, and MMS will give them full consideration under the 
processes outlined.
    We did not make any changes to this section.

What information will MMS publish in the Proposed Sale Notice and Final 
Sale Notice? (Sec.  285.216)

    We will publish Proposed Sale Notices and Final Sale Notices in the 
Federal Register for each lease sale. Proposed Sale Notices and Final 
Sale Notices will provide information pertaining to:
    <bullet> The area offered for leasing;
    <bullet> Proposed and final lease terms and conditions including 
lease size, lease term, payment and financial assurance requirements, 
performance requirements, and site-specific lease stipulations;
    <bullet> Auction details including bidding procedures and systems, 
the bid variable and minimum bid, the bid deposit, the place and time 
for filing bids, and the place, date, and hour for opening bids;
    <bullet> The official MMS lease form to be used or a reference to 
that form;
    <bullet> Bid evaluation criteria we will use and how the criteria 
will be used in decision-making for awarding a lease;
    <bullet> Award procedures including how and when we will award 
leases and how we will handle rejected bids or applications;
    <bullet> Procedures for appealing the lease issuance decision; and
    <bullet> Execution of the lease.
    The Proposed Sale Notice will invite comments from all interested 
and affected parties. We expect that the use of such a notice in the 
process of offering leases for development of OCS renewable energy 
sources will provide a valuable opportunity for us to consult on the 
selection of appropriate competitive leasing procedures and the 
formulation of the details of the leases to be issued. After 
considering comments on the Proposed Sale Notice, we will revise and 
publish a Final Sale Notice. The final steps in the leasing process 
will be conducting the auction and awarding the leases.
    We received comments recommending that we should delete the 
regulatory reference to minimum bids and provide additional guidance as 
to the bid evaluation criteria MMS might announce and apply. We have 
decided to retain the regulatory reference. The MMS will set a minimum 
bid to inform auction participants of the smallest bid amount that 
could be accepted in a sealed bid auction or to set the level for 
opening bids in an ascending bid auction. Potential lessees should find 
this information helpful when making financial preparations prior to 
participating in an auction. Further, minimum bids can serve as a 
deterrent to speculative bidding from companies who either are less 
financially sound than is desirable, do not plan to undertake 
investments in an expeditious manner, or whose main goal is to make a 
profit by re-selling the property rights. We will address bid 
evaluation procedures generally in implementation guidance that we 
intend to issue after the rule is approved, and we will publish the 
details of bid evaluation criteria in the sale notices.

[[Page 19665]]

    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.217 Through 285.219)

    Sections 285.217 through 285.219 are reserved.

Competitive Lease Award Process

What auction format may MMS use in a lease sale? (Sec.  285.220)

    This section, as well as the following two sections, describes the 
auction formats and bidding systems that will be available to MMS for 
awarding renewable energy leases on a competitive basis. In the 
proposed rule, we set forth three auction formats: Sealed bidding, 
ascending bidding, and two-stage bidding. In response to comments, we 
have added a fourth auction format that considers multiple factors 
relating to proposed OCS renewable energy projects. This additional 
format is described in detail in the next section. The concept of 
package bidding, introduced in Sec.  285.220 and applicable to all the 
auction formats described in this section, is also detailed in this 
section.
    The sealed bidding format is mandated for oil and gas lease sales 
by subsection 8(a) of the OCS Lands Act. In contrast, no particular 
auction format is required for renewable energy lease sales conducted 
under subsection 8(p) of the OCS Lands Act.
    For each auction, we will establish a sale area or sale areas based 
on information received in response to Request for Interest and Call 
notices, and establish a bid variable, a minimum acceptable bid, and 
the criteria for bid acceptance. We will include specific details of 
the selected auction format in notices published in the Federal 
Register including the Proposed Sale Notice and the Final Sale Notice. 
The sale notices will include details on the bidding process, such as 
the auction format, bidder eligibility, bidder deposits, bid variable, 
minimum bid amounts, bid increments, criteria for ending or continuing 
the auction, method for determining the provisional winning bidder(s), 
and bid adequacy considerations. A general description of the four 
auction formats from which we propose to choose follows.
    Sealed Bidding will consist of a single round of bidding and 
provide for each lease sale participant to submit a single bid by post 
or email, after which we will publicly announce the high bidder. We 
will specify in the Call either a cash bonus or an operating fee rate 
for the bid variable. This auction format is administratively 
compatible with the application of a ranking and filtering procedure to 
identify the set of highest bids per tract before MMS decides which of 
those tracts to lease. This ranking of high bids can serve as a bid 
adequacy mechanism for determining which high bids to accept. It also 
has the advantage of creating competition for lease rights across 
tracts when competition for individual leases is absent. This procedure 
is known as ``intertract competition.''
    Ascending Bidding involves multiple rounds of bidding and provides 
for participants to submit increasing sequential bids over a specific 
time period. Again, we will specify either a cash bonus or an operating 
fee rate for the bid variable. Bids may be submitted orally or 
electronically (e.g., internet). If bidding activity continues until 
the deadline, the time period for bidding may be extended if warranted 
by additional bidding activity.
    Two-stage Bidding combines the previous two formats, sealed and 
ascending bidding. Generally, we will require interested bidders to 
offer a minimum cash bonus to join the auction. In the most likely 
process formulation, participants are expected to submit ascending bids 
(e.g., operating fee rate, cash bonus, etc.) in the first stage until 
all but two bidders drop out or more than one bidder offers to pay the 
maximum bid amount specified by MMS. The auction will then move to the 
second stage, where the remaining participants typically will offer a 
sealed bid on a bid variable not employed in stage one. However, we 
reserve the option to conduct the two-stage auction using sealed or 
ascending bidding in either or both stages, and to select the bid 
variables in each stage.
    Multiple-factor Auction may be employed to rank proposals, 
resulting in a lease award to the bidder making what MMS perceives is 
the best offer. Single or multiple financial bid variables may be 
considered (e.g., rental rate, operating fee, variable cash bonus, or 
combination). Nonmonetary variables may also be considered including 
technical merit, timeliness, financing and economics, the environment, 
public benefits, consistency with State and local needs and 
requirements, or other factors.
    Subject to the bid adequacy requirements referenced in Sec.  
285.222, typically the qualified bidder offering the highest cash bonus 
or the highest fee rate, depending on which deciding bid variable is 
used, will win the lease. When there are multiple leases, intertract 
competition could be used to decide which of the high bids to accept 
under the category of bid adequacy.
    We received numerous comments on this section of the rule, many 
recommending more subjective lease issuance processes. We revised the 
rule at Sec. Sec.  285.220 through 285.224, and Sec.  285.501, to 
accommodate a multiple factor auction format for competitive lease 
award. A method of assessing multiple factor bids may be employed to 
rank proposals, resulting in a lease award to the bidder making what 
MMS perceives is the best offer. Single or multiple financial bid 
variables may be considered along with nonmonetary variables, such as 
technical merit, timeliness, financing and economics, the environment, 
public benefits, consistency with State and local needs and 
requirements, or other factors. While we have included the multiple 
factor auction format as an option, we are concerned that this format 
would not meet the objective under the mandate of subsection 8(p)(3) of 
the OCS Lands Act (43 U.S.C. 1337(p)(3)), which is to issue renewable 
energy leases through a simple and straightforward process in a fair 
and equitable manner. This auction format is likely to be less 
transparent to the public and more susceptible to favoritism and 
manipulation by selected parties than other auctioning formats. 
However, MMS is willing to work with States and other interested 
organizations to develop a procedure that would meet the OCS Lands Act 
mandate.
    Some entities submitted a preference for sealed bidding rather than 
ascending bidding. In their view, a single round of bidding is a more 
equitable process than ascending bidding and is the simplest, most 
straight forward method. One comment related a sealed bidding auction 
format as proposed by MMS to procedures for placing a bid in response 
to a request for proposal (RFP). Another comment explained that, to the 
extent there is competitive interest, ascending bidding will assure MMS 
that it is receiving the maximum amount each of the participants is 
willing to bid for a lease and help satisfy MMS's concerns regarding a 
``fair return.'' Other commenters criticized the sealed bid process 
because of the risk that one of the bidding parties will offer an 
unnecessarily high bonus bid, depriving that entity of important 
capital that it will need to develop the lease and potentially other 
leases. We recognize that under certain conditions, a sealed bid 
auction may yield better results than an ascending bid auction. It is 
also true that if different conditions prevail, an ascending auction 
may maximize the public's expected revenue. The MMS will make a 
determination regarding the

[[Page 19666]]

type of auction to be used based on whether the choice would encourage 
companies to participate in the auction and result in leasing to 
developers that have the financial and technical means to successfully 
develop a renewable energy project. The MMS will review information 
received in response to a Request for Interest and a Call before 
announcing a sale design and auction format in a Proposed Sale Notice.
    On the issue of package bidding, the general consensus of the 
comments supported such an approach, although there were some concerns 
expressed about its complexity. This approach was possible under the 
rule as proposed, and MMS believes that package bidding should be 
available under the final rule. Package bidding used in the auction 
formats described in this section would allow project proponents to 
identify possible synergies between tracts, then delineate a lease area 
comprised of those tracts, and bid the value of those tracts based on 
the development potential of the overall proposed project. Before 
making the decision to hold an auction that featured the option to 
submit package bids, MMS would analyze information submitted in 
response to the competitive lease process given in Sec. Sec.  285.210 
through 285.215 to determine if it was in the public's interest. If 
utilizing such an approach is beneficial and selected, MMS may choose 
among different approaches to implement package bidding. For example, a 
simultaneous ascending auction could be held, where MMS believes that 
package bidding would provide the best means by which bidders may 
compete for leases they need for project development. Bidders would 
submit a bid consisting of multiple lease blocks whereby the bid value 
would represent the total value of those lease blocks. The 
determination of winning packages can be made through the application 
of a software algorithm that maximized the sum of the package bids 
submitted in successive rounds. As a simpler, alternate approach, a 
bidder's choice ascending auction could be held in which the high 
bidder in each round earns the right to choose one tract, or multiple 
tracts to form a logical development unit, from all tracts offered.
    We did not make any changes to this section other than the addition 
of the multiple-factor auction format.

What bidding systems may MMS use for commercial leases and limited 
leases? (Sec.  285.221)

    A bidding system is composed of various elements, the most 
important of which are the bid variable(s) and the payment 
requirements. The bid variable is generally subject to a minimum bid 
level and potentially to a reservation price, both established by MMS. 
The minimum bid level represents the entry level of the bid, i.e., the 
smallest bid amount that MMS would consider acceptable. Usually the 
same minimum bid level will be set across certain classes of tracts. 
The reservation price is a tract-specific measure that represents an 
estimate of the underlying value of the tract when used for a specific 
purpose. In cases where sufficient competition is deemed to exist, a 
reservation price typically will not be needed to ensure that a fair 
return is obtained in the auction for the individual tract. For a 
renewable energy lease, we will choose from six different bid systems:
    (1) A cash bonus with a constant fee rate (decimal);
    (2) A constant operating fee rate with a fixed cash bonus;
    (3) A sliding operating fee rate with a fixed cash bonus;
    (4) A cash bonus and a constant operating fee rate;
    (5) A cash bonus and a sliding operating fee rate; or
    (6) A multiple-factor combination of nonmonetary and monetary 
factors.
    The fee rate in this context is analogous to a royalty rate used in 
oil and gas leasing. If a cash bonus is the bid variable, the operating 
fee each year will be based on the formula in subpart E. If the fee 
rate is the bid variable, the cash bonus will be fixed, and the 
operating fee will be calculated using the fee rate offered by the 
winning bidder as a part of the formula in subpart E of this 
regulation. The two-bid variable systems, cash bonus and operating fee 
rate, either constant or as a sliding scale, will be used only in a 
two-stage auction.
    The resulting annual operating fee in these two-stage bidding 
auctions will be derived from the formula established in subpart E of 
this part which is based, in part, on megawatts of installed capacity 
and the prevailing market rates for electricity sold in the consuming 
region targeted by the lease. Values for the formula components, 
excluding the fee rate when it is used as the bid variable, will be 
established in the Final Sale Notice or in the final public notice in 
the case when no competitive interest exists for a proposed lease.
    For limited leases, the cash bonus will be the only permissible bid 
variable. The MMS imposes no operating fee for limited leases because 
such leases could produce and sell power only within limits set by the 
terms and conditions of the lease; limited leases will not authorize 
long-term or large-scale commercial operations. Since we anticipate 
only small amounts of power (e.g., 5 MW) being generated for relatively 
short duration (less than 5 years), we do not propose to charge an 
operating fee for the sale of power from limited leases. We will charge 
only rentals for limited leases. This also means we will not be using a 
two-stage auction format for issuing limited leases.
    One renewable bidding system that we considered but rejected in the 
proposed rule is a multiple-factor system. Such a system consists of 
many different bid variables as factors, both quantitative and 
qualitative, in determining the winning bid in a competitive process. 
This is the approach used in Denmark, which has the most developed 
offshore wind program in the world and issues licenses based on 
multiple factors (e.g., project design, operator experience, etc.).
    However, we received numerous comments recommending that we 
reconsider the multiple-factor approach, and based on those comments, 
we revised the rule at Sec. Sec.  285.220 through 285.224, and Sec.  
285.501, to accommodate a multiple-factor auction format for 
competitive lease award. The multiple-factor auction format may be 
employed to rank proposals, resulting in a lease award to the bidder 
making what MMS perceives is the best offer. Single or multiple 
financial bid variables that may be considered include a rental rate 
and operating fee, with a fixed or variable cash bonus or a fixed entry 
fee. Nonmonetary variables may also be considered including technical 
merit, timeliness, financing and economics, the environment, public 
benefits, consistency with State and local needs and requirements, or 
other factors.
    Under the multiple-factor auction format, MMS will publish criteria 
for winning bid determinations in the Final Sale Notice. A panel made 
up of members selected by MMS, or members from MMS, would assess and 
rank the proposals. Possibly, a quantitative framework may be devised 
that would weigh the importance of each factor and provide a rating 
scheme for bids placed on the factors. Further, it is possible that a 
negotiation stage may be included in the bid assessment criteria, to be 
used if it becomes necessary to modify a proposal prior to acceptance. 
The MMS will coordinate with States and other stakeholders, as 
appropriate, to establish procedures that are best designed to assure 
that the winning proposal will result in the selection of the most

[[Page 19667]]

worthy offer and provide a fair return to the public.
    Multiple factor bidding may be useful if MMS identifies a market 
failure in a purely monetary auction format. In certain circumstances, 
nonmonetary factors involving important public policy matters may not 
be reflected in auctions where a fiscal term measure is applied to 
determine the winning bidder. Examples of such market failure include 
situations where public benefits could accrue from innovative research 
and technology development or situations where public benefits could 
accrue from the abatement of existing or potential carbon emissions.
    In the first example, two or more project proponents want to prove 
a new project concept using technology that is not available on a 
commercial scale. The expected value of this type of project is 
marginal; so the proponents would seek the minimal initial cost of 
obtaining access rights, perhaps to a level even lower than the cost of 
obtaining a lease when no competition exists, in order to have more 
capital for facility expenses. When more than one project proponent 
indicates an interest in acquiring leases to develop resources in the 
same area, MMS might hold a multiple-factor auction to encourage the 
advancement of the technology. The MMS could design the bidding factors 
specifically for the type of project proposed, giving consideration to 
the estimated resource potential. It is possible that MMS could give 
the winning bidder, in a multiple-factor auction, an opportunity to 
prove the project concept and profitability before requiring payment of 
a significant share of the cash flow. The Government would take on the 
role of supporting a promising project concept impeded by financing 
difficulties for public policy reasons. While MMS originally chose to 
exclude this option from the proposed rule, comments indicated that 
this method of lease award may advance the development in wave energy 
technology, and so it has been added to the auction format regulations 
in this rule.
    In the second example, MMS may choose to use a multiple-factor 
auction to advance the synchronization of State and Federal regulatory 
processes that have different but compatible conceptual goals, e.g., a 
State administered RFP to supply electricity under a power purchase 
agreement in conjunction with an MMS competitive renewable energy 
commercial lease offering. This situation may arise when a State 
announces an RFP for a power purchase agreement that would help a 
utility company meet growing demand for electricity within its customer 
base. Proposals would be assessed based on factors such as technical 
merit, timeliness, financing and economics, the environment and public 
benefits, or other factors. The RFP could specifically state that 
consideration in awarding leases would be given to potential emission 
reduction benefits to the public and could request that bidders submit 
a lease bonus bid payable to MMS for its preferred site in any proposal 
to develop an OCS renewable energy project. The lease bonus bid would 
be one of the multiple factors published in the RFP, to be assessed by 
the State and MMS jointly to determine the winning proposal. A primary 
concern would be that the interests of the Federal Government might not 
coincide with that of the power purchaser and the State, resulting in a 
bid factor weighting and assessment process that does not lead to a 
fully satisfactory selection process. In such cases, the proposal 
receiving the highest ranking may not be the proposal that is the 
highest valued, thus negatively impacting the return to the United 
States and the State(s) when revenues are shared. The MMS will 
coordinate with States and interested organizations to establish 
procedures that assure competition and a fair return to the United 
States.
    Several commenters expressed concerns about inviting possible sham 
bidding and speculation, especially with the use of bidding systems 
based on fee rate as the variable. We understand these concerns and 
agree that a combination of bonus, rental, and operating fee payments 
should be balanced in a way that encourages participation by serious 
project proponents. We will analyze energy market conditions through 
the competitive lease process, beginning with the analysis of 
information available after a request for interest is published, and 
continuing through the Call and the Proposed Sale Notice. We will 
endeavor to hold auctions that will tend to award leases to bidders who 
value the tracts the most. We anticipate that renewable energy lease 
sales will be focused on sites where the resource potential can be 
assessed with a relatively high level of certainty before the auction. 
This could allow MMS to set the minimum bid at a level that potential 
bidders who do not have the financial and technical capability to 
develop a lease would not be willing to pay. As a result, speculative 
bidders should not be able to compete effectively for renewable energy 
leases against legitimate project proponents. However, to provide 
additional assurance, MMS intends to defer from using bidding systems 
incorporating the fee rate, as used in the formula found in Sec.  
285.506, until the technology for the development of the given 
renewable energy source has been commercially proven.

What does MMS do with my bid? (Sec.  285.222)

    The MMS will open sealed bids at the place, date, and hour 
specified in the Final Sale Notice for the sole purpose of publicly 
announcing and recording the bids. However, we will not accept or 
reject any bids at that time. We will determine whether to accept a 
high bid as a winning bid based on the following factors.
    With sealed bidding, bid acceptance criteria typically rely on (1) 
minimum bid levels we establish, with bids above that level being 
acceptable if there is a sufficient level of competition or if the 
lease area is not considered to be viable, or (2) assessments of the 
adequacy of the high bids for a specific lease area in comparison to 
calculated reservation prices for the property rights that are the 
object of the bidding. Whereas a minimum bid reflects a publicized 
level below which bids are not deemed satisfactory or competitive and 
thus will not be considered, the reservation price reflects an 
unpublished estimate of the value of the tract, and thus generally the 
lowest bid level at which we would award the lease. In this context, 
the term ``reservation price'' could also refer to the lowest operating 
fee at which we would award the lease, if the operating fee is used as 
the deciding bid variable. The calculation of the reservation price 
compensates for insufficient market competition, so if enough 
competition for the tract materializes, there is less of a need to rely 
on a reservation price. However, when there is little competition for 
specific acreage, the reservation price becomes critical if the absence 
of competition is known to the potential bidder. An additional factor 
we may consider in calculating the reservation price is the value of 
other uses of the area that are incompatible with the renewable energy 
project.
    Due to the competitive aspects of the ascending bidding procedure, 
bid acceptance ordinarily would be less dependent on application of a 
reservation price and instead would rely solely on the bidding results 
to ensure receipt of fair market value. The ascending bid framework has 
been used by the BLM for allocating the property ROWs for wind energy 
projects. If we conclude that ascending bidding is the preferred 
auction format for many proposed renewable energy leases, then

[[Page 19668]]

sale procedures for ascending auctions could differ substantially from 
the customary OCS sealed bid model.
    With a two-stage auction format, the bid acceptance considerations 
are the same as those that apply to the format for the final stage that 
was used (i.e., sealed and/or ascending bidding).
    One way to reduce reliance on a calculated reservation price in 
sealed bidding or two-stage bidding could be to apply the auction 
format to multiple areas employing intertract competition. Intertract 
competition may be needed in areas with high industry interest in a 
number of OCS leases, but where expected demand per tract is limited or 
constrained. In addition to enhancing competition, the object of 
intertract competition would be to provide signals through the bids, 
which serve to assist us in leasing areas providing access to the most 
valuable sources of energy.
    Our goal is to accept or reject all sealed bids within 90 days 
after the sale date, although we may extend that time if necessary. In 
the case of ascending bidding, we may be able to determine the winning 
bidder once we confirm that the high bidder is a qualified bidder. 
Nevertheless, we reserve the right to reject any and all bids, 
regardless of the amount offered or bidding system employed. We will 
send a written notice to each high bidder, accepting or rejecting the 
bid or informing the bidder of tied high bids.
    One comment on this section recommended that a 30-day deadline for 
acceptance or rejection of the high bid be set for MMS. This commenter 
and others also recommended revisions to establish meaningful bidder 
competence requirements. They suggested that the proposed Sec.  
285.222(b) be changed to provide that MMS review the high bidders' 
qualifications as they relate to the bidders capabilities to make 
productive use of renewable energy leases. This review should take 
place prior to awarding the lease and should substitute for conducting 
a bid adequacy review. The commenter further stated that MMS's 
authority under this section to nullify an auction, because the 
competitively determined value of a lease falls short of a minimum 
value that MMS has placed on it, is misguided.
    We have decided to establish a bidder competence requirement in 
Sec.  285.107. To ensure a fair return, MMS intends to rely primarily 
on area-specific minimum bid levels and auction designs that encourage 
competitive bids. Where competition clearly prevails, MMS expects to 
make high bid acceptance and rejection decisions within 30 days 
following the sale, absent the presence of unusual bidding patterns. 
This amount of time may be necessary to ensure that MMS has selected 
the proper allocation of leases to high bidders when (1) package 
bidding is employed, (2) one or more package bids overlap, and (3) 
determination of the appropriate set of winning packages requires 
application of a software algorithm.
    The 90-day postsale evaluation period is generally intended to 
apply in those unusual cases where bid adequacy procedures must be 
used. Bid adequacy considerations will be used where bidding evidences 
certain anomalies that indicate anti-competitive, illegal, or 
unauthorized behavior, where bidding is expected to be sparse, or when 
bids submitted for a tract are otherwise not a good indicator of true 
market competition. Legal bids would be bids submitted in compliance 
with the MMS regulations at 30 CFR part 285 and the Final Sale Notice. 
Anti-competitive or unauthorized behavior includes any form of 
collusion, or attempts to manipulate MMS auction rules to obtain an 
improper advantage over competitors. In cases where there are multiple 
tracts of interest but few bidders per lease, MMS may choose to employ 
intertract competition to assess bid adequacy. Under this approach, the 
high bids would be ranked, and a subset of those high bids would be 
accepted subject to the bid adequacy conditions that applied. If MMS 
decides that a tract should undergo evaluation to determine if fair 
value has been received, or there is a wide variation among bids, a 
reservation price may be calculated. A wide variation in bidder values 
could be caused by asymmetric information concerning the resource 
potential on a tract or tracts, or dissimilar bidding strategies. Bid 
adequacy would be used if MMS has reasonable confidence in its ability 
to accurately estimate project value in conjunction with the bids for 
the project.
    Several commenters took issue with our proposed approach to 
determining and assuring fair return for renewable energy rights. Some 
commenters stated that our approach misapplies elements of the approach 
taken to determine fair market value for oil and gas resources. We 
agree that there are significant differences among the market 
conditions for oil and gas exploration and development and renewable 
energy siting and development, but we believe that a competitive lease 
process is compatible with assuring that the United States receives a 
fair return for issuance of a renewable energy lease. Conceptually, the 
MMS renewable energy lease program will be different from an oil and 
gas lease program due to resource risk considerations. We anticipate 
that renewable energy lease offerings will be focused on sites where 
the resource potential can be more accurately assessed before the 
auction than during typical oil and gas lease offerings. Further, costs 
to measure renewable energy resource potential are relatively low in 
comparison to the cost of oil and gas exploratory drilling. While it is 
not known whether oil and gas accumulations exist on most oil and gas 
tracts offered in MMS sales, there is a significant amount of OCS 
renewable energy resource information available to the public. In light 
of these differences, renewable energy developers should not need to 
assemble the type of extensive lease portfolios typical of an oil and 
gas exploration company in order to identify a site suitable for 
development. As a result, the minimum bid set by MMS could more closely 
relate to the value of the tract to the project proponent, than, for 
example, the value to an investor that hoped to re-sell the lease 
rights on the secondary market. This factor could make it more 
difficult for speculative bidders to compete effectively for renewable 
energy leases against legitimate project proponents.
    We have made changes to this section relating to the addition of 
the multiple-factor approach and the rationale for rejecting bids.

What does MMS do if there is a tie for the highest bid? (Sec.  285.223)

    In response to comments objecting to the proposed approach of 
breaking ties by lot, we have revised the text of Sec.  285.223(a) to 
authorize an additional round of bidding when more than one bidder on a 
lease submits the same high bid amount. If the highest bids are tied, 
we will notify the tied bidders. The winning bidder will be determined 
from the tied bidders by a final round of ascending or sealed bidding. 
This section does not apply to bids at the end of stage one of a two-
stage bidding format.
    One commenter suggested that creditworthiness be considered in 
breaking ties. We did not adopt this approach because it would 
introduce unnecessary complexity into the determination of a winner by 
requiring MMS to establish a measure to differentiate one bidder from 
another through the analysis of financial information that may not be 
readily accessible to MMS.

What happens if MMS accepts my bid? (Sec.  285.224)

    This section explains the responsibilities of the successful 
bidder.

[[Page 19669]]

Our acceptance notice will include three copies of the lease to be 
executed by the bidder. The proposed rule required execution of the 
lease, payment of the first 6 months' rental, payment of the balance of 
the winning or fixed bonus, and filing of required financial assurance 
within 10 business days. Numerous commenters recommended increasing 
this 10-day timeframe. We believe this timeframe is reasonable for 
lease execution, payment of the balance of the bonus bid, and filing of 
financial assurance, and we have retained it for those actions. Also, 
we may extend this deadline upon request if we find a delay is due to 
events beyond the control of the successful bidder.
    Based on experience with our interim policy for issuing limited 
leases, and in response to comments on the proposed rule, we have 
increased to 45 days the timeframe for providing the first 6 months' 
rental. This will give lessees the opportunity to relinquish unwanted 
acreage before having to pay a rental that is based on the total amount 
of acreage under lease. While the rental requirement will be deferred 
for 45 days, the payment will cover the first 6 months of the lease, 
beginning on the effective date of the lease.
    After three executed copies of the lease are returned to MMS, we 
will execute the lease on behalf of the United States and send one 
fully executed copy to the lessee. If the bidder fails to execute the 
lease or otherwise fulfill requirements, the bidder's deposit will be 
forfeited, and no lease will be issued.
    If, before the lease or grant is executed on behalf of the United 
States, the offer to the lease is withdrawn or restricted from leasing, 
we will not issue a lease and will refund the deposit. We reserve this 
right to rescind a lease offering in situations where new environmental 
or other concerns about the prospective area, operation, or need for 
the facility surface after the lease sale. If the awarded lease or 
grant is executed by an agent acting on behalf of the bidder, the 
bidder must submit with the executed lease evidence that the agent is 
authorized to act on behalf of the bidder.
    We also made changes to this section to accommodate addition of the 
multiple-factor approach.

What happens if my bid is rejected, and what are my appeal rights? 
(Sec.  285.225)

    This section explains what options a bidder has if we reject the 
apparent high bid. We will provide a written statement of reasons and 
refund any money deposited with the bid. The bidder may then petition 
the MMS Director for reconsideration, in writing, within 15 business 
days of bid rejection. The Director will send the bidder a written 
response either affirming or reversing the rejection. Denial of a bid 
reconsideration by the Director is a final agency action. It is not 
subject to review by the Interior Board of Land Appeals, but is 
judicially reviewable.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.226 Through 285.229)

    Sections 285.226 through 285.229 are reserved.
Noncompetitive Lease Award Process

May I request a lease if there is no Call? (Sec.  285.230)

    Anyone qualified to hold an OCS lease under Sec.  285.106 may 
request a renewable energy lease from us at any time, except in areas 
otherwise proposed for competitive lease offerings or excluded by 
statute from leasing. Such an unsolicited request for a lease may be 
submitted to conduct either commercial or noncommercial activities 
authorized in this part. To be valid, the request must include 
information equivalent to that required under Sec.  285.213 in response 
to a Call for Information and Nominations. Specifically, the 
unsolicited request must contain a depiction of the area requested for 
lease; a general description of the objectives of the project and the 
facilities that would be used; a general schedule of proposed 
activities, including those leading to commercial production or other 
approved operations; available and pertinent data and information 
concerning renewable energy resources and environmental conditions in 
the area of interest; a statement that the proposed activity conforms 
with State and local energy planning requirements, initiatives, or 
guidance, if any; and documentation that you are qualified to be a 
lessee as specified in Sec.  285.107. In response to comments, we have 
changed Sec.  285.230(e) to refer to a statement rather than 
certification in order to eliminate any confusion that this provision 
is alluding to CZMA compliance.
    In addition, your request must include an acquisition fee of $0.25 
per acre for the area requested as required by Sec.  285.502. This fee 
is at a level intended to be high enough to discourage speculation but 
low enough not to inhibit interest, allowing lessees to establish a low 
ratio of lease acquisition costs to total project costs.
    We have revised this section by adding to paragraph (d) a statement 
that we will withhold trade secrets and commercial or financial 
information that is privileged or confidential from public disclosure 
under exemption 4 of the FOIA.

How will MMS process my unsolicited request for a noncompetitive lease? 
(Sec.  285.231)

    Paragraphs (a), (b), and (c) of this section state that MMS will 
first determine competitive interest in processing an unsolicited 
request in order to decide whether to proceed with leasing under a 
competitive or noncompetitive process. If we find that there is 
competitive interest in the lease area, we will proceed with a 
competitive lease process. If we determine that there is no competitive 
interest, then we will issue a notice of such determination. This 
section also states that if MMS processes a proposed lease area on a 
competitive basis, no unsolicited requests for leasing in that area 
will be considered for as long as that process is pending. Thus, once 
an area is subject to a lease sale process, the only way to pursue a 
lease within that area is through that competitive process until that 
process concludes. After the process concludes, and if acreage within 
the area that had been considered for lease remains unleased, 
unsolicited requests will again be considered for that acreage.
    If we determine that there is a competitive interest, we will 
proceed with a competitive process and will apply your acquisition fee 
to any bid you submit. If you choose not to bid, we will not refund 
your acquisition fee. We believe retention of your fee in this case is 
appropriate in order to discourage all but serious requests and because 
of the costs associated with processing your original request. If you 
submit a qualified bid that does not win, we will refund your deposit, 
including the amount of the acquisition fee.
    Paragraph (d) describes how MMS will proceed if it determines there 
is no competitive interest. Within 60 days after we issue a finding 
that there is no competitive interest, the prospective lessee must 
submit either a SAP for a commercial lease or a GAP for a limited 
lease. We will review the plan and conduct NEPA and other required 
analyses before simultaneously issuing the lease or grant and approving 
the SAP or the GAP. As explained in the preamble discussion of plans in 
subpart F, a combined SAP and COP may be submitted for commercial 
leases. For hydrokinetic projects early coordination with the FERC 
licensing process will be necessary, but no COP will be required.

[[Page 19670]]

    Our process for conveying OCS sand and gravel by negotiated 
noncompetitive lease under Public Law 103-421 is a relevant model for 
the process for issuing renewable energy leases when no competitive 
interest exists. The sand and gravel process starts with a request to 
MMS for a noncompetitive lease. If we determine that the request has 
potential, we require a NEPA analysis (EIS or EA). We inform the 
requestor of the type of environmental analysis required and provide an 
estimated schedule for completing the analysis and making the decision 
on whether or not to issue a lease. As part of the NEPA analysis, we 
undertake or participate in endangered species consultations with NOAA 
and the FWS. We may ask the requestor to fund the NEPA analysis. After 
the NEPA analysis is completed, we decide whether or not to issue a 
lease. If the decision is made to issue a lease, the specific terms and 
conditions (e.g., mitigating measures, size and length of lease) are 
discussed with the requestor and included in the noncompetitive 
agreement (lease) that we offer. The requestor must sign that agreement 
to complete acquisition of the lease.
    We will follow the requirements of subsection 307(c)(3)(A) of the 
CZMA and 15 CFR part 930, subpart D, as shown in Table 1 for 
noncompetitive lease issuance and SAP or GAP. Under the CZMA and its 
implementing regulations, an OCS plan is any plan for the exploration 
or development of, or production from, any area leased under the OCS 
Lands Act that is submitted to the DOI, which describes in detail 
Federal license or permit activities. The SAP or GAP cannot qualify as 
an ``OCS Plan'' under the CZMA implementing regulations for leases 
issued when no competitive interest exists, because the lease and the 
SAP or GAP will be processed simultaneously. For leases issued 
competitively, the SAP or GAP would be submitted and processed after 
the lease has been issued, and in those instances, the SAP or GAP would 
be processed as an ``OCS Plan'' (as defined by 15 CFR 930.73), 
following the requirements of subsection 307(c)(3)(B) of the CZMA and 
15 CFR part 930, subpart E.
    In response to comments, we have added provisions to this section 
that address public notification and participation in the 
noncompetitive leasing process. We also have revised this section by 
adding procedures and timeframes for executing leases issued 
noncompetitively that are analogous to those for competitive leases.

May I acquire a lease noncompetitively after responding to a Request 
for Interest or Call for Information and Nominations under Sec.  
285.213? (Sec.  285.232)

    This is a new section that describes the process that MMS will 
follow to consider issuing a lease noncompetitively, if an area of 
interest was submitted by only one interested party, in response to the 
Request for interest or Call. The MMS may inform you that there does 
not appear to be competitive interest and ask if you wish to proceed 
with acquiring a lease. If you wish to proceed with acquiring a lease, 
you must submit your acquisition fee as specified in Sec.  285.502. 
After receiving the acquisition fee, MMS will follow the process 
outlined in Sec. Sec.  285.231(b) through (i).
    We added this section in recognition that Sec. Sec.  285.230 and 
285.231 of the proposed rule did not explicitly address situations in 
which a Request for Interest or Call for Information and Nominations 
results in no overlapping or otherwise competing indications of 
interest. The new section clarifies that in such a situation the 
prospective lessee may pursue the leasing process set forth in Sec.  
285.231, leading to either competitive or noncompetitive lease 
issuance.

Reserved Sections (Sec. Sec.  285.233 Through 285.234)

    Sections 285.233 through 285.234 are reserved.

Commercial and Limited Lease Terms

If I have a commercial lease, how long will my lease remain in effect? 
(Sec.  285.235)

    This section describes the duration terms for a commercial lease. 
Commercial leases issued competitively would have three separate phases 
of lease activity: Preliminary term, site assessment term, and 
operations term. For commercial leases issued competitively, the 
preliminary term extends for the initial 6 months during which the 
lessee must submit a SAP or a combined SAP/COP in accordance with 
subpart F. If the commercial lease is issued when no competitive 
interest exists, there is no preliminary term because lease issuance 
and SAP or SAP/COP approval occur simultaneously. The site assessment 
term for all commercial leases would begin on the date that we approve 
the lessee's SAP or SAP/COP and extend for a term of 5 years in most 
cases to allow the lessee to conduct the approved activities proposed 
in the SAP. Unless the lessee has submitted a SAP/COP and received MMS 
approval, the lessee is required to submit a COP, in form and content 
satisfactory to us, before the end of this 5-year term to keep the 
lease in effect. A commercial lease would expire at the end of the site 
assessment term unless the lessee submits a COP, in form and content 
satisfactory to us, before the end of the 5-year term. The preliminary 
and site assessment terms are automatically extended as necessary to 
allow review and approval of plans.
    The operations term will follow, beginning on the date that we 
approve the lessee's COP, and will be for a period of 25 years to allow 
development, construction, and ultimately commercial production 
activities. If you submit a COP, your operations term begins on the 
date we approve it. If you submit a SAP/COP, your operations term 
begins 5 years after we approve it or when fabrication and installation 
commence, whichever is earlier. An operations term longer than 25 years 
could be established if applicable parties determine that such a term 
is warranted (e.g., the lessee and project proponent negotiate a power 
purchase agreement with a 30-year term before the lease is issued). 
While we revised the timing of the operating fee requirement in 
response to comments (see subpart E), this change does not alter the 
lease terms that originally were proposed. As provided in subpart D, 
the operations term may be renewed.
    For hydrokinetic commercial leases the COP in the previous 
discussion would be replaced with a FERC license application. In cases 
where a combined SAP/license application is submitted, MMS would 
review, approve, and regulate the SAP activities, and FERC would 
review, approve, and regulate the license activities. The preliminary 
and site assessment terms will be the same for all commercial leases, 
but the operations term for commercial hydrokinetic leases will 
coincide with the term of the FERC license.
    The MMS revised this section to clarify that the term of a lease 
renewal will be the same as the original term of the lease, unless a 
longer term is negotiated by applicable parties.

If I have a limited lease, how long will my lease term remain in 
effect? (Sec.  285.236)

    Limited leases issued competitively will have two phases: 
Preliminary term and operations term. For limited leases issued 
competitively, the preliminary term will be the initial 6 months during 
which the lessee must submit a GAP in accordance with subpart F. If the 
limited lease is issued when no competitive interest exists, there is 
no

[[Page 19671]]

preliminary term because lease issuance and GAP approval occur 
simultaneously. The operations term for all limited leases will begin 
on the date that we approve the GAP and continue for a term of 5 years 
to allow the lessee to conduct the approved activities proposed in the 
GAP.
    For hydrokinetic activity MMS will only issue limited leases if 
FERC determines that a license or exemption is not required. If a FERC 
license or exemption is required, MMS will issue a commercial lease.
    We did not make any changes to this section.

What is the effective date of a lease? (Sec.  285.237)

    This section describes how we will determine the effective date of 
a lease. A lease issued under this part must be dated and become 
effective on the first day of the month following the date a lease is 
signed on behalf of the lessor. However, if the lessee submits a 
written request and we approve, a lease may be dated and become 
effective on the first day of the month within which it is signed on 
behalf of the lessor.

Are there any other renewable energy research activities that will be 
allowed on the OCS? (Sec.  285.238)

    This section describes how renewable energy research activities 
might be conducted on the OCS. This provision was developed following 
discussions with Department of Energy (DOE) officials who cited a need 
for an offshore research area or areas patterned after the European 
Marine Energy Center, an offshore wave and tidal energy technology 
testing site in the United Kingdom. This section describes the process 
for MMS to issue leases, ROWs, and RUEs to Federal agencies and States 
for testing all types of offshore renewable energy technology, after 
giving public notice and determining that there is no competitive 
interest in the area and complying with all relevant Federal statutes 
(e.g., ESA, NEPA, MSA, etc.). In response to comments from States 
recommending that they be allowed to establish and manage OCS renewable 
energy research areas, we have broadened this provision to apply to 
States and other Federal agencies in addition to DOE.
    We believe that such research areas should not preempt potential 
commercial development and should be only offered to a Federal agency 
or a State if there is no competitive interest. The purposes, issue 
process, and terms of this kind of lease or grant may be established by 
MMS and a Federal agency or a State on a case-by-case basis, or 
pursuant to a framework established by a Memorandum of Agreement. These 
leases or grants would not be available to private project proponents 
seeking to conduct either commercial or noncommercial activities. 
Leases and grants issued to a Federal agency and a State for research 
activities are different from the limited leases issued for renewable 
energy activities through the competitive or noncompetitive process. In 
further response to comments, we have clarified this section.
    When FERC determines that any OCS-sited hydrokinetic research 
activities will not require a license or exemption, the MMS has the 
discretion to authorize such research activities under this section. 
This is consistent with the April 2009 MOU which provides that when 
FERC has determined that a license or exemption is not required, MMS 
may authorize hydrokinetic construction and operation activities 
related to noncommercial projects. It is anticipated that FERC could 
find hydrokinetic research activities do not require a license or 
exemption and therefore the lessee must comply with the requirements of 
Sec.  285.238. However, if FERC determines that a license or exemption 
is required for a research project, then MMS would not consider that 
project to be a research activity under this section and would initiate 
the commercial leasing process.

Subpart C--Rights-of-Way Grants and Rights-of-Use and Easement Grants 
for Renewable Energy Activities

Overview

Applicability

    Subpart C addresses issuing ROW grants and RUE grants for OCS to 
support renewable energy activities associated with onshore projects, 
State leases, or an MMS-issued renewable energy lease. Renewable energy 
leases include the rights to project easements for cables, pipelines, 
and other facilities associated with projects on OCS leases as 
discussed in subparts B and F; so in most cases a ROW grant or RUE 
grant will not be needed for an OCS renewable energy lease. However, 
there may be some cases when it makes more sense for an OCS renewable 
energy leaseholder to receive a ROW grant or RUE grant instead of a 
project easement. An example of this would be when multiple OCS 
renewable energy lessees want to share a ROW for a transmission cable 
or a RUE for a substation. In this case, it may make more sense for the 
lessees to use an ROW or RUE grant. Additionally, a transmission 
company may want to request an ROW grant for a transmission cable to 
support an OCS renewable energy project or multiple projects. It is 
important to distinguish the grant authority under this part with grant 
authorities of MMS under other regulations, such as those in 30 CFR 
part 250. The following two examples are helpful to illustrate the 
types of activities, not associated with an OCS renewable energy lease, 
MMS will authorize with a ROW grant or RUE grant issued under subpart 
C.

     \Example 1: The MMS will issue a ROW grant under this part for 
activities involving the placement and maintenance of a transmission 
cable that crosses the OCS and transmits energy produced from 
renewable energy resources onshore or in State waters. The proposed 
Juan de Fuca Cable Project--which will install, on the OCS, a cable 
several-hundred-miles-long to transport electricity from renewable 
energy sources in the northwest to the San Francisco area--is a good 
illustration of an activity requiring a ROW granted under this 
subpart.
    Example 2: The MMS will issue a RUE grant under this part for 
activities involving the placement and operation of a facility on 
the OCS that supports a renewable energy project located on State 
submerged lands.

    The provisions include general requirements for ROW grant and RUE 
grant applicants, as well as application and issuance procedures. These 
provisions are similar to the provisions for issuing OCS renewable 
energy leases.
    The MMS will not issue ROW grants and RUE grants for installing 
site assessment facilities (e.g., meteorological towers) on the OCS. If 
a company intends to install site assessment facilities, it must 
acquire a lease under this part.
    Commenters raised questions concerning the issuance of ROWs for 
transmission lines that mix electricity generated from renewable energy 
sources and nonrenewable energy sources. After serious consideration, 
MMS has decided the following: (1) MMS will authorize renewable energy 
ROWs for transmission of energy from sources other than oil and gas; 
(2) MMS will not authorize renewable energy ROWs that solely support 
the transmission of energy from oil or gas sources; and (3) MMS will 
consider, on a case-by-case basis, renewable energy ROWs supporting the 
transmission of energy from oil or gas sources that is combined with 
energy from sources other than oil or gas, provided that renewable 
energy generated from sources other than oil and gas is primarily what 
is being transmitted.

[[Page 19672]]

Competitive and Noncompetitive Processes

    As required by subsection 8(p) of the OCS Lands Act, MMS must issue 
ROW grants and RUE grants through a competitive process unless MMS 
determines after public notice that there is no competitive interest. 
This subpart provides for public notice of applications for ROW grants 
and RUE grants to allow potential competitors and other interested and 
affected parties to comment on proposals and possibly compete for the 
ROW grants and RUE grants. However, due to the nature of potential 
operations on ROW grants and RUE grants, as well as the areal 
requirements involved, it is unlikely that there will be much, if any, 
competition. It appears that, in most cases, even separate 
geographically overlapping proposals for ROWs and RUEs will not be 
mutually exclusive. It is therefore unlikely that MMS will conduct an 
auction of ROW grants or RUE grants. The noncompetitive process for 
granting ROWs and RUEs will be similar to the noncompetitive leasing 
process described in subpart B, except there is no acquisition fee, and 
a GAP is required in lieu of a SAP.
    In the unlikely event that MMS did determine there is competition 
for a ROW or RUE, we will follow the process outlined in subpart B for 
competitive issuance of leases, with the ultimate terms and conditions 
of the grant established in a Final Sale Notice. As noted in the 
discussions of subparts A and B, we have changed the qualification 
requirements for lessees and grantees to discourage nuisance 
indications of interest. Also, in instances where a competitive process 
for the issuance of an ROW or RUE is pursued, MMS may choose to 
recognize companies selected by State or utility competitions in 
developing the terms and conditions of the auction and the grant, as 
explained in the subpart B discussion. While the rule provides the 
means necessary to conduct fair and efficient competitions for ROWs and 
RUEs, we continue to believe it is more likely that we will receive 
unsolicited proposals that will be processed after a public notice and 
determination that no competitive interest exists. As explained 
previously in the discussion of subpart B, because of the competition 
requirement set forth in section 8(p) of the OCS Lands Act, MMS decided 
to authorize transportation and other ancillary activities associated 
with an OCS renewable energy lease through the issuance of a project 
easement as part of the lease rather than providing for separate grants 
of ROWs and RUEs.

Data and Information

    Subpart C requires the submission of data and information 
associated with ROW grant and RUE grant proposals. Subpart A discusses 
how MMS will handle such data and information, including procedures for 
withholding trade secrets and proprietary information from public 
disclosure to the extent allowed by law.

Coordination and Consultation

    The MMS must coordinate and consult with other Federal, State, and 
local governments and affected Indian tribes as directed by sections 
8(p)(4) and (7) of the OCS Lands Act and by other relevant Federal 
statutory requirements (e.g., ESA and MSA). As in subpart B, subpart C 
provides for coordination and consultation with affected Federal 
agencies, the Governors of affected States, and the executives of 
affected localities, including possible participation of State and 
local governments in task forces or other joint planning agreements 
with MMS.

CZMA Compliance

    For purposes of Federal consistency, MMS will treat ROW grants and 
RUE grants issued through a competitive process as direct Federal 
agency activities and follow the subsection 307(c)(1) procedures of the 
CZMA. The MMS will determine if the ROW grant or RUE grant is 
reasonably likely to affect any land or water use or natural resource 
of a State's coastal zone and comply with the appropriate Federal 
consistency regulations under 15 CFR part 930 subpart C.
    The MMS will treat ROW grants and RUE grants issued 
noncompetitively as Federal licenses or permits, which will follow 
requirements of CZMA subsection 307(c)(3)(A) and 15 CFR part 930 
subpart D. For ROW grants and RUE grants issued noncompetitively, MMS 
requires the applicant to submit a proposed GAP simultaneously with the 
application for the ROW or RUE grant. The GAP is a Federal license or 
permit under current CZMA regulations since it will describe activities 
and operations proposed to be undertaken in areas of the OCS that are 
not under a lease; and therefore, does not qualify as an OCS plan (as 
defined by 15 CFR 930.73).

Areas Available for ROW Grants and RUE Grants

    As with OCS renewable energy leases, ROWs and RUEs may be granted 
on any appropriately platted area not located within the exterior 
boundaries of any unit of the National Park System, National Wildlife 
Refuge System, National Marine Sanctuary System, or any National 
Monument.

ROW and RUE Sizes

    The size of an ROW will encompass 200 feet (61 meters) in width, 
the full length of the cable, pipeline, or other facilities, and 
adjacent areas reasonably necessary for accessory facilities, such as 
power stations for electricity or pumping stations for other energy 
products (i.e., hydrogen). The size of a RUE grant will be determined 
by MMS on a case-by-case basis to include the site of facilities, 
associated structures, and the areal extent of anchors, chains, or 
other equipment.

ROW and RUE Term

    An ROW grant or RUE grant is in effect for as long as it is 
properly maintained, continues to support the activities for which it 
was granted, and is used for the purpose for which it was granted, 
unless otherwise stated on a case-by-case basis. Since ROW grants and 
RUE grants are tied to specific activities and purposes, MMS believes 
that, in most cases, it will be appropriate to link their term to those 
activities and purposes rather than setting specific independent terms. 
However, MMS may set specific independent terms when appropriate.

Other ROW and RUE Provisions

    The ROW grants and RUE grants will be issued on forms approved by 
MMS and will become effective on the date of the grant or as specified 
in the grant instrument. Financial assurance and rental requirements 
are provided in subpart E. Additional provisions relating to the 
administration of ROW grants and RUE grants are set forth in subpart D.

Section-by-Section Discussion for Subpart C

ROW Grants and RUE Grants

What types of activities are authorized by ROW grants and RUE grants 
issued under this part? (Sec.  285.300)

    This section explains what ROW grants and RUE grants authorize, 
which includes activities relating to the production, transportation, 
or transmission of electricity or energy from any renewable energy 
resource that is not produced or generated on an OCS renewable energy 
lease issued under this part. It further clarifies that you do not need 
a ROW grant or RUE grant for a project easement authorized under 
subpart B of this part however, there may be cases when a ROW grant or 
RUE grant is more appropriate than a project.

[[Page 19673]]

    The MMS changed this section to allow the holder of a ROW grant to 
install on the OCS cables, pipelines, and associated facilities that 
involve the transportation or transmission of electricity or other 
energy product from renewable energy projects both on the OCS and not 
on the OCS. We made this change to avoid excluding possible beneficial 
uses of ROW grants for renewable energy projects on the OCS.

Section 285.301 What do ROW grants and RUE grants include?

    This section provides a detailed description of ROW grants and RUE 
grants, including their dimensions, boundaries, and limitations based 
on factors such as locations of associated and accessory facilities. 
This does not cover RUE grants issued for the alternate use of existing 
facilities, which are covered in subpart J of this part.
    We did not make any changes to this section.

What are the general requirements for ROW grant and RUE grant holders? 
(Sec.  285.302)

    This section cites the regulation pertaining to lease and grant 
holder qualifications in subpart A. It then describes that the rights 
to be granted with a ROW or a RUE will not prevent the granting of 
other rights by the United States. Further, other users may be granted 
the right to use or occupy any part of the ROW grant or RUE grant not 
actually occupied or required for any necessary operations as long as 
they do not unreasonably interfere with the activities approved or 
impede existing operations.
    We did not make any changes to this section.

How long will my ROW grant or RUE grant remain in effect? (Sec.  
285.303)

    This section states in general terms the duration of ROW grants and 
RUE grants.
    We did not make any changes to this section.

Reserved Section (Sec.  285.304)

    Section Sec.  285.303 is reserved.

Obtaining ROW Grants and RUE Grants

How do I request an ROW grant or RUE grant? (Sec.  285.305)

    This section addresses how to apply for a new or modified ROW grant 
or RUE grant. A separate application is required for each ROW grant or 
RUE grant requested. It lists the information the application must 
contain, including the area requested, objectives, facilities projected 
to achieve those objectives, a general schedule of proposed activities, 
and environmental conditions in the area of interest.
    We did not make any changes to this section.

What action will MMS take on my request? (Sec.  285.306)

    This section explains how MMS will process requests for ROW grants 
and RUE grants based on whether or not competitive interest is 
determined. It cites the competitive process outlined in Sec.  285.308 
and describes the noncompetitive process. The noncompetitive ROW grant 
and RUE grant process is similar to the noncompetitive lease issuance 
process, requiring a determination of no competitive interest, 
negotiation of terms and conditions between grantee and grantor, as 
well as submission and approval of a GAP.
    We did not make any changes to this section.

How will MMS determine whether competitive interest exists for ROW 
grants and RUE grants? (Sec.  285.307)

    This section outlines how MMS will determine whether or not there 
is competitive interest by publishing a public notice (Request for 
Interest) of the proposed ROW grant or RUE grant. The public notice 
will describe the parameters of a project and give potential 
competitors an opportunity to express their interest. The MMS will make 
a determination of competitive interest based on comments received in 
response to the notice. If competitive interest is determined, MMS will 
initiate the process outlined in Sec.  285.308. If no competitive 
interest is determined, MMS will follow the process outlined in Sec.  
285.306.
    We did not make any changes to this section.

How will MMS conduct an auction for ROW grants and RUE grants? (Sec.  
285.308)

    This section describes how an auction will be held if MMS 
determines there is competitive interest for ROW grants and RUE grants. 
The grant auction process is similar to the auction process for leases.
    We did not make any changes to this section.

When will MMS issue a noncompetitive ROW grant or RUE grant? (Sec.  
285.309)

    This section describes the circumstances under which MMS will issue 
a grant. The MMS will issue a grant if we approve your GAP and you 
accept all terms and conditions of the grant.
    We did not make any changes to this section.

What is the effective date of an ROW grant or RUE grant? (Sec.  
285.310)

    The effective date of an ROW grant or RUE grant is established by 
MMS in the ROW grant or RUE grant.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.311 Through 285.314)

    Sections 285.311 through 285.314 are reserved.

Financial Requirements for Row Grants and Rue Grants

What deposits are required for a competitive ROW grant or RUE grant? 
(Sec.  285.315)

    This section cites the deposit requirements of Sec.  285.501 
pertaining to ROW grant and RUE grant auctions, and provides for the 
return of your deposit when a bid is rejected. It also states that a 
written statement of reason will be provided if the high bid is 
rejected.
    We did not make any changes to this section.

What payments are required for ROW grants or RUE grants? (Sec.  
285.316)

    This section lists the payments required in order for MMS to issue 
the ROW grant or RUE grant. It states the balance on an accepted high 
bid and the first year annual rental as specified in Sec.  285.507 (the 
greater of $5 per acre per year or $450 per year), must be paid before 
MMS will issue the ROW grant or RUE grant.
    We did not make any changes to this section.

Subpart D--Lease and Grant Administration

Overview

    Subpart D addresses noncompliance with regulations pertaining to a 
lease or grant; assignment and designation of operator; and suspension, 
renewal, termination, relinquishment, and cancellation of leases and 
grants. We received numerous comments recommending that we prescribe 
time limits on MMS to complete actions under this subpart. We have 
declined to add such time limits to the rule, but we will include 
target timelines for actions under this subpart in the guidance 
document we intend to issue after the rule is published.
Noncompliance
    The requirements that the lessee or grantee must meet to maintain a 
lease or grant in effect include plan and

[[Page 19674]]

reporting requirements (subpart F); payment obligations (subpart E); 
and procedures for conducting, stopping, and resuming operations or 
receiving appropriate suspensions from MMS (subpart D). In an instance 
of noncompliance, MMS may issue a notice of noncompliance that will 
specifically cite how you failed to comply and will prescribe 
corrective action. In an instance of noncompliance that poses an 
imminent threat, MMS may issue a cessation order directing the lessee 
or grantee to cease an activity or activities. Likewise, failure to 
take corrective action prescribed in a noncompliance order may lead to 
the issuance of a cessation order. A cessation order does not lengthen 
the term of the lease or grant or relieve any payment obligations. 
Also, noncompliance may lead to the assessment of civil or criminal 
penalties. The MMS believes the noncompliance provisions, in 
conjunction with the regulatory requirements, are essential to ensure 
prompt, efficient, and responsible renewable energy activities on a 
lease or grant.
Designation of Operator
    The provisions governing designation of an operator to perform 
activities on a lease or grant are patterned after the regulations at 
30 CFR 250.143 through 250.146.
Assignment
    The provisions governing assignment of leases or grants are 
patterned after the regulations at 30 CFR 256.62, including assignor 
and assignee responsibilities, procedures for filing transfers, and the 
effects of an assignment on a particular lease or grant. The MMS 
believes such requirements are appropriate for all OCS renewable energy 
leases and grants.
Suspension
    The rule provides for lease or grant suspensions that will lengthen 
the duration of the lease or grant to allow completion of activities or 
continuation of operations. Extensions relating to MMS technical and 
environmental review of required plans will be automatic. The lessee or 
grant holder could request suspensions for other purposes, and these 
will be subject to Director approval.
Renewal
    The rule provides that a lessee or grantee may request a renewal to 
conduct activities substantially similar to those that were originally 
authorized, and MMS, at its sole discretion, may approve such requests. 
The renewal provisions also provide timeframes and information 
requirements associated with renewal requests, as well as guidance on 
making payments and suspending activities while a renewal request is 
pending. The length of a renewal will be set by MMS on a case-by-case 
basis. As explained previously in the discussion of lease term 
provisions in subpart B, MMS retains discretion relating to lease terms 
and renewals in order to ensure the efficient use of OCS resources.
Termination, Relinquishment, and Cancellation
    The MMS may cancel leases or grants for failure to comply with the 
OCS Lands Act and other applicable laws, regulations, and lease 
requirements; for fraudulent acquisition; and for a continuing and 
undiminished threat to marine life, property, natural resources, 
national security or defense, or the marine, coastal, or human 
environment. Provisions governing terminations and relinquishments of a 
lease or parts of a lease are also included.

Section-by-Section Discussion for Subpart D

Noncompliance and Cessation Orders

What happens if I fail to comply with this part? (Sec.  285.400)

    This section states that MMS can take appropriate corrective action 
if you fail to comply with applicable provisions of Federal law, the 
regulations in this part, other applicable regulations, or MMS orders. 
The MMS may issue you a notice of noncompliance if it has determined 
there has been a violation. A notice of noncompliance will tell you how 
you failed to comply, and will specify what you must do to correct the 
noncompliance and when you must act. This section also states that if 
you do not follow a notice of noncompliance, or any other regulation of 
this part, MMS may issue a cessation order, cancel your lease or grant, 
and assess civil penalties. In addition, you may be subject to criminal 
penalties.
    The MMS received a comment requesting that we consider reducing 
civil penalties for small businesses regulated under this part. If a 
civil penalty is assessed, the company may submit a request to modify 
the payment schedule to the Office of Financial Management, within 
MMS's Mineral Revenue Management program. We will include information 
on the Small Business Regulatory Enforcement Fairness Act and payment 
schedules in the guidance document we intend to issue after the rule is 
published.
    We did not make any changes to this section.

When may MMS issue a cessation order? (Sec.  285.401)

    This section specifies that a cessation order may be issued if you 
fail to comply with any law or regulation under this part. The 
cessation order will have a timeframe for you to correct the 
noncompliance and set forth what measures you are required to take in 
order to resume activities on your lease or grant.
    We did not make any changes to this section.

What is the effect of a cessation order? (Sec.  285.402)

    This section gives details of what you must do when you receive a 
cessation order. You must cease all activities on your lease or grant 
for the specified period, and you must continue to make all required 
payments while a cessation order is in effect. A cessation order does 
not extend the term of your lease or grant for the period you are 
prohibited from conducting activities. If MMS determines that the 
circumstances giving rise to the cessation order cannot be resolved 
within a reasonable time period, your lease or grant may be cancelled. 
We received a comment recommending that MMS specify lease or grant 
activities covered by a cessation order and allow other activities to 
proceed. We prefer the discretion afforded in the rule, which allows us 
to issue an order to cease all activities, perform necessary reviews, 
and then decide which, if any, activities will be allowed to proceed. 
After issuing a cessation order to a lessee or grantee, we will provide 
instructions as to which activities are authorized to continue.
    Another commenter asked that the process for lifting a cessation 
order be specified in the rule. We believe this is already addressed in 
the previous section of the rule, which states that a cessation order 
will indicate the actions that lessees or grantees must take to resume 
ceased activities.

Reserved Sections (Sec. Sec.  285.403 Through 285.404)

    Sections 285.403 through 285.404 are reserved.

Designation of Operator

How do I designate an operator? (Sec.  285.405)

    Under this section, you must identify the operator in your specific 
plan (SAP, COP, or GAP) if you intend to designate an operator who is 
not the lessee or grant holder. Once approved in your plan, the 
designated operator is

[[Page 19675]]

authorized to act on your behalf and authorized to perform activities 
necessary to fulfill your obligations under laws and regulations in 
this part. This section requires you to keep MMS informed if there is 
any change of status with your designated operator. If you are the 
designated operator, you must comply with all regulations governing 
those activities and are responsible for any noncompliance. Designation 
of an operator does not relieve the lessee or grantee of its 
obligations. We received a comment recommending we provide a timeframe 
for notification of a change in designated operator rather than 
requiring one immediately. We have revised paragraph (e) to provide 72 
hours for such notification.
    Another commenter asked for clarification of the information that 
must be included in a written change of designated operator. We have 
revised paragraph (e) to require that written notification be provided 
on a form approved by MMS that will specify the information required.

Who is responsible for fulfilling lease and grant obligations? (Sec.  
285.406)

    When you are not the sole lessee or grantee, you and your co-
lessee(s) or co-grantee(s) are jointly and severally responsible for 
fulfilling your obligations under the lease or grant. If your 
designated operator fails to fulfill any obligations under this part, 
MMS may require you or any or all of your co-lessees or co-grantees to 
fulfill those obligations.
    We did not make any changes to this section.

Reserved Section (Sec.  285.407)

    Section 285.407 is reserved.

Lease or Grant Assignment

May I assign my lease or grant interest? (Sec.  285.408)

    Under this section, you can assign all or part of your lease or 
grant interest. To assign interest, an assignment application must be 
sent to MMS. The assignment application includes various detailed 
requirements outlined in this section (i.e., location identification, 
qualifications, contact information, etc.). The assignment takes effect 
on the date MMS approves your application. We received a comment 
requesting clarification on whether mergers and acquisitions will 
require assignments. We added a statement about mergers, name changes, 
and changes to business forms to clearly state that you do not need to 
assign your lease or grant interest in these cases. Another comment 
asked whether subletting would be possible under the rule. We consider 
subletting to be synonymous with assigning.

How do I request approval of a lease or grant assignment? (Sec.  
285.409)

    This section contains additional details of the assignment 
requirements.
    We did not make any changes to this section.

How does an assignment affect the assignor's liability? (Sec.  285.410)

    You are liable for all obligations that accrued under your lease or 
grant before MMS approves your assignment. If your assignee fails to 
perform any obligation, you may be responsible for corrective action.
    We did not make any changes to this section.

How does an assignment affect the assignee's liability? (Sec.  285.411)

    The assignee is liable for all obligations once MMS has approved 
the assignment. The assignee will be responsible to comply with all 
lease or grant terms and conditions, as well as all applicable 
regulations.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.412 Through 285.414)

    Sections 285.412 through 285.414 are reserved.
Lease or Grant Suspension

What is a lease or grant suspension? (Sec.  285.415)

    A suspension is an interruption of the term of your lease or grant. 
You may request, or MMS may order, a suspension. A suspension extends 
the term of your lease or grant for the length of time the suspension 
is in effect. Activities may not be conducted on your lease or grant 
during the period of a suspension unless otherwise directed by MMS.
    We did not make any changes to this section.

How do I request a lease or grant suspension? (Sec.  285.416)

    To request a suspension, you must submit a request to MMS 
containing the details explained in this section.
    We did not make any changes to this section.

When may MMS order a suspension? (Sec.  285.417)

    Under this section, MMS may order a suspension to comply with 
judicial decrees prohibiting some or all activities under your lease or 
when continued activities pose an imminent threat of serious or 
irreparable harm or damage to natural resources, life (including human 
and wildlife), property, etc. This section also states that if you have 
a suspension from an imminent threat, you may be required to conduct a 
site-specific study to resume activities. One commenter stated that the 
possible requirement to conduct such a study could be interpreted to 
require automatic preparation of a NEPA or National Historic 
Preservation Act (NHPA) study. The requirements of NEPA or NHPA would 
not automatically be invoked if a site-specific study was required to 
resume activities. The same commenter also requested that the final 
rule specify the process for review of a site-specific study. We 
believe that flexibility in our approach to such studies is important 
and have not added the requested specifications. We will address this 
issue in the implementation guidance that we intend to issue after the 
rule is published.
    We did not make any changes to this section.

How will MMS issue a suspension? (Sec.  285.418)

    The MMS may initially issue a suspension order orally, but will 
follow up with a written order. The written explanation will describe 
the effect of the suspension order on your lease or grant and any 
associated activities. The order may also include authorization of 
certain activities during the period of the suspension.
    We did not make any changes to this section.

What are my immediate responsibilities if I receive a suspension order? 
(Sec.  285.419)

    You must take action to comply fully with the terms of a suspension 
order upon receipt.
    We did not make any changes to this section.

What effect does a suspension order have on my payments? (Sec.  
285.420)

    You must make all payments on your original term obligations until 
MMS authorizes/orders the suspension. Once the suspension has been 
issued, MMS may waive your payments during the suspension period. We 
received a comment recommending an automatic waiver of payment 
obligations for a suspension requested by a lessee or grantee, or in 
the absence of such a waiver, the criteria on which MMS will base 
decisions about payment obligations under such suspensions. We do not 
believe that automatic waivers should be granted for a suspension 
requested by a lessee or grantee because

[[Page 19676]]

a suspension may be necessitated by circumstances created or 
significantly contributed to by the lessee or grantee. It is important 
that MMS have discretion in deciding the circumstances under which 
payment obligations will continue under suspensions; therefore, we have 
not added criteria on which to base such decisions in the text of the 
rule.
    We did not make any changes to this section.

How long will a suspension be in effect? (Sec.  285.421)

    A suspension will be in effect for a period specified by MMS. 
However, if you request a suspension, MMS will not approve a suspension 
request longer than 2 years. We received a comment recommending an 
increase in the maximum suspension period to 5 years. In the interest 
of avoiding delays in lease development, we have retained the maximum 
suspension period at 2 years.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.422 Through 285.424)

    Sections 285.422 through 285.424 are reserved.

Lease or Grant Renewal

May I obtain a renewal of my lease or grant before it terminates? 
(Sec.  285.425)

    The MMS may approve a renewal request to conduct substantially 
similar activities that were authorized under the original lease or 
grant. The MMS will not approve a renewal request that involves 
development of renewable energy not originally authorized in the lease 
or grant. We received several comments recommending automatic renewals. 
We have not adopted those recommendations because we are concerned that 
continuation of inefficient or obsolete operations could result.
    We also received a recommendation to adopt the following criteria 
for considering lease renewals that were offered for comment in the 
proposed rule:
    (1) Design life of existing technology;
    (2) Availability and feasibility of new technology;
    (3) Environmental and safety record of the lessee;
    (4) Operational and financial compliance record of the lessee; and
    (5) Competitive interest and fair return considerations.
    We have adopted these criteria in Sec.  285.429 along with an 
additional criterion suggested by the commenter. Application of these 
criteria will be addressed in the implementation guidance that we plan 
to issue after the rule is published.
    Specific procedures detailing how an entity operating a FERC-
licensed hydrokinetic project on an MMS-issued lease may obtain a lease 
renewal will need to be developed, and will be proposed at a later 
time. In accordance with the terms of the April 2009 DOI/FERC MOU, the 
MMS and FERC will work together to establish an efficient process to 
allow lessees to obtain such renewals.
    We did not make any changes to this section.

When must I submit my request for renewal? (Sec.  285.426)

    This section specifies when you must request a renewal. You must 
submit your request for a renewal no later than 180 days before the 
termination date of your limited lease or grant, and no later than 2 
years before the termination date of the operations term of your 
commercial lease. We received a comment requesting clarification that a 
lessee would be allowed to upgrade equipment and apply for a lease 
renewal much earlier (e.g., 15 years into the lease). This approach is 
possible under the rule and will be addressed in the guidance document 
that we intend to issue after the rule is published.
    We did not make any changes to this section.

How long is a renewal? (Sec.  285.427)

    The MMS will set the term of a renewal on a case-by-case basis not 
to exceed the original term of the lease or grant. We received a 
comment recommending that the renewal term be shorter. Shorter terms 
are available under the rule. Another commenter called for providing a 
longer term in particular circumstances. We have revised this section 
to provide for renewal of a commercial lease for a duration not to 
exceed the original term or for a longer term negotiated by applicable 
parties. We have retained the same term for limited leases, and we have 
clarified that renewed grants will continue indefinitely unless 
otherwise stated.

What effect does applying for a renewal have on my activities and 
payments? (Sec.  285.428)

    If you request a renewal, you must continue all payments and may 
continue to conduct your approved activities until your lease expires, 
or until we make a determination on your request. We received a comment 
requesting clarification that a lessee or grantee who has requested a 
renewal will be able to continue operating after lease or grant 
termination while the request is pending decision by MMS. We have 
revised paragraph (a) to make this clarification.

What criteria will MMS consider in deciding whether to renew a lease or 
grant? (Sec.  285.429)

    As described previously, this section was added to provide criteria 
that MMS will consider in processing a lease or grant renewal request.

Reserved Sections (Sec. Sec.  285.430 Through 285.431)

    Sections 285.430 through 285.431 are reserved.

Lease or Grant Termination

When does my lease or grant terminate? (Sec.  285.432)

    Your lease or grant terminates upon the expiration of the 
applicable term, cancellation by the Secretary, or approval of your 
relinquishment. We received a comment recommending that this section 
provide for leases continuing while renewal requests are pending. We 
have revised paragraph (a) to include such a provision.

What must I do after my lease or grant terminates? (Sec.  285.433)

    After your lease or grant terminates, you must make all payments 
due and perform any other outstanding obligations under the lease or 
grant (including decommissioning). We have changed the timeframe in 
subsection (b) to 2 years to conform to our revision of Sec.  
285.902(a), which now calls for meeting decommissioning requirements 
within 2 years following lease or grant termination.

Reserved Section (Sec.  285.434)

    Section 285.434 is reserved.

Lease or Grant Relinquishment

How can I relinquish a lease or a grant or parts of a lease or grant? 
(Sec.  285.435)

    To surrender a lease or grant, you must submit a relinquishment 
application to MMS. The application will include the information 
required in this section such as identifying information and contact 
information. You are responsible for all payment obligations until the 
relinquishment is in effect.
    We did not make any changes to this section.

[[Page 19677]]

Lease or Grant Contraction

Can MMS require lease or grant contraction? (Sec.  285.436)

    The MMS may review your lease or grant area, at intervals no more 
frequent than every 5 years, to determine whether the lease or grant 
area is larger than needed to develop the project and manage activities 
in a manner that is consistent with the provisions of this part. The 
MMS will notify you of our proposal to contract the lease or grant area 
and give you the opportunity to present, orally or in writing, 
information demonstrating that you need the area in question to manage 
lease activities consistent with these regulations. Prior to taking 
action to contract the lease or grant area, MMS will issue a decision 
addressing your contentions that the area is needed. We received 
several comments expressing concern that MMS might act arbitrarily or 
overreach in applying this section. We believe this section 
appropriately safeguards the rights of lessees and grantees by 
providing notification and opportunity to challenge contraction 
decisions.
    We did not make any changes to this section.

Lease or Grant Cancellation

When can my lease or grant be canceled? (Sec.  285.437)

    The Secretary may cancel your lease or grant if you obtained it 
fraudulently; if you fail to comply with laws and regulations; if it is 
required for national security reasons; or if your activities cause 
serious harm or damage to natural resources, life, property, etc. In 
the proposed rule, we stated that, in certain circumstances, the 
Federal Government may provide compensation if your lease is cancelled. 
Section 285.437(c) in the proposed rule provided that, in the event 
that we cancelled a lease or grant under (b)(3) or (b)(4) of Sec.  
285.437, compensation would be provided as appropriate to the extent 
funds are authorized and appropriated for such purposes. This provision 
was removed because the compensation as a result of such a cancellation 
under paragraphs (b)(3) or (b)(4) of this section would have to be 
determined on a case-by-case basis. Consequently, the proposed 
provision provided no guarantees to lessees or grantees and might have 
created unrealistic expectations.
    Two commenters stated that the rule should expressly provide for 
affected States and Federal agencies to recommend cancellation. We 
believe that any interested or affected party may approach MMS with a 
recommendation to cancel a lease or grant under the rule. Another 
commenter requested that compensation for cancellation be specified in 
the rule.
    We made the changes described previously to this section.

Subpart E--Payments and Financial Assurance Requirements

Overview

    This subpart provides the payment structure for renewable energy 
leases that implements subsection 8(p)(2) of the OCS Lands Act (43 
U.S.C. 1337(p)(2)) which directs the Secretary to establish royalties, 
fees, rents, bonuses, or other payments to ensure a fair return to the 
United States for any lease, easement, or ROW granted for renewable 
energy activity on the OCS. This also applies to leases, easements, and 
rights-of-way issued for FERC-licensed hydrokinetic projects. We intend 
to ensure a fair return through a combination of payments. In addition 
to up-front acquisition fees or bonus payments for renewable energy 
leases, we will charge acreage-based rents for technology assessment 
activities on limited leases. On commercial leases we will charge 
acreage-based rents for the pre-development phases of renewable energy 
production ventures and their ancillary facilities, and a share of 
revenues from the renewable energy production phase in the form of an 
operating fee. You can find a detailed summary of how MMS selected our 
approach to payments in the NPR. For commercial leases issued for FERC-
licensed hydrokinetic projects, the operating fee will be determined on 
a case-by-case basis.

Financial Assurance Requirements

    This portion of subpart E is intended to minimize the risk of 
financial loss to the Federal Government if lessees, operators, and 
grant holders default in fulfilling their obligations under this rule 
and other applicable laws or regulations. The final rule will fulfill 
that purpose in two ways: (1) Through the prequalification of lessees, 
operators, and grant holders, and (2) by requiring the provision of 
sufficient financial security to assure that lessee, operator, and 
grant holder obligations can be fulfilled by a third party in the event 
of default. The rule anticipates different requirements for ranges of 
activities for commercial production leases, limited leases, ROW 
grants, and RUE grants.
    The financial assurance portion of the rule is divided into four 
general areas:
    (1) Basic financial assurance requirements for commercial leases;
    (2) Financial assurance for limited leases, ROW grants, and RUE 
grants;
    (3) Requirements for financial assurance instruments; and
    (4) Changes in financial assurance.

Basic Financial Assurance Requirements for Commercial Leases

    The financial assurance requirements for commercial leases ensure 
the performance of the following lease obligations:
    (a) Rents and other payments due the Government over the next 12 
months;
    (b) Any past due rents and/or other payments;
    (c) Other monetary obligations; and
    (d) Project decommissioning and lease cleanup.
    Before MMS will issue a commercial lease, the prospective lessee 
must provide either a lease-specific $100,000 bond; alternative 
financial assurance that the Regional Director determines protects U.S. 
interests to the same extent as the bond; or evidence that your 
designated lease operator has provided commensurate financial 
assurance.
    Additional bonds/financial assurance are required before MMS will 
approve a SAP or a COP. The amount of this additional bond/financial 
assurance will be determined by MMS and will be based upon the type and 
number of facilities to be used in your planned activities.

Financial Assurance for Limited Leases, ROW Grants, and RUE Grants

    The final rule requires that when you obtain a limited lease, ROW 
grant, or RUE grant, you must post a lease or grant-specific bond or 
other approved financial assurance in the amount of $300,000. Unlike 
commercial leases, further financial assurance is not automatically 
triggered by applications for activity such as the SAP and the GAP. 
However, MMS may require you to increase your level of financial 
assurance as activities progress on your limited lease or grant.

Requirements for Financial Assurance Instruments

    This portion of the final rule sets forth the requirements for the 
financial instrument you use. The financial instrument must be payable 
to MMS upon demand, on a form approved by MMS, and guarantee compliance 
with all terms and conditions of the lease or grant. Surety bonds must 
be issued by a surety listed in the current Department of the Treasury 
Circular 570.
    This portion of the final rule also provides guidance on the types 
of financial instruments that MMS will accept.

[[Page 19678]]

Changes in Financial Assurance

    This portion of the final rule sets forth additional financial 
assurance requirements such as termination or reduction of financial 
assurance instruments and reduction of required bond amounts. Also 
included are requirements such as forfeiture of bonds and supplemental 
bonds.

Revenue Sharing

    This portion of the final rule addresses the requirements related 
to section 8(p)(2)(B) of the OCS Lands Act (43 U.S.C. 1337(p)(2)(B)), 
which describes how revenues received by the Federal Government as a 
result of payments from renewable energy projects or alternate uses of 
existing facilities are to be shared, in some cases, with affected 
States. Sections 285.540 through 285.543 set forth a process for 
implementing revenue sharing from renewable energy projects.
    We will share 27 percent of revenues from a project that is within 
3 miles of State submerged lands with all States within 15 miles of the 
geographical center of the project. The proportion of revenues to be 
shared by an eligible State depends on the distance from the 
geographical center of the qualified project area to the nearest point 
of the State's coastline. The MMS will base State revenue sharing 
eligibility and proportionate shares due the eligible States on the 
objective measure of the lease area active at the end of the fiscal 
year in which MMS collects the sharable revenue. The configuration of 
the area on the last day of the fiscal year will be used to determine 
eligible State payments for that year regardless of when during that 
year a change may have occurred in the dimensions of the lease or 
grant. This procedure combines the objective basis for revenue sharing 
with the need to make adjustments due to changes in project area over 
the life cycle of a project. The fiscal year-end is an administratively 
efficient point for establishing revenue shares from all renewable 
energy projects.
    At the time MMS published the NPR, we had not fully resolved 
whether a State was eligible for revenue sharing if part of the project 
area is located within 3 nautical miles of the seaward boundary of that 
coastal State but the nearest point on that State's coastline was more 
than 15 miles from the geographical center of the qualified project 
area. Although the proposed regulatory text stipulated that in this 
scenario such a State would be eligible for revenue sharing, we 
included a question in the NPR asking whether our interpretation of the 
statutory language in subsection 388 of the EPAct was reasonable and 
provided the most equitable distribution of the revenue to coastal 
States. In response to this question, MMS received one comment 
requesting clarification on the provisional MMS interpretation that a 
State farther than 15 miles from the geographic center of the qualified 
project area would be eligible for revenue sharing.
    We have re-examined the statutory language in subsection 388 of the 
EPAct and have concluded that allowing a State to be eligible for 
revenue sharing when its nearest coastal point is farther than 15 miles 
from the geographic center of the project area would not be consistent 
with the statutory language. Accordingly, we have revised the final 
rule to reflect a more literal reading of the statute. Therefore, 
revenues from a project will not be shared with a State if the nearest 
point on its coastline is not within 15 miles of the geographic center 
of a qualified project area, even if a portion of the qualified project 
area is located within 3 nautical miles of that State's seaward 
boundary.
    A project is qualified (its revenues may be shared with States) if 
the project is located wholly or partially within the area extending 3 
nautical miles seaward of State submerged lands. The MMS will determine 
and announce the project area (for each qualified project) and its 
geographic center at the time it grants or issues a lease, easement, or 
ROW on the OCS for the purpose of a specific qualified project. The 
distance between the closest point on a State's coastline to the 
geographic center of the qualified project area is the sole determinant 
of whether or not a State or any State is eligible for sharing the 
revenues from that qualified project. States having the nearest point 
along their coastlines within 15 miles of the geographic center of the 
qualified project area will be eligible for revenue sharing, while 
those States not satisfying this criterion will not be eligible. 
Consideration of whether or not a qualified project area extends into a 
State's 8(g) zone will not be used to determine a State's eligibility 
for revenue sharing. Location within 3 miles of some State's submerged 
lands is only relevant to determining if a project is subject to 
revenue sharing under subsection 388 of the EPAct 2005.
    Areas granted for transmission cables and other off-lease 
infrastructure on project easements will not be considered part of the 
project area for purposes of determining the geographic center of the 
project or whether the project is within 3 miles of State submerged 
lands. However, revenues from project easements will be shared as 
revenues of the qualified project to which they appertain. Only 
proximity of a State's coastline to the geographic center of the 
qualified project area would be a factor in allocating revenues among 
eligible States, should more than one State be eligible. If a qualified 
project area changes in size or shape as a result of contraction or 
modification of the lease or grant, MMS will re-determine the 
geographic center of the project area to re-determine eligibility and 
to adjust the allocations among States.
    We received a number of comments with respect to disproportionate 
effects due to activity on a given lease. The MMS considered, but 
rejected, the option of defining a special project area that differs 
from the lease area to try to account for situations when proximity 
might not be a good surrogate for effects that could be compensated by 
revenue sharing payments. The MMS rejected this idea because the 
statute requires us to base the allocation formula solely on proximity 
to the project. To respond to such situations, we will adjust lease 
acreage as the project evolves, re-determine the geographic center of 
the project area, identify eligible States, and determine the eligible 
State proportionate shares in a timely manner.
    We received comments indicating that the inverse distance formula 
does not equitably distribute revenue among eligible States as 
additional factors other than proximity should be used to determine the 
impact the lease's project would have on States. However, subsection 
388 of the EPAct requires that equitable distribution of revenues among 
States be determined by a formula that is based on the proximity of the 
eligible States to the project.
    The MMS also received comments recommending that mitigation costs, 
such as civil penalties for environmental damages, be considered as 
revenue eligible for distribution as part of State revenue sharing. The 
rule provides that MMS collect payments in the form of bonuses, 
acquisition fees, rentals, and operating fees to ensure the receipt of 
fair value for the acreage that MMS leases to generate power from 
renewable energy resources on the OCS.
    As a commenter suggests, it is possible that the leaseholder or 
operator may provide a State or other entity compensation for impacts; 
however any agreement would not be facilitated by the DOI, and the 
funds would not be subject to revenue sharing. The revenue resulting 
from these payments under section 8(p)(2)(A) of the OCS Lands Act are 
the types of receipts that qualify for

[[Page 19679]]

State revenue sharing. Other types of revenues, not constituting 
payment for the use of Federal property, such as the proceeds from 
forfeiture of a surety bond or other form of financial assurance, cost 
recovery fees, and civil penalties, are not subject to revenue sharing. 
The MMS may assess civil penalties as authorized under the OCS Lands 
Act and referenced in Sec.  285.400(f) of this regulation. However, any 
civil penalties levied for noncompliance of lease obligations, 
including civil penalties for environmental damage, are excluded under 
the State revenue sharing provisions since they are not revenue from 
payments under section 8(p)(2)(A) of the OCS Lands Act. Accordingly, we 
have added language to the definition of ``revenues'' in Sec.  285.112 
to clarify this distinction between payments that do and do not qualify 
for State revenue sharing.
    As a commenter suggests, it is possible that the leaseholder or 
operator may provide a State or other entity compensation for impacts; 
however, any such compensation would not be revenues received by the 
DOI subject to revenue sharing.

Section-by-Section Discussion for Subpart E

Payments

How do I make payments under this part? (Sec.  285.500)

    This section explains how persons would submit application and 
filing fees, as well as payments due under the provisions of leases, 
easements, and ROW grants. Some payments will be made electronically 
through the Pay.Gov Web site at: https://www.pay.gov/paygov/. Other 
payments will be made directly to the Minerals Revenue Management 
office in Denver, Colorado. We plan to promulgate subsequent 
regulations to describe specific payment procedures for the Alternative 
Energy and Alternate Use Program.
    Depending on the method of award we select for issuing a lease or 
grant, project proponents that seek a lease, easement, or ROW on the 
OCS for renewable energy activities may be required to submit a bonus 
or other up-front cash payment for a lease or grant issued 
competitively, or an acquisition fee for a lease or grant issued 
noncompetitively. Lessees will pay rent during the preliminary and site 
assessment terms. During the operations term, after commercial 
generation begins, commercial leaseholders would pay operating fees or 
a rent. We are not requiring operating payments for limited leases, 
easements, and ROW grants because they would not be issued for the 
purposes of commercial generation. Only rent would be paid by limited 
leaseholders for each year of a specified lease term, and would be paid 
by grantees for as long as an easement or ROW is in effect.
    We did not make any changes to this section.

What deposits must I submit for a competitively issued lease, ROW 
grant, or RUE grant? (Sec.  285.501)

    This section provides the deposit requirements for persons 
submitting a bonus or other cash payments on a competitive lease, ROW 
grant, or RUE grant. Sealed bids would be offered with a deposit of 20 
percent of the bid amount, unless otherwise specified in the Final Sale 
Notice. Bidders participating in ascending auctions would deposit a 
cash payment as established in the Final Sale Notice. Procedures for 
submitting the balance owed on accepted high bids would also be 
established in the Final Sale Notice. We require a 20 percent deposit 
on sealed bids submitted in oil and gas sales to assure bids are 
genuine, but through the lease sale process, we will consider proposals 
for setting a different deposit requirement for renewable energy lease 
sales as they are scheduled. Successful bidders that fail to execute 
the lease within the prescribed time will forfeit their deposits. The 
MMS is implementing a similar requirement for renewable energy 
competitive auctions.
    We did not make any changes to this section.

What initial payment requirements must I meet to obtain a 
noncompetitive lease, ROW grant, or RUE grant? (Sec.  285.502)

    Developers may submit unsolicited applications for renewable energy 
leases. The MMS is required by law to give the public notice of such 
applications, and determine if other parties are interested in 
competing for the lease rights. We will require an acquisition fee 
payment when applying for a noncompetitive lease. We will not require 
an acquisition fee payment when applying for a noncompetitive ROW grant 
or RUE grant. In cases where there is no competitive interest, we may 
issue a lease to the applicant. We set the acquisition fee of $0.25 per 
acre for noncompetitive leases, unless otherwise set by the Director. 
For example, an application to lease a single OCS block of 25 square 
miles in area, or 16,000 acres, would be submitted with an acquisition 
fee of $4,000. In the event we do not issue a noncompetitive lease to 
you, we will refund your acquisition fee.
    If, after public notice we make the determination that there is 
competitive interest, a lease or grant sale would be held. If the 
applicant submits a qualified bid, the acquisition fee would be applied 
to the applicant's bid for the lease. If the applicant does not bid for 
or acquire the lease, we would not refund the acquisition fee.
    We will not require an acquisition fee payment when applying for a 
noncompetitive ROW grant or RUE grant.
    We did not make any changes to this section.

What are the rent and operating fee requirements for a commercial 
lease? (Sec.  285.503)

    This section provides a rent rate of $3 per acre per year for a 
commercial lease, unless we specify a different rate in the Final Sale 
Notice for leases issued on a competitive basis. When we issue a 
commercial lease noncompetitively, the elements of the rent and any 
adjustments to it would be stated in the lease instrument. Rent for the 
first 6 months, or preliminary term, would be due 45 days after we 
issue your lease. Rent for the next 12 months and for each subsequent 
year during the site assessment term would be due at the beginning of 
the year for the entire lease area until commercial generation begins 
under an approved COP, which begins the operations term and when the 
obligation to pay operating fees would begin. We will apply an interest 
charge to late rent from renewable energy leases as we do to other late 
payments under 30 CFR 218.54.
    We may specify the payment of rent during part, or all, of the 
operations term, instead of or in addition to operating fees, in the 
Final Sale Notice for leases issued on a competitive basis. We reserve 
this right partly to make any adjustments that may be needed in 
connection with the operating fee structure in Sec.  285.506.
    For example, when a lease is developed in phases, both rent and 
operating fees may be due on different parts of the commercial lease 
during the same time period. Rent would be paid on portions of the 
lease not authorized for commercial development, and operating fees 
could be required for the portion of the lease with commercial 
operations.
    A variety of considerations are behind our baseline $3-per-acre 
rent value, subject to change in the Final Sale Notice for 
competitively issued leases. In general, a rent payment serves several 
purposes. It provides a fair return to the United States for the 
opportunity cost of precluding other incompatible uses of

[[Page 19680]]

the OCS area. Also, it serves as a holding cost that encourages the 
lessee to expedite development of the project on the area. Under some 
circumstances, we may determine that charging progressively higher 
rents over time would be desirable to obtain a fair return and to 
encourage diligent operations. In those cases, we may adopt a rent rate 
schedule instead of a constant rent rate.
    The baseline commercial renewable energy lease rent rate of $3 per 
acre is less than \1/2\ of the rental rate of $6.25 per acre for oil 
and gas leases in shallow waters of the Gulf of Mexico issued in 2007. 
Rents, as well as operating fees, in these regulations for commercial 
renewable energy leases are lower than those for other uses of the OCS, 
such as oil and gas development, in part to encourage industry to 
invest in offshore renewable energy technology. Another reason for 
setting lower payment rates is the lower environmental costs of 
generating electricity with renewable energy, rather than fossil fuels 
such as oil, gas, and coal, as discussed in the Overview to this part. 
Since external costs of electricity generated from renewable energy are 
much lower than external costs of electricity generated from fossil 
fuels, we provide for relatively lower payments by renewable energy 
developers to encourage investment.
    Based on comments MMS received, we modified this section to require 
that the payment of the operating fee starts when commercial generation 
begins, instead of with the approval of the COP.

How are my payments affected if I develop my lease in phases? (Sec.  
285.504)

    This is a new section that we added to clarify how developing your 
lease in phases would affect your payments.

What are the rent and operating fee requirements for a limited lease? 
(Sec.  285.505)

    This section provides a $3-per-acre per year rent rate for a 
limited lease, unless a different rate is specified in the Final Sale 
Notice for leases issued on a competitive basis. When we issue a 
limited lease noncompetitively, the rent and any adjustments to it 
would be established in the lease instrument. Rent for the first 6 
months will be due when MMS issues the lease. Rent for the next 12 
months and for each subsequent year will be due at the beginning of the 
year for the entire lease area through the end of the lease term. We 
will apply an interest charge to late rents from renewable energy 
leases as we apply under 30 CFR 218.54. These rent requirements are 
equivalent to those on a commercial renewable energy lease during the 
preliminary and site assessment terms, before commercial generation 
begins. We also have added a statement that no operating fee will be 
charged for the authorized sale of power from limited leases.
    We renumbered this section to accommodate a new section, Sec.  
285.504. We did not make any other changes to this section.

What operating fees must I pay on a commercial lease? (Sec.  285.506)

    This section provides that the annual operating fee payments for 
commercial renewable energy leases will be determined by a formula 
related to the anticipated, rather than actual, gross value of the 
electricity generated on the lease. Upon commencement of electricity 
production for commercial projects under an approved COP, rent payments 
will cease. We will apply a production charge in the form of a 
capacity-based operating fee payment. This operating fee will not apply 
to limited leases because those leases do not allow commercial 
production of energy. Operating fee payments will be due on a schedule 
established in the Final Sale Notice and lease. We will also apply an 
interest charge to late operating fees from renewable energy leases as 
we do under 30 CFR 218.54. The following is the formula for determining 
the annual operating fee:

 
                                                                                                              P (power price per
    F (annual operating fee)       =     M (nameplate      *  H (hours per year)   *      c (capacity      *        unit of        *   r (operating fee
                                           capacity)                                        factor)               production)                rate)
 
 
 

    The operating fee rate r, like a royalty rate, is one element in 
the formula. The other elements serve as reasonable and easily 
observable proxy measures of the output and price related to a specific 
operation.
    Based on the comments that we have received regarding the timing of 
the operating fee payment, the operating fee rate will be set at 2 
percent for each year of the operating term, beginning at the time that 
the generating facility starts generating electricity commercially, 
unless we specify otherwise in the Final Sale Notice for competitively 
issued leases. We may set a time limit as to when the rent payments, 
following approval of the COP, would cease and the operating fee 
payment would commence, and/or we may increase the rental fee during 
this time in order to ensure that the construction and commercial 
operations specified in the lessee's approved COP are done in a timely 
manner. For example, we may fix a date of 2 years after the time when 
the COP would have likely been approved under normal circumstances, 
when the operating fee would commence regardless of whether the 
generating facility actually begins producing electricity. 
Alternatively, we may not set a time limit but rather provide that the 
rent fee escalate for each year of construction, such that the rent fee 
rate would be $3/acre/year in the first year after the COP is approved, 
$6/acre/year in the next year, etc. Any adjustments to the rent fee 
and/or the inclusion of a fixed date when operating fees would commence 
will be specified in the Final Sale Notice or the lease. We will 
establish initial values for the other elements in the formula, such as 
the power price and capacity factor, in the lease and provide for the 
periodical revision of the initially selected values based on new 
information. When we issue a commercial lease noncompetitively, the 
elements of the operating fee and any adjustments will be set forth in 
the lease.
    Using these payment terms, lease revenues for a commercial lease in 
any given year would depend on the phase of the project and the 
relevant prices as designated by MMS for electricity in the State. The 
lease rent and operating fee payments can be illustrated with the 
following example for wind energy. An offshore wind lease, issued 
noncompetitively, on 12,000 acres of the OCS would be required to pay 
$36,000 annually based on a charge of $3 per acre in rent during the 
site assessment term under Sec.  285.503. Once we approve the COP and 
the generating facility begins generating electricity commercially, the 
operating fees will be payable. For a lease with an installed capacity 
of 200 MW and an operating capacity factor of 0.38, i.e., 38 percent, 
the operating fee would be $666,000 annually if the applicable 
wholesale power price was $50 per megawatt hour. Additionally, if the 
approved project

[[Page 19681]]

plan has easements covering 2,000 acres, an additional $10,000 in rents 
($5.00 per acre) would be collected per year under Sec.  285.506.
    Although a number of comments we received recommended that a 
production-based operating fee be used, we were not persuaded with such 
arguments and did believe a change from the proposed capacity-based 
operating fee was warranted. During the production phase of a project, 
a capacity-based operating fee, rather than a production amount or 
value-based fee, has several advantages. The capacity-based fee avoids 
detailed audits of production sales accounts and lessens the likelihood 
of subsequent disagreements and legal challenges.
    The MMS believes that there are good reasons for requiring a higher 
rental rate or operating fee higher during the operating period than 
the charges imposed during the preliminary and site assessment period. 
First, a lease with proven resource potential is likely more valuable 
and should command a higher payment. Second, the lessee will be using 
the leased area more intensively during the construction work phase. 
While there is no depletion of a public asset, as there is with oil or 
gas, they are causing increased disturbances of the seabed.
    Prior to holding a lease sale, a high level of uncertainty may 
exist in the estimation of the amount of energy a given facility may 
generate based upon the resource potential and technology. In the 
interest of reducing uncertainty and stimulating investment in 
renewable energy projects, we may initially use a 2-percent fee rate 
for commercial renewable energy leases. However, although there is a 
baseline 2-percent fee rate in the regulation subject to revisions in 
the Final Sale Notice, we reserve the right to adjust the rate.
    For leases issued competitively, a renewable energy lease on the 
OCS may be issued, depending on the bidding system, with a constant or 
sliding operating fee rate. However, in response to the number of 
comments received recommending deferral of more complex bidding system, 
we will likely use a bidding system that is relatively simple and 
straightforward for the first lease sales, such as using a cash bonus 
as the bid variable and setting a constant operating fee rate. If the 
operating fee rate is constant, it may only vary from one year to the 
next if MMS approves a request for reduction or waiver.
    With a sliding fee rate, the operating fees may automatically 
change over the life of a lease according to a sliding scale schedule 
specified in the Final Sale Notice and/or lease. The term sliding in 
this context applies generally to any change in the operating fee rate 
over time or other increment. A sliding fee rate may provide for future 
adjustments based on the analysis of either market data or actual 
project data. It may also provide that the fee rate used to calculate 
the operating fee changes in a specific manner at predetermined time 
intervals. If a sliding operating fee rate is used as a bid variable in 
an auction, MMS would specify a mathematical function to determine 
changes to the value of the operating fee over time, and the function 
variable which would be bid. The sliding operating fee in any year 
would be the amount derived from this function in conjunction with the 
operating fee formula.
    We received comments expressing concern that MMS would make 
unilateral adjustments to the components of the operating fee formula, 
which would result in increased uncertainty for project proponents. 
Adjustments maybe made to the power price and capacity factor 
components of the operating fee formula without a reduction or waiver 
application, as specified in Sec.  285.510. We will specify how the 
adjustments will be made in the Final Sale Notice and the lease 
instrument.
    Based on the number of comments that we have received recommending 
the use of the wholesale power price for the State where the 
transmission makes landfall in the operating fee formula, we have 
accepted that recommendation and made the appropriate changes in the 
final rule. The power price component will be adjusted on an annual 
basis using publicly available information from an independent outside 
source, the Department of Energy, Energy Information Agency (EIA), to 
reflect prevailing conditions. However, we retain the authority to 
adjust that published value to reflect variations by State within a 
region, as well as current market conditions that may be better 
captured in the published retail power price. For example, if the 
published wholesale power price for a State is 2 years old, we may use 
the retail power price, which may be just a year old, to scale the 
wholesale power price for that State. We also retain the flexibility to 
use more timely or disaggregated wholesale power price indices.
    We reserve the right to review relevant capacity factor information 
as it relates to the formula, established in subpart E, and adjust the 
value used in the operating fee formula accordingly. Upon the 
completion of the first year of commercial operations on the lease, MMS 
may adjust the capacity factor (representing a comparison of actual 
production over a given period of time with the amount of power a 
facility would have produced if it had run at full capacity) to reflect 
operating experience during that first production year. The MMS may 
also retain the initial capacity factor if it is determined to be a 
reasonable value, and defer an adjustment of the capacity factor to a 
subsequent year. Thereafter, MMS may adjust the capacity factor no 
earlier than every 5 years from the most recent year that MMS adjusts 
the capacity factor. The process by which MMS will adjust the capacity 
factor, including any calculations, will be specified in the lease 
instrument. For example, a generating facility may have an initial 
capacity factor set at 35 percent in the lease, but at the end of the 
first full year of operations, the actual capacity utilization for the 
generating facility was 34 percent. The MMS may adjust the capacity 
factor and lower it to 34 percent for the next 5 years in order to 
reflect more accurately future production of the generating facility in 
the annual operating fee formula. Alternatively, if MMS determines that 
the existing capacity factor is a better representation of future use 
than was evidenced by actual utilization in year one, then MMS may 
leave the original capacity factor in place for a number of years, say 
in this example for 4 years. Following the end of that year, the 
process is repeated in 5-year intervals thereafter, with MMS choosing 
whether to keep the existing capacity factor in place, or to rely on 
experience during the most recent 5-year period.
    If MMS chooses to rely on actual experience, it must select the 
rolling average capacity utilization of the most recent experience 
between the timing of price adjustment decisions. To facilitate the 
adjustment of the capacity factor, the lessee will be required to 
submit to MMS the gross annual generation of electricity by the 
generating facility on the lease, using the appropriate form provided 
by EIA to collect the generation information or a form otherwise 
required by MMS. In either the case of a competitively or 
noncompetitively issued lease, we may reduce or waive fee rates under 
the process given in Sec.  285.510.
    We would establish operating fees for activities not related to the 
generation of electricity, such as the generation of hydrogen, on a 
case-by-case basis through the lease sale process. Operating fees and 
other payment requirements for activities conducted as an alternate use 
of an OCS facility, such as an oil and gas platform, previously 
authorized under the OCS Lands Act,

[[Page 19682]]

are explained in subpart J of these regulations.
    We would establish operating fees for hydrokinetic activities 
requiring a FERC license on a case-by-case basis. This would give MMS 
the flexibility to adjust the operating fee rate for these projects, 
taking into consideration that hydrokinetic technologies are in a 
nascent stage of development and that FERC may require payments from 
the project developer as well.

What rent payments must I pay on a project easement? (Sec.  285.507)

    This section provides an annual rent rate of $5 per acre for 
project easements, or a minimum of $450 per year, which will be due 
initially upon approval of the COP or GAP. Subsequent payments will be 
made on an annual basis, probably in conjunction with payments due 
under Sec.  285.505, unless we specify otherwise in the lease for the 
associated commercial project. The width of the area covered by a 
project easement for a cable or pipeline would be 200 feet. The area 
covered by an installation, outside of the cable or pipeline corridor, 
would be limited to the areal extent of anchor chains, other devices, 
or facilities associated with the installation.
    We grant ROW easements for electrical cables and pipelines under 
the existing oil and gas program, similar to project easements under 
the Alternative Energy Program. Rent rates for grants issued through 
the oil and gas program are specified by regulation and provide a 
precedent. The level of compensation due to the government for grants 
issued under the oil and gas program is an appropriate analog for uses 
under the program. Accordingly, we will charge project easement holders 
a constant rent rate equal to $5 per acre, commencing with our approval 
of your COP or GAP and continuing until lease termination.
    We renumbered this section to accommodate a new section, Sec.  
285.504. We did not make any other changes to this section.

What rent payments must I pay on ROW grants or RUE grants associated 
with renewable energy projects? (Sec.  285.508)

    This section provides the rent rates for ROW grant and RUE grants. 
Rent rates for renewable energy ROWs parallel rents considered fair and 
reasonable for oil and gas ROWs, and will be due in the amount of $70 
per statute mile that a ROW crosses. For sites outside the main 
corridor, MMS will charge an additional rent of $5 per acre, or a 
minimum of $450 per year. Likewise, rent rates for a renewable energy 
RUE parallel those for oil and gas RUEs, and will be charged at an 
annual rent rate of $5 per acre, or a minimum of $450 per year. The 
first rent payment will be due when the ROW or RUE request is filed. 
Subsequent payments must be made on an annual basis, for a 5 year 
period or for multiples of 5 years. We apply the same interest charge 
to late rents due on ROW grants or RUE grants for renewable energy 
projects as we do to late payments from oil and gas ROWs and RUEs under 
30 CFR 218.54.
    ROW authorizations approved under the oil and gas program are 
granted for electrical cables and pipelines, and similar requests will 
also be approved under the Alternative Energy Program. The value of 
compensation due to the government for ROW grants issued under the oil 
and gas program, which also appears to be an appropriate analog for 
renewable energy activities, forms a useful precedent. As discussed in 
the last paragraph of the preceding section on project easements, the 
rent requirements for a renewable energy RUE are related to the payment 
requirements for oil and gas RUEs.
    We renumbered this section to accommodate a new section, Sec.  
285.504. We did not make any other changes to this section.

Who is responsible for submitting lease or grant payments to MMS? 
(Sec.  285.509)

    For each lease, easement, ROW or RUE, one person, designated as 
payor, will be responsible for making all payments. All lessees and the 
payor must maintain auditable records in accordance with regulations in 
subpart A. We may also issue guidance related to recordkeeping.
    We renumbered this section to accommodate a new section, Sec.  
285.504. We did not make any other changes to this section.

May MMS reduce or waive my lease or grant payments? (Sec.  285.510)

    This section provides that the MMS Director has the authority to 
reduce or waive a rent or operating fee, including components of the 
operating fee such as the fee rate or capacity factor, when necessary 
to encourage continued or additional activities. Applications to modify 
lease payment terms must include information that demonstrates that 
continued or additional activity would not be economic without the 
reductions or waiver requested. No more than 6 years of your operations 
term will be subject to a full waiver of the operating fee.
    It is our intent to use relevant electricity market and operating 
information to set the initial values for the power price and capacity 
factor of the operating fee formula, and to revise the same parameters 
after a lease is issued, as discussed in Sec. Sec.  285.506(c)(2) and 
(3). Beyond that mechanism for revising payment requirements, the 
Director may consider a reduction or waiver of payments. In practice, 
we anticipate that most requests for reduced payments would involve a 
reduction in the fee rate of the operating fee formula. The Director 
may authorize such reductions if an applicant can show that market or 
operating conditions have changed significantly in a way that reduces 
project cash flows to uneconomic levels.
    We renumbered this section to accommodate a new section, Sec.  
285.504. We did not make any other changes to this section.

Reserved Sections (Sec. Sec.  285.511 Through 285.514)

    Sections 285.511 through 285.514 are reserved.

Financial Assurance Requirements for Commercial Leases

What financial assurance must I provide when I obtain my commercial 
lease? (Sec.  285.515)

    Before MMS will issue a commercial lease, the applicant must 
provide either a $100,000 basic lease-specific bond or another MMS-
approved financial assurance. You may also satisfy this requirement by 
providing proof that your designated lease operator provided the bond 
or approved financial assurance.
    We changed the word ``security'' to ``financial assurance.'' We did 
not make any other changes to this section.

What are the financial assurance requirements for each stage of my 
commercial lease? (Sec.  285.516)

    Minimum financial assurance requirements for each stage of lease 
development are presented in this section. A $100,000 basic bond or 
other financial assurance is required at lease issuance. A second bond 
or pledged financial instrument, in an amount determined by MMS, is due 
before the MMS will approve your SAP. And a third bond or pledged 
financial instrument, in an amount determined by MMS, is due before the 
MMS will approve your COP or before FERC issues a license for a 
hydrokinetic project.
    As the rule was proposed, the COP supplemental bond would cover all 
obligations on a lease accrued after the approval of the COP, including 
decommissioning costs. However, based on comments, we modified this 
provision to add a separate bond

[[Page 19683]]

specifically to cover decommissioning costs. Before you install 
facilities under your approved COP or FERC license, you must provide a 
decommissioning bond or other approved assurance. The amount of the 
decommissioning bond will be based on the anticipated decommissioning 
costs. The MMS may allow you to provide the decommissioning bond in 
stages, based on the schedule for facility installation. The MMS must 
approve the schedule for providing this bond.
    We made conforming changes throughout this section to reflect 
FERC's role in regulating hydrokinetic activity.

How will MMS determine the amounts of the supplemental and 
decommissioning financial assurance requirements associated with 
commercial leases? (Sec.  285.517)

    The MMS will determine the amount required for each bond by 
considering projected amounts of rents and other payments due the 
government over the next 12 months; any past due rents or other 
payments; and the costs of lease abandonment and cleanup. You may 
increase an existing bond or use a combination of existing bonds and 
other approved forms of financial assurance to satisfy your 
requirements.
    We made minor edits to this section, including conforming changes 
to reflect FERC's role in regulating hydrokinetic activity.

Reserved Sections (Sec. Sec.  285.518 Through 285.519)

    Sections 285.518 through 285.519 are reserved.

Financial Assurance for Limited Leases, ROW Grants, and RUE Grants

What financial assurance must I provide when I obtain my limited lease, 
ROW grant, or RUE grant? (Sec.  285.520)

    Before MMS will issue a limited lease, ROW grant, or RUE grant, the 
applicant must provide either a $300,000 basic limited lease or grant-
specific bond or another MMS-approved financial assurance. The basic 
bond for a limited lease or grant is higher than the basic bond on a 
commercial lease because we anticipate that obligations on a limited 
lease or grant will begin to accrue sooner, but will not be as 
extensive as the obligations on a commercial lease. With the commercial 
lease, we have established periods to reassess the bond amount (i.e., 
before approving the SAP or the COP). We do not have these automatic 
reassessments under a limited lease or grant. Also, a limited lease has 
a short term, only 5 years, and we do not anticipate reassessing the 
bond amount unless the applicant proposes significant or complex 
facilities. You may also satisfy this requirement by providing proof 
that your designated limited lease or grant operator provided the bond 
or approved financial assurance.
    We revised parts of this section to conform with changes we made to 
bonding requirements in Sec. Sec.  285.526 through 285.529.

Do my financial assurance requirements change as activities progress on 
my limited lease or grant? (Sec.  285.521)

    The MMS may require you to provide additional financial assurance 
as activities on your lease progress to cover projected liabilities of 
rents and other payments due the government over the next 12 months; 
any past due rents or other payments; and the costs of lease 
abandonment and cleanup increase.
    We revised paragraph (a)(4) to make it consistent with Sec.  
285.517. We also added a new paragraph to add the option for a separate 
decommissioning bond or other form of financial assurance, as we did 
with commercial leases.

Reserved Sections (Sec. Sec.  285.522 Through 285.524)

    Sections 285.522 through 285.524 are reserved.

Requirements for Financial Assurance Instruments

What general requirements must a financial assurance instrument meet? 
(Sec.  285.525)

    All bonds and other forms of financial assurance must be payable to 
MMS upon demand and be in a form approved by MMS. Your surety bonds 
must be issued by a certified surety listed in the current Treasury 
Circular 570. This section also provides instructions on executing your 
bond and when your surety must notify you and the MMS due to changes in 
its Treasury certification status, insolvency, or bankruptcy.
    We did not make any changes to this section.

What instruments other than a surety bond may I use to meet the 
financial assurance requirement? (Sec.  285.526)

    You may utilize alternative financial assurance instruments when 
MMS determines that they protect the interests of the U.S. Government 
to the same extent as a bond. If using an alternative financial 
assurance instrument, you must monitor its value and must provide the 
authority for MMS to sell it and use the proceeds if the MMS determines 
that you have failed to satisfy any lease obligation.
    Based on comments that we received, requesting more financial 
assurance options, MMS added options for:
    <bullet> Negotiable U.S. Government, State, and Municipal 
securities or bonds;
    <bullet> Investment-grade rated securities; or
    <bullet> Insurance.
    These security instruments must protect MMS to the same extent as a 
surety bond.

May I demonstrate financial strength and reliability to meet the 
financial assurance requirement for lease or grant activities? (Sec.  
285.527)

    The MMS added a new section to allow you to demonstrate financial 
strength and reliability, instead of a bond or other form of financial 
assurance, to meet the financial assurance requirements under this 
part. This section was added based on comments we received requesting 
such an option. This section details the requirements for demonstrating 
financial strength and reliability.

May I use a third-party guaranty to meet the financial assurance 
requirement for lease or grant activities? (Sec.  285.528)

    The MMS added this section to allow use of a third-party guaranty 
to meet financial assurance requirements. This section was added in 
response to comments requesting more options to meeting the financial 
assurance requirements under this part. The section details the 
requirements for using a third-party guaranty.

Can I use a lease- or grant-specific decommissioning account to meet 
the financial assurance requirements related to decommissioning? (Sec.  
285.529)

    The MMS may authorize you to establish a decommissioning account in 
a federally insured institution with certain limitations to satisfy 
that portion of your financial assurance obligation that is for 
decommissioning. Funds may not be withdrawn without prior MMS approval, 
and must be pledged to meet your decommissioning and site clearance 
obligations. This section also discusses how interest paid on the 
account must be treated and when we may allow the use of Treasury 
Securities to satisfy the obligation to make payments into the account.
    We did not make any changes to the regulatory text of this section; 
however, we renumbered this section from Sec.  285.527 to Sec.  285.529 
to accommodate new sections.

[[Page 19684]]

Changes in Financial Assurance

What must I do if my financial assurance lapses? (Sec.  285.530)

    This section discusses the steps you must take if your surety loses 
Treasury certification, becomes insolvent, or has its charter 
suspended, or if your approved financial assurance expires. You must 
promptly notify MMS and provide new financial assurance.
    We did not make any edits to this section.

What happens if the value of my financial assurance is reduced? (Sec.  
285.531)

    This section requires that additional financial assurance be 
provided whenever the value of the current assurance falls below the 
required amount.
    We did not make any changes to this section.

What happens if my surety wants to terminate the period of liability of 
my bond? (Sec.  285.532)

    This section describes the liabilities that accrue during a period 
of liability and provides requirements that a surety must follow when 
requesting to terminate the period of liability under its bond.

How does my surety obtain cancellation of my bond? (Sec.  285.533)

    The MMS will release a bond or allow a surety to cancel a bond only 
when all obligations covered by the bond have been completed 
satisfactorily or MMS accepts a replacement bond or alternative form of 
financial assurance that covers the existing liabilities from the 
period covered by the bond to be cancelled. This section describes when 
your period of liability ends, when your financial assurance will be 
released by MMS, and how the MMS may approve a reduction in the amount 
of your approved financial assurance if portions of your lease 
obligations have been satisfactorily completed.
    We did not make any changes to this section.

When may MMS cancel my bond? (Sec.  285.534)

    This section presents a comprehensive table which displays the 
different types of bonds required in this subpart, and when the period 
of liability ends. The table further displays when the bond will be 
released under a variety of circumstances.
    We did not make any changes to this section.

Why might MMS call for forfeiture of my bond? (Sec.  285.535)

    The MMS may call for forfeiture of your bond if you default on any 
of the conditions under which you accepted your bond or refuse or fail 
to comply with any term or condition of your lease or grant.
    We did not make any changes to this section.

How will I be notified of a call for forfeiture? (Sec.  285.536)

    This section specifies that you and your surety will be notified in 
writing of the call for forfeiture and will be provided the reasons for 
the MMS action. The MMS will also advise you and your surety in writing 
of the actions you must take within 10 days to avoid forfeiture.
    We did not make any changes to this section.

How will MMS proceed once my bond or other security is forfeited? 
(Sec.  285.537)

    This section explains that you and any co-lessee or co-grant 
holders are jointly and severally liable for the full cost of 
corrective actions on your lease or grant, even if they exceed the 
amount collected under your bond. The MMS may take or direct action to 
recover all costs in excess of the forfeited bonds.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.538 Through 285.539)

    Sections Sec. Sec.  285.538 through 285.539 are reserved.

Revenue Sharing With States

    Sections 285.540 through 285.543 of this rule describes the factors 
MMS will consider in determining how to equitably distribute revenues 
among eligible States.

How will MMS equitably distribute revenues to States? (Sec.  285.540)

    This section provides the procedure for calculating the State 
shares of revenue. To determine each eligible State's share of the 27 
percent of the revenues received by the Federal Government for a 
qualified project, MMS will use the inverse distance formula, based on 
the shortest distance between State coastlines and the geographic 
center of the qualified project area. This is the formula used for the 
same purpose under the Coastal Impact Assistance Program administered 
by MMS.
    We made minor changes to this section to clarify that revenues do 
not include administrative fees such as service fees and those assessed 
for civil penalties and forfeiture of bond or other surety obligations.

What is a qualified project for revenue sharing purposes? (Sec.  
285.541)

    This is a new section that describes what projects qualify for 
revenue sharing purposes. A qualified project for the purpose of 
revenue sharing with eligible coastal States consists of lease acreage 
that is wholly or partially located within the area extending 3 
nautical miles seaward of State submerged lands.

What makes a State eligible for payment of revenues? (Sec.  285.542)

    This is a new section that describes how MMS will determine if a 
State is eligible for payment of revenues. A State is eligible for 
payment of revenues if any part of the State's coastline is located 
within 15 miles of the announced geographic center of the qualified 
project area. A State is not eligible for revenue sharing if all points 
on that State's coastline are more than 15 miles from the announced 
geographic center of the qualified project area. This is the case even 
if no State's coastline is located within 15 miles from the announced 
geographic center of the qualified project area, and thus no State 
would share revenues from the project.

Example of How the Inverse Distance Formula Works (Sec.  285.543)

    This is a revised section that illustrates several examples of how 
the inverse distance formula works.
    Example (a). A qualified project area is located partially within 
the zone extending 3 miles seaward of State A's submerged lands. The 
geographic center of the qualified project area is more than 15 miles 
from the coastline of any State. In this scenario, no State would be 
eligible for payment of Federal revenues from that qualified project. 
This is the case because the distance from the geographic center of the 
qualified project area to the nearest point on each of the States' 
coastline is greater than 15 miles, which is the only determinant as to 
whether or not a State is eligible for payment of revenues.
    Example (b). A qualified project area is located partially within 
the zone extending 3 nautical miles seaward of State A's submerged 
lands. The geographic center of the qualified project area is within 15 
miles of State B's coastline, but is farther than 15 miles from State 
A's coastline. In this scenario, State B would receive the entirety of 
the 27 percent of revenues to be shared from the project. This is the 
case because State A's proximity to the

[[Page 19685]]

geographic center of the qualified project area is greater than 15 
miles, even though the qualified project area is located partially 
within the zone extending 3 miles seaward of State A's submerged lands. 
Again, the location of the project area within 3 nautical miles of a 
State's submerged lands is only used to determine if a project is 
subject to revenue sharing (i.e., is a qualified project) and is not 
used to determine any State's eligibility for payment of revenue from a 
qualified project.
    Example (c). A qualified project area is located partially within 
the zone extending 3 nautical miles seaward of State C's submerged 
lands. The geographic center of the qualified project area is within 15 
miles of both State A's and State B's coastline, but is farther than 15 
miles from any other States' coastline, including State C. In this 
scenario, State A and State B would split the 27 percent of revenues to 
be shared from the project. The sharing between these two States would 
be based on their proximity to the geographic center of the qualified 
project area. To elaborate, assume that the geographic center of the 
qualified project area lies 12 miles from the closest point on State 
A's coastline and 4 miles from the closest point on State B's 
coastline. Pursuant to the inverse distance formula, eligible States 
with coastlines that are farther from the geographic center of a 
qualified project area would get proportionally lower revenue shares 
from the project.

State A's proportion = [(\1/12\) / (\1/12\ + \1/4\)] = \1/4\
State B's proportion = [(\1/4\) / (\1/12\ + \1/4\)] = \3/4\.

Therefore, State B, being three times closer than State A to the center 
of the qualified project's area, would receive a share that is three 
times larger than State A's share.

    Eligible States share the 27 percent of the total revenues from the 
qualified project as mandated under the EPAct. Hence, if the qualified 
project generates $1,000,000 of revenues in a given year, the Federal 
Government would distribute the States' 27 percent shares as follows, 
rounded to the nearest whole dollar:

State A's share = $270,000 x \1/4\ = $67,500.
State B's share = $270,000 x \3/4\ = $202,500.

Subpart F--Plans and Information Requirements

Overview

    Subpart F describes the types of plans and information requirements 
for commercial leases, limited leases, ROW grants, and RUE grants for 
renewable energy activities. The subpart outlines the timing of 
submission, content requirements, and necessary MMS approvals for each 
of the plans. The types of required plans are described in the next 
section. The lessee, grant holder, or operator must submit the 
appropriate plan to MMS for review and approval before beginning any 
activities covered by that plan.

Types of Plans

    Three types of plans are required, depending on the type of 
instrument held and the activity to be conducted:
    (1) Site Assessment Plan (SAP),
    (2) Construction and Operations Plan (COP), and
    (3) General Activities Plan (GAP).
    The SAP and the COP will be used for commercial leases, while the 
GAP will be used for limited leases and grants.
    As originally proposed, MMS would not allow a lease or grant holder 
to conduct any activities on the OCS without proper plan submittal and 
MMS approval. Based on comments received on the proposed rule, MMS has 
determined that geophysical and geological surveys, hazards surveys, 
archaeological surveys, and baseline collection studies (e.g., 
biological) conducted for the purpose of preparing SAPs, COPs, and GAPs 
may be permitted under the authority of the U.S. Army Corps of 
Engineers (ACOE). In many instances, these types of activities may be 
verified under the ACOE's Nationwide Permit program. We have revised 
the regulation to remove the requirement for MMS approval of these 
types of surveys and the requirement to describe the survey designs in 
a SAP, COP, or GAP. Companies may now conduct these surveys pre- or 
post-lease/grant, subject to ACOE verification under the Nationwide 
Permit program or other appropriate authorization and other applicable 
Federal law. However, MMS strongly encourages applicants to coordinate 
any pre- or post-lease/grant survey activities with MMS and the ACOE 
prior to their conduct to ensure that the activities being proposed 
meet the conditions of the Nationwide Permits. Certain Nationwide 
Permits require that an applicant notify the ACOE and receive 
verification that an activity is covered under a Nationwide Permit 
prior to start of construction. Applicants will be required to submit 
the results of their surveys as part of their SAP, COP, or GAP. The 
data collected from these surveys must meet the technical requirements 
that MMS will set forth in guidance to be published after the 
promulgation of this rule. By making this change, MMS believes that 
applicants will be able to complete their plans more efficiently. Any 
construction activities (e.g., installation of a meteorological tower, 
a meteorological buoy) or the testing of technology devices needs to be 
proposed in the SAP, COP, or GAP. We have changed the text of the rule 
to reflect these changes.
    Based on comments, we have reduced the number of NEPA and CZMA 
reviews for a commercial lease issued competitively from three to two 
by combining the lease sale and site assessment activities into one 
review. This, in combination with the elimination of MMS approval of 
surveys (e.g., geophysical, geological, archaeological, and 
biological), should greatly reduce the review time for commercial 
leases issued competitively. The MMS will prepare a NEPA document and a 
consistency determination to cover the lease sale and site assessment 
activities. The MMS may review the effects of geophysical, geological, 
archaeological, and biological surveys in the NEPA documentation for 
the lease sale, as well.
    Also based on comments received on the proposed rule, we will now 
include technology testing as an activity that may be conducted under a 
SAP or a GAP. We have changed the definition of site assessment 
activities to ``those initial activities conducted to characterize a 
site on the OCS, such as resource assessment surveys (e.g., 
meteorological and oceanographic) or technology testing.''
    Prior to conducting site assessment activities on a commercial 
lease, a lessee will be required to submit a SAP. The SAP describes the 
activities (e.g., installation of meteorological towers, meteorological 
buoys) a lessee plans to perform for the characterization of their 
commercial lease, including the project easement, or to test technology 
devices. The SAP must include data from: (1) Physical characterization 
surveys (e.g., geological and geophysical surveys or hazards surveys); 
and (2) baseline environmental surveys (e.g., biological or 
archaeological surveys). If you propose to construct a facility or 
combination of facilities, which MMS determines to be complex or 
significant, you must also comply with the requirements of subpart G.
    A COP will be required before a lessee may begin construction and/
or operations on a commercial lease, including a project easement. The 
COP describes the construction, operations, and conceptual 
decommissioning activities the lessee plans to undertake.

[[Page 19686]]

    A GAP will be required before a lessee or grantee may begin 
activities on a limited lease (including a project easement, as 
applicable) or ROW grant or RUE grant. The GAP describes the site 
assessment and/or development activities. The GAP must describe: (1) 
Resources assessment surveys (e.g., meteorological and oceanographic 
data collection); (2) technology testing; and (3) construction 
activities, operations, and conceptual decommissioning plans for all 
planned facilities. The GAP must include the data from: (1) Physical 
characterization surveys (e.g., geological and geophysical surveys or 
hazards surveys); (2) baseline environmental surveys (e.g., biological, 
archaeological, or socioeconomic surveys); and (3) construction 
activities, operations, and conceptual decommissioning plans for all 
planned facilities.
    The rule requires two plans for a commercial lease (SAP and COP) 
and one plan (GAP) for limited leases and ROW grants or RUE grants. We 
chose this approach for a commercial lease because there are two 
distinct phases for commercial development for renewable energy 
projects: (1) A site assessment phase, where a lessee may install a 
meteorological or marine data collection facility to assess renewable 
energy resources; and (2) a generation of power phase, which includes 
construction, operations, and decommissioning. As described previously, 
physical characterization studies (e.g., geological and geophysical 
surveys, hazard and archaeological surveys) and baseline collection 
studies (e.g., biological) may be permitted under the ACOE Nationwide 
Permit program and other applicable Federal law. Therefore, the survey 
designs will not need to be included in a SAP, COP, or GAP, nor will 
they need to receive approval from MMS prior to implementation.
    Limited leases are limited to resource measurements or technology 
testing and are not for the commercial generation of power. Therefore, 
only one phase exists, and only one plan, a GAP, is required for this 
phase. Having only one plan for one phase allows for a simple process 
to conduct resource evaluation or technology testing. The same 
reasoning was used for ROW grants and RUE grants--these grants do not 
involve commercial power generation activities on the OCS.

Overview of Required Plans

    The two plans for commercial development are a SAP and a COP. These 
plans should clearly describe the general approach to the project and 
include detailed technical and environmental information. The two-plan 
approach for commercial activities sets two defined times for 
conducting NEPA analysis and CZMA reviews. These plans must include all 
the information needed to conduct appropriate NEPA analysis and for 
compliance with other Federal laws. Based on comments received on the 
proposed rule, we have revised the rule to clarify the CZMA reviews for 
SAPs, COPs, and GAPs. For purposes of Federal consistency, MMS will 
treat plans (COPs and GAPs) associated with competitively-issued 
commercial and limited leases as OCS plans which must comply with 
requirements of CZMA subsection 307(c)(3)(B) and 15 CFR part 930, 
subpart E. The applicant must submit one copy of their CZMA consistency 
certification with each plan. The MMS will prepare a consistency 
determination for a competitive lease sale and site assessment 
activities.
    The MMS will treat SAPs and GAPs associated with noncompetitively-
issued commercial and limited leases as Federal licenses and permits 
which must comply with requirements of CZMA subsection 307(c)(3)(A) and 
15 CFR part 930, subpart D. The applicant will be required to prepare a 
consistency certification and concurrently submit it to the affected 
State's CZM agency and MMS along with the proposed SAP or GAP and all 
supporting information required in 15 CFR part 930, subpart D. The 
details of the CZMA process are described under ``CZMA Compliance for 
Plans.'' This approach includes a predictable schedule for development 
and milestones for plan submittals.
    The SAP covers resource, other data gathering activities (e.g., 
meteorological, oceanographic), and the testing of technology devices 
that would be conducted to gather information needed to develop the 
project. The SAP includes the results and data collected from physical 
characterization surveys (e.g., geological and geophysical surveys or 
hazards surveys) and baseline environmental surveys (e.g., biological 
and archaeological surveys) conducted prior to the preparation of the 
SAP and under the authority of the ACOE and other Federal laws. 
However, MMS strongly encourages applicants to coordinate any pre- or 
post-lease/grant survey activities with MMS and the ACOE prior to their 
conduct. Applicants will be required to submit the results of their 
surveys as part of their SAP, COP, or GAP. The data collected from 
these surveys must meet the technical requirements that MMS will set 
forth in guidance to be issued after the rule is final. The data 
gathered under the SAP would be used to develop the COP for the 
project. The site assessment activities may include resource assessment 
surveys (e.g., meteorological and oceanographic data collection), and 
the testing of technology devices. Additionally, a SAP may include the 
construction of simple facilities for data collection, such as 
meteorological towers. However, if you are constructing a facility or a 
combination of facilities deemed by MMS to be complex or significant, 
you must comply with the requirements of subpart G and submit a Safety 
Management System. The SAP expires when MMS approves the COP. To 
conduct site assessment type activities after a COP is approved, the 
applicant would need to include those activities in the COP.
    To facilitate development of a commercial lease, an applicant may 
choose to submit to MMS a COP with the SAP. In this case, the NEPA 
analysis, CZMA review, and compliance with other relevant laws would be 
done at one time. If the applicant decides to submit the COP and SAP 
simultaneously, then sufficient data and information must be submitted 
with the COP for MMS to conduct needed technical, NEPA, and other 
required reviews. If new information becomes available after the 
applicant completes the site assessment activities, then the COP may 
require revision. Furthermore, MMS may need to conduct additional 
reviews, including NEPA, CZMA, and other Federal reviews, on any new 
information.
    The COP describes the construction and operations for the project 
itself, covering all planned facilities, including onshore and support 
facilities, and all anticipated project easements needed for the 
project. It also describes the actual activities related to the project 
including construction, commercial operations, maintenance, and 
decommissioning. The COP does not need to repeat information that was 
previously submitted in the SAP, but should reference such material. 
The COP includes the results of the activities conducted under the SAP. 
The COP must demonstrate to MMS that the operator has planned and is 
prepared to conduct the proposed activities in a manner that conforms 
to their responsibilities under these regulations. It also must 
demonstrate that the project:
    <bullet> Will conform to all applicable laws, implementing 
regulations, lease provisions and stipulations, or conditions of the 
commercial lease;
    <bullet> Is safe;
    <bullet> Does not unreasonably interfere with other uses of the 
OCS, including

[[Page 19687]]

those involved with national security or defense;
    <bullet> Does not cause undue harm or damage to natural resources, 
life (including human and wildlife), property, or the marine, coastal, 
or human environment;
    <bullet> Does not cause undue harm or damage to sites, structures, 
or objects of historical or archaeological significance;
    <bullet> Will use best available and safest technology, will use 
best management practices, and will employ properly trained personnel.
    Limited leases, ROW grants, and RUE grants will require approval of 
a GAP. The GAP includes components of both the SAP and the COP. 
However, we expect that limited leases, ROWs, and RUEs would involve 
less extensive activities than those planned for a commercial lease. 
The applicant may include multiple scenarios in the GAP to address the 
potential outcome of the site assessment activities, so that multiple 
locations would be evaluated as part of the NEPA analysis. If, after 
evaluating the site, the initially planned location of a facility needs 
to be relocated, additional NEPA would not be required since 
alternative locations were evaluated in the NEPA for the GAP.

Site Assessment Plan (SAP)

    The SAP describes the activities (e.g., installation of 
meteorological towers, meteorological buoys) a lessee plans to perform 
for the characterization of their commercial lease, including testing 
technology devices. These activities would take place during the site 
assessment term of a commercial lease. The data obtained during site 
assessment is used to develop a COP and is included in the COP. The 
activities proposed in a SAP may include the installation of facilities 
(including vessels) attached to the sea floor, such as meteorological 
towers to measure winds, radars to assess avian resources, or marine 
data collection facilities to measure waves or currents; or the testing 
of technology devices. The MMS expects that the applicant would conduct 
physical characterization surveys and baseline environmental surveys 
prior to the preparation of the SAP, and include the results and 
supporting data from those surveys in the SAP. Information contained in 
the SAP must provide sufficient detail for MMS to adequately assess the 
proposed activities and ensure compliance with NEPA and other relevant 
Federal laws.
    The MMS must approve the SAP before the operator can begin 
conducting any proposed activities. If MMS approves the SAP, the 
operator may begin conducting activities, including the installation of 
facilities. However, if you are constructing a facility or a 
combination of facilities deemed by MMS to be complex or significant, 
you must comply with the requirements of subpart G and submit a Safety 
Management System before construction may begin.
    When MMS receives the applicant's COP for technical and 
environmental review, MMS may extend the site-assessment term during 
the review period, if necessary. The SAP expires when MMS approves the 
COP. Therefore, if an applicant anticipates conducting site assessment 
activities anytime during the COP period, those activities must be 
described in the COP, and the applicant must receive MMS approval of 
the COP before conducting the activities.
    Subpart F outlines what issues the applicant must address in the 
SAP such as legal requirements, safety, other uses of the OCS, 
environmental protection, technology, best management practices, and 
the use of properly trained personnel. The provisions also outline the 
information that the applicant must submit with the SAP as well as 
additional information that must be submitted if the SAP includes 
activities that require the installation of bottom-founded facilities. 
The MMS envisions that most such facilities would be relatively simple 
and temporary. However, if an operator proposes to install a facility 
that the MMS determines is significant or complex, additional 
information would be required. If MMS makes such a determination, you 
must submit a Facility Design Report and a Facility Fabrication and 
Installation Report, as described in subpart G, and a Safety Management 
System, as described in subpart H, before any construction may begin. 
The Facility Design Report provides MMS with a detailed description of 
the proposed facility or facilities and locations on the OCS. The 
Fabrication and Installation Report describes the lessee/operator's or 
grant holder's plans for both the facility's fabrication and 
installation process. The MMS will review these reports prior to each 
stage of these operations.
    One commenter suggested that applicant preparation and MMS review 
and approval of the Facility Design Report and Fabrication and 
Installation Report should proceed in parallel with MMS's preparation 
of the EIS and review of the COP. The commenter suggested that 
proceeding in parallel could reduce the overall project development 
timeline by 4-6 months. The regulations bind the Facility Design Report 
and the Fabrication and Installation Report to the approved COP. This 
is necessary to ensure that these two reports cover the activities and 
facilities as approved. As written, the regulations do not prevent an 
applicant from submitting the Facility Design Report or the Fabrication 
and Installation Report with the COP. However, we envision that there 
will be changes to the COP during its review and that such changes 
could result in revisions to the Facility Design Report and the 
Fabrication and Installation Report. If that situation occurs, the 
applicant would have to revise and resubmit the two required reports. 
We do not see that submittal of the Facility Design Report and 
Fabrication and Installation Report with the COP saves much, if any, 
time leading up to the installation of facilities, but we will not 
prevent an applicant from doing so.
    For commercial leases acquired noncompetitively, you must submit 
the SAP within 60 days after the MMS determination of no competitive 
interest. The MMS will not issue the lease until the SAP is approved. 
If you acquired a commercial lease competitively, you must submit the 
SAP within 6 months of the date of lease issuance. A commenter raised 
the concern that these time periods may not provide enough time to 
conduct the needed assessments and incorporate them into a plan. We 
believe that the time period is adequate to prepare a SAP. However, if 
more time is needed, the lessee may request a suspension under Sec.  
285.416(c) after acquiring the lease. We will conduct technical and 
environmental reviews. In this case, the NEPA and CZMA reviews would be 
completed at the lease sale stage. However, if new information from the 
SAP submittal showed changes in impacts identified at the lease sale 
stage, the SAP could be subjected to further environmental review. If 
the lease was obtained noncompetitively, the applicant will be required 
to prepare a consistency certification and concurrently submit it to 
the affected State's CZM agency and MMS along with the proposed SAP or 
GAP, as well as all supporting information required in 15 CFR part 930, 
subpart D. After the reviews are complete, MMS would approve, 
disapprove, or approve with modifications the SAP. Based on comments 
received on the proposed rule, we have revised the rule to clarify our 
process for when a State objects to the consistency certification. When 
a State objects to the consistency certification, MMS will not approve 
the plan if: (1) Consistency has not been

[[Page 19688]]

conclusively presumed; or (2) the State objects to the applicant's 
consistency certification, and the Secretary of Commerce has not found 
that the permitted activities are consistent with the objectives of the 
CZMA or are otherwise necessary in the interest of national security.
    In response to a comment asking how MMS will determine ``affected 
States'' for CZMA purposes, MMS will coordinate with the appropriate 
CZMA agencies and consult with regional task forces. The MMS will 
specify the terms and conditions of the approval, and you must 
incorporate these into your SAP. If the SAP is approved or approved 
with modifications, the applicant must conduct all site assessment 
activities in accordance with the provisions of the approved plan. The 
MMS may require the applicant to certify compliance with certain of the 
terms and conditions as identified by the MMS. If MMS does not approve 
the SAP, we will provide an explanation of our disapproval, and the 
applicant may modify and resubmit the revised SAP.
    One commenter asked us to identify the type of document MMS will 
issue as its final decision on a SAP or COP. The MMS will issue 
decision letters for a SAP, COP, and GAP. In addition, where an EIS is 
prepared, a ROD will be issued. In cases where an EA is prepared, 
either a Finding of No Significant Impact would be prepared (in 
addition to the decision letter), or, depending on the outcome of the 
environmental review, an EIS could be prepared.
    One commenter stated that the proposed rule is unclear as to the 
process available to States or other stakeholders to address and remedy 
disagreements arising from the content of the SAP, GAP or COP, other 
than that offered by the comment review process. The commenter stated 
that this process is particularly important where a ROW easement 
crosses the State territorial sea. The commenter recommends that MMS 
develop language to include such a process. The MMS will work closely 
with affected States and local governments to coordinate and consult on 
such activities to ensure that related issues and concerns are 
addressed. For competitive leases, MMS addresses potential impacts from 
a subsea cable route through State waters in the lease sale, COP, and 
GAP NEPA documentation. The MMS may consider performing this assessment 
with an affected State in a joint environmental document. Since MMS's 
authority is limited to the OCS (outside of State waters), the affected 
State would have full authority to decide on access issues within State 
waters.
    If you want to conduct activities not directly addressed in the 
approved SAP, you must provide MMS with a written description of the 
proposed activities and receive approval from MMS before conducting the 
activities. We will determine whether the activities are within the 
scope of the approved SAP or if the SAP needs to be revised. If MMS 
determines that you must revise the SAP, then MMS must approve the 
revised SAP before you can conduct the activities.

Construction and Operations Plan (COP)

    The COP describes the construction, operations, and conceptual 
decommissioning plans for the operations term of any project under a 
commercial lease, including your project easement. Your plan should 
describe all operations and facilities (onshore and offshore) that 
would be installed and used to test, gather, transport, transmit, or 
generate and distribute energy from the lease. The COP should include:
    <bullet> Nominations of CVAs for MMS approval or request of an 
exemption, where required;
    <bullet> Preliminary plans for project design, facility fabrication 
and installation, and production transportation and transmission;
    <bullet> Plans for safety management, inspection, maintenance, and 
monitoring systems; and
    <bullet> The decommissioning concept.
    The rule outlines the process for preparing, submitting, 
processing, and implementing a COP or a combined SAP/COP. The MMS must 
approve the COP or the combined SAP/COP before you can construct any 
facilities for commercial operation.
    As with the SAP, the provisions of the rule outline what a COP must 
contain and demonstrate, as well as how the COP is submitted, 
processed, and authorized. The MMS may require additional specific 
information for submittal with the COP, to aid in the appropriate 
reviews of the project by external agencies and to assist in compliance 
with all relevant Federal laws and regulations (e.g., NEPA, CZMA, ESA, 
and MMPA). We may request additional information if the information 
provided is insufficient. However, the COP does not need to repeat 
information that was previously submitted in the SAP, but should 
reference such material.
    For commercial leases acquired noncompetitively and competitively, 
you must submit a COP within 5 years after MMS approves your SAP. The 
MMS will extend the term of the SAP, if necessary, while conducting the 
technical and environmental reviews of your COP. We will conduct these 
technical and environmental reviews of your COP, including NEPA 
analysis, and, for leases issued competitively, will forward the plan, 
your consistency certification and information required pursuant to 15 
CFR part 930, subpart E to affected States for CZMA review. For leases 
issued in a noncompetitive process, you will be required to prepare a 
consistency certification and concurrently submit it to the affected 
State's CZM agency and MMS along with the proposed COP and all 
supporting information required in 15 CFR part 930, subpart D. After 
the reviews are complete, MMS would approve, disapprove, or approve 
with modifications the COP. Based on comments received on the proposed 
rule, we have revised the rule to clarify our decision process when a 
State objects to the consistency certification. When a State objects to 
the consistency certification, MMS will not approve the plan if: (1) 
Consistency has not been conclusively presumed; or (2) the State 
objects to the applicant's consistency certification, and the Secretary 
of Commerce has not found that the permitted activities are consistent 
with the objectives of the CZMA or are otherwise necessary in the 
interest of national security. The MMS will specify the terms and 
conditions of the approval, and they would be incorporated into your 
COP. If MMS approves the COP or approves the COP with modifications, 
the applicant must conduct all of the proposed activities in accordance 
with the provisions of the approved plan and certify compliance with 
those terms and conditions identified by the MMS. If MMS does not 
approve the COP, we will provide an explanation of our disapproval, and 
the applicant may modify and resubmit the revised COP.
    If MMS approves your project easement, we will issue an addendum to 
your lease specifying the terms of the easement. The project easement 
will provide for areas off the original lease areas for cable, 
pipeline, or associated facilities. Areas for cable and pipelines may 
not exceed 200 feet (61 meters) in width, unless safety and 
environmental factors during construction and maintenance of the 
associated cables or pipelines require a greater width. For associated 
facilities, the area is limited to the area reasonably necessary for 
power stations for electricity or

[[Page 19689]]

pumping stations for other energy products such as hydrogen.
    You may propose in your COP to develop your lease in phases. You 
must clearly provide details as to the portions of the lease that will 
be initially developed for commercial operations, and the portions of 
the lease that will be reserved for subsequent phased development.
    If MMS approves your COP, you must commence construction by the 
date given in your construction schedule, as stated in the approved 
COP. The MMS may approve a deviation from this schedule. However, 
before you may construct and install facilities under the approved COP, 
you must submit to MMS a Facility Design Report and a Fabrication and 
Installation Report. You may commence commercial operations 30 days 
after the CVA or project engineer has submitted the final Fabrication 
and Installation Report to MMS. The activities described in these two 
reports must fall within the scope of the approved COP, or you will be 
required to submit a revision to the COP for approval before commencing 
the activity.
    A COP may require further revisions and potentially require 
additional or new environmental and regulatory reviews. You must notify 
MMS in writing before you conduct any activities not described in your 
approved COP, describing in detail the activities you propose to 
conduct. The MMS will determine whether the proposed activities may be 
conducted under your existing COP or will require a revision to the 
COP. We may request that you provide additional information to us to 
make this determination. The MMS will periodically review an approved 
COP and may determine, based on the significance of any changes in 
information and environmental conditions affecting activities, that 
revisions are necessary. The revisions may require new environmental 
and technical reviews.
    Any time you cease commercial operations without an MMS approved 
suspension, you must notify MMS. The MMS may cancel your lease, and you 
must start the decommissioning process if you cease commercial 
operations for a period longer than 6 months.
    When you complete the commercial operations under your approved 
COP, you must start the decommissioning process described in subpart I 
of this part.

General Activities Plan (GAP)

    The GAP describes the operator's planned activities for a limited 
lease, ROW grant, or RUE grant. It includes information similar to what 
is required in a SAP, as well as additional information concerning 
planned activities throughout the term of the lease or grant. As with 
the SAP, the GAP must be submitted within 6 months of competitive 
issuance of a lease or grant or within 60 days after the determination 
of no competitive interest for a lease or grant being pursued 
noncompetitively. In some cases, a GAP would describe activities that 
are analogous to those covered in a COP for a commercial lease, i.e., 
if you are proposing a facility deemed by MMS to be complex or 
significant. Review, approval, and revision of a GAP will be subject to 
requirements and procedures similar to those applied to SAPs and COPs.

NEPA Compliance for Plans

    The MMS action on the SAP, COP, and GAP would require the 
preparation of appropriate NEPA documentation. We anticipate that, 
initially, all commercial development projects will require an EIS for 
the COP. Also, we anticipate that limited leases and RUE and ROW grants 
will initially require an EIS. After the impacts and related mitigation 
of renewable energy activities on the OCS are better understood, it is 
possible that projects may require an EA. As the program matures, MMS 
will review the impacts from the program and make a determination 
whether we can recommend categorical exclusions for certain activities 
to the Council on Environmental Quality. For competitively issued 
commercial leases, MMS will prepare a lease sale and site assessment 
NEPA review to include the SAP activities. The applicant must provide 
MMS with the data necessary to complete the required NEPA documentation 
for other types of plans. This would include a description of those 
resources, conditions, and activities that could be affected by your 
proposed activities, or that could affect the activities proposed in 
your plan, including associated construction and decommissioning 
activities. An applicant may reference information that was included in 
the MMS NEPA review prepared for the lease. The required information 
would include, but is not limited to, information on the following:
    <bullet> Hazard information including meteorology, oceanography, or 
manmade hazards;
    <bullet> Water quality including turbidity and total suspended 
solids from construction;
    <bullet> Biological resources including benthic communities, marine 
mammals, sea turtles, coastal and marine birds, fish and shellfish, 
plankton, barrier islands, beaches, dunes, wetlands, seagrasses and 
plant life;
    <bullet> Threatened or endangered species including critical 
habitats, as defined by the Endangered Species Act of 1973;
    <bullet> Sensitive biological resources or habitats including 
essential fish habitat, refuges, preserves, special management areas 
identified in coastal management programs (CMPs), sanctuaries, 
rookeries, hard bottom habitats, chemosynthetic communities, and 
calving grounds;
    <bullet> Archaeological resources including historic and 
prehistoric archaeological resources to meet the requirements of the 
National Historic Preservation Act of 1966, as amended, and associated 
regulations;
    <bullet> Social and economic information, including employment, 
existing offshore and coastal infrastructure (including major sources 
of supplies, services, energy, and water), land use, subsistence 
resources and harvest practices, recreation, recreational and 
commercial fishing (including typical fishing seasons, location, and 
type), minority and lower income groups, coastal zone management 
programs, and viewshed;
    <bullet> Coastal and marine uses including military activities, 
vessel traffic, and mineral exploration or development; and
    <bullet> Other resources, conditions, and activities as identified 
by MMS.
    The MMS may decide to use a third party to prepare the NEPA 
document. However, you may ask for our approval to perform, or to 
directly pay a contractor for, the NEPA document (see subpart A, Sec.  
285.111).
    One commenter suggested that in order for States and local 
governments to use the MMS NEPA document for their ``equivalent'' 
environmental process, several analyses and information needs would 
need to be included. The MMS will work closely with affected States and 
local governments to coordinate and consult on activities proposed 
under this program to ensure efficient preparation of environmental 
reviews. These reviews may be conducted jointly by MMS and other 
appropriate agencies or separately.
    The MMS received numerous comments regarding cumulative impacts. It 
was stated that, as more renewable energy projects are developed on the 
OCS, the cumulative effects of those projects may compound individual 
effects and put an additional strain on the ecology of the marine 
environment. The MMS shares the concerns of the commenters regarding 
cumulative effects. We will work closely

[[Page 19690]]

with Federal agencies, affected States, local governments, and other 
stakeholders to coordinate and consult on activities proposed under 
this program and to identify critical issues including their cumulative 
effects. Cumulative effects will be assessed at each stage of 
environmental review of projects, including lease sales, in order to 
identify such effects and to recommend appropriate mitigation measures 
and monitoring.
    One commenter requested that MMS incorporate the requirement of 
adaptive management into the rule. We designed the structure of the 
regulations to reflect the approach of adaptive management. Operating 
companies are required to demonstrate and validate their performance. 
The MMS will set forth terms and conditions to be incorporated into 
plans and will determine when to require adjustments to mitigation and 
monitoring activities based on operating experience. Lessees are 
required to certify compliance with certain of those terms and 
conditions. Also, refer to the preamble discussion in subpart H.
    CZMA Compliance for Plans: Based on comments received on the 
proposed rule, we have clarified the rule with respect to CZMA 
compliance. For purposes of Federal consistency, MMS will treat plans 
(COPs, and GAPs) associated with competitively-issued commercial and 
limited leases as OCS plans which must comply with requirements of CZMA 
subsection 307(c)(3)(B) and 15 CFR part 930, subpart E. The MMS will 
treat COPs associated with noncompetitively-issued commercial leases as 
OCS plans which must comply with requirements of CZMA subsection 
307(c)(3)(B) and 15 CFR part 930, subpart E. The plans must describe 
all federally licensed or permitted activities and operations proposed 
on the MMS-issued lease, ROW grant, or RUE grant. The lease or grant 
holder will be required to prepare a consistency certification to 
submit to MMS with the proposed plan. The MMS will send one copy of the 
plan, supporting information, and consistency certification to the 
affected State CZM agency. The State agency will then determine whether 
the supplied information is adequate for its review. When the State 
agency has adequate information, it will begin its consistency review 
and either concur with or object to the consistency certification. For 
SAPs submitted under a competitive lease, MMS will prepare a 
consistency determination that will cover the lease sale and site 
assessment activities.
    The MMS will treat SAPs and GAPs associated with noncompetitively-
issued commercial and limited leases as Federal licenses and permits 
which must comply with requirements of CZMA subsection 307(c)(3)(A) and 
15 CFR part 930, subpart D. The applicant will be required to prepare a 
consistency certification and concurrently submit it to the affected 
State's CZM Agency and MMS along with the proposed SAP or GAP and all 
supporting information required in 15 CFR part 930, subpart D. The 
State agency will then determine whether the supplied information is 
adequate for its review. When the State agency has adequate 
information, it will begin its consistency review and either concur 
with or object to the consistency certification.
    The MMS will treat a combined COP and SAP associated with a 
noncompetitive commercial lease as a Federal license and permit which 
must comply with requirements of CZMA subsection 307(c)(3)(A) and 15 
CFR part 930, subpart D.
    Subsequent consistency reviews for revisions for SAPs, COPs, and 
GAPs are not required unless MMS determines that the revisions: (1) 
Result in a significant change in the impacts previously identified and 
evaluated; (2) require any additional Federal authorizations; or (3) 
involve activities not previously identified and evaluated.
    For CZMA compliance purposes, when a State objects to the 
consistency certification, MMS will not approve the plan if: (1) 
Consistency has not been conclusively presumed; or (2) the State 
objects to the applicant's consistency certification, and the Secretary 
of Commerce has not found that the permitted activities are consistent 
with the objectives of the CZMA or are otherwise necessary in the 
interest of national security.

NEPA and CZMA Compliance for Additional Reports and Approvals

    The NEPA and CZMA compliance for a project will be addressed in the 
MMS decision process for the SAP, COP, or GAP. The reports and 
applications that are required relating to facility design, 
fabrication, installation, and decommissioning are intended to provide 
MMS with specific technical details on the project as approved in the 
SAP, COP, or GAP. If these documents present activities that fall 
outside the scope of your approved SAP, COP, or GAP, then you will be 
required to submit a revision to your SAP, COP, or GAP. Additional NEPA 
or CZMA review may be required if the revisions for facility design, 
fabrication, installations, or decommissioning:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional authorizations; or
    (3) Propose activities not previously identified and evaluated.

Frequency of NEPA/CZMA Reviews Based on the Type of Lease or Grant

    The number of NEPA and CZMA reviews that would be conducted on your 
lease or grant is determined by the type of lease or grant that you 
hold (Table 2). For a competitive, commercial lease, MMS would conduct 
two NEPA and two CZMA reviews--one NEPA and CZMA review for the lease 
sale action, and the SAP activities, and one NEPA and CZMA review for 
the COP. We reduced the number of reviews we identified in the proposed 
rule from 3 to 2 in the final rule by covering SAP activities in the 
lease issuance reviews (e.g., lease sale or noncompetitive lease NEPA 
documents). This should greatly reduce the processing time for a SAP. 
However, if new information becomes available upon SAP submission that 
identifies potential impacts that were not previously identified and 
evaluated, additional review (including NEPA and CZMA) may be required. 
Applicants with competitive, commercial leases could reduce the review 
time and gain efficiency by submitting the COP with the SAP. The MMS 
received comments to allow the COP and SAP to be submitted 
simultaneously; however, this option was available in the proposed 
rule. It is an option in the final rule for those applicants that 
provide sufficient data and information with the COP for MMS to 
complete the needed technical, NEPA, CZMA, and other required reviews. 
For a noncompetitive commercial lease, two NEPA and two CZMA reviews 
would be required--one for the lease with the SAP and one for the COP. 
Since MMS requires the applicant to submit a SAP or a GAP within 60 
days after the Director issues a determination that there is no 
competitive interest for the lease or grant, the SAP would be reviewed 
under the same review for the lease issuance. Efficiency is gained in 
this example because MMS can conduct reviews on the SAP and the lease 
at the same time. Again, the rule allows the applicant to submit a 
combined SAP/COP, which could result in additional efficiencies.
    For limited leases, two NEPA and two CZMA reviews would be required 
for a competitive limited lease and one review for a noncompetitive 
limited lease. The reviews for the competitive limited lease would be 
conducted on the lease sale action and the GAP, while

[[Page 19691]]

the noncompetitive limited lease would have a simultaneous review of 
the lease issuance and the GAP.
    We envision that all ROW grants and RUE grants would likely be 
noncompetitive. The ROW/RUE issuance action and the GAP would be 
reviewed under NEPA and CZMA simultaneously. In the unlikely case of a 
competitive ROW/RUE grant, a separate NEPA and CZMA review would be 
conducted on the ROW/RUE sale and the GAP. 
[GRAPHIC] [TIFF OMITTED] TR29AP09.008

Section-by-Section Discussion for Subpart F

What plans and information must I submit to MMS before I conduct 
activities on my lease or grant? (Sec.  285.600)

    This section describes the three different types of plans that are 
required to be submitted to MMS for approval. The type of plan that you 
would submit depends on the type of instrument held and the type of 
activity to be conducted: SAP, COP, and GAP. The SAP and the COP are 
used for commercial leases, while the GAP is used for limited leases 
and grants. Prior to conducting site assessment activities (e.g., 
resource data collection, technology testing) on a commercial lease, a 
lessee is required to submit a SAP to MMS for review and approval. A 
COP is required to be submitted to MMS for review and approval before a 
lessee may begin construction and/or operations on a commercial lease, 
including a project easement. A GAP is required to be submitted to MMS 
for review and approval before a lessee may begin activities on a 
limited lease or ROW grant or RUE grant including, if applicable, a 
project easement.
    A commenter suggested that the proposed rule was unclear when a SAP 
and COP or a GAP is required. The comment states, ``The SAP and the COP 
are used for commercial leases, while the GAP would be used for limited 
leases and grants. However, Sec.  285.640(a) notes that the GAP may be 
applicable to the project easement.'' We believe the rule clearly 
states the requirements for submitting the appropriate plan for a 
lease, easement, or ROW. A GAP is used if your limited lease includes a 
project easement. In such a case, the proposed activities for the 
project easement associated with your limited lease would be described 
in a GAP.
    We did not make any changes to this section.

When am I required to submit my plans to MMS? (Sec.  285.601)

    The timing for the submission of your plans depends on whether your 
lease or grant is issued on a competitive or noncompetitive basis 
(refer to subpart B for leases or subpart C for grants for further 
discussion of these types of conveyance). The timing is as follows:
    <bullet> Competitively issued lease or grant: You must submit your 
SAP or GAP within 6 months of issuance.
    <bullet> Noncompetitive lease or grant: You must submit your SAP or 
your GAP within 60 days after the Director issues a determination that 
there is no competitive interest for your lease or grant.
    <bullet> Operations for commercial lease: You must submit a COP or 
a FERC license application at least 6 months before the end of your 
site assessment term if you intend to continue your commercial lease 
with an operations term for your commercial lease.
    The MMS allows you to submit your COP with your SAP. However, you 
must submit the necessary data and information with your COP to allow 
MMS to complete its technical and environmental reviews. In an effort 
to make the process as streamlined as possible, some commenters 
suggested that the MMS combine both the SAP and COP into one step or 
plan, or at least allow the environmental analysis to be completed at 
one time, thereby reducing the burden on project proponents. They 
stated that, in some cases, it may be desirable for the lessee to go 
through both steps, but in others, a lessee may be ready to proceed 
with commercial operations. It was proposed that MMS would greatly 
facilitate development by combining the SAP and COP and their required 
environmental reviews where appropriate and desirable. Section 
285.601(d) states that you may submit your COP with your SAP. The NEPA 
analyses could be performed on both submittals simultaneously.
    For hydrokinetic commercial leases you may submit your FERC license 
application with your SAP. Although details for joint processing of 
such documents have not yet been developed, MMS and FERC will strive to 
establish an efficient process to accomplish review and approval,

[[Page 19692]]

including NEPA analysis. The MMS will be responsible for regulating 
approved site assessment activities, and FERC will be responsible for 
regulating approved construction and operations activities.
    We made conforming changes to this section relating to FERC's role 
in regulating hydrokinetic activity.
    Based on comments, we have reduced the number of NEPA and CZMA 
reviews for a commercial lease issued competitively from three to two 
by combining the lease sale and site assessment activities into one 
review. This, in combination with the elimination of MMS approval of 
site assessment surveys (e.g., geophysical, archaeological, 
biological), should greatly reduce the review time for commercial 
leases issued competitively, and would allow applicants to conduct site 
assessment surveys sooner.
    One commenter noted that it is unclear why MMS has proposed to give 
the applicant only 60 days to prepare the GAP/SAP and all required 
environmental documentation for a noncompetitive lease, while holders 
of competitive leases are given 6 months to produce this documentation. 
The commenter stated that noncompetitive lease applicants should be 
given at least 6 months as well, noting that the physical impacts to be 
evaluated in a SAP or GAP will be the same whether a project is leased 
competitively or noncompetitively. We believe that since an unsolicited 
request for a noncompetitive lease is initiated by the applicant, 60 
days after the publication of a notice of no competitive interest is a 
sufficient time period to prepare the SAP/GAP. The applicant should 
have ample time to gather information prior to application for a lease 
and during the time it takes MMS to make a determination of no 
competitive interest. However, if more time is needed, the lessee may 
request a suspension under Sec.  285.416(c) after acquiring the lease. 
No changes have been made to this section.

What records must I maintain? (Sec.  285.602)

    You must maintain and provide to MMS upon request all data and 
information related to compliance with required terms and conditions of 
your SAP, COP, or GAP. You must meet this requirement until MMS 
releases your financial assurance. Also, while hydrokinetic projects 
will entail obligations and responsibilities relating to FERC 
regulation under licenses and exemptions, under the terms and 
conditions of the lease, you must make available to MMS upon request, 
data and information for all activities conducted on leases issued 
under this part to meet our statutory responsibilities as lessor. We 
did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.603 Through 285.604)

    Sections 285.603 through 285.604 are reserved.

Site Assessment Plan and Information Requirements for Commercial Leases

What is a Site Assessment Plan (SAP)? (Sec.  285.605)

    This section describes a SAP. A SAP contains the plans for 
conducting data gathering and other activities, such as technology 
testing, to characterize a commercial lease, including the project 
easement. A SAP must include the results and supporting data from 
surveys such as physical characterization surveys and baseline surveys. 
It includes additional requirements for both simple and complex 
facilities. This section has been substantially revised. Based on 
comments received on the proposed rule, MMS has determined that 
geophysical and geological surveys, hazards surveys, archaeological 
surveys, and baseline collection studies (e.g., biological) conducted 
for the purpose of preparing SAPs, COPs, and GAPs may be permitted 
under the authority of the ACOE. In many instances, these types of 
activities may be verified under the ACOE's Nationwide Permit program. 
We have revised the regulation to remove the MMS approval of these 
types of surveys and the requirement to describe the survey designs in 
a SAP, COP, or GAP. Project proponents and lessees may now conduct 
these surveys pre- or post-lease/grant, subject to ACOE verification 
under the Nationwide Permit program or other appropriate approval and 
other applicable Federal law. However, MMS strongly encourages 
applicants to coordinate any pre- or post-lease/grant survey activities 
with MMS and the ACOE prior to their conducting such activities to 
ensure that the activities being proposed meet the conditions of the 
Nationwide Permits. Certain Nationwide Permits require that an 
applicant notify the ACOE and receive verification that an activity is 
covered under a Nationwide Permit prior to start of construction. 
Additionally, for competitively issued commercial leases, we will now 
prepare a NEPA document and a consistency determination that covers 
both the lease sale and site assessment activities. Applicants and 
lessees will be required to submit the results of their surveys and 
supporting data as part of their SAP, COP, or GAP. The data collected 
from these surveys must meet the technical requirements that MMS will 
set forth in guidance to be published after the rule is promulgated.
    We also added language stating that MMS will withhold trade secrets 
and commercial or financial information that is privileged or 
confidential from public disclosure under exemption 4 of the FOIA and 
in accordance with the terms of Sec.  285.113. This text was added in 
response to commenters who were concerned about the confidentiality of 
certain proprietary information in their plans.
    One commenter did not believe the construction of two or three 
identical meteorological towers should trigger additional requirements, 
which will add significantly to the time and expense of SAP submission, 
and requested that Sec.  285.605(c) be revised. The MMS revised Sec.  
285.605(d) to clarify the requirement. This section now states that an 
applicant must comply with the requirements of subpart G when they 
propose to construct a facility or combination of facilities that MMS 
determines to be complex or significant.

What must I demonstrate in my SAP? (Sec.  285.606)

    This section provides details on the requirements for a SAP. The 
SAP must demonstrate how a lessee will conform to all applicable laws, 
implementing regulations, lease provisions, and stipulations. The 
activities conducted under a SAP must:
    <bullet> Conform to all applicable laws, implementing regulations, 
lease provisions and stipulations;
    <bullet> Be safe;
    <bullet> Not unreasonably interfere with other uses of the OCS, 
including those involved with national security or defense;
    <bullet> Not cause undue harm or damage to natural resources, life 
(including human and wildlife); property; or the marine, coastal, or 
human environment; or sites, structures, or objects of historical or 
archaeological significance;
    <bullet> Use best available and safest technology;
    <bullet> Use best management practices; and
    <bullet> Use properly trained personnel.
    One revision was made to this section--to state that the SAP must 
demonstrate that the planned site assessment activities will collect 
the necessary information and data required for the COP. One commenter 
requested that MMS not require the exact language, ``Best Available and 
Safest Technology.'' The commenter stated that this requirement is 
overly

[[Page 19693]]

restrictive and inappropriate for a new industry where the economics 
are challenging, the technology is new and evolving, and there are no 
accepted design standards. Instead, the commenter suggested, the MMS 
should require use of ``reasonably available and safe technology,'' 
noting that these facilities will be unmanned during most of their 
operation. Also, the commenter stated that the proposed Sec.  
285.606(a)(2) already requires that proposed activities be ``safe,'' 
and this is sufficient to address safety concerns. The commenter 
concluded that subsection (a)(5) be omitted until and unless a 
sufficient record of scientific measurement studies demonstrates a need 
for a tighter safety standard. We kept the requirement of ``Best 
Available and Safest Technology,'' in Sec.  285.606(a)(5), as it is 
required for activities conducted pursuant to the OCS Lands Act (43 
U.S.C. 1347(b), et seq.).
    One commenter strongly supports the use of best management 
practices to ensure that potential adverse impacts associated with the 
development of renewable energy resources on the OCS are minimized to 
the greatest extent practicable. We were requested to publish the 
applicable best management practices in a specific guidance document, 
which would be updated on a regular basis to reflect recent adaptive 
management strategies, technology development, and monitoring results. 
The MMS prepared a Record of Decision (ROD) in December 2007, for its 
Programmatic EIS on the Alternative Energy Program. The EIS identified 
initial mitigation measures for the new program by adopting 15 interim 
policies and 52 initial best management practices. The ROD is published 
at http://ocsenergy.anl.gov/documents/docs/OCS_PEIS_ROD.PDF. New 
measures will be identified as appropriate. The MMS will provide 
guidance to applicants after the promulgation of this rule. This 
guidance will incorporate these best management practices and interim 
policies.

How do I submit my SAP? (Sec.  285.607)

    This section requires you to submit a paper copy and an electronic 
copy of the SAP to MMS at the address in Sec.  285.110.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.608 Through 285.609)

    Sections 285.608 through 285.609 are reserved.

Contents of the Site Assessment Plan

What must I include in my SAP? (Sec.  285.610)

    This section contains further detailed requirements on what 
information must be submitted for SAP applications, including: 
Identifying information, a discussion of the objectives of the site 
assessment or technology testing proposal, designation of operator (if 
applicable), general structural and project design, fabrication and 
installation information, deployment activities, air emissions, lease 
stipulations, a listing of all Federal, State, and local authorizations 
or approvals for projected site assessment activities, a list of 
entities that you have consulted with regarding the potential impacts 
of your project, how you will mitigate and monitor impacts, CVA 
nomination (if required), decommissioning procedures, a statement about 
other authorizations, financial assurance information, and additional 
information as requested by MMS. For site assessment activities that 
include the installation of any facilities (e.g., a meteorological 
tower, meteorological buoy), additional requirements are listed. They 
include survey results and supporting data from geotechnical, shallow 
hazards, archaeological, geological, and biological surveys.
    This section was revised to state the requirements for survey 
results and supporting data and to provide descriptions of any 
technology testing activities. We also made conforming revisions 
relating to FERC's role in regulating hydrokinetic activity.

What information must I submit with my SAP to assist MMS in complying 
with NEPA and other relevant laws? (Sec.  285.611)

    This section requires the applicant to submit information needed to 
assist MMS in preparing compliance documents related to NEPA (EIS or 
EA) and other relevant laws, including MSA, ESA, and CZMA, that are 
required for SAP approval. As stated previously, MMS will prepare a 
NEPA review and consistency determination to cover both the lease sale 
and site assessment activities. If the action proposed under a 
competitively issued commercial lease does not change from that 
described in the environmental reviews conducted for the lease sale and 
site assessment activities, then no further environmental review would 
be required for a SAP. However, if MMS determines that the action has 
changed to the extent that the previously conducted environmental 
reviews do not cover the activities, then MMS would notify the 
applicant that additional information and reviews would be required. In 
this case, and for noncompetitively issued commercial leases, this 
includes information on resources, conditions, and activities listed in 
this section that may be affected by or may affect activities proposed 
and approved in your SAP.
    This section also requires the applicant for a noncompetitively 
issued lease, or if notified by MMS for a competitive commercial lease, 
to submit a consistency certification for CZMA. The consistency 
certification must state that the proposed activities covered in the 
SAP comply with the State(s) approved CMP and that the applicant will 
conduct these activities in a manner consistent with such a program. 
For leases issued noncompetitively, the consistency certification must 
also include ``information'' and ``analysis'' as required by 15 CFR 
part 930, subpart D.
    When leases are issued competitively, the consistency certification 
must also include ``information'' and ``analysis'' as required by 15 
CFR part 930, subpart E.
    We revised this section based on comments requesting us to clarify 
the NEPA and CZMA requirements.

How will my SAP be processed for Federal consistency under the Coastal 
Zone Management Act? (Sec.  285.612)

    This is a new section that explains that processing your SAP will 
be dependent upon how your commercial lease was issued. When your 
commercial lease is competitively issued, MMS will prepare a 
consistency determination for the lease sale and site assessment 
activities. If the action proposed under a competitively issued 
commercial lease does not change from that described in the 
environmental reviews conducted for the lease sale and site assessment 
activities, then no further environmental review would be required for 
a SAP. However, if MMS determines that the action has changed to the 
extent that the previously conducted environmental reviews do not cover 
the activities, then MMS would notify the applicant that additional 
information and reviews would be required. When your commercial lease 
is noncompetitively issued, you must furnish your SAP, consistency 
certification, and other information and analysis required by 15 CFR 
part 930, subpart D, to the State CZM agency and MMS concurrently. This 
section was added in response to comments requesting clarification of 
the CZMA process.

[[Page 19694]]

How will MMS process my SAP? (Sec.  285.613)

    This section describes the MMS review process for a SAP. The MMS 
will review the SAP and determine if it contains all of the required 
information needed to complete the technical and environmental reviews. 
Multiple commenters suggested that, in order to help prevent regulatory 
delays, the MMS should include language that requires the MMS to 
determine completeness of the GAP/SAP/COP within a specific timeframe 
(e.g., 30 days for the SAP/GAP and 60 days for the COP). We did not 
include specific timeframes in the rule, since section 8(p) of the OCS 
Lands Act does not require them. However, in response to comments, 
after the final rule is published, we will issue guidance setting 
target deadlines for MMS processes.
    After MMS has all of the information needed for its reviews, we 
will prepare appropriate NEPA documentation.
    We will consult with relevant Federal, State, and local agencies 
and affected Indian tribes and provide to other Federal, State, and 
local agencies and affected Indian tribes relevant nonproprietary data 
and information pertaining to the proposed site assessment activities, 
as directed by subsections 8(p)(4) and (7) of the OCS Lands Act and by 
other relevant Federal statutory requirements (e.g., ESA and MSA). We 
may request additional information during the review and approval 
process; if you do not provide this information, MMS may disapprove 
your application.
    After MMS completes the technical and environmental reviews, we may 
approve, disapprove, or approve with modifications your SAP. When a 
State objects to the consistency certification, MMS will not approve 
the plan if: (1) Consistency has not been conclusively presumed; or (2) 
the State objects to the applicant's consistency certification, and the 
Secretary of Commerce has not found that the permitted activities are 
consistent with the objectives of the CZMA or are otherwise necessary 
in the interest of national security. If we disapprove your SAP, we 
will provide the reasons for the disapproval, and you will have an 
opportunity to revise and resubmit your SAP. If we approve your SAP, it 
will be subject to terms and conditions set by MMS. We will specify 
these terms and conditions, and they will be incorporated into your 
SAP. Examples of the types of terms and conditions we may require 
include, but are not limited to, terms and conditions from an ESA 
incidental take statement; conservation recommendations resulting from 
essential fish habitat (EFH) consultations; and other safety, 
operational, or environmental protection measures. Also, you must 
certify compliance with certain terms and conditions identified by MMS. 
The certification would include summary reports, a description of 
mitigation measures and monitoring, the effectiveness of the mitigation 
measures, and new proposed mitigation measures.
    We revised this section in response to comments requesting us to 
clarify the CZMA process that will be followed and requests to include 
affected Indian tribes in our consultation process. We also renumbered 
this section.

Activities Under an Approved SAP

When may I begin conducting activities under my approved SAP? (Sec.  
285.614)

    After MMS approves the SAP, the applicant may begin to conduct 
approved activities. However, if you are constructing a facility or a 
combination of facilities deemed by MMS to be complex or significant, 
as provided in Sec.  285.613(a)(1), you must comply with the 
requirements of subpart G and submit your Safety Management System, 
required by Sec.  285.810, before construction may begin.
    This section was revised to state that a lessee may begin approved 
activities that are not deemed by MMS to be complex or significant 
following approval of the SAP. In the proposed rule, MMS did not allow 
site assessment activities to be performed prior to approval of a SAP. 
Now those surveys may be conducted under the verification of the ACOE 
and other applicable Federal law, as described previously. However, MMS 
strongly encourages applicants to coordinate with MMS and the ACOE 
prior to conducting any pre- or post-lease/grant survey activities. 
Applicants will be required to submit the results of their surveys as 
part of their SAP, COP, or GAP.

When may I construct OCS facilities proposed under my SAP? (Sec.  
285.614 proposed)

    The provisions of this proposed section were deleted or combined 
with Sec.  285.615.

What other reports or notices must I submit to MMS under my approved 
SAP? (Sec.  285.615)

    This section identifies the various reports and notifications that 
must be submitted to MMS and their timing. These include the initial 
survey report, an annual summary of findings from site assessment 
activities, notification of completion of construction and installation 
activities, and annual compliance certification. The compliance 
certification includes a listing and description of any mitigation 
measures and monitoring and their effectiveness. The MMS will protect 
the annual summary information from public disclosure, as provided in 
Sec.  285.113.

Reserved Section (Sec.  285.616)

    Section 285.616 is reserved.

What activities require a revision to my SAP, and when will MMS approve 
the revision? (Sec.  285.617)

    The lessee or operator must notify MMS in writing, including a 
detailed description, prior to conducting any activities not described 
in the SAP, and we will determine if those activities require a 
revision to the approved SAP. We will also conduct periodic reviews of 
the activities being conducted under an approved SAP to ensure that 
they fall within the scope of the SAP. The SAP will likely be required 
to be revised if the applicant plans to:
    <bullet> Conduct activities not described in the approved SAP,
    <bullet> Change the size or type of facility or equipment used,
    <bullet> Change the surface location of a facility or structure,
    <bullet> Add another facility or structure not contemplated in the 
approved SAP,
    <bullet> Change the location of the onshore support base from one 
State to another or to a new base requiring expansion, or
    <bullet> Change the location of bottom disturbances by 500 feet 
(152 meters), or changes to any other activity specified by MMS.
    A revision to the SAP may require NEPA, CZMA, and other reviews if 
MMS determines that the proposed revision could result in a significant 
change in impacts previously identified and evaluated; require any 
additional Federal authorizations; or involve activities not previously 
identified and evaluated.
    The MMS may approve the revision to the SAP if the revision is 
designed to prevent or minimize adverse effects to the coastal and 
marine environments, including their physical, atmospheric, and 
biological components to the extent practicable; and if the revision is 
otherwise consistent with the provisions of subsection 8(p) of the OCS 
Lands Act.
    We did not make any changes to this section.

What must I do upon completion of approved site assessment activities? 
(Sec.  285.618)

    After completing activities under the approved SAP, the lessee must 
initiate

[[Page 19695]]

the decommissioning process for any facilities built for conducting SAP 
activities. However, if you submit a COP to MMS, you may leave the 
facilities in place while MMS reviews the COP. You are not required to 
start decommissioning if the facilities are authorized to remain in 
place under your approved COP. However, if MMS determines that the 
facilities built for conducting SAP activities may not remain in place, 
then the decommissioning process described in subpart I of this part 
must be initiated. Upon the termination of your lease, you must 
initiate this same decommissioning process for all facilities 
authorized by your approved COP.
    We made conforming revisions to this section relating to FERC's 
role in regulating hydrokinetic activity.

Reserved Section (Sec.  285.619)

    Section 285.619 is reserved.

Construction and Operations Plan for Commercial Leases

What is a Construction and Operations Plan (COP)? (Sec.  285.620)

    This section provides the basic requirements for the COP. The COP 
describes your construction, operations, and conceptual decommissioning 
plans under your commercial lease, including your project easement. The 
COP must include the location of the operations and facilities; the 
land, labor, material, and energy requirements associated with such 
operations and facilities; and the environmental and safety safeguards. 
The COP must cover all proposed activities and operations, including 
activities associated with constructing and maintaining project 
easements. The MMS must approve the COP before any construction and 
operation can begin.
    It should be noted that COPs are required only for OCS renewable 
energy activities other than hydrokinetic activity. Since construction 
and operations relating to OCS hydrokinetic activity are regulated 
under the FERC licensing process, the construction and operations 
information for hydrokinetic commercial leases will be submitted to 
FERC in the form of a license application.
    This section was revised to include a provision that MMS will 
withhold trade secrets and commercial or financial information that is 
privileged or confidential from public disclosure under exemption 4 of 
the FOIA and in accordance with the terms of Sec.  285.113.

What must I demonstrate in my COP? (Sec.  285.621)

    This section describes what the lessee must demonstrate in the COP. 
The COP must demonstrate how proposed activities conform to all 
applicable laws, implementing regulations, lease provisions and 
stipulations or conditions of the commercial lease. In addition, the 
COP must demonstrate that the proposed activity is:
    <bullet> Safe;
    <bullet> Does not unreasonably interfere with other uses of the 
OCS;
    <bullet> Does not cause undue harm or damage;
    <bullet> Uses best available and safest technology;
    <bullet> Uses best management practices; and
    <bullet> Uses properly trained personnel.
    We did not make any changes to this section. One commenter 
requested that MMS not require the strict language ``Best Available and 
Safest Technology.'' The commenter stated that this requirement is 
overly restrictive and inappropriate for a new industry where the 
economics are challenging, the technology is new and evolving, and 
there are no accepted design standards. Instead, the commenter 
suggested, the MMS should require use of ``reasonably available and 
safe technology,'' noting that these facilities will be unmanned during 
most of their operation. Further, the commenter stated that the 
proposed Sec.  285.606(a)(2) already requires that proposed activities 
be ``safe,'' which is sufficient to address safety concerns. The 
commenter suggested that subsection (a)(5) could be omitted until and 
unless a sufficient record of scientific measurement studies 
demonstrates a need for a tighter safety standard. We kept the 
requirement of ``Best Available and Safest Technology,'' as it is 
required for activities conducted pursuant to the OCS Lands Act. Best 
available and safest technologies are those that are economically 
feasible for use when failure of equipment would have a significant 
effect on safety, health, or the environment. We believe this is a 
reasonable requirement.

How do I submit my COP? (Sec.  285.622)

    This section provides the requirements for submitting the COP and 
future revisions. The lessee must submit one hard copy and one 
electronic version of the COP to MMS. The lessee may submit information 
to cover the project easement with the original submission of the COP, 
or at a later time as a revision to the COP.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.623 Through 285.624)

    Sections 285.623 through 285.624 are reserved.

Contents of the Construction and Operations Plan

What survey activities must I conduct to obtain approval for the 
proposed site of facilities? (Sec.  285.625 proposed)

    We moved the requirements proposed in Sec.  285.625 to Sec.  
285.626, so that all of the information that is required in the COP is 
located together. Section 285.625 is now reserved.

What must I include in my COP? (Sec.  285.626)

    This section lists the project-specific information that must be 
included in the COP. We incorporated proposed Sec.  285.625 to this 
section so that all of the information that is required in the COP is 
located together.
    Before MMS will approve the site of the commercial facilities 
proposed for the project, you must submit the results of the listed 
surveys with supporting data to MMS in your COP. The required surveys 
and activities include:
    <bullet> Shallow hazard surveys;
    <bullet> Geological surveys;
    <bullet> Geotechnical surveys;
    <bullet> Archaeological resource surveys;
    <bullet> Biological surveys; and
    <bullet> An overall site investigation.
    You should conduct these surveys and activities prior to the 
preparation of your SAP.
    This section was revised to state the requirement to include the 
results and supporting data from the listed surveys in your COP. 
Results and supporting data from any socioeconomic surveys that you 
might conduct should be submitted with your COP, pursuant to Sec.  
285.627, to assist MMS in complying with NEPA and other Federal laws. 
The COP does not need to repeat information that was previously 
submitted in the SAP, but should reference such material.
    Additional required information includes:
    <bullet> Identifying information;
    <bullet> The construction and operation concept;
    <bullet> Designation of an operator;
    <bullet> Lease stipulation and compliance information;
    <bullet> A location plat;
    <bullet> General structural and project design, fabrication, and 
installation information; including how you will use a CVA to review 
and verify each stage of the project (if required);
    <bullet> All cables and pipelines, including lines on project 
easements;

[[Page 19696]]

    <bullet> A description of the deployment activities;
    <bullet> A list of solid and liquid wastes generated;
    <bullet> A listing of chemical products used;
    <bullet> A description of any vessels, vehicles, and aircraft that 
will be used to support the activities;
    <bullet> A general description of the operating procedures and 
systems;
    <bullet> Decommissioning and site clearance procedures;
    <bullet> A listing of all Federal, State, and local authorizations, 
approvals, or permits that are required;
    <bullet> Proposed measures for avoiding, minimizing, reducing, 
eliminating, and monitoring environmental impacts;
    <bullet> A summary of information incorporated by reference;
    <bullet> A list of entities with whom you communicated, or with 
whom you will communicate, regarding potential impacts associated with 
the proposed activities;
    <bullet> Reference information;
    <bullet> Financial assurance statements;
    <bullet> CVA nominations (if required);
    <bullet> Construction schedule;
    <bullet> Air quality information as described in Sec.  285.659; and
    <bullet> Any other information required by MMS.
    This section was revised to change the word ``consulted'' to 
``communicated'' and the word ``consulting'' to ``communicate.'' This 
clarifies our intent to require communication, not consultation, 
concerning the potential impacts of your proposed activities. 
Previously, the air quality requirements were in subpart F, and we 
integrated the air quality requirements into this section. The MMS will 
clearly describe all plan requirements in guidance to applicants after 
promulgation of the rule. The MMS also plans to hold workshops to 
explain the provisions of the rule following publication.

What information and certifications must I submit with my COP to assist 
the MMS in complying with NEPA and other relevant laws? (Sec.  285.627)

    This section discusses additional submittal requirements to assist 
MMS in complying with NEPA and other relevant laws, including MSA, ESA, 
and CZMA. The information must include the resources, conditions, and 
activities listed in this subpart that could be affected by proposed 
activities or that could affect proposed construction, operation, and 
decommissioning activities. A lessee may reference information that was 
included in the MMS NEPA review prepared for the lease. The lessee must 
include one copy of the consistency certification for the project to 
verify compliance with each State's approved CMP, including required 
``information'' and ``analysis'' per Sec.  285.627(a)(9). Also, the 
lessee must submit an oil spill response plan and the Safety Management 
System for the project.
    This section was expanded in response to comments requesting more 
detail on the information requirements for MMS compliance with NEPA and 
other relevant laws. We included a new table that describes this 
information more clearly. Additionally, MMS will prepare guidance to 
applicants after the rule is promulgated and will hold workshops on the 
final rule. This section was also modified to clearly state that MMS 
will require a lessee to submit an electronic version of its 
consistency certification so that MMS will be able to easily provide it 
to State CZM agencies.

How will MMS process my COP? (Sec.  285.628)

    This section discusses how MMS will review the submitted COP and 
determine if it contains the information necessary to conduct the 
technical and environmental reviews. The MMS will notify the applicant 
if the COP lacks any information needed for the reviews. We will 
prepare appropriate NEPA documentation and forward one copy of the COP, 
consistency certification, and associated data and information under 
the CZMA to the State's CZM agency. When appropriate, we will 
coordinate and consult with, and provide relevant, nonproprietary data 
and information to, relevant State, Federal, and local agencies and 
affected Indian tribes, as directed by subsections 8(p)(4) and (7) of 
the OCS Lands Act and by other relevant Federal statutory requirements 
(e.g., ESA and MSA) and Executive Orders. We may request additional 
information during the review and approval process; if you do not 
provide this information, MMS may disapprove your COP.
    After MMS completes the technical and environmental reviews, we may 
approve, disapprove, or approve with modifications your COP. When a 
State objects to the consistency certification, MMS will not approve 
the plan if: (1) Consistency has not been conclusively presumed; or (2) 
the State objects to the applicant's consistency certification, and the 
Secretary of Commerce has not found that the permitted activities are 
consistent with the objectives of the CZMA or are otherwise necessary 
in the interest of national security. If we approve your COP, it will 
be subject to terms and conditions set forth by MMS. The lessee must 
certify compliance with certain terms and conditions required under 
Sec.  285.633(b). If MMS disapproves your COP, we will inform you of 
the reasons, and you will have an opportunity to resubmit a revised 
plan making the necessary corrections. The MMS may suspend the term of 
your lease, as appropriate, to allow this to occur. If a project 
easement is approved, MMS will issue an addendum to the lease 
specifying the terms of the project easement.
    We revised this section to include coordination and consultation 
with affected Indian tribes. We also revised the section based on 
comments requesting that we clearly state how MMS's decision process 
will take place when a State objects to a consistency certification.

May I develop my lease in phases? (Sec.  285.629)

    In the COP, the lessee may request to develop the commercial lease 
in phases. To support this request, the lessee must provide details 
about the portions of the lease that will be initially developed for 
commercial operations, and those portions of the lease that will be 
reserved for subsequent phased development.
    This option to develop a lease in phases applies only for non-
hydrokinetic lease activities. Those lessees conducting hydrokinetic 
activities requiring a FERC license may only develop their project per 
the terms of their license.
    We did not make any changes to this section.

Reserved Section (Sec.  285.630)

    Section 285.639 is reserved.

Activities Under an Approved COP

When must I initiate activities under an approved COP? (Sec.  285.631)

    After MMS approves the COP, the lessee must commence construction 
by the date given in the construction schedule, and included as a part 
of your approved COP, unless MMS approves a deviation from the 
schedule.
    We did not make any changes to this section.

What documents must I submit before I may construct and install 
facilities under my approved COP? (Sec.  285.632)

    This section describes documents that must be submitted to MMS for 
review, before construction and installation of facilities may begin 
under an approved COP. This includes a Facility Design Report and a 
Fabrication and Installation Report for facilities proposed for 
commercial operations. The requirements for these reports are

[[Page 19697]]

found in Sec.  285.701 and 702. The activities described in these 
reports must fall within the scope of the approved COP. If they are not 
within the scope of the approved COP, the lessee will be required to 
submit a revision to the COP for MMS approval, before commencing the 
activity.
    We did not make any changes to this section.

How do I comply with my COP? (Sec.  285.633)

    After completing the environmental and technical reviews of the 
COP, if MMS approves your COP, we will specify terms and conditions to 
be incorporated into your COP. These terms and conditions will be 
considered as part of the COP, and you must comply with them. Examples 
of the types of terms and conditions we may require include, but are 
not limited to: (1) Terms and conditions from the ESA incidental take 
statement; (2) conservation recommendations resulting from EFH 
consultations; and (3) other safety, operational, or environmental 
protection measures. You must certify compliance with certain terms and 
conditions identified by MMS. The certification would include summary 
reports, a description of mitigation measures and monitoring, the 
effectiveness of the mitigation measures, and new proposed mitigation 
measures.
    We did not make any changes to this section.

What activities require a revision to my COP, and when will MMS approve 
the revision? (Sec.  285.634)

    The lessee or operator must notify MMS in writing, including a 
detailed description, prior to conducting any activities not described 
in the COP, and we will determine if those activities require a 
revision to the approved COP. We will also conduct periodic reviews of 
the activities being conducted under an approved COP to ensure that 
they fall within the scope of the COP. The COP will likely be required 
to be revised if the lessee plans to:
    <bullet> Conduct activities not described in the approved COP;
    <bullet> Change the size or type of facility or equipment used;
    <bullet> Change the surface location of a facility or structure;
    <bullet> Add another facility or structure not contemplated in the 
approved COP;
    <bullet> Change the location of the onshore support base from one 
State to another or to a new base requiring expansion;
    <bullet> Change the location of bottom disturbances by 500 feet 
(152 meters);
    <bullet> Respond to structural failure of one or more facilities; 
or
    <bullet> Make changes to any other activity specified by MMS.
    A revision to the COP may require NEPA, CZMA, and other reviews if 
MMS determines that the proposed revision could result in a significant 
change in impacts previously identified and evaluated; require any 
additional Federal authorizations; or involve activities not previously 
identified and evaluated.
    The MMS may approve the revision to the COP if the revision is 
designed to prevent or minimize adverse effects to the coastal and 
marine environments, including their physical, atmospheric, and 
biological components to the extent practicable; and the revision is 
otherwise consistent with the provisions of subsection 8(p) of the OCS 
Lands Act.
    Commenters recommended that a distinct recovery plan to address 
structural failure of one or more facilities, regardless of the cause, 
be a mandatory component in the rule rather than a general description 
of operating procedures in case of emergencies. In response to this 
comment, the rule requires that the lessee submit to MMS a revised COP 
(see Sec.  285.634(c)(7)) to describe its response to a structural 
failure of one or more facilities. The MMS will conduct a NEPA 
evaluation of the proposed revision to the COP and develop specific 
terms and conditions of approval for the project. The MMS requires 
certification of compliance with certain terms and conditions of plans.

What must I do if I cease activities approved in my COP before the end 
of my commercial lease? (Sec.  285.635)

    The lessee must notify MMS any time commercial operations are 
ceased without an MMS approved suspension. We may cancel the lease if 
activities are ceased for an indefinite period that is longer than 6 
months, and you must initiate the decommissioning process described in 
subpart I of this part.
    We did not make any changes to this section.

What notices must I provide MMS following approval of my COP? (Sec.  
285.636)

    The lessee must notify MMS, in writing, of the following events 
within the time periods provided:
    <bullet> No later than 30 days after commencing activities 
associated with the placement of facilities on the lease area under a 
Fabrication and Installation Report;
    <bullet> No later than 30 days after completion of construction and 
installation activities under a Fabrication and Installation Report; 
and
    <bullet> At least 7 days before commencing commercial operations.
    We did not make any changes to this section.

When may I commence commercial operations on my commercial lease? 
(Sec.  285.637)

    For non-hydrokinetic projects (i.e., wind), the lessee may commence 
commercial operations 30 days after the CVA or project engineer has 
submitted to MMS the final report for the fabrication and installation 
review.
    If the lessee's proposed activities require a FERC license or 
exemption (i.e., hydrokinetic activities), then the terms of the 
license or exemption govern when the lessee may begin commercial 
operations.
    We changed the rule to now allow a CVA or a project engineer to 
submit the fabrication and installation review to MMS and to 
acknowledge FERC license requirements relating to initiation of 
commercial hydrokinetic operations. These revisions were in response to 
comments.

What must I do upon completion of my commercial operations as approved 
in my COP or FERC license? (Sec.  285.638)

    After completing operations on your lease, you must initiate the 
decommissioning process as set forth in subpart I of this part. If your 
project activities are instead governed by a FERC license, then the 
terms of your FERC license and MMS requirements will dictate your 
decommissioning activities.
    We made conforming revisions to this section relating to FERC's 
role in regulating hydrokinetic activity.

Reserved Section (Sec.  285.639)

    Section 285.639 is reserved.

General Activities Plan Requirements for Limited Leases, ROW Grants, 
and RUE Grants

What is a General Activities Plan (GAP)? (Sec.  285.640)

    The GAP describes proposed activities and operations for the 
assessment and development of a limited lease or grant including, if 
applicable, a project easement. A GAP contains the plans for resource 
data gathering, operations, and the testing of technology devices to 
characterize a limited lease or grant. A GAP must include the results 
and supporting data from surveys such as physical characterization 
surveys and baseline surveys. It includes requirements for 
construction, activities, and

[[Page 19698]]

decommissioning plans for all planned facilities, including onshore and 
support facilities that you will construct and use for your project 
including project easements. It includes additional requirements for 
both simple and complex facilities, or if you intend to apply for a 
project easement. You must receive MMS approval of your GAP before you 
can begin activities on your lease or grant. For a ROW grant or RUE 
grant that is issued competitively, you must submit your GAP within 6 
months of issuance. For a ROW grant or RUE grant issued 
noncompetitively, you must submit your GAP within 60 days of the 
determination of no competitive interest. The MMS will evaluate your 
request for a noncompetitive grant and GAP simultaneously.
    This section has been substantially revised. Based on comments 
received on the proposed rule and a re-interpretation of subsection 
8(p) of the OCS Lands Act, as amended, MMS has determined that 
geophysical and geological surveys, hazards surveys, archaeological 
surveys, and baseline collection studies (e.g., biological) conducted 
for the purpose of preparing SAPs, COPs, and GAPs are permitted under 
the authority of the ACOE. In many instances, these types of activities 
may be verified under the ACOE Nationwide Permit program. We have 
revised the rule to remove the MMS approval of these types of surveys 
and the requirement to describe the survey designs in a SAP, COP, or 
GAP. Project proponents may now conduct these surveys pre- or post-
lease/grant, subject to ACOE verification under the Nationwide Permit 
program or other appropriate authorization and other applicable Federal 
law. However, MMS strongly encourages applicants to coordinate any pre- 
or post-lease/grant survey activities with MMS and the ACOE prior to 
their conduct to ensure that the activities being proposed meet the 
conditions of the Nationwide Permits. Certain Nationwide Permits 
require that an applicant notify the ACOE and receive verification that 
an activity is covered under a Nationwide Permit prior to start of 
construction. Lessees will be required to submit the results of their 
surveys and supporting data as part of their SAP, COP, or GAP.
    We also added provisions in this section stating that MMS will 
withhold trade secrets and commercial or financial information that is 
privileged or confidential from public disclosure under exemption 4 of 
the FOIA and in accordance with the terms of Sec.  285.113. This text 
was added in response to commenters who were concerned about the 
confidentiality of certain proprietary information in their plans.
    One commenter did not believe the construction of two or three 
identical meteorological towers should trigger additional requirements, 
which will add significantly to the time and expense of a GAP 
submission, and requested that proposed Sec.  285.640(b) be revised. 
The MMS revised the rule to clarify the requirement. We revised Sec.  
285.645(c) to state that a lessee must comply with the requirements of 
subpart G if the lessee proposes to construct a facility or combination 
of facilities which MMS determines to be complex or significant.

What must I demonstrate in my GAP? (Sec.  285.641)

    The GAP must demonstrate that the applicant plans and is prepared 
to conduct the proposed activities in a manner that:
    <bullet> Conforms to all applicable laws (e.g., NEPA, MSA, ESA, and 
CZMA), implementing regulations, lease provisions, and stipulations;
    <bullet> Is safe;
    <bullet> Does not unreasonably interfere with other uses of the 
OCS, including those involved with national security or defense;
    <bullet> Does not cause undue harm or damage to natural resources; 
life (including human and wildlife); property; the marine, coastal, or 
human environment; or sites, structures, or objects of historical or 
archaeological significance;
    <bullet> Uses best available and safest technology;
    <bullet> Uses best management practices; and
    <bullet> Uses properly trained personnel.
    We did not make any changes to this section. One commenter 
requested that MMS not require the strict language ``Best Available and 
Safest Technology.'' The commenter stated that this requirement is 
overly restrictive and inappropriate for a new industry where the 
economics are challenging, the technology is new and evolving, and 
there are no accepted design standards. Instead, the commenter 
suggested that the MMS should require use of ``reasonably available and 
safe technology,'' noting that these facilities will be unmanned during 
most of their operation. The commenter stated that proposed Sec.  
285.641(e) already requires that proposed activities be ``safe,'' and 
this is sufficient to address safety concerns. The commenter 
recommended that subsection (a)(5) be omitted until and unless a 
sufficient record of scientific measurement studies demonstrates a need 
for a tighter safety standard. We kept the requirement of ``Best 
Available and Safest Technology,'' as it is required for activities 
conducted pursuant to the OCS Lands Act.

How do I submit my GAP? (Sec.  285.642)

    This section provides the requirements for submitting the GAP. The 
lessee must submit one paper copy and one electronic version of the GAP 
to MMS. The lessee may submit information to cover the project easement 
with the original submission of the GAP, or at a later time as a 
revision to the GAP.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.643 Through 285.644)

    Sections 285.643 through 285.644 are reserved.

Contents of the General Activities Plan

Section 285.645 What must I include in my GAP?

    This section lists the project-specific information that must be 
included in the GAP.
    This includes: Identifying information, a discussion of the 
objectives of the site assessment or technology testing proposal, 
designation of operator (if applicable), general structural and project 
design, fabrication and installation information, deployment 
activities, air emissions, lease stipulations, a listing of all 
Federal, State, and local authorizations or approvals for projected 
site assessment activities, a list of entities that you have 
communicated with regarding the potential impacts of your project, how 
you will mitigate and monitor impacts, CVA nomination (if required), 
decommissioning procedures, a statement about other authorizations, 
financial assurance information, and additional information as 
requested by MMS. If you are applying for a project easement, or 
constructing a facility or a combination of facilities deemed by MMS to 
be complex or significant, you must provide the following information 
in addition to what is required in paragraphs (a) and (b) of this 
section and comply with the requirements of subpart G: The construction 
and operation concept, all cable and pipeline plans including cables on 
project easements, a description of the deployment activities, a 
general description of the operating procedures and systems, contact 
information, CVA information, construction schedule, and other 
information as required by MMS.
    For the installation of any facilities (e.g., meteorological tower, 
meteorological buoy, technology testing

[[Page 19699]]

device, anchored vessels, transmission substations), you are required 
to also include survey results and supporting data from: Geotechnical, 
shallow hazards, archaeological, geological, and biological surveys.
    This section was revised to state the requirement for survey 
results and supporting data and descriptions of any technology testing 
activities.

What information and certifications must I submit with my GAP to assist 
MMS in complying with NEPA and other relevant laws? (Sec.  285.646)

    This section discusses the information that must be submitted with 
the GAP to assist MMS in complying with NEPA and other relevant laws. 
For NEPA compliance, the lessee or grantee must provide information on 
resources, conditions, and activities listed in this section that could 
be affected by or could affect your proposed activities. In addition, 
the lessee or grantee must submit information for CZMA compliance 
including one copy of the consistency certification required by CZMA 
and required ``information'' and ``analysis'' as required in Sec.  
285.646.
    This section was expanded in response to comments requesting more 
detail on the information requirements for MMS compliance with NEPA and 
other relevant laws. We included a new table that describes this 
information more clearly. Some commenters requested us to describe in 
the rule the specific requirements for baseline information. The MMS 
will prepare guidance to applicants after the rule is promulgated and 
will hold workshops on the final rule.

How will my GAP be processed for Federal consistency under the Coastal 
Zone Management Act? (Sec.  285.647)

    This section explains that processing of your GAP will be dependent 
upon how your limited lease, ROW, or RUE was issued. If your limited 
lease, ROW grant, or RUE grant is competitively issued, you must submit 
one copy and one electronic copy of your consistency certification to 
MMS along with other necessary information and analysis required in 15 
CFR part 930, subpart E. After MMS has determined that all GAP 
information requirements are met and has prepared its NEPA compliance 
document, we will forward this information to the affected State's CZM 
Agency. If your limited lease, ROW grant, or RUE grant is 
noncompetitively issued, you must furnish your SAP, consistency 
certification, and other information and analysis required by 15 CFR 
part 930, subpart D, to the State CZM Agency and MMS concurrently. This 
is a new section that we added in response to comments to clarify the 
CZMA process.

How will MMS process my GAP? (Sec.  285.648)

    This section discusses how MMS will review the submitted GAP and 
determine if it contains the information necessary to conduct our 
technical and environmental reviews. The MMS will review the submitted 
GAP and determine if it contains all the required information necessary 
to conduct our technical and environmental reviews. If the GAP lacks 
information needed for the reviews, we will notify the applicant and 
request the necessary information. We will prepare appropriate NEPA 
documentation. When appropriate, we will coordinate and consult with 
relevant State and Federal agencies as directed by subsections 8(p)(4) 
and (7) of the OCS Lands Act and by other relevant Federal statutory 
requirements (e.g. ESA and MSA), and provide to other State and Federal 
agencies relevant data and information pertaining to the proposed site 
assessment activities. We may request additional information during the 
review and approval process; if you do not provide this information, 
MMS may disapprove your application.
    After MMS completes the technical and environmental reviews, MMS 
may approve, disapprove, or approve with modifications your GAP. When a 
State objects to the consistency certification, MMS will not approve 
the plan if: (1) Consistency has not been conclusively presumed; or (2) 
the State objects to the applicant's consistency certification, and the 
Secretary of Commerce has not found that the permitted activities are 
consistent with the objectives of the CZMA or are otherwise necessary 
in the interest of national security. If we disapprove your GAP, we 
will provide the reasons for the disapproval, and you will have an 
opportunity to revise and resubmit your GAP. If we approve your GAP, it 
will be subject to terms and conditions set forth by MMS. We will 
specify these terms and conditions, and they will be incorporated into 
your GAP. Examples of the types of terms and conditions we may require 
include, but are not limited to: (1) Terms and conditions from an ESA 
incidental take statement; (2) conservation recommendations resulting 
from EFH consultations; and (3) other safety, operational, or 
environmental protection measures. Also, you must certify compliance 
with certain of these terms and conditions as identified by MMS. The 
certification would include summary reports, a description of 
mitigation measures and monitoring, the effectiveness of the mitigation 
measures, and new proposed mitigation measures. If a project easement 
is approved, MMS will issue an addendum to the lease specifying its 
terms.
    This section was revised in response to comments to clarify the 
CZMA process for a GAP.

Reserved Section (Sec.  285.649)

    Section 285.649 is reserved.

Activities Under an Approved GAP

When may I begin conducting activities under my GAP? (Sec.  285.650)

    After MMS approves the GAP, the lessee may begin conducting 
activities that do not involve the construction of facilities on the 
OCS.

When may I construct complex or significant OCS facilities on my 
limited lease or any facilities on my project easement proposed under 
my GAP? (Sec.  285.651)

    After MMS approves the GAP, the lessee may begin to conduct 
approved activities. However, the lessee also must comply with the 
requirements of subpart G and submit your Safety Management System, 
required by Sec.  285.810, before construction may begin, if the lessee 
is applying for a project easement, or installing a facility or a 
combination of facilities deemed by MMS to be complex or significant as 
provided in Sec.  285.648(a)(1).
    Additionally, in the proposed rule, MMS did not allow site 
assessment activities to be performed prior to approval of a GAP. Now 
those surveys may be conducted under the authority of the ACOE and 
other applicable Federal law, as described previously. However, MMS 
strongly encourages applicants to coordinate any pre- or post-lease/
grant survey activities with MMS and the ACOE prior to conducting such 
activities. Lessees will be required to submit the results of their 
surveys as part of their SAP, COP, or GAP. The data collected from 
these surveys must meet the technical requirements that MMS will set 
forth in guidance to be issued after the rule is promulgated.

How long do I have to conduct activities under an approved GAP? (Sec.  
285.652)

    For a limited lease, after MMS approves the GAP, the lessee must 
conduct the approved activities within 5 years unless MMS renews the 
term. For an ROW grant or RUE grant, the time for conducting approved 
activities is provided in the terms of the grant.
    We did not make any changes to this section.

[[Page 19700]]

What other reports or notices must I submit to MMS under my approved 
GAP? (Sec.  285.653)

    This section lists the various reports and notifications that must 
be submitted to MMS. These include the initial survey report, notice of 
completion of construction and installation activities, annual 
compliance certification, an annual report of findings that result from 
conducting the activities approved under the GAP, and an annual 
compliance certification of certain terms and conditions of your GAP 
that MMS identifies. The compliance certification includes a listing 
and description of any mitigation measures and monitoring and their 
effectiveness. If you determine that either the measures or monitoring 
were not effective, then you must include recommendations for new 
measures or monitoring methods. You must also submit an annual summary 
report of the findings from any activities that you conduct under your 
approved GAP and the results of those activities. The information from 
this report will be protected as provided in Sec.  285.113.
    We did not make any changes to this section.

Reserved Section (Sec.  285.654)

    Section 285.654 is reserved.

What activities require a revision to my GAP, and when will MMS approve 
the revision? (Sec.  285.655)

    The lessee or grantee must notify MMS in writing prior to 
conducting any activities not documented in the GAP. The MMS will 
determine if those activities require a revision to the approved GAP. 
We will also conduct periodic reviews of the activities being conducted 
under an approved GAP to ensure that they fall within the scope of the 
GAP. The GAP will likely be required to be revised if you plan to:
    <bullet> Conduct activities not described in the approved GAP;
    <bullet> Change the size or type of facility or equipment used;
    <bullet> Change the surface location of a facility or structure;
    <bullet> Add another facility or structure not contemplated in the 
approved GAP;
    <bullet> Change the location of the onshore support base from one 
State to another or to a new base requiring expansion;
    <bullet> Change the location of bottom disturbances by 500 feet 
(152 meters);
    <bullet> Respond to structural failure of one or more facilities; 
or
    <bullet> Change to any other activity specified by MMS.
    Revisions to the GAP will require NEPA and other reviews if MMS 
determines that the proposed revision could result in a significant 
change in impacts previously identified and evaluated; could require 
any additional Federal authorizations; or could involve activities not 
previously identified and evaluated.
    The MMS may approve the revision to the GAP if the revision is 
designed not to cause undue harm or damage to natural resources; or to 
sites, structures, or objects of historical or archaeological 
significance; and the revision is otherwise consistent with the 
provisions of subsection 8(p) of the OCS Lands Act.

What must I do if I cease activities approved in my GAP before the end 
of my term? (Sec.  285.656)

    The lessee or grantee must notify the MMS upon ceasing activities 
under an approved GAP without an approved suspension. If activities are 
ceased for an indefinite period that exceeds 6 months, MMS may cancel 
the lease or grant under Sec.  285.437, and the lessee or grantee must 
initiate the decommissioning process, as set forth in subpart I of this 
part.
    We did not make any changes to this section.

What must I do upon completion of approved activities under my GAP? 
(Sec.  285.657)

    After completing the activities approved under the GAP, the lessee 
or grantee must initiate the decommissioning process, as required in 
subpart I of this part.
    We did not make any changes to this section.

Cable and Pipeline Deviations

Can my cable or pipeline construction deviate from my approved COP or 
GAP? (Sec.  285.658)

    This section discusses the requirements related to the construction 
of cables, pipelines, and facilities so as to minimize deviations from 
the approved plan under the limited lease or grant.
    If MMS determines that significant changes have occurred requiring 
an adjustment to your lease or grant before construction of a cable or 
pipeline, it will consider modification to your ROW grant, RUE grant, 
or lease addendum for a project easement in connection with your COP or 
GAP. This section has been revised to make clear that modifications to 
your grant or lease addendum would require MMS and you to agree on such 
modification. If MMS determines that a deviation occurred after you 
have constructed your cable or pipeline, you would be required to 
notify affected lessees or ROW/RUE grant holders, and you would be 
required to relinquish the unused portion of the lease or grant. 
Substantial deviations could result in the cancellation of the lease or 
grant.
    We did not make any changes to this section.

What requirements must I include in my SAP, COP, or GAP regarding air 
quality? (Sec.  285.659)

    This section was relocated from subpart H to clarify that the air 
quality requirements are part of the SAP, COP, or GAP. This section 
discusses compliance with the Clean Air Act (42 U.S.C. 7409) and its 
implementing regulations. The section informs the applicant of 
requirements if their project is located in the western Gulf of Mexico 
or if it is located anywhere else on the OCS. If air quality modeling 
is needed, the section outlines how to establish a modeling protocol. 
Finally, for projects located in the Gulf of Mexico, the number of 
copies to be submitted is stated and the types of information required.

Subpart G--Facility Design, Fabrication, and Installation

Overview
    As indicated in the discussion of subpart F, your plan (SAP, COP, 
or GAP) would include general descriptions for project design and 
facility fabrication and installation. Subpart G describes the various 
detailed technical reports that the MMS will require lessees, 
operators, and grant holders to submit that address the final design, 
fabrication, and installation of facilities on a lease or grant. These 
reports will be submitted after MMS approves the SAP, COP, or GAP, as 
applicable.
    Subpart G also describes a third-party verification process that 
will require lessees, operators, and grant holders to use a CVA to 
verify and certify that projects are designed, fabricated, and 
installed in conformance with accepted engineering practices and with 
the submitted reports. However, MMS may waive the requirement to use a 
CVA, under certain conditions. If you are not required to use a CVA, 
your project engineer will perform functions similar to the CVA.
Certified Verification Agent (CVA)
    The CVA is responsible for conducting an independent assessment of 
the facility design and the fabrication and installation processes to 
ensure that facilities are designed, fabricated, and installed in 
conformance with accepted engineering practices and the approved plans 
and applications.

[[Page 19701]]

    The CVA will also ensure that repairs and major modifications are 
completed in conformance with accepted engineering practices. The CVA 
will certify and report to the lessee, operator, or grant holder and 
MMS on the status of each phase included in the Facility Design Report 
and the Fabrication and Installation Report. The CVA must submit 
interim reports, as required by the Director, and a final report 
covering the adequacy of each phase.
    The MMS received comments requesting that we either remove the CVA 
requirement or only require CVAs on high-impact or high-risk projects. 
Concerns with cost, redundancy, and the fact that most projects will be 
developed under a project-financing structure, with the lender 
providing an independent engineer to review design and construction, 
were cited as reasons for forgoing the CVA. In response to these 
concerns, MMS is including a provision that will allow the lessee, 
grant holders, or operators to request a waiver of the CVA requirement.
    The MMS will consider waivers on a case-by-case basis. Requests for 
waivers must be submitted with the SAP, COP, or GAP, and we will 
provide a decision on the waiver, along with the decision on the SAP, 
COP, or GAP. However, if MMS waives the CVA requirement, the project 
engineer will be expected to perform the same duties and 
responsibilities as the CVA.
    To receive a waiver, the company must demonstrate to MMS the 
following:
    <bullet> For design of the structure, you must demonstrate that the 
facility will be of a standardized design that has been used 
successfully in a similar environment and the installation will be 
designed in conformance with accepted engineering practices.
    <bullet> For the fabrication of your structure(s), you must 
demonstrate that the facility manufacturer has successfully 
manufactured similar facilities and the facility will be fabricated in 
conformance with accepted engineering practices.
    <bullet> For the installation of your structure(s), you must 
demonstrate that the contractor has successfully installed similar 
facilities in a similar offshore environment and your structure(s) will 
be installed in conformance with accepted engineering practices.
    <bullet> For repairs and major modifications of a structure, you 
must demonstrate that the repairs and major modifications are completed 
in conformance with accepted engineering practices.
Facility Design Report
    This report provides MMS with a detailed description of the 
proposed facility or facilities and locations on the OCS. The lessee, 
operator, or grant holder is required to provide to MMS a complete set 
of structural drawings, structural loading information, detailed design 
criteria, and foundation information including mooring or tethering 
systems in the case of a floating facility. The CVA, nominated in your 
plan, will conduct an independent assessment of the design of the 
facility and ensure that it is designed to withstand the environmental 
and functional load conditions appropriate for the intended service 
life at the proposed location. The CVA must submit interim reports, as 
required by the Director, and a final report covering the adequacy of 
the design phase.
Fabrication and Installation Report
    Under the final rule, Fabrication and Installation Reports will be 
combined. The Fabrication and Installation Report describes the plans 
for both the facility's fabrication (including the manufacture, 
assembly, and construction) and installation process. The report will 
include a schedule for fabrication and installation as well as detailed 
engineering and environmental information. The CVA, nominated in the 
SAP, COP or GAP, or the project engineer, will conduct an independent 
assessment of the fabrication and installation phases. The CVA or 
project engineer must use good engineering judgment and practices in 
conducting an independent assessment of fabrication and installation 
activities and ensure that these activities are conducted according to 
the approved applications. The CVA or project engineer must submit 
interim reports, as required by the Director, and a final report 
covering the adequacy of the fabrication and installation phase.
    After fabrication and installation activities are completed, the 
CVA or project engineer must submit a certification statement 
certifying that the fabrication and installation were conducted in 
accordance with accepted engineering practices.
Section-by-Section Discussion for Subpart G

Reports

What reports must I submit to MMS before installing facilities 
described in my approved SAP, COP, or GAP? (Sec.  285.700)

    This section lists two reports required prior to installing 
facilities: (1) Facility Design Report; and (2) Fabrication and 
Installation Report. The MMS has 60 days to review these reports and 
notify the applicant of any objections. If MMS does not have any 
objections, the applicant may begin to construct and install the 
facilities at the end of the 60-period.
    If there are any objections, MMS will notify you either verbally or 
in writing within 60 days of receipt. After notification of objections, 
MMS may follow up with written correspondence outlining its specific 
objections to the report and identifying certain actions necessary to 
resolve the agency's objections. You cannot commence activities 
addressed in such report until all objections are resolved to MMS's 
satisfaction.
    The MMS did not make any changes to this section.

What must I include in my Facility Design Report? (Sec.  285.701)

    The Facility Design Report provides specific details of the design 
of all facilities, including cables and pipelines, outlined in your 
approved SAP, COP, or GAP. This report must demonstrate that the design 
conforms to the responsibilities of a lessee contained in these 
regulations. This section includes a list of required contents for the 
report and details the required contents of each element of the report. 
The report must include:
    <bullet> A cover letter;
    <bullet> A location plat;
    <bullet> Front, side, and plan view drawings;
    <bullet> A complete set of structural drawings;
    <bullet> A summary of environmental data used for design;
    <bullet> A summary of the engineering design data;
    <bullet> A complete set of design calculations;
    <bullet> Project-specific studies used in the facility design or 
installation;
    <bullet> Description of the loads imposed on the facility;
    <bullet> A geotechnical report; and
    <bullet> A certification statement and location of records.
    In response to comments, we added a provision to this section that 
clarifies that MMS will withhold trade secrets and commercial or 
financial information that is privileged or confidential from public 
disclosure under exemption 4 of the FOIA and in accordance with the 
terms of Sec.  285.113.

What must I include in my Fabrication and Installation Report? (Sec.  
285.702)

    The Fabrication and Installation Report describes how facilities 
will be

[[Page 19702]]

fabricated and installed in accordance with the design criteria 
identified in the Facility Design Report, the approved SAP, COP, or 
GAP; and generally accepted industry standards and practices. The 
Fabrication and Installation Report must demonstrate how your 
facilities will be fabricated and installed in a manner that conforms 
to the responsibilities of a lessee contained in these regulations. 
This section includes a list of required contents for the report, and 
details the required contents of each element of the report. The report 
must include:
    <bullet> A cover letter;
    <bullet> A schedule for fabrication and installation;
    <bullet> Fabrication information;
    <bullet> Installation process information;
    <bullet> Federal, State, and local permits (e.g., EPA, ACOE);
    <bullet> Environmental information; and
    <bullet> Project easement design.
    In response to comments, we added a provision to this section that 
clarifies that MMS will withhold trade secrets and commercial or 
financial information that is privileged or confidential from public 
disclosure under exemption 4 of the FOIA and in accordance with the 
terms of Sec.  285.113. We also added a provision that will allow MMS 
to waive the requirement for a CVA for the Fabrication and Installation 
Report, based on criteria added to Sec.  285.705.

What reports must I submit for project modifications and repairs? 
(Sec.  285.703)

    This section requires a report from the lessee on major repairs and 
modifications to certify that the repairs and modifications to the 
project conform with accepted engineering practices. The report must 
also identify the location of all records pertaining to the major 
repairs or major modifications.
    A major repair is a corrective action involving structural members 
affecting the structural integrity of a portion of or all the facility. 
A major modification is an alteration involving structural members 
affecting the structural integrity of a portion of or all the facility.
    We moved this section from Sec.  285.711, because we changed the 
requirement to always use a CVA for project modifications and repairs. 
We revised this section to state that MMS may require the lessee to use 
a CVA for project modifications and repairs.

Reserved Section (Sec.  285.704)

    Section 285.704 is reserved.

Certified Verification Agent

When must I use a Certified Verification Agent (CVA)? (Sec.  285.705)

    This section details the responsibilities of the CVA. The CVA must 
ensure that facilities are designed, fabricated, and installed in 
conformance with accepted engineering practices, the Facility Design 
Report, and the Fabrication and Installation Report, and ensure that 
repairs and major modifications are completed in conformance with 
accepted engineering practices. The CVA must provide reports of all 
incidents that affect the design, fabrication, and installation of the 
project and its components.
    In response to comments, we added a provision to this section that 
allows MMS to waive the requirement to use a CVA. The new provision 
describes the criteria that MMS will use to decide whether to waive the 
CVA; this revision was made in conjunction with those in Sec. Sec.  
285.701 and 285.702. In addition, we changed the title of this section 
from ``What is the function of a Certified Verification Agent (CVA)?'' 
to ``When must I use a Certified Verification Agent (CVA)?'' to reflect 
the changes made in the purpose of this section. Even if MMS waives the 
requirement that you use a CVA, the project engineer must perform the 
same duties and responsibilities as the CVA.

How do I nominate a CVA for MMS approval? (Sec.  285.706)

    A CVA must be nominated in the SAP, COP, or GAP, as applicable. 
This section describes the process for nominating the CVA and the 
information that must be included in the qualifications statement. The 
section also requires that the verification be conducted by or under 
the direct supervision of registered professional engineers and 
prohibits a CVA from functioning in a way to create a conflict of 
interest.
    We did not make any changes to this section.

What are the CVA's primary duties for facility design review? (Sec.  
285.707)

    The CVA must certify to MMS that the facility is designed to 
withstand the environmental and functional load conditions for the 
intended life at the proposed location. This section lists those 
elements of the design phase that the CVA must independently assess. 
These elements include:
    <bullet> Planning criteria;
    <bullet> Operational requirements;
    <bullet> Environmental loading data;
    <bullet> Load determinations;
    <bullet> Stress analyses;
    <bullet> Material designations;
    <bullet> Soil and foundation conditions;
    <bullet> Safety factors; and
    <bullet> Other pertinent parameters of the proposed design.
    For floating facilities, the CVA must ensure that any requirements 
of the U.S. Coast Guard for structural integrity and stability (e.g., 
verification of center of gravity, etc.) are met.
    We did not make any changes to this section.

What are the CVA's or project engineer's primary duties for fabrication 
and installation review? (Sec.  285.708)

    The CVA or project engineer must certify to the MMS that the 
facilities are fabricated and installed as proposed in the approved 
Facility Design Report and the Fabrication and Installation Report. 
This section details the monitoring and inspection functions of the CVA 
or project engineer during this phase of the project. It also requires 
the CVA or project engineer to inform the lessee when procedures or 
design specifications are changed.
    For the fabrication and installation review, the CVA or project 
engineer must:
    <bullet> Use good engineering judgment and practice in conducting 
an independent assessment of the fabrication and installation 
activities;
    <bullet> Monitor the fabrication and installation of the facility;
    <bullet> Make periodic onsite inspections while fabrication is in 
progress;
    <bullet> Make periodic onsite inspections while installation is in 
progress; and
    <bullet> Certify in a report that project components are fabricated 
and installed in accordance with accepted engineering practices, the 
approved COP, SAP, or GAP, and the Fabrication and Installation Report.
    The report must identify the location of all records pertaining to 
fabrication and installation. The lessee or grantee may commence 
commercial operations or other approved activities 30 days after MMS 
receives the certification report, unless MMS notifies the applicant 
within that time period of objections to the certification report.
    The CVA or project engineer must monitor the fabrication and 
installation of the facility to ensure that it is built and installed 
according to the Facility Design Report and Fabrication and 
Installation Report. If the CVA or project engineer finds that 
fabrication and installation procedures are changed or design 
specifications are modified, the CVA or project engineer must inform 
the applicant.
    We made minor edits to this section to include the applicable 
project engineer functions.

[[Page 19703]]

When conducting onsite fabrication inspections, what must the CVA or 
project engineer verify? (Sec.  285.709)

    The CVA or project engineer must make periodic onsite inspections 
while fabrication of the facility is in progress. The CVA or project 
engineer must verify the following items during these inspections:
    <bullet> Quality control by lessee (or grant holder) and builder;
    <bullet> Fabrication site facilities;
    <bullet> Material quality and identification methods;
    <bullet> Fabrication procedures specified in the Fabrication and 
Installation Report, and adherence to such procedures;
    <bullet> Welder and welding procedure qualification and 
identification;
    <bullet> Structural tolerances specified, and adherence to those 
tolerances;
    <bullet> The nondestructive examination requirements, and 
evaluation results of the specified examinations;
    <bullet> Destructive testing requirements and results;
    <bullet> Repair procedures;
    <bullet> Installation of corrosion-protection systems and splash-
zone protection;
    <bullet> Erection procedures to ensure that overstressing of 
structural members does not occur;
    <bullet> Alignment procedures;
    <bullet> Dimensional check of the overall structure, including any 
turrets, turret-and-hull interfaces, any mooring line and chain and 
riser tensioning line segments; and
    <bullet> Status of quality-control records at various stages of 
fabrication.
    For any floating facilities, the CVA or project engineer must 
ensure that any requirements of the U.S. Coast Guard for structural 
integrity and stability (e.g., verification of center of gravity, etc.) 
have been met. The CVA or project engineer must also consider 
foundations, foundation pilings and templates, and anchoring systems 
and mooring or tethering systems.
    We made minor revisions to this section to include the applicable 
project engineer functions.

When conducting onsite installation inspections, what must the CVA or 
project engineer do? (Sec.  285.710)

    The CVA or project engineer must make periodic onsite inspections 
while installation is in progress. The CVA or project engineer must 
verify, survey, witness, or check the following items during facility 
installation:
    <bullet> Loadout and initial flotation procedures;
    <bullet> Towing operations procedures to the specified location, 
and review the towing records;
    <bullet> Launching and uprighting activities;
    <bullet> Submergence activities;
    <bullet> Pile or anchor installations;
    <bullet> Installation of mooring and tethering systems;
    <bullet> Final deck and component installations; and
    <bullet> Installation at the approved location according to the 
Facility Design Report and the Fabrication and Installation Report.
    For a fixed or floating facility, the CVA or project engineer must 
verify that proper procedures were utilized during the loadout of the 
jacket, decks, piles, or structures from each fabrication site; the 
actual installation of the facility or major modification; and the 
related installation activities.
    For a floating facility, the CVA or project engineer must verify 
that proper procedures were utilized during the loadout of the 
facility; the installation of foundation pilings and templates, and 
anchoring systems; and the installation of the mooring and tethering 
systems.
    The CVA or project engineer must conduct an onsite survey of the 
facility after transportation to the approved location. The CVA or 
project engineer must spot-check the equipment, procedures, and 
recordkeeping as necessary to determine compliance with the applicable 
documents incorporated by reference and the regulations under this 
part.
    In response to comments, MMS changed this section to require the 
CVA or project engineer to verify that proper procedures were followed 
during the operations addressed in the section. This change no longer 
requires the CVA or project engineer to witness all of the activities, 
but rather to verify that proper procedures were used.

Reserved Section (Sec.  285.711)

    Section 285.711 is reserved.

What are the CVA's or project engineer's reporting requirements? (Sec.  
285.712)

    This section details when the CVA or project engineer must submit 
reports to MMS and the lessee or grantee, including interim reports, as 
requested by the MMS. For each report, the CVA or project engineer must 
submit one electronic copy and one paper copy to MMS. In each report, 
the CVA or project engineer must:
    <bullet> Give details of how, by whom, and when the CVA or project 
engineer activities were conducted;
    <bullet> Describe the CVA's or project engineer's activities during 
the verification process;
    <bullet> Summarize the CVA's or project engineer's findings; and
    <bullet> Provide any additional comments that the CVA or project 
engineer deems necessary.
    We made minor revisions to this section to include the applicable 
project engineer functions.

What must I do after the CVA or project engineer confirms compliance 
with the Fabrication and Installation Report on my commercial lease? 
(Sec.  285.713)

    After receiving confirmation of compliance with the Fabrication and 
Installation Report from the CVA or project engineer, the lessee or 
grantee must notify MMS within 10 business days after commencing 
commercial operations.
    We made minor edits to this section to include the applicable 
project engineer functions.

What records relating to SAPs, COPs, and GAPs must I keep? (Sec.  
285.714)

    This section provides requirements for records that the lessee must 
maintain for the duration of the project, until MMS releases the 
required financial assurance. The lessee or grantee must compile, 
retain, and make these records available to MMS representatives. These 
records include:
    <bullet> The as-built drawings;
    <bullet> The design assumptions and analyses;
    <bullet> A summary of the fabrication and installation examination 
records;
    <bullet> The inspection results; and
    <bullet> Records of repairs not covered in the inspection report.
    The lessee or grantee must record and retain the original material 
test results of all primary structural materials during all stages of 
construction. The lessee or grantee must provide MMS with the location 
of these records in the certification statement.
    We did not make any changes to this section.

Subpart H--Environmental and Safety Management, Inspections, and 
Facility Assessments for Activities Conducted Under SAPs, COPs and GAPs

Overview
    This subpart describes requirements to prevent or minimize the 
likelihood of harm or damage to the marine and coastal environments and 
to promote safe operations, including their physical, atmospheric, and 
biological components. The MMS intends to use adaptive management 
practices to help ensure that renewable energy activities are conducted 
safely. Such a system relies on demonstrating and validating actual 
operating performance. The MMS then will require adjustments to

[[Page 19704]]

mitigation and monitoring activities on a case-by-case basis based on 
operating experiences. You must certify compliance with certain terms 
and conditions that the MMS will specify and incorporate into the SAP, 
COP, or GAP.
    We retitled this subpart to reflect FERC's role in regulating 
hydrokinetic activity. Since FERC will regulate construction and 
operations activity on hydrokinetic commercial leases, this subpart 
applies only to the renewable energy activities that will be regulated 
by MMS under approved SAPs, COPs, and GAPs.
Air Quality
    The air quality requirements were moved to subpart F.
Safety Management System
    The safety management system would include, as applicable:
    <bullet> Remote monitoring, control, and shutdown capabilities;
    <bullet> Emergency response procedures;
    <bullet> Fire suppression equipment;
    <bullet> Testing procedures; and
    <bullet> Training.
    These safety management provisions also cover maintenance and 
equipment shutdowns, including reporting and notification requirements, 
as well as requirements relating to both MMS and operator self 
inspections. The safety management system would be required to be 
submitted as part of the COP.
Maintenance and Shutdowns
    This section describes when operators are required to notify MMS of 
shutdowns. Notification is required when safety equipment is taken out 
of service for more than 12 hours. If safety equipment is removed from 
service for more than 60 days, the operator must submit a written 
notice to MMS. The operator must also notify MMS when the equipment is 
returned to service.
Equipment Failure and Adverse Environmental Affects
    These provisions address equipment failure and adverse effects of 
environmental or other conditions. Operators are required to notify MMS 
and repair any equipment failure, including pipelines and cables, as 
soon as practicable. The MMS may require an analysis to determine the 
cause of the failure. The final rule has been revised to clarify what 
repairs must be reported to MMS. The rule also states that MMS may 
require a lessee to revise its COP depending on the magnitude of the 
damages to facilities. If environmental or other conditions adversely 
affect a cable, pipeline, or facility, the operator must submit a 
corrective action plan to MMS; take the actions described in the plan; 
and submit a report to MMS of the actions taken.
Inspections
    The MMS will conduct periodic scheduled and unscheduled inspections 
of OCS renewable energy facilities. The purpose of an MMS inspection is 
to ensure that an operator is conducting operations in accordance with 
all laws, regulations, and MMS-approved plans and to verify that proper 
safety equipment is correctly installed and working properly.
    Operators are required to develop a self-inspection program for all 
facilities that covers all structures including all parts above and 
below the waterline. Each operator must inspect for corrosion and other 
factors affecting the structural integrity of the facility. Operators 
also must submit annually a summary of inspections, including how they 
conducted the inspections; what equipment was used; what repairs were 
made, if any; and the structural condition.
    With regard to hydrokinetic activity regulated under FERC license, 
MMS will retain a role in inspections under the MOU adopted by FERC and 
MMS. We may inspect to ensure compliance with any provision of a lease, 
easement, or right-of-way we issue. The MMS will coordinate such 
inspections with FERC.
Facility Assessments
    This subpart also contains the requirements for facility 
assessments, incorporating sections 17.2.1 through 17.2.5 of the 
American Petroleum Institute Recommended Practice 2A-WSD (API RP 2A-
WSD), as they relate to initiating facility assessments. This proposed 
provision would also require mitigation if a facility did not pass the 
assessment process described in API RP 2A-WSD. We selected the API RP 
2A-WSD because there is a lack of standards for offshore renewable 
energy facilities, and this standard has proven to be an effective 
assessment tool for other OCS structures in U.S. waters. This relates 
to the structure only and does not include production or transmission 
equipment.
Incident Reporting
    This final rule will require that operators report immediately to 
the Director certain significant incidents associated with activities 
regulated under this part. An initial report must be followed within 15 
days by a written report. Significant incidents that require immediate 
notification are identified, and include any incidents resulting in 
fire, explosions, or that involve a fatality. In addition, MMS requires 
submission of a written incident report within 15 days following 
certain types of incidents, including those involving injuries that 
result in the injured not being able to resume all duties the following 
day.
Section-by-Section Discussion for Subpart H

How must I conduct my activities to comply with safety and 
environmental requirements? (Sec.  285.800)

    This section states the performance requirements for using trained 
personnel and technologies, precautions, and techniques to prevent or 
minimize the likelihood of harm or damage to human life and the 
environment. In addition, you must certify compliance with those terms 
and conditions identified in your approved SAP, COP, or GAP.
    We did not make any changes to this section.

How must I conduct my approved activities to protect marine mammals, 
threatened and endangered species, and designated critical habitat? 
(Sec.  285.801)

    This section describes the actions you must take if there is reason 
to believe that protected species or designated critical habitat may be 
affected by your operations. If there is reason to believe that a 
threatened or endangered species may be present or designated critical 
habitat may be affected while you conduct your MMS-approved activities, 
you must notify MMS, and we will consult with appropriate agencies and, 
after consultation, shall identify whether, and under what conditions, 
you may proceed. If there is reason to believe that marine mammals or 
threatened or endangered species may be incidentally taken as a result 
of your MMS-approved activities, you must agree to secure an 
authorization from NOAA or the FWS for incidental taking, including 
taking by harassment, which may result from your actions. This section 
also includes provisions related to mitigating and monitoring measures 
you may be required to take.
    We deleted the references to the SAP, COP, and GAP to clarify that 
this section applies to conducting activities under an approved plan 
and not to the information requirements for those plans.

How must I protect archaeological resources? (Sec.  285.802)

    This section was removed from the final rule. The details about how 
a lessee or grant holder should protect

[[Page 19705]]

archaeological resources will be included in a guidance document that 
MMS will develop after the rule is final.

What must I do if I discover a potential archaeological resource while 
conducting my approved activities? (Sec.  285.802)

    This section describes the procedures that must be followed if a 
potential archaeological resource is discovered while conducting any 
activity related to a project. It also includes additional requirements 
MMS may impose after such a discovery, such as conducting additional 
archaeological investigations. If a potential archaeological resource 
is discovered, you must immediately halt all seafloor disturbing 
activities within the area of the discovery; notify the Director of the 
discovery within 72 hours; and keep the location of the discovery 
confidential and not take any action that may adversely affect the 
archaeological resource until MMS has made an evaluation and tells you 
how to proceed.
    The MMS may require additional investigations to determine if the 
resource is eligible for listing in the National Register of Historic 
Places under 36 CFR 60.4. This will be required if either the site has 
been impacted by your project activities or if impacts to the site or 
to the area of potential effect cannot be avoided. If these 
investigations indicate that the resource is potentially eligible to be 
listed in the National Register of Historic Places, MMS will tell you 
how to protect the resource or how to mitigate adverse effects to the 
site. Under section 110(g) of the National Historic Preservation Act, 
MMS may charge reasonable costs for carrying out preservation 
responsibilities under the OCS Lands Act.
    The MMS changed the title from, ``What must I do if I discover a 
potential archaeological resource?'' to ``What must I do if I discover 
a potential archaeological resource while conducting my approved 
activities?'' to clarify that this section addresses activities under 
approved plans, not information requirements for the SAP, COP, or GAP.

How must I conduct my approved activities to protect essential fish 
habitats identified and described under the Magnuson-Stevens Fishery 
Conservation and Management Act? (Sec.  285.803)

    This section addresses the actions that MMS and you must take if, 
during the conduct of approved activities, MMS finds an EFH or habitat 
areas of particular concern that may be adversely affected by your 
approved activities. The MMS will consult with NMFS, and the lessee or 
grant holder will be required to adopt mitigation measures designed to 
avoid or minimize the adverse effects. The MMS may require additional 
surveys to define boundaries and avoidance distances. If MMS requires 
additional surveys, we will specify the requirements at that time.
    The MMS renamed this section from, ``How must I protect essential 
fish habitats identified and described under MSA?'' to ``How must I 
conduct my approved activities to protect essential fish habitats 
identified and described under the Magnuson-Stevens Fishery 
Conservation and Management Act?'' to clarify that this section 
addresses activities under approved plans, not information requirements 
for the SAP, COP, or GAP.

Reserved Sections (Sec.  285.804 Through Sec.  285.806)

    Sections 285.804 through 285.806 are reserved.

Air Quality

What requirements must I meet regarding air quality? (Sec.  285.807)

    This section was moved to subpart F, Sec.  285.659, and renamed to 
``What requirements must I include in my SAP, COP, or GAP regarding air 
quality?'' to reflect that this section addresses information that must 
be included in a SAP, COP, or GAP.

Reserved Sections (Sec.  285.808 Through Sec.  285.809)

    Sections 285.808 through 285.809 are reserved.

Safety Management Systems

What must I include in my Safety Management System? (Sec.  285.810)

    You must submit a Safety Management System with the SAP, COP, or 
GAP. The Safety Management System must describe the following for all 
aspects of the project:
    <bullet> How you will ensure the safety of personnel;
    <bullet> Remote monitoring, control, and shutdown capabilities;
    <bullet> Emergency response procedures;
    <bullet> Fire suppression equipment, if needed;
    <bullet> How and when you will test your Safety Management System; 
and
    <bullet> How you will demonstrate that personnel are properly 
trained.
    This section also requires that you demonstrate compliance, 
identify any impacts and any mitigation measures that are not 
effective, and make recommendations for new mitigation measures.
    We did not make any changes to this section.

When must I follow my Safety Management System? (Sec.  285.811)

    This is a new section added to clarify when a lessee or grantee 
must implement their Safety Management System.

Reserved Section (Sec.  285.812)

    Section 285.812 is reserved.

Maintenance and Shutdowns

When do I have to report removing equipment from service? (Sec.  
285.813)

    This section requires you to notify MMS when equipment necessary 
for implementing an approved plan is taken out of service for more than 
12 hours. It also requires that MMS be notified after the repairs are 
complete.
    We revised this section, based on comments that stated that the 
section was unclear as to the requirement for reporting when safety 
equipment is removed from service. We clarified that the lessee/
operator must report the removal of any equipment that is necessary for 
implementing the approved plan.

Reserved Section (Sec.  285.814)

    Section 285.814 is reserved.

Equipment Failure and Adverse Environmental Affects

What must I do if I have facility damage or an equipment failure? 
(Sec.  285.815)

    This section requires that all facility damage or equipment 
failures be repaired as soon as possible, and that MMS be notified of 
the repairs as soon as practicable. Based on comments, we revised this 
section to clarify what equipment and facility repairs must be reported 
to MMS. We did this by requiring repair notifications if you are 
required to report facility damage or failure under Sec.  285.381. This 
section also requires that you submit a report describing the repairs 
to MMS, and states that MMS may require an analysis of the failure 
necessitating the repairs. This section also states that MMS may 
require you to submit a revised COP depending on the extent of the 
damage to facilities or other failure.

What must I do if environmental or other conditions adversely affect a 
cable, pipeline, or facility? (Sec.  285.816)

    If environmental or other conditions adversely affect a cable, 
pipeline, or facility, this section requires you to submit a plan of 
corrective action to

[[Page 19706]]

MMS. In addition, the lessee or grantee must take the remedial action 
described in the plan, and submit a report of the remedial action 
taken.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.817 Through 285.819)

    Sections 285.817 through 285.819 are reserved.

Inspections and Assessments

Will MMS conduct inspections? (Sec.  285.820)

    The MMS conducts inspections of OCS facilities and any vessels 
engaged in activities authorized under this part to verify that the 
applicant is operating in accordance with the OCS Lands Act, the 
regulations, lease stipulations, conditions of the grant, approved 
plans, and other applicable laws and regulations, and to determine 
whether the proper safety equipment is installed and operating 
properly.
    We did not make any changes to this section.

Will MMS conduct scheduled and unscheduled inspections? (Sec.  285.821)

    The MMS will conduct both scheduled and unscheduled inspections of 
your facilities.
    We did not make any changes to this section.

What must I do when MMS conducts an inspection? (Sec.  285.822)

    These regulations require you to make the area of the lease or 
grant; all facilities on the lease or grant; and records of design, 
construction, operation, maintenance, repairs, or investigations 
available to MMS for inspection. You must retain all records as 
required, and certain records must be retained until MMS releases your 
financial assurance.
    We did not make any changes to this section.

Will MMS reimburse me for my expenses related to inspections? (Sec.  
285.823)

    Upon request, MMS will reimburse your reasonable expenses for the 
expenses related to food, quarters, and transportation provided for MMS 
representatives while they inspect the project facilities.
    We did not make any changes to this section.

How must I conduct self inspections? (Sec.  285.824)

    This section requires the lessee or grantee to develop an annual 
self inspection plan describing both above-water and below-water 
structural inspections and describing how corrosion protection will be 
monitored. It also requires that you submit an annual report that 
summarizes the results of the inspections.
    We did not make any changes to this section.

When must I assess my facilities? (Sec.  285.825)

    This section requires the lessee or grantee to use the assessment 
requirements of American Petroleum Institute Recommended Practice for 
Planning, Designing, and Constructing Fixed Offshore Platforms--Working 
Stress Design (API RP 2A-WSD) to conduct assessments of structures, 
when needed, based on the platform assessment initiators in API RP 2A-
WSD. The lessee or grantee must initiate mitigation actions for 
structures that do not pass the assessment process of API RP 2A-WSD and 
perform other assessments as required by MMS.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.826 Through 285.829)

    Sections 285.826 through 285.829 are reserved.

Incident Reporting and Investigation

What are my incident reporting requirements? (Sec.  285.830)

    This section requires that all incidents listed in Sec.  285.831 
that occur on the area covered by a lease or grant and that are related 
to operations conducted under your lease or grant be reported to MMS. 
We did not make any changes to this section.

What incidents must I report, and when must I report them? (Sec.  
285.831)

    This section requires that all fatalities, incidents requiring 
evacuation of a person(s) from a facility, fires, explosions, 
incidents, and collisions resulting in property damage greater than 
$25,000, incidents resulting in structural damage, crane incidents, and 
incidents that damage or disable safety systems be reported to MMS 
immediately with written follow up within 15 days. It also requires 
that any injuries that result in the injured not being able to resume 
all duties the following day and incidents that require personnel to 
muster for evacuation be reported in writing within 15 days.
    We did not make any changes to this section.

How do I report incidents requiring immediate notification? (Sec.  
285.832)

    This section describes what you must do for incidents that require 
immediate notification. You must notify the Director orally immediately 
after aiding the injured and stabilizing the situation. This section 
also describes the information required in the notification.
    We did not make any changes to this section.

What are the reporting requirements for incidents requiring written 
notification? (Sec.  285.833)

    This section describes the specific information regarding incidents 
that must be reported in writing to the MMS. It allows you to submit a 
form prepared for another agency to fulfill the requirement as long as 
it contains all the information required by MMS. The MMS may 
subsequently require additional information about an incident on a 
case-by-case basis.
    We did not make any changes to this section.

Subpart I--Decommissioning

Overview
    This subpart describes requirements for decommissioning OCS 
renewable energy facilities and associated structures including the 
submission of advance plans, applications, and notices to the MMS. Co-
lessees and co-grant holders are all jointly and severally responsible 
for meeting decommissioning obligations on their respective leases or 
grants. All facilities, including pipelines, cables, and other 
structures and obstructions, must be removed when they are no longer 
used for operations but no later than 2 years after the termination of 
the lease, ROW grant, or RUE grant.
    The MMS made conforming changes to the 30 CFR, part 250, subpart Q 
regulations regarding decommissioning requirements as they apply to oil 
and gas facilities that could be left in place for alternate use. We 
removed the phrase ``or other use'' from Sec.  250.1730 because the 
EPAct amended the OCS Lands Act (43 U.S.C. 1337(p)(1)(D)) to give DOI 
authority to allow the use of OCS oil and gas platforms for other 
authorized marine-related purposes. For uses that MMS authorizes, the 
structure would no longer need to meet the requirements of Sec.  
250.1730(a).

[[Page 19707]]

Section-by-Section Discussion for Subpart I

Decommissioning Obligations and Requirements

Who must meet the decommissioning obligations in this subpart? (Sec.  
285.900)

    Co-lessees and co-grant holders are jointly and severally 
responsible for the decommissioning responsibilities for facilities on 
a lease or grant, including all obstructions.
    We did not make any changes to this section.

When do I accrue decommissioning obligations? (Sec.  285.9010)

    Decommissioning obligations accrue when the lessee or grant holder 
installs; constructs; or acquires a facility, cable, or pipeline; or 
creates an obstruction.
    We did not make any changes to this section.

What are the general requirements for decommissioning for facilities 
authorized under my SAP, COP, or GAP? (Sec.  285.902)

    This section provides a general overview of the decommissioning 
process:
    <bullet> After your lease terminates, the lessee or grant holder 
has 2 years to decommission and clear the seafloor of all obstructions 
created by activities on the lease or grant.
    <bullet> Before decommissioning, the lessee or grant holder must 
submit a decommissioning application. This can be submitted at any 
time, but no later than 2 years before any intended decommissioning 
operation.
    <bullet> Once MMS approves the decommissioning application, a 
decommissioning notice is required before beginning any decommissioning 
activity. The decommissioning notice is required to keep MMS informed 
of decommissioning activities.
    <bullet> If an archaeological resource is discovered while 
decommissioning, activities around the resource must stop, and the 
lessee or grantee must inform MMS.
    <bullet> Biologically sensitive features and items of 
archaeological interest must be avoided and protected during 
decommissioning and site clearance activities.
    <bullet> If biologically sensitive features or items of 
archaeological interest are found, MMS will direct the lessee or 
grantee on what action to take.
    <bullet> The MMS added a provision to document early efforts made 
by the applicant to coordinate with affected State, local, and tribal 
governments. This was added to remind project operators of the 
importance of coordinating early with affected entities.
    Lessees decommissioning FERC-licensed facilities are not required 
to comply with this section.
    Based on comments received, we changed the time to complete 
decommissioning on a lease or grant from 1 year after termination to 2 
years after termination.

What are the requirements for decommissioning FERC-licensed 
hydrokinetic facilities? (Sec.  285.903)

    This is a new section addressing the decommissioning requirements 
for FERC-licensed hydrokinetic facilities on the OCS. FERC license 
holders must comply with the conditions of their MMS-issued lease, 
including decommissioning requirements.
    If you fail to comply with the requirements, then MMS may call for 
the forfeiture of your bond or other financial assurance and take 
enforcement action under Sec.  285.400 of this part. Further, you 
remain liable for removal or disposal costs and responsible for 
accidents or damages that might result from such failure.

Can I request a departure from the decommissioning requirements? (Sec.  
285.904)

    Based on comments, we added a new section to clarify that a lessee 
or grant holder may request a departure from the decommissioning 
requirements under Sec.  285.103. The MMS will consider the impacts of 
leaving the facilities, projects, cables, pipelines, and other 
obstructions in place versus the impacts of removal when determining 
whether to approve the departure. This also applies to circumstances 
when a limited lease holder installs a met tower or other equipment, 
then the lessee acquires a commercial lease that encompasses the 
limited lease area.

Decommissioning Applications

When must I submit my decommissioning application? (Sec.  285.905)

    While the conceptual decommissioning plans will be included in the 
SAP, COP, or GAP, in many cases the project will not be decommissioned 
until many years after approval of the plan; therefore, a 
decommissioning application is required. A decommissioning application 
may be submitted at any time, but no later than 2 years before any 
intended decommissioning operation. However, if a lease or grant is 
cancelled, relinquished, or otherwise terminated, the application must 
be submitted within 90 days.
    We did not make any changes to this section.

What must my decommissioning application include? (Sec.  285.906)

    The application will include such items as: An identification and 
description of the facilities to be removed; a proposed decommissioning 
schedule; a description of the removal methods; description of site 
clearance activities; plans for transporting and disposing of the 
removed facilities; a description of those resources, conditions, and 
activities that could be affected by or could affect the proposed 
decommissioning activities; results of any recent biological surveys 
conducted in the vicinity of the structure and recent observations of 
turtles or marine mammals at the structure site; mitigation measures to 
protect archaeological and sensitive biological features during removal 
activities; and a statement on whether or not divers will be used to 
survey the area after removal to determine any effects on marine life.
    The MMS revised this section to require that the decommissioning 
application include a description of measures to prevent unauthorized 
discharge of pollutants including marine trash and debris into the 
offshore waters.

How will MMS process my decommissioning application? (Sec.  285.907)

    The MMS will review the proposed decommissioning and site clearance 
activities to ensure compliance with all applicable laws, regulations, 
and other requirements. The MMS will compare the decommissioning 
application with the decommissioning general concept in the approved 
SAP, COP, or GAP to determine what technical and environmental reviews 
are needed. The operator may be required to revise the approved SAP, 
COP, or GAP, if MMS determines the proposed decommissioning activities 
would result in a significant change in the SAP, COP, or GAP; or 
requires any additional permits; or proposes activities not previously 
identified and evaluated in the SAP, COP, or GAP. The MMS may begin the 
appropriate NEPA and other regulatory reviews as required.
    After completing the technical and environmental reviews, MMS may 
approve, approve with conditions, or disapprove the decommissioning 
application. If MMS disapproves decommissioning application, the 
operator must resubmit the application to address the concerns 
identified by MMS.

[[Page 19708]]

    We did not make any changes to this section.

What must I include in my decommissioning notice? (Sec.  285.908)

    This section describes what needs to be included in the 
decommissioning notice. A decommissioning notice is separate from the 
decommissioning application and can only be submitted after MMS 
approves the decommissioning application. The decommissioning notice is 
submitted at least 60 days before you plan to begin decommissioning 
activities. The decommissioning notice includes any changes from your 
decommissioning application and your decommissioning schedule. The MMS 
will evaluate your decommissioning notice and may require additional 
changes to your decommissioning application before you can begin 
decommissioning activities.
    We did not make any changes to this section.

Facility Removal

When may MMS authorize facilities to remain in place following 
termination of a lease or grant? (Sec.  285.909)

    In the decommissioning application, the operator may request that 
certain facilities authorized in the lease or grant remain in place for 
other activities authorized in this part, elsewhere in this subchapter, 
or by other applicable Federal laws. The MMS will approve such requests 
on a case-by-case basis considering potential impacts to the marine 
environment; competing uses of the OCS; impacts on marine safety and 
national defense; maintenance of adequate financial assurance; and 
other factors determined by the Director.
    If MMS authorizes facilities to remain in place, the former lessee 
or grantee under this part remains jointly and severally liable for 
decommissioning the facility unless satisfactory evidence is provided 
to MMS showing that another party has assumed that responsibility and 
has secured adequate financial assurances. In the decommissioning 
application, the operator may request that certain facilities 
authorized in the lease or grant be converted to an artificial reef or 
otherwise toppled in place.
    We did not make any changes to this section.

What must I do when I remove my facility? (Sec.  285.910)

    All facilities must be removed to a depth of 15 feet below the 
mudline, and you must verify to MMS that you have cleared the site 
within 60 days after you remove a facility.
    We did not make any changes to this section.

Reserved Section (Sec.  285.911)

    Section 285.911 is reserved.

Decommissioning Report

After I remove a facility, cable, or pipeline, what information must I 
submit? (Sec.  285.912)

    Within 30 days after removing a facility, the operator must submit 
a written report to MMS summarizing removal operations. The report must 
include a summary of the removal activities including the date it was 
completed; a description of any mitigation measures you took; and, if 
explosives were used, a statement signed by an authorized 
representative that certifies that the types and amount of explosives 
used in removing the facility were consistent with those in the 
approved decommissioning application.
    We did not make any changes to this section.

Compliance With an Approved Decommission Application

What happens if I fail to comply with my approved decommissioning 
application? (Sec.  285.913)

    If the lessee, grantee, or operator fails to comply with the 
approved decommissioning plan or application, MMS may call for the 
forfeiture of your bond or other financial guarantee, and the lessees 
or grantee remain liable for removal or disposal costs and responsible 
for accidents or damages that might result from such failure.
    We did not make any changes to this section.

Subpart J--Rights-of-Use and Easement for Energy and Marine-Related 
Activities Using Existing OCS Facilities

Overview
    This subpart establishes general requirements for how MMS will 
consider proposals for activities that involve the alternate use of 
existing OCS facilities. This subpart also includes general provisions 
that explain how MMS will approve and regulate such alternate use 
activities on the OCS. We will authorize such activities through the 
issuance of an Alternate Use Right-of-Use and Easement (Alternate Use 
RUE).
    This subpart explains how applicants request an Alternate Use RUE, 
how MMS will decide whether to issue Alternate Use RUEs, and how 
Alternate Use RUEs will be competitively issued (if MMS determines that 
competitive interest exists). Once an Alternate Use RUE is issued by 
MMS, this subpart provides details on the term of such authorizations; 
required payments to MMS; necessary financial assurance; as well as 
other administrative issues such as assignment, suspension, and 
termination of Alternate Use RUEs.
    This subpart also includes provisions regarding decommissioning of 
approved alternate use facilities. In addition to the provisions in 
this subpart J, MMS has associated revisions to MMS's existing oil and 
gas decommissioning regulations found in 30 CFR part 250, subpart Q, 
that clarify and expand on an oil and gas platform owner's obligations 
for decommissioning, and when such decommissioning obligations may be 
suspended for approved alternate uses.
    The statutory authority for this subpart is paragraph 8(p)(1)(D) of 
the OCS Lands Act (43 U.S.C. 1337(p)(1)(D)). Under this authority, as 
delegated by the Secretary, the MMS may approve activities that use, 
for energy or other marine-related purposes, facilities that are 
currently or were previously used for other activities authorized under 
the OCS Lands Act.
    We received numerous comments on the proposed rule pertaining to 
the use of OCS facilities for aquaculture purposes. We wish to clarify 
that this rule does not authorize aquaculture operations. A different 
agency would be responsible for permitting and managing actual 
aquaculture activity under any RUE that is granted. In the event that 
legislation is enacted that regulates OCS aquaculture, we will reassess 
this issue and ensure coordination will be accomplished with all 
relevant agencies.
Section-by-Section Discussion for Subpart J

Regulated Activities

What activities does this subpart regulate? (Sec.  285.1000)

    This provision describes the scope of activities regulated by this 
subpart. The authority for Alternate Use Rights-of-Use and Easements 
(Alternate Use RUEs) was established in paragraph 8(p)(1)(D) of the OCS 
Lands Act (43 U.S.C. 1337(p)(1)(D)). Under this authority, as delegated 
by the Secretary, the MMS may approve activities that use, for energy 
or other marine-related purposes, facilities that are currently or were 
previously used for other activities authorized under the OCS Lands 
Act. However, the MMS may not approve alternate use activities under 
subsection 8(p)(1)(D) of the OCS Lands Act if those activities are 
authorized by another statutory authority, including: The OCS Lands 
Act, the Deepwater Port Act of 1974 (33 U.S.C. 1501 et seq.), the Ocean

[[Page 19709]]

Thermal Energy Conversion Act of 1980 (42 U.S.C. 9101 et seq.), or 
other applicable law.
    To illustrate the types of activities that will be subject to this 
subpart, examples such as the following are useful. In the first 
example, an individual seeks to use an existing oil and gas platform in 
the Gulf of Mexico as an offshore emergency rescue training facility. 
Utilizing an existing OCS facility for such activities is not currently 
authorized by any other statutory authority. Therefore, MMS may 
authorize the use of an existing facility for such emergency rescue 
training activities using an Alternate Use RUE. In another example, an 
individual seeks to convert an existing oil and gas platform in the 
Gulf of Mexico to a deepwater port. Activities associated with the 
construction and operation of a deepwater port on the OCS are 
authorized under the Deepwater Port Act of 1974, as amended, and 
regulated jointly by the U.S. Coast Guard and U.S. Maritime 
Administration. Since such deepwater port activities are authorized by 
the Deepwater Port Act, the activities do not require an Alternate Use 
RUE under this subpart. While the MMS may not issue an Alternate Use 
RUE for deepwater port activities (or other activities that are 
authorized by other Federal law) that would use an existing OCS 
structure, MMS approvals may be required under either part 250 or part 
282 of this subchapter for activities that could impact existing MMS-
approved operations on an existing facility, as well as for deferring 
decommissioning requirements upon the termination of an OCS lease.
    Use of the term ``existing facility'' or ``existing platform'' in 
this subpart is not intended to limit such facilities to those that are 
currently in place as of the time of publication of this rule. Any 
facility that, at the time of an alternate use proposal, is situated on 
the OCS and has been authorized by MMS under the OCS Lands Act is 
potentially eligible for consideration under this subpart. Therefore, 
such ``existing facilities'' may include oil and gas facilities, 
facilities constructed in association with sand, gravel, sulfur or any 
other mineral resource development approved under the OCS Lands Act, as 
well as renewable energy facilities pursuant to this part.
    As stated in Sec.  285.1000(c), MMS has the discretion to authorize 
alternate use activities on existing OCS structures that are currently 
in active operation, or limit alternate use activities to existing OCS 
structures that are no longer in operation and would otherwise be 
subject to removal. The MMS will consider these issues on a case-by-
case basis taking into account the unique operating considerations for 
each proposed alternate use activity as well as the associated 
operations on the existing OCS platform. As explained previously, MMS 
does not intend to implement an aquaculture program under subpart J.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.1001 Through 285.1003)

    Sections 285.1001 through 285.1003 are reserved.

Requesting an Alternate Use RUE

What must I do before I request an Alternate Use RUE? (Sec.  285.1004)

    Before submitting a request to the MMS for issuance of an Alternate 
Use RUE, the applicant must contact the owner of the existing OCS 
facility as well as the current lessee of the area in which the 
facility is located and reach preliminary agreement regarding the 
alternate use of the structure. Since the platform or other facility is 
the private property of the owner, MMS could not issue an Alternate Use 
RUE unless the alternate use was tentatively agreed to by the owner of 
the facility. If the alternate use applicant is also the lessee and 
owner of the existing OCS facility, a preliminary agreement regarding 
alternate use is not needed.
    This provision does not require the owner of the facility and 
lessee of the area in which the facility is located to give a final, 
unconditional approval for the proposed alternate use. This initial 
agreement among the parties need only state that the owner and lessee 
are aware of the proposed alternate use activity, and have no immediate 
objections to such activities. This preliminary agreement does not need 
to be in any specific prescribed form.
    We did not make any changes to this section.

How do I request an Alternate Use RUE? (Sec.  285.1005)

    The MMS will consider requests for an Alternate Use RUE on a case-
by-case basis, provided such requests comply with the requirements of 
this provision. An applicant's request for an Alternate Use RUE must 
include a summary of the proposed activities that would involve use of 
the existing OCS facility; a statement affirming that the proposed 
activities are not otherwise authorized by other MMS regulations or any 
other Federal law; and satisfactory evidence that the applicant 
qualifies to hold a lease, ROW, or RUE on the OCS. When summarizing the 
proposed activities under an Alternate Use RUE, the applicant must 
include all of the information identified in Sec.  285.1005(a). Any 
request to MMS for an Alternate Use RUE must also include the 
signatures of the alternate use applicant, the owner of the existing 
OCS facility, and the lessee of the area in which the existing facility 
is located.
    If an existing OCS facility proposed for an Alternate Use RUE is in 
operation on an active OCS lease, the alternate use applicant as well 
as the lessee or owner of the structure must consider what approvals 
and plan modifications may be required under part 250 or part 282 of 
this subchapter with respect to impacts on operations regulated by 
those parts.
    We did not make any changes to this section.

How will MMS decide whether to issue an Alternate Use RUE? (Sec.  
285.1006)

    The MMS will consider requests for an Alternate Use RUE on a case-
by-case basis. The MMS will evaluate all proposals to ensure that the 
proposed activities that would involve the use of existing OCS 
facilities can be conducted in a manner that is safe and protects the 
marine, coastal, and human environment; does not inhibit or otherwise 
restrain orderly development of OCS mineral and energy resources; and 
avoids serious harm or damage to, or waste of, any natural resources or 
property. Regardless of whether the existing OCS facility is currently 
in use or no longer in use and subject to removal, the MMS has the 
discretion whether or not to approve and issue an Alternate Use RUE. 
Since Alternate Use RUEs will require the MMS to regulate the 
development, operation, and eventual decommissioning of such alternate 
use projects, the MMS may determine that it has insufficient resources 
or subject matter expertise to properly regulate such projects. 
However, the MMS may partner with other Federal agencies with relevant 
expertise to ensure proper regulation of certain types of alternate use 
activities.
    We did not make any changes to this section.

What process will MMS use for competitively offering an Alternate Use 
RUE? (Sec.  285.1007)

    Paragraph 8(p)(3) of the OCS Lands Act requires that Alternate Use 
RUEs be issued on a competitive basis unless the Secretary determines, 
after public notice of the proposed Alternate Use RUE, that there is no 
competitive interest.

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    Before initiating the competitive process, the MMS will first 
determine whether an applicant's proposal contains the information 
necessary to be deemed acceptable, as set forth in Sec.  285.1005. The 
MMS will then determine whether the proposed activity that would 
involve the use of an existing OCS facility is one that is (1) subject 
to MMS authority under paragraph 8(p)(1)(D) of the OCS Lands Act, and 
(2) the type of activity that the MMS has the necessary expertise and 
resources to regulate effectively. If the answer is yes to both (1) and 
(2), the MMS will issue a public notice in the Federal Register to 
determine if there is competitive interest in using the facility for 
other alternate use activities. The MMS will specify a time period 
(e.g., 30 days) from the date of issuance of the public notice for 
those who are interested in the use of that facility to respond to MMS 
indicating that interest. Indications of competitive interest are not 
required to provide all the information required in Sec.  285.1005. If 
there is no expression of competitive interest within the timeframe 
expressed in the public notice, the MMS will presume that there is no 
competitive interest and will commence review of the applicant's 
proposal for an Alternate Use RUE.
    If there are indications of competitive interest received by the 
MMS within the timeframe in the public notice, the MMS will proceed 
with a competitive offering. The MMS will request that each competing 
applicant submit a description of the types of activities proposed for 
the existing facility, as well as satisfactory evidence that the 
competing applicant qualifies to hold a lease, ROW, or RUE on the OCS. 
The MMS may impose a time period to submit the requested information, 
but one that would allow sufficient time for competing applicants to 
prepare the necessary information requested. The MMS may subsequently 
request additional information to adequately evaluate competing 
proposals. At this stage, competing applicants are not required to seek 
or obtain the consent of the lessee or owner of the existing OCS 
facility.
    The MMS will evaluate the competing proposals to determine whether 
the proposed activities appear to be compatible with existing 
operations at the facility and are activities that it has the expertise 
and resources available to regulate effectively. If more than one 
proposal initially appears feasible, the MMS may commence an 
environmental review under NEPA, where each of the proposals is 
analyzed. Based on its NEPA analysis, the MMS may select one or more of 
the alternative proposals as potentially acceptable.
    Once the MMS has chosen one or more acceptable proposals for 
activities involving the alternate use of an existing OCS facility, it 
will notify the competing applicants and submit each acceptable 
proposal to the lessee and owner of the existing OCS facility. The 
lessee and owner of the existing OCS facility may accept any one of the 
proposals deemed acceptable by the MMS. If the lessee and owner of the 
facility agree to accept one of the proposals through a written 
acknowledgement submitted to MMS, the MMS will complete efforts to 
issue an Alternate Use RUE. If the lessee and owner of the facility are 
unwilling to accept any of the proposals deemed acceptable by the MMS, 
the MMS will not issue an Alternate Use RUE.
    Activities under subpart J will include full analysis as required 
by NEPA and other applicable laws. Compliance with the CZMA will follow 
15 CFR part 930, subpart C, for competitive RUE offerings and 15 CFR 
part 930, subpart D, for noncompetitive RUE offerings.
    We did not make any changes to this section.

Reserved Sections (Sec. Sec.  285.1008 Through 285.1009)

    Sections 285.1008 through 285.1009 are reserved.

Alternate Use RUE Administration

How long may I conduct activities under an Alternate Use RUE? (Sec.  
285.1010)

    This provision explains that MMS will determine the duration of 
Alternate Use RUEs on a case-by-case basis considering pertinent 
factors including the size, scale, and type of the proposed alternate 
use activities. Considering the scope of potential alternate use 
activities that could reasonably occur on the OCS, MMS does not believe 
that it is appropriate to set a specific term in the regulations for 
Alternate Use RUEs.
    This provision also provides that MMS will consider requests for 
renewal of an Alternate Use RUE on a case-by-case basis, at MMS's 
discretion.
    We did not make any changes to this section.

What payments are required for an Alternate Use RUE? (Sec.  285.1011)

    This provision provides that MMS will determine rentals or other 
charges on a case-by-case basis, and such rentals or other charges will 
be set forth in the Alternate Use RUE. The MMS will charge rentals or 
other charges for Alternate Use RUEs to ensure a fair return to the 
United States, as required by subsection 8(p)(2) of the OCS Lands Act 
(43 U.S.C. 1337(p)(2)). There are many different potential alternate 
uses of the OCS that could be authorized (e.g., training, research, 
education, and recreation), and each of these potential uses could have 
different effects in terms of the exclusion of other valuable uses of 
the OCS area. Certain alternate use activities could require that a 
significant portion of an OCS area be excluded from other potentially 
valuable uses. The MMS will consider such exclusivity requirements for 
a potential alternate use activity in determining a fair return to the 
United States. The MMS will calculate the rentals or other charges for 
Alternate Use RUEs taking into account the areal extent of the 
alternate use activity, the MMS resources needed for regulating such 
activities, and the exclusion in that area of competing uses.
    We did not make any changes to this section.

What financial assurance is required for an Alternate Use RUE? (Sec.  
285.1012)

    This provision makes clear that MMS will require that holders of 
Alternate Use RUEs provide financial assurance in an amount sufficient 
to cover all obligations under the Alternate Use RUE, including 
decommissioning obligations. Holders of Alternate Use RUEs will be 
required to retain such financial assurance until MMS determines that 
all obligations have been fulfilled to MMS satisfaction. The provision 
also provides that MMS may increase or decrease required financial 
assurance amounts, as appropriate, provided that financial assurance 
will always be required in an amount necessary to satisfy all 
obligations under the authorizing instrument.
    The MMS has not defined in the regulations what specific forms of 
financial assurance will be deemed acceptable. The MMS will consider 
all forms of financial assurance that are deemed acceptable by MMS 
under its other regulatory programs, and will consider other proposals 
for financial assurance on a case-by-case basis.
    Unlike the provisions for renewable energy under this part, and 
what is established for oil and gas leasing under part 256, MMS has 
determined that the regulations for alternate use activities should not 
set specific minimum levels for financial assurance. Considering the 
range of potential activities that could be approved for an Alternate 
Use RUE, MMS has determined that it is more appropriate to set required 
financial assurance levels on a case-by-case basis.
    We did not make any changes to this section.

[[Page 19711]]

Is an Alternate Use RUE assignable? (Sec.  285.1013)

    This provision provides that Alternate Use RUEs may be assigned to 
eligible assignees. This provision sets forth the requirements that 
must be satisfied for MMS to approve an assignment request. At this 
time, it is not clear to what extent Alternate Use RUEs will be 
requested and approved by MMS. Therefore, we are not creating a 
standard MMS form for assignments at this time.
    In Sec. Sec.  285.1013(d) and (e), we describe to what extent 
assignors and assignees are responsible for obligations associated with 
an Alternate Use RUEs arising both before and after MMS approval of an 
assignment. This provision is intended to be consistent with other MMS 
regulatory precedent (See 30 CFR 256.62(d) and (e)).
    We did not make any changes to this section.

When will MMS suspend an Alternate Use RUE? (Sec.  285.1014)

    This section explains that MMS may suspend activities authorized 
under an Alternate Use RUE and describes when such a suspension may be 
ordered. It is important to note that MMS may suspend activities 
authorized under an Alternate Use RUE even if there has been no finding 
of fault by the grantee. The holder of an Alternate Use RUE may be in 
full compliance with the terms and conditions of the grant, but other 
circumstances outside the control of the grantee may require MMS to 
suspend activities in order to comply with judicial decrees, for 
reasons of national security or defense, to avoid unsafe activities or 
interference with lessee's operation, and to protect against potential 
environmental damage. For this reason, any such suspension will extend 
the term of the Alternate Use RUE for the period of the suspension.
    We did not make any changes to this section.

How do I relinquish an Alternate Use RUE? (Sec.  285.1015)

    This provision explains that the holder of an Alternate Use RUE may 
relinquish its grant at any time provided it complies with the 
requirements of this section. The MMS will officially approve any 
relinquishment after it has determined that the requestor has complied 
with all necessary requirements, including the payment of any 
outstanding rentals (or other payments) and fines. The relinquishment 
will take effect on the date that MMS officially approves the request.
    We did not make any changes to this section.

When will an Alternate Use RUE be cancelled? (Sec.  285.1016)

    This provision explains under what circumstances MMS may cancel an 
Alternate Use RUE. The provisions of this section are similar to the 
cancellation provisions under subpart D of this part, but include an 
additional provision for cancellation when continued activity under an 
Alternate Use RUE is determined to be adversely impacting ongoing lease 
activities on the existing OCS facility (e.g., an associated oil and 
gas production platform on which alternate use activities have been 
authorized).
    Commenters to the proposed rule expressed concern that this 
provision did not provide for notice and opportunity to be heard prior 
to cancellation of an Alternate Use RUE. The MMS agrees with these 
comments and added a provision to the rule concerning notice and an 
opportunity to be heard.

Reserved Section (Sec.  285.1017)

    Section 285.1017 is reserved.

Decommissioning an Alternate Use RUE

Who is responsible for decommissioning an OCS facility subject to an 
Alternate Use RUE? (Sec.  285.1018)

    This provision explains that the holder of an Alternate Use RUE 
will be responsible for removing all structures and completing all 
other decommissioning activities associated with an approved alternate 
use activity. The Alternate Use RUE will set forth specific 
requirements for decommissioning, as determined by the MMS based on the 
approved alternate use activity.
    As set forth in the conforming amendments to part 250, subpart Q, 
included in this final rule, approval of an Alternate Use RUE will not 
relieve the original lessee (e.g., the original oil and gas lessee) 
from its accrued decommissioning obligations. If the MMS approves an 
Alternate Use RUE with respect to an existing facility located on a 
lease that has terminated, or a lease that subsequently terminates 
following approval of an Alternate Use RUE, the MMS will defer 
commencement of decommissioning activities related to that facility for 
the duration of the Alternate Use RUE. Such deferral will be limited, 
however, to the facility that is associated with the alternate use 
activities, and the lessee will be required to complete all other 
decommissioning activities associated with the lease. Unless the lessee 
and owner of the existing facility are also the holder of the Alternate 
Use RUE, the lessee and owner of the existing facility are not 
responsible for decommissioning requirements associated with an 
Alternate Use RUE. Similarly, the holder of an Alternate Use RUE is not 
responsible for decommissioning requirements with respect to the 
existing facility. To avoid confusion or potential subsequent dispute 
between the parties, MMS anticipates setting forth in the Alternate Use 
RUE grant the specific decommissioning obligations pertaining to the 
alternate use activities.
    We did not make any changes to this section.

What are the decommissioning requirements for an Alternate Use RUE? 
(Sec.  285.1019)

    This provision explains that decommissioning requirements for 
Alternate Use RUEs will be established on a case-by-case basis after 
considering the specific alternate use proposal. These specific 
decommissioning requirements will be set forth in detail in the grant 
authorizing instrument. This provision also explains that all 
decommissioning activities will be required to be completed within 1 
year of termination of the Alternate Use RUE.
    We did not make any changes to this section.
Comments on the Proposed Rule and MMS Responses
    We reviewed all the comments on the preamble and proposed rule. We 
categorized and summarized similar comments and then responded to those 
comments by subpart subject matter. We organized the comments and our 
responses in a table for each subpart as follows.
BILLING CODE 4310-MR-P

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BILLING CODE 4310-MR-C

Specific Comment Areas Identified in the Proposed Rule

    The preamble of the proposed rule (73 FR 39440) requested public 
comments or all aspects of the proposed rule. In addition, the preamble 
requested comments on specific areas in the proposed rule that were of 
particular interest to MMS and to the regulated

[[Page 19791]]

community and other interested parties. We planned to use the comments 
on these specific areas as the starting place for responding to 
comments. However, we found that very few commenters responded directly 
to the specific areas identified in the preamble. Instead, the vast 
majority of commenters provided comments on a subpart-by-subpart and 
section-by-section basis. All comments that touched on the issues 
raised by the specific areas we identified are addressed in our 
response to comments in the comment table. In addition, any changes to 
the rule as a result of comments are discussed in the subpart-by-
subpart and section-by-section discussions.

Procedural Matters

Regulatory Planning and Review (Executive Order (E.O.) 12866)

    This final rule is a significant rule as determined by the Office 
of Management and Budget (OMB) and is subject to review under E.O. 
12866. We have made the assessments required by E.O. 12866, and the 
results are as follows:
    (1) The final rule will not have an annual effect on the economy of 
$100 million or more for the first 15 years or adversely affect in a 
material way the economy, a sector of the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities. The final regulations are 
made necessary by compelling public need in that they will be used to 
oversee the nascent offshore renewable energy industry consistent with 
the EPAct.
    The final rule does two things: (1) It sets forth clear regulatory 
requirements; and (2) it institutes payments to the Government as a 
fair return for use of public lands. Discussions between MMS and OMB 
resulted in a determination that the appropriate analysis of the 
rulemaking is one that focuses on the financial impacts of the rule 
over a 20-year period (2008-2027). While financial revenues (i.e., the 
revenues the Federal Government will receive due to economic activity 
that occurs under this rule) are traditionally considered a transfer 
payment, in this analysis they are treated as a ``benefit.'' The cost 
side of the analysis comprises the Federal Government's costs to 
implement the program that will administer the rules. While the program 
will generate new receipts for the U.S. Government primarily in the 
form of cash bonuses, acquisition fees, rentals, and operating fees, 
the aggregate annual amounts of these payments, as estimated in the 
fiscal cost-benefit study supporting this rulemaking, were found to be 
below $100 million for at least the next 15 years, and then slightly 
above that level only in intermediate and high case scenarios. Any 
projections beyond that time horizon should be considered highly 
speculative given the early stage of development in this industry on 
the OCS. Any economic effects characterized by the EA are predicated 
upon the assumption that there is available transmission capacity to 
carry the energy generated on the OCS to demand centers. The payments 
to Federal agencies represent a transfer of money from one set of 
entities to another, not the anticipated effect of the regulations on 
real resources in the economy. The MMS finds that the benefits of this 
rule, when weighed against the potential payments that may exceed $100 
million, justify this regulation because it will establish a new 
regulatory program intended to encourage safe, efficient, and 
environmentally sound development of renewable energy sources on the 
OCS. The MMS included a detailed discussion of the results of the Final 
Technical report on the ``Fiscal Cost-Benefit Analysis to Support the 
Rulemaking Process for 30 CFR Part 285 Governing Alternative Energy 
Production and Alternate Uses of Existing Facilities on the Outer 
Continental Shelf,'' MMS 2007-050, February 2008, by Industrial 
Economics, Incorporated, in the NPR, published in the Federal Register 
on July 9, 2008 (73 FR 39376). The NPR and the Final Technical report 
are available on the Regulations.gov Web site.
    (2) The rule will not create a serious inconsistency or otherwise 
interfere with the actions taken or planned by any other agency. Until 
March 2009, regulatory uncertainty existed regarding which Federal 
agencies had authority to regulate wave and current energy development 
on the outer Continental Shelf (OCS). Both MMS and the Federal Energy 
Regulatory Commission (FERC) claimed this authority based on differing 
interpretations of Part I of the Federal Power Act (FPA) and section 
8(p) of OCSLA, as amended by EPAct. However, on March 17, 2009, the 
Secretary of the Interior and the Acting Chairman of the Federal Energy 
Regulatory Commission issued a joint statement on the development of 
renewable energy resources on the OCS. In this joint statement, the 
Secretary and the Acting Commissioner requested that MMS and FERC staff 
prepare a Memorandum of Understanding (MOU) to describe the process by 
which authorizations related to renewable energy resources in offshore 
waters will be developed.
    The MMS and FERC finalized this MOU on April 09, 2009. This 
agreement clarifies jurisdictional understandings regarding renewable 
energy projects on the OCS in order to develop a cohesive, streamlined 
process that would help accelerate the development of wind, solar, and 
hydrokinetic energy projects. Specifically, the MOU recognizes that (1) 
MMS has exclusive jurisdiction with regard to the production, 
transportation, or transmission of energy from non-hydrokinetic 
alternative energy projects on the OCS, including renewable energy 
sources such as wind and solar; (2) MMS has exclusive jurisdiction to 
issue leases, easements, and rights-of-way regarding OCS lands for 
hydrokinetic projects; and (3) the Commission has exclusive 
jurisdiction to issue licenses and exemptions for hydrokinetic projects 
located on the OCS.
    Under this new agreement, those entities interested in operating a 
hydrokinetic project on the OCS must first obtain a lease from MMS. The 
MMS will issue a public notice to determine whether competitive 
interest exists in the area, and will proceed with either the 
competitive or noncompetitive lease issuance process depending on 
responses received to this public notice. The MMS will conduct the NEPA 
analysis necessary for the lease issuance and any site assessment 
activities that will occur on the lease. After an applicant acquires a 
lease from MMS, FERC may issue a license or exemption for the 
hydrokinetic project, and conduct any necessary NEPA analysis. After a 
license is issued, construction and operations of the project may begin 
as per the terms of the license. To facilitate efficient processing of 
the lease and license applications, it may be helpful for potential 
lessees to apprise both MMS and FERC of their interest in hydrokinetic 
development at the start of the process.
    Further, the MOU states that MMS and FERC will work together to the 
extent practicable to develop policies and regulations with respect to 
OCS hydrokinetic projects, and coordinate to ensure that hydrokinetic 
projects meet the public interest, including the adequate protection, 
mitigation, and enhancement of fish, wildlife, and marine resources and 
other beneficial public uses. The MOU ensures that the interests of 
both agencies are adequately represented and that the process of 
developing renewable energy on the OCS happens efficiently, in an 
environmentally responsible manner, and with appropriate benefit to the 
people of the United States.

[[Page 19792]]

    Importantly, the agreement addresses the issue of potential site-
banking by developers on the OCS by eliminating redundant regulatory 
processes for acquiring use of OCS lands. In addition, by eliminating 
dual regulatory processes, the agreement addresses the potential for 
granting conflicting awards of OCS sites to developers by the two 
agencies. Specifically, FERC has agreed not to issue preliminary 
permits for hydrokinetic activities on the OCS, and MMS has agreed that 
FERC will have the primary responsibility to issue licenses for these 
activities. The Federal Government has effectively eliminated the 
opportunity for abuse by entities seeking to reserve, block, or acquire 
for speculative purposes large portions of the OCS. These concerns were 
raised by many commenters on the REAU rulemaking. The DOI/FERC MOU 
creates a unified, coherent process for the authorization of 
hydrokinetic activities on the OCS, ensuring that U.S. resources on the 
OCS will not be subject to a ``land rush,'' and will be developed in 
the most efficient manner possible.
    (3) This final rule would not alter the budgetary effects of 
entitlements, grants, user fees or loan programs, or the rights or 
obligations of their recipients. The rule does not contain any 
requirements or regulations that will alter the budgetary effects of 
entitlements, grants, user fees or loan programs, or the rights or 
obligations of their recipients.
    (4) This final rule raises novel legal or policy issues because the 
rulemaking establishes a new regulatory program for the development of 
renewable energy on the OCS and to allow for alternate uses of existing 
OCS facilities. For these reasons, OMB determined that this is a 
significant rule.
    Prior to the passage of the EPAct, the Federal Government lacked 
the authority to oversee all aspects of renewable energy project 
development on the OCS, including siting, construction, operation, and 
decommissioning. Additionally, prior to the passage of the EPAct, the 
Federal Government lacked the authority to seek payments from private 
interests for use of our Nation's OCS for purposes other than oil and 
gas production. These regulations will provide the framework for MMS's 
management of the Alternative Energy-Alternate Use Program. This 
program will create a system that provides a degree of regulatory 
certainty to those proposing, planning, or potentially financing an 
offshore renewable energy project on the OCS, as it will address lease 
and grant issuance, activity authorization, payment collection, 
financial assurance, and project decommissioning.
    As described previously, MMS conducted an economic (``benefit-
cost'') analysis of this rulemaking because it was determined to be a 
significant regulatory action, as defined in E.O. 12866. Discussions 
between MMS and OMB resulted in a determination that the appropriate 
analysis of the rulemaking is one that focuses on the financial impacts 
of the rule over a 20-year period (2008-2027). While financial revenues 
(i.e., the revenues the Federal Government will receive due to economic 
activity that occurs under this rule) are traditionally considered a 
transfer payment, in this analysis they are treated as a ``benefit.'' 
The cost side of the analysis comprises the Federal Government's costs 
to implement the program that will administer the rules. In addition, 
as required by the Regulatory Flexibility Act (RFA) of 1980 (as amended 
by the Small Business Regulatory Enforcement Fairness Act of 1996 
(SBREFA) and E.O. 13272 (``Proper Consideration of Small Entities in 
Agency Rulemaking''), this analysis considers whether the financial 
payments made by the developers of regulated projects to MMS will 
significantly affect a substantial number of small entities. The MMS 
included a detailed discussion of the analysis in the NPR published in 
the Federal Register on July 9, 2008 (73 FR 39376). The NPR is 
available on the Regulations.gov Web site.

Regulatory Flexibility Act (RFA)

    Under the requirements of the RFA (5 U.S.C. 601 et seq.), as 
amended by the SBREFA and E.O. 13272, Federal agencies must consider 
the potential distributional impact of new rules on small businesses, 
small governmental jurisdictions, and small organizations. The MMS 
prepared an initial regulatory flexibility analysis to determine the 
impacts of this regulation on small entities. Based on this analysis, 
we concluded that these regulations will impact a substantial number of 
small entities; however, the regulations would not have a significant 
economic impact on these small entities when compared to the economic 
impact the regulations will have on large entities. The MMS included a 
detailed discussion of the RFA analysis in the NPR published in the 
Federal Register on July 9, 2008 (73 FR 39376). The NPR is available on 
the Regulations.gov Web site. We did not receive any comments on the 
RFA section of the NPR.

Discussion of the Regulatory Flexibility Act Analysis

Number of Small Entities to Which the Rule Will Apply
    The North American Industry Classification System (NAICS) code for 
the industry affected by the rule is 221119 (Other Electric Power 
Generation). The definition for this code is:

    This U.S. industry comprises establishments primarily engaged in 
operating electric power generation facilities (except 
hydroelectric, fossil fuel, nuclear). These facilities convert other 
forms of energy, such as solar, wind, or tidal power, into 
electrical energy. The electric energy produced in these 
establishments is provided to electric power transmission systems or 
to electric power distribution systems.

    An entity within this classification is ``small'' if it is 
``primarily engaged in the generation, transmission, and/or 
distribution of electric energy for sale and its total electric output 
for the preceding fiscal year did not exceed four million megawatt 
hours'' (MWh). Some new companies may be created solely to develop one 
or more offshore renewable energy projects that combined will not have 
a total electric output greater than 4 million MWh. Some companies, 
either through a combination of projects or through the incorporation 
of offshore renewable energy projects into a larger portfolio of 
electricity generating stations, will exceed the 4 million MWh 
threshold.
    Given the newness of the offshore renewable energy industry, it is 
difficult to develop an accurate count of the number of entities that 
will or may be subject to this rule in order to determine whether the 
rule will affect a ``substantial'' number of small entities. Several 
companies have formally or informally expressed interest in being 
granted access to the OCS for electricity generation purposes. At least 
40 to 50 entities are identifiable as potential project or technology 
developers with a focus on utilizing offshore wind, wave, or ocean 
current resources. The U.S. Census Bureau's 2002 Economic Census 
reported 411 entities within NAICS Code 221119. However, for the 
purposes of this analysis MMS assumes that most of the relevant 
entities will be considered ``small,'' and therefore, can conclude that 
a substantial number of small entities will be affected.
    It is possible that the final rule may eventually govern hydrogen 
production, affecting entities that fall under NAICS Code 325120, 
Industrial Gas Manufacturing. The definition for this code is:


[[Page 19793]]


    This industry comprises establishments primarily engaged in 
manufacturing industrial organic and inorganic gases in compressed, 
liquid, and solid forms.

    However, it is unlikely that hydrogen will be produced on the OCS 
in significant amounts during the next 20 years, given the lack of 
proposals for projects that would produce hydrogen, and MMS has no 
means to predict what kinds of entities would likely be involved in OCS 
hydrogen production.
Impacts of This Rule on Small Businesses
    We believe that most affected companies will be small businesses 
according to the size standard. While large power/energy companies may 
engage in offshore renewable energy, we do not see that company size 
plays a factor in the economic impact of our rulemaking.
    Both large and small business will be subject to the same 
regulations because we do not believe it is necessary to have different 
regulations for large and small companies.
    For example, the payments for a commercial lease are rentals and 
operating fees. Rentals (during the preliminary and site assessment 
terms) are based on the size of the leased area. The operating fee is 
based on the potential generation capacity of a commercial project. The 
lease area needed will be determined by the size of the project, and 
the operating fee is determined by capacity of the actual installed 
project. The applicant determines the project size. As a result, the 
applicant's project size determines the fee the applicant pays without 
respect to its business size. Both small and large entities bear the 
equal burden of selecting a project for MMS' consideration and 
submitting all appropriate payments. The greater the project's ability 
to produce, the greater the fee, but also the greater the potential 
income from the project to the developer.
    One factor that could influence a company's ability to deal with 
these new regulations will be its experience and knowledge in working 
in the offshore environment. This knowledge is not size dependent, as 
evidenced by the size of the companies that own leases and operate oil 
and gas facilities on the OCS. The vast majority of companies that 
operate oil and gas facilities on the OCS (70 percent) are considered 
to be small companies according the size standards.
    Due to the significant costs involved to develop, construct, and 
produce energy in the offshore environment, a project would need to 
generate a significant amount of electricity or energy to be 
economical. There are provisions in the rule for short-term leases that 
would allow a company to do preliminary site work and research without 
the same level of commitment as a commercial production lease. This is 
one way a small company could approach offshore development without 
committing extensive resources to a project.
    In addition, the costs of operating in an offshore environment are 
significantly higher than the costs of complying with this regulation. 
For example, this final rule will require the use of CVAs, in some 
cases. Although this is an additional cost to project developers, the 
cost of the CVA is small in comparison to the cost of designing and 
engineering the projects. In addition, we added a provision to the 
final rule that will allow a project developer to request a waiver of 
the CVA requirement. Much of the data required for this final rule will 
need to be gathered by the project developers anyway (i.e., site 
surveys). The rule requires the data be provided to MMS to ensure 
protection of the environment and endangered species.
    The MMS also has provisions that allow for departures from the 
requirements in this rule. The MMS can evaluate, on a case-by-case 
basis, if any part of this final regulation places an unnecessary 
burden on a small business and can make adjustments to the 
requirements, as appropriate. However, MMS cannot waive requirements to 
comply with other Federal laws, such as NEPA and CZMA.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

    The final rule is not a major rule under 5 U.S.C. 804(2) of the 
Small Business Regulatory Enforcement Fairness Act. This final rule:
    a. Will not have an annual effect on the economy of $100 million or 
more, as discussed previously under the Regulatory Planning and Review 
section.
    b. Will not cause a major increase in costs or prices for 
consumers, individual industries, Federal, State, or local government 
agencies, or geographic regions. This rule will allow greater 
production of energy from the OCS and will make more energy available 
in the United States.
    c. Will not have significant adverse effects on competition, 
employment, investment, productivity, innovation, or the ability of 
U.S.-based enterprises to compete with foreign-based enterprises. 
Leasing on the U.S. OCS is limited to residents of the United States or 
companies incorporated in the United States under this final rule. This 
final rule will encourage competition, employment, investment, 
productivity, and innovation, and will not have an adverse impact on 
the ability of U.S.-based companies to compete with foreign-based 
enterprises. This rule will allow production of energy (e.g., 
electricity) in areas where there is no production at this time. It 
will encourage companies to explore new avenues for generating 
electricity and other energy from sources other than oil and gas. The 
final rule includes a competitive process for leasing. New developments 
and projects will create new jobs and investment. Since this is a 
nascent industry in the United States, it will also encourage the 
development of new technology.
    The MMS received a comment on the NPR requesting that we consider 
reducing or waiving civil penalties for small businesses regulated 
under this part. If a civil penalty is assessed, the company may submit 
a request to modify the payment schedule to the Office of Financial 
Management, with the Mineral Revenue Management Program of the MMS. 
This did not require any changes to the final rule.

Unfunded Mandates Reform Act of 1995

    This final rule will not impose an unfunded mandate on State, 
local, or tribal governments or the private sector of more than $100 
million per year. The final rule will not have a significant or unique 
effect on State, local, or tribal governments or the private sector. A 
statement containing the information required by the Unfunded Mandates 
Reform Act (2 U.S.C. 1501 et seq.) is not required.

Takings Implication Assessment (E.O. 12630)

    Under the criteria in E.O. 12630, this final rule does not have 
significant takings implications. The final rule is not a governmental 
action capable of interference with constitutionally protected property 
rights. There are not, at present, any property rights in renewable 
energy facilities. Further, the rule on alternate use of existing 
facilities will require consent of the owner of the existing facility 
to any RUE that MMS might issue. A Takings Implication Assessment is 
not required.

Federalism (E.O. 13132)

    Under the criteria in E.O. 13132, this final rule does not have 
sufficient federalism implications. This final rule will not 
substantially and directly affect the relationship between the Federal 
and State governments. To the extent

[[Page 19794]]

that State and local governments have a role in OCS activities, this 
rule will affect that role. A Federalism Assessment is not required.

Civil Justice Reform (E.O. 12988)

    This rule complies with the requirements of E.O. 12988. 
Specifically, this rule:
    (a) Meets the criteria of section 3(a) requiring that all 
regulations be reviewed to eliminate errors and ambiguity and be 
written to minimize litigation; and
    (b) Meets the criteria of section 3(b)(2) requiring that all 
regulations be written in clear language and contain clear legal 
standards.

Consultation With Indian Tribes (E.O. 13175)

    Under the criteria in E.O. 13175, we have evaluated this final rule 
and determined that it may have substantial effects on federally 
recognized Indian tribes. Although there are no Indian or tribal lands 
on the OCS, tribes occupy land on or near the shoreline that may be 
impacted. The final rule provides opportunities for MMS to coordinate 
with affected tribes related to all activities that the rule covers. 
The provisions are the same as provisions we have for coordination with 
affected States and local communities.

Paperwork Reduction Act (PRA)

    This rule contains new information collection (IC) requirements; 
therefore, a submission to OMB under the PRA is required. The OMB has 
approved the IC for the final rulemaking and assigned OMB Control 
Number 1010-0176, expiration 4/30/2012, for a total of 31,124 burden 
hours and $3,816,000 non-hour cost burdens.
    The title of the collection of information is ``30 CFR 285--
Renewable Energy and Alternate Uses of Existing Facilities on the Outer 
Continental Shelf.'' Respondents primarily will be an estimated 15-25 
Federal OCS companies that submit unsolicited proposals, lessees and 
designated operators, and ROW or RUE grant holders. Other potential 
respondents are companies or States and local governments that submit 
information or comments relative to renewable energy-related uses of 
the OCS; CVAs; and surety or third-party guarantors. The frequency of 
response varies depending upon the requirement. Responses to this 
collection of information are mandatory or are required to obtain or 
retain a benefit. The MMS will protect proprietary information 
according to the Freedom of Information Act (5 U.S.C. 552), its 
implementing regulations (43 CFR part 2), and 30 CFR 285.112 through 
285.114.
    Between the proposed and final rule, there have been some changes 
to the numbering of sections requiring the collection of information, 
as well as some clarifications. The final regulations also are more 
specific with respect to several reporting requirements. The changes 
were all based on comments received, approximately seven that affected 
IC, and were included in the subsequent information collection 
submission that OMB approved. The comments are addressed in detail in 
the preamble of this rulemaking.
    The following is a description of the revisions to the IC in the 
final rule:
    <bullet> Sec.  285.223(a)--Revised section eliminates a reporting 
requirement for tied bidders who will now be allowed to resubmit 
revised bids (-4 burden hours).
    <bullet> Sec.  285.506(c)(4)--Added requirement to allow MMS the 
ability to verify that the numbers we use in our formula are accurate 
to determine the operating fee (+1 burden hour).
    <bullet> Sec.  285.516(a)(4)--Added requirement to provide a 
separate decommissioning bond or other financial assurance (+3 burden 
hours).
    <bullet> Sec.  285.526(c)--Added annual reporting requirement for 
new option to allow more choices for financial assurance security 
instruments (+1 burden hour).
    <bullet> Sec.  285.527--Added options to allow respondents to 
demonstrate financial strength and reliability instead of submitting a 
bond (+10 burden hours).
    <bullet> Sec.  285.528--Added option to allow a third-party 
guaranty to meet financial assurance requirements (+10 burden hours).
    <bullet> Sec.  285.612(b)--Clarified CZMA process (+4 burden 
hours).
    <bullet> Sec.  285.614--Removed requirement as the activities may 
be conducted under U.S. Army Corps of Engineers regulations (-180 
burden hours).
    <bullet> Sec.  285.705(b)--Added option to allow respondents to 
request a CVA requirement waiver (+40 burden hours).
    <bullet> Sec.  285.802(a), (b)--Revised section eliminates a 
reporting requirement on the protection of archaeological resources (-
10 burden hours).
    <bullet> Sec.  285.815(b)--Revised section eliminates requirement 
to report equipment and facility repairs to MMS (-2 burden hours).
    The following table provides a breakdown of the hour burden and 
non-hour cost estimates.
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BILLING CODE 4310-MR-C
    An agency may not conduct or sponsor, and you are not required to 
respond to, a collection of information unless it displays a currently 
valid OMB control number. The public may comment, at any time, on the 
accuracy of the IC burden in this rule and may submit any comments to 
the Department of the Interior; Minerals Management Service; Attention: 
Regulations and Standards Branch; Mail Stop 4024; 381 Elden Street; 
Herndon, Virginia 20170-4817.

National Environmental Policy Act (NEPA) of 1969

    The MMS has analyzed this rule under the criteria of the National 
Environmental Policy Act. This rule meets the criteria set forth in 516 
Departmental Manual 3.2 A for the preparation of an ``Environmental 
Assessment.'' The MMS prepared an EA analyzing the regulations for the 
MMS Alternative Energy and Alternate Use program. The EA incorporates 
by reference the PEIS, Programmatic Environmental Impact Statement for 
Alternative Energy Development and Production and Alternate Use of 
Facilities on the Outer Continental Shelf, Final Environmental Impact 
Statement, October 2007.
    Based on the analysis in the EA, and the PEIS that it tiers off of, 
we have determined that the rule would not significantly affect the 
quality of the human environment (40 CFR 1508.27) and will not cause 
``undue or serious harm or damage to the human, marine, or coastal 
environment.'' Therefore, the MMS has made a determination that results 
in a Finding of No Significant Impact. The EA and the PEIS are 
available on the MMS Web site at: http://www.mms.gov/offshore/AlternativeEnergy/RegulatoryInformation.htm.

Data Quality Act

    In developing this rule we did not conduct or use a study, 
experiment, or survey requiring peer review under the Data Quality Act 
(Pub. L. 106-554, app. C section 515, 114 Stat. 2763, 2763A-153-154).

Effects on the Energy Supply (E.O. 13211)

    While this final rule is a significant regulatory action under E.O. 
12866, the final rule will not have a significant adverse effect on the 
supply, distribution, or use of energy. In fact, this rule is expected 
to have a positive effect on the production, supply, and distribution 
of energy because the rule would establish a framework for allowing the 
development and production of new energy sources on the OCS. 
Furthermore, the Administrator of the Office of Information and 
Regulatory Affairs, OMB, has not designated this final rule a 
significant energy action. Therefore, this final rule is not a 
significant energy action and does not require a Statement of Energy 
Effects. Executive Order 13211 requires the agency to prepare a 
Statement of Energy Effects when it takes a regulatory action that is 
identified as a significant energy action. According to E.O. 13211, a 
significant energy action means any action by an agency that 
promulgates or is expected to lead to promulgation of a final rule or 
regulations that is a significant regulatory action under E.O. 12866 
and is likely to have a significant adverse effect on the supply, 
distribution, or use of energy.

List of Subjects

30 CFR Part 250

    Administrative practice and procedure, Continental shelf, 
Environmental protection, Public lands--rights-of-way, Reporting and 
recordkeeping requirement.

[[Page 19807]]

30 CFR Part 285

    Bonding, Coastal zone, Continental shelf, Electric power, Energy, 
Environmental impact statements, Environmental protection, 
Incorporation by Reference, Marine resources, Natural resources, 
Payments, Public lands, Public lands--rights-of-way, Reporting and 
recordkeeping requirements, Revenue sharing, Solar energy.

30 CFR Part 290

    Administrative practice and procedure.

    Dated: April 21, 2009.
Richard T. Cardinale,
Acting Assistant Secretary--Land and Minerals Management.

0
For the reasons stated in the preamble, the Minerals Management Service 
(MMS) amends 30 CFR chapter II as follows:

PART 250--OIL AND GAS AND SULPHUR OPERATIONS IN THE OUTER 
CONTINENTAL SHELF

0
1. The authority citation for 30 CFR part 250 continues to read as 
follows:

    Authority:  31 U.S.C. 9701, 43 U.S.C. 1334.

0
2. Amend Sec.  250.1703 by revising paragraph (c) to read as follows:


Sec.  250.1703   What are the general requirements for decommissioning?

* * * * *
    (c) Remove all platforms and other facilities, except as provided 
in sections 1725(a) and 1730.
* * * * *

0
3. Amend Sec.  250.1725 by adding a third and fourth sentence to the 
introductory text of paragraph (a), and adding new paragraphs (a)(1) 
and (a)(2) to read as follows:


Sec.  250.1725   When do I have to remove platforms and other 
facilities?

    (a) * * * Other activities include those supporting OCS oil and gas 
production and transportation, as well as other energy-related or 
marine-related uses (including LNG) for which adequate financial 
assurance for decommissioning has been provided to a Federal agency 
which has given MMS a commitment that it has and will exercise 
authority to compel the performance of decommissioning within a time 
following cessation of the new use acceptable to MMS. The approval will 
specify:
    (1) Whether you must continue to maintain any financial assurance 
for decommissioning; and
    (2) Whether, and under what circumstances, you must perform any 
decommissioning not performed by the new facility owner/user.
* * * * *


Sec.  250.1730   [Amended]

0
4. In Sec.  250.1730, amend the introductory text by removing the words 
``or other use''.

0
5. Add Sec.  250.1731, to read as follows:


Sec.  250.1731   Who is responsible for decommissioning an OCS facility 
subject to an Alternate Use RUE?

    (a) The holder of an Alternate Use RUE issued under part 285 of 
this subchapter is responsible for all decommissioning obligations that 
accrue following the issuance of the Alternate Use RUE and which 
pertain to the Alternate Use RUE. See 30 CFR part 285, subpart J, for 
additional information concerning the decommissioning responsibilities 
of an Alternate Use RUE grant holder.
    (b) The lessee under the lease originally issued under 30 CFR part 
256 will remain responsible for decommissioning obligations that 
accrued before issuance of the Alternate Use RUE, as well as for 
decommissioning obligations that accrue following issuance of the 
Alternate Use RUE to the extent associated with continued activities 
authorized under this part.
    (c) If a lease issued under 30 CFR part 256 is cancelled or 
otherwise terminated under any provision of this subchapter, the 
lessee, upon our approval, may defer removal of any OCS facility within 
the lease area that is subject to an Alternate Use RUE. If we elect to 
grant such a deferral, the lessee remains responsible for removing the 
facility upon termination of the Alternate Use RUE and will be required 
to retain sufficient bonding or other financial assurances to ensure 
that the structure is removed or otherwise decommissioned in accordance 
with the provisions of this subpart.

0
6. Add 30 CFR part 285 to subchapter B to read as follows:

PART 285--RENEWABLE ENERGY ALTERNATE USES OF EXISTING FACILITIES ON 
THE OUTER CONTINENTAL SHELF

Subpart A--General Provisions
Sec.
285.100 Authority.
285.101 What is the purpose of this part?
285.102 What are MMS's responsibilities under this part?
285.103 When may MMS prescribe or approve departures from these 
regulations?
285.104 Do I need an MMS lease or other authorization to produce or 
support the production of electricity or other energy product from a 
renewable energy resource on the OCS?
285.105 What are my responsibilities under this part?
285.106 Who can hold a lease or grant under this part?
285.107 How do I show that I am qualified to be a lessee or grant 
holder?
285.108 When must I notify MMS if an action has been filed alleging 
that I am insolvent or bankrupt?
285.109 When must I notify MMS of mergers, name changes, or changes 
of business form?
285.110 How do I submit plans, applications, reports, or notices 
required by this part?
285.111 When and how does MMS charge me processing fees on a case-
by-case basis?
285.112 Definitions.
285.113 How will data and information obtained by MMS under this 
part be disclosed to the public?
285.114 Paperwork Reduction Act statements--information collection.
285.115 Documents incorporated by reference.
285.116 Requests for information on the state of the offshore 
renewable energy industry.
285.117 [Reserved]
285.118 What are my appeal rights?
Subpart B--Issuance of OCS Renewable Energy Leases

General Lease Information

285.200 What rights are granted with a lease issued under this part?
285.201 How will MMS issue leases?
285.202 What types of leases will MMS issue?
285.203 With whom will MMS consult before issuance of a lease?
285.204 What areas are available for leasing consideration?
285.205 How will leases be mapped?
285.206 What is the lease size?
285.207-285.209 [Reserved]

Competitive Lease Process

285.210 How does MMS initiate the competitive leasing process?
285.211 What is the process for competitive issuance of leases?
285.212 What is the process MMS will follow if there is reason to 
believe that competitors have withdrawn before the Final Sale Notice 
is issued?
285.213 What must I submit in response to a Request for Interest or 
a Call for Information and Nominations?
285.214 What will MMS do with information from the Requests for 
Information or Calls for Information and Nominations?
285.215 What areas will MMS offer in a lease sale?
285.216 What information will MMS publish in the Proposed Sale 
Notice and Final Sale Notice?
285.217-285.219 [Reserved]

Competitive Lease Award Process

285.220 What auction format may MMS use in a lease sale?

[[Page 19808]]

285.221 What bidding systems may MMS use for commercial leases and 
limited leases?
285.222 What does MMS do with my bid?
285.223 What does MMS do if there is a tie for the highest bid?
285.224 What happens if MMS accepts my bid?
285.225 What happens if my bid is rejected, and what are my appeal 
rights?
285.226-285.229 [Reserved]

Noncompetitive Lease Award Process

285.230 May I request a lease if there is no Call?
285.231 How will MMS process my unsolicited request for a 
noncompetitive lease?
285.232 May I acquire a lease noncompetitively after responding to a 
Request for Interest or Call for Information and Nominations under 
Sec.  285.213?
285.233-285.234 [Reserved]

Commercial and Limited Lease Terms

285.235 If I have a commercial lease, how long will my lease remain 
in effect?
285.236 If I have a limited lease, how long will my lease remain in 
effect?
285.237 What is the effective date of a lease?
285.238 Are there any other renewable energy research activities 
that will be allowed on the OCS?
Subpart C--Rights-of-Way Grants and Rights-of-Use and Easement Grants 
for Renewable Energy Activities

ROW Grants and RUE Grants

285.300 What types of activities are authorized by ROW grants and 
RUE grants issued under this part?
285.301 What do ROW grants and RUE grants include?
285.302 What are the general requirements for ROW grant and RUE 
grant holders?
285.303 How long will my ROW grant or RUE grant remain in effect?
285.304 [Reserved]

Obtaining ROW Grants and RUE Grants

285.305 How do I request an ROW grant or RUE grant?
285.306 What action will MMS take on my request?
285.307 How will MMS determine whether competitive interest exists 
for ROW grants and RUE grants?
285.308 How will MMS conduct an auction for ROW grants and RUE 
grants?
285.309 When will MMS issue a noncompetitive ROW grant or RUE grant?
285.310 What is the effective date of an ROW grant or RUE grant?
285.311-285.314 [Reserved]

Financial Requirements for ROW Grants and RUE Grants

285.315 What deposits are required for a competitive ROW grant or 
RUE grant?
285.316 What payments are required for ROW grants or RUE grants?
Subpart D--Lease and Grant Administration

Noncompliance and Cessation Orders

285.400 What happens if I fail to comply with this part?
285.401 When may MMS issue a cessation order?
285.402 What is the effect of a cessation order?
285.403-285.404 [Reserved]

Designation of Operator

285.405 How do I designate an operator?
285.406 Who is responsible for fulfilling lease and grant 
obligations?
285.407 [Reserved]

Lease or Grant Assignment

285.408 May I assign my lease or grant interest?
285.409 How do I request approval of a lease or grant assignment?
285.410 How does an assignment affect the assignor's liability?
285.411 How does an assignment affect the assignee's liability?
285.412-285.414 [Reserved]

Lease or Grant Suspension

285.415 What is a lease or grant suspension?
285.416 How do I request a lease or grant suspension?
285.417 When may MMS order a suspension?
285.418 How will MMS issue a suspension?
285.419 What are my immediate responsibilities if I receive a 
suspension order?
285.420 What effect does a suspension order have on my payments?
285.421 How long will a suspension be in effect?
285.422-285.424 [Reserved]

Lease or Grant Renewal

285.425 May I obtain a renewal of my lease or grant before it 
terminates?
285.426 When must I submit my request for renewal?
285.427 How long is a renewal?
285.428 What effect does applying for a renewal have on my 
activities and payments?
285.429 What criteria will MMS consider in deciding whether to renew 
a lease or grant?
285.430-285.431 [Reserved]

Lease or Grant Termination

285.432 When does my lease or grant terminate?
285.433 What must I do after my lease or grant terminates?
285.434 [Reserved]

Lease or Grant Relinquishment

285.435 How can I relinquish a lease or a grant or parts of a lease 
or grant?

Lease or Grant Contraction

285.436 Can MMS require lease or grant contraction?

Lease or Grant Cancellation

285.437 When can my lease or grant be canceled?
Subpart E--Payments and Financial Assurance Requirements

Payments

285.500 How do I make payments under this part?
285.501 What deposits must I submit for a competitively issued 
lease, ROW grant, or RUE grant?
285.502 What initial payment requirements must I meet to obtain a 
noncompetitive lease, ROW grant, or RUE grant?
285.503 What are the rent and operating fee requirements for a 
commercial lease?
285.504 How are my payments affected if I develop my lease in 
phases?
285.505 What are the rent and operating fee requirements for a 
limited lease?
285.506 What operating fees must I pay on a commercial lease?
285.507 What rent payments must I pay on a project easement?
285.508 What rent payments must I pay on ROW grants or RUE grants 
associated with renewable energy projects?
285.509 Who is responsible for submitting lease or grant payments to 
MMS?
285.510 May MMS reduce or waive my lease or grant payments?
285.511-285.514 [Reserved]

Financial Assurance Requirements for Commercial Leases

285.515 What financial assurance must I provide when I obtain my 
commercial lease?
285.516 What are the financial assurance requirements for each stage 
of my commercial lease?
285.517 How will MMS determine the amounts of the supplemental and 
decommissioning financial assurance requirements associated with 
commercial leases?
285.518-285.519 [Reserved]

Financial Assurance for Limited Leases, ROW Grants, and RUE Grants

285.520 What financial assurance must I provide when I obtain my 
limited lease, ROW grant, or RUE grant?
285.521 Do my financial assurance requirements change as activities 
progress on my limited lease or grant?
285.522-285.524 [Reserved]

Requirements for Financial Assurance Instruments

285.525 What general requirements must a financial assurance 
instrument meet?
285.526 What instruments other than a surety bond may I use to meet 
the financial assurance requirement?
285.527 May I demonstrate financial strength and reliability to meet 
the financial assurance requirement for lease or grant activities?
285.528 May I use a third-party guaranty to meet the financial 
assurance requirement for lease or grant activities?
285.529 Can I use a lease- or grant-specific decommissioning account 
to meet the financial assurance requirements related to 
decommissioning?

[[Page 19809]]

Changes in Financial Assurance

285.530 What must I do if my financial assurance lapses?
285.531 What happens if the value of my financial assurance is 
reduced?
285.532 What happens if my surety wants to terminate the period of 
liability of my bond?
285.533 How does my surety obtain cancellation of my bond?
285.534 When may MMS cancel my bond?
285.535 Why might MMS call for forfeiture of my bond?
285.536 How will I be notified of a call for forfeiture?
285.537 How will MMS proceed once my bond or other security is 
forfeited?
285.538-285.539 [Reserved]

Revenue Sharing With States

285.540 How will MMS equitably distribute revenues to States?
285.541 What is a qualified project for revenue sharing purposes?
285.542 What makes a State eligible for payment of revenues?
285.543 Example of how the inverse distance formula works.
Subpart F--Plans and Information Requirements
285.600 What plans and information must I submit to MMS before I 
conduct activities on my lease or grant?
285.601 When am I required to submit my plans to MMS?
285.602 What records must I maintain?
285.603-285.604 [Reserved]

Site Assessment Plan and Information Requirements for Commercial Leases

285.605 What is a Site Assessment Plan (SAP)?
285.606 What must I demonstrate in my SAP?
285.607 How do I submit my SAP?
285.608-285.609 [Reserved]

Contents of the Site Assessment Plan

285.610 What must I include in my SAP?
285.611 What information must I submit with my SAP to assist MMS in 
complying with NEPA and other relevant laws?
285.612 How will my SAP be processed for Federal consistency under 
the Coastal Zone Management Act?
285.613 How will MMS process my SAP?

Activities Under an Approved SAP

285.614 When may I begin conducting activities under my approved 
SAP?
285.615 What other reports or notices must I submit to MMS under my 
approved SAP?
285.616 [Reserved]
285.617 What activities require a revision to my SAP, and when will 
MMS approve the revision?
285.618 What must I do upon completion of approved site assessment 
activities?
285.619 [Reserved]

Construction and Operations Plan for Commercial Leases

285.620 What is a Construction and Operations Plan (COP)?
285.621 What must I demonstrate in my COP?
285.622 How do I submit my COP?
285.623-285.625 [Reserved]

Contents of the Construction and Operations Plan

285.626 What must I include in my COP?
285.627 What information and certifications must I submit with my 
COP to assist the MMS in complying with NEPA and other relevant 
laws?
285.628 How will MMS process my COP?
285.629 May I develop my lease in phases?
285.630 [Reserved]

Activities Under an Approved COP

285.631 When must I initiate activities under an approved COP?
285.632 What documents must I submit before I may construct and 
install facilities under my approved COP?
285.633 How do I comply with my COP?
285.634 What activities require a revision to my COP, and when will 
MMS approve the revision?
285.635 What must I do if I cease activities approved in my COP 
before the end of my commercial lease?
285.636 What notices must I provide MMS following approval of my 
COP?
285.637 When may I commence commercial operations on my commercial 
lease?
285.638 What must I do upon completion of my commercial operations 
as approved in my COP or FERC license?
285.639 [Reserved]

General Activities Plan Requirements for Limited Leases, ROW Grants, 
and RUE Grants

285.640 What is a General Activities Plan (GAP)?
285.641 What must I demonstrate in my GAP?
285.642 How do I submit my GAP?
285.643-285.644 [Reserved]

Contents of the General Activities Plan

285.645 What must I include in my GAP?
285.646 What information and certifications must I submit with my 
GAP to assist MMS in complying with NEPA and other relevant laws?
285.647 How will my GAP be processed for Federal consistency under 
the Coastal Zone Management Act?
285.648 How will MMS process my GAP?
285.649 [Reserved]

Activities Under an Approved GAP

285.650 When may I begin conducting activities under my GAP?
285.651 When may I construct complex or significant OCS facilities 
on my limited lease or any facilities on my project easement 
proposed under my GAP?
285.652 How long do I have to conduct activities under an approved 
GAP?
285.653 What other reports or notices must I submit to MMS under my 
approved GAP?
285.654 [Reserved]
285.655 What activities require a revision to my GAP, and when will 
MMS approve the revision?
285.656 What must I do if I cease activities approved in my GAP 
before the end of my term?
285.657 What must I do upon completion of approved activities under 
my GAP?

Cable and Pipeline Deviations

285.658 Can my cable or pipeline construction deviate from my 
approved COP or GAP?
285.659 What requirements must I include in my SAP, COP, or GAP 
regarding air quality?
Subpart G--Facility Design, Fabrication, and Installation

Reports

285.700 What reports must I submit to MMS before installing 
facilities described in my approved SAP, COP, or GAP?
285.701 What must I include in my Facility Design Report?
285.702 What must I include in my Fabrication and Installation 
Report?
285.703 What reports must I submit for project modifications and 
repairs?
285.704 [Reserved]

Certified Verification Agent

285.705 When must I use a Certified Verification Agent (CVA)?
285.706 How do I nominate a CVA for MMS approval?
285.707 What are the CVA's primary duties for facility design 
review?
285.708 What are the CVA's or project engineer's primary duties for 
fabrication and installation review?
285.709 When conducting onsite fabrication inspections, what must 
the CVA or project engineer verify?
285.710 When conducting onsite installation inspections, what must 
the CVA or project engineer do?
285.711 [Reserved]
285.712 What are the CVA's or project engineer's reporting 
requirements?
285.713 What must I do after the CVA or project engineer confirms 
conformance with the Fabrication and Installation Report on my 
commercial lease?
285.714 What records relating to SAPs, COPs, and GAPs must I keep?
Subpart H--Environmental and Safety Management, Inspections, and 
Facility Assessments for Activities Conducted Under SAPs, COPs and GAPs
285.800 How must I conduct my activities to comply with safety and 
environmental requirements?
285.801 How must I conduct my approved activities to protect marine 
mammals, threatened and endangered species, and designated critical 
habitat?
285.802 What must I do if I discover a potential archaeological 
resource while conducting my approved activities?
285.803 How must I conduct my approved activities to protect 
essential fish habitats identified and described under the Magnuson-
Stevens Fishery Conservation and Management Act?
285.804-285.809 [Reserved]

[[Page 19810]]

Safety Management Systems

285.810 What must I include in my Safety Management System?
285.811 When must I follow my Safety Management System?
285.812 [Reserved]

Maintenance and Shutdowns

285.813 When do I have to report removing equipment from service?
285.814 Reserved

Equipment Failure and Adverse Environmental Effects

285.815 What must I do if I have facility damage or an equipment 
failure?
285.816 What must I do if environmental or other conditions 
adversely affect a cable, pipeline, or facility?
285.817-285.819 [Reserved]

Inspections and Assessments

285.820 Will MMS conduct inspections?
285.821 Will MMS conduct scheduled and unscheduled inspections?
285.822 What must I do when MMS conducts an inspection?
285.823 Will MMS reimburse me for my expenses related to 
inspections?
285.824 How must I conduct self-inspections?
285.825 When must I assess my facilities?
285.826-285.829 [Reserved]

Incident Reporting and Investigation

285.830 What are my incident reporting requirements?
285.831 What incidents must I report, and when must I report them?
285.832 How do I report incidents requiring immediate notification?
285.833 What are the reporting requirements for incidents requiring 
written notification?
Subpart I--Decommissioning

Decommissioning Obligations and Requirements

285.900 Who must meet the decommissioning obligations in this 
subpart?
285.901 When do I accrue decommissioning obligations?
285.902 What are the general requirements for decommissioning for 
facilities authorized under my SAP, COP, or GAP?
285.903 What are the requirements for decommissioning FERC-licensed 
hydrokinetic facilities?
285.904 Can I request a departure from the decommissioning 
requirements?

Decommissioning Applications

285.905 When must I submit my decommissioning application?
285.906 What must my decommissioning application include?
285.907 How will MMS process my decommissioning application?
285.908 What must I include in my decommissioning notice?

Facility Removal

285.909 When may MMS authorize facilities to remain in place 
following termination of a lease or grant?
285.910 What must I do when I remove my facility?
285.911 [Reserved]

Decommissioning Report

285.912 After I remove a facility, cable, or pipeline, what 
information must I submit?

Compliance With an Approved Decommissioning Application

285.913 What happens if I fail to comply with my approved 
decommissioning application?
Subpart J--Rights of Use and Easement for Energy and Marine-Related 
Activities Using Existing OCS Facilities

Regulated Activities

285.1000 What activities does this subpart regulate?
285.1001-285.1003 [Reserved]

Requesting an Alternate Use RUE

285.1004 What must I do before I request an Alternate Use RUE?
285.1005 How do I request an Alternate Use RUE?
285.1006 How will MMS decide whether to issue an Alternate Use RUE?
285.1007 What process will MMS use for competitively offering an 
Alternate Use RUE?
285.1008-285.1009 [Reserved]

Alternate Use RUE Administration

285.1010 How long may I conduct activities under an Alternate Use 
RUE?
285.1011 What payments are required for an Alternate Use RUE?
285.1012 What financial assurance is required for an Alternate Use 
RUE?
285.1013 Is an Alternate Use RUE assignable?
285.1014 When will MMS suspend an Alternate Use RUE?
285.1015 How do I relinquish an Alternate Use RUE?
285.1016 When will an Alternate Use RUE be cancelled?
285.1017 [Reserved]

Decommissioning an Alternate Use RUE

285.1018 Who is responsible for decommissioning an OCS facility 
subject to an Alternate Use RUE?
285.1019 What are the decommissioning requirements for an Alternate 
Use RUE?

    Authority:  43 U.S.C. 1331 et seq., 43 U.S.C. 1337.

Subpart A--General Provisions


Sec.  285.100  Authority.

    The authority for this part derives from amendments to subsection 8 
of the Outer Continental Shelf Lands Act (OCS Lands Act) (43 U.S.C. 
1337), as set forth in section 388(a) of the Energy Policy Act of 2005 
(EPAct) (Pub. L. 109-58). The Secretary of the Interior delegated to 
the Minerals Management Service (MMS) the authority to regulate 
activities under section 388(a) of the EPAct. These regulations 
specifically apply to activities that:
    (a) Produce or support production, transportation, or transmission 
of energy from sources other than oil and gas; or
    (b) Use, for energy-related purposes or for other authorized 
marine-related purposes, facilities currently or previously used for 
activities authorized under the OCS Lands Act.


Sec.  285.101  What is the purpose of this part?

    The purpose of this part is to:
    (a) Establish procedures for issuance and administration of leases, 
right-of-way (ROW) grants, and right-of-use and easement (RUE) grants 
for renewable energy production on the Outer Continental Shelf (OCS) 
and RUEs for the alternate use of OCS facilities for energy or marine-
related purposes;
    (b) Inform you and third parties of your obligations when you 
undertake activities authorized in this part; and
    (c) Ensure that renewable energy activities on the OCS and 
activities involving the alternate use of OCS facilities for energy or 
marine-related purposes are conducted in a safe and environmentally 
sound manner, in conformance with the requirements of subsection 8(p) 
of the OCS Lands Act, other applicable laws and regulations, and the 
terms of your lease, ROW grant, RUE grant, or Alternate Use RUE grant.
    (d) This part will not convey access rights for oil, gas, or other 
minerals.


Sec.  285.102  What are MMS's responsibilities under this part?

    (a) The MMS will ensure that any activities authorized in this part 
are carried out in a manner that provides for:
    (1) Safety;
    (2) Protection of the environment;
    (3) Prevention of waste;
    (4) Conservation of the natural resources of the OCS;
    (5) Coordination with relevant Federal agencies (including, in 
particular, those agencies involved in planning activities that are 
undertaken to avoid conflicts among users and maximize the economic and 
ecological benefits of the OCS, including multifaceted spatial planning 
efforts);
    (6) Protection of national security interests of the United States;
    (7) Protection of the rights of other authorized users of the OCS;
    (8) A fair return to the United States;
    (9) Prevention of interference with reasonable uses (as determined 
by the Secretary or Director) of the exclusive economic zone, the high 
seas, and the territorial seas;
    (10) Consideration of the location of and any schedule relating to 
a lease or

[[Page 19811]]

grant under this part for an area of the OCS, and any other use of the 
sea or seabed;
    (11) Public notice and comment on any proposal submitted for a 
lease or grant under this part; and
    (12) Oversight, inspection, research, monitoring, and enforcement 
of activities authorized by a lease or grant under this part.
    (b) The MMS will require compliance with all applicable laws, 
regulations, other requirements, and the terms of your lease or grant 
under this part and approved plans. The MMS will approve, disapprove, 
or approve with conditions any plans, applications, or other documents 
submitted to MMS for approval under the provisions of this part.
    (c) Unless otherwise provided in this part, MMS may give oral 
directives or decisions whenever prior MMS approval is required under 
this part. The MMS will document in writing any such oral directives 
within 10 business days.
    (d) The MMS will establish practices and procedures to govern the 
collection of all payments due to the Federal Government, including any 
cost recovery fees, rents, operating fees, and other fees or payments. 
The MMS will do this in accordance with the terms of this part, the 
leasing notice, the lease or grant under this part, and applicable 
Minerals Revenue Management regulations or guidance.
    (e) The MMS will provide for coordination and consultation with the 
Governor of any State or the executive of any local government or 
Indian tribe that may be affected by a lease, easement, or ROW under 
this subsection. The MMS may invite any affected State Governor, 
representative of an affected Indian tribe, and affected local 
government executive to join in establishing a task force or other 
joint planning or coordination agreement in carrying out our 
responsibilities under this part.


Sec.  285.103  When may MMS prescribe or approve departures from these 
regulations?

    (a) The MMS may prescribe or approve departures from these 
regulations when departures are necessary to:
    (1) Facilitate the appropriate activities on a lease or grant under 
this part;
    (2) Conserve natural resources;
    (3) Protect life (including human and wildlife), property, or the 
marine, coastal, or human environment; or
    (4) Protect sites, structures, or objects of historical or 
archaeological significance.
    (b) Any departure approved under this section and its rationale 
must:
    (1) Be consistent with subsection 8(p) of the OCS Lands Act;
    (2) Protect the environment and the public health and safety to the 
same degree as if there was no approved departure from the regulations;
    (3) Not impair the rights of third parties; and
    (4) Be documented in writing.


Sec.  285.104  Do I need an MMS lease or other authorization to produce 
or support the production of electricity or other energy product from a 
renewable energy resource on the OCS?

    Except as otherwise authorized by law, it will be unlawful for any 
person to construct, operate, or maintain any facility to produce, 
transport, or support generation of electricity or other energy product 
derived from a renewable energy resource on any part of the OCS, except 
under and in accordance with the terms of a lease, easement, or ROW 
issued pursuant to the OCS Lands Act.


Sec.  285.105  What are my responsibilities under this part?

    As a lessee, applicant, operator, or holder of a ROW grant, RUE 
grant, or Alternate Use RUE grant, you must:
    (a) Design your projects and conduct all activities in a manner 
that ensures safety and will not cause undue harm or damage to natural 
resources, including their physical, atmospheric, and biological 
components to the extent practicable; and take measures to prevent 
unauthorized discharge of pollutants including marine trash and debris 
into the offshore environment.
    (b) Submit requests, applications, plans, notices, modifications, 
and supplemental information to MMS as required by this part;
    (c) Follow up, in writing, any oral request or notification you 
made, within 3 business days;
    (d) Comply with the terms, conditions, and provisions of all 
reports and notices submitted to MMS, and of all plans, revisions, and 
other MMS approvals, as provided in this part;
    (e) Make all applicable payments on time;
    (f) Comply with the DOI's nonprocurement debarment regulations at 2 
CFR part 1400;
    (g) Include the requirement to comply with 2 CFR part 1400 in all 
contracts and transactions related to a lease or grant under this part;
    (h) Conduct all activities authorized by the lease or grant in a 
manner consistent with the provisions of subsection 8(p) of the OCS 
Lands Act;
    (i) Compile, retain, and make available to MMS representatives, 
within the time specified by MMS, any data and information related to 
the site assessment, design, and operations of your project; and
    (j) Respond to requests from the Director in a timely manner.


Sec.  285.106  Who can hold a lease or grant under this part?

    (a) You may hold a lease or grant under this part if you can 
demonstrate that you have the technical and financial capabilities to 
conduct the activities authorized by the lease or grant and you are 
a(n):
    (1) Citizen or national of the United States;
    (2) Alien lawfully admitted for permanent residence in the United 
States as defined in 8 U.S.C. 1101(a)(20);
    (3) Private, public, or municipal corporations organized under the 
laws of any State of the United States, the District of Columbia, or 
any territory or insular possession subject to U.S. jurisdiction;
    (4) Association of such citizens, nationals, resident aliens, or 
corporations;
    (5) Executive Agency of the United States as defined in section 105 
of Title 5 of the U.S. Code;
    (6) State of the United States; and
    (7) Political subdivision of States of the United States.
    (b) You may not hold a lease or grant under this part or acquire an 
interest in a lease or grant under this part if:
    (1) You or your principals are excluded or disqualified from 
participating in transactions covered by the Federal nonprocurement 
debarment and suspension system (2 CFR part 1400), unless MMS 
explicitly has approved an exception for this transaction;
    (2) The MMS determines or has previously determined after notice 
and opportunity for a hearing that you or your principals have failed 
to meet or exercise due diligence under any OCS lease or grant; or
    (3) The MMS determines or has previously determined after notice 
and opportunity for a hearing that you:
    (i) Remained in violation of the terms and conditions of any lease 
or grant issued under the OCS Lands Act for a period extending longer 
than 30 days (or such other period MMS allowed for compliance) after 
MMS directed you to comply; and
    (ii) You took no action to correct the noncompliance within that 
time period.


Sec.  285.107  How do I show that I am qualified to be a lessee or 
grant holder?

    (a) You must demonstrate your technical and financial capability to 
construct, operate, maintain, and terminate/decommission projects for

[[Page 19812]]

which you are requesting authorization. Documentation can include:
    (1) Descriptions of international or domestic experience with 
renewable energy projects or other types of electric-energy-related 
projects; and
    (2) Information establishing access to sufficient capital to carry 
out development.
    (b) An individual must submit a written statement of citizenship 
status attesting to U.S. citizenship. It does not need to be notarized 
nor give the age of individual. A resident alien may submit a photocopy 
of the Immigration and Naturalization Service form evidencing legal 
status of the resident alien.
    (c) A corporation or association must submit evidence, as specified 
in the table in paragraph (d) of this section, acceptable to MMS that:
    (1) It is qualified to hold leases or grants under this part;
    (2) It is authorized to conduct business under the laws of its 
State;
    (3) It is authorized to hold leases or grants on the OCS under the 
operating rules of its business; and
    (4) The persons holding the titles listed are authorized to bind 
the corporation or association when conducting business with MMS.
    (d) Acceptable evidence under paragraph (c) of this section 
includes, but is not limited to the following:
BILLING CODE 4310-MR-P

[[Page 19813]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.100


[[Page 19814]]


[GRAPHIC] [TIFF OMITTED] TR29AP09.101

BILLING CODE 4310-MR-C
    (e) A local, state, or Federal executive entity must submit a 
written statement that:
    (1) It is qualified to hold leases or grants under this part; and
    (2) The person(s) acting on behalf of the entity is authorized to 
bind the entity when conducting business with us.
    (f) The MMS may require you to submit additional information at any 
time considering your bid or request for a noncompetitive lease.


Sec.  285.108  When must I notify MMS if an action has been filed 
alleging that I am insolvent or bankrupt?

    You must notify MMS within 3 business days after you learn of any 
action filed alleging that you are insolvent or bankrupt.


Sec.  285.109  When must I notify MMS of mergers, name changes, or 
changes of business form?

    You must notify MMS in writing of any merger, name change, or 
change of business form. You must notify MMS as soon as practicable 
following the merger, name change, or change in business form, but no 
later than 120 days after the earliest of either the effective date, or 
the date of filing the change or action with the Secretary of the State 
or other authorized official in the State of original registry.


Sec.  285.110  How do I submit plans, applications, reports, or notices 
required by this part?

    (a) You must submit all plans, applications, reports, or notices 
required by this part to MMS at the following address: Associate 
Director, OEMM, Minerals Management Service, MS-4001, 381 Elden Street, 
Herndon, VA 20170.
    (b) Unless otherwise stated, you must submit one paper copy and one 
electronic copy of all plans, applications, reports, or notices 
required by this part.


Sec.  285.111  When and how does MMS charge me processing fees on a 
case-by-case basis?

    (a) The MMS will charge a processing fee on a case-by-case basis 
under the procedures in this section with regard to any application or 
request under this part if we decide at any time that the preparation 
of a particular document or study is necessary for the application or 
request and it will have a unique processing cost, such as the 
preparation of an Environmental Assessment (EA) or Environmental Impact 
Statement (EIS).
    (1) Processing costs will include contract oversight and efforts to 
review and approve documents prepared by contractors, whether the 
contractor is paid directly by the applicant or through MMS.
    (2) We may apply a standard overhead rate to direct processing 
costs.
    (b) We will assess the ongoing processing fee for each individual 
application or request according to the following procedures:
    (1) Before we process your application or request, we will give you 
a written estimate of the proposed fee based on reasonable processing 
costs.
    (2) You may comment on the proposed fee.
    (3) You may:
    (i) Ask for our approval to perform, or to directly pay a 
contractor to perform, all or part of any document, study, or other 
activity according to standards we specify, thereby reducing our costs 
for processing your application or request; or
    (ii) Ask to pay us to perform, or contract for, all or part of any 
document, study, or other activity.
    (4) We will then give you the final estimate of the processing fee 
amount with payment terms and instructions after considering your 
comments and any MMS-approved work you will do.
    (i) If we encounter higher or lower processing costs than 
anticipated, we will re-estimate our reasonable processing costs 
following the procedures in paragraphs (b)(1), (b)(2), (b)(3), and 
(b)(4) of this section, but we will not stop ongoing processing unless 
you do not pay in accordance with paragraph (b)(5) of this section.
    (ii) Once processing is complete, we will refund to you the amount 
of money that we did not spend on processing costs.
    (5)(i) Consistent with the payment and billing terms provided in 
the final estimate, we will periodically estimate what our reasonable 
processing costs will be for a specific period and will bill you for 
that period. Payment is due to us 30 days after you receive your bill. 
We will stop processing your document if you do not pay the bill by the 
date payment is due.
    (ii) If a periodic payment turns out to be more or less than our 
reasonable processing costs for the period, we will adjust the next 
billing accordingly or make a refund. Do not deduct any amount from a 
payment without our prior written approval.
    (6) You must pay the entire fee before we will issue the final 
document or take final action on your application or request.
    (7) You may appeal our estimated processing costs in accordance 
with the regulations in 43 CFR part 4. We will not process the document 
further until the appeal is resolved, unless you pay

[[Page 19815]]

the fee under protest while the appeal is pending. If the appeal 
results in a decision changing the proposed fee, we will adjust the fee 
in accordance with paragraph (b)(5)(ii) of this section. If we adjust 
the fee downward, we will not pay interest.


Sec.  285.112  Definitions.

    Terms used in this part have the meanings as defined in this 
section:
    Affected local government means with respect to any activities 
proposed, conducted, or approved under this part, any locality--
    (1) That is, or is proposed to be, the site of gathering, 
transmitting, or distributing electricity or other energy product, or 
is otherwise receiving, processing, refining, or transshipping product, 
or services derived from activities approved under this part;
    (2) That is used, or is proposed to be used, as a support base for 
activities approved under this part; or
    (3) In which there is a reasonable probability of significant 
effect on land or water uses from activities approved under this part.
    Affected State means with respect to any activities proposed, 
conducted, or approved under this part, any coastal State--
    (1) That is, or is proposed to be, the site of gathering, 
transmitting, or distributing energy or is otherwise receiving, 
processing, refining, or transshipping products, or services derived 
from activities approved under this part;
    (2) That is used, or is scheduled to be used, as a support base for 
activities approved under this part; or
    (3) In which there is a reasonable probability of significant 
effect on land or water uses from activities approved under this part.
    Alternate Use refers to the energy- or marine-related use of an 
existing OCS facility for activities not otherwise authorized by this 
subchapter or other applicable law.
    Alternate Use RUE means a right-of-use and easement issued for 
activities authorized under subpart J of this part.
    Archaeological resource means any material remains of human life or 
activities that are at least 50 years of age and that are of 
archaeological interest (i.e., which are capable of providing 
scientific or humanistic understanding of past human behavior, cultural 
adaptation, and related topics through the application of scientific or 
scholarly techniques, such as controlled observation, contextual 
measurement, controlled collection, analysis, interpretation, and 
explanation).
    Best available and safest technology means the best available and 
safest technologies that MMS determines to be economically feasible 
wherever failure of equipment would have a significant effect on 
safety, health, or the environment.
    Best management practices mean practices recognized within their 
respective industry, or by Government, as one of the best for achieving 
the desired output while reducing undesirable outcomes.
    Certified Verification Agent (CVA) means an individual or 
organization, experienced in the design, fabrication, and installation 
of offshore marine facilities or structures, who will conduct specified 
third-party reviews, inspections, and verifications in accordance with 
this part.
    Coastline means the same as the term ``coast line'' in section 2 of 
the Submerged Lands Act (43 U.S.C. 1301(c)).
    Commercial activities mean, for renewable energy leases and grants, 
all activities associated with the generation, storage, or transmission 
of electricity or other energy product from a renewable energy project 
on the OCS, and for which such electricity or other energy product is 
intended for distribution, sale, or other commercial use, except for 
electricity or other energy product distributed or sold pursuant to 
technology-testing activities on a limited lease. This term also 
includes activities associated with all stages of development, 
including initial site characterization and assessment, facility 
construction, and project decommissioning.
    Commercial lease means a lease issued under this part that 
specifies the terms and conditions under which a person can conduct 
commercial activities.
    Commercial operations mean the generation of electricity or other 
energy product for commercial use, sale, or distribution on a 
commercial lease.
    Decommissioning means removing MMS-approved facilities and 
returning the site of the lease or grant to a condition that meets the 
requirements under subpart I of this part.
    Director means the Director of MMS of the U.S. Department of the 
Interior, or an official authorized to act on the Director's behalf.
    Distance means the minimum great circle distance.
    Eligible State means a coastal State having a coastline (measured 
from the nearest point) no more than 15 miles from the geographic 
center of a qualified project area.
    Facility means an installation that is permanently or temporarily 
attached to the seabed of the OCS. Facilities include any structures; 
devices; appurtenances; gathering, transmission, and distribution 
cables; pipelines; and permanently moored vessels. Any group of OCS 
installations interconnected with walkways, or any group of 
installations that includes a central or primary installation with one 
or more satellite or secondary installations, is a single facility. The 
MMS may decide that the complexity of the installations justifies their 
classification as separate facilities.
    Geographic center of a project means the centroid (geometric center 
point) of a qualified project area. The centroid represents the point 
that is the weighted average of coordinates of the same dimension 
within the mapping system, with the weights determined by the density 
function of the system. For example, in the case of a project area 
shaped as a rectangle or other parallelogram, the geographic center 
would be that point where lines between opposing corners intersect. The 
geographic center of a project could be outside the project area itself 
if that area is irregularly shaped.
    Governor means the Governor of a State or the person or entity 
lawfully designated by or under State law to exercise the powers 
granted to a Governor.
    Grant means a right-of-way, right-of-use and easement, or alternate 
use right-of-use and easement issued under the provisions of this part.
    Human environment means the physical, social, and economic 
components, conditions, and factors that interactively determine the 
state, condition, and quality of living conditions, employment, and 
health of those affected, directly or indirectly, by activities 
occurring on the OCS.
    Income, unless clearly specified to the contrary, refers to the 
money received by the project owner or holder of the lease or grant 
issued under this part. The term does not mean that project receipts 
exceed project expenses.
    Lease means an agreement authorizing the use of a designated 
portion of the OCS for activities allowed under this part. The term 
also means the area covered by that agreement, when the context 
requires.
    Lessee means the holder of a lease, an MMS-approved assignee, and, 
when describing the conduct required of parties engaged in activities 
on the lease, it also refers to the operator and all persons authorized 
by the holder of the lease or operator to conduct activities on the 
lease.
    Limited lease means a lease issued under this part that specifies 
the terms and conditions under which a person

[[Page 19816]]

may conduct activities on the OCS that support the production of 
energy, but do not result in the production of electricity or other 
energy product for sale, distribution, or other commercial use 
exceeding a limit specified in the lease.
    Marine environment means the physical, atmospheric, and biological 
components, conditions, and factors that interactively determine the 
productivity, state, condition, and quality of the marine ecosystem. 
These include the waters of the high seas, the contiguous zone, 
transitional and intertidal areas, salt marshes, and wetlands within 
the coastal zone and on the OCS.
    Miles mean nautical miles, as opposed to statute miles.
    MMS means the Minerals Management Service of the Department of the 
Interior.
    Natural resources include, without limiting the generality thereof, 
renewable energy, oil, gas, and all other minerals (as defined in 
section 2(q) of the OCS Lands Act), and marine animal and marine plant 
life.
    Operator means the individual, corporation, or association having 
control or management of activities on the lease or grant under this 
part. The operator may be a lessee, grant holder, or a contractor 
designated by the lessee or holder of a grant under this part.
    Outer Continental Shelf (OCS) means all submerged lands lying 
seaward and outside of the area of lands beneath navigable waters, as 
defined in section 2 of the Submerged Lands Act (43 U.S.C. 1301), whose 
subsoil and seabed appertain to the United States and are subject to 
its jurisdiction and control.
    Person means, in addition to a natural person, an association 
(including partnerships and joint ventures); a Federal agency; a State; 
a political subdivision of a State; a Native American tribal 
government; or a private, public, or municipal corporation.
    Project, for the purposes of defining the source of revenues to be 
shared, means a lease ROW, RUE, or Alternate Use RUE on which the 
activities authorized under this part are conducted on the OCS. The 
term ``project'' may be used elsewhere in this rule to refer to these 
same authorized activities, the facilities used to conduct these 
activities, or to the geographic area of the project, i.e., the project 
area.
    Project area means the geographic surface leased, or granted, for 
the purpose of a specific project. If OCS acreage is granted for a 
project under some form of agreement other than a lease (i.e., a ROW, 
RUE, or Alternate Use RUE issued under this part), the Federal acreage 
granted would be considered the project area. To avoid distortions in 
the calculation of the geometric center of the project area, project 
easements issued under this part are not considered part of the 
qualified project's area.
    Project easement means an easement to which, upon approval of your 
Construction and Operations Plan (COP) or General Activities Plan 
(GAP), you are entitled as part of the lease for the purpose of 
installing, gathering, transmission, and distribution cables, 
pipelines, and appurtenances on the OCS as necessary for the full 
enjoyment of the lease.
    Renewable Energy means energy resources other than oil and gas and 
minerals as defined in 30 CFR part 280. Such resources include, but are 
not limited to, wind, solar, and ocean waves, tides, and current.
    Revenues mean bonuses, rents, operating fees, and similar payments 
made in connection with a project or project area. It does not include 
administrative fees such as those assessed for cost recovery, civil 
penalties, and forfeiture of financial assurance.
    Right-of-use and easement (RUE) grant means an easement issued by 
MMS under this part that authorizes use of a designated portion of the 
OCS to support activities on a lease or other use authorization for 
renewable energy activities. The term also means the area covered by 
the authorization.
    Right-of-way (ROW) grant means an authorization issued by MMS under 
this part to use a portion of the OCS for the construction and use of a 
cable or pipeline for the purpose of gathering, transmitting, 
distributing, or otherwise transporting electricity or other energy 
product generated or produced from renewable energy, but does not 
constitute a project easement under this part. The term also means the 
area covered by the authorization.
    Secretary means the Secretary of the Interior or an official 
authorized to act on the Secretary's behalf.
    Significant archaeological resource means an archaeological 
resource that meets the criteria of significance for eligibility for 
listing in the National Register of Historic Places, as defined in 36 
CFR 60.4 or its successor.
    Site assessment activities mean those initial activities conducted 
to characterize a site on the OCS, such as resource assessment surveys 
(e.g., meteorological and oceanographic) or technology testing, 
involving the installation of bottom-founded facilities.
    You and your refer to an applicant, lessee, the operator, a 
designated agent of the lessee(s) or designated operator, ROW grant 
holder, RUE grant holder, or Alternate Use RUE grant holder under this 
part, or the possessive of each, depending on the context.
    We, us, and our refer to the Minerals Management Service of the 
Department of the Interior, or its possessive, depending on the 
context.


Sec.  285.113  How will data and information obtained by MMS under this 
part be disclosed to the public?

    (a) The MMS will make data and information available in accordance 
with the requirements and subject to the limitations of the Freedom of 
Information Act (FOIA) (5 U.S.C. 552), the regulations contained in 43 
CFR part 2 (Records and Testimony).
    (b) The MMS will not release such data and information that we have 
determined is exempt from disclosure under exemption 4 of FOIA. We will 
review such data and information and objections of the submitter by the 
following schedule to determine whether release at that time will 
result in substantial competitive harm or disclosure of trade secrets.

[[Page 19817]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.102

    (c) After considering any objections from the submitter, if we 
determine that release of such data and information will result in:
    (1) No substantial competitive harm or disclosure of trade secrets, 
then the data and information will be released.
    (2) Substantial competitive harm or disclosure of trade secrets, 
then the data and information will not be released at that time but 
will be subject to further review every 3 years thereafter.


Sec.  285.114  Paperwork Reduction Act statements--information 
collection.

    (a) The Office of Management and Budget (OMB) has approved the 
information collection requirements in 30 CFR part 285 under 44 U.S.C. 
3501, et seq., and assigned OMB Control Number 1010-0176. The table in 
paragraph (e) of this section lists the subpart in the rule requiring 
the information and its title, summarizes the reasons for collecting 
the information, and summarizes how MMS uses the information.
    (b) Respondents are primarily renewable energy applicants, lessees, 
ROW grant holders, RUE grant holders, Alternate Use RUE grant holders, 
and operators. The requirement to respond to the information collection 
in this part is mandated under subsection 8(p) of the OCS Lands Act. 
Some responses are also required to obtain or retain a benefit, or may 
be voluntary.
    (c) The Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) 
requires us to inform the public that an agency may not conduct or 
sponsor, and you are not required to respond to, a collection of 
information unless it displays a currently valid OMB control number.
    (d) Comments regarding any aspect of the collections of information 
under this part, including suggestions for reducing the burden should 
be sent to the Information Collection Clearance Officer, Minerals 
Management Service, Mail Stop 5438, 1849 C Street, NW., Washington, DC 
20240.
    (e) The MMS is collecting this information for the reasons given in 
the following table:
BILLING CODE 4310-MR-P

[[Page 19818]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.103

BILLING CODE 4310-MR-C


Sec.  285.115  Documents incorporated by reference.

    (a) The MMS is incorporating by reference the documents listed in 
the table in paragraph (e) of this section. The Director of the Federal 
Register has approved this incorporation by

[[Page 19819]]

reference according to 5 U.S.C. 552(a) and 1 CFR part 51.
    (1) The MMS will publish, as a rule, any changes in the documents 
incorporated by reference in the Federal Register.
    (2) The MMS may amend by rule the list of industry standards 
incorporated by reference of the document effective without prior 
opportunity for public comment when MMS determines that the revisions 
to a document result in safety improvements or represent new industry 
standard technology and do not impose undue costs on the affected 
parties; and
    (3) The MMS may make a rule, effective immediately, amending the 
list of industry standards incorporated by reference if it determines 
good cause exists for doing so under 5 U.S.C. 553.
    (b) The MMS is incorporating each document or specific portion by 
reference in the sections noted. The entire document is incorporated by 
reference, unless the text of the corresponding sections in this part 
calls for compliance with specific portions of the listed documents. In 
each instance, the applicable document is the specific edition, or 
specific edition and supplement, or specific addition and addendum 
cited in this section.
    (c) You may comply with a later edition of a specific document 
incorporated by reference, only if:
    (1) You show that complying with the later edition provides a 
degree of protection, safety, or performance equal to or better than 
what would be achieved by compliance with the listed edition; and
    (2) You obtain the prior written approval for alternative 
compliance from the authorized MMS official.
    (d) You may inspect these documents at the Minerals Management 
Service, 381 Elden Street, Room 3313, Herndon, Virginia, 703-787-1605; 
or at the National Archives and Records Administration (NARA). For 
information on the availability of this material at NARA, call 202-741-
6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html You may obtain the documents 
from the publishing organizations at the addresses given in the 
following table: 
[GRAPHIC] [TIFF OMITTED] TR29AP09.104

    (e) This paragraph lists documents incorporated by reference. To 
easily reference text of the corresponding sections with the list of 
documents incorporated by reference, the list is in alphanumerical 
order by organization and document. 
[GRAPHIC] [TIFF OMITTED] TR29AP09.105

Sec.  285.116  Requests for information on the state of the offshore 
renewable energy industry.

    (a) The Director may, from time to time, and at his discretion, 
solicit information from industry and other relevant stakeholders 
(including State and local agencies), as necessary, to evaluate the 
state of the offshore renewable energy industry, including the 
identification of potential challenges or obstacles to its continued 
development. Such requests for information may relate to the 
identification of environmental, technical, regulatory, or economic 
matters that promote or detract from continued development of renewable 
energy technologies on the OCS. From the information received, the 
Director may evaluate potential refinements to the OCS Alternative 
Energy Program that promote development of the industry in a safe and 
environmentally responsible manner, and that ensure fair value for use 
of the Nation's OCS.
    (b) The MMS may make such requests for information on a regional 
basis, and may tailor the requests to specific types of renewable 
energy technologies.
    (c) The MMS will publish such requests for information by the 
Director in the Federal Register.


Sec.  285.117  [Reserved]


Sec.  285.118  What are my appeal rights?

    (a) Any party adversely affected by an MMS official's final 
decision or order issued under the regulations of this part may appeal 
that decision or order to the Interior Board of Land Appeals. The 
appeal must conform with the procedures found in 30 CFR part 290 and 43 
CFR part 4, subpart E. Appeal of a final decision for bid acceptance is 
covered under paragraph (c) of this section.
    (b) A decision will remain in full force and effect during the 
period in which an appeal may be filed and during an appeal, unless a 
stay is granted pursuant to 43 CFR part 4.
    (c) Our decision on a bid is the final action of the Department, 
except that an unsuccessful bidder may apply for reconsideration by the 
Director.
    (1) A bidder whose bid we reject may file a written request for 
reconsideration with the Director within 15 days of the date of the 
receipt of the notice of rejection, accompanied by a statement of 
reasons, with one copy to us. The Director will respond in writing 
either affirming or reversing the decision.
    (2) The delegation of review authority given to the Office of 
Hearings and Appeals does not apply to decisions on high bids for 
leases or grants under this part.

[[Page 19820]]

Subpart B--Issuance of OCS Renewable Energy Leases

General Lease Information


Sec.  285.200  What rights are granted with a lease issued under this 
part?

    (a) A lease issued under this part grants the lessee the right, 
subject to obtaining the necessary approvals, including but not limited 
to those required under the FERC hydrokinetic licensing process, and 
complying with all provisions of this part, to occupy, and install and 
operate facilities on, a designated portion of the OCS for the purpose 
of conducting:
    (1) Commercial activities; or
    (2) Other limited activities that support, result from, or relate 
to the production of energy from a renewable energy source.
    (b) A lease issued under this part confers on the lessee the right 
to one or more project easements without further competition for the 
purpose of installing gathering, transmission, and distribution cables; 
pipelines; and appurtenances on the OCS as necessary for the full 
enjoyment of the lease.
    (1) You must apply for the project easement as part of your COP or 
GAP, as provided under subpart F of this part; and
    (2) The MMS will incorporate your approved project easement in your 
lease as an addendum.
    (c) A commercial lease issued under this part may be developed in 
phases, with MMS approval as provided in Sec.  285.629.


Sec.  285.201  How will MMS issue leases?

    The MMS will issue leases on a competitive basis, as provided under 
Sec. Sec.  285.210 through 285.225. However, if we determine after 
public notice of a proposed lease that there is no competitive 
interest, we will issue leases noncompetitively, as provided under 
Sec. Sec.  285.230 and 285.232. We will issue leases on forms approved 
by MMS and will include terms, conditions, and stipulations identified 
and developed through the process set forth in Sec. Sec.  285.211 and 
285.231.


Sec.  285.202  What types of leases will MMS issue?

    The MMS may issue leases on the OCS for the assessment and 
production of renewable energy and may authorize a combination of 
specific activities. We may issue commercial leases or limited leases.


Sec.  285.203   With whom will MMS consult before issuance of a lease?

    For leases issued under this part, through either the competitive 
or noncompetitive process, MMS prior to issuing the lease, will 
coordinate and consult with relevant Federal agencies (including, in 
particular, those agencies involved in planning activities that are 
undertaken to avoid conflicts among users and maximize the economic and 
ecological benefits of the OCS, including multifaceted spatial planning 
efforts), the Governor of any affected State, the executive of any 
affected local government, and any affected Indian tribe, as directed 
by subsections 8(p)(4) and (7) of the OCS Lands Act or other relevant 
Federal laws. Federal statutes that require us to consult with or 
respond to findings include the Endangered Species Act (ESA), and the 
Magnuson-Stevens Fishery Conservation and Management Act (MSA).


Sec.  285.204   What areas are available for leasing consideration?

    The MMS may offer any appropriately platted area of the OCS, as 
provided in Sec.  285.205, for a renewable energy lease, except any 
area within the exterior boundaries of any unit of the National Park 
System, National Wildlife Refuge System, National Marine Sanctuary 
System, or any National Monument.


Sec.  285.205   How will leases be mapped?

    The MMS will prepare leasing maps and official protraction diagrams 
of areas of the OCS. The areas included in each lease will be in 
accordance with the appropriate leasing map or official protraction 
diagram.


Sec.  285.206   What is the lease size?

    (a) The MMS will determine the size for each lease based on the 
area required to accommodate the anticipated activities. The processes 
leading to both competitive and noncompetitive issuance of leases will 
provide public notice of the lease size adopted. We will delineate 
leases by using mapped OCS blocks or portions, or aggregations of 
blocks.
    (b) The lease size includes the minimum area that will allow the 
lessee sufficient space to develop the project and manage activities in 
a manner that is consistent with the provisions of this part. The lease 
may include whole lease blocks or portions of a lease block.


Sec. Sec.  285.207--285.209   [Reserved]

Competitive Lease Process


Sec.  285.210   How does MMS initiate the competitive leasing process?

    The MMS may publish in the Federal Register a public notice of 
Request for Interest to assess interest in leasing all or part of the 
OCS for activities authorized in this part. The MMS will consider 
information received in response to a Request for Interest to determine 
whether there is competitive interest for scheduling sales and issuing 
leases. We may prepare and issue a national, regional, or more specific 
schedule of lease sales pertaining to one or more types of renewable 
energy.


Sec.  285.211   What is the process for competitive issuance of leases?

    The MMS will use auctions to award leases on a competitive basis. 
We will publish details of the process to be employed for each lease 
sale auction in the Federal Register. For each lease sale, we will 
publish a Proposed Sale Notice and a Final Sale Notice. Individual 
lease sales will include steps such as:
    (a) Call for Information and Nominations (Call). The MMS will 
publish in the Federal Register Calls for Information and Nominations 
for leasing in specified areas. The comment period following issuance 
of a Call will be 45 days. In this document, we may:
    (1) Request comments on areas which should receive special 
consideration and analysis;
    (2) Request comments concerning geological conditions (including 
bottom hazards); archaeological sites on the seabed or nearshore; 
multiple uses of the proposed leasing area (including navigation, 
recreation, and fisheries); and other socioeconomic, biological, and 
environmental information; and
    (3) Suggest areas to be considered by the respondents for leasing.
    (b) Area Identification. The MMS will identify areas for 
environmental analysis and consideration for leasing. We will do this 
in consultation with appropriate Federal agencies, States, local 
governments, affected Indian tribes, and other interested parties.
    (1) We may consider for lease those areas nominated in response to 
the Call for Information and Nominations, together with other areas 
that MMS determines are appropriate for leasing.
    (2) We will evaluate the potential effect of leasing on the human, 
marine, and coastal environments, and develop measures to mitigate 
adverse impacts, including lease stipulations.
    (3) We will consult to develop measures, including lease 
stipulations and conditions, to mitigate adverse impacts on the 
environment; and
    (4) We may hold public hearings on the environmental analysis after 
appropriate notice.
    (c) Proposed Sale Notice. The MMS will publish the Proposed Sale 
Notice in the Federal Register and send it to the Governor of any 
affected State and the executive of any local government that

[[Page 19821]]

might be affected. The comment period following issuance of a Proposed 
Sale Notice will be 60 days.
    (d) Final Sale Notice. The MMS will publish the Final Sale Notice 
in the Federal Register at least 30 days before the date of the sale.


Sec.  285.212   What is the process MMS will follow if there is reason 
to believe that competitors have withdrawn before the Final Sale Notice 
is issued?

    The MMS may decide to end the competitive process before the Final 
Sale Notice if we have reason to believe that competitors have 
withdrawn and competition no longer exists. We will issue a second 
public notice of Request for Interest and consider comments received to 
confirm that there is no competitive interest.
    (a) If, after reviewing comments in response to the notice of 
Request for Interest, MMS determines that there is no competitive 
interest in the lease area, and one party wishes to acquire a lease, we 
will discontinue the competitive process and will proceed with the 
noncompetitive process set forth in Sec.  285.231(d) through (i). Under 
the noncompetitive process, the acquisition fee specified in Sec.  
285.502(a) must be submitted with the Site Assessment Plan (SAP) or 
GAP.
    (b) If, after reviewing comments in response to the notice of 
Request for Interest, MMS determines that competitive interest in the 
lease area continues to exist, we will continue with the competitive 
process set forth in Sec.  285.211 through 285.225.


Sec.  285.213   What must I submit in response to a Request for 
Interest or a Call for Information and Nominations?

    If you are a potential lessee, when you respond to a Request for 
Interest or a Call, your response must include the following items:
    (a) The area of interest for a possible lease.
    (b) A general description of your objectives and the facilities 
that you would use to achieve those objectives.
    (c) A general schedule of proposed activities, including those 
leading to commercial operations.
    (d) Available and pertinent data and information concerning 
renewable energy and environmental conditions in the area of interest, 
including energy and resource data and information used to evaluate the 
area of interest. The MMS will withhold trade secrets and commercial or 
financial information that is privileged or confidential from public 
disclosure under exemption 4 of the FOIA and as provided in Sec.  
285.113.
    (e) Documentation showing that you are qualified to hold a lease, 
as specified in Sec.  285.107.
    (f) Any other information requested by MMS in the Federal Register 
notice.


Sec.  285.214   What will MMS do with information from the Requests for 
Information or Calls for Information and Nominations?

    The MMS will use the information received in response to the 
Requests or Calls to:
    (a) Identify the lease area;
    (b) Develop options for the environmental analysis and leasing 
provisions (stipulations, payments, terms, and conditions); and
    (c) Prepare appropriate documentation to satisfy applicable Federal 
requirements, such as NEPA, CZMA, the ESA, and the MSA.


Sec.  285.215  What areas will MMS offer in a lease sale?

    The MMS will offer the areas for leasing determined through the 
process set forth in Sec.  285.211 of this part. We will not accept 
nominations after the Call for Information and Nominations closes.


Sec.  285.216  What information will MMS publish in the Proposed Sale 
Notice and Final Sale Notice?

    For each competitive lease sale, MMS will publish a Proposed Sale 
Notice and a Final Sale Notice in the Federal Register. In the Proposed 
Sale Notice, we will request public comment on the items listed in this 
section. We will consider all public comments received in developing 
the final lease sale terms and conditions. We will publish the final 
terms and conditions in the Final Sale Notice. The Proposed Sale Notice 
and Final Sale Notice will include, or describe the availability of, 
information pertaining to:
    (a) The area available for leasing.
    (b) Proposed and final lease provisions and conditions, including, 
but not limited to:
    (1) Lease size;
    (2) Lease term;
    (3) Payment requirements;
    (4) Performance requirements; and
    (5) Site-specific lease stipulations.
    (c) Auction details, including:
    (1) Bidding procedures and systems;
    (2) Minimum bid;
    (3) Deposit amount;
    (4) The place and time for filing bids and the place, date, and 
hour for opening bids;
    (5) Lease award method; and
    (6) Bidding or application instructions.
    (d) The official MMS lease form to be used or a reference to that 
form.
    (e) Criteria MMS will use to evaluate competing bids or 
applications and how the criteria will be used in decision-making for 
awarding a lease.
    (f) Award procedures, including how and when MMS will award leases 
and how MMS will handle unsuccessful bids or applications.
    (g) Procedures for appealing the lease issuance decision.
    (h) Execution of the lease instrument.


Sec. Sec.  285.217-285.219  [Reserved]

Competitive Lease Award Process


Sec.  285.220  What auction format may MMS use in a lease sale?

    (a) Except as provided in Sec.  285.231, we will hold competitive 
auctions to award renewable energy leases and will use one of the 
following auction formats, as determined through the lease sale process 
and specified in the Proposed Sale Notice and in the Final Sale Notice:

[[Page 19822]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.106

    (b) You must submit your bid and a deposit as specified in 
Sec. Sec.  285.500 and 285.501 to cover the bid for each lease area, 
according to the terms specified in the Final Sale Notice.


Sec.  285.221  What bidding systems may MMS use for commercial leases 
and limited leases?

    (a) For commercial leases, we will specify minimum bids in the 
Final Sale Notice and use one of the following bidding systems, as 
specified in the Proposed Sale Notice and in the Final Sale Notice: 
[GRAPHIC] [TIFF OMITTED] TR29AP09.107

    (b) For limited leases, the bid variable will be a cash bonus, with 
a minimum bid as we specify in the Final Sale Notice.


Sec.  285.222  What does MMS do with my bid?

    (a) If sealed bidding is used:
    (1) We open the sealed bids at the place, date, and hour specified 
in the Final Sale Notice for the sole purpose of publicly announcing 
and recording the bids. We do not accept or reject any bids at that 
time.
    (2) We reserve the right to reject any and all high bids, including 
a bid for any proposal submitted under the multiple-factor bidding 
format, regardless of the amount offered or bidding system used. The 
reasons for the rejection of a winning bid may include, but are not 
necessarily limited to, insufficiency, illegality, anti-competitive 
behavior, administrative error, and the presence of unusual bidding 
patterns. We intend to accept or reject all high bids within 90 days, 
but we may extend that time if necessary.
    (b) If we use ascending bidding, we may, in the Final Sale Notice, 
reserve the right to accept the winning bid solely based on its being 
the highest bid submitted by a qualified bidder (qualified to be an OCS 
lessee under Sec.  285.107).
    (c) If we use two-stage bidding and the auction concludes with

[[Page 19823]]

    (i) an ascending bidding stage, the winning bid will be determined 
as stated in paragraph (b) of this section; or
    (ii) a sealed bidding stage, the winning bid will be determined as 
stated in paragraph (a) of this section.
    (d) If we use multiple-factor bidding, determination of the winning 
bid for any proposal submitted will be made by a panel composed of 
members selected by MMS. The details of the process will be described 
in the Final Sale Notice.
    (e) We will send a written notice of our decision to accept or 
reject bids to all bidders whose deposits we hold.


Sec.  285.223   What does MMS do if there is a tie for the highest bid?

    (a) Unless otherwise specified in the Final Sale Notice, except in 
the first stage of a two-stage bidding auction, if more than one bidder 
on a lease submits the same high bid amount, the winning bidder will be 
determined by a further round or stage of bidding as described in the 
Final Sale Notice.
    (b) The winning bidder will be subject to final confirmation 
following determination of bid adequacy.


Sec.  285.224   What happens if MMS accepts my bid?

    If we accept your bid, we will send you a notice with three copies 
of the lease form.
    (a) Within 10 business days after you receive the lease copies, you 
must:
    (1) Execute the lease;
    (2) File financial assurance as required under Sec. Sec.  285.515 
through 285.537; and
    (3) Pay the balance of the bonus bid as specified in the lease sale 
notice.
    (b) Within 45 days after you receive the lease copies, you must pay 
the first 6 months rent as required in Sec.  285.503.
    (c) When you execute three copies of the lease and return the 
copies to us, we will execute the lease on behalf of the United States 
and send you one fully executed copy.
    (d) You will forfeit your deposit if you do not execute and return 
the lease within 10 business days of receipt, or otherwise fail to 
comply with applicable regulations or terms of the Final Sale Notice.
    (e) We may extend the 10 business day time period for executing and 
returning the lease if we determine the delay to be caused by events 
beyond your control.
    (f) We reserve the right to withdraw an OCS area in which we have 
held a lease sale before you and MMS execute the lease in that area. If 
we exercise this right, we will refund your bid deposit, without 
interest.
    (g) If the awarded lease is executed by an agent acting on behalf 
of the bidder, the bidder must submit, along with the executed lease, 
written evidence that the agent is authorized to act on behalf of the 
bidder.
    (h) The MMS will consider the highest submitted qualified bid to be 
the winning bid when bidding occurs under the systems described in 
Sec. Sec.  285.221(a)(1) through (5). We will determine the winning bid 
for proposals submitted under the multiple-factor bidding format on the 
basis of selection by the panel as specified in Sec.  285.222(d) when 
the bidding system under Sec.  285.221(a)(6) is used. We will refund 
the deposit on all other bids.


Sec.  285.225   What happens if my bid is rejected, and what are my 
appeal rights?

    (a) If we reject your bid, we will provide a written statement of 
the reasons and refund any money deposited with your bid, without 
interest.
    (b) You may ask the MMS Director for reconsideration, in writing, 
within 15 business days of bid rejection, under Sec.  285.118(c)(1). We 
will send you a written response either affirming or reversing the 
rejection.


Sec. Sec.  285.226-285.229   [Reserved]

Noncompetitive Lease Award Process


Sec.  285.230   May I request a lease if there is no Call?

    You may submit an unsolicited request for a commercial lease or a 
limited lease under this part. Your unsolicited request must contain 
the following information:
    (a) The area you are requesting for lease.
    (b) A general description of your objectives and the facilities 
that you would use to achieve those objectives.
    (c) A general schedule of proposed activities including those 
leading to commercial operations.
    (d) Available and pertinent data and information concerning 
renewable energy and environmental conditions in the area of interest, 
including energy and resource data and information used to evaluate the 
area of interest. The MMS will withhold trade secrets and commercial or 
financial information that is privileged or confidential from public 
disclosure under exemption 4 of the FOIA and as provided in Sec.  
285.113.
    (e) If available from the appropriate State or local government 
authority, a statement that the proposed activity conforms with State 
and local energy planning requirements, initiatives, or guidance.
    (f) Documentation showing that you meet the qualifications to 
become a lessee, as specified in Sec.  285.107.
    (g) An acquisition fee, as specified in Sec.  285.502(a).


Sec.  285.231   How will MMS process my unsolicited request for a 
noncompetitive lease?

    (a) The MMS will consider unsolicited requests for a lease on a 
case-by-case basis and may issue a lease noncompetitively in accordance 
with this part. We will not consider an unsolicited request for a lease 
under this part that is proposed in an area of the OCS that is 
scheduled for a lease sale under this part.
    (b) The MMS will issue a public notice of a request for interest 
relating to your proposal and consider comments received to determine 
if competitive interest exists.
    (c) If MMS determines that competitive interest exists in the lease 
area:
    (1) The MMS will proceed with the competitive process set forth in 
Sec. Sec.  285.210 through 285.225;
    (2) If you submit a bid for the lease area in a competitive lease 
sale, your acquisition fee will be applied to the deposit for your 
bonus bid; and
    (3) If you do not submit a bid for the lease area in a competitive 
lease sale, MMS will not refund your acquisition fee.
    (d) If MMS determines that there is no competitive interest in a 
lease:
    (1) We will publish a notice, in the Federal Register, of such 
determination; and
    (2) You must submit within 60 days of the date of the notice to 
MMS:
    (i) For a commercial lease, a SAP, as described in Sec. Sec.  
285.605 through 285.613; or
    (ii) For a limited lease, a GAP, as described in Sec. Sec.  285.640 
through 285.648.
    (e) The MMS will coordinate and consult with affected Federal 
agencies, State, and local governments, and affected Indian tribes in 
the review of noncompetitive lease requests and associated plans.
    (f) If we approve or approve with conditions your SAP or GAP, we 
may offer you a noncompetitive lease.
    (g) If you accept the terms and conditions of the lease, then we 
will issue the lease, and you must comply with all terms and conditions 
of your lease and all applicable provisions of this part. If we issue 
you a lease, we will send you a notice with 3 copies of the lease form.
    (1) Within 10 business days after you receive the lease copies you 
must:
    (i) Execute the lease;
    (ii) File financial assurance as required under Sec. Sec.  285.515 
through 285.537; and

[[Page 19824]]

    (2) Within 45 days after you receive the lease copies, you must pay 
the first 6-months rent, as required in Sec.  285.503.
    (h) The MMS will publish in the Federal Register a notice 
announcing the issuance of your lease.
    (i) If you do not accept the terms and conditions, MMS will not 
issue a lease, and we will not refund your acquisition fee.


Sec.  285.232  May I acquire a lease noncompetitively after responding 
to a Request for Interest or Call for Information and Nominations under 
Sec.  285.213?

    (a) If you submit an area of interest for a possible lease and MMS 
receives no competing submissions in response to the RFI or Call, we 
may inform you that there does not appear to be competitive interest, 
and ask if you wish to proceed with acquiring a lease.
    (b) If you wish to proceed with acquiring a lease, you must submit 
your acquisition fee as specified in Sec.  285.502(a).
    (c) After receiving the acquisition fee, MMS will follow the 
process outlined in Sec.  285.231(b) through (i).


Sec. Sec.  285.233-285.234  [Reserved]

Commercial and Limited Lease Terms


Sec.  285.235  If I have a commercial lease, how long will my lease 
remain in effect?

    (a) For commercial leases, the lease terms and applicable automatic 
extensions are as shown in the following table:
BILLING CODE 4310-MR-P

[[Page 19825]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.108

BILLING CODE 4310-MR-C
    (b) If you do not timely submit a SAP, COP, or SAP/COP, as 
appropriate, you may request additional time to extend the preliminary 
or site assessment term of your commercial lease that includes a 
revised schedule for submission of the plan, as appropriate.


Sec.  285.236  If I have a limited lease, how long will my lease remain 
in effect?

    (a) For limited leases, the lease terms are as shown in the 
following table:

[[Page 19826]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.109

    (b) If you do not timely submit a GAP, you may request additional 
time to extend the preliminary term of your limited lease that includes 
a revised schedule for submission of a GAP.


Sec.  285.237  What is the effective date of a lease?

    (a) A lease issued under this part must be dated and becomes 
effective as of the first day of the month following the date a lease 
is signed by the lessor.
    (b) If the lessee submits a written request and MMS approves, a 
lease may be dated and become effective the first day of the month in 
which it is signed by the lessor.


Sec.  285.238   Are there any other renewable energy research 
activities that will be allowed on the OCS?

    (a) The Director may issue OCS leases, ROW grants, and RUE grants 
to a Federal agency or a State for renewable energy research activities 
that support the future production, transportation, or transmission of 
renewable energy.
    (b) In issuing leases, ROW grants, and RUE grants to a Federal 
agency or a State on the OCS for renewable energy research activities 
under this provision, MMS will coordinate and consult with other 
relevant Federal agencies, any other affected State(s), affected local 
government executives, and affected Indian tribes.
    (c) The MMS may issue leases, RUEs, and ROWs for research 
activities managed by a Federal agency or a State only in areas for 
which the Director has determined, after public notice and opportunity 
to comment, that no competitive interest exists.
    (d) The Director and the head of the Federal agency or the Governor 
of a requesting State, or their authorized representatives, will 
negotiate the terms and conditions of such renewable energy leases, 
RUEs, or ROWs under this provision on a case-by-case basis. The 
framework for such negotiations, and standard terms and conditions of 
such leases, RUEs, or ROWs may be set forth in a memorandum of 
agreement (MOA) or other agreement between MMS and a Federal agency or 
a State. The MOA must include the agreement of the head of the Federal 
agency or the Governor to assure that all subcontractors comply with 
these regulations, other applicable laws, and terms and conditions of 
such leases or grants.
    (e) Any lease, RUE, or ROW that MMS issues to a Federal agency or 
to a State that authorizes access to an area of the OCS for research 
activities managed by a Federal agency or a State must include:
    (1) Requirements to comply with all applicable Federal laws; and
    (2) Requirements to comply with these regulations, except as 
otherwise provided in the lease or grant.
    (f) The MMS will issue a public notice of any lease, RUE, ROW 
issued to a Federal agency or to a State, or an approved MOA for such 
research activities.
    (g) The MMS will not charge any fees for the purpose of ensuring a 
fair return for the use of such research areas on the OCS.

Subpart C--Rights-of-Way Grants and Rights-of-Use and Easement 
Grants for Renewable Energy Activities

ROW Grants and RUE Grants


Sec.  285.300   What types of activities are authorized by ROW grants 
and RUE grants issued under this part?

    (a) An ROW grant authorizes the holder to install on the OCS 
cables, pipelines, and associated facilities that involve the 
transportation or transmission of electricity or other energy product 
from renewable energy projects.
    (b) An RUE grant authorizes the holder to construct and maintain 
facilities or other installations on the OCS that support the 
production, transportation, or transmission of electricity or other 
energy product from any renewable energy resource.
    (c) You do not need an ROW grant or RUE grant for a project 
easement authorized under Sec.  285.200(b) to serve your lease.


Sec.  285.301   What do ROW grants and RUE grants include?

    (a) An ROW grant:

[[Page 19827]]

    (1) Includes the full length of the corridor on which a cable, 
pipeline, or associated facility is located;
    (2) Is 200 feet (61 meters) in width, centered on the cable or 
pipeline, unless safety and environmental factors during construction 
and maintenance of the associated cable or pipeline require a greater 
width; and
    (3) For the associated facility, is limited to the area reasonably 
necessary for a power or pumping station or other accessory facility.
    (b) An RUE grant includes the site on which a facility or other 
structure is located and the areal extent of anchors, chains, and other 
equipment associated with a facility or other structure. The specific 
boundaries of an RUE will be determined by MMS on a case-by-case basis 
and set forth in each RUE grant.


Sec.  285.302   What are the general requirements for ROW grant and RUE 
grant holders?

    (a) To acquire an ROW grant or RUE grant you must provide evidence 
that you meet the qualifications as required in Sec.  285.107.
    (b) An ROW grant or RUE grant is subject to the following 
conditions:
    (1) The rights granted will not prevent the granting of other 
rights by the United States, either before or after the granting of the 
ROW or RUE, provided that any subsequent authorization issued by MMS in 
the area of a previously issued ROW grant or RUE grant may not 
unreasonably interfere with activities approved or impede existing 
operations under such a grant; and
    (2) The holder agrees that the United States, its lessees, or other 
ROW grant or RUE grant holders may use or occupy any part of the ROW 
grant or RUE grant not actually occupied or necessarily incident to its 
use for any necessary activities.


Sec.  285.303   How long will my ROW grant or RUE grant remain in 
effect?

    Your ROW grant or RUE grant will remain in effect for as long as 
the associated activities are properly maintained and used for the 
purpose for which the grant was made, unless otherwise expressly stated 
in the grant.


Sec.  285.304   [Reserved]

Obtaining ROW Grants and RUE Grants


Sec.  285.305   How do I request an ROW grant or RUE grant?

    You must submit to MMS one paper copy and one electronic copy of a 
request for a new or modified ROW grant or RUE grant. You must submit a 
separate request for each ROW grant or RUE grant you are requesting. 
The request must contain the following information:
    (a) The area you are requesting for a ROW grant or RUE grant.
    (b) A general description of your objectives and the facilities 
that you would use to achieve those objectives.
    (c) A general schedule of proposed activities.
    (d) Pertinent information concerning environmental conditions in 
the area of interest.


Sec.  285.306   What action will MMS take on my request?

    The MMS will consider requests for ROW grants and RUE grants on a 
case-by-case basis and may issue a grant competitively, as provided in 
Sec.  285.308, or noncompetitively if we determine after public notice 
that there is no competitive interest. The MMS will coordinate and 
consult with relevant Federal agencies, with the Governor of any 
affected State, and the executive of any affected local government.
    (a) In response to an unsolicited request for a ROW grant or RUE 
grant, the MMS will first determine if there is competitive interest, 
as provided in Sec.  285.307.
    (b) If MMS determines that there is no competitive interest in a 
ROW grant or RUE grant, we will:
    (1) In consultation with you, establish the terms and conditions 
for the grant;
    (2) Require you to submit a GAP, as described in Sec. Sec.  285.640 
through 285.648, within 60 days of the determination of no competitive 
interest; and
    (3) Evaluate your request for a noncompetitive grant and GAP 
simultaneously.
    (c) If we award your ROW grant or RUE grant competitively, you must 
submit and receive MMS approval of your GAP, as provided in Sec. Sec.  
285.640 through 285.648.


Sec.  285.307   How will MMS determine whether competitive interest 
exists for ROW grants and RUE grants?

    To determine whether or not there is competitive interest:
    (a) We will publish a public notice, describing the parameters of 
the project, to give affected and interested parties an opportunity to 
comment on the proposed ROW grant or RUE grant area.
    (b) We will evaluate any comments received on the notice and make a 
determination of the level of competitive interest.


Sec.  285.308   How will MMS conduct an auction for ROW grants and RUE 
grants?

    (a) If MMS determines that there is competitive interest, we will:
    (1) Publish a notice of each grant auction in the Federal Register 
describing auction procedures, allowing interested persons 30 days to 
comment; and
    (2) Conduct a competitive auction for issuing the ROW grant or RUE 
grant. The auction process for ROW grants and RUE grants will be 
conducted following the same process for leases set forth in Sec. Sec.  
285.211 through 285.225.
    (b) If you are the successful bidder in an auction, you must pay 
the first year's rent, as provided in Sec.  285.316.


Sec.  285.309  When will MMS issue a noncompetitive ROW grant or RUE 
grant?

    If we approve or approve with conditions your GAP, we may offer you 
a noncompetitive grant.
    (a) If you accept the terms and conditions of the grant, then we 
will issue the grant, and you must comply with all terms and conditions 
of your grant and all applicable provisions of this part.
    (b) If you do not accept the terms and conditions, MMS will not 
issue a grant.


Sec.  285.310  What is the effective date of an ROW grant or RUE grant?

    Your ROW grant or RUE grant becomes effective on the date 
established by MMS on the ROW grant or RUE grant instrument.


Sec. Sec.  285.311-285.314  [Reserved]

Financial Requirements for ROW Grants and RUE Grants


Sec.  285.315  What deposits are required for a competitive ROW grant 
or RUE grant?

    (a) You must make a deposit, as required in Sec.  285.501(a), 
regardless of whether the auction is a sealed-bid, oral, electronic, or 
other auction format. The MMS will specify in the sale notice the 
official to whom you must submit the payment, the time by which the 
official must receive the payment, and the forms of acceptable payment.
    (b) If your high bid is rejected, we will provide a written 
statement of reasons.
    (c) For all rejected bids, we will refund, without interest, any 
money deposited with your bid.


Sec.  285.316  What payments are required for ROW grants or RUE grants?

    Before we issue the ROW grant or RUE grant, you must pay:
    (a) Any balance on accepted high bids to MMS, as provided in the 
sale notice.
    (b) An annual rent for the first year of the grant, as specified in 
Sec.  285.508.

[[Page 19828]]

Subpart D--Lease and Grant Administration

Noncompliance and Cessation Orders


Sec.  285.400  What happens if I fail to comply with this part?

    (a) The MMS may take appropriate corrective action under this part 
if you fail to comply with applicable provisions of Federal law, the 
regulations in this part, other applicable regulations, any order of 
the Director, the provisions of a lease or grant issued under this 
part, or the requirements of an approved plan or other approval under 
this part.
    (b) The MMS may issue to you a notice of noncompliance if we 
determine that there has been a violation of the regulations in this 
part, any order of the Director, or any provision of your lease, grant 
or other approval issued under this part. When issuing a notice of 
noncompliance, MMS will serve you at your last known address.
    (c) A notice of noncompliance will tell you how you failed to 
comply with this part, any order of the Director, and/or the provisions 
of your lease, grant or other approval, and will specify what you must 
do to correct the noncompliance and the time limits within which you 
must act.
    (d) Failure of a lessee, operator, or grant holder under this part 
to take the actions specified in a notice of noncompliance within the 
time limit specified provides the basis for MMS to issue a cessation 
order as provided in Sec.  285.401, and/or a cancellation of the lease 
or grant as provided in Sec.  285.437.
    (e) If the MMS determines that any incident of noncompliance poses 
an imminent threat of serious or irreparable damage to natural 
resources; life (including human and wildlife); property; the marine, 
coastal, or human environment; or sites, structures, or objects of 
historical or archaeological significance, MMS may include with its 
notice of noncompliance an order directing you to take immediate 
remedial action to alleviate threats and to abate the violation and, 
when appropriate, a cessation order.
    (f) The MMS may assess civil penalties, as authorized by section 24 
of the OCS Lands Act, if you fail to comply with any provision of this 
part or any term of a lease, grant, or order issued under the authority 
of this part, after notice of such failure and expiration of any 
reasonable period allowed for corrective action. Civil penalties will 
be determined and assessed in accordance with the procedures set forth 
in 30 CFR part 250, subpart N.
    (g) You may be subject to criminal penalties as authorized by 
section 24 of the OCS Lands Act.


Sec.  285.401  When may MMS issue a cessation order?

    (a) The MMS may issue a cessation order during the term of your 
lease or grant when you fail to comply with an applicable law; 
regulation; order; or provision of a lease, grant, plan, or other MMS 
approval under this part. Except as provided in Sec.  285.400(e), MMS 
will allow you a period of time to correct any noncompliance before 
issuing an order to cease activities.
    (b) A cessation order will set forth what measures you are required 
to take, including reports you are required to prepare and submit to 
MMS, to receive approval to resume activities on your lease or grant.


Sec.  285.402  What is the effect of a cessation order?

    (a) Upon receiving a cessation order, you must cease all activities 
on your lease or grant, as specified in the order. The MMS may 
authorize certain activities during the period of the cessation order.
    (b) A cessation order will last for the period specified in the 
order or as otherwise specified by MMS. If MMS determines that the 
circumstances giving rise to the cessation order cannot be resolved 
within a reasonable time period, the Secretary may initiate 
cancellation of your lease or grant, as provided in Sec.  285.437.
    (c) A cessation order does not extend the term of your lease or 
grant for the period you are prohibited from conducting activities.
    (d) You must continue to make all required payments on your lease 
or grant during the period a cessation order is in effect.


Sec. Sec.  285.403-285.404  [Reserved]

Designation of Operator


Sec.  285.405  How do I designate an operator?

    (a) If you intend to designate an operator who is not the lessee or 
grant holder, you must identify the proposed operator in your SAP 
(under Sec.  285.610(a)(3)), COP (under Sec.  285.626(b)(2)), or GAP 
(under Sec.  285.645(b)(3)), as applicable. If no operator is 
designated in a SAP, COP, or GAP, MMS will deem the lessee or grant 
holder to be the operator.
    (b) An operator must be designated in any SAP, COP, or GAP if there 
is more than one lessee or grant holder for any individual lease or 
grant.
    (c) Once approved in your plan, the designated operator is 
authorized to act on your behalf and required to perform activities 
necessary to comply with the OCS Lands Act, the lease or grant, and the 
regulations in this part.
    (d) You, or your designated operator, must immediately provide MMS 
with a written notification of change of address of the lessee or 
operator.
    (e) If there is a change in the designated operator, you must 
provide written notice to MMS and identify the new designated operator 
within 72 hours on a form approved by MMS. The lessee(s) or grantee(s) 
is the operator and responsible for compliance until MMS approves 
designation of the new operator.
    (f) Designation of an operator under any lease or grant issued 
under this part does not relieve the lessee or grant holder of its 
obligations under this part or its lease or grant.
    (g) A designated operator performing activities on the lease must 
comply with all regulations governing those activities and may be held 
liable or penalized for any noncompliance during the time it was 
operator, notwithstanding its subsequent resignation.


Sec.  285.406  Who is responsible for fulfilling lease and grant 
obligations?

    (a) When you are not the sole lessee or grantee, you and your co-
lessee(s) or co-grantee(s) are jointly and severally responsible for 
fulfilling your obligations under the lease or grant and the provisions 
of this part, unless otherwise provided in these regulations.
    (b) If your designated operator fails to fulfill any of your 
obligations under the lease or grant and this part, MMS may require you 
or any or all of your co-lessees or co-grantees to fulfill those 
obligations or other operational obligations under the OCS Lands Act, 
the lease, grant, or the regulations.
    (c) Whenever the regulations in this part require the lessee or 
grantee to conduct an activity in a prescribed manner, the lessee or 
grantee and operator (if one has been designated) are jointly and 
severally responsible for complying with the regulations.


Sec.  285.407  [Reserved]

Lease or Grant Assignment


Sec.  285.408  May I assign my lease or grant interest?

    (a) You may assign all or part of your lease or grant interest, 
including record title, subject to MMS approval under this subpart. 
Each instrument that creates or transfers an interest must describe the 
entire tract or describe by officially designated subdivisions the 
interest you propose to create or transfer.

[[Page 19829]]

    (b) You may assign a lease or grant interest by submitting one 
paper copy and one electronic copy of an assignment application to MMS. 
The assignment application must include:
    (1) The MMS-assigned lease or grant number;
    (2) A description of the geographic area or undivided interest you 
are assigning;
    (3) The names of both the assignor and the assignee, if applicable;
    (4) The names and telephone numbers of the contacts for both the 
assignor and the assignee;
    (5) The names, titles, and signatures of the authorizing officials 
for both the assignor and the assignee;
    (6) A statement that the assignee agrees to comply with and to be 
bound by the terms and conditions of the lease or grant;
    (7) The qualifications of the assignee to hold a lease or grant 
under Sec.  285.107; and
    (8) A statement on how the assignee will comply with the financial 
assurance requirements of Sec. Sec.  285.515 through 285.537. No 
assignment will be approved until the assignee provides the required 
financial assurance.
    (c) If you submit an application to assign a lease or grant, you 
will continue to be responsible for payments that are or become due on 
the lease or grant until the date MMS approves the assignment.
    (d) The assignment takes effect on the date MMS approves your 
application.
    (e) You do not need to request an assignment for mergers, name 
changes, or changes of business form. You must notify MMS of these 
events under Sec.  285.109.


Sec.  285.409  How do I request approval of a lease or grant 
assignment?

    (a) You must request approval of each assignment on a form approved 
by MMS, and submit originals of each instrument that creates or 
transfers ownership of record title or certified copies thereof within 
90 days after the last party executes the transfer agreement.
    (b) Any assignee will be subject to all the terms and conditions of 
your original lease or grant, including the requirement to furnish 
financial assurance in the amount required in Sec. Sec.  285.515 
through 285.537.
    (c) The assignee must submit proof of eligibility and other 
qualifications specified in Sec.  285.107.
    (d) Persons executing on behalf of the assignor and assignee must 
furnish evidence of authority to execute the assignment.


Sec.  285.410  How does an assignment affect the assignor's liability?

    As assignor, you are liable for all obligations, monetary and 
nonmonetary, that accrued under your lease or grant before MMS approves 
your assignment. Our approval of the assignment does not relieve you of 
these accrued obligations. The MMS may require you to bring the lease 
or grant into compliance to the extent the obligation accrued before 
the effective date of your assignment if your assignee or subsequent 
assignees fail to perform any obligation under the lease or grant.


Sec.  285.411  How does an assignment affect the assignee's liability?

    (a) As assignee, you are liable for all lease or grant obligations 
that accrue after MMS approves the assignment. As assignee, you must 
comply with all the terms and conditions of the lease or grant and all 
applicable regulations, remedy all existing environmental and 
operational problems on the lease or grant, and comply with all 
decommissioning requirements under subpart I of this part.
    (b) Assignees are bound to comply with each term or condition of 
the lease or grant and the regulations in this subchapter. You are 
jointly and severally liable for the performance of all obligations 
under the lease or grant and under the regulations in this part with 
each prior and subsequent lessee who held an interest from the time the 
obligation accrued until it is satisfied, unless this part provides 
otherwise.


Sec. Sec.  285.412-285.414  [Reserved]

Lease or Grant Suspension


Sec.  285.415  What is a lease or grant suspension?

    (a) A suspension is an interruption of the term of your lease or 
grant that may occur:
    (1) As approved by MMS at your request, as provided in Sec.  
285.416; or
    (2) As ordered by MMS, as provided in Sec.  285.417.
    (b) A suspension extends the term of your lease or grant for the 
length of time the suspension is in effect.
    (c) Activities may not be conducted on your lease or grant during 
the period of a suspension except as expressly authorized by MMS under 
the terms of the suspension.


Sec.  285.416  How do I request a lease or grant suspension?

    You must submit a written request to MMS that includes the 
following information no later than 90 days prior to the expiration of 
your appropriate lease or grant term:
    (a) The reasons you are requesting suspension of your lease or 
grant term, and the length of additional time requested.
    (b) An explanation of why the suspension is necessary in order to 
ensure full enjoyment of your lease or grant and why it is in the 
lessor's or grantor's interest to approve the suspension.
    (c) If you do not timely submit a SAP, COP, or GAP, as required, 
you may request a suspension to extend the preliminary or site 
assessment term of your lease or grant that includes a revised schedule 
for submission of a SAP, COP, or GAP, as appropriate.
    (d) Any other information MMS may require.


Sec.  285.417  When may MMS order a suspension?

    (a) The MMS may order a suspension under the following 
circumstances:
    (1) When necessary to comply with judicial decrees prohibiting some 
or all activities under your lease;
    (2) When continued activities pose an imminent threat of serious or 
irreparable harm or damage to natural resources; life (including human 
and wildlife); property; the marine, coastal, or human environment; or 
sites, structures, or objects of historical or archaeological 
significance; or
    (3) When the suspension is necessary for reasons of national 
security or defense.
    (b) If MMS orders a suspension under paragraph (a)(2) of this 
section, and if you wish to resume activities, we may require you to 
conduct a site-specific study that evaluates the cause of the harm, the 
potential damage, and the available mitigation measures. Other 
requirements and actions may occur:
    (1) You may be required to pay for the study;
    (2) You must furnish one paper copy and one electronic copy of the 
study and results to us;
    (3) We will make the results available to other interested parties 
and to the public; and
    (4) We will use the results of the study and any other information 
that become available:
    (i) To decide if the suspension order can be lifted; and
    (ii) To determine any actions that you must take to mitigate or 
avoid any damage to natural resources; life (including human and 
wildlife); property; the marine, coastal, or human environment; or 
sites, structures, or objects of historical or archaeological 
significance.

[[Page 19830]]

Sec.  285.418  How will MMS issue a suspension?

    (a) The MMS will issue a suspension order orally or in writing.
    (b) The MMS will send you a written suspension order as soon as 
practicable after issuing an oral suspension order.
    (c) The written order will explain the reasons for its issuance and 
describe the effect of the suspension order on your lease or grant and 
any associated activities. The MMS may authorize certain activities 
during the period of the suspension, as set forth in the suspension 
order.


Sec.  285.419  What are my immediate responsibilities if I receive a 
suspension order?

    You must comply with the terms of a suspension order upon receipt 
and take any action prescribed within the time set forth therein.


Sec.  285.420  What effect does a suspension order have on my payments?

    (a) While MMS evaluates your request for a suspension under Sec.  
285.416, you must continue to fulfill your payment obligation until the 
end of the original term of your lease or grant. If our evaluation goes 
beyond the end of the original term of your lease or grant, the term of 
your lease or grant will be extended for the period of time necessary 
for MMS to complete its evaluation of your request, but you will not be 
required to make payments during the time of the extension.
    (b) If MMS approves your request for a suspension, as provided in 
Sec.  285.416, we may suspend your payment obligation, as appropriate 
for the term that is suspended, depending on the reasons for the 
requested suspension.
    (c) If MMS orders a suspension, as provided in Sec.  285.417, your 
payments, as appropriate for the term that is suspended, will be waived 
during the suspension period.


Sec.  285.421  How long will a suspension be in effect?

    A suspension will be in effect for the period specified by MMS.
    (a) The MMS will not approve a suspension request pursuant to Sec.  
285.416 for a period longer than 2 years.
    (b) If MMS determines that the circumstances giving rise to a 
suspension ordered under Sec.  285.417 cannot be resolved within 5 
years, the Secretary may initiate cancellation of the lease or grant, 
as provided in Sec.  285.437.


Sec. Sec.  285.422-285.424  [Reserved]

Lease or Grant Renewal


Sec.  285.425  May I obtain a renewal of my lease or grant before it 
terminates?

    You may request renewal of the operations term of your lease or the 
original authorized term of your grant. The MMS, at its discretion, may 
approve a renewal request to conduct substantially similar activities 
as were originally authorized under the lease or grant. The MMS will 
not approve a renewal request that involves development of a type of 
renewable energy not originally authorized in the lease or grant. The 
MMS may revise or adjust payment terms of the original lease, as a 
condition of lease renewal.


Sec.  285.426  When must I submit my request for renewal?

    (a) You must request a renewal from MMS:
    (1) No later than 180 days before the termination date of your 
limited lease or grant.
    (2) No later than 2 years before the termination date of the 
operations term of your commercial lease.
    (b) You must submit to MMS all information we request pertaining to 
your lease or grant and your renewal request.


Sec.  285.427  How long is a renewal?

    The MMS will set the term of a renewal at the time of renewal on a 
case-by-case basis.
    (a) For commercial leases, a renewal term will not exceed the 
original operations term unless a longer term is negotiated by the 
applicable parties.
    (b) For limited leases, a renewal term will not exceed the original 
operations term.
    (c) For RUE and ROW grants, a renewal will continue for as long as 
the associated activities are conducted and facilities properly 
maintained and used for the purpose for which the grant was made, 
unless otherwise expressly stated.


Sec.  285.428  What effect does applying for a renewal have on my 
activities and payments?

    If you timely request a renewal:
    (a) You may continue to conduct activities approved under your 
lease or grant under the original terms and conditions for as long as 
your request is pending decision by MMS.
    (b) You may request a suspension of your lease or grant, as 
provided in Sec.  285.416, while we consider your request.
    (c) For the period MMS considers your request for renewal, you must 
continue to make all payments in accordance with the original terms and 
conditions of your lease or grant.


Sec.  285.429  What criteria will MMS consider in deciding whether to 
renew a lease or grant?

    The MMS will consider the following criteria in deciding whether to 
renew a lease or grant:
    (a) Design life of existing technology.
    (b) Availability and feasibility of new technology.
    (c) Environmental and safety record of the lessee or grantee.
    (d) Operational and financial compliance record of the lessee or 
grantee.
    (e) Competitive interest and fair return considerations.
    (f) Effects of the lease or grant on generation capacity and 
reliability within the regional electrical distribution and 
transmission system.


Sec. Sec.  285.430-285.431  [Reserved]

Lease or Grant Termination


Sec.  285.432  When does my lease or grant terminate?

    Your lease or grant terminates on whichever of the following dates 
occurs first:
    (a) The expiration of the applicable term of your lease or grant, 
unless your term is automatically extended under Sec. Sec.  285.235 or 
285.236, a request for renewal of your lease or grant is pending a 
decision by MMS, or your lease or grant is suspended or renewed as 
provided in this subpart;
    (b) A cancellation, as set forth in Sec.  285.437; or
    (c) Relinquishment, as set forth in Sec.  285.435.


Sec.  285.433  What must I do after my lease or grant terminates?

    (a) After your lease or grant terminates, you must:
    (1) Make all payments due, including any accrued rentals and 
deferred bonuses; and
    (2) Perform any other outstanding obligations under the lease or 
grant within 6 months.
    (b) Within 2 years following termination of a lease or grant, you 
must remove or dispose of all facilities, installations, and other 
devices permanently or temporarily attached to the seabed on the OCS in 
accordance with a plan or application approved by MMS under subpart I 
of this part.
    (c) If you fail to comply with your approved decommissioning plan 
or application:
    (1) The MMS may call for the forfeiture of your financial 
assurance; and
    (2) You remain liable for removal or disposal costs and responsible 
for

[[Page 19831]]

accidents or damages that might result from such failure.


Sec.  285.434  [Reserved]

Lease or Grant Relinquishment


Sec.  285.435  How can I relinquish a lease or a grant or parts of a 
lease or grant?

    (a) You may surrender the lease or grant, or an officially 
designated subdivision thereof, by filing one paper copy and one 
electronic copy of a relinquishment application with MMS. A 
relinquishment takes effect on the date we approve your application, 
subject to the continued obligation of the lessee and the surety to:
    (1) Make all payments due on the lease or grant, including any 
accrued rent and deferred bonuses;
    (2) Decommission all facilities on the lease or grant to be 
relinquished to the satisfaction of MMS; and
    (3) Perform any other outstanding obligations under the lease or 
grant.
    (b) Your relinquishment application must include:
    (1) Name;
    (2) Contact name;
    (3) Telephone number;
    (4) Fax number;
    (5) E-mail address;
    (6) The MMS-assigned lease or grant number, and, if applicable, the 
name of any facility;
    (7) A description of the geographic area you are relinquishing;
    (8) The name, title, and signature of your authorizing official 
(the name, title, and signature must match exactly the name, title, and 
signature in MMS qualification records); and
    (9) A statement that you will adhere to the requirements of subpart 
I of this part.
    (c) If you have submitted an application to relinquish a lease or 
grant, you will be billed for any outstanding payments that are due 
before the relinquishment takes effect, as provided in paragraph (a) of 
this section.

Lease or Grant Contraction


Sec.  285.436  Can MMS require lease or grant contraction?

    At an interval no more frequent than every 5 years, the MMS may 
review your lease or grant area to determine whether the lease or grant 
area is larger than needed to develop the project and manage activities 
in a manner that is consistent with the provisions of this part. The 
MMS will notify you of our proposal to contract the lease or grant 
area.
    (a) The MMS will give you the opportunity to present orally or in 
writing information demonstrating that you need the area in question to 
manage lease or grant activities consistent with these regulations.
    (b) Prior to taking action to contract the lease or grant area, MMS 
will issue a decision addressing your contentions that the area is 
needed.
    (c) You may appeal this decision under Sec.  285.118 of this part.

Lease or Grant Cancellation


Sec.  285.437  When can my lease or grant be canceled?

    (a) The Secretary will cancel any lease or grant issued under this 
part upon proof that it was obtained by fraud or misrepresentation, and 
after notice and opportunity to be heard has been afforded to the 
lessee or grant holder.
    (b) The Secretary may cancel any lease or grant issued under this 
part when:
    (1) The Secretary determines after notice and opportunity for a 
hearing that, with respect to the lease or grant that would be 
canceled, the lessee or grantee has failed to comply with any 
applicable provision of the OCS Lands Act or these regulations; any 
order of the Director; or any term, condition or stipulation contained 
in the lease or grant, and that the failure to comply continued 30 days 
(or other period MMS specifies) after you receive notice from MMS. The 
Secretary will mail a notice by registered or certified letter to the 
lessee or grantee at its record post office address;
    (2) The Secretary determines after notice and opportunity for a 
hearing that you have terminated commercial operations under your COP, 
as provided in Sec.  285.635, or other approved activities under your 
GAP, as provided in Sec.  285.656;
    (3) Required by national security or defense; or
    (4) The Secretary determines after notice and opportunity for a 
hearing that continued activity under the lease or grant:
    (i) Would cause serious harm or damage to natural resources; life 
(including human and wildlife); property; the marine, coastal, or human 
environment; or sites, structures, or objects of historical or 
archaeological significance; and
    (ii) That the threat of harm or damage would not disappear or 
decrease to an acceptable extent within a reasonable period of time; 
and
    (iii) The advantages of cancellation outweigh the advantages of 
continuing the lease or grant in force.

Subpart E--Payments and Financial Assurance Requirements

Payments


Sec.  285.500  How do I make payments under this part?

    (a) For acquisition fees or the initial 6-months rent paid for the 
preliminary term of your lease, you must make credit card or automated 
clearing house payments through the Pay.gov Web site, and you must 
include one copy of the Pay.gov confirmation receipt page with your 
unsolicited request or signed lease instrument. You may access the 
Pay.gov Web site through links on the MMS Offshore Web site at: http://www.mms.gov/offshore or directly through Pay.gov at: https://www.pay.gov/paygov/.
    (b) For rent during the preliminary term, subsequent to the first 
6-months rent, or the site assessment term; or operating fees during 
the operations term, you must make your payments as required in Sec.  
218.51 of this chapter.
    (c) This table summarizes payments you must make for leases and 
grants, unless otherwise specified in the Final Sale Notice:
BILLING CODE 4310-MR-P

[[Page 19832]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.110

BILLING CODE 4310-MR-C


Sec.  285.501  What deposits must I submit for a competitively issued 
lease, ROW grant, or RUE grant?

    (a) For a competitive lease or grant that we offer through sealed 
bidding, you must submit a deposit of 20 percent of the total bid 
amount, unless some other amount is specified in the Final Sale Notice.
    (b) For a competitive lease that we offer through ascending 
bidding, you must submit a deposit as established in the Final Sale 
Notice.
    (c) You must pay any balances on accepted high bids in accordance 
with the Final Sale Notice, this part, and your lease or grant 
instrument.
    (d) The deposit will be forfeited for any successful bidder who 
fails to execute the lease within the prescribed time, or otherwise 
does not comply with the regulations concerning acquisition of a lease 
or grant or stipulations in the Final Sale Notice.


Sec.  285.502  What initial payment requirements must I meet to obtain 
a noncompetitive lease, ROW grant, or RUE grant?

    When requesting a noncompetitive lease, you must meet the initial 
payment (acquisition fee) requirements of this section, unless 
specified otherwise in your lease instrument. No initial payment is 
required when requesting noncompetitive ROW grants and RUE grants.
    (a) If you request a noncompetitive lease, you must submit an 
acquisition fee of $0.25 per acre, unless otherwise set by the 
Director, as provided in Sec.  285.500.
    (b) If MMS determines there is no competitive interest, we will 
then:
    (1) Retain your acquisition fee if we issue you a lease; or
    (2) Refund your acquisition fee, without interest, if we do not 
issue your requested lease.
    (c) If we determine that there is a competitive interest in an area 
you requested, then we will proceed with a competitive lease sale 
process provided for in subpart B of this part, and we will:
    (1) Apply your acquisition fee to the required deposit for your bid 
amount if you submit a bid;
    (2) Apply your acquisition fee to your bonus bid if you acquire the 
lease; or
    (3) Retain your acquisition fee if you do not bid for or acquire 
the lease.


Sec.  285.503  What are the rent and operating fee requirements for a 
commercial lease?

    (a) The rent for a commercial lease is $3 per acre per year, unless 
otherwise established in the Final Sale Notice or lease.
    (1) You must pay the first 6-months rent, as provided in Sec.  
285.500, 45 days after we issue your lease.

[[Page 19833]]

    (2) You must pay rent at the beginning of each subsequent 1-year 
period in accordance with the regulations at Sec.  218.51 of this 
chapter for the entire lease area until the facility begins to generate 
commercially, as specified in Sec.  285.506 or as otherwise specified 
in the Final Sale Notice or lease instrument:
    (i) For leases issued competitively, the MMS will specify in the 
Final Sale Notice and lease any adjustment to the rent fee to take 
effect during the operations term and prior to the commercial 
generation.
    (ii) For leases issued noncompetitively, the MMS will specify in 
the lease any adjustment to the rent fee to take effect during the 
operations term and prior to the commercial generation.
    (3) You must pay the rent for a project easement in addition to the 
lease rent, as provided in Sec.  285.507. You must commence rent 
payments for your project easement upon our approval of your COP or 
GAP.
    (b) After your lease begins commercial generation of electricity or 
on the date specified by MMS, you must pay operating fees in the amount 
specified in Sec.  285.506:
    (1) For leases issued competitively, MMS will specify in the Final 
Sale Notice and lease the date when operating fees commence; and
    (2) For leases issued noncompetitively, MMS will specify in the 
lease the date when operating fee commences.


Sec.  285.504  How are my payments affected if I develop my lease in 
phases?

    If you develop your commercial lease in phases, as approved by us 
in your COP under Sec.  285.629, you must pay:
    (a) Rent on the portion of the lease that is not authorized for 
commercial operations.
    (b) Operating fees on the portion of the lease that is authorized 
for commercial operations, in the amount specified in Sec.  285.506 and 
as described in Sec.  285.503(b).
    (c) Rent for a project easement in addition to lease rent, as 
provided in Sec.  285.507. You must commence rent payments for your 
project easement upon our approval of your COP.


Sec.  285.505  What are the rent and operating fee requirements for a 
limited lease?

    (a) The rent for a limited lease is $3 per acre per year, unless 
otherwise established in the Final Sale Notice and your lease 
instrument.
    (b) You must pay the first 6-months rent when MMS issues your 
limited lease, as provided in Sec.  285.500.
    (c) You must pay rent at the beginning of each subsequent 1-year 
period on the entire lease area for the duration of your operations 
term in accordance with the regulations at Sec.  218.51 of this 
chapter.
    (d) The MMS will not charge an operating fee for the authorized 
sale of power from a limited lease.


Sec.  285.506  What operating fees must I pay on a commercial lease?

    If you are generating electricity, you must pay operating fees on 
your commercial lease when you begin commercial generation, as 
described in Sec.  285.503.
    (a) The MMS will determine the annual operating fee for activities 
relating to the generation of electricity on your lease based on the 
following formula,


F = M * H * c * P * r, where:

    (1) F is the dollar amount of the annual operating fee;
    (2) M is the nameplate capacity expressed in megawatts;
    (3) H is the number of hours in a year, equal to 8,760, used to 
calculate an annual payment;
    (4) c is the ``capacity factor'' representing the anticipated 
efficiency of the facility's operation expressed as a decimal between 
zero and one;
    (5) P is a measure of the annual average wholesale electric power 
price expressed in dollars per megawatt hour, as provided in paragraph 
(c)(2) of this section; and
    (6) r is the operating fee rate expressed as a decimal between zero 
and one.
    (b) The annual operating fee formula relating to the value of 
annual electricity generation is restated as:

 
                                         M (nameplate                                     c (capacity                                  r (operating fee
    F (annual operating fee)       =       capacity)       *  H (hours per year)   *        factor)        *    P (power price)    *         rate)
 
 
 

     (c) The MMS will specify operating fee parameters in the Final 
Sale Notice for commercial leases issued competitively and in the lease 
for those issued noncompetitively.
    (1) Unless MMS specifies otherwise, in the operating fee rate, (r) 
is 0.02 for each year the operating fee applies when you begin 
commercial generation of electricity. We may apply a different fee rate 
for new projects (i.e., a new generation based on new technology) after 
considering factors such as program objectives, state of the industry, 
project type, and project potential. Also, we may agree to reduce or 
waive the fee rate under Sec.  285.510.
    (2) The power price (P), for each year when the operating fee 
applies, will be determined annually. The process by which the power 
price will be determined will be specified in the Final Sale Notice 
and/or in the lease. The MMS:
    (i) Will use the most recent annual average wholesale power price 
in the State in which a project's transmission cables make landfall, as 
published by the DOE, Energy Information Administration (EIA), or other 
publicly available wholesale power price indices; and
    (ii) May adjust the published average wholesale power price to 
reflect documented variations by State or within a region and recent 
market conditions.
    (3) The MMS will select the capacity factor (c) based upon 
applicable analogs drawn from present and future domestic and foreign 
projects that operate in comparable conditions and on comparable 
scales.
    (i) Upon the completion of the first year of commercial operations 
on the lease, MMS may adjust the capacity factor as necessary (to 
accurately represent a comparison of actual production over a given 
period of time with the amount of power a facility would have produced 
if it had run at full capacity) in a subsequent year.
    (ii) After the first adjustment, MMS may adjust the capacity factor 
(to accurately represent a comparison of actual generation over a given 
period of time with the amount of power a facility would have generated 
if it had run at full capacity) no earlier than in 5-year intervals 
from the most recent year that MMS adjusts the capacity factor.
    (iii) The process by which MMS will adjust the capacity factor, 
including any calculations (incorporating an average capacity factor 
reflecting actual operating experience), will be specified in the 
lease. The operator or lessee may request review and adjustment of the 
capacity factor under Sec.  285.510.
    (4) Ten days after the anniversary date of when you began to 
commercially generate electricity, you must submit to

[[Page 19834]]

MMS documentation of the gross annual generation of electricity 
produced by the generating facility on the lease. You must use the same 
information collection form as authorized by the EIA for this 
information.
    (5) For the nameplate capacity (M), MMS will use the total 
installed capacity of the equipment you install, as specified in your 
approved COP.
    (d) You must submit all operating fee payments to MMS in accordance 
with the provisions under Sec.  218.51 of this chapter.
    (e) The MMS will establish the operating fee in the Final Sale 
Notice or in the lease on a case-by-case basis for:
    (1) Activities that do not relate to the generation of electricity 
(e.g., hydrogen production), and
    (2) Leases issued for hydrokinetic activities requiring a FERC 
license.


Sec.  285.507  What rent payments must I pay on a project easement?

    (a) You must pay MMS a rent fee for your project easement of $5 per 
acre, subject to a minimum of $450 per year, unless specified otherwise 
in the Final Sale Notice or lease:
    (1) The size of the project easement area for a cable or a pipeline 
is the full length of the corridor and a width of 200 feet (61 meters), 
centered on the cable or pipeline; and
    (2) The size of a project easement area for an accessory platform 
is limited to the aerial extent of anchor chains and other facilities 
and devices associated with the accessory.
    (b) You must commence rent payments for your project easement upon 
our approval of your COP or GAP:
    (1) You must make the first rent payment when the operations term 
begins, as provided in Sec.  285.500;
    (2) You must submit all subsequent rent payments in accordance with 
the regulations at Sec.  218.51 of this chapter; and
    (3) You must continue to pay annual rent for your project easement 
until your lease is terminated.


Sec.  285.508  What rent payments must I pay on ROW grants or RUE 
grants associated with renewable energy projects?

    (a) For each ROW grant MMS approves under subpart C of this part, 
you must pay an annual rent as follows, unless specified otherwise in 
the Final Sale Notice:
    (1) A fee of $70 for each nautical mile or part of a nautical mile 
of the OCS that your ROW crosses; and
    (2) An additional $5 per acre, subject to a minimum of $450 for use 
of the entire affected area, if you hold a ROW grant that includes a 
site outside the corridor of a 200-foot width (61 meters), centered on 
the cable or pipeline. The affected area includes the areal extent of 
anchor chains, risers, and other devices associated with a site outside 
the corridor.
    (b) For each RUE grant MMS approves under subpart C of this part, 
you must pay a rent of:
    (1) $5 per acre per year; or
    (2) A minimum of $450 per year.
    (c) You must make the rent payments required by paragraphs (a) and 
(b) of this section on:
    (1) An annual basis;
    (2) For a 5-year period; or
    (3) For multiples of 5 years.
    (d) You must make the first annual rent payment upon approval of 
your ROW grant or RUE grant request, as provided in Sec.  285.500, and 
all subsequent rent payments to MMS in accordance with the regulations 
at Sec.  218.51 of this chapter.


Sec.  285.509  Who is responsible for submitting lease or grant 
payments to MMS?

    (a) For each lease, ROW grant, or RUE grant issued under this part, 
you must identify one person who is responsible for all payments due 
and payable under the provisions of the lease or grant. The responsible 
person identified is designated as the payor, and you must document 
acceptance of such responsibilities, as provided in Sec.  218.52 of 
this chapter.
    (b) All payors must submit payments and maintain auditable records 
in accordance with guidance we issue or any applicable regulations in 
subchapter A of this chapter. In addition, the lessee or grant holder 
must also maintain such auditable records.


Sec.  285.510  May MMS reduce or waive my lease or grant payments?

    (a) The MMS Director may reduce or waive the rent or operating fee 
or components of the operating fee, such as the fee rate or capacity 
factor, when the Director determines that it is necessary to encourage 
continued or additional activities.
    (b) When requesting a reduction or waiver, you must submit an 
application to us that includes all of the following:
    (1) The number of the lease, ROW grant, or RUE grant involved;
    (2) Name of each lessee or grant holder of record;
    (3) Name of each operator;
    (4) A demonstration that:
    (i) Continued activities would be uneconomic without the requested 
reduction or waiver, or
    (ii) A reduction or waiver is necessary to encourage additional 
activities; and
    (5) Any other information required by the Director.
    (c) No more than 6 years of your operations term will be subject to 
a full waiver of the operating fee.


Sec.  285.511-285.514  [Reserved]

Financial Assurance Requirements for Commercial Leases


Sec.  285.515  What financial assurance must I provide when I obtain my 
commercial lease?

    (a) Before MMS will issue your commercial lease or approve an 
assignment of an existing commercial lease, you (or, for an assignment, 
the proposed assignee) must guarantee compliance with all terms and 
conditions of the lease by providing either:
    (1) A $100,000 minimum, lease-specific bond; or
    (2) Another approved financial assurance instrument guaranteeing 
performance up to $100,000, as specified in Sec. Sec.  285.526 through 
285.529.
    (b) You meet the financial assurance requirements under this 
subpart if your designated lease operator provides a $100,000 minimum, 
lease-specific bond or other approved financial assurance that 
guarantees compliance with all terms and conditions of the lease.
    (1) The dollar amount of the minimum, lease-specific financial 
assurance in paragraphs (a)(1) and (b) of this section will be adjusted 
to reflect changes in the Consumer Price Index-All Urban Consumers 
(CPI-U) or a substantially equivalent index if the CPI-U is 
discontinued; and
    (2) The first CPI-U-based adjustment can be made no earlier than 
the 5-year anniversary of the adoption of this rule. Subsequent CPI-U-
based adjustments may be made every 5 years thereafter.


Sec.  285.516  What are the financial assurance requirements for each 
stage of my commercial lease?

    (a) The basic financial assurance requirements for each stage of 
your commercial lease are as follows:

[[Page 19835]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.111

    (b) Each bond or other financial assurance must guarantee 
compliance with all terms and conditions of the lease. You may provide 
a new bond or increase the amount of your existing bond, to satisfy any 
additional financial assurance requirements.
    (c) For hydrokinetic commercial leases, supplemental financial 
assurance may be required in an amount determined by MMS before FERC 
issues a license.


Sec.  285.517  How will MMS determine the amounts of the supplemental 
and decommissioning financial assurance requirements associated with 
commercial leases?

    (a) The MMS will base the determination for the amounts of the SAP, 
COP, and decommissioning financial assurance requirements on estimates 
of the cost to meet all accrued lease obligations.
    (b) We determine the amount of the supplemental and decommissioning 
financial assurance requirements on a case-by-case basis. The amount of 
the financial assurance must be no less than the amount required to 
meet all lease obligations, including:
    (1) The projected amount of rent and other payments due the 
Government over the next 12 months;
    (2) Any past due rent and other payments;
    (3) Other monetary obligations; and
    (4) The estimated cost of facility decommissioning, as required by 
subpart I of this part.
    (c) If your cumulative potential obligations and liabilities 
increase or decrease, we may adjust the amount of supplemental or the 
decommissioning financial assurance.
    (1) If we propose adjusting your financial assurance amount, we 
will notify you of the proposed adjustment and give you an opportunity 
to comment; and
    (2) We may approve a reduced financial assurance amount if you 
request it and if the reduced amount that you request continues to be 
greater than the sum of:
    (i) The projected amount of rent and other payments due the 
Government over the next 12 months;
    (ii) Any past due rent and other payments;
    (iii) Other monetary obligations; and
    (iv) The estimated cost of facility decommissioning.


Sec.  285.518-285.519  [Reserved]

Financial Assurance for Limited Leases, ROW Grants, and RUE Grants


Sec.  285.520  What financial assurance must I provide when I obtain my 
limited lease, ROW grant, or RUE grant?

    (a) Before MMS will issue your limited lease, ROW grant, or RUE 
grant, you or a proposed assignee must guarantee compliance with all 
terms and conditions of the lease or grant by providing either:
    (1) A $300,000 minimum, lease- or grant-specific bond; or
    (2) Another approved financial assurance instrument of such minimum 
level as specified in Sec. Sec.  285.526 through 285.529.
    (b) You meet the financial assurance requirements under this 
subpart if your designated lease or grant operator provides a minimum 
limited lease-specific or grant-specific bond in an amount sufficient 
to guarantee compliance with all terms and conditions of the limited 
lease or grant.
    (1) The dollar amount of the minimum, lease- or grant-specific 
financial assurance in paragraph (a)(1) of this section will be 
adjusted to reflect changes in the CPI-U or a substantially equivalent 
index if the CPI-U is discontinued; and
    (2) The first CPI-U-based adjustment can be made no earlier than 
the 5-year anniversary of the adoption of this rule. Subsequent CPI-U-
based adjustments may be made every 5 years thereafter.


Sec.  285.521  Do my financial assurance requirements change as 
activities progress on my limited lease or grant?

    (a) The MMS may require you to increase the level of your financial 
assurance as activities progress on your limited lease or grant. We 
will base the determination for the amount of financial assurance 
requirements on our estimate of the cost to meet all accrued lease or 
grant obligations, including:
    (1) The projected amount of rent and other payments due the 
Government over the next 12 months;
    (2) Any past due rent and other payments;
    (3) Other monetary obligations; and
    (4) The estimated cost of facility decommissioning.
    (b) You may satisfy the requirement for increased financial 
assurance levels for the limited lease or grant by increasing the 
amount of your existing bond or replacing your existing bond.

[[Page 19836]]

    (c) The MMS will authorize you to establish a separate 
decommissioning bond or other financial assurance for your limited 
lease or grant.
    (1) The separate decommissioning bond or other financial assurance 
instrument must meet the requirements specified in Sec. Sec.  285.525 
through 285.529.
    (2) The MMS will allow you to provide your financial assurance for 
decommissioning in accordance with the number of facilities installed 
or being installed. The MMS must approve the schedule for providing the 
appropriate financial assurance coverage.


Sec. Sec.  285.522-285.524  [Reserved]

Requirements for Financial Assurance Instruments


Sec.  285.525  What general requirements must a financial assurance 
instrument meet?

    (a) Any bond or other acceptable financial assurance instrument 
that you provide must:
    (1) Be payable to MMS upon demand; and
    (2) Guarantee compliance of all lessees, grant holders, operators, 
and payors with all terms and conditions of the lease or grant, any 
subsequent approvals and authorizations, and all applicable 
regulations.
    (b) All bonds and other forms of financial assurance must be on or 
in a form approved by MMS. You may submit this on an approved form that 
you have reproduced or generated by use of a computer. If the document 
you submit omits any terms and conditions that are included on the MMS-
approved form, your bond is deemed to contain the omitted terms and 
conditions.
    (c) Surety bonds must be issued by an approved surety listed in the 
current Treasury Circular 570, as required by 31 CFR 223.16. You may 
obtain a copy of Circular 570 from the Treasury Web site at http://www.fms.treas.gov/c570/.
    (d) Your surety bond cannot exceed the underwriting limit listed in 
the current Treasury Circular 570, except as permitted therein.
    (e) You and a qualified surety must execute your bond. When the 
surety is a corporation, an authorized corporate officer must sign the 
bond and attest to it over the corporate seal.
    (f) You may not terminate the period of liability of your bond or 
cancel your bond, except as provided in this subpart. Bonds must 
continue in full force and effect even though an event has occurred 
that could diminish or terminate a surety's obligation under State law.
    (g) Your surety must notify you and MMS within 5 business days 
after:
    (1) It initiates any judicial or administrative proceeding alleging 
its insolvency or bankruptcy; or
    (2) The Treasury decertifies the surety.


Sec.  285.526  What instruments other than a surety bond may I use to 
meet the financial assurance requirement?

    (a) You may use other types of security instruments, if MMS 
determines that such security protects MMS to the same extent as the 
surety bond. The MMS will consider pledges of the following:
    (1) U.S. Department of Treasury securities identified in 31 CFR 
part 225;
    (2) Cash in an amount equal to the required dollar amount of the 
financial assurance, to be deposited and maintained in a Federal 
depository account of the U.S. Treasury by MMS;
    (3) Certificates of deposit or savings accounts in a bank or 
financial institution organized or authorized to transact business in 
the United States with:
    (i) Minimum net assets of $500,000,000; and
    (ii) Minimum Bankrate.com Safe & Sound rating of 3 Stars, and 
Capitalization, Assets, Equity and Liquidity (CAEL) rating of 3 or 
less;
    (4) Negotiable U.S. Government, State, and municipal securities or 
bonds having a market value of not less than the required dollar amount 
of the financial assurance and maintained in a Securities Investors 
Protection Corporation insured trust account by a licensed securities 
brokerage firm for the benefit of the MMS;
    (5) Investment-grade rated securities having a Standard and Poor's 
rating of AAA or an equivalent rating from a nationally recognized 
securities rating service having a market value of not less than the 
required dollar amount of the financial assurance and maintained in a 
Securities Investors Protection Corporation insured trust account by a 
licensed securities brokerage firm for the benefit of MMS; and
    (6) Insurance, if its form and function is such that the funding or 
enforceable pledges of funding are used to guarantee performance of 
regulatory obligations in the event of default on such obligations by 
the lessee. Insurance must have an A.M. Best rating of ``superior'' or 
an equivalent rating from a nationally recognized insurance rating 
service.
    (b) If you use a Treasury security:
    (1) You must post 115 percent of your financial assurance amount;
    (2) You must monitor the collateral value of your security. If the 
collateral value of your security as determined in accordance with the 
31 CFR part 203 Collateral Margins Table (which can be found at http://www.treasurydirect.gov) falls below the required level of coverage, you 
must pledge additional security to provide 115 percent of the required 
amount; and
    (3) You must include with your pledge authority for us to sell the 
security and use the proceeds if we determine that you have failed to 
comply with any of the terms and conditions of your lease or grant, any 
subsequent approval or authorization, or applicable regulations.
    (c) If you use the instruments described in paragraphs (a)(4) or 
(a)(5) of this section, you must provide MMS by the end of each 
calendar year a certified statement describing the nature and market 
value of the instruments maintained in that account, and including any 
current statements or reports furnished by the brokerage firm to the 
lessee concerning the asset value of the account.


Sec.  285.527  May I demonstrate financial strength and reliability to 
meet the financial assurance requirement for lease or grant activities?

    The MMS may allow you to use your financial strength and 
reliability to meet financial assurance requirements. We will make this 
determination based on audited financial statements, business 
stability, reliability, and compliance with regulations.
    (a) You must provide the following information if you want to 
demonstrate financial strength and reliability to meet your financial 
assurance requirements:
    (1) Audited financial statements (including auditor's certificate, 
balance sheet, and profit and loss sheet) that show you have financial 
capacity substantially in excess of existing and anticipated lease and 
other obligations;
    (2) Evidence that shows business stability based on 5 years of 
continuous operation and generation of renewable energy on the OCS or 
onshore;
    (3) Evidence that shows reliability in meeting obligations based on 
credit ratings or trade references, including names and addresses of 
other lessees, contractors, and suppliers with whom you have dealt; and
    (4) Evidence that shows a record of compliance with laws, 
regulations, and lease, ROW, or RUE terms.
    (b) If we approve your request to use your financial strength and 
reliability to meet your financial assurance requirements, you must 
submit annual updates to the information required by paragraph (a) of 
this section. You must submit this information no later than March 31 
of each year.
    (c) If the annual updates to the information required by paragraph 
(a) of

[[Page 19837]]

this section do not continue to demonstrate financial strength and 
reliability or MMS has reason to believe that you are unable to meet 
the financial assurance requirements of this section, after notice and 
opportunity for a hearing, MMS will terminate your ability to use 
financial strength and reliability for financial assurance and require 
you to provide another type of financial assurance. You must provide 
this new financial assurance instrument within 90 days after we 
terminate your use of financial strength and reliability.


Sec.  285.528  May I use a third-party guaranty to meet the financial 
assurance requirement for lease or grant activities?

    (a) You may use a third-party guaranty if the guarantor meets the 
criteria prescribed in paragraph (b) of this section and submits an 
agreement meeting the criteria prescribed in paragraph (c) of this 
section. The agreement must guarantee compliance with the obligations 
of all lessees and operators and grant holders.
    (b) The MMS will consider the following factors in deciding whether 
to accept an agreement:
    (1) The length of time that your guarantor has been in continuous 
operation as a business entity. You may exclude periods of interruption 
that are beyond the guarantor's control by demonstrating, to the 
satisfaction of the Director, that the interruptions do not affect the 
likelihood of your guarantor remaining in business during the SAP, COP, 
and decommissioning stages of activities covered by the indemnity 
agreement.
    (2) Financial information available in the public record or 
submitted by your guarantor in sufficient detail to show us that your 
guarantor meets the criterion stated in paragraph (b)(4) of this 
section. Such detail includes:
    (i) The current rating for your guarantor's most recent bond 
issuance by a generally recognized bond rating service such as Moody's 
Investor Service or Standard and Poor's Corporation;
    (ii) Your guarantor's net worth, taking into account liabilities 
for compliance with all terms and conditions of your lease, 
regulations, and other guarantees;
    (iii) Your guarantor's ratio of current assets to current 
liabilities, taking into account liabilities for compliance with all 
terms and conditions of your lease, regulations, and other guarantees; 
and
    (iv) Your guarantor's unencumbered domestic fixed assets.
    (3) If the information in paragraph (b)(2) of this section is not 
publicly available, your guarantor must submit the information in the 
following table, to be updated annually within 90 days of the end of 
the fiscal year (FY) or as otherwise prescribed. 
[GRAPHIC] [TIFF OMITTED] TR29AP09.112

    (4) Your guarantor's total outstanding and proposed guarantees must 
not exceed 25 percent of its unencumbered domestic net worth.
    (c) Your guarantor must submit an agreement executed by the 
guarantor and all parties bound by the agreement. All parties are bound 
jointly and severally and must meet the qualifications set forth in 
Sec.  285.107.
    (1) When any party is a corporation, two corporate officers 
authorized to execute the guaranty agreement on behalf of the 
corporation must sign the agreement.
    (2) When any party is a partnership, joint venture, or syndicate, 
the guaranty agreement must bind each party who has a beneficial 
interest in your guarantor and provide that, upon MMS demand under your 
guaranty, each party is jointly and severally liable for compliance 
with all terms and conditions of your lease(s) or grant(s) covered by 
the agreement.
    (3) When forfeiture of the guaranty is called for, the agreement 
must provide that your guarantor will either bring your lease(s) or 
grant(s) into compliance or provide, within 7 days, sufficient funds to 
permit MMS to complete corrective action.
    (4) The guaranty agreement must contain a confession of judgment, 
providing that, if we determine that you are, or your operator or 
operating rights owner is, in default, the guarantor must not challenge 
the determination and must remedy the default.
    (5) If you fail, or your operator or operating rights owner fails, 
to comply with any law, term, or regulation, your guarantor must either 
take corrective action or provide, within 7 days or other agreed upon 
time period, sufficient funds for MMS to complete corrective action. 
Such compliance must not reduce your guarantor's liability.
    (6) If your guarantor wants to terminate the period of liability, 
your guarantor must notify you and us at least 90 days before the 
proposed termination date, obtain our approval for termination of all 
or a specified portion of the guarantee for liabilities arising after 
that date, and remain liable for all your work performed during the 
period the agreement is in effect.
    (7) Each guaranty submitted pursuant to this section is deemed to 
contain all the above terms, even if they are not actually in the 
agreement.
    (d) Before the termination of your guaranty, you must provide an 
acceptable replacement in the form of a bond or other security.


Sec.  285.529  Can I use a lease- or grant-specific decommissioning 
account to meet the financial assurance requirements related to 
decommissioning?

    (a) In lieu of a surety bond, MMS may authorize you to establish a 
lease-, ROW grant-, or RUE grant-specific decommissioning account in a 
federally-insured institution. The funds may not be withdrawn from the 
account without our written approval.
    (1) The funds must be payable to MMS and pledged to meet your lease 
or grant decommissioning and site clearance obligations; and
    (2) You must fully fund the account within the time MMS prescribes 
to cover all costs of decommissioning including site clearance. The MMS 
will estimate the cost of decommissioning, including site clearance.

[[Page 19838]]

    (b) Any interest paid on the account will be treated as account 
funds unless we authorize in writing that any interest be paid to the 
depositor.
    (c) We may allow you to pledge Treasury securities, payable to MMS 
on demand, to satisfy your obligation to make payments into the 
account. Acceptable Treasury securities and their collateral value are 
determined in accordance with 31 CFR part 203, Collateral Margins Table 
(which can be found at http://www.treasurydirect.gov).
    (d) We may require you to commit a specified stream of revenues as 
payment into the account so that the account will be fully funded, as 
prescribed in paragraph (a)(2) of this section. The commitment may 
include revenue from other operations.

Changes in Financial Assurance


Sec.  285.530  What must I do if my financial assurance lapses?

    (a) If your surety is decertified by the Treasury, becomes bankrupt 
or insolvent, or if your surety's charter or license is suspended or 
revoked, or if any other approved financial assurance expires for any 
reason, you must:
    (1) Inform MMS within 3 business days about the financial assurance 
lapse; and
    (2) Provide new financial assurance in the amount set by MMS, as 
provided in this subpart.
    (b) You must notify MMS within 3 business days after you learn of 
any action filed alleging that you, your surety, or third-party 
guarantor, is insolvent or bankrupt.


Sec.  285.531  What happens if the value of my financial assurance is 
reduced?

    If the value of your financial assurance is reduced below the 
required financial assurance amount because of a default or any other 
reason, you must provide additional financial assurance sufficient to 
meet the requirements of this subpart within 45 days or within a 
different period as specified by MMS.


Sec.  285.532  What happens if my surety wants to terminate the period 
of liability of my bond?

    (a) Terminating the period of liability of a bond ends the period 
during which surety liability continues to accrue. The surety continues 
to be responsible for obligations and liabilities that accrued during 
the period of liability and before the date on which MMS terminates the 
period of liability under paragraph (b) of this section. The 
liabilities that accrue during a period of liability include:
    (1) Obligations that started to accrue before the beginning of the 
period of liability and have not been met; and
    (2) Obligations that began accruing during the period of liability.
    (b) Your surety must submit to MMS its request to terminate the 
period of liability under its bond and notify you of that request. If 
you intend to continue activities, or have not met all obligations of 
your lease or grant, you must provide a replacement bond or alternative 
form of financial assurance of equivalent or greater value. The MMS 
will terminate that period of liability within 90 days after MMS 
receives the request.


Sec.  285.533  How does my surety obtain cancellation of my bond?

    (a) The MMS will release a bond or allow a surety to cancel a bond, 
and will relieve the surety from accrued obligations only if:
    (1) The MMS determines that there are no outstanding obligations 
covered by the bond; or
    (2) The following occurs:
    (i) The MMS accepts a replacement bond or an alternative form of 
financial assurance in an amount equal to or greater than the bond to 
be cancelled to cover the terminated period of liability;
    (ii) The surety issuing the new bond has expressly agreed to assume 
all outstanding liabilities under the original bond that accrued during 
the period of liability that was terminated; and
    (iii) The surety issuing the new bond has agreed to assume that 
portion of the outstanding liabilities that accrued during the 
terminated period of liability that exceeds the coverage of the bond 
prescribed under Sec. Sec.  285.515, 285.516, 285.520, or 285.521, and 
of which you were notified.
    (b) When your lease or grant ends, your surety(ies) remain(s) 
responsible, and MMS will retain any financial assurance as follows:
    (1) The period of liability ends when you cease all operations and 
activities under the lease or grant, including decommissioning and site 
clearance;
    (2) Your surety or collateral financial assurance will not be 
released until 7 years after the lease ends, or a longer period as 
necessary to complete any appeals or judicial litigation related to 
your bonded obligation, or for MMS to determine that all of your 
obligations under the lease or grant have been satisfied; and
    (3) The MMS will reduce the amount of your bond or return a portion 
of your financial assurance if we determine that we need less than the 
full amount of the bond or financial assurance to meet any possible 
future obligations.


Sec.  285.534  When may MMS cancel my bond?

    When your lease or grant ends, your surety(ies) remain(s) 
responsible, and MMS will retain any pledged security as shown in the 
following table:

[[Page 19839]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.113

Sec.  285.535  Why might MMS call for forfeiture of my bond?

    (a) The MMS may call for forfeiture of all or part of the bond, 
pledged security, or other form of guaranty if:
    (1) After notice and demand for performance by MMS, you refuse or 
fail, within the timeframe we prescribe, to comply with any term or 
condition of your lease or grant, other authorization or approval, or 
applicable regulations; or
    (2) You default on one of the conditions under which we accepted 
your bond.
    (b) We may pursue forfeiture without first making demands for 
performance against any co-lessee or holder of an interest in your ROW 
or RUE, or other person approved to perform obligations under your 
lease or grant.


Sec.  285.536  How will I be notified of a call for forfeiture?

    (a) The MMS will notify you and your surety, including any provider 
of financial assurance, in writing of the call for forfeiture and 
provide the reasons for the forfeiture and the amount to be forfeited. 
We will base the amount upon an estimate of the total cost of 
corrective action to bring your lease or grant into compliance.
    (b) We will advise you and your surety that you may avoid 
forfeiture if, within 10 business days:
    (1) You agree to and demonstrate in writing to MMS that you will 
bring your lease or grant into compliance within the timeframe we 
prescribe, and you do so; or
    (2) Your surety agrees to and demonstrates that it will bring your 
lease or grant into compliance within the timeframe we prescribe, even 
if the cost of compliance exceeds the face amount of the bond.


Sec.  285.537  How will MMS proceed once my bond or other security is 
forfeited?

    (a) If MMS determines that your bond or other security is 
forfeited, we will collect the forfeited amount and use the funds to 
bring your lease or grant(s) into compliance and correct any default.
    (b) If the amount collected under your bond or other security is 
insufficient to pay the full cost of corrective action, MMS may take or 
direct action to obtain full compliance and recover all costs in excess 
of the forfeited bond from you or any co-lessee or co-grantee.
    (c) If the amount collected under your bond or other security 
exceeds the full cost of corrective action to bring your lease or 
grant(s) into compliance, we will return the excess funds to the party 
from whom the excess was collected.


Sec. Sec.  285.538-285.539  [Reserved]

Revenue Sharing With States


Sec.  285.540  How will MMS equitably distribute revenues to States?

    (a) The MMS will distribute among the eligible coastal States 27 
percent of the following revenues derived from qualified projects, 
where a qualified project and qualified project area is determined in 
Sec.  285.541 and an eligible State is determined in Sec.  285.542, 
with each term defined in Sec.  285.112. Revenues subject to 
distribution to eligible States include all bonuses, acquisition fees, 
rentals, and operating fees derived from the entire qualified project 
area and associated project easements not limited to revenues 
attributable to the portion of the project area within 3 miles of the 
seaward boundary of a coastal State. The revenues to be shared do not 
include administrative fees such as service fees and those assessed for 
civil penalties and forfeiture of bond or other surety obligations.
    (b) The project area is the area included within a single lease or 
grant. For each qualified project, MMS will determine and announce the 
project area and its geographic center at the time it grants or issues 
a lease, easement, or right-of-way on the OCS. If a qualified project 
lease or grant's boundaries change significantly due to

[[Page 19840]]

actions pursuant to Sec. Sec.  285.435 or 285.436, MMS will re-evaluate 
the project area to determine whether the geographic center has 
changed. If it has, MMS will re-determine State eligibility and shares 
accordingly.
    (c) To determine each eligible State's share of the 27 percent of 
the revenues for a qualified project, MMS will use the inverse distance 
formula, which apportions shares according to the relative proximity of 
the nearest point on the coastline of each eligible State to the 
geographic center of the qualified project area. If S<INF>i</INF> is 
equal to the nearest distance from the geographic center of the project 
area to the i = 1, 2, ... nth eligible State's coastline, then eligible 
State i would be entitled to the fraction F<INF>i</INF> of the 27-
percent aggregate revenue share due to all the eligible States 
according to the formula:

F<INF>i</INF> = (1/S<INF>i</INF>) / ([Sigma] <INF>i=1</INF> ... 
<INF>n</INF> (1/S<INF>i</INF>)).


Sec.  285.541  What is a qualified project for revenue sharing 
purposes?

    A qualified project for the purpose of revenue sharing with 
eligible coastal States is one authorized under subsection 8(p) of the 
OCS Lands Act, which includes acreage within the area extending 3 
nautical miles seaward of State submerged lands. A qualified project is 
subject to revenue sharing with those States that are eligible for 
revenue sharing under Sec.  285.542. The entire area within a lease or 
grant for the qualified project, excluding project easements, is 
considered the qualified project area.


Sec.  285.542  What makes a State eligible for payment of revenues?

    A State is eligible for payment of revenues if any part of the 
State's coastline is located within 15 miles of the announced 
geographic center of the project area of a qualified project. A State 
is not eligible for revenue sharing if all parts of that State's 
coastline are more than 15 miles from the announced geographic center 
of the qualified project area. This is the case even if the qualified 
project area is located wholly or partially within an area extending 3 
nautical miles seaward of the submerged lands of that State or if there 
are no States with a coastline less than 15 miles from the announced 
geographic center of the qualified project area.


Sec.  285.543  Example of how the inverse distance formula works.

    (a) Assume that the geographic center of the project area lies 12 
miles from the closest coastline point of State A and 4 miles from the 
closest coastline point of State B. The MMS will round dollar shares to 
the nearest whole dollar. The proportional share due each State would 
be calculated as follows:
    (1) State A's share = [(\1/12\) / (\1/12\ + \1/4\)] = \1/4\.
    (2) State B's share = [\1/4\) / (\1/12\ + \1/4\)] = \3/4\.
    (b) Therefore, State B would receive a share of revenues that is 
three times as large as that awarded to State A, based on the finding 
that State B's nearest coastline is one-third the distance to the 
geographic center of the qualified project area as compared to State 
A's nearest coastline. Eligible States share the 27 percent of the 
total revenues from the qualified project as mandated under the OCS 
Lands Act. Hence, if the qualified project generates $1,000,000 of 
Federal revenues in a given year, the Federal Government would 
distribute the States' 27-percent share as follows:
    (1) State A's share = $270,000 x \1/4\ = $67,500.
    (2) State B's share = $270,000 x \3/4\ = $202,500.

Subpart F--Plans and Information Requirements


Sec.  285.600  What plans and information must I submit to MMS before I 
conduct activities on my lease or grant?

    You must submit a SAP, COP, or GAP and receive MMS approval as set 
forth in the following table: 
[GRAPHIC] [TIFF OMITTED] TR29AP09.114

 Before you: you must: (a) Conduct any site assessment activities on 
your commercial lease. Submit and obtain approval for your SAP 
according to Sec. Sec.  285.605 through 285.613. (b) Conduct any 
activities pertaining to construction of facilities for commercial 
operations on your commercial lease, Submit and obtain approval for 
your COP, according to Sec. Sec.  285.620 through 285.629. (c) Conduct 
any activities on your limited lease, ROW grant, or RUE grant in any 
OCS area, Submit and obtain approval for your GAP according to 
Sec. Sec.  285.640 through 285.648.Sec.  285.601   When am I required 
to submit my plans to MMS?

    Your plan submission requirements depend on whether your lease or 
grant was issued competitively or noncompetitively under subpart B or 
subpart C of this part.
    (a) If your lease or grant is issued competitively, you must submit 
your SAP or your GAP within 6 months of issuance.
    (b) If you request that a lease or grant be issued 
noncompetitively, you must submit your SAP or your GAP within 60 days 
after the Director issues a determination that there is no competitive 
interest.
    (c) If you intend to continue your commercial lease with an 
operations term, you must submit a COP, or a FERC license application, 
at least 6 months before the end of your site assessment term.
    (d) You may submit your COP or FERC license application with your 
SAP.
    (1) You must provide sufficient data and information with your COP 
for MMS to complete the needed reviews and NEPA analysis; and
    (2) The MMS may need to conduct additional reviews, including NEPA 
analysis, if significant new information becomes available after you 
complete your site assessment activities or you revise your COP. As a 
result of the additional reviews, we may require modification of your 
COP.


Sec.  285.602   What records must I maintain?

    Until MMS releases your financial assurance under Sec.  285.534, 
you must maintain and provide to MMS, upon request, all data and 
information related to compliance with required terms and conditions of 
your SAP, COP, or GAP.


Sec. Sec.  285.603-285.604   [Reserved]

Site Assessment Plan and Information Requirements for Commercial Leases


Sec.  285.605   What is a Site Assessment Plan (SAP)?

    (a) A SAP describes the activities (e.g., installation of 
meteorological towers, meteorological buoys) you plan to perform for 
the characterization of your commercial lease, including your project 
easement, or to test technology devices.
    (1) Your SAP must describe how you will conduct your resource 
assessment (e.g., meteorological and oceanographic

[[Page 19841]]

data collection) or technology testing activities; and
    (2) The MMS will withhold trade secrets and commercial or financial 
information that is privileged or confidential from public disclosure 
under exemption 4 of the FOIA and as provided in Sec.  285.113.
    (b) Your SAP must include data from:
    (1) Physical characterization surveys (e.g., geological and 
geophysical surveys or hazards surveys); and
    (2) Baseline environmental surveys (e.g., biological or 
archaeological surveys).
    (c) You must receive MMS approval of your SAP before you can begin 
any of the approved activities on your lease, as provided in Sec.  
285.613.
    (d) If you propose to construct a facility or combination of 
facilities deemed by MMS to be complex or significant, as provided in 
Sec.  285.613(a)(1), you must also comply with the requirements of 
subpart G of this part and submit your Safety Management System as 
required by Sec.  285.810.


Sec.  285.606   What must I demonstrate in my SAP?

    (a) Your SAP must demonstrate that you have planned and are 
prepared to conduct the proposed site assessment activities in a manner 
that conforms to your responsibilities listed in Sec.  285.105(a) and:
    (1) Conforms to all applicable laws, regulations, and lease 
provisions of your commercial lease;
    (2) Is safe;
    (3) Does not unreasonably interfere with other uses of the OCS, 
including those involved with national security or defense;
    (4) Does not cause undue harm or damage to natural resources; life 
(including human and wildlife); property; the marine, coastal, or human 
environment; or sites, structures, or objects of historical or 
archaeological significance;
    (5) Uses best available and safest technology;
    (6) Uses best management practices; and
    (7) Uses properly trained personnel.
    (b) You must also demonstrate that your site assessment activities 
will collect the necessary information and data required for your COP, 
as provided in Sec.  285.626(a).


Sec.  285.607  How do I submit my SAP?

    You must submit one paper copy and one electronic version of your 
SAP to MMS at the address listed in Sec.  285.110(a).


Sec. Sec.  285.608-285.609  [Reserved]

Contents of the Site Assessment Plan


Sec.  285.610  What must I include in my SAP?

    Your SAP must include the following information, as applicable.
    (a) For all activities you propose to conduct under your SAP, you 
must provide the following information:
BILLING CODE 4310-MR-P

[[Page 19842]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.115

    (b) You must provide the results of geophysical and geological 
surveys, hazards surveys, archaeological surveys (if required), and 
baseline collection studies (e.g., biological) with the supporting data 
in your SAP:

[[Page 19843]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.116

BILLING CODE 4310-MR-C
    (c) If you submit your COP or FERC license application with your 
SAP then:
    (1) You must provide sufficient data and information with your COP 
or FERC license application for MMS and/or FERC to complete the needed 
reviews and NEPA analysis.
    (2) You may need to revise your COP or FERC license application and 
MMS and/or FERC may need to conduct additional reviews, including NEPA 
analysis, if new information becomes available after you complete your 
site assessment activities.


Sec.  285.611   What information must I submit with my SAP to assist 
MMS in complying with NEPA and other relevant laws?

    (a) You must submit with your SAP detailed information to assist 
MMS in complying with NEPA and other relevant laws, as appropriate. For 
a noncompetitive commercial lease, you must submit a SAP that describes 
those resources, conditions, and activities listed in the following 
table that could be affected by your proposed activities, or that could 
affect the activities proposed in your SAP.
    (b) For competitively issued commercial leases, MMS will have 
prepared a NEPA document and consistency determination for the lease 
sale and site assessment activities. However, if you submit a SAP that 
shows changes in impacts from those identified in the NEPA document or 
consistency determination prepared for the lease, MMS may determine 
that your SAP is subject to a new NEPA/CZMA

[[Page 19844]]

and other relevant Federal reviews. In that case, MMS will notify you 
of the determination, and you must submit a SAP that describes those 
resources, conditions, and activities listed in the following table 
that could be affected by your proposed activities, or that could 
affect the activities proposed in your SAP, including: 
[GRAPHIC] [TIFF OMITTED] TR29AP09.117

Sec.  285.612   How will my SAP be processed for Federal consistency 
under the Coastal Zone Management Act?

    Your SAP will be processed based on how your commercial lease was 
issued:

[[Page 19845]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.118

Sec.  285.613  How will MMS process my SAP?

    (a) The MMS will review your submitted SAP, and additional 
information provided pursuant to Sec.  285.611, to determine if it 
contains the information necessary to conduct our technical and 
environmental reviews.
    (1) We will notify you if we deem your proposed facility or 
combination of facilities to be complex or significant;
    (2) We will notify you if your submitted SAP lacks any necessary 
information;
    (b) The MMS will prepare NEPA analysis, as appropriate.
    (c) As appropriate, we will coordinate and consult with relevant 
Federal and State agencies, executives of relevant local governments, 
and affected Indian tribes and will provide to other Federal, State, 
and local agencies and affected Indian tribes relevant nonproprietary 
data and information pertaining to your proposed activities.
    (d) During the review process, we may request additional 
information if we determine that the information provided is not 
sufficient to complete the review and approval process. If you fail to 
provide the requested information, MMS may disapprove your SAP.
    (e) Upon completion of our technical and environmental reviews and 
other reviews required by Federal laws (e.g., CZMA), MMS may approve, 
disapprove, or approve with modifications your SAP.
    (1) If we approve your SAP, we will specify terms and conditions to 
be incorporated into your SAP. You must certify compliance with those 
terms and conditions required under Sec.  285.615(c); and
    (2) If we disapprove your SAP, we will inform you of the reasons 
and allow you an opportunity to submit a revised plan making the 
necessary corrections, and may suspend the term of your lease, as 
appropriate, to allow this to occur.

Activities Under an Approved SAP


Sec.  285.614  When may I begin conducting activities under my approved 
SAP?

    (a) You may begin conducting the activities approved in your SAP 
following MMS approval of your SAP.
    (b) If you are installing a facility or a combination of facilities 
deemed by MMS to be complex or significant, as provided in Sec.  
285.613(a)(1), you must comply with the requirements of subpart G of 
this part and submit your Safety Management System required by Sec.  
285.810 before construction may begin.


Sec.  285.615  What other reports or notices must I submit to MMS under 
my approved SAP?

    (a) You must notify MMS in writing within 30 days of completing 
installation activities approved in your SAP.
    (b) You must prepare and submit to MMS a report annually on 
November 1 of each year that summarizes your site assessment activities 
and the results of those activities. The MMS will withhold trade 
secrets and commercial or financial information that is privileged or 
confidential from public disclosure under exemption 4 of the FOIA and 
as provided in Sec.  285.113.
    (c) You must submit a certification of compliance annually (or 
other frequency as determined by MMS) with certain terms and conditions 
of your SAP that MMS identifies under Sec.  285.613(e)(1). Together 
with your certification, you must submit:
    (1) Summary reports that show compliance with the terms and 
conditions which require certification; and
    (2) A statement identifying and describing any mitigation measures 
and monitoring methods and their effectiveness. If you identified 
measures that were not effective, you must include your recommendations 
for new mitigation measures or monitoring methods.


Sec.  285.616  [Reserved]


Sec.  285.617  What activities require a revision to my SAP, and when 
will MMS approve the revision?

    (a) You must notify MMS in writing before conducting any activities 
not described in your approved SAP, describing in detail the type of 
activities you propose to conduct. We will determine whether the 
activities you propose are authorized by your existing SAP or require a 
revision to your SAP. We may request additional information from you, 
if necessary, to make this determination.
    (b) The MMS will periodically review the activities conducted under 
an approved SAP. The frequency and extent of the review will be based 
on the significance of any changes in available information and on 
onshore or offshore conditions affecting, or affected by, the 
activities conducted under your SAP. If the review indicates that the 
SAP should be revised to meet the requirements of this part, we will 
require you to submit the needed revisions.
    (c) Activities for which a proposed revision to your SAP will 
likely be necessary include:
    (1) Activities not described in your approved SAP;
    (2) Modifications to the size or type of facility or equipment you 
will use;
    (3) Changes in the surface location of a facility or structure;

[[Page 19846]]

    (4) Addition of a facility or structure not contemplated in your 
approved SAP;
    (5) Changes in the location of your onshore support base from one 
State to another, or to a new base requiring expansion;
    (6) Changes in the location of bottom disturbances (anchors, 
chains, etc.) by 500 feet (152 meters) or greater from the approved 
locations. If a specific anchor pattern was approved as a mitigation 
measure to avoid contact with bottom features, any change in the 
proposed bottom disturbances would likely trigger the need for a 
revision;
    (7) Structural failure of one or more facilities; or
    (8) Changes to any other activity specified by MMS.
    (d) We may begin the appropriate NEPA analysis and other relevant 
consultations when we determine that a proposed revision could:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional Federal authorizations; or
    (3) Involve activities not previously identified and evaluated.
    (e) When you propose a revision, we may approve the revision if we 
determine that the revision is:
    (1) Designed not to cause undue harm or damage to natural 
resources; life (including human and wildlife); property; the marine, 
coastal, or human environment; or sites, structures, or objects of 
historical or archaeological significance; and
    (2) Otherwise consistent with the provisions of subsection 8(p) of 
the OCS Lands Act.


Sec.  285.618  What must I do upon completion of approved site 
assessment activities?

    (a) If, prior to the expiration of your site assessment term, you 
timely submit a COP meeting the requirements of this subpart, or a 
complete FERC license application, that describes the continued use of 
existing facilities approved in your SAP, you may keep such facilities 
in place on your lease during the time that MMS reviews your COP for 
approval or FERC reviews your license application for approval.
    (b) You are not required to initiate the decommissioning process 
for facilities that are authorized to remain in place under your 
approved COP or approved FERC license.
    (c) If, following the technical and environmental review of your 
submitted COP, MMS determines that such facilities may not remain in 
place, you must initiate the decommissioning process, as provided in 
subpart I of this part.
    (d) If FERC determines that such facilities may not remain in 
place, you must initiate the decommissioning process as provided in 
subpart I of this part.
    (e) You must initiate the decommissioning process, as set forth in 
subpart I of this part, upon the termination of your lease.


Sec.  285.619  [Reserved]

Construction and Operations Plan for Commercial Leases


Sec.  285.620  What is a Construction and Operations Plan (COP)?

    The COP describes your construction, operations, and conceptual 
decommissioning plans under your commercial lease, including your 
project easement. The MMS will withhold trade secrets and commercial or 
financial information that is privileged or confidential from public 
disclosure under exemption 4 of the FOIA and in accordance with the 
terms of Sec.  285.113.
    (a) Your COP must describe all planned facilities that you will 
construct and use for your project, including onshore and support 
facilities and all anticipated project easements.
    (b) Your COP must describe all proposed activities including your 
proposed construction activities, commercial operations, and conceptual 
decommissioning plans for all planned facilities, including onshore and 
support facilities.
    (c) You must receive MMS approval of your COP before you can begin 
any of the approved activities on your lease.


Sec.  285.621  What must I demonstrate in my COP?

    Your COP must demonstrate that you have planned and are prepared to 
conduct the proposed activities in a manner that conforms to your 
responsibilities listed in Sec.  285.105(a) and:
    (a) Conforms to all applicable laws, implementing regulations, 
lease provisions, and stipulations or conditions of your commercial 
lease;
    (b) Is safe;
    (c) Does not unreasonably interfere with other uses of the OCS, 
including those involved with National security or defense;
    (d) Does not cause undue harm or damage to natural resources; life 
(including human and wildlife); property; the marine, coastal, or human 
environment; or sites, structures, or objects of historical or 
archaeological significance;
    (e) Uses best available and safest technology;
    (f) Uses best management practices; and
    (g) Uses properly trained personnel.


Sec.  285.622   How do I submit my COP?

    (a) You must submit one paper copy and one electronic version of 
your COP to MMS at the address listed in Sec.  285.110(a).
    (b) You may submit information and a request for any project 
easement as part of your original COP submission or as a revision to 
your COP.


Sec. Sec.  285.623-285.625   [Reserved]

Contents of the Construction and Operations Plan


Sec.  285.626   What must I include in my COP?

    (a) You must submit the results of the following surveys for the 
proposed site(s) of your facility(ies). Your COP must include the 
following information:
BILLING CODE 4310-MR-P

[[Page 19847]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.119


[[Page 19848]]


[GRAPHIC] [TIFF OMITTED] TR29AP09.120

    (b) Your COP must include the following project-specific 
information, as applicable.

[[Page 19849]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.121


[[Page 19850]]


[GRAPHIC] [TIFF OMITTED] TR29AP09.122

Sec.  285.627   What information and certifications must I submit with 
my COP to assist the MMS in complying with NEPA and other relevant 
laws?

    (a) You must submit with your COP detailed information to assist 
MMS in complying with NEPA and other relevant laws. Your COP must 
describe those resources, conditions, and activities listed in the 
following table that could be affected by your proposed activities, or 
that could affect the activities proposed in your COP, including:

[[Page 19851]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.123

    (b) You must submit one paper copy and one electronic copy of your 
consistency certification. Your consistency certification must include:
    (1) One copy of your consistency certification under subsection 
307(c)(3)(B) of the CZMA (16 U.S.C. 1456(c)(3)(B)) and 15 CFR 930.76 
stating that the proposed activities described in detail in your plans 
comply with the State(s) approved coastal management program(s) and 
will be conducted in a manner that is consistent with such program(s); 
and
    (2) ``Information,'' as required by 15 CFR 930.76(a) and 15 CFR 
930.58(a)(2), and ``Analysis,'' as required by 15 CFR 930.58(a)(3).
    (c) You must submit your oil spill response plan, as required by 
part 254 of this subchapter.
    (d) You must submit your Safety Management System as required by 
Sec.  285.810.


Sec.  285.628  How will MMS process my COP?

    (a) The MMS will review your submitted COP, and the information 
provided pursuant to Sec.  285.627, to determine if it contains all the 
required information necessary to conduct our technical and 
environmental reviews. We will notify you if your submitted COP lacks 
any necessary information.
    (b) The MMS will prepare an appropriate NEPA analysis.
    (c) The MMS will forward one copy of your COP, consistency 
certification, and associated data and information under the CZMA to 
the State's CZM agency after all information requirements for the COP 
are met.
    (d) As appropriate, MMS will coordinate and consult with relevant 
Federal, State, and local agencies and affected Indian tribes, and 
provide to them relevant nonproprietary data and information pertaining 
to your proposed activities.
    (e) During the review process, we may request additional 
information if we determine that the information provided is not 
sufficient to complete the review and approval process. If you fail to 
provide the requested information, MMS may disapprove your COP.
    (f) Upon completion of our technical and environmental reviews and 
other reviews required by Federal law (e.g., CZMA), MMS may approve, 
disapprove, or approve with modifications your COP.
    (1) If we approve your COP, we will specify terms and conditions to 
be incorporated into your COP. You must certify compliance with certain 
of those terms and conditions, as required under Sec.  285.633(b); and
    (2) If we disapprove your COP, we will inform you of the reasons 
and allow you an opportunity to resubmit a revised plan addressing the 
concerns identified, and may suspend the term of your lease, as 
appropriate, to allow this to occur.
    (g) If MMS approves your project easement, MMS will issue an 
addendum to your lease specifying the terms of the project easement. A 
project easement may include off-lease areas that:
    (1) Contain the sites on which cable, pipeline, or associated 
facilities are located;

[[Page 19852]]

    (2) Do not exceed 200 feet (61 meters) in width, unless safety and 
environmental factors during construction and maintenance of the 
associated cables or pipelines require a greater width; and
    (3) For associated facilities, are limited to the area reasonably 
necessary for power or pumping stations or other accessory facilities.


Sec.  285.629  May I develop my lease in phases?

    In your COP, you may request development of your commercial lease 
in phases. In support of your request, you must provide details as to 
what portions of the lease will be initially developed for commercial 
operations and what portions of the lease will be reserved for 
subsequent phased development.


Sec.  285.630  [Reserved]

Activities Under an Approved COP


Sec.  285.631  When must I initiate activities under an approved COP?

    After your COP is approved, you must commence construction by the 
date given in the construction schedule required by Sec.  
285.626(b)(21), and included as a part of your approved COP, unless MMS 
approves a deviation from your schedule.


Sec.  285.632  What documents must I submit before I may construct and 
install facilities under my approved COP?

    (a) You must submit to MMS the documents listed in the following 
table: 
[GRAPHIC] [TIFF OMITTED] TR29AP09.124

    (b) You must submit your Safety Management System, as required by 
Sec.  285.810 of this part.
    (c) These activities must fall within the scope of your approved 
COP. If they do not fall within the scope of your approved COP, you 
will be required to submit a revision to your COP, under Sec.  285.634, 
for MMS approval before commencing the activity.


Sec.  285.633  How do I comply with my COP?

    (a) Based on MMS's environmental and technical reviews, we will 
specify terms and conditions to be incorporated into your COP.
    (b) You must submit a certification of compliance annually (or 
other frequency as determined by MMS) with certain terms and conditions 
of your COP that MMS identifies. Together with your certification, you 
must submit:
    (1) Summary reports that show compliance with the terms and 
conditions which require certification; and
    (2) A statement identifying and describing any mitigation measures 
and monitoring methods, and their effectiveness. If you identified 
measures that were not effective, then you must make recommendations 
for new mitigation measures or monitoring methods.
    (c) As provided at Sec.  285.105(i), MMS may require you to submit 
any supporting data and information.


Sec.  285.634  What activities require a revision to my COP, and when 
will MMS approve the revision?

    (a) You must notify MMS in writing before conducting any activities 
not described in your approved COP, describing in detail the type of 
activities you propose to conduct. We will determine whether the 
activities you propose are authorized by your existing COP or require a 
revision to your COP. We may request additional information from you, 
if necessary, to make this determination.
    (b) The MMS will periodically review the activities conducted under 
an approved COP. The frequency and extent of the review will be based 
on the significance of any changes in available information, and on 
onshore or offshore conditions affecting, or affected by, the 
activities conducted under your COP. If the review indicates that the 
COP should be revised to meet the requirement of this part, we will 
require you to submit the needed revisions.
    (c) Activities for which a proposed revision to your COP will 
likely be necessary include:
    (1) Activities not described in your approved COP;
    (2) Modifications to the size or type of facility or equipment you 
will use;
    (3) Change in the surface location of a facility or structure;
    (4) Addition of a facility or structure not described in your 
approved COP;
    (5) Change in the location of your onshore support base from one 
State to another or to a new base requiring expansion;
    (6) Changes in the location of bottom disturbances (anchors, 
chains, etc.) by 500 feet (152 meters) or greater from the approved 
locations (e.g., if a specific anchor pattern was approved as a 
mitigation measure to avoid contact with bottom features, any change in 
the proposed bottom disturbances would likely trigger the need for a 
revision);
    (7) Structural failure of one or more facilities; or
    (8) Change in any other activity specified by MMS.
    (d) We may begin the appropriate NEPA analysis and relevant 
consultations when we determine that a proposed revision could:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional Federal authorizations; or
    (3) Involve activities not previously identified and evaluated.
    (e) When you propose a revision, we may approve the revision if we 
determine that the revision is:
    (1) Designed not to cause undue harm or damage to natural 
resources; life (including human and wildlife); property; the marine, 
coastal, or human environment; or sites, structures, or objects of 
historical or archaeological significance; and
    (2) Otherwise consistent with the provisions of subsection 8(p) of 
the OCS Lands Act.


Sec.  285.635  What must I do if I cease activities approved in my COP 
before the end of my commercial lease?

    You must notify the MMS, within 5 business days, any time you cease 
commercial operations, without an approved suspension, under your 
approved COP. If you cease commercial operations for an indefinite 
period which extends longer than 6 months, we may cancel your lease 
under Sec.  285.437, and you must initiate the decommissioning process, 
as set forth in subpart I of this part.


Sec.  285.636  What notices must I provide MMS following approval of my 
COP?

    You must notify MMS in writing of the following events, within the 
time periods provided:
    (a) No later than 30 days after commencing activities associated 
with the placement of facilities on the lease area under a Fabrication 
and Installation Report.

[[Page 19853]]

    (b) No later than 30 days after completion of construction and 
installation activities under a Fabrication and Installation Report.
    (c) At least 7 days before commencing commercial operations.


Sec.  285.637  When may I commence commercial operations on my 
commercial lease?

    If you are conducting activities on your lease that:
    (a) Do not require a FERC license (i.e. wind), then you may 
commence commercial operations 30 days after the CVA or project 
engineer has submitted to MMS the final Fabrication and Installation 
Report for the fabrication and installation review, as provided in 
Sec.  285.708.
    (b) Require a FERC license or exemption, then you may commence 
commercial operations when permitted by the terms of your license or 
exemption.


Sec.  285.638  What must I do upon completion of my commercial 
operations as approved in my COP or FERC license?

    (a) Upon completion of your approved activities under your COP, you 
must initiate the decommissioning process as set forth in subpart I of 
this part. You must submit your decommissioning application as provided 
in Sec. Sec.  285.905 and 285.906.
    (b) Upon completion of your approved activities under your FERC 
license, the terms of your FERC license will govern your 
decommissioning activities.


Sec.  285.639  [Reserved]

General Activities Plan Requirements for Limited Leases, ROW Grants, 
and RUE Grants


Sec.  285.640  What is a General Activities Plan (GAP)?

    (a) A GAP describes your proposed construction, activities, and 
conceptual decommissioning plans for all planned facilities, including 
testing of technology devices and onshore and support facilities that 
you will construct and use for your project, including any project 
easements for the assessment and development of your limited lease or 
grant.
    (b) You must receive MMS approval of your GAP before you can begin 
any of the approved activities on your lease or grant. For a ROW grant 
or RUE grant issued competitively, you must submit your GAP within 6 
months of issuance.


Sec.  285.641  What must I demonstrate in my GAP?

    Your GAP must demonstrate that you have planned and are prepared to 
conduct the proposed activities in a manner that:
    (a) Conforms to all applicable laws, implementing regulations, 
lease provisions and stipulations;
    (b) Is safe;
    (c) Does not unreasonably interfere with other uses of the OCS, 
including those involved with national security or defense;
    (d) Does not cause undue harm or damage to natural resources; life 
(including human and wildlife); property; the marine, coastal, or human 
environment; or sites, structures, or objects of historical or 
archaeological significance;
    (e) Uses best available and safest technology;
    (f) Uses best management practices; and
    (g) Uses properly trained personnel.


Sec.  285.642  How do I submit my GAP?

    (a) You must submit one paper copy and one electronic version of 
your GAP to MMS at the address listed in Sec.  285.110(a).
    (b) If you have a limited lease, you may submit information on any 
project easement as part of your original GAP submission or as a 
revision to your GAP.


Sec. Sec.  285.643-285.644  [Reserved]

Contents of the General Activities Plan


Sec.  285.645  What must I include in my GAP?

    (a) You must provide the following results of geophysical and 
geological surveys, hazards surveys, archaeological surveys (if 
required), and baseline collection studies (e.g., biological) with the 
supporting data in your GAP:
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[[Page 19854]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.125

    (b) For all activities you propose to conduct under your GAP, you 
must provide the following information:

[[Page 19855]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.126

    (c) If you are applying for a project easement or constructing a 
facility, or a combination of facilities deemed by MMS to be complex or 
significant, you must provide the following information in addition to 
what is required in paragraphs (a) and (b) of this section and comply 
with the requirements of subpart G of this part:

[[Page 19856]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.127

    (d) The MMS will withhold trade secrets and commercial or financial 
information that is privileged or confidential from public disclosure 
in accordance with the terms of Sec.  285.113.


Sec.  285.646  What information and certifications must I submit with 
my GAP to assist MMS in complying with NEPA and other relevant laws?

    You must submit with your GAP detailed information to assist MMS in 
complying with NEPA and other relevant laws. Your GAP must describe 
those resources, conditions, and activities listed in the following 
table that could be affected by your proposed activities, or that could 
affect the activities proposed in your GAP, including:

[[Page 19857]]

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BILLING CODE 4310-MR-C


Sec.  285.647  How will my GAP be processed for Federal consistency 
under the Coastal Zone Management Act?

    Your GAP will be processed based on how your limited lease, ROW 
grant, or RUE grant was issued: 
[GRAPHIC] [TIFF OMITTED] TR29AP09.129

Sec.  285.648  How will MMS process my GAP?

    (a) The MMS will review your submitted GAP, along with the 
information and certifications provided pursuant to Sec.  285.646, to 
determine if it contains all the required information necessary to 
conduct our technical and environmental reviews.

[[Page 19858]]

    (1) We will notify you if we deem your proposed facility or 
combination of facilities to be complex or significant; and
    (2) We will notify you if your submitted GAP lacks any necessary 
information.
    (b) The MMS will prepare appropriate NEPA analysis.
    (c) When appropriate, we will coordinate and consult with relevant 
State and Federal agencies and affected Indian tribes and provide to 
other local, State, and Federal agencies and affected Indian tribes 
relevant nonproprietary data and information pertaining to your 
proposed activities.
    (d) During the review process, we may request additional 
information if we determine that the information provided is not 
sufficient to complete the review and approval process. If you fail to 
provide the requested information, MMS may disapprove your GAP.
    (e) Upon completion of our technical and environmental reviews and 
other reviews required by Federal law (e.g., CZMA), MMS may approve, 
disapprove, or approve with modifications your GAP.
    (1) If we approve your GAP, we will specify terms and conditions to 
be incorporated into your GAP. You must certify compliance with certain 
of those terms and conditions, as required under Sec.  285.653(c); and
    (2) If we disapprove your GAP, we will inform you of the reasons 
and allow you an opportunity to resubmit a revised plan making the 
necessary corrections, and may suspend the term of your lease or grant, 
as appropriate, to allow this to occur.


Sec.  285.649  [Reserved]

Activities Under an Approved GAP


Sec.  285.650  When may I begin conducting activities under my GAP?

    After MMS approves your GAP, you may begin conducting the approved 
activities that do not involve a project easement or the construction 
of facilities on the OCS that MMS has deemed to be complex or 
significant.


Sec.  285.651  When may I construct complex or significant OCS 
facilities on my limited lease or any facilities on my project easement 
proposed under my GAP?

    If you are applying for a project easement, or installing a 
facility or a combination of facilities on your limited lease deemed by 
MMS to be complex or significant, as provided in Sec.  285.648(a)(1), 
you also must comply with the requirements of subpart G of this part 
and submit your Safety Management System required by Sec.  285.810 
before construction may begin.


Sec.  285.652  How long do I have to conduct activities under an 
approved GAP?

    After MMS approves your GAP, you have:
    (a) For a limited lease, 5 years to conduct your approved 
activities, unless we renew the term under Sec. Sec.  285.425 through 
285.429.
    (b) For a ROW grant or RUE grant, the time provided in the terms of 
the grant.


Sec.  285.653  What other reports or notices must I submit to MMS under 
my approved GAP?

    (a) You must notify MMS in writing within 30 days after completing 
installation activities approved in your GAP.
    (b) You must prepare and submit to MMS annually a report that 
summarizes the findings from any activities you conduct under your 
approved GAP and the results of those activities. We will protect the 
information from public disclosure as provided in Sec.  285.113.
    (c) You must annually (or other frequency as determined by MMS) 
submit a certification of compliance with those terms and conditions of 
your GAP that MMS identifies under Sec.  285.648(e)(1). Together with 
your certification, you must submit:
    (1) Summary reports that show compliance with the terms and 
conditions which require certification; and
    (2) A statement identifying and describing any mitigation measures 
and monitoring methods and their effectiveness. If you identified 
measures that were not effective, you must include your recommendations 
for new mitigation measures or monitoring methods.


Sec.  285.654  [Reserved]


Sec.  285.655  What activities require a revision to my GAP, and when 
will MMS approve the revision?

    (a) You must notify MMS in writing before conducting any activities 
not described in your approved GAP, describing in detail the type of 
activities you propose to conduct. We will determine whether the 
activities you propose are authorized by your existing GAP or require a 
revision to your GAP. We may request additional information from you, 
if necessary, to make this determination.
    (b) The MMS will periodically review the activities conducted under 
an approved GAP. The frequency and extent of the review will be based 
on the significance of any changes in available information and on 
onshore or offshore conditions affecting, or affected by, the 
activities conducted under your GAP. If the review indicates that the 
GAP should be revised to meet the requirement of this part, we will 
require you to submit the needed revisions.
    (c) Activities for which a proposed revision to your GAP will 
likely be necessary include:
    (1) Activities not described in your approved GAP;
    (2) Modifications to the size or type of facility or equipment you 
will use;
    (3) Change in the surface location of a facility or structure;
    (4) Addition of a facility or structure not contemplated in your 
approved GAP;
    (5) Change in the location of your onshore support base from one 
State to another or to a new base requiring expansion;
    (6) Changes in the locations of bottom disturbances (anchors, 
chains, etc.) by 500 feet (152 meters) or greater from the approved 
locations. If a specific anchor pattern was approved as a mitigation 
measure to avoid contact with bottom features, any change in the 
proposed bottom disturbances would likely trigger the need for a 
revision;
    (7) Structural failure of one or more facilities; or
    (8) Change to any other activity specified by MMS.
    (d) We may begin the appropriate NEPA analysis and any relevant 
consultations when we determine that a proposed revision could:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional Federal authorizations; or
    (3) Involve activities not previously identified and evaluated.
    (e) When you propose a revision, we may approve the revision if we 
determine that the revision is:
    (1) Designed not to cause undue harm or damage to natural 
resources; life (including human and wildlife); property; the marine, 
coastal, or human environment; or sites, structures, or objects of 
historical or archaeological significance; and
    (2) Otherwise consistent with the provisions of subsection 8(p) of 
the OCS Lands Act.


Sec.  285.656  What must I do if I cease activities approved in my GAP 
before the end of my term?

    You must notify the MMS any time you cease activities under your 
approved GAP without an approved suspension. If you cease activities 
for an indefinite period that exceeds 6 months, MMS may cancel your 
lease or grant

[[Page 19859]]

under Sec.  285.437, as applicable, and you must initiate the 
decommissioning process, as set forth in subpart I of this part.


Sec.  285.657  What must I do upon completion of approved activities 
under my GAP?

    Upon completion of your approved activities under your GAP, you 
must initiate the decommissioning process as set forth in subpart I of 
this part. You must submit your decommissioning application as provided 
in Sec. Sec.  285.905 and 285.906.

Cable and Pipeline Deviations


Sec.  285.658  Can my cable or pipeline construction deviate from my 
approved COP or GAP?

    (a) You must make every effort to ensure that all cables and 
pipelines are constructed in a manner that minimizes deviations from 
the approved plan under your lease or grant.
    (b) If MMS determines that a significant change in conditions has 
occurred that would necessitate an adjustment to your ROW, RUE or lease 
before the commencement of construction of the cable or pipeline on the 
grant or lease, MMS will consider modifications to your ROW grant, RUE 
grant, or your lease addendum for a project easement in connection with 
your COP or GAP.
    (c) If, after construction, it is determined that a deviation from 
the approved plan has occurred, you must:
    (1) Notify the operators of all leases (including mineral leases 
issued under this subchapter) and holders of all ROW grants or RUE 
grants (including all grants issued under this subchapter) which 
include the area where a deviation has occurred and provide MMS with 
evidence of such notification;
    (2) Relinquish any unused portion of your lease or grant; and
    (3) Submit a revised plan for MMS approval as necessary.
    (d) Construction of a cable or pipeline that substantially deviates 
from the approved plan may be grounds for cancellation of the lease or 
grant.


Sec.  285.659  What requirements must I include in my SAP, COP, or GAP 
regarding air quality?

    (a) You must comply with the Clean Air Act (42 U.S.C. 7409) and its 
implementing regulations, according to the following table. 
[GRAPHIC] [TIFF OMITTED] TR29AP09.130

    (b) For air quality modeling that you perform in support of the 
activities proposed in your plan, you should contact the appropriate 
regulatory agency to establish a modeling protocol to ensure that the 
agency's needs are met and that the meteorological files used are 
acceptable before initiating the modeling work. In the western Gulf of 
Mexico (west of 87.5[deg] west longitude), you must submit to MMS three 
copies of the modeling report and three sets of digital files as 
supporting information. The digital files must contain the formatted 
meteorological files used in the modeling runs, the model input file, 
and the model output file.

Subpart G--Facility Design, Fabrication, and Installation

Reports


Sec.  285.700  What reports must I submit to MMS before installing 
facilities described in my approved SAP, COP, or GAP?

    (a) You must submit the following reports to MMS before installing 
facilities described in your approved COP (Sec.  285.632(a)) and, when 
required by this part, your SAP (Sec.  285.614(b)) or GAP (Sec.  
285.651):
    (1) A Facility Design Report; and
    (2) A Fabrication and Installation Report.
    (b) You may begin to fabricate and install the approved facilities 
after MMS notifies you that it has received your reports and has no 
objections. If MMS receives the reports, but does not respond with 
objections within 60 days of receipt or 60 days after we approve your 
SAP, COP, or GAP, if you submitted your report with the plan, MMS is 
deemed not to have objections to the reports, and you may commence 
fabrication and installation of your facility or facilities.
    (c) If MMS has any objections, we will notify you verbally or in 
writing within 60 days of receipt of the report. Following initial 
notification of objections, MMS may follow up with written 
correspondence outlining its specific objections to the report and 
request that certain actions be undertaken. You cannot commence 
activities addressed in such report until you resolve all objections to 
MMS's satisfaction.


Sec.  285.701  What must I include in my Facility Design Report?

    (a) Your Facility Design Report provides specific details of the 
design of any facilities, including cables and pipelines, that are 
outlined in your approved SAP, COP, or GAP. Your Facility Design Report 
must demonstrate that your design conforms to your responsibilities 
listed in Sec.  285.105(a). You must include the following items in 
your Facility Design Report:
BILLING CODE 4310-MR-P

[[Page 19860]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.132


[[Page 19861]]


[GRAPHIC] [TIFF OMITTED] TR29AP09.133

BILLING CODE 4310-MR-C
    (b) For any floating facility, your design must meet the 
requirements of the U.S. Coast Guard for structural integrity and 
stability (e.g., verification of center of gravity). The design must 
also consider:
    (1) Foundations, foundation pilings and templates, and anchoring 
systems; and
    (2) Mooring or tethering systems.
    (c) You must provide the location of records, as required in Sec.  
285.714(c).
    (d) If you are required to use a CVA, the Facility Design Report 
must include one paper copy of the following certification statement: 
``The design of this structure has been certified by a MMS approved CVA 
to be in accordance with accepted engineering practices and the 
approved SAP, GAP, or COP as appropriate. The certified design and as-
built plans and specifications will be on file at (given location).''
    (e) The MMS will withhold trade secrets and commercial or financial 
information that is privileged or confidential from public disclosure 
under exemption 4 of the FOIA and in accordance with the terms of Sec.  
285.113.


Sec.  285.702  What must I include in my Fabrication and Installation 
Report?

    (a) Your Fabrication and Installation Report must describe how your 
facilities will be fabricated and installed in accordance with the 
design criteria identified in the Facility Design Report; your approved 
SAP, COP, or GAP; and generally accepted industry standards and 
practices. Your Fabrication and Installation Report must demonstrate 
how your facilities will be fabricated and installed in a manner that 
conforms to your responsibilities listed in Sec.  285.105(a). You must 
include the following items in your Fabrication and Installation 
Report:

[[Page 19862]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.134

    (b) You must provide the location of records, as required in Sec.  
285.714(c).
    (c) If you are required to use a CVA, the Fabrication and 
Installation Report must include one paper copy of the following 
certification statement: ``The fabrication and installation of this 
structure has been certified by a MMS approved CVA to be in accordance 
with accepted engineering practices and the approved SAP, GAP, or COP 
as appropriate. The certified design and as-built plans and 
specifications will be on file at (given location).''
    (d) The MMS will withhold trade secrets and commercial or financial 
information that is privileged or confidential from public disclosure 
under exemption 4 of the FOIA and in accordance with the terms of Sec.  
285.113.


Sec.  285.703   What reports must I submit for project modifications 
and repairs?

    (a) You must verify and, in a report to us, certify that major 
repairs and major modifications to the project conform to accepted 
engineering practices.
    (1) A major repair is a corrective action involving structural 
members affecting the structural integrity of a portion of or all the 
facility.
    (2) A major modification is an alteration involving structural 
members affecting the structural integrity of a portion of or all the 
facility.
    (b) The report must also identify the location of all records 
pertaining to the major repairs or major modifications, as required in 
Sec.  285.714(c).
    (c) The MMS may require you to use a CVA for project modifications 
and repairs.


Sec.  285.704  [Reserved]

Certified Verification Agent


Sec.  285.705  When must I use a Certified Verification Agent (CVA)?

    You must use a CVA to review and certify the Facility Design 
Report, the Fabrication and Installation Report, and the Project 
Modifications and Repairs Report.
    (a) You must use a CVA to:
    (1) Ensure that your facilities are designed, fabricated, and 
installed in conformance with accepted engineering practices and the 
Facility Design Report and Fabrication and Installation Report;
    (2) Ensure that repairs and major modifications are completed in 
conformance with accepted engineering practices; and
    (3) Provide MMS immediate reports of all incidents that affect the 
design, fabrication, and installation of the project and its 
components.
    (b) The MMS may waive the requirement that you use a CVA if you can 
demonstrate the following:

[[Page 19863]]

[GRAPHIC] [TIFF OMITTED] TR29AP09.135

    (c) You must submit a request to waive the requirement to use a CVA 
to MMS in writing, along with your SAP under Sec.  285.610(a)(9), COP 
under Sec.  285.626(b)(20), or GAP under Sec.  285.645(c)(5).
    (1) The MMS will review your request to waive the use of the CVA 
and notify you of our decision along with our decision on your SAP, 
COP, or GAP.
    (2) If MMS does not waive the requirement for a CVA, you may file 
an appeal under Sec.  285.118.
    (3) If MMS waives the requirement that you use a CVA, your project 
engineer must perform the same duties and responsibilities as the CVA, 
except as otherwise provided.


Sec.  285.706  How do I nominate a CVA for MMS approval?

    (a) As part of your COP (as provided in Sec.  285.626(b)(20) and, 
when required by this part, your SAP (Sec.  285.610(a)(9)) or GAP 
(Sec.  285.645(c)(5)), you must nominate a CVA for MMS approval. You 
must specify whether the nomination is for the Facility Design Report, 
Fabrication and Installation Report, Modification and Repair Report, or 
for any combination of these.
    (b) For each CVA that you nominate, you must submit to MMS a list 
of documents used in your design that you will forward to the CVA and a 
qualification statement that includes the following:
    (1) Previous experience in third-party verification or experience 
in the design, fabrication, installation, or major modification of 
offshore energy facilities;
    (2) Technical capabilities of the individual or the primary staff 
for the specific project;
    (3) Size and type of organization or corporation;
    (4) In-house availability of, or access to, appropriate technology 
(including computer programs, hardware, and testing materials and 
equipment);
    (5) Ability to perform the CVA functions for the specific project 
considering current commitments;
    (6) Previous experience with MMS requirements and procedures, if 
any; and
    (7) The level of work to be performed by the CVA.
    (c) Individuals or organizations acting as CVAs must not function 
in any capacity that will create a conflict of interest, or the 
appearance of a conflict of interest.
    (d) The verification must be conducted by or under the direct 
supervision of registered professional engineers.
    (e) The MMS will approve or disapprove your CVA as part of its 
review of the COP or, when required, of your SAP or GAP.
    (f) You must nominate a new CVA for MMS approval if the previously 
approved CVA:
    (1) Is no longer able to serve in a CVA capacity for the project; 
or
    (2) No longer meets the requirements for a CVA set forth in this 
subpart.


Sec.  285.707  What are the CVA's primary duties for facility design 
review?

    If you are required to use a CVA:
    (a) The CVA must use good engineering judgment and practices in 
conducting an independent assessment of the design of the facility. The 
CVA must certify in the Facility Design Report to MMS that the facility 
is designed to withstand the environmental and functional load 
conditions appropriate for the intended service life at the proposed 
location.
    (b) The CVA must conduct an independent assessment of all proposed:
    (1) Planning criteria;
    (2) Operational requirements;
    (3) Environmental loading data;
    (4) Load determinations;
    (5) Stress analyses;
    (6) Material designations;
    (7) Soil and foundation conditions;
    (8) Safety factors; and
    (9) Other pertinent parameters of the proposed design.
    (c) For any floating facility, the CVA must ensure that any 
requirements of the U.S. Coast Guard for structural integrity and 
stability (e.g., verification of center of gravity), have been met. The 
CVA must also consider:
    (1) Foundations, foundation pilings and templates, and anchoring 
systems; and
    (2) Mooring or tethering systems.


Sec.  285.708  What are the CVA's or project engineer's primary duties 
for fabrication and installation review?

    (a) The CVA or project engineer must do all of the following:
    (1) Use good engineering judgment and practice in conducting an 
independent assessment of the fabrication and installation activities;
    (2) Monitor the fabrication and installation of the facility as 
required by paragraph (b) of this section;
    (3) Make periodic onsite inspections while fabrication is in 
progress and verify the items required by Sec.  285.709;
    (4) Make periodic onsite inspections while installation is in 
progress and satisfy the requirements of Sec.  295.710; and
    (5) Certify in a report that project components are fabricated and 
installed in accordance with accepted engineering practices; your 
approved COP, SAP, or GAP (as applicable); and the Fabrication and 
Installation Report.

[[Page 19864]]

    (i) The report must also identify the location of all records 
pertaining to fabrication and installation, as required in Sec.  
285.714(c); and
    (ii) You may commence commercial operations or other approved 
activities 30 days after MMS receives that certification report, unless 
MMS notifies you within that time period of its objections to the 
certification report.
    (b) To comply with paragraph (a)(5) of this section, the CVA or 
project engineer must monitor the fabrication and installation of the 
facility to ensure that it has been built and installed according to 
the Facility Design Report and Fabrication and Installation Report.
    (1) If the CVA or project engineer finds that fabrication and 
installation procedures have been changed or design specifications have 
been modified, the CVA or project engineer must inform you; and
    (2) If you accept the modifications, then you must also inform MMS.


Sec.  285.709  When conducting onsite fabrication inspections, what 
must the CVA or project engineer verify?

    (a) To comply with Sec.  285.708(a)(3), the CVA or project engineer 
must make periodic onsite inspections while fabrication is in progress 
and must verify the following fabrication items, as appropriate:
    (1) Quality control by lessee (or grant holder) and builder;
    (2) Fabrication site facilities;
    (3) Material quality and identification methods;
    (4) Fabrication procedures specified in the Fabrication and 
Installation Report, and adherence to such procedures;
    (5) Welder and welding procedure qualification and identification;
    (6) Structural tolerances specified, and adherence to those 
tolerances;
    (7) Nondestructive examination requirements and evaluation results 
of the specified examinations;
    (8) Destructive testing requirements and results;
    (9) Repair procedures;
    (10) Installation of corrosion-protection systems and splash-zone 
protection;
    (11) Erection procedures to ensure that overstressing of structural 
members does not occur;
    (12) Alignment procedures;
    (13) Dimensional check of the overall structure, including any 
turrets, turret-and-hull interfaces, any mooring line and chain and 
riser tensioning line segments; and
    (14) Status of quality-control records at various stages of 
fabrication.
    (b) For any floating facilities, the CVA or project engineer must 
ensure that any requirements of the U.S. Coast Guard for structural 
integrity and stability (e.g., verification of center of gravity) have 
been met. The CVA or project engineer must also consider:
    (1) Foundations, foundation pilings and templates, and anchoring 
systems; and
    (2) Mooring or tethering systems.


Sec.  285.710  When conducting onsite installation inspections, what 
must the CVA or project engineer do?

    To comply with Sec.  285.708(a)(4), the CVA or project engineer 
must make periodic onsite inspections while installation is in progress 
and must, as appropriate, verify, witness, survey, or check, the 
installation items required by this section.
    (a) The CVA or project engineer must verify, as appropriate, all of 
the following:
    (1) Loadout and initial flotation procedures;
    (2) Towing operation procedures to the specified location, and 
review the towing records;
    (3) Launching and uprighting activities;
    (4) Submergence activities;
    (5) Pile or anchor installations;
    (6) Installation of mooring and tethering systems;
    (7) Final deck and component installations; and
    (8) Installation at the approved location according to the Facility 
Design Report and the Fabrication and Installation Report.
    (b) For a fixed or floating facility, the CVA or project engineer 
must verify that proper procedures were used during the following:
    (1) The loadout of the jacket, decks, piles, or structures from 
each fabrication site; and
    (2) The actual installation of the facility or major modification 
and the related installation activities.
    (c) For a floating facility, the CVA or project engineer must 
verify that proper procedures were used during the following:
    (1) The loadout of the facility;
    (2) The installation of foundation pilings and templates, and 
anchoring systems; and
    (3) The installation of the mooring and tethering systems.
    (d) The CVA or project engineer must conduct an onsite survey of 
the facility after transportation to the approved location.
    (e) The CVA or project engineer must spot-check the equipment, 
procedures, and recordkeeping as necessary to determine compliance with 
the applicable documents incorporated by reference and the regulations 
under this part.


Sec.  285.711  [Reserved]


Sec.  285.712  What are the CVA's or project engineer's reporting 
requirements?

    (a) The CVA or project engineer must prepare and submit to you and 
MMS all reports required by this subpart. The CVA or project engineer 
must also submit interim reports to you and MMS, as requested by the 
MMS.
    (b) For each report required by this subpart, the CVA or project 
engineer must submit one electronic copy and one paper copy of each 
final report to MMS. In each report, the CVA or project engineer must:
    (1) Give details of how, by whom, and when the CVA or project 
engineer activities were conducted;
    (2) Describe the CVA's or project engineer's activities during the 
verification process;
    (3) Summarize the CVA's or project engineer's findings; and
    (4) Provide any additional comments that the CVA or project 
engineer deems necessary.


Sec.  285.713  What must I do after the CVA or project engineer 
confirms conformance with the Fabrication and Installation Report on my 
commercial lease?

    After the CVA or project engineer files the certification report, 
you must notify MMS within 10 business days after commencing commercial 
operations.


Sec.  285.714  What records relating to SAPs COPs and GAPs must I keep?

    (a) Until MMS releases your financial assurance under Sec.  
285.534, you must compile, retain, and make available to MMS 
representatives, within the time specified by MMS, all of the 
following:
    (1) The as-built drawings;
    (2) The design assumptions and analyses;
    (3) A summary of the fabrication and installation examination 
records;
    (4) The inspection results from the inspections and assessments 
required by Sec. Sec.  285.820 through 285.825; and
    (5) Records of repairs not covered in the inspection report 
submitted under Sec.  285.824(b)(3).
    (b) You must record and retain the original material test results 
of all primary structural materials during all stages of construction 
until MMS releases your financial assurance under Sec.  285.534. 
Primary material is material that, should it fail, would lead to a 
significant reduction in facility safety, structural reliability, or 
operating capabilities. Items such as steel brackets, deck stiffeners 
and secondary braces or beams would not generally be

[[Page 19865]]

considered primary structural members (or materials).
    (c) You must provide MMS with the location of these records in the 
certification statement, as required in Sec. Sec.  285.701(c), 
285.703(b), and 285.708(a)(5)(i).

Subpart H--Environmental and Safety Management, Inspections, and 
Facility Assessments for Activities Conducted Under SAPs, COPs and 
GAPs


Sec.  285.800  How must I conduct my activities to comply with safety 
and environmental requirements?

    (a) You must conduct all activities on your lease or grant under 
this part in a manner that conforms with your responsibilities in Sec.  
285.105(a), and using:
    (1) Trained personnel; and
    (2) Technologies, precautions, and techniques that will not cause 
undue harm or damage to natural resources, including their physical, 
atmospheric, and biological components.
    (b) You must certify compliance with those terms and conditions 
identified in your approved SAP, COP, or GAP, as required under 
Sec. Sec.  285.615(c), 285.633(b), or 285.653(c).


Sec.  285.801  How must I conduct my approved activities to protect 
marine mammals, threatened and endangered species, and designated 
critical habitat?

    (a) You must not conduct any activity under your lease or grant 
that may affect threatened or endangered species or that may affect 
designated critical habitat of such species until the appropriate level 
of consultation is conducted, as required under the ESA, as amended (16 
U.S.C. 1531 et seq.), to ensure that your actions are not likely to 
jeopardize a threatened or endangered species and are not likely to 
destroy or adversely modify designated critical habitat.
    (b) You must not conduct any activity under your lease or grant 
that may result in an incidental taking of marine mammals until the 
appropriate authorization has been issued under the Marine Mammal 
Protection Act of 1972 (MMPA) as amended (16 U.S.C. 1361 et seq.).
    (c) If there is reason to believe that a threatened or endangered 
species may be present while you conduct your MMS approved activities 
or may be affected by the direct or indirect effects of your actions:
    (1) You must notify us that endangered or threatened species may be 
present in the vicinity of the lease or grant or may be affected by 
your actions; and
    (2) We will consult with appropriate State and Federal fish and 
wildlife agencies and, after consultation, shall identify whether, and 
under what conditions, you may proceed.
    (d) If there is reason to believe that designated critical habitat 
of a threatened or endangered species may be affected by the direct or 
indirect effects of your MMS approved activities:
    (1) You must notify us that designated critical habitat of a 
threatened or endangered species in the vicinity of the lease or grant 
may be affected by your actions; and
    (2) We will consult with appropriate State and Federal fish and 
wildlife agencies and, after consultation, shall identify whether, and 
under what conditions, you may proceed.
    (e) If there is reason to believe that marine mammals may be 
incidentally taken as a result of your proposed activities:
    (1) You must agree to secure an authorization from National Oceanic 
and Atmospheric Administration (NOAA) or the U.S. Fish and Wildlife 
Service (FWS) for incidental taking, including taking by harassment, 
that may result from your actions; and
    (2) You must comply with all measures required by the NOAA or FWS, 
including measures to affect the least practicable impact on such 
species and its habitat and to ensure no unmitigable adverse impact on 
the availability of the species for subsistence use.
    (f) Submit to us:
    (1) Measures designed to avoid or minimize adverse effects and any 
potential incidental take of the endangered or threatened species or 
marine mammals;
    (2) Measures designed to avoid likely adverse modification or 
destruction of designated critical habitat of such endangered or 
threatened species; and
    (3) Your agreement to monitor for the incidental take of the 
species and adverse effects on the critical habitat, and provide the 
results of the monitoring to MMS as required; and
    (4) Your agreement to perform any relevant terms and conditions of 
the Incidental Take Statement that may result from the ESA 
consultation.
    (5) Your agreement to perform any relevant mitigation measures 
under an MMPA incidental take authorization.


Sec.  285.802  What must I do if I discover a potential archaeological 
resource while conducting my approved activities?

    (a) If you, your subcontractors, or any agent acting on your behalf 
discovers a potential archaeological resource while conducting 
construction activities, or any other activity related to your project, 
you must:
    (1) Immediately halt all seafloor-disturbing activities within the 
area of the discovery;
    (2) Notify MMS of the discovery within 72 hours; and
    (3) Keep the location of the discovery confidential and not take 
any action that may adversely affect the archaeological resource until 
we have made an evaluation and instructed you on how to proceed.
    (b) We may require you to conduct additional investigations to 
determine if the resource is eligible for listing in the National 
Register of Historic Places under 36 CFR 60.4. We will do this if:
    (1) The site has been impacted by your project activities; or
    (2) Impacts to the site or to the area of potential effect cannot 
be avoided.
    (c) If investigations under paragraph (b) of this section indicate 
that the resource is potentially eligible for listing in the National 
Register of Historic Places, we will tell you how to protect the 
resource, or how to mitigate adverse effects to the site.
    (d) If we incur costs in protecting the resource, under section 
110(g) of the NHPA, we may charge you reasonable costs for carrying out 
preservation responsibilities under the OCS Lands Act.


Sec.  285.803  How must I conduct my approved activities to protect 
essential fish habitats identified and described under the Magnuson-
Stevens Fishery Conservation and Management Act?

    (a) If, during the conduct of your approved activities, MMS finds 
that essential fish habitat or habitat areas of particular concern may 
be adversely affected by your activities, MMS must consult with 
National Marine Fisheries Service.
    (b) Any conservation recommendations adopted by MMS to avoid or 
minimize adverse affects on Essential Fish Habitat will be incorporated 
as terms and conditions in the lease and must be adhered to by the 
applicant. The MMS may require additional surveys to define boundaries 
and avoidance distances.
    (c) If required, MMS will specify the survey methods and 
instrumentations for conducting the biological survey and will specify 
the contents of the biological report.


Sec. Sec.  285.804-285.809  [Reserved]

Safety Management Systems


Sec.  285.810  What must I include in my Safety Management System?

    You must submit a description of the Safety Management System you 
will use with your COP (provided under

[[Page 19866]]

Sec.  285.627(d)) and, when required by this part, your SAP (as 
provided in Sec.  285.614(b)) or GAP (as provided in Sec.  285.651). 
You must describe:
    (a) How you will ensure the safety of personnel or anyone on or 
near your facilities;
    (b) Remote monitoring, control, and shut down capabilities;
    (c) Emergency response procedures;
    (d) Fire suppression equipment, if needed;
    (e) How and when you will test your Safety Management System; and
    (f) How you will ensure personnel who operate your facilities are 
properly trained.


Sec.  285.811  When must I follow my Safety Management System?

    Your Safety Management System must be fully functional when you 
begin activities described in your approved COP, SAP, or GAP. You must 
conduct all activities described in your approved COP, SAP, or GAP in 
accordance with the Safety Management System you described, as required 
by Sec.  285.810.


Sec.  285.812  [Reserved]

Maintenance and Shutdowns


Sec.  285.813  When do I have to report removing equipment from 
service?

    (a) The removal of any equipment from service may result in MMS 
applying remedies, as provided in this part, when such equipment is 
necessary for implementing your approved plan. Such remedies may 
include an order from MMS requiring you to replace or remove such 
equipment or facilities.
    (b)(1) You must report within 24 hours when equipment necessary for 
implementing your approved plan is removed from service for more than 
12 hours. If you provide an oral notification, you must submit a 
written confirmation of this notice within 3 business days, as required 
by Sec.  285.105(c);
    (2) You do not have to report removing equipment necessary for 
implementing your plan if the removal is part of planned maintenance or 
repair activities; and
    (3) You must notify MMS when you return the equipment to service.


Sec.  285.814  [Reserved]

Equipment Failure and Adverse Environmental Effects


Sec.  285.815  What must I do if I have facility damage or an equipment 
failure?

    (a) If you have facility damage or the failure of a pipeline, 
cable, or other equipment necessary for you to implement your approved 
plan, you must make repairs as soon as practicable. If you have a major 
repair, you must submit a report of the repairs to MMS, as required in 
Sec.  285.711.
    (b) If you are required to report any facility damage or failure 
under Sec.  285.831, MMS may require you to revise your SAP, COP, or 
GAP to describe how you will address the facility damage or failure as 
required by Sec.  285.634 (COP), Sec.  285.617 (SAP), Sec.  285.655 
(GAP). You must submit a report of the repairs to MMS, as required in 
Sec.  285.703.
    (c) The MMS may require that you analyze cable, pipeline, or 
facility damage or failure to determine the cause. If requested by MMS, 
you must submit a comprehensive written report of the failure or damage 
to MMS as soon as available.


Sec.  285.816  What must I do if environmental or other conditions 
adversely affect a cable, pipeline, or facility?

    If environmental or other conditions adversely affect a cable, 
pipeline, or facility so as to endanger the safety or the environment, 
you must:
    (a) Submit a plan of corrective action to MMS within 30 days of the 
discovery of the adverse effect.
    (b) Take remedial action as described in your corrective action 
plan.
    (c) Submit to the MMS a report of the remedial action taken within 
30 days after completion.


Sec. Sec.  285.817-285.819  [Reserved]

Inspections and Assessments


Sec.  285.820  Will MMS conduct inspections?

    The MMS will inspect OCS facilities and any vessels engaged in 
activities authorized under this part. We conduct these inspections:
    (a) To verify that you are conducting activities in compliance with 
subsection 8(p) of the OCS Lands Act; the regulations in this part; the 
terms, conditions, and stipulations of your lease or grant; approved 
plans; and other applicable laws and regulations.
    (b) To determine whether proper safety equipment has been installed 
and is operating properly according to your Safety Management System, 
as required in Sec.  285.810.


Sec.  285.821  Will MMS conduct scheduled and unscheduled inspections?

    The MMS will conduct both scheduled and unscheduled inspections.


Sec.  285.822  What must I do when MMS conducts an inspection?

    (a) When MMS conducts an inspection, you must:
    (1) Provide access to all facilities on your lease (including your 
project easement) or grant; and
    (2) Make the following available for MMS to inspect:
    (i) The area covered under a lease, ROW grant, or RUE grant;
    (ii) All improvements, structures, and fixtures on these areas; and
    (iii) All records of design, construction, operation, maintenance, 
repairs, or investigations on or related to the area.
    (b) You must retain these records in paragraph (a)(2)(iii) of this 
section until MMS releases your financial assurance under Sec.  285.534 
and provide them to MMS upon request, within the time period specified 
by MMS.
    (c) You must demonstrate to the inspector how you are in compliance 
with your Safety Management System.


Sec.  285.823  Will MMS reimburse me for my expenses related to 
inspections?

    Upon request, MMS will reimburse you for food, quarters, and 
transportation that you provide for our representatives while they 
inspect your lease or grant facilities and associated activities. You 
must send us your reimbursement request within 90 days of the 
inspection.


Sec.  285.824  How must I conduct self-inspections?

    (a) You must develop a comprehensive annual self-inspection plan 
covering all of your facilities. You must keep this plan wherever you 
keep your records and make it available to MMS inspectors upon request. 
Your plan must specify:
    (1) The type, extent, and frequency of in-place inspections that 
you will conduct for both the above-water and the below-water 
structures of all facilities and pertinent components of the mooring 
systems for any floating facilities; and
    (2) How you are monitoring the corrosion protection for both the 
above-water and below-water structures.
    (b) You must submit a report annually to us no later than November 
1 that must include:
    (1) A list of facilities inspected in the preceding 12 months;
    (2) The type of inspection employed, (i.e., visual, magnetic 
particle, ultrasonic testing); and
    (3) A summary of the inspection indicating what repairs, if any, 
were needed and the overall structural condition of the facility.


Sec.  285.825  When must I assess my facilities?

    (a) You must perform an assessment of the structure, when needed, 
based on

[[Page 19867]]

the platform assessment initiators listed in sections 17.2.1-17.2.5 of 
API RP 2A-WSD, Recommended Practice for Planning, Designing and 
Constructing Fixed Offshore Platforms--Working Stress Design 
(incorporated by reference, as specified in Sec.  285.115).
    (b) You must initiate mitigation actions for structures that do not 
pass the assessment process of API RP 2A-WSD.
    (c) You must perform other assessments as required by MMS.


Sec. Sec.  285.826-285.829   [Reserved]

Incident Reporting and Investigation


Sec.  285.830   What are my incident reporting requirements?

    (a) You must report all incidents listed in Sec.  285.831 to MMS, 
according to the reporting requirements for these incidents in 
Sec. Sec.  285.832 and 285.833.
    (b) These reporting requirements apply to incidents that occur on 
the area covered by your lease or grant under this part and that are 
related to activities resulting from the exercise of your rights under 
your lease or grant under this part.
    (c) Nothing in this subpart relieves you from providing notices and 
reports of incidents that may be required by other regulatory agencies.
    (d) You must report all spills of oil or other liquid pollutants in 
accordance with 30 CFR 254.46.


Sec.  285.831   What incidents must I report, and when must I report 
them?

    (a) You must report the following incidents to us immediately via 
oral communication, and provide a written follow-up report (paper copy 
or electronically transmitted) within 15 business days after the 
incident:
    (1) Fatalities;
    (2) Incidents that require the evacuation of person(s) from the 
facility to shore or to another offshore facility;
    (3) Fires and explosions;
    (4) Collisions that result in property or equipment damage greater 
than $25,000 (Collision means the act of a moving vessel (including an 
aircraft) striking another vessel, or striking a stationary vessel or 
object. Property or equipment damage means the cost of labor and 
material to restore all affected items to their condition before the 
damage, including, but not limited to, the OCS facility, a vessel, a 
helicopter, or the equipment. It does not include the cost of salvage, 
cleaning, dry docking, or demurrage);
    (5) Incidents involving structural damage to an OCS facility that 
is severe enough so that activities on the facility cannot continue 
until repairs are made;
    (6) Incidents involving crane or personnel/material handling 
activities, if they result in a fatality, injury, structural damage, or 
significant environmental damage;
    (7) Incidents that damage or disable safety systems or equipment 
(including firefighting systems);
    (8) Other incidents resulting in property or equipment damage 
greater than $25,000; and
    (9) Any other incidents involving significant environmental damage, 
or harm.
    (b) You must provide a written report of the following incidents to 
us within 15 days after the incident:
    (1) Any injuries that result in the injured person not being able 
to return to work or to all of their normal duties the day after the 
injury occurred; and
    (2) All incidents that require personnel on the facility to muster 
for evacuation for reasons not related to weather or drills.


Sec.  285.832   How do I report incidents requiring immediate 
notification?

    For an incident requiring immediate notification under Sec.  
285.831(a), you must notify MMS verbally after aiding the injured and 
stabilizing the situation. Your verbal communication must provide the 
following information:
    (a) Date and time of occurrence;
    (b) Identification and contact information for the lessee, grant 
holder, or operator;
    (c) Contractor, and contractor representative's name and telephone 
number (if a contractor is involved in the incident or injury/
fatality);
    (d) Lease number, OCS area, and block;
    (e) Platform/facility name and number, or cable or pipeline segment 
number;
    (f) Type of incident or injury/fatality;
    (g) Activity at time of incident; and
    (h) Description of the incident, damage, or injury/fatality.


Sec.  285.833   What are the reporting requirements for incidents 
requiring written notification?

    (a) For any incident covered under Sec.  285.831, you must submit a 
written report within 15 days after the incident to MMS. The report 
must contain the following information:
    (1) Date and time of occurrence;
    (2) Identification and contact information for each lessee, grant 
holder, or operator;
    (3) Name and telephone number of the contractor and the 
contractor's representative, if a contractor is involved in the 
incident or injury;
    (4) Lease number, OCS area, and block;
    (5) Platform/facility name and number, or cable or pipeline segment 
number;
    (6) Type of incident or injury;
    (7) Activity at time of incident;
    (8) Description of incident, damage, or injury (including days away 
from work, restricted work, or job transfer), and any corrective action 
taken; and
    (9) Property or equipment damage estimate (in U.S. dollars).
    (b) You may submit a report or form prepared for another agency in 
lieu of the written report required by paragraph (a) of this section if 
the report or form contains all required information.
    (c) The MMS may require you to submit additional information about 
an incident on a case-by-case basis.

Subpart I--Decommissioning

Decommissioning Obligations and Requirements


Sec.  285.900   Who must meet the decommissioning obligations in this 
subpart?

    (a) Lessees are jointly and severally responsible for meeting 
decommissioning obligations for facilities on their leases, including 
all obstructions, as the obligations accrue and until each obligation 
is met.
    (b) Grant holders are jointly and severally liable for meeting 
decommissioning obligations for facilities on their grant, including 
all obstructions, as the obligations accrue and until each obligation 
is met.


Sec.  285.901   When do I accrue decommissioning obligations?

    You accrue decommissioning obligations when you are or become a 
lessee or grant holder, and you either install, construct, or acquire 
by an MMS-approved assignment a facility, cable, or pipeline, or you 
create an obstruction to other uses of the OCS.


Sec.  285.902   What are the general requirements for decommissioning 
for facilities authorized under my SAP, COP, or GAP?

    (a) Except as otherwise authorized by MMS under Sec.  285.909, 
within 2 years following termination of a lease or grant, you must:
    (1) Remove or decommission all facilities, projects, cables, 
pipelines, and obstructions;
    (2) Clear the seafloor of all obstructions created by activities on 
your lease, including your project easement, or grant, as required by 
the MMS.
    (b) Before decommissioning the facilities under your SAP, COP, or 
GAP, you must submit a decommissioning

[[Page 19868]]

application and receive approval from the MMS.
    (c) The approval of the decommissioning concept in the SAP, COP, or 
GAP is not an approval of a decommissioning application. However, you 
may submit your complete decommissioning application simultaneously 
with the SAP, COP, or GAP so that it may undergo appropriate technical 
and regulatory reviews at that time.
    (d) Following approval of your decommissioning application, you 
must submit a decommissioning notice under Sec.  285.908 to MMS at 
least 60 days before commencing decommissioning activities.
    (e) If you, your subcontractors, or any agent acting on your behalf 
discover any archaeological resource while conducting decommissioning 
activities, you must immediately halt bottom-disturbing activities 
within 1,000 feet of the discovery and report the discovery to us 
within 72 hours. We will inform you how to conduct investigations to 
determine if the resource is significant and how to protect it. You, 
your subcontractors, or any agent acting on your behalf must keep the 
location of the discovery confidential and must not take any action 
that may adversely affect the archaeological resource until we have 
made an evaluation and told you how to proceed.
    (f) Provide MMS with documentation of any coordination efforts you 
have made with the affected States, local, and tribal governments.


Sec.  285.903   What are the requirements for decommissioning FERC-
licensed hydrokinetic facilities?

    You must comply with the decommissioning requirements in your MMS-
issued lease. If you fail to comply with the decommissioning 
requirements of your lease then:
    (a) The MMS may call for the forfeiture of your bond or other 
financial assurance;
    (b) You remain liable for removal or disposal costs and responsible 
for accidents or damages that might result from such failure; and
    (c) The MMS may take enforcement action under Sec.  285.400 of this 
part.


Sec.  285.904   Can I request a departure from the decommissioning 
requirements?

    You may request a departure from the decommissioning requirements 
under Sec.  285.103.

Decommissioning Applications


Sec.  285.905   When must I submit my decommissioning application?

    You must submit your decommissioning application upon the earliest 
of the following dates:
    (a) 2 years before the expiration of your lease.
    (b) 90 days after completion of your commercial activities on a 
commercial lease.
    (c) 90 days after completion of your approved activities under a 
limited lease on a ROW grant or RUE grant.
    (d) 90 days after cancellation, relinquishment, or other 
termination of your lease or grant.


Sec.  285.906   What must my decommissioning application include?

    You must provide one paper copy and one electronic copy of the 
application. Include the following information in the application, as 
applicable.
    (a) Identification of the applicant including:
    (1) Lease operator, ROW grant holder, or RUE grant holder;
    (2) Address;
    (3) Contact person and telephone number; and
    (4) Shore base.
    (b) Identification and description of the facilities, cables, or 
pipelines you plan to remove or propose to leave in place, as provided 
in Sec.  285.909.
    (c) A proposed decommissioning schedule for your lease, ROW grant, 
or RUE grant, including the expiration or relinquishment date and 
proposed month and year of removal.
    (d) A description of the removal methods and procedures, including 
the types of equipment, vessels, and moorings (i.e., anchors, chains, 
lines, etc.) you will use.
    (e) A description of your site clearance activities.
    (f) Your plans for transportation and disposal (including as an 
artificial reef) or salvage of the removed facilities, cables, or 
pipelines and any required approvals.
    (g) A description of those resources, conditions, and activities 
that could be affected by or could affect your proposed decommissioning 
activities. The description must be as detailed as necessary to assist 
MMS in complying with the NEPA and other relevant Federal laws.
    (h) The results of any recent biological surveys conducted in the 
vicinity of the structure and recent observations of turtles or marine 
mammals at the structure site.
    (i) Mitigation measures you will use to protect archaeological and 
sensitive biological features during removal activities.
    (j) A description of measures you will take to prevent unauthorized 
discharge of pollutants, including marine trash and debris, into the 
offshore waters.
    (k) A statement of whether or not you will use divers to survey the 
area after removal to determine any effects on marine life.


Sec.  285.907   How will MMS process my decommissioning application?

    (a) Based upon your inclusion of all the information required by 
Sec.  285.906, MMS will compare your decommissioning application with 
the decommissioning general concept in your approved SAP, COP, or GAP 
to determine what technical and environmental reviews are needed.
    (b) You will likely have to revise your SAP, COP, or GAP, and MMS 
will begin the appropriate NEPA analysis and other regulatory reviews 
as required, if MMS determines that your decommissioning application 
would:
    (1) Result in a significant change in the impacts previously 
identified and evaluated in your SAP, COP, or GAP;
    (2) Require any additional Federal permits; or
    (3) Propose activities not previously identified and evaluated in 
your SAP, COP, or GAP.
    (c) During the review process, we may request additional 
information if we determine that the information provided is not 
sufficient to complete the review and approval process.
    (d) Upon completion of the technical and environmental reviews, we 
may approve, approve with conditions, or disapprove your 
decommissioning application.
    (e) If MMS disapproves your decommissioning application, you must 
resubmit your application to address the concerns identified by MMS.


Sec.  285.908   What must I include in my decommissioning notice?

    (a) The decommissioning notice is distinct from your 
decommissioning application and may only be submitted following 
approval of your decommissioning application, as described in 
Sec. Sec.  285.905 through 285.907. You must submit a decommissioning 
notice at least 60 days before you plan to begin decommissioning 
activities.
    (b) Your decommissioning notice must include:
    (1) A description of any changes to the approved removal methods 
and procedures in your approved decommissioning application, including 
changes to the types of vessels and equipment you will use; and

[[Page 19869]]

    (2) An updated decommissioning schedule.
    (c) We will review your decommissioning notice and may require you 
to resubmit a decommissioning application if MMS determines that your 
decommissioning activities would:
    (1) Result in a significant change in the impacts previously 
identified and evaluated;
    (2) Require any additional Federal permits; or
    (3) Propose activities not previously identified and evaluated.

Facility Removal


Sec.  285.909   When may MMS authorize facilities to remain in place 
following termination of a lease or grant?

    (a) In your decommissioning application, you may request that 
certain facilities authorized in your lease or grant remain in place 
for other activities authorized in this part, elsewhere in this 
subchapter, or by other applicable Federal laws.
    (b) The MMS may approve such requests on a case-by-case basis 
considering the following:
    (1) Potential impacts to the marine environment;
    (2) Competing uses of the OCS;
    (3) Impacts on marine safety and national defense;
    (4) Maintenance of adequate financial assurance; and
    (5) Other factors determined by the Director.
    (c) Except as provided in paragraph (d) of this section, if MMS 
authorizes facilities to remain in place, the former lessee or grantee 
under this part remains jointly and severally liable for 
decommissioning the facility unless satisfactory evidence is provided 
to MMS showing that another party has assumed that responsibility and 
has secured adequate financial assurances.
    (d) In your decommissioning application, you may request that 
certain facilities authorized in your lease or grant be converted to an 
artificial reef or otherwise toppled in place. The MMS will evaluate 
all such requests, as provided in Sec.  250.1730 of this subchapter.


Sec.  285.910   What must I do when I remove my facility?

    (a) You must remove all facilities to a depth of 15 feet below the 
mudline, unless otherwise authorized by MMS.
    (b) Within 60 days after you remove a facility, you must verify to 
MMS that you have cleared the site.


Sec.  285.911   [Reserved]

Decommissioning Report


Sec.  285.912   After I remove a facility, cable, or pipeline, what 
information must I submit?

    Within 60 days after you remove a facility, cable, or pipeline, you 
must submit a written report to MMS that includes the following:
    (a) A summary of the removal activities, including the date they 
were completed;
    (b) A description of any mitigation measures you took; and
    (c) If you used explosives, a statement signed by your authorized 
representative that certifies that the types and amount of explosives 
you used in removing the facility were consistent with those in the 
approved decommissioning application.

Compliance with an Approved Decommissioning Application


Sec.  285.913   What happens if I fail to comply with my approved 
decommissioning application?

    If you fail to comply with your approved decommissioning plan or 
application:
    (a) The MMS may call for the forfeiture of your bond or other 
financial assurance;
    (b) You remain liable for removal or disposal costs and responsible 
for accidents or damages that might result from such failure; and
    (c) The MMS may take enforcement action under Sec.  285.400.

Subpart J--Rights of Use and Easement for Energy- and Marine-
Related Activities Using Existing OCS Facilities

Regulated Activities


Sec.  285.1000   What activities does this subpart regulate?

    (a) This subpart provides the general provisions for authorizing 
and regulating activities that use (or propose to use) an existing OCS 
facility for energy- or marine-related purposes, that are not otherwise 
authorized under any other part of this subchapter or any other 
applicable Federal statute. Activities authorized under any other part 
of this subchapter or under any other Federal law that use (or propose 
to use) an existing OCS facility are not subject to this subpart.
    (b) The MMS will issue an Alternate Use RUE for activities 
authorized under this subpart.
    (c) At the discretion of the Director, an Alternate Use RUE may:
    (1) Permit alternate use activities to occur at an existing 
facility that is currently in use under an approved OCS lease; or
    (2) Limit alternate use activities at the existing facility until 
after previously authorized activities at the facility have ceased and 
the OCS lease terminates.


Sec. Sec.  285.1001--285.1003   [Reserved]

Requesting an Alternate Use RUE


Sec.  285.1004   What must I do before I request an Alternate Use RUE?

    If you are not the owner of the existing facility on the OCS and 
the lessee of the area in which the facility is located, you must 
contact the lessee and owner of the facility and reach a preliminary 
agreement as to the proposed activity for the use of the existing 
facility.


Sec.  285.1005  How do I request an Alternate Use RUE?

    To request an Alternate Use RUE, you must submit to MMS all of the 
following:
    (a) The name, address, e-mail address, and phone number of an 
authorized representative.
    (b) A summary of the proposed activities for the use of an existing 
OCS facility, including:
    (1) The type of activities that would involve the use of the 
existing OCS facility;
    (2) A description of the existing OCS facility, including a map 
providing its location on the lease block;
    (3) The names of the owner of the existing OCS facility, the 
operator, the lessee, and any owner of operating rights on the lease at 
which the facility is located;
    (4) A description of additional structures or equipment that will 
be required to be located on or in the vicinity of the existing OCS 
facility in connection with the proposed activities;
    (5) A statement indicating whether any of the proposed activities 
are intended to occur before existing activities on the OCS facility 
have ceased; and
    (6) A statement describing how existing activities at the OCS 
facility will be affected if proposed activities are to occur at the 
same time as existing activities at the OCS facility.
    (c) A statement affirming that the proposed activities sought to be 
approved under this subpart are not otherwise authorized by other 
provisions in this subchapter or any other Federal law.
    (d) Evidence that you meet the requirements of Sec.  285.106, as 
required by Sec.  285.107.
    (e) The signatures of the applicant, the owner of the existing OCS 
facility, and

[[Page 19870]]

the lessee of the area in which the existing facility is located.


Sec.  285.1006  How will MMS decide whether to issue an Alternate Use 
RUE?

    (a) We will consider requests for an Alternate Use RUE on a case-
by-case basis. In considering such requests, we will consult with 
relevant Federal agencies and evaluate whether the proposed activities 
involving the use of an existing OCS facility can be conducted in a 
manner that:
    (1) Ensures safety and minimizes adverse effects to the coastal and 
marine environments, including their physical, atmospheric, and 
biological components, to the extent practicable;
    (2) Does not inhibit or restrain orderly development of OCS mineral 
or energy resources; and
    (3) Avoids serious harm or damage to, or waste of, any natural 
resource (including OCS mineral deposits and oil, gas, and sulphur 
resources in areas leased or not leased), any life (including fish and 
other aquatic life), or property (including sites, structures, or 
objects of historical or archaeological significance);
    (4) Is otherwise consistent with subsection 8(p) of the OCS Lands 
Act; and
    (5) MMS can effectively regulate.
    (b) Based on the evaluation that we perform under paragraph (a) of 
this section, the MMS may authorize or reject, or authorize with 
modifications or stipulations, the proposed activity.


Sec.  285.1007  What process will MMS use for competitively offering an 
Alternate Use RUE?

    (a) An Alternate Use RUE must be issued on a competitive basis 
unless MMS determines, after public notice of the proposed Alternate 
Use RUE, that there is no competitive interest.
    (b) We will issue a public notice in the Federal Register to 
determine if there is competitive interest in using the proposed 
facility for alternate use activities. The MMS will specify a time 
period for members of the public to express competitive interest.
    (c) If we receive indications of competitive interest within the 
published timeframe, we will proceed with a competitive offering. As 
part of such competitive offering, each competing applicant must submit 
a description of the types of activities proposed for the existing 
facility, as well as satisfactory evidence that the competing applicant 
qualifies to hold a lease or grant on the OCS, as required in 
Sec. Sec.  285.106 and 285.107, by a date we specify. We may request 
additional information from competing applicants, as necessary, to 
adequately evaluate the competing proposals.
    (d) We will evaluate all competing proposals to determine whether:
    (1) The proposed activities are compatible with existing activities 
at the facility; and
    (2) We have the expertise and resources available to regulate the 
activities effectively.
    (e) We will evaluate all proposals under the requirements of NEPA, 
CZMA, and other applicable laws.
    (f) Following our evaluation, we will select one or more acceptable 
proposals for activities involving the alternate use of an existing OCS 
facility, notify the competing applicants, and submit each acceptable 
proposal to the lessee and owner of the existing OCS facility. If the 
lessee and owner of the facility agree to accept a proposal, we will 
proceed to issue an Alternate Use RUE. If the lessee and owner of the 
facility are unwilling to accept any of the proposals that we deem 
acceptable, we will not issue an Alternate Use RUE.


Sec. Sec.  285.1008--285.1009  [Reserved]

Alternate Use RUE Administration


Sec.  285.1010  How long may I conduct activities under an Alternate 
Use RUE?

    (a) We will establish on a case-by-case basis, and set forth in the 
Alternate Use RUE, the length of time for which you are authorized to 
conduct activities approved in your Alternate Use RUE instrument.
    (b) In establishing this term, MMS will consider the size and scale 
of the proposed alternate use activities, the type of alternate use 
activities, and any other relevant considerations.
    (c) The MMS may authorize renewal of Alternate Use RUEs at its 
discretion.


Sec.  285.1011  What payments are required for an Alternate Use RUE?

    We will establish rental or other payments for an Alternate Use RUE 
on a case-by-case basis, as set forth in the Alternate Use RUE grant, 
depending on our assessment of the following factors:
    (a) The effect on the original OCS Lands Act approved activity;
    (b) The size and scale of the proposed alternate use activities;
    (c) The income, if any, expected to be generated from the proposed 
alternate use activities; and
    (d) The type of alternate use activities.


Sec.  285.1012  What financial assurance is required for an Alternate 
Use RUE?

    (a) The holder of an Alternate Use RUE will be required to secure 
financial assurances in an amount determined by MMS that is sufficient 
to cover all obligations under the Alternate Use RUE, including 
decommissioning obligations, and must retain such financial assurance 
amounts until all obligations have been fulfilled, as determined by 
MMS.
    (b) We may revise financial assurance amounts, as necessary, to 
ensure that there is sufficient financial assurance to secure all 
obligations under the Alternate Use RUE.
    (c) We may reduce the amount of the financial assurance that you 
must retain if it is not necessary to cover existing obligations under 
the Alternate Use RUE.


Sec.  285.1013  Is an Alternate Use RUE assignable?

    (a) The MMS may authorize assignment of an Alternate Use RUE.
    (b) To request assignment of an Alternate Use RUE, you must submit 
a written request for assignment that includes the following 
information:
    (1) The MMS-assigned Alternate Use RUE number;
    (2) The names of both the assignor and the assignee, if applicable;
    (3) The names and telephone numbers of the contacts for both the 
assignor and the assignee;
    (4) The names, titles, and signatures of the authorizing officials 
for both the assignor and the assignee;
    (5) A statement affirming that the owner of the existing OCS 
facility and lessee of the lease in which the facility is located 
approve of the proposed assignment and assignee;
    (6) A statement that the assignee agrees to comply with and to be 
bound by the terms and conditions of the Alternate Use RUE;
    (7) Evidence required by Sec.  285.107 that the assignee satisfies 
the requirements of Sec.  285.106; and
    (8) A statement on how the assignee will comply with the financial 
assurance requirements set forth in the Alternate Use RUE.
    (c) The assignment takes effect on the date we approve your 
request.
    (d) The assignor is liable for all obligations that accrue under an 
Alternate Use RUE before the date we approve your assignment request. 
An assignment approval by MMS does not relieve the assignor of 
liability for accrued obligations that the assignee, or a subsequent 
assignee, fail to perform.
    (e) The assignee and each subsequent assignee are liable for all 
obligations that accrue under an Alternate Use RUE after the date we 
approve the assignment request.

[[Page 19871]]

Sec.  285.1014  When will MMS suspend an Alternate Use RUE?

    (a) The MMS may suspend an Alternate Use RUE if:
    (1) Necessary to comply with judicial decrees;
    (2) Continued activities pursuant to the Alternate Use RUE pose an 
imminent threat of serious or irreparable harm or damage to natural 
resources; life (including human and wildlife); property; the marine, 
coastal, or human environment; or sites, structures, or objects of 
historical or archaeological significance;
    (3) The suspension is necessary for reasons of national security or 
defense; or
    (4) We have suspended or temporarily prohibited operation of the 
existing OCS facility that is subject to the Alternate Use RUE, and 
have determined that continued activities under the Alternate Use RUE 
are unsafe or cause undue interference with the operation of the 
original OCS Lands Act approved activity.
    (b) A suspension will extend the term of your Alternate Use RUE 
grant for the period of the suspension.


Sec.  285.1015  How do I relinquish an Alternate Use RUE?

    (a) You may voluntarily surrender an Alternate Use RUE by 
submitting a written request to us that includes the following:
    (1) The name, address, e-mail address, and phone number of an 
authorized representative;
    (2) The reason you are requesting relinquishment of the Alternate 
Use RUE;
    (3) The MMS-assigned Alternate Use RUE number;
    (4) The name of the associated OCS facility, its owner, and the 
lessee for the lease in which the OCS facility is located;
    (5) The name, title, and signature of your authorizing official 
(which must match exactly the name, title, and signature in the MMS 
qualification records); and
    (6) A statement that you will adhere to the decommissioning 
requirements in the Alternate Use RUE.
    (b) We will not approve your relinquishment request until you have 
paid all outstanding rentals (or other payments) and fines.
    (c) The relinquishment takes effect on the date we approve your 
request.


Sec.  285.1016  When will an Alternate Use RUE be cancelled?

    The Secretary may cancel an Alternate Use RUE if it is determined, 
after notice and opportunity to be heard:
    (a) You no longer qualify to hold an Alternate Use RUE;
    (b) You failed to provide any additional financial assurance 
required by MMS, replace or provide additional coverage for a de-valued 
bond, or replace a lapsed or forfeited bond within the prescribed time 
period;
    (c) Continued activity under the Alternate Use RUE is likely to 
cause serious harm or damage to natural resources; life (including 
human and wildlife); property; the marine, coastal, or human 
environment; or sites, structures, or objects of historical or 
archaeological significance;
    (d) Continued activity under the Alternate Use RUE is determined to 
be adversely impacting the original OCS Lands Act approved activities 
on the existing OCS facility;
    (e) You failed to comply with any of the terms and conditions of 
your approved Alternate Use RUE or your approved plan; or
    (f) You otherwise failed to comply with applicable laws or 
regulations.


Sec.  285.1017  [Reserved]

Decommissioning an Alternate Use RUE


Sec.  285.1018  Who is responsible for decommissioning an OCS facility 
subject to an Alternate Use RUE?

    (a) The holder of an Alternate Use RUE is responsible for all 
decommissioning obligations that accrue following the issuance of the 
Alternate Use RUE and which pertain to the Alternate Use RUE.
    (b) The lessee under the lease originally issued under part 250 of 
this chapter will remain responsible for decommissioning obligations 
that accrued before issuance of the Alternate Use RUE, as well as for 
decommissioning obligations that accrue following issuance of the 
Alternate Use RUE to the extent associated with continued activities 
authorized under other parts of this subchapter.


Sec.  285.1019  What are the decommissioning requirements for an 
Alternate Use RUE?

    (a) Decommissioning requirements will be determined by MMS on a 
case-by-case basis, and will be included in the terms of each Alternate 
Use RUE.
    (b) Decommissioning activities must be completed within 1 year of 
termination of the Alternate Use RUE.
    (c) If you fail to satisfy all decommissioning requirements within 
the prescribed time period, we will call for the forfeiture of your 
bond or other financial guarantee, and you will remain liable for all 
accidents or damages that might result from such failure.

PART 290--APPEAL PROCEDURES

0
7. Revise the authority citation for part 290 to read as follows:

    Authority:  5 U.S.C. 301 et seq.; 43 U.S.C. 1331

0
8. Revise the last sentence in Sec.  290.2 to read as follows:


Sec.  290.2  Who may appeal?

    * * * A request for reconsideration of an MMS decision concerning a 
lease bid, authorized in 30 CFR 256.47(e)(3), 281.21(a)(1), or 
285.118(c), is not subject to the procedures found in this part.
[FR Doc. E9-9462 Filed 4-22-09; 1:15 pm]
BILLING CODE 4310-MR-P


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