2010-9610. Commercial Leasing for Wind Power on the Outer Continental Shelf (OCS) Offshore Delaware-Request for Interest (RFI)

AGENCY:

Minerals Management Service, Interior.

ACTION:

RFI in renewable energy leasing offshore Delaware, and invitation of comments from interested and affected parties.

SUMMARY:

The Minerals Management Service (MMS) invites submissions describing interest in obtaining one or more commercial leases for the construction of a wind energy project(s) on the OCS offshore Delaware. The MMS will use responses to this RFI to enable MMS to gauge specific interest in commercial development of OCS wind resources in the area described, as required by 43 U.S.C. 1337(p)(3). Parties wishing to obtain a commercial lease for a wind energy project should submit detailed and specific information as described below in the section entitled, “Required Indication of Interest Information.” Also, with this announcement the MMS invites all interested and affected parties to comment and provide information—including information on environmental issues and concerns—that will be useful in the consideration of the area of interest for commercial wind energy leases.

This RFI is published pursuant to subsection 8(p) of the OCS Lands Act, as amended by section 388 of the Energy Policy Act of 2005 (EPAct) (43 U.S.C. 1337(p)(3)) and the implementing regulations at 30 CFR Part 285.

The area of interest rests between the incoming and outgoing shipping routes for Delaware Bay. The geographic extent was selected based on preliminary indications of interest from developers in response to Delmarva Power's Request for Proposals (RFP) in 2006 and through consultation with the MMS Delaware OCS Renewable Energy Task Force. A detailed description of the area of interest is found later in this notice.

DATES:

The MMS must receive your submission indicating your interest in this potential commercial leasing area no later than June 25, 2010 for your submission to be considered. The MMS requests comments or other submissions of information by this same date. We will consider only the submissions we receive by that time.

Submission Procedures: You may submit your indications of interest, comments, and information by one of two methods:

1. Federal eRulemaking Portal: http://www.regulations.gov. Under the tab “More Search Options,” click “Advanced Docket Search,” then select “Minerals Management Service” from the agency drop-down menu, then click “submit.” In the Docket ID column, select MMS-2010-OMM-0017 to submit public comments and to view supporting and related materials available for this rulemaking. Information on using Regulations.gov, including instructions for accessing documents, submitting comments, and viewing the docket after the close of the comment period, is available through the site's “User Tips” link;

2. By mail, sending your indications of interest, comments, and information to the following address: Minerals Management Service, Office of Offshore Alternative Energy Programs, 381 Elden Street, Mail Stop 4090, Herndon, VA 20170.

FOR FURTHER INFORMATION CONTACT:

Erin C. Trager, Projects and Coordination Branch, Minerals Management Service, Office of Offshore Alternative Energy Programs, 381 Elden Street, Mail Stop 4090, Herndon, Virginia 20170-4817; telephone [phone].

SUPPLEMENTARY INFORMATION:

Purpose of the Request for Interest

The OCS Lands Act requires MMS to award leases competitively, unless MMS makes a determination that there is no competitive interest (43 U.S.C. 1337(p)(3)). This RFI is a preliminary step in the leasing process and the responses to it will assist MMS in determining if there is competitive interest in the area described herein on the OCS off the coast of Delaware. If, following this RFI, MMS determines that there is no competitive interest in this area off the coast of Delaware, MMS may proceed with the noncompetitive lease process pursuant to 30 CFR 285.230 through 285.232 of the Renewable Energy and Alternate Uses of Existing Facilities on the Outer Continental Shelf (REAU) rulemaking. If, following this RFI, MMS determines that there is competitive interest in the area of interest, MMS may proceed with the competitive lease process set forth under 30 CFR 285.211 through 285.225. Whether the leasing process is competitive or noncompetitive, it will include opportunities for the public to provide input as well as a thorough environmental review, and will be conducted in conformance with all applicable laws.

Parties other than those interested in obtaining a commercial lease are welcome to submit comments in response to this RFI. Additionally, MMS has formed a Delaware OCS Renewable Energy Task Force for coordination with affected Federal agencies and State, local, and Tribal governments throughout the leasing process. Task Force members and meeting materials are available on the MMS Web site at: http://www.mms.gov/​offshore/​RenewableEnergy/​stateactivities.htm#Delaware.

Background

Energy Policy Act of 2005

The EPAct amended the OCS Lands Act by adding subsection 8(p) that authorizes the Secretary of the Interior to grant a lease, easement, or right-of-way (ROW) on the OCS for activities that are not otherwise authorized by law and that produce or support the production, transportation, or transmission of energy from sources other than oil or gas. The EPAct also required the issuance of regulations to carry out the new authority pertaining to renewable energy on the OCS. The Secretary delegated the authority to issue leases, easements, and ROWs and to promulgate regulations to the Director of MMS.

Interim Policy

After the passage of EPAct, the MMS created and published an Interim Policy (IP) to allow the issuance of leases to assess the renewable energy resource potential on the OCS and evaluate new technology. The IP governed the issuance of leases for the installation of offshore data collection and technology testing facilities on the OCS until the effective date of the REAU rule. Leases issued under the IP have terms of five years and confer no preferential right to acquire, develop, or operate commercially any renewable energy project on the OCS.

The IP lease issuance process began on November 6, 2007, when MMS published in the Federal Register a Request for Information and Nominations for IP leases. Subsequently, MMS published a listing of the locations described in the responses to the Request for Information and Nominations in the Federal Register to determine if there was competitive interest in leasing the proposed areas pursuant to the IP. After considering responses to the second Federal Register notice, MMS determined that there was no competitive interest in any of the sites and decided to proceed with a noncompetitive leasing process. A single area on the OCS 14 miles offshore was nominated off the coast of Delaware by one developer. The MMS received an application for the construction of meteorological towers and other site assessment activities on the OCS for this area from Bluewater Wind Delaware LLC. The MMS executed an IP lease on November 1, 2009, with the installation of meteorological towers anticipated to begin in the summer of 2010.

Renewable Energy and Alternate Use Rulemaking

The MMS began the REAU rulemaking process by issuing an Advance Notice of Proposed Rulemaking on December 30, 2005, (70 FR 250 December 30, 2005). The MMS began the preparation of a Programmatic Environmental Impact Statement (PEIS), analyzing the environmental consequences of establishing a REAU program, with a Notice of Intent issued on May 5, 2006, (71 FR 87 May 5, 2006). Subsequently, MMS held scoping meetings, issued a draft PEIS for comment on March 21, 2007, and held hearings on the draft PEIS in the Spring of 2007. The MMS issued the final PEIS on November 6, 2007, and the related Record of Decision on January 10, 2008. In July 2008, MMS published a Notice of Proposed Rulemaking for the REAU rule (73 FR 132 July 9, 2008) and the comment period closed on September 8, 2008. After considering all comments submitted, MMS published the final REAU rule on April 29, 2009, (74 FR 81 April 29, 2009).

Relevant Actions Taken by the State of Delaware

In 2006, the Delaware General Assembly passed a bill directing the State's largest utility, Delmarva Power, to contract with providers of new power resources that will guarantee stable prices for electricity. The Delaware legislature also passed a Renewable Portfolio Standard (RPS) requiring that 20 percent of Delaware's electricity come from renewable sources by the year 2019. In November 2006, Delmarva Power issued a RFP for the construction of a new power plant to serve Delaware. Proposals were evaluated by Delmarva Power along with four State agencies: the Delaware Public Service Commission (PSC), the Delaware Energy Office, the Office of Management and Budget, and the Office of the Controller General. Bluewater Wind Delaware LLC submitted the winning proposal. In June 2008, Bluewater Wind Delaware LLC announced that it signed a 25-year power purchase agreement with Delmarva Power to sell up to 200 megawatts (MW) of power to the utility from an offshore wind facility proposed on the OCS, about 12.5 miles off of Rehoboth Beach. The agreement with Delmarva Power was ratified by the Delaware legislature on July 31, 2008.

Determination of Competitive Interest

The first step in determining whether there is competitive interest in an area on the OCS for wind energy projects offshore of Delaware will be the evaluation of submissions indicating whether parties are willing to nominate particular areas of interest as suitable for renewable energy projects in response to this RFI. At the conclusion of the comment period for this RFI, the MMS will review information submitted and make a determination of whether competitive interest exists. Factors MMS may consider when evaluating the submittals include, but are not limited to: site locations; the timing and type of proposed activities; infrastructure; anticipated power production and likely purchasers; environmental and resource data and information; and the qualifications of a bidder to hold a lease on the OCS.

Specifically, MMS will first determine whether there is any geographic overlap of the areas of interest. If two areas of interest fully or partially overlap, the competitive process will begin as outlined in 30 CFR 285.211 through 285.225 and discussed below.

Situations may arise in which several parties nominate project areas that do not overlap. Under these circumstances, MMS could choose to employ an allocation system of leases that involves competition across tracts. This system is referred to as intertract competition and will also trigger the competitive process outlined in 30 CFR 285.211 through 285.225 and discussed below.

Competitive Process

If MMS determines that competitive interest exists for this area, it would proceed with the following defined process, as described in 30 CFR 285.211 through 285.225:

(1) Call for Information and Nominations (Call). The MMS would publish in the Federal Register a notice of a Call for Information and Nominations for leasing in specified areas. The comment period following the notice of a Call would be 45 days. In the notice, MMS may request comments seeking information on areas that should receive special consideration and analysis; on geological conditions (including bottom hazards); on archaeological sites on the seabed or nearshore; on possible multiple uses of the proposed leasing area (including navigation, recreation, and fisheries); and on other socioeconomic, biological, and environmental matters.

In response to the Call, the MMS would require potential lessees to submit the following information: the area of interest for a possible lease; a general description of the potential lessee's objectives and the facilities that the potential lessee would use to achieve those objectives; a general schedule of proposed activities, including those leading to commercial operations; and data and information concerning renewable energy and environmental conditions in the area of interest, including the energy and resource data and information that was used to evaluate the area of interest. However, an applicant would not be required to resubmit information already submitted in response to this RFI.

(2) Area Identification. The MMS would identify areas for environmental analysis and consideration for leasing in discussion with appropriate Federal agencies, States, local governments, Indian Tribes, and other interested parties based on the information submitted in this RFI and the Call.

(3) Proposed Sale Notice. The MMS would then publish a Proposed Sale Notice (PSN) in the Federal Register and send the PSN to the Governor of any affected State and the executive of any local government that might be affected. The PSN would describe the areas offered for leasing and the proposed terms and conditions of a lease sale, including the proposed auction format, lease form, and lease provisions. Additionally, the PSN would describe the criteria and process for evaluating bids. Generally, the PSN would be issued after completion of the final National Environmental Policy Act (NEPA) documentation, preparation of the Consistency Determination as required by the Coastal Zone Management Act (CZMA) and its implementing regulations, and preparation of various analyses of proposed lease sale economic terms and conditions. The comment period following issuance of a PSN would be 60 days.

Should MMS proceed with a competitive lease award process, MMS will use one of the following four auction formats to select the winner as described at 30 CFR § 285.220: multiple-factor bidding; sealed bidding; ascending bidding; or two-stage bidding (a combination of ascending bidding and sealed bidding). The multi-factor auction format may consider factors such as: (1) Documentation that you have entered into a purchase power agreement with a utility based in the State of Delaware for the purchase of power from a wind power project on the OCS and/or (2) documentation of your receipt of, and progress under, a limited lease under MMS' IP for the installation of offshore data collection or technology testing facilities on the OCS offshore Delaware.

(4) Final Sale Notice. The MMS would then publish the Final Sale Notice (FSN) in the Federal Register at least 30 days before the date of the sale. The MMS would publish the criteria for winning bid determinations in the FSN.

(5) Bid Evaluation. Following publication of the FSN in the Federal Register, qualified bidders may submit their bids to MMS in accordance with procedures specified for the auction format to be used. The bids, including the bid deposits, if applicable, would be checked for technical and legal adequacy. The MMS would evaluate the bids 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.

If MMS were to use a multiple-factor auction format, the evaluation of bids would be made by a panel composed of members selected by MMS.

Factors that likely would be considered for inclusion in this auction process are: Cash bonus; operating fees; rentals; technical merit, including site assessment efforts, project planning, and engineering studies; project experience; credit and security; the existence of power purchase arrangements; timeliness; financing and economics; environmental considerations; public benefits; and compatibility with State and local needs.

The MMS would coordinate with States and other stakeholders, as appropriate, to establish procedures designed to assure the selection of the most worthy proposal that would provide a fair return to the United States.

(6) Issuance of a Lease. Following the selection of a winning bid by the MMS, the submitter would be immediately notified of the decision and provided a set of official lease forms for execution. The successful bidder would have to pay the remaining 80 percent of the bonus bid, or other amount as specified in the Final Sale Notice, and file the required financial assurance within 10 days. Upon receipt of the required payments and properly executed lease forms, a lease would be issued to the successful bidder. The MMS leases would become effective on the first day of the month following the date the lease is signed by an MMS official unless MMS approves a written request that it become effective on the first day of the month in which it is signed. Within 45 days after receipt of the copies of the signed lease, payment of the first 6 months' rent is due.

Noncompetitive Process

If, after evaluating the responses to this RFI, MMS determines that there is no competitive interest in a proposed lease, a lease may be issued noncompetitively pursuant to the process described in 30 CFR 285.232, which is summarized below.

Based on responses to this RFI, MMS would publish a notice of the proposed lease in the Federal Register. If, after publishing this notice, MMS receives no responses indicating competitive interest in the proposed lease, MMS would issue a determination that there is no competitive interest in the proposed lease.

Within 60 days of the date of this determination, the lease applicant would be required to submit a Site Assessment Plan (SAP), as described in 30 CFR 285.231(d)(2)(i) and submit an acquisition fee pursuant to 30 CFR 285.502(a). Leases issued noncompetitively need to comply with the requirements of NEPA, CZMA, the Endangered Species Act (ESA), and other applicable Federal statutes. In accordance with 30 CFR 285.231(e), MMS would coordinate and consult, as appropriate, with affected Federal agencies, State and local governments, and affected Indian Tribes in issuing a noncompetitive lease and developing lease terms and conditions.

If, in response to the second Federal Register notice, MMS receives additional indications of interest in the proposed lease, MMS may determine that there is competitive interest and would follow the competitive process outlined above.

Other Process Issues

In the event that there is geographically overlapping interest (or intertract competition) for some areas but not for others, MMS may defer announcement of the determination of competitive interest for leases involving the overlapping (or intertract) areas. In such a circumstance, MMS may first publish a notice of its determination of the proposed lease(s) for area(s) in which there is no competitive interest. Next, MMS would provide notice identifying the leases that were proposed for all areas for which there is competitive interest. All lease areas for which there is competitive interest would be processed under the competitive leasing procedures set forth in 30 CFR 285.211 through 30 CFR 285.225. All lease(s) area(s) for which there is no competitive interest would be processed individually under the applicable provisions of 30 CFR 285.231.

Environmental Review

The following describes MMS' environmental review process, which would be coordinated, to the extent possible, with any Federal and State agencies having jurisdiction over activities associated with OCS commercial wind energy leases. Other Federal and State agencies may have additional and separate environmental review, consultation, and permitting processes and requirements.

After evaluating the responses to the RFI, but before publishing the PSN for a competitive lease sale or issuing a lease noncompetitively, MMS would prepare a NEPA analysis for public review and conduct required consultations with Federal and State agencies.

Several consultations would be conducted and integrated into the NEPA process described below. These consultations include, but are not limited to, those required by the CZMA, ESA, Magnuson-Stevens Fishery Conservation and Management Act, National Historic Preservation Act, and Executive Order 13175—“Consultation and Coordination with Tribal Governments.” These consultations would be completed prior to the issuance of any leases.

Should MMS determine that lease issuance would significantly affect the quality of the human environment, MMS would begin the process of preparing an Environmental Impact Statement (EIS) to analyze the effects of issuing the lease(s) through either a noncompetitive or competitive process. This would include a public scoping period, including a minimum 30-day comment period and one or more public meetings, would be conducted to solicit input on the alternatives and issues to be addressed in a draft EIS. This review would describe the technology expected to be used or deemed necessary for site assessment, construction, operations, and decommissioning in the area proposed for leasing, and any potential direct, indirect, and cumulative impacts to biological and physical resources, as well as socioeconomic consequences. During this process, MMS would review pertinent published and unpublished studies from academic and other institutions and organizations and from other Federal and State agencies. Upon completion of a draft EIS, MMS would file the draft EIS with the Environmental Protection Agency (EPA) and would publish a Notice of Availability in the Federal Register. The draft EIS would be made available and distributed for public review and comment during a minimum 45-day public comment period.

The MMS would hold one or more public hearings in the vicinity of the proposed lease area for the purpose of receiving comments on the draft EIS. The MMS would announce the time and location in the Federal Register at least 30 days before the public hearings.

The MMS would analyze the comments and information received during public review process, including those from public hearings, along with any newly acquired information and, where appropriate, would incorporate this information into the final EIS. Based on the NEPA analysis, results of the consultations, and comments received, the MMS would develop lease terms or stipulations to protect sensitive areas and/or biological and cultural resources. After the public hearings, MMS would develop a final EIS. The MMS would file the final EIS with EPA and publish a Notice of Availability in the Federal Register.

In a competitive leasing process, MMS would issue the final EIS with the PSN. In a noncompetitive leasing process, MMS would issue the final EIS at least 30 days prior to issuance of the lease.

Description of the Area

The area of interest rests between the incoming and outgoing shipping routes for Delaware Bay. The geographic extent of the area was selected based on preliminary indications of interest from developers in response to Delmarva Power's RFP in 2006, and through consultation with the MMS Delaware OCS Renewable Energy Task Force. The following full OCS lease blocks are included within the area of interest: Salisbury NJ18-05 Blocks 6324, 6325, 6326, 6327, 6375, 6376, 6377, 6426, 6427, 6477, and 6527. In addition, the following partial OCS lease blocks are included within the area of interest: Salisbury NJ18-05 Blocks 6272, 6273, 6274, 6275, 6276, 6277, 6278, 6322, 6323, 6328, 6373, 6374, 6378, 6424, 6425, 6428, 6475, 6476, 6478, 6526, 6528, 6577, and 6578.

This area is bounded by four coordinate pairs (listed below in a clockwise direction) and its closest point to shore is approximately 7.5 miles due east from Rehoboth Beach Delaware.

Coordinates are provided in X, Y (eastings, northings) UTM Zone 18N, NAD 83 and geographic (longitude, latitude), NAD83. Coordinate pairs start and end on the same location (Point No. 1).

Point No.	X (easting)	Y (northing)	Longitude	Latitude
1	505537.918949	4289342.054910	−74.936267	38.752755
2	537257.896672	4287622.083370	−74.571316	38.736486
3	535159.620824	4262175.494230	−74.596744	38.507255
4	530399.822669	4259687.322270	−74.651442	38.485007
1	505537.918949	4289342.054910	−74.936267	38.752755

Obstruction Area

At this time, the MMS has identified at least one obstruction area within the area of interest, although more may be identified during a future project review process. Within this area lies a fish haven/artificial reef site identified on National Oceanic and Atmospheric Administration (NOAA) nautical charts. The obstruction area's coordinates are listed below.

Point No.	X (easting)	Y (northing)	Longitude	Latitude
1	523043.216256	4281282.246340	−74.735077	38.679839
2	525024.306894	4281183.549880	−74.712304	38.678896
3	524708.429395	4279986.367770	−74.715978	38.668116
4	524599.514352	4279572.346900	−74.717245	38.664388
5	524255.539477	4279604.189130	−74.721198	38.664684
6	522091.708618	4279798.266490	−74.746063	38.666490
7	522393.836728	4281025.207860	−74.742551	38.677539
8	522464.137335	4281311.495710	−74.741733	38.680118
1	523043.216256	4281282.246340	−74.735077	38.679839

Traffic Separation Scheme (TSS) Buffer

The U.S. Coast Guard will require an initial buffer from the edge of a traffic lane of 500 meters. Because proposed project characteristics will be unique to each individual project, the specific buffer may be adjusted as more information is collected. In addition, it is important to note that two-way routes, fairways, and TSSs are various forms of routing measures, and that distances from them will vary because of many factors, one of which is vessel traffic and rules-of-the-road protocol.

Map of Area of Interest

A map of the area of interest can be found at the following URL: http://www.mms.gov/​offshore/​RenewableEnergy/​stateactivities.htm#Delaware

A large-scale map of the RFI area showing boundaries of the RFI area with numbered blocks is available from MMS at the following address: Minerals Management Service, Office of Offshore Alternative Energy Programs, 381 Elden Street, Mail Stop 4090, Herndon, VA 20170, Phone: [phone], Fax: [phone].

Required Indication of Interest Information

If you intend to submit an indication of interest in a commercial lease from MMS for the development of wind resources in the area(s) identified in this RFI, you must provide the following:

(1) A description of the specific whole or partial OCS blocks or areas within the RFI area that are of interest for commercial development, including any required buffer area. Note that any indications of interest identifying areas greater than what would be reasonably necessary to develop a proposed commercial wind facility will not be considered as valid indications of interest. In addition, MMS will not consider any areas outside of the RFI area in this process;

(2) A description of your objectives and the facilities that you would use to achieve those objectives;

(3) A schedule of proposed activities, including those leading to commercial operations;

(4) 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;

(5) Documentation demonstrating that you are qualified to hold a lease as set forth in 30 CFR 285.107, including documentation demonstrating that you are technically and financially capable of constructing, operating, maintaining, and decommissioning the facilities described in (2) above. Documentation of financial qualification may include information establishing access to sufficient capital to carry out development. Examples of documentation of technical qualification may include evidence of international or domestic experience with renewable energy projects or other types of electric-energy-related projects.

Protection of Privileged or Confidential Information

The MMS 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 the MMS treat it as confidential. The MMS will not disclose such information, subject to the requirements of FOIA. However, the MMS will not treat as confidential any aggregate summaries of such information or comments not containing such information. Please label privileged or confidential information “Contains Confidential Information” and consider submitting such information as a separate attachment.

Dated: March 31, 2010.

S. Elizabeth Birnbaum,

Director, Minerals Management Service.