NACO

National Association of Charterboat Operators

Sale Notice for Wind Power Commercial Leasing

This document is the Final Sale Notice (FSN) for the sale of two commercial wind energy leases on the Outer Continental Shelf (OCS) offshore Rhode Island and Massachusetts, pursuant to BOEM's regulations at 30 CFR 585.216. BOEM is offering Lease OCS-A 0486 (North Lease Area) and Lease OCS-A 0487 (South Lease Area) for sale simultaneously using a multiple factor auction format. The two lease areas together comprise the Rhode Island and Massachusetts Wind Energy Area (WEA) announced on February 24, 2012, (see ``Areas Offered for Leasing'' below for a description of the WEA and lease areas). The two lease areas are identical to those announced in the Proposed Sale Notice (PSN) for Commercial Leasing for Wind Power on the Outer Continental Shelf (OCS) Offshore Rhode Island and Massachusetts, which was published on December 3, 2012, in the Federal Register with a 60-day public comment period (77 FR 71612). This FSN contains information pertaining to the areas available for leasing, lease provisions and conditions, auction details, the lease form, criteria for evaluating competing bids, award procedures, appeal procedures, and lease execution. The issuance of the leases resulting from this lease sale would not constitute an approval of project-specific plans to develop offshore wind energy. Such plans, expected to be submitted by successful lessees, will be subject to subsequent environmental and public review prior to a decision to proceed with development.

 

DATES: BOEM will hold a mock auction for the eligible bidders on July 24, 2013. The nonmonetary phase of the auction will begin on July 29, 2013. The monetary phase of the auction will be held online and will begin at 10:30 a.m. on July 31, 2013. Additional details are provided in the section entitled, ``Deadlines and Milestones for Bidders.''

 

FOR FURTHER INFORMATION CONTACT: Jessica Bradley, BOEM Office of Renewable Energy Programs, 381 Elden Street, HM 1328, Herndon, Virginia 

20170, (703) 787-1320 or This email address is being protected from spambots. You need JavaScript enabled to view it.

      Background: The two lease areas offered in this FSN are the same 

areas as BOEM announced in the PSN on December 3, 2012 (77 FR 71612). 

BOEM received 82 comments in response to the PSN, which are available 

on BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. BOEM has also posted a document 

containing responses to comments submitted during the PSN comment 

period and listing other changes that BOEM has implemented for this 

lease sale since publication of the PSN.

    On July 3, 2012, BOEM published a Notice of Availability (NOA) (77 

FR 39508) of an Environmental Assessment (EA) for commercial wind lease 

issuance and site assessment activities on the Atlantic OCS Offshore 

Rhode Island and Massachusetts with a 30-day public comment period. 

BOEM received 32 comments, which are available at http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. BOEM has 

also concluded consultations under the Endangered Species Act (ESA), 

the Magnuson-Stevens Fishery Conservation and Management Act (MSFCMA), 

Section 106 of the National Historic Preservation Act (NHPA), and the 

Coastal Zone Management Act (CZMA).

    Based on the public comments in response to the EA, the conclusion 

of required consultations, and public outreach and information 

meetings, BOEM decided to make certain revisions to the EA originally 

published in July 2012. Concurrent with this notice, BOEM is publishing 

a NOA for the revised EA and Finding of No Significant Impact (FONSI). 

The Commercial Wind Lease Issuance and Site Assessment Activities on 

the Atlantic Outer Continental Shelf (OCS) Offshore Rhode Island and 

Massachusetts Revised Environmental Assessment (EA) can be found at 

http://www.boem.gov/Renewable-Energy-Program/Smart-from-the-Start/Index.aspx.

    The two lease areas offered in Atlantic Wind Lease Sale 2 (ATLW2) 

comprise the Rhode Island and Massachusetts WEA described as the 

proposed action and preferred alternative in the EA. Additional 

environmental reviews will be conducted upon receipt of the lessees' 

proposed project-specific plans, such as a Site Assessment Plan (SAP) 

or Construction and Operations Plan (COP).

    List of Eligible Bidders: BOEM has determined that the following 

companies are legally, technically and financially qualified pursuant 

to 30 CFR 585.106 and 107, and are therefore eligible to participate in 

this lease sale as bidders.

 

------------------------------------------------------------------------

                                                                Company

                         Company name                             No.

------------------------------------------------------------------------

Deepwater Wind New England, LLC..............................      15012

EDF Renewable Development, Inc...............................      15027

Energy Management, Inc.......................................      15015

Fishermen's Energy, LLC......................................      15005

IBERDROLA RENEWABLES, Inc....................................      15019

Neptune Wind LLC.............................................      15011

Sea Breeze Energy LLC........................................      15044

US Mainstream Renewable Power (Offshore) Inc.................      15029

US Wind Inc..................................................      15023

------------------------------------------------------------------------

 

    Deadlines and Milestones for Bidders: This section describes the 

major deadlines and milestones in the auction process from publication 

of this FSN to execution of leases pursuant to this sale.

     Bidders Financial Form (BFF): Each eligible bidder must 

submit a BFF to BOEM by June 12, 2013. Please note that the BFF has 

been updated since publication of the PSN. The updated BFF is available 

at http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. Once this information has been processed by BOEM, bidders 

may log into pay.gov and leave bid deposits.

     Bid Deposits: Each bidder must submit an adequate bid 

deposit by July 17, 2013.

     Non-Monetary Package: Each bidder must submit a non-

monetary package, if it is applying for a credit, by July 17, 2013.

     Mock Auction: BOEM will hold a Mock Auction on July 24, 

2013. The Mock Auction is not an ``in-person'' event. BOEM will contact 

each eligible bidder and provide instructions for participation. Only 

bidders eligible to participate in this auction will be permitted to 

participate in the Mock Auction.

     Panel Convenes to Evaluate Non-Monetary Packages: On July 

29, 2013, the panel described in the ``Auction

 

[[Page 33899]]

 

Procedures'' section will convene to consider non-monetary packages. 

The panel will send determinations of eligibility to BOEM, who will 

inform each bidder by email of the panel's determination with respect 

to them.

     Monetary Auction: On July 31, 2013, BOEM, through its 

contractor, will hold the monetary stage of the auction. The auction 

will start at 10:30 a.m. The auction will proceed electronically 

according to a schedule to be distributed by the BOEM Auction Manager 

at the time of the auction. BOEM anticipates that the auction will 

continue on consecutive business days, as necessary, until the auction 

ends according to the procedures described in the Auction Format 

section of this notice.

     Announce Provisional Winners: BOEM will announce the 

provisional winners of the lease sale after the auction ends.

     Reconvene the Panel: The panel will reconvene to verify 

auction results.

     Department of Justice (DOJ) Review: BOEM will afford the 

Department of Justice (DOJ) 30 days to conduct an antitrust review of 

the auction, pursuant to 43 U.S.C. 1337(c), which reads, in relevant 

part:

    Antitrust review of lease sales. Following each notice of a 

proposed lease sale and before the acceptance of bids and the issuance 

of leases based on such bids, the Secretary [of the Interior] shall 

allow the Attorney General, in consultation with the Federal Trade 

Commission, thirty days to review the results of such lease sale, 

except that the Attorney General, after consultation with the Federal 

Trade Commission, may agree to a shorter review period.

     Delivery of Leases: BOEM will send three lease copies to 

each winner, with instructions on how to accept and execute the leases. 

The first 6-months of the first year's rent payment is due 45 days 

after the winner receives the lease for execution.

     Return the Leases: The auction winners will have ten days 

from receiving the lease copies in which to post financial assurance, 

pay any outstanding balance of their bonus bids, and sign and return 

the three copies.

     Refund Non-Winners: BOEM will return the bid deposits of 

any bidders that did not win leases in the lease sale with a written 

explanation of why the bidder did not win.

     Execution of Leases: Once BOEM has received the signed 

lease copies and verified that all required materials have been 

received, BOEM will make a final determination regarding its execution 

of the leases, and execute if appropriate.

    Areas Offered For Leasing: The North and South Lease Areas offshore 

Rhode Island and Massachusetts comprise 13 whole OCS blocks and 26 sub-

blocks encompassing 164,750 acres. The North Lease Area consists of 

97,498 acres, and the South Lease Area consists of 67,252 acres. If 

there are adequate bids, two leases will be issued pursuant to this 

lease sale. A description of the lease areas and lease activities can 

be found in Addendum ``A'' of each lease, which BOEM has made available 

with this notice on its Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.

    BOEM commissioned the Department of Energy's National Renewable 

Energy Laboratory (NREL) to evaluate BOEM's delineation of the lease 

areas that was published in the PSN. The final technical evaluation 

report is available on BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. One 

conclusion of the report is that the North and South Lease Areas have 

significantly dissimilar attributes and that ``together these differing 

attributes tend to indicate that the North Lease area is a more 

competitive and cost effective area for near term commercial 

development.'' Still, the report concludes, ``the current RI/MA WEA 

delineation is logical in terms of providing two distinct developable 

leasing areas . . .''

    Ascending bidding over the course of the auction will ensure that 

the relative values of the lease areas will determine the amount 

bidders will pay. BOEM has determined that the differences highlighted 

in the NREL report justify adjusting the minimum bids for the two lease 

areas. Accordingly, the minimum bid for the South Lease Area will be $1 

per acre, or $67,252. The minimum bid for the North Lease Area will be 

$2 per acre, or $194,996.

    Map of the Area Offered for Leasing: A map of the North and South 

Lease Areas and a table of the boundary coordinates in X, Y (eastings, 

northings) UTM Zone 18, NAD83 Datum and geographic X, Y (longitude, 

latitude), NAD83 Datum can be found at the following URL: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.

    A large scale map of these areas, showing boundaries of the area 

with numbered blocks, is available from BOEM at the following address: 

Bureau of Ocean Energy Management, Office of Renewable Energy Programs, 

381 Elden Street, HM 1328, Herndon, Virginia 20170, Phone: (703) 787-

1320, Fax: (703) 787-1708.

    Withdrawal of Blocks: BOEM reserves the right to withdraw areas 

from this lease sale prior to its execution of a lease.

    Lease Terms and Conditions: BOEM has included specific terms, 

conditions, and stipulations for OCS commercial wind leases in the 

Rhode Island and Massachusetts WEA within Addendum ``C'' of each lease. 

BOEM reserves the right to apply additional terms and conditions to 

activities conducted on the lease incident to any future approval or 

approval with modifications of a SAP and/or COP. Each lease, including 

Addendum ``C'', is available on BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. Each lease consists of an instrument with 18 sections and 

the following six attachments:

    Addendum ``A'' (Description of Leased Area and Lease Activities);

    Addendum ``B'' (Lease Term and Financial Schedule);

    Addendum ``C'' (Lease Specific Terms, Conditions, and 

Stipulations);

    Addendum ``D'' (Project Easement)

    Addendum ``E'' (Rent Schedule); and

    Appendix A to Addendum C (Incident Report: Protected Species Injury 

or Mortality).

    Addenda ``A'', ``B'', and ``C'' provide detailed descriptions of 

lease terms and conditions.

    Addenda ``D'' and ``E'' will be completed at the time of COP 

approval.

    Plans: Pursuant to 30 CFR 585.601, the leaseholder must submit a 

SAP within 6 months of lease issuance. If the leaseholder intends to 

continue its commercial lease with an operations term, the leaseholder 

must submit a COP at least 6 months before the end of the site 

assessment term.

    Pursuant to 30 CFR 585.629, a leaseholder may include in its COP a 

request to develop its commercial lease in phases. If a leaseholder 

requests and BOEM approves phased development, this approval will not 

affect the length of the preliminary, site assessment, or commercial 

terms offered under the lease. The COP must describe in sufficient 

detail the activities proposed for all phases of commercial 

development, including a schedule detailing the proposed timelines for 

phased development. Further, the COP must include the results of all 

site characterization surveys, as described in 30 CFR 585.626(a), 

necessary to support each phase of commercial development. The 

requirements of the SAP remain the same as they would under a non-

phased development scenario, and must meet the requirements set forth 

in the regulatory provisions in 30 CFR 585.605-585.613 for the full 

commercial lease area.

    Financial Terms and Conditions: This section provides an overview 

of the basic annual payments required of the Lessee, which will be 

fully described in each lease.

    Rent: The first year's rent payment of $3 per acre for the entire 

lease area will be separated into two 6-month payments. The first 6-

month payment is due within 45 calendar days of the date the Lessee 

receives the lease for execution. The second 6-month payment is due 6 

months after the Effective Date of the lease. Thereafter, annual rent 

payments are due on the anniversary of the Effective Date of the lease, 

i.e., the Lease Anniversary. Once the first commercial operations under 

the lease begin, rent will be charged on the remaining part of the 

lease not authorized for Commercial Operations, i.e., not generating 

electricity. However, instead of geographically dividing the lease area 

into acreage that is ``generating'' and acreage that is ``non-

generating,'' the fraction of the lease accruing rent is based on the 

fraction of the total nameplate capacity of the project that is not yet 

in operation. The fraction is the ratio of the actual nameplate 

capacity (as defined below) not yet authorized for commercial 

operations at the time payment is due divided by the maximum nameplate 

capacity authorized in the Lessee's most recent approved COP in any 

year of commercial operations on the lease. This fraction is then 

multiplied by the amount of rent that would be due for the Lessee's 

entire leased area at the rental rate of $3 per acre to obtain the 

annual rent due for a given year.

    For example, for a lease the size of 164,750 acres (the size of the 

entire WEA), the amount of rent payment will be $494,250 per year if 

the entire leased area is not authorized for commercial operations. If 

the Lessee has 500 MW authorized under commercial operations and its 

most recent approved COP specifies a maximum project size of 1000 MW on 

the entire leased area in any year of commercial operations, the rent 

payment will be $247,125.

    The Lessee also must pay rent for any project easement associated 

with the lease commencing on the date that BOEM approves the COP (or 

modification) that describes the project easement. Annual rent for a 

project easement, 200-feet wide and centered on the transmission cable, 

is $70.00 per statute mile. For any additional acreage required, the 

Lessee must also pay the greater of $5.00 per acre per year or $450.00 

per year.

    Operating Fee: The annual operating fee reflects a 2% operating fee 

rate applied to a proxy for the wholesale market value of electricity 

production. The initial payment is prorated to reflect the period 

between the start of commercial operations and the Lease Anniversary, 

and is due within 45 days of the start of commercial operations; 

thereafter, subsequent annual operating fee payments are due on or 

before each Lease Anniversary. The annual operating fee payment is 

calculated by multiplying the operating fee rate by the imputed 

wholesale market value of the projected annual electric power 

production. For the purposes of this calculation, the imputed market 

value is the product of the project's nameplate capacity, the total 

number of hours in the year (8,760), a capacity utilization factor, and 

the annual average price of electricity derived from a historical 

regional wholesale power price index.

    Operating Fee Rate: The operating fee rate is set at 0.02 (i.e., 

2%) during the entire life of commercial operations.

    Nameplate Capacity: Nameplate capacity is the maximum rated 

electric output, expressed in megawatts (MW), that the turbines of the 

wind farm facility under commercial operations can produce at their 

rated wind speed as designated by the turbine's manufacturer. The 

nameplate capacity at the start of each year of commercial operations 

on the lease will be specified in the COP. For example, if a Lessee has 

20 turbines under commercial operations rated by the design 

manufacturer at 5 MW of output each, the nameplate capacity of the wind 

farm facility at the rated wind speed of the turbines would be 100 MW.

    Capacity Factor: Capacity factor represents the share of 

anticipated generation of the wind farm facility that is delivered to 

the interconnection grid (i.e., where the Lessee's facility 

interconnects with the electric grid) relative to the wind farm 

facility's generation at continuous full power operation at nameplate 

capacity, expressed as a decimal between zero and one. The capacity 

factor for the year in which the Commercial Operation Date occurs and 

for the first six full years of commercial operations on the lease is 

set to 0.4 (i.e., 40%) to allow for one year of installation and 

testing followed by five years at full availability. At the end of the 

sixth year, the capacity factor will be adjusted to reflect the 

performance over the previous five years based upon the actual metered 

electricity generation at the delivery point to the electrical grid. 

Similar adjustments to the capacity factor will be made once every five 

years thereafter. The maximum change in the capacity factor from one 

period to the next will be limited to plus or minus 10 percent of the 

previous period's value.

    Wholesale Power Price Index: The wholesale power price, expressed 

in dollars per MW hour, is determined at the time each annual operating 

fee payment is due, based on the weighted average of the inflation-

adjusted peak and off-peak spot price indices for the Northeast--Mass 

Hub power market for the most recent year of data available as reported 

by the Federal Energy Regulatory Commission (FERC) as part of its 

annual State of the Markets Report with specific reference to the 

summary entitled, ``Electric Market Overview: Regional Spot Prices.'' 

The wholesale power price is adjusted for inflation from the year 

associated with the published spot price indices to the year in which 

the operating fee is to be due based on the Lease Anniversary using 

annual implicit price deflators as reported by the U.S. Department of 

Commerce Bureau of Economic Analysis (BEA).

    Financial Assurance: Within ten days after receiving the lease 

copies, the provisional winner must provide an initial lease-specific 

bond or other approved means of meeting the Lessor's initial financial 

assurance requirements in the amount of $100,000. BOEM will base the 

amount of all SAP, COP, and decommissioning financial assurance 

requirements on estimates of cost to meet all accrued lease 

obligations. The amount of supplemental and decommissioning financial 

assurance requirements will be determined on a case-by-case basis.

    The financial terms can be found in Addendum ``B'' of the proposed 

lease, which BOEM has made available with this notice on its Web site 

at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.

    Bid Deposit and Minimum Bid: A bid deposit is an advance cash 

deposit submitted to BOEM in order to participate in the auction. No 

later than July 17, 2013, each bidder must have submitted a bid deposit 

of $450,000 per unit of desired initial eligibility. Each lease is 

worth one unit of bid eligibility in the auction. The required bid 

deposit for any participant intending to bid on both leases in the 

first round of the auction will be $900,000. Any participant intending 

to bid on only one of the leases during the auction must submit a bid 

deposit of $450,000. Any bidder that fails to submit the bid deposit by 

the deadline described herein may be prevented by BOEM from 

participating in the auction. Bid deposits will be accepted online via 

pay.gov.

 

[[Page 33901]]

 

    Approximately 97,498 acres are offered for sale as Lease OCS-A 0486 

(North Lease Area), and approximately 67,252 acres are offered as Lease 

OCS-A 0487 (South Lease Area) in this auction. The minimum bid is $1 

per acre for the South Lease Area and $2 per acre for the North Lease 

Area. Therefore, the minimum acceptable bid, i.e., the opening asking 

price for the South Lease Area, will be $67,252, and for the North 

Lease Area, will be $194,996.

    Each bidder must complete the Bidder's Financial Form that BOEM has 

made available with this notice on its Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. This form must be submitted by June 12, 2013, to BOEM, 

pursuant to the instructions posted with the form. Please note that the 

BFF has been updated since publication of the PSN. This form requests 

that each bidder designate an email address, which the bidder should 

use to create an account in pay.gov. After establishing the pay.gov 

account, bidders may use the Bid Deposit Form on the pay.gov Web site 

to leave a deposit.

    Following the auction, bid deposits will be applied against any 

bonus bids or other obligations owed to BOEM. If the bid deposit 

exceeds the bidder's total financial obligation, the balance of the bid 

deposit will be refunded to the bidder. BOEM will refund the bid 

deposit to unsuccessful bidders.

 

Auction Procedures

 

Summary

 

    For the sale of Lease OCS-A 0486 (``North'') and Lease OCS-A0487 

(``South''), BOEM will use a multiple-factor auction format, with a 

multiple-factor bidding system. Under this system, BOEM may consider a 

combination of monetary and nonmonetary factors, or ``variables,'' in 

determining the outcome of the auction. BOEM has appointed a panel of 

three BOEM employees for the purposes of reviewing the non-monetary 

packages and verifying the results of the lease sale. BOEM reserves the 

right to change the composition of this panel prior to the date of the 

lease sale. The panel will meet to consider non-monetary packages on 

July 29, 2013. The panel will determine whether any bidder has earned a 

non-monetary credit to be used during the auction, and, if one or more 

bidders have earned such a credit, the percentage the credit will be 

worth. The monetary auction will take place on July 31, 2013. The 

auction will balance consideration of two variables--(1) a cash bid, 

and (2) a non-monetary credit, i.e., if a bidder holds a Power Purchase 

Agreement (PPA), or a Joint Development Agreement (JDA). In sum, these 

two variables comprise the ``As-Bid'' auction price, as reflected 

either in a bidder meeting BOEM's asking price or the bidder offering 

its own Intra-Round Bid price subject to certain conditions, as 

described more fully below. A multiple-factor auction, wherein both 

monetary and non-monetary bid variables are considered, is provided for 

under BOEM's regulations at 30 CFR 585.220(a)(4) and 585.221(a)(6).

 

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

 

    Under a multiple-factor bidding format, as set forth at 30 CFR 

585.220(a)(4), BOEM may consider many factors as part of a bid. The 

regulation states that one bid proposal per bidder will be accepted, 

but does not further specify the procedures to be followed in the 

multiple-factor format. This multiple-factor format is intended to 

allow BOEM flexibility in administering the auction and in balancing 

the variables presented. The regulation leaves to BOEM the 

determination of how to administer the multiple-factor auction format 

in order to ensure receipt of a fair return under the Act, 43 U.S.C. 

1337(p)(2)(A). BOEM has chosen to do this through an auction format 

that considers a non-monetary factor along with ascending bidding over 

multiple rounds, sharing certain useful information with bidders at the 

end of each auction round, such as the number of live bids associated 

with each Lease Area (LA), and ensuring that a bidder's live bid 

submitted in the final round of the auction will win the LAs included 

in that bid. This auction format enhances competition and reduces 

bidder uncertainty more effectively than other auction types that BOEM 

considered.

    BOEM's regulations at 30 CFR 585.220(a)(4) provides for a multi-

round auction in which each bidder may submit only one proposal per LA 

or for a set of LAs in each round of the auction. This formulation 

presents an administratively efficient auction process. It also takes 

advantage of the flexibility built into the regulations by enabling 

BOEM to benefit from both the consideration of more than one bidding 

factor and the price discovery involved in successive rounds of 

bidding.

    The auction will be conducted in a series of rounds. At the start 

of each round, BOEM will state an asking price for the North LA and an 

asking price for the South LA. The asking price for a bid on both LAs 

is the sum of the asking prices for the North LA and the South LA. Each 

bidder will indicate whether it is willing to meet the asking price for 

one or both LAs. A bid submitted at the full asking price for one or 

both LAs in a particular round is referred to as a ``live bid.'' A 

bidder must submit a live bid for at least one of the LAs in each round 

to participate in the next round of the auction. As long as there is at 

least one LA that is included in two or more live bids, the auction 

continues, and the next round is held.

    A bidder's As-Bid price must meet the asking price in order for it 

to be considered a live bid. A bidder may meet the asking price by 

submitting a monetary bid equal to the asking price, or, if it has 

earned a credit, by submitting a multiple-factor bid--that is, a live 

bid that consists of a monetary element and a non-monetary element, the 

sum of which equals the asking price. In particular, the multiple-

factor bid would consist of the sum of a cash portion and any credit 

portion which the bidder has earned.

    An uncontested bid is a live bid that does not overlap with other 

live bids in that round. For example, a bid for both the North and the 

South LAs is considered contested if any LA included in that bid is 

included in another bid--a bid cannot be ``partially uncontested.'' An 

uncontested bid represents the only apparent interest in that bid's 

LA(s) at the asking price for that round. If a bidder submits an 

uncontested bid consisting of one LA, and the auction continues for 

another round, BOEM automatically carries that same live bid forward as 

a live bid into the next round, and BOEM's asking price for the LA 

contained in the uncontested bid would remain unchanged from the 

previous round. In other words, BOEM assumes that the bidder is willing 

to pay that same price for the LA in that bid in the next round as it 

revealed it was willing to pay for it in the current round. If the 

price on the LA in that bid rises later in the auction because another 

bidder places a live bid on that LA, BOEM will stop automatically 

carrying forward the previously uncontested bid. Once the asking price 

goes up, the bidder that placed the previously carried-forward bid is 

free to bid on either lease area at the new asking prices.

    Following each round in which either LA is contained in more than 

one live bid, BOEM will raise the asking price for that LA by an 

increment determined by BOEM. The auction concludes when neither the 

North nor the South LA is included in more than one live bid. The 

series of rounds and the rising asking prices set by BOEM will 

facilitate consideration of the first variable--the cash portion of the bid.

    The second variable--a credit of up to 25% of a monetary bid for 

holding a PPA or JDA--will be applied throughout the auction rounds as 

a form of imputed payment against the asking price for the highest 

priced LA in a bidder's multiple-factor bid. This credit serves to 

supplement the amount of a cash bid proposal made by a particular 

bidder in each round. A bidder holding a qualified PPA will receive a 

credit of up to 25%. A bidder holding a qualified JDA will receive a 

credit of 20%. The total percentage credit for each bidder is limited 

to 25% on a single LA in the auction to address concerns about creating 

too large an advantage to certain bidders in the auction, as discussed 

in BOEM's Auction Format Information Request (76 FR 76174). BOEM has 

considered the overall impact on competition and the relative strength 

of a PPA and JDA in enabling a lessee to install a viable project on 

the OCS in setting the credits. In the case of a bidder holding a 

credit and bidding on more than one LA, the credit will be applied only 

on the LA with the highest asking price. More details on the non-

monetary factors are found in the ``Credit Factors'' section below.

    By way of example, assume a bidder holds a qualified PPA for the 

sale of 400 MW, and its live bid consists of both the North and South 

LAs in the current round: the South LA having an asking price of 

$1,000,000 and the North LA having an asking price of $2,000,000. 

Suppose the bidder receives a 25% credit, which applies only against 

the North LA, the higher priced LA in that round, at $2,000,000. A live 

bid for these two LAs would require the bidder to submit an As-Bid 

price of $3,000,000 which would consist of a monetary payment of 

$1,500,000 for North, (25% less than the asking price), and $1,000,000 

for South. Hence, the monetary portion of the live bid would be 

$2,500,000, and the credit portion would be $500,000. Each bid in each 

round will thus be considered based on both factors--the amount of the 

cash bid proposed and the amount of a potential credit for holding a 

qualified PPA or JDA.

    BOEM's regulations at 30 CFR 585.222(d) require the use of a panel 

to weigh the variables and to determine the winner(s) of the auction. 

The regulations state that BOEM ``will determine the winning bid for 

proposals submitted under the multiple-factor bidding format on the 

basis of selection by the panel . . .'' 30 CFR 585.224(h). The panel 

will evaluate non-monetary packages consisting of any purported PPA or 

qualified JDA to determine whether it is acceptable to BOEM, and 

therefore whether it will qualify for a credit for its holder. It is 

possible that the panel will determine that no bidder qualifies for a 

non-monetary credit during the auction, in which case the auction will 

otherwise proceed as described in the FSN. The panel will determine the 

winning bids for each LA in accordance with the procedures described 

below.

 

Details of the Auction Process

 

Bidding--Live Bids

 

    Each bidder is allowed to submit a live bid for one LA (North or 

South), or both LAs based on its ``eligibility'' at the opening of each 

round. A bidder's eligibility is either two, one, or zero LAs, and it 

corresponds to the maximum number of LAs that a bidder may include in a 

live bid during a single round of the auction. A bidder's initial 

eligibility is determined based on the amount of the bid deposit 

submitted by the bidder prior to the auction. To be eligible to offer a 

bid on one LA at the start of the auction, a bidder must submit a bid 

deposit of $450,000. To be eligible to offer a bid on both North and 

South in the first round of the auction, the bidder must submit a bid 

deposit of $900,000. A bidder's bid deposit will be used by BOEM as a 

down payment on any monetary obligations incurred by the bidder should 

it be awarded a lease.

    As the auction proceeds, a bidder's eligibility is determined by 

the number of LAs included in its live bid submitted in the round prior 

to the current round. That is, if a bidder submitted a live bid on one 

LA in the previous round, that bidder may submit a bid that includes at 

most one LA in the current round. If a bidder submitted a live bid 

comprised of both LAs in the previous round, that bidder may submit a 

live bid that also includes these two LAs in the current round. In both 

cases, unless a bidder has an uncontested bid that is carried forward 

into the next round, the bidder also may choose to submit a live bid 

with fewer LAs than the maximum number it is eligible to include in its 

bid. Thus, eligibility in successive rounds may stay the same or go 

down, but it can never go up.

    In the first round of the auction, bidders have the following 

options: A bidder with an initial eligibility of one (that is, a bidder 

who submitted a bid deposit of $450,000) may:

     Submit a live bid on the North LA or the South LA, or

     Submit nothing, and drop out of the auction.

    A bidder with an initial eligibility of two (that is, a bidder who 

submitted a bid deposit of $900,000) may:

     Submit a live bid for both the North and South LAs,

     Submit a live bid for the North LA or the South LA, or

     Submit nothing, and drop out of the auction.

    Before each subsequent round of the auction, BOEM will raise the 

asking price for any LA that was contained in more than one live bid in 

the previous round. BOEM will not raise the asking price for a LA that 

was in one or no live bids in the previous round.

    Asking price increments will be determined by BOEM, in its sole 

discretion. BOEM will base asking price increments on a number of 

factors, including:

     Making the increments sufficiently large that the auction 

will not take an unduly long time to conclude;

     Decreasing the increments as the asking price of a LA 

nears its final price. Because the final price for a LA is not known 

until the entire auction has ended, the number of bids that have 

included the same LA in the most recent round may be used as an 

imperfect indicator of how close a LA's asking price is to its final 

price.

    BOEM has reduced the minimum bids for both LAs in this auction 

compared to the minimum bids announced in the PSN. Because the minimum 

bids have been significantly reduced, BOEM believes that it would be 

appropriate to raise asking prices by greater bid increments in early 

rounds of the auction than originally suggested. BOEM intends to use 

bid increments in the range of 20% to 50% in early rounds of the 

auction. At some point, BOEM intends to reduce the bid increments to 

the 5% to 20% range. BOEM reserves the right during the auction to 

increase or decrease increments if it determines, in its sole 

discretion, that a different increment is warranted to enhance the 

efficiency of the auction process. Asking prices for the LAs included 

in multiple live bids in the previous round will be raised and rounded 

to the nearest whole dollar amount to obtain the asking prices in the 

current round.

    A bidder must submit a live bid in each round of the auction (or 

have an uncontested live bid automatically carried forward by BOEM) for 

it to remain active and continue bidding in future rounds. All of the 

live bids submitted in any round of the auction will be preserved and 

considered binding until determination of the winning bids is made. 

Therefore, the bidders are responsible for payment of the bids they 

submit and can be held accountable for up to the maximum amount of those bids determined to be 

winning bids during the final award procedures.

    Between rounds, BOEM will release the following information:

     The level of demand for each LA in the previous round of 

the auction. The level of demand for a given LA is defined as the 

number of live bids that included the LA.

     The asking price for each LA in the upcoming round of the 

auction.

    In any subsequent round of the auction, if a bidder's previous 

round bid was uncontested, and the auction continues for another round, 

then BOEM will automatically carry forward that bid as a live bid in 

the next round. A bidder whose bid is being carried forward will not 

have an opportunity to modify or drop its bid until some other bidder 

submits a live bid that overlaps with the LA in the carried forward 

bid. Note that in this sale a carried forward bid will always be for 

only one LA--if a live bid consisting of both North and South was 

uncontested, the auction would end. In particular, for rounds in which 

a bidder finds its uncontested bid is carried forward, the bidder will 

be unable to do the following:

     Switch to the other LA;

     Submit an Intra-Round Bid (see below for discussion of 

Intra-Round Bids); or

     Drop out of the auction.

    In this scenario the bidder is effectively ``frozen'' through 

future auction rounds for as long as its bid for that LA remains 

uncontested. Moreover, the bidder may be bound by that bid or, indeed, 

for any other bid which BOEM determines is a winning bid in the award 

stage. Hence, the bidder cannot drop an uncontested bid, and in no 

scenario can the bidder be relieved of any of its bids from previous or 

future rounds until a determination is made in the award stage about 

the LAs won by the bidder.

    If a bidder's bid is not being carried forward by BOEM, a bidder 

with an eligibility of one (that is, a bidder who submitted a live bid 

for either the North LA or the South LA in the previous round) may:

     Submit a live bid for either the North LA or the South LA,

     Submit an Intra-Round Bid for the same LA that the bidder 

submitted a live bid for in the previous round and exit the auction: Or

     Submit nothing, and drop out of the auction.

    A bidder with an eligibility of two (that is, a bidder who 

submitted a live bid for both North and South in the previous round) 

may:

     Submit a live bid for both the North and South LAs,

     Submit a live bid for either the North LA or the South LA,

     Submit an Intra-Round Bid for both the North and South 

LAs, and a live bid for either the North LA or the South LA,

     Submit an Intra-Round Bid for both the North and South 

LAs, no live bids, and exit the auction; or

     Submit nothing, and drop out of the auction.

    Subsequent auction rounds occur in this sale as long as either the 

North LA or the South LA is contested. The auction concludes at the end 

of the round in which neither the North LA nor the South LA is included 

in the live bid of more than one bidder, i.e., all live bids are 

uncontested.

 

Bidding--Intra-Round Bids

 

    All asking prices and asking price increments will be determined by 

the BOEM Auction Manager. It is possible that multiple bidders will be 

willing to meet the previous round's asking price for a LA, while no 

bidders will be willing to meet the next round's asking price. Without 

some mechanism to resolve this situation, the auction could result in a 

tie for this LA.

    Intra-Round Bidding is a mechanism to minimize the chance of ties. 

It also allows bidders to more precisely express the maximum price they 

are willing to offer for the North, South, or both LAs.

    When submitting a live bid, a bidder simply indicates willingness 

or unwillingness to pay the asking price for each LA offered in the 

auction. The bidder's response is either yes or no. In contrast, when 

submitting an Intra-Round Bid, the bidder is indicating that it is not 

willing to meet the current round's asking price, but it is willing to 

pay more than the previous round's asking price. In particular, in an 

Intra-Round Bid, the bidder specifies the maximum (higher than the 

previous round's asking price and less than the current round's asking 

price) that it is willing to offer for the specific LA(s) in its 

previous round's live bid.

    Because an Intra-Round Bid must consist of a single offer price for 

exactly the same LA(s) included in the bidder's live bid in the 

previous round, a bidder cannot submit a live bid on the North LA in 

the previous round and then offer an Intra-Round Bid on the South LA in 

the current round (or vice versa). Rather, an Intra-Round Bid from this 

bidder in the current round must be for the North. In the same way, if 

the bidder submitted a live bid which includes both the North and South 

LAs in the previous round, then an Intra-Round Bid in the current round 

must include both the North and South LAs.

    The number of LAs in a bidder's live bid will determine that 

bidder's eligibility in the next round. If a bidder includes two LAs in 

a bid in round 1, that bidder can include up to two LAs in a live bid 

in round 2, if the bidder chooses not to submit an Intra-Round Bid. 

However, if the bidder does choose to submit an Intra-Round Bid in 

round 2, which must be for both LAs included in the bidder's previous 

round's live bid, any accompanying live bid must be for only one of the 

two LAs. Otherwise, the bidder would be duplicating its carried forward 

live bid at a different price. Accordingly, although an Intra-Round Bid 

is not a live bid, in the round in which a valid Intra-Round Bid is 

submitted for both LAs, the bidder's eligibility for a live bid in that 

same round and future rounds is permanently reduced from including two 

LAs to one LA. In other words, once an Intra-Round Bid is submitted, 

the bidder will never again have the opportunity to submit a live bid 

on as many LAs as it has bid in previous rounds.

    Because Intra-Round Bids are not live bids, and since BOEM only 

raises asking prices on LAs that are included in multiple live bids, 

BOEM will not consider Intra-Round Bids for the purpose of determining 

either to increase the asking price for a particular LA or to end the 

auction. Also, BOEM will not count nor share with bidders between 

rounds the number of Intra-Round Bids received for each LA.

    All of the Intra-Round Bids submitted during the auction will be 

preserved, and may be determined to be winning bids. Therefore, bidders 

are responsible for payment of the bids they submit and may be held 

accountable for up to the maximum amount of any Intra-Round Bids or 

live bids determined to be winning bids during the final award 

procedures.

 

Determining Provisional Winners

 

    After the bidding ends, BOEM will determine provisionally winning 

bids in accordance with the process described in this section. This 

process consists of two stages: Stage 1 and Stage 2, which are 

described below. Once the auction itself ends, nothing further is 

required of bidders within or between Stages 1 and 2. In practice, the 

stages of the process will take place as part of the solution algorithm 

for analyzing the monetary and credit portion of the bids, determining 

provisional winners, finding the LAs won by the provisional winners, 

and calculating the applicable bid prices to be paid by the winners for 

the LAs they won. This evaluation will be reviewed, checked and validated by the panel. The determination of 

provisional winners, in both stages, will be based on the two auction 

variables, as well as on a bidder's adherence to the rules of the 

auction, and the absence of conduct detrimental to the integrity of the 

competitive auction.

 

Stage 1

 

    Live bids submitted in the final round of the auction are Qualified 

Bids. In Stage 1, a bidder with a Qualified Bid is provisionally 

guaranteed of winning the LA(s) included in its final round bid, 

regardless of any other prior-to-final round live bids or Intra-Round 

Bids in any round. This guarantee provides bidders assurance that as 

long as they stay active in the bidding for a LA until the last round 

when the auction closes, they cannot be outbid on that LA or 

unexpectedly lose that LA. Not only does this provision strengthen 

competition and fairness in the auction, it also limits opportunities 

for anti-competitive tactics.

    If both LAs are awarded to bidders in Stage 1, the second award 

stage is not necessary. If the North LA or the South LA received a bid 

but was not awarded in Stage 1, BOEM will proceed to Stage 2 to award 

remaining leases.

    Following the auction, all winning bidders must pay the price 

associated with their winning bids, which may consist of cash and non-

monetary credits or just cash.

 

Stage 2

 

    All bids are either Qualified Bids or Contingent Bids. Contingent 

bids include all of the live bids received before the final round, and 

any Intra-Round Bids received during the auction. In Stage 2, BOEM will 

consider Contingent Bids, to see if the unawarded LA(s) can be awarded 

without interfering with Stage 1 awards. BOEM will make Stage 2 awards 

to the bid(s) that maximize(s) the total As-Bid prices.

    Any Contingent Bids that conflict with Qualified Bids will not be 

considered. That is, if there was a Qualified Bid for the North LA 

(i.e., a live bid in the final round for the North LA), BOEM will not 

consider any Contingent Bid that contains the North LA. Only one bid 

per bidder may win. Accordingly, BOEM will not consider a Contingent 

Bid from any bidder that received a Stage 1 award for submitting a 

Qualified Bid.

    There is one notable exception to the rule described in the 

preceding paragraph. This exception allows BOEM to accept a Contingent 

Bid for both LAs notwithstanding the existence of a Qualified Bid by 

the same bidder, provided the acceptance of the Contingent Bid results 

in higher overall As-Bid prices than acceptance of only the Qualified 

Bid. Suppose, for example, that a bidder submitted an Intra-Round Bid 

for the North and South LAs, and a live bid in the same round for the 

South LA. Suppose as well that the live bid turned out to be the only 

live bid submitted in that round, i.e., it is a Qualified Bid because 

the auction closes at the conclusion of that round. Without the 

exception, the Intra-Round Bid for both the North and South LAs would 

not win, because the Qualified Bid (for the South LA) overlaps with 

part of the Contingent Intra-Round Bid (for the North and South LAs), 

so BOEM would award the bidder only the South LA based on its Qualified 

Bid as provisionally awarded in Stage 1. In cases such as this, and 

related ones where the same bidder's Contingent Bid occurs in other 

than the final auction round where it has submitted an overlapping 

Qualified Bid, there are sound reasons to prefer the Contingent Bid to 

the Qualified Bid if the Contingent Bid results in higher As-Bid 

prices.

    Based on the bids received, if the bidder values the Contingent Bid 

on both LAs more than the Qualified Bid on one LA:

     Awarding the Qualified Bid could discourage bidders from 

submitting live bids that compete with their own Intra-Round Bids, and

     Awarding the Qualified Bid could result in undersell, if 

one of the LAs would otherwise not be awarded in Stage 2.

    The exception discussed here would prevent these adverse results.

    In the example, the Intra-Round Contingent Bid could prevail, in 

which case the bidder would win both the North and South LAs. Note that 

all winning bidders must pay the As-Bid price associated with the 

winning bid, which may consist of cash and non-monetary credits or just 

cash. This means that the bidder would be required to pay its Intra-

Round Bid price associated with its Intra-Round Bid, even though it 

submitted a Qualified Bid that guaranteed the South LA would be 

provisionally awarded to that bidder. In other words, the guarantee 

(that the bidder that submitted a Qualified Bid will be awarded the 

LA(s) associated with that bid) does not extend to the price the bidder 

might have to pay for the South LA if that LA is ultimately awarded 

through a Stage 2 evaluation in which the South LA was a subset of the 

North and South LAs awarded provisionally to that bidder in Stage 2.

    This exception represents the only situation in which BOEM will 

consider for award a Contingent Bid which overlaps a Qualified Bid, 

i.e., when a bidder's Contingent Bid overlaps its own Qualified Bid. In 

contrast, there is no situation in which one bidder's Contingent Bid 

will be considered for award if it overlaps with any LA that is 

included in another bidder's Qualified Bid.

    If more than one combination of Contingent Bids exist that would 

yield the same highest As-Bid price total, while preserving the LAs 

originally awarded in Stage 1, the resulting tie in the allocation of 

these LAs would be settled by a random draw.

    In the event a bidder submits a bid for a LA that the panel and 

BOEM determine to be a winning bid, the bidder is expected to timely 

sign the applicable lease documents and submit the full cash payment 

due. If the bidder fails to timely sign and pay for the lease, then 

BOEM will not issue the lease to that bidder, and the bidder will 

forfeit its bid deposit. BOEM may consider failure of the bidder to 

timely pay the full amount due an indication that a bidder is no longer 

financially qualified to participate in other lease sales under BOEM's 

regulations at 30 CFR 585.106 and 585.107.

 

Credit Factors

 

    Prior to the auction, BOEM will convene a panel to evaluate 

bidders' non-monetary packages to determine whether and to what extent 

each bidder is eligible for a non-monetary credit applicable to the As-

Bid auction price for one of the LAs in each round of the auction, as 

described below. Any single JDA or PPA cannot be used by more than one 

bidder in the auction.

    The percentage credit is determined based on the panel's evaluation 

of required documentation submitted by the bidders as of July 17, 2013. 

Bidders will be informed by email before the monetary auction about the 

percentage credit applicable to their bids. The bid credit will be 

applicable to only one LA. Any non-monetary credit would only be 

applicable to the higher priced LA in a bid for both LAs. For an Intra-

Round Bid containing both LAs, the higher priced LA will be determined 

using the previous round's asking prices. In each round, the auction 

system will display information showing how their As-Bid auction prices 

are affected by the credit imputed to their bid to determine their net 

monetary payment due to BOEM, should their bids prevail as winning bids 

in the award stages. Application of the credit percentage to the 

appropriate As-Bid auction price will be rounded to

 

[[Page 33905]]

 

the nearest whole dollar amount. This entire process is conceptually 

similar to one in which the multiple bid factors are combined into an 

aggregate score for the purpose of awarding LAs, but is more 

transparent to bidders and facilitates the bidding process in a 

dynamic, multiple-factor, multiple round auction process.

    The bidder's imputed credit throughout the auction and award 

process is limited to the greater of 25% for a PPA or 20% for a JDA, 

applied to the highest priced LA related to the bidder's latest live 

bid or Intra-Round Bid. During each round, bidders are informed by the 

BOEM Auction Manager how the credit applies to their live bid and any 

Intra-Round Bid. In the case of a live bid for both LAs, the credit 

will apply only to the LA having the highest current round asking 

price. In the case of an Intra-Round Bid for both LAs, the credit will 

also apply only to the higher-priced LA, but the applicable price for 

calculating the credit will be based on the previous round's asking 

prices, not on any additional amount above the previous round's asking 

prices as reflected in the incremental amount associated with its 

Intra-Round Bid.

    The reason for using the previous round asking price in this 

situation is the difficulty of determining the precise LA As-Bid price 

attributable to each individual LA in an Intra-Round Bid that contains 

both LAs. The amount of the Intra-Round Bid attributable to each LA is 

not directly available when the bidder makes an Intra-Round Bid on both 

LAs. The individual LA bid amounts are available at the previous round 

asking prices. For this reason, the imputed credit is calculated based 

on the highest asking price of a LA included in the Intra-Round Bid 

submitted in the round preceding the round in which the Intra-Round Bid 

was made.

    The panel will review the non-monetary package submitted by each 

bidder, and determine whether bidders have established that they are 

qualified to receive a credit, and the percentage at which that credit 

will apply, based on the definitional information regarding the PPA and 

JDA. If the panel determines that no bidder has qualified for a non-

monetary factor, the auction will proceed with each bidder registered 

with no imputed credit.

    Credit Factor Definitions: The definitions below will apply to the 

factors for which bidders may earn a credit.

    Power purchase agreement (PPA) is any legally enforceable long term 

contract negotiated between an electricity generator (Generator) and a 

power purchaser (Buyer) that identifies, defines, and stipulates the 

rights and obligations of one party to produce, and the other party to 

purchase, energy from an offshore wind project to be located in the 

lease sale area. The PPA must have been approved by a public utility 

commission or similar legal authority. The PPA must state that the 

Generator will sell to the Buyer and the Buyer will buy from the 

Generator capacity, energy, and/or environmental attribute products 

from the project, as defined in the terms and conditions set forth in 

the PPA. Energy products to be supplied by the Generator and the 

details of the firm cost recovery mechanism approved by the State's 

public utility commission or other applicable authority used to recover 

expenditures incurred as a result of the PPA must be specified in the 

PPA. In order to qualify, a PPA must contain the following terms or 

supporting documentation:

    (i) A complete description of the proposed project;

    (ii) Identification of both the electricity Generator and Buyer 

that will enter into a long term contract;

    (iii) A time line for permitting, licensing, and construction;

    (iv) Pricing projected under the long term contract being sought, 

including prices for all market products that would be sold under the 

proposed long term contract;

    (v) A schedule of quantities of each product to be delivered and 

projected electrical energy production profiles;

    (vi) The term for the long term contract;

    (vii) Citations to all filings related to the PPA that have been 

made with state and Federal agencies, and identification of all such 

filings that are necessary to be made; and

    (viii) Copies of or citations to interconnection filings related to 

the PPA.

    The panel will assign a 25% non-monetary credit to any bidder that 

establishes in its non-monetary package that it meets the criteria 

described above for a PPA for the sale of 350 MW of power. The panel 

will assign a smaller percentage credit to any bidder that establishes 

in its non-monetary package that it meets the criteria described above 

for a PPA for the sale of less than 350 MW of power. The smaller 

percentage credit will be calculated according to the formula below:

[GRAPHIC] [TIFF OMITTED] TN05JN13.000

 

 

Where:

 

     Partial Credit = Percent credit for which a smaller PPA 

is eligible.

     Full PPA = 350 MW

     Full Credit = 25%

     Partial PPA = amount (less than 350 MW) of power under 

contract

 

    Joint Development Agreement (JDA) is a binding agreement between a 

state and a legal entity that proposes to develop renewable (wind) 

energy, which sets forth the rights, obligations, and certain economic 

development activities of the parties in connection with the 

development of an offshore wind project. The legal entity named in a 

JDA must be selected through a competitive selection process, such as a 

request for proposals that is conducted by a state adjacent to the wind 

energy area issuing and entering into the JDA, where the subsequent 

submitted proposals are evaluated by a state agency, committee or 

public utility board. To apply for a non-monetary credit, the bidder 

must send the agreement to BOEM by July 17, 2013, in its non-monetary 

package. The JDA will qualify if the panel determines that the 

agreement includes the following identifiable factors: (1) Sufficient 

specificity to the size, timing, and location of the proposed project 

on the OCS; (2) the financial commitment of the state, the identified 

legal entity, and/or a third party (buyer of power), if applicable, 

included in the agreement; (3) the developmental, financial, and/or 

regulatory processes through which the state will support the 

identified legal entity that proposes to develop renewable (wind) 

energy; (4) significant project milestones; (5) the ramifications for 

not meeting said milestones; and (6) any exclusionary rights awarded to 

said identified legal entity. Please clearly designate all information 

that BOEM should treat as business confidential. The panel will assign 

each holder of a qualifying JDA a credit of 20%.

 

[[Page 33906]]

 

Additional Information Regarding the Auction

 

Non-Monetary Auction Procedures

 

    All bidders seeking a non-monetary auction credit are required to 

submit a non-monetary auction package. If a bidder seeks a non-monetary 

auction credit, this submission must contain information sufficient to 

establish the bidder's eligibility to receive a non-monetary credit in 

the monetary phase of the auction. Further information on this subject 

can be found in the section of this notice entitled, ``Credit Factor 

Definitions.'' If a bidder does not submit a non-monetary package by 

July 17, 2013, to BOEM, then BOEM will assume that bidder is not 

seeking a non-monetary auction credit and the panel will not consider 

that bidder for a non-monetary auction credit.

 

Bidder Authentication

 

    The Auction Manager will send several bidder authentication 

packages to each bidder shortly after BOEM has processed the Bidder 

Financial Forms. One package will contain tokens for each authorized 

individual. Tokens are digital authentication devices. The tokens will 

be mailed to the address of record that BOEM has on file for each 

company, care of the Primary Point of Contact indicated on the Bidder's 

Financial Form. This individual is responsible for distributing the 

tokens to the individuals authorized to bid for that company. Bidders 

are to ensure that each token is returned within three business days 

following the auction. An addressed, stamped envelope will be provided 

to facilitate this process.

    The second package contains login credentials for authorized 

bidders. The login credentials will be mailed to the address provided 

in the Bidder's Financial Form for each authorized individual. Bidders 

can confirm these addresses by calling 703-787-1320. This package will 

contain user login information and instructions for accessing the 

Auction System Technical Supplement and Alternative Bidding Form. The 

login information, along with the tokens, will be tested during the 

mock auction.

 

Monetary Auction Times

 

    This section will describe, from a bidder's perspective, how the 

monetary phase of the auction will take place. This information will be 

elaborated on and clarified in the Mock Auction to be held on July 24, 

2013, and an Auction System Technical Supplement that will be made 

publicly available on BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. The 

Auction System Technical Supplement describes auction procedures that 

are incorporated by reference in this notice, except where the 

procedures described in the Auction System Technical Supplement 

directly contradict this notice.

    The monetary auction will begin at 10:30 a.m. on July 31, 2013. 

Bidders may log in as early as 8:30 a.m. on that day. We recommend that 

bidders log in no later than 9:30 a.m. on that day to ensure that any 

login issues have been resolved in time. Once bidders have logged in, 

they should review the auction schedule, which lists the start times, 

end times, and recess times of each round in the auction. Each round is 

structured as follows:

     Round 1 Bidding Begins;

     Bidders enter their bids;

     Round 1 Bidding Ends and the first Recess begins;

     Sometime during the first Recess, Round 1 results are 

posted;

     Bidders review the Round 1 results and prepare their Round 

2 bids;

     Round 2 Bidding Begins * * *

    The first round will last about 30 minutes, though subsequent 

rounds may be closer to 20 minutes in length. Recesses are anticipated 

to last approximately 10 minutes. The descriptions of the auction 

schedule and asking price increments included with this FSN are for 

informational purposes only. Bidders should consult the auction 

schedule on the bidding Web site for updated times. Bidding will 

continue until about 5 p.m. each day. BOEM anticipates the auction will 

last one or two business days, but bidders are advised to prepare to 

continue bidding for additional business days as necessary to resolve 

the auction.

    The schedule and asking price increments are in BOEM's discretion, 

and are subject to change at any time before or during the auction.

    BOEM and the auction contractors will use the auction platform 

messaging service to keep bidders informed on issues of interest during 

the auction. For example, BOEM may change the schedule at any time, 

including during the auction. If BOEM changes the schedule during the 

auction, it will use the messaging feature to notify bidders that a 

revision has been made, and direct bidders to the relevant page. BOEM 

will also use the messaging system for other changes and items of 

particular note during the auction.

    Bidders may place bids at any time during the round. At the top of 

the bidding page, a countdown clock will show how much time remains in 

the round. Bidders have until the scheduled time to place bids. Bidders 

should do so according to the procedures described in the Auction 

System Technical Supplement, and practiced at the Mock Auction. No 

information about the round is available until the round has closed and 

results have been posted, so there should be no strategic advantage to 

placing bids early or late in the round.

 

Alternate Bidding Procedures

 

    Any bidder who is unable to place a bid using the online auction 

should follow these instructions:

     Call BOEM/the BOEM Auction Manager at the help desk number 

that is listed in the Auction System Technical Supplement before the 

end of the round.

     BOEM will authenticate the caller to ensure he/she is 

authorized to bid on behalf of the company.

     Explain the problem.

     BOEM may, in its sole discretion, accept a bid using the 

Alternative Bidding Procedure.

     The Alternative Bidding Procedure enables a bidder who is 

having difficulties accessing the Internet to submit its bid via an 

Alternative Bidding Form that can be faxed to the auction manager.

    [cir] If the bidder has not placed a bid, but calls BOEM before the 

end of the round and notifies BOEM that it is preparing a bid using the 

Alternate Bidding Procedure, and submits the Alternate Bidding Form by 

fax before the round ends, BOEM will likely accept the bid, though 

acceptance or rejection of the bid is within BOEM's sole discretion.

    [cir] If the bidder calls during the round, but does not submit the 

bid until after the round ends (but before the round is posted), BOEM 

may or may not accept the bid, in part based on how much time remains 

in the recess. Bidders are strongly encouraged to submit the 

Alternative Bidding Form before the round ends.

    [cir] If the bidder calls during the recess following the round, 

but before the previous round's results have been posted, BOEM will 

likely reject its bid, even if it has otherwise complied with all of 

BOEM's Alternate Bidding Procedures.

    [cir] If the bidder calls to enter a bid after results have been 

posted, BOEM will reject the bid.

    Except for bidders who have uncontested bids in the current round, 

failure to place a bid during a round will be interpreted as dropping 

out of the auction. It is possible that bids entered before the bidder 

stopped entering bids may be awarded one or

 

[[Page 33907]]

 

both LAs pursuant to BOEM's stage 2 procedures. Bidders are held 

accountable for all bids placed during the auction. This is true if 

they continued bidding in the last round, if they placed an Intra-Round 

Bid for a single LA in an earlier round, or if they stopped bidding 

during the auction.

    Acceptance, Rejection or Return of Bids: BOEM reserves the right 

and authority to reject any and all bids. In any case, no lease will be 

awarded to any bidder, and no bid will be accepted, unless (1) The 

bidder has complied with all requirements of the FSN, applicable 

regulations and statutes, including, but not limited to, bidder 

qualifications, bid deposits, and adherence to the integrity of the 

competitive bidding process, (2) the bid conforms with the requirements 

and rules of the auction, and (3) the amount of the bid has been 

determined to be adequate by the authorized officer. Any bid submitted 

that does not satisfy any of these requirements may be returned to the 

bidder submitting that bid by the Program Manager of BOEM's Office of 

Renewable Energy Programs and not considered for acceptance.

    Process for Issuing the Lease: If BOEM proceeds with lease 

issuance, it will issue three unsigned copies of the lease form to each 

winning bidder. Within 10 business days after receiving the lease 

copies, each winning bidder must:

    1. Execute the lease on the bidder's behalf;

    2. File financial assurance, as required under 30 CFR 585.515-537; 

and

    3. Pay by EFT the balance of the bonus bid (bid amount less the bid 

deposit). BOEM requires bidders to use EFT procedures (not to include 

pay.gov) for payment of the balance of the bonus bid, following the 

detailed instructions contained in the ``Instructions for Making 

Electronic Payments'' available on BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.

    If a winning bidder does not meet these three requirements within 

10 business days of receiving the lease copies as described above, or 

if a winning bidder otherwise fails to comply with applicable 

regulations or the terms of the FSN, the winning bidder will forfeit 

its bid deposit. BOEM may extend this 10 business-day time period if it 

determines the delay was caused by events beyond the winning bidder's 

control.

    In the event that the provisional winner does not execute and 

return the leases according to the instructions in this notice, BOEM 

reserves the right to reconvene the panel to determine whether it is 

possible to identify a bid that would have won in the absence of the 

bid previously determined to be the winning bid. In the event that a 

new winning bid is selected by the panel, BOEM will follow the 

procedures in this section for the new winner(s).

    BOEM will not execute a lease until the three requirements above 

have been satisfied, BOEM has accepted the winning bidder's financial 

assurance, and BOEM has processed the winning bidder's payment. The 

winning bidder may meet financial assurance requirements by posting a 

surety bond or by setting up an escrow account with a trust agreement 

giving BOEM the right to withdraw the money held in the account on 

demand by BOEM. BOEM may accept other forms of financial assurance on a 

case-by-case basis in accordance with its regulations. BOEM encourages 

provisionally winning bidders to discuss the financial assurance 

requirement with BOEM as soon as possible after the auction has 

concluded.

    Within 45 calendar days of the date that the Lessee receives the 

lease copies, the Lessee must pay the first 6-months' rent using the 

pay.gov Renewable Energy Initial Rental Payment Form available at: 

https://pay.gov/paygov/forms/formInstance.html?agencyFormId=27797604. 

The Lessee must pay the remaining 6-months' rent by the first day of 

the seventh month following the effective date of the lease, following 

the detailed instructions contained in the ``Instructions for Making 

Electronic Payments'' available on BOEM's Web site at: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx.

    Anti-Competitive Behavior: In addition to the auction rules 

described in this notice, bidding behavior is governed by Federal 

antitrust laws designed to prevent anticompetitive behavior in the 

marketplace. Compliance with BOEM's auction procedures will not 

insulate a party from enforcement of the antitrust laws.

    In accordance with the Act at 43 U.S.C. 1337(c), following the 

auction, and before the acceptance of bids and the issuance of leases, 

BOEM will ``allow the Attorney General, in consultation with the 

Federal Trade Commission, 30 days to review the results of the lease 

sale.''

    If a bidder is found to have engaged in anti-competitive behavior 

or otherwise violated BOEM's rules in connection with its participation 

in the competitive bidding process, BOEM may reject the high bid.

    Anti-competitive behavior determinations are fact specific. 

However, such behavior may manifest itself in several different ways, 

including, but not limited to:

     An agreement, either express or tacit, among bidders to 

not bid in an auction, or to bid a particular price;

     An agreement among bidders not to bid for a particular 

Lease Area;

     An agreement among bidders not to bid against each other; 

and

     Other agreements among bidders that have the effect of 

limiting the final auction price.

    BOEM may decline to award a lease if doing so would otherwise 

create a situation inconsistent with the antitrust laws (e.g., heavily 

concentrated market, etc.).

    For more information on whether specific communications or 

agreements could constitute a violation of Federal antitrust law, 

please see: http://www.justice.gov/atr/public/business-resources.html, 

or consult counsel.

    Post-Auction Certification: Each bidder is required to sign the 

self-certification, in accordance with 18 U.S.C. 1001 (Fraud and False 

Statements) in the Bidder's Financial Form, which can be found on 

BOEM's Web site: http://www.boem.gov/Renewable-Energy-Program/State-Activities/Rhode-Island.aspx. The form must be filled out and returned 

to BOEM in accordance with the ``Deadlines and Milestones for Bidders'' 

section of this notice.

    Non-Procurement Debarment and Suspension Regulations: Pursuant to 

regulations at 43 CFR Part 42, Subpart C, an OCS renewable energy 

Lessee must comply with the U.S. Department of the Interior's non-

procurement debarment and suspension regulations at 2 CFR parts 180 and 

1400 and agree to communicate the requirement to comply with these 

regulations to persons with whom the Lessee does business as it relates 

to this lease, by including this term as a condition in their contracts 

and other transactions.

    Force Majeure: The Program Manager of BOEM's Office of Renewable 

Energy Programs has the discretion to change any date, time, and/or 

location specified in the FSN in case of a force majeure event that the 

Program Manager deems may interfere with a fair and proper lease sale 

process. Such events may include, but are not limited to, natural 

disasters (e.g., earthquakes, hurricanes, floods), wars, riots, acts of 

terrorism, fire, strikes, civil disorder or other events of a similar 

nature. In case of such events, bidders should call 703-787-1320 or 

access the BOEM Web site at: http://www.boem.gov/Renewable-Energy-Program/index.aspx.

    Appeals: The appeals procedures are provided in BOEM's regulations 

at 30

 

[[Page 33908]]

 

CFR 585.225 and 585.118(c). Pursuant to 30 CFR 585.225:

    (a) If BOEM rejects your bid, BOEM will provide a written statement 

of the reasons, and refund any money deposited with your bid, without 

interest.

    (b) You will then be able to ask the BOEM Director for 

reconsideration, in writing, within 15 business days of bid rejection, 

under 30 CFR 585.118(c)(1). We will send you a written response either 

affirming or reversing the rejection.

    The procedures for appealing adverse final decisions with respect 

to lease sales are described in 30 CFR 585.118(c).

    Protection of Privileged or Confidential Information: BOEM will 

protect privileged or confidential information that you submit as 

required by the Freedom of Information Act (FOIA). Exemption 4 of FOIA 

applies to trade secrets and commercial or financial information that 

you submit that is privileged or confidential. If you wish to protect 

the confidentiality of such information, clearly mark it and request 

that BOEM treat it as confidential. BOEM will not disclose such 

information, subject to the requirements of FOIA. Please label 

privileged or confidential information ``Contains Confidential 

Information'' and consider submitting such information as a separate 

attachment.

    However, BOEM will not treat as confidential any aggregate 

summaries of such information or comments not containing such 

information. Additionally, BOEM may not treat as confidential the legal 

title of the commenting entity (e.g., the name of your company). 

Information that is not labeled as privileged or confidential will be 

regarded by BOEM as suitable for public release.

 

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