[Federal Register Volume 82, Number 11 (Wednesday, January 18, 2017)]
[Notices]
[Pages 5600-5606]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01059]


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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

[Docket No. BOEM-2016-0045]


Atlantic Wind Lease Sale 7 (ATLW-7) for Commercial Leasing for 
Wind Power on the Outer Continental Shelf Offshore Kitty Hawk, North 
Carolina--Final Sale Notice; MMAA104000

AGENCY: Bureau of Ocean Energy Management, Interior.

ACTION: Final Sale Notice for Commercial Leasing for Wind Power on the 
Outer Continental Shelf Offshore Kitty Hawk, North Carolina.

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SUMMARY: This document is the Final Sale Notice (FSN) for the sale of 
one commercial wind energy lease on the Outer Continental Shelf (OCS) 
offshore Kitty Hawk, North Carolina, pursuant to 30 CFR 585.216. The 
Bureau of Ocean Energy Management (BOEM) will offer Lease OCS-A 0508 
for sale using an ascending bidding auction format. The FSN contains 
information pertaining to the area available for leasing, provisions 
and conditions, auction details, the lease form, criteria for 
evaluating competing bids, award procedures, appeal procedures, and 
lease execution. The issuance of the lease resulting from this sale 
would not constitute an approval of project-specific plans to develop 
offshore wind energy. Such plans, if submitted by the lessee, would be 
subject to subsequent environmental, technical, and public reviews 
prior to a decision to authorize any such development.

DATES: BOEM will hold a mock auction for the bidders starting at 9:00 
a.m. Eastern Standard Time (EST) on March 14, 2017. The monetary 
auction will be held online and will begin at 9:00 a.m. EST on March 
16, 2017. Additional details are provided in the section entitled 
``Deadlines and Milestones for Bidders.''

FOR FURTHER INFORMATION CONTACT: Will Waskes, BOEM Office of Renewable 
Energy Programs, 45600 Woodland Road, VAM-OREP, Sterling, Virginia 
20166,(703) 787-1320 or [email protected].
    Authority: This FSN is published pursuant to subsection 8(p) of the 
OCS Lands Act (43 U.S.C. 1337(p)), as amended by section 388 of the 
Energy Policy Act of 2005, and the implementing regulations at 30 CFR 
part 585, including sections 211 and 216.
    Background: BOEM proposed this lease sale on August 16, 2016, in 
the Proposed Sale Notice and Request for Interest (PSN/RFI) for 
Commercial

[[Page 5601]]

Leasing for Wind Power on the Outer Continental Shelf (OCS) Offshore 
North Carolina (Kitty Hawk), which was published in the Federal 
Register (81 FR 54591). A 60-day comment period followed. BOEM received 
19 comment submissions in response to the PSN/RFI, which are available 
on regulations.gov (Docket ID: BOEM-2016-0045) at: https://www.regulations.gov/docket?D=BOEM-2016-0045. BOEM has posted a document 
containing responses to comments submitted during the PSN/RFI comment 
period. The document, entitled Response to Comments, can be found 
through BOEM's Web site at: http://www.boem.gov/North-Carolina.
    In response to the Request for Interest, BOEM received one 
affirmation of interest from an existing legally, technically, and 
financially qualified entity. In addition to this affirmation of 
interest, eight new entities submitted qualifications in response to 
the PSN and have been determined to be qualified to participate in the 
North Carolina (Kitty Hawk) lease sale. Accordingly, BOEM has 
determined that competitive interest in OCS-A 0508 continues to exist, 
and BOEM is proceeding with a competitive leasing process as set forth 
in 30 CFR 585.211 through 585.225.

Environmental Reviews

    On January 23, 2015, BOEM published a Notice of Availability (NOA) 
of an Environmental Assessment (EA) for commercial wind lease issuance 
and site assessment activities on the Atlantic OCS offshore North 
Carolina with a 30-day public comment period (80 FR 3621). In response 
to the NOA, BOEM received 195 comments, which are available at http://www.regulations.gov, Docket No. BOEM-2015-0001. Many of the comments 
focused on mitigation measures to protect wildlife, specifically marine 
mammals. Based on the comments received in response to the EA, public 
outreach, information meetings, and new information received, BOEM made 
revisions to the EA originally published in January 2015.As a result of 
the analysis in the revised EA, BOEM issued a Finding of No Significant 
Impact (FONSI) on September 18, 2015, (80 FR 56494). The revised EA and 
FONSI can be found at: http://www.boem.gov/North-Carolina/.
    In addition, BOEM has concluded consultations under the Endangered 
Species Act (ESA) with the U.S. Fish and Wildlife Service and the 
National Marine Fisheries Service (NMFS), and under the Magnuson-
Stevens Fishery Conservation and Management Act with NMFS, relating to 
the lease sale, associated site characterization surveys, and 
subsequent site assessment activities. In October 2016, the States of 
North Carolina and Virginia concurred with BOEM's consistency 
determination under the Coastal Zone Management Act.
    On May 23, 2013, BOEM executed a programmatic agreement (PA) with 
the State Historic Preservation Officer of North Carolina and the 
Advisory Council on Historic Preservation to guide consultation under 
section 106 of the National Historic Preservation Act for renewable 
energy activities offshore North Carolina. The PA provides for 
consultation to continue throughout BOEM's commercial leasing process 
and the decision-making process regarding the approval, approval with 
modification, or disapproval of a lessee's Site Assessment Plan (SAP) 
and/or Construction and Operations Plan (COP). In addition, the PA 
allows for phased identification and evaluation of historic properties. 
The PA can be found at: http://www.boem.gov/South-Atlantic-Renewable-Energy-Activities/.
    On May 7, 2015, BOEM completed its section 106 review for issuing 
commercial leases within the North Carolina Wind Energy Areas (WEA) and 
published a Finding of No Historic Properties Affected For the Issuance 
of Commercial Leases within the Kitty Hawk, Wilmington East and 
Wilmington West Wind Energy Areas For Wind Energy Development on the 
Outer Continental Shelf Offshore North Carolina. The Finding can be 
found at: http://www.boem.gov/NC-WEAs-Lease-Issuance/.
    Through its environmental review process, and in consideration of 
the comments received in response to the EA, BOEM developed measures to 
mitigate potential impacts from site characterization surveys and site 
assessment activities. Mitigation measures designed to reduce or 
eliminate impacts from survey activities will be enforced through the 
terms, conditions, and stipulations included in Addendum ``C'' of Lease 
OCS-A 0508. Mitigation measures related to the installation and 
operation of meteorological towers and/or buoys would be included as 
terms and conditions of the eventual lessee's SAP approval. This suite 
of mitigation measures was developed using the best available science, 
and BOEM will continue to work with affected stakeholders and assess 
ongoing and future research relating to potential survey, site 
assessment, and construction and operations impacts, including 
potential mitigation measures. Additional environmental reviews and 
consultations will be conducted as necessary upon receipt of the 
lessee' SAP and COP.
    List of Eligible Bidders: BOEM has determined that pursuant to 30 
CFR 585.106 and 107, the following entities are legally, technically, 
and financially qualified to hold a commercial wind lease offshore 
North Carolina, and therefore may participate in this lease sale as 
bidders subject to meeting the requirements outlined in this notice.

------------------------------------------------------------------------
                                                                Company
                         Company name                             No.
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Avangrid Renewables, LLC.....................................      15019
Enbridge Holdings (Green Energy) L.L.C.......................      15065
Shell WindEnergy Inc.........................................      15066
Northland Power America Inc..................................      15068
Wind Future LLC..............................................      15067
Outer Banks Ocean Energy, LLC................................      15008
PNE Wind USA, Wind Inc.......................................      15056
Statoil Wind US LLC..........................................      15058
wpd offshore Alpha LLC.......................................      15060
------------------------------------------------------------------------

    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 the lease pursuant to this sale. These are 
organized into various stages: the FSN Waiting Period; Conducting the 
Auction; and From the Auction to Lease Execution.

 FSN Waiting Period

     Bidder's Financial Form (BFF): Each bidder must submit a 
BFF to BOEM in order to participate in the auction. BOEM must receive 
each bidder's BFF no later than February 2, 2017. BOEM will consider 
extensions to this deadline only if BOEM determines that the failure to 
timely submit a BFF was caused by events beyond the bidder's control. 
The BFF can be downloaded at: http://www.boem.gov/North-Carolina/. Once 
the BFF has been processed, bidders may log into pay.gov and submit a 
bid deposit. For purposes of this auction, BOEM will not consider any 
BFFs submitted by bidders for previous lease sales. BOEM will only 
accept an originally executed paper copy of the BFF. The BFF must be 
executed by an authorized representative as shown on the bidder's legal 
qualifications. Each bidder is required to sign the self-certification 
in the BFF, in accordance with 18 U.S.C. 1001 (Fraud and False 
Statements).
     Bid Deposit: Each bidder must provide a bid deposit of 
$450,000 no later than February 16, 2017, in order to participate in 
the mock auction and the monetary auction. BOEM will consider 
extensions to this deadline only if BOEM determines that the failure to

[[Page 5602]]

timely submit the bid deposit was caused by events beyond the bidder's 
control. Further information about bid deposits can be found in the 
``Bid Deposit'' section of this notice.
     Mock Auction: BOEM will hold a Mock Auction on March 14, 
2017, beginning at 9:00 a.m. EST. The Mock Auction will be held online. 
BOEM will contact each bidder that has timely filed a BFF and bid 
deposit and provide instructions for participation. Only bidders that 
have timely submitted BFFs and bid deposits will be permitted to 
participate in the Mock Auction.
     Conducting the Auction: BOEM, through its contractor, will 
hold an auction as described in this notice.
     Auction: On March 16, 2017, BOEM, through its contractor, 
will hold the auction. The first round of the auction will start at 
9:00 a.m. EST. 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 last one business 
day, but it may continue on consecutive business days, as necessary, 
until the auction ends in accordance with the procedures described in 
the ``Auction Format'' section of this notice. The monetary bidding 
will end in the first round in which BOEM receives one or zero bids at 
the asking price.
     Announce Provisional Winner: BOEM will announce the 
provisional winner of the lease sale after the auction ends.

 From the Auction to Lease Execution

     Refund Non-Winners: Once the provisional winner has been 
announced, BOEM will provide the non-winners a written explanation of 
why they did not win and return their bid deposits.
     Department of Justice (DOJ) Review: DOJ will have 30 days 
in which to conduct an antitrust review of the auction, pursuant to 43 
U.S.C Sec.  1337(c).
     Delivery of the Lease: BOEM will send three lease copies 
to the winner, with instructions on how to execute the lease. The first 
year's rent is due 45 calendar days after the winner receives the lease 
copies for execution.
     Return the Lease: Within 10 business days of receiving the 
lease copies, the auction winner must post financial assurance, pay any 
outstanding balance of its bonus bid (i.e., winning monetary bid minus 
applicable bid deposit), and sign and return the three executed lease 
copies. The winner may request extensions to the 10-day deadline, and 
BOEM may grant such extensions if BOEM determines the delay to be 
caused by events beyond the winner's control, pursuant to 30 CFR 
585.224(e).
     Execution of Lease: Once BOEM has received the lease 
copies and verified that all other required materials have been 
received, BOEM will make a final determination regarding its issuance 
of the lease and will execute the lease, if appropriate.
    Area Offered for Leasing: The area available for sale will be 
auctioned as one lease, Lease OCS-A 0508, (Kitty Hawk Lease Area (LA)). 
The Kitty Hawk LA consists of 122,405 acres. The Kitty Hawk LA is the 
same as the Kitty Hawk WEA that BOEM announced on August 11, 2014, and 
published in the PSN. A description of the Kitty Hawk LA can be found 
in Addendum ``A'' of the lease, which along with the Area 
Identification announcement and PSN, are available with this notice on 
the BOEM Web site at: http://www.boem.gov/North-Carolina/.

Map of the Area Offered for Leasing

    A map of the Kitty Hawk LA, and GIS spatial files X, Y (eastings, 
northings) UTM Zone 18, NAD83 Datum, and geographic X, Y (longitude, 
latitude), NAD83 Datum can be found on BOEM's Web site at: http://www.boem.gov/North-Carolina/.
    A large scale map of the Kitty Hawk LA, showing boundaries of the 
area with numbered blocks, is available from BOEM upon request at the 
following address: Bureau of Ocean Energy Management, Office of 
Renewable Energy Programs, 45600 Woodland Road, VAM-OREP, Sterling, 
Virginia 20166, Phone: (703) 787-1300, Fax: (703) 787-1708.
    Withdrawal of Blocks: BOEM reserves the right to withdraw all or 
portions of the Kitty Hawk LA prior to executing the lease with the 
winning bidder, based upon relevant information provided to BOEM.
    Lease Terms and Conditions: BOEM has included terms, conditions, 
and stipulations for the OCS commercial wind lease to be offered 
through this sale. After the lease is issued, BOEM reserves the right 
to require compliance with additional terms and conditions associated 
with approval of a SAP or COP. The lease is available on BOEM's Web 
site at: http://www.boem.gov/North-Carolina/. The lease includes the 
following seven attachments:
     Addendum ``A'' (Description of Leased Area and Lease 
Activities);
     Addendum ``B'' (Lease Term and Financial Schedule);
     Addendum ``C'' (Lease Specific Terms, Conditions, and 
Stipulations);
     Addendum ``D'' (Project Easement);
     Addendum ``E'' (Rent Schedule post-COP approval);
     Appendix A to Addendum ``C'' (Incident Report: Protected 
Species Injury or Mortality); and
     Appendix B to Addendum ``C'' (Required Data Elements for 
Protected Species Observer Reports).

Addenda ``A,'' ``B,'' and ``C'' provide detailed descriptions of lease 
terms and conditions. Addenda ``D'' and ``E'' will be completed at the 
time of COP approval or approval with modifications.
    The most recent version of BOEM's renewable energy commercial lease 
form(BOEM-0008) is available on BOEM's Web site at: http://www.boem.gov/BOEM-OCS-Operation-Forms/.
    Potential bidders should note that BOEM and the Bureau of Safety 
and Environmental Enforcement (BSEE) are in the process of reassigning 
regulations relating to safety and environmental oversight and 
enforcement responsibilities for offshore renewable energy projects 
from BOEM to BSEE. Once this administrative reassignment is finalized, 
BOEM may make ministerial and non-substantive amendments to the lease 
to conform it to the regulatory revisions.
    Plans: Pursuant to 30 CFR 585.601, the leaseholder wishing to 
submit a SAP must do so within 12 months of lease issuance. If the 
lessee intends to continue its commercial lease with an operations 
term, the lessee must submit a COP at least 6 months before the end of 
the site assessment term.
    Financial Terms and Conditions: This section provides an overview 
of the annual payments required of the lessee that will be fully 
described in the lease, and the financial assurance requirements that 
will be associated with the lease.
    Rent: Pursuant to 30 CFR 585.224(b) and 585.503, the first year's 
rent payment of $3 per acre is due within 45 calendar days of the date 
the lessee receives the lease for execution. Thereafter, annual rent 
payments are due on the anniversary of the Effective Date of the lease 
(the ``Lease Anniversary''). Once commercial operations under the lease 
begin, BOEM will charge rent only for the portions of the lease not 
authorized for commercial operations, i.e., not generating electricity. 
However, instead of geographically dividing the leased area into 
acreage that is ``generating'' and ``non-generating,'' the fraction of 
the lease accruing rent will be based on the fraction of the total 
nameplate capacity of the project that is not yet in operation. This 
fraction is calculated by

[[Page 5603]]

dividing the nameplate capacity not yet authorized for commercial 
operations at the time payment is due by the anticipated nameplate 
capacity after full installation of the project (as described in the 
COP). The annual rent due for a given year is then derived by 
multiplying this fraction by the amount of rent that would have been 
due for the lessee's entire LA at the rental rate of $3 per acre.
    For a 122,405 acre lease (the size of the Kitty Hawk LA), the rent 
payment will be $367,215 per year if no portion of the LA is authorized 
for commercial operations. If 300 megawatts (MW) of a project's 
nameplate capacity is operating (or authorized for operation), and the 
approved COP specifies a maximum project size of 500 MW, the rent 
payment will be $146,886. This payment is based on the 200 MW of 
nameplate capacity BOEM has not yet authorized for commercial 
operations. For the above example, this would be calculated as follows: 
200MW/500MW x ($3/acre x 122,405 acres) = $146,886.
    If the lessee submits an application for relinquishment of a 
portion of its leased area within the first 45 calendar days following 
the date that the lease is received by the lessee for execution, and 
BOEM approves that application, no rent payment will be due on the 
relinquished portion of the Kitty Hawk LA. Later relinquishments of any 
portion of the Kitty Hawk LA will reduce the lessee's rent payments 
starting in the year following BOEM's approval of the relinquishment.
    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 thereof) that describes the project easement. Annual rent 
for a project easement that is 200 feet wide and centered on the 
transmission cable is $70 per statute mile. For any additional acreage 
required, the lease must also pay the greater of $5 per acre per year 
or $450 per year.
    Operating Fee: For purposes of calculating the initial annual 
operating fee payment and pursuant to 30 CFR 585.506, an operating fee 
rate is applied to a proxy for the wholesale market value of the 
electricity expected to be generated from the project during its first 
twelve months of operations. This initial payment will be prorated to 
reflect the period between the commencement of commercial operations 
and the Lease Anniversary. The initial annual operating fee payment is 
due within 45 days of the commencement of commercial operations. 
Thereafter, subsequent annual operating fee payments are due on or 
before each Lease Anniversary.
    The subsequent annual operating fee payments are calculated by 
multiplying 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 annual nameplate capacity, the total number of hours 
in the year (8,760), the capacity factor, and the annual average price 
of electricity derived from a historical regional wholesale power price 
index. For example, the annual operating fee for a 100 MW wind facility 
operating at a 40% capacity (i.e., capacity factor of 0.4) with a 
regional wholesale power price of $40/MWh and an operating fee rate of 
0.02 would be calculated as follows:
[GRAPHIC] [TIFF OMITTED] TN18JA17.043

    Operating Fee Rate: The operating fee rate is the share of imputed 
wholesale market value of the projected annual electric power 
production due to the Office of Natural Resources Revenue as an annual 
operating fee. For the Kitty Hawk LA, BOEM will set the fee rate at 
0.02 (i.e., 2%) for the entire life of commercial operations.
    Nameplate Capacity: Nameplate capacity is the maximum rated 
electric output, expressed in MW, that the turbines of the wind 
facility under commercial operations can produce at their rated wind 
speed as designated by the turbine's manufacturer. The lessee will 
specify in its COP the nameplate capacity available at the start of 
each year of commercial operations on the lease. For example, if the 
lessee specifies 20 turbines in its COP, and each is rated by the 
manufacturer at 5 MW, the nameplate capacity of the wind facility is 
100 MW.
    Capacity Factor: The capacity factor compares the amount of energy 
delivered to the grid during a period of time to the amount of energy 
the wind facility would have produced at full capacity. The amount of 
power delivered in a year will always be less than the theoretical 100% 
capacity, largely because of the variability of wind speeds, 
transmission line loss, and downtime for maintenance or other purposes.
    The capacity factor is expressed as a decimal between zero and one, 
and represents the share of anticipated generation of the wind facility 
that is delivered to the interconnection grid (i.e., where the lessee's 
facility interconnects with the electric grid) relative to the wind 
facility's generation at continuous full power operation at nameplate 
capacity. BOEM has set the capacity factor for the year in which 
commercial operations commence and the six full years thereafter at 0.4 
(i.e., 40%). At the end of the sixth year, BOEM may adjust the capacity 
factor to reflect the performance over the previous five years based 
upon the actual metered electricity generation at the delivery point to 
the electrical grid. BOEM may make similar adjustments to the capacity 
factor 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: Pursuant to 30 CFR 585.506(c)(2)(i), 
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 PJM Dominion zone for the most recent year 
of spot price data available. 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 and using annual implicit price deflators as 
reported by the U.S. Department of Commerce, Bureau of Economic 
Analysis.
    Financial Assurance: Within 10 business days after receiving the 
lease copies and pursuant to 30 CFR 585.515-516, the provisional winner 
of the Kitty Hawk LA must provide an initial lease-specific bond or 
other approved means of meeting the lessor's initial financial 
assurance requirements. The provisional winner may meet financial 
assurance requirements by posting a surety bond or by setting up an 
escrow account with a trust agreement giving BOEM the right to withdraw 
the money held in the account on demand. BOEM encourages the 
provisionally winning bidder to discuss the financial assurance 
requirement with BOEM as soon as possible after the auction has 
concluded.

[[Page 5604]]

    BOEM will base the amount of all SAP, COP, and decommissioning 
financial assurance requirements on cost estimates for meeting all 
accrued lease obligations at the respective stages of development. The 
required amount of supplemental and decommissioning financial assurance 
will be determined on a case-by-case basis.
    The financial terms described above can be found in Addendum ``B'' 
of the lease, which BOEM has made available with this notice on its Web 
site at: http://www.boem.gov/North-Carolina/.
    Bidder's Financial Form: Each bidder must fill out the BFF 
referenced in this FSN. BOEM has also made a copy of the form available 
with this notice on its Web site at: http://www.boem.gov/North-Carolina/. BOEM recommends that each bidder designate an email address 
in its BFF that the bidder will then use to create an account in 
pay.gov (if it has not already done so).
    BOEM will not consider BFFs submitted by bidders for previous lease 
sales to satisfy the requirements of this auction. BOEM will also only 
consider BFFs submitted after the deadline if BOEM determines that the 
failure to timely submit the BFF was caused by events beyond the 
bidder's control. BOEM will only accept an original, executed paper 
copy of the BFF. The BFF must be executed by an authorized 
representative who has been identified in the qualifications package on 
file with BOEM as authorized to bind the company.
    Bid Deposit: A bid deposit is an advance cash payment submitted to 
BOEM in order to participate in the auction. After creating an account 
in pay.gov (if necessary), bidders may use the Bid Deposit Form on the 
pay.gov Web site to leave a deposit. Each bidder must submit a bid 
deposit of $450,000 no later than February 16, 2017. Any bidder who 
fails to submit the bid deposit by this deadline may be disqualified 
from participating in the auction.
    Following the auction, bid deposits will be applied against bonus 
bids or other obligations owed to BOEM. If the bid deposit exceeds a 
bidder's total financial obligation, the balance of the bid deposit 
will be refunded to the bidder. BOEM will refund bid deposits to non-
winners once BOEM has announced the provisional winner.
    If BOEM offers a lease pursuant to a provisionally winning bid, and 
that bidder fails to timely return the signed lease form, establish 
financial assurance, and/or pay the balance of its bid, BOEM will 
retain the bidder's $450,000 bid deposit. BOEM reserves the right to 
determine which bid would have won in the absence of the bid 
previously-determined to be the winning bid, and to offer a lease 
pursuant to this next highest bid.
    Minimum Bid: The minimum bid is the lowest bid BOEM will accept as 
a winning bid and it is where BOEM will start the monetary bidding. 
BOEM has established a minimum bid of $2.00 per acre, or $244,810, for 
this lease sale.
Auction Procedures
Ascending Bidding With Cash Bid Variable
    As authorized under 30 CFR 585.220(a)(2) and 585.221(a)(1), BOEM 
will use an ascending bidding auction with cash as the bid variable for 
this sale. Using an online bidding system to host the auction, BOEM 
will start the bidding for Lease OCS-A 0508 at $244,810, and increase 
that price incrementally until no more than one active bidder remains 
in the auction.
The Auction
    The auction will be conducted in a series of rounds. At the start 
of each round, BOEM will state an asking price for the LA. If a bidder 
is willing to meet that asking price for the LA, it will indicate this 
by submitting a bid equal to the asking price, i.e., a live bid.
    To participate in any round of the auction, a bidder must have 
submitted a live bid in the previous round. As long as there are two or 
more live bids for the LA, the auction will proceed to the next round. 
Between rounds, BOEM will raise the asking price for the LA by an 
increment that it determines appropriate. Asking price increments are 
within BOEM's sole discretion, but may be based on a number of factors, 
including the number of bidders still active in the auction and BOEM's 
best estimate of how many rounds may remain before the auction is 
resolved.
    As the auction proceeds, a bidder will retain its eligibility to 
continue bidding as long as that bidder submitted a live bid in the 
previous round. Between rounds, BOEM will release information 
indicating the number of live bids in the previous round of the auction 
(i.e., the level of demand) and the asking price in the upcoming round 
of the auction. Bidders may be bound by any of their bids until the 
auction results are finalized.
Exit Bidding
    In any round after the first round of the auction, a bidder may 
submit an exit bid that is higher than the previous round's asking 
price, but less than the current round's asking price. If a bidder 
submits an exit bid, it is not eligible to participate in any 
subsequent rounds of the auction. During the auction, exit bids will be 
seen only by BOEM and not by other bidders.
    If the LA receives only exit bids in a round, no bidders will be 
eligible to bid in the next round, and the auction will conclude.
Determining the Provisional Winner
    The auction will end in the first round in which at most one live 
bid is received. If there is one live bid in the final round, that bid 
is the provisionally winning bid. If there are no live bids, the 
highest exit bid is the provisionally winning bid. If there is a tie 
for the highest exit bid, BOEM's tie-breaking procedures will resolve 
the tie. If BOEM receives no live or exit bids, then there is a tie 
among all bidders that had submitted live bids in the previous round 
and BOEM's tie-breaking procedures will determine the provisionally 
winning bid.
    Ties are resolved by a random process. The auction system generates 
a random number for each bidder. In the event of a tie, these numbers 
are compared, and the tied bidder with the highest random number is 
deemed the provisional winner.

Additional Information Regarding the Auction Format

Bidder Authentication
    For the online auction, BOEM will require two-factor 
authentication. After BOEM has processed the bid deposits, the auction 
contractor sends several bidder authentication packages to the bidders. 
One package will contain digital authentication tokens necessary for 
allowing access to the auction Web site. As a general practice, tokens 
are mailed to the Primary Point of Contact indicated on the BFF. This 
individual is responsible for distributing the tokens to the 
individuals authorized to bid for that company. Bidders are to ensure 
that each token is returned within three business days following the 
auction. An addressed, stamped envelope will be provided to facilitate 
this process. In the event that a bidder fails to submit a bid deposit 
or does not participate in the auction, BOEM will de-activate that 
bidder's tokens and login information, and the bidder will be asked to 
return its tokens.
    The second package contains login credentials for authorized 
bidders. The login credentials are mailed to the address provided in 
the BFF for each authorized individual. Bidders can confirm these 
addresses by calling 703-787-1320. This package will contain user login 
information and instructions for accessing the Bidder Manual for the

[[Page 5605]]

auction system, the Auction System Technical Supplement (ASTS) and the 
Alternative Bidding Form, all of which are available on BOEM's Web site 
at: http://www.boem.gov/North-Carolina/. The login information, along 
with the tokens, will be tested during the Mock Auction.
Timing of Auction
    The auction will begin at 9:00 a.m. EST on March 16, 2017. Bidders 
may log in as early as 8:30 a.m. on that day. We recommend that bidders 
log in earlier than 9:00 a.m. on that day to ensure that any login 
issues are resolved prior to the start of the auction. Once bidders 
have logged in, they should review the auction schedule, which lists 
the anticipated start times, end times, and recess times of each round 
in the auction. Each round is structured as follows:
     Round bidding begins;
     Bidders enter their bids;
     Round bidding ends and the Recess begins;
     During the Recess, previous Round results are posted;
     Bidders review the previous Round results and prepare 
their next Round bids; and
     Next Round bidding begins.
    The first round will last about 30 minutes, though subsequent 
rounds may be shorter. Recesses are anticipated to last approximately 
10 minutes. The description of the auction schedule included with this 
FSN is tentative. Bidders should consult the auction schedule on the 
bidding Web site during the auction for updated times. Bidding may 
continue until about 6:00 p.m. each day. BOEM anticipates that the 
auction will last one business day, but bidders are advised to prepare 
to continue bidding for additional business days as necessary to 
resolve 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. When BOEM changes the schedule during an 
auction, it uses the messaging feature to notify bidders that a 
revision has been made, and directs bidders to the relevant page. BOEM 
also uses the messaging system for other changes and updates during the 
auction.
    Bidders may place bids at any time during the round. At the top of 
the bidding page, a countdown clock shows 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 this notice, and 
the ASTS. No information about the round results is available until the 
round has closed and results have been posted, so there is no strategic 
advantage to placing bids early or late in the round.
    The timing of the auction will be elaborated on and clarified in 
the ASTS. The ASTS describes auction procedures that are incorporated 
by reference in this notice, unless the procedures described in the 
ASTS directly contradict this notice. In the event of an inconsistency 
between the ASTS and the FSN, the FSN is controlling.
Prohibition on Communications Between Bidders During Auction
    During the auction, bidders are prohibited from communicating with 
each other regarding their participation in the auction. Additionally, 
during the auction, bidders are prohibited from communicating to the 
general public, including, but not limited to, through social media, 
updated Web sites, or press releases, regarding any aspect of their 
participation or lack thereof in the auction.
Alternate Bidding Procedures
    Alternate Bidding Procedures enable a bidder who is having 
difficulty accessing the Internet to submit its bid via fax using an 
Alternate Bidding Form available on BOEM's Web site at: http://www.boem.gov/North-Carolina/.
    In order to be authorized to use an Alternate Bidding Form, a 
bidder must call the help desk number listed in the Auction Manual 
before the end of the round. BOEM will authenticate the caller to 
ensure he/she is authorized to bid on behalf of the bidder. The bidder 
must explain the reasons for which he/she is forced to place a bid 
using the Alternate Bidding Procedures. BOEM may, in its sole 
discretion, permit or refuse to accept a request for the placement of a 
bid using the Alternate Bidding Procedures.
    Rejection or Non-Acceptance of Bids: BOEM reserves the right and 
authority to reject any and all bids that do not satisfy the 
requirements and rules of the auction, the FSN, or applicable 
regulations and statutes.
    Anti-Competitive Review: Bidding behavior in this sale is subject 
to Federal antitrust laws. Accordingly, following the auction, but 
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.'' 43 
U.S.C. 1337(c). If a bidder is found to have engaged in anti-
competitive behavior in connection with its participation in the 
competitive bidding process, BOEM may reject the provisionally winning 
bid. Compliance with BOEM's auction procedures and regulations is not 
an absolute defense to violations of antitrust laws.
    Anti-competitive behavior determinations are fact-specific. 
However, such behavior may manifest itself in several different ways, 
including, but not limited to:
     An express or tacit agreement among bidders not to bid in 
an auction, or to bid a particular price;
     An agreement among bidders not to bid;
     An agreement among bidders not to bid against each other; 
or
     Other agreements among bidders that have the potential to 
affect the final auction price.
    BOEM will decline to award a lease pursuant to 43 U.S.C. 1337(c) if 
the Attorney General, in consultation with the Federal Trade 
Commission, determines that awarding the lease would be inconsistent 
with the antitrust laws.
    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 legal counsel.
    Process for Issuing the Lease: Once all post-auction reviews have 
been completed to BOEM's satisfaction, BOEM will issue three unsigned 
copies of the lease to the provisionally winning bidder. Within 10 
business days after receiving the lease copies, the provisionally 
winning bidder must:
    1. Sign and return the lease copies on the bidder's behalf;
    2. File financial assurance, as required under 30 CFR 585.515-537; 
and
    3. Pay by electronic funds transfer (EFT) the balance (if any) of 
the bonus bid (winning bid less the bid deposit). BOEM requires bidders 
to use EFT procedures (not pay.gov, the Web site bidders used to submit 
bid deposits) 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/North-Carolina/.
    BOEM will not execute a lease until the three requirements above 
have been satisfied, BOEM has accepted the provisionally winning 
bidder's financial assurance pursuant to 30 CFR 585.515, and BOEM has 
processed the provisionally winning bidder's payment.
    BOEM may extend the 10 business day deadline for signing the lease, 
filing the required financial assurance, and/or paying the balance of 
the bonus bid if

[[Page 5606]]

BOEM determines the delay was caused by events beyond the provisionally 
winning bidder's control.
    If the provisionally winning bidder does not meet these 
requirements or otherwise fails to comply with applicable regulations 
or the terms of the FSN, BOEM reserves the right not to issue the lease 
to that bidder. In such a case, the provisionally winning bidder will 
forfeit its bid deposit. In such an event, BOEM reserves the right to 
identify the next highest bid submitted during the lease sale and offer 
the lease pursuant to that bid.
    Within 45 calendar days of the date that the provisionally winning 
bidder receives copies of the lease, it must pay the first year's rent 
using the pay.gov Renewable Energy Initial Rental Payment form 
available at: https://www.pay.gov/public/form/start/27797604/. 
Subsequent annual rent payments must be made following the detailed 
instructions contained in the ``Instructions for Making Electronic 
Payments,'' available on BOEM's Web site at: http://www.boem.gov/North-Carolina/.
    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 Department of the Interior's non-
procurement debarment and suspension regulations at 2 CFR 180 and 1400. 
The lessee must also communicate this requirement to persons with whom 
the lessee does business relating 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 auction details 
specified in the FSN, including the date and time, 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, 
blizzards), wars, riots, acts of terrorism, fire, strikes, civil 
disorder or other events of a similar nature. In case of such events, 
BOEM will notify all qualified bidders via email or phone, or through 
the BOEM Web site at: http://www.boem.gov/Renewable-Energy-Program/index.aspx.
    Bidders should call 703-787-1320 if they have concerns.
    Appeals: The appeals procedures are provided in BOEM's regulations 
at 30 CFR 585.225 and 585.118(c). Pursuant to 30 CFR 585.225:
    (a) If BOEM rejects your bid, BOEM will provide a written statement 
of the reasons and refund any money deposited with your bid, without 
interest.
    (b) You will then be able to ask the BOEM Director for 
reconsideration, in writing, within 15 business days of bid rejection, 
under 30 CFR 585.118(c)(1). We will send you a written response either 
affirming or reversing the rejection.
    The procedures for appealing final decisions with respect to lease 
sales are described in 30 CFR 585.118(c).
    Protection of Privileged or Confidential Information: BOEM will 
protect privileged or confidential information that you submit, as 
required by the Freedom of Information Act (FOIA). Exemption 4 of FOIA 
applies to ``trade secrets and commercial or financial information that 
you submit that is privileged or confidential.'' 5 U.S.C. 552(b)(4). If 
you wish to protect the confidentiality of such information, clearly 
mark it ``Contains Privileged or Confidential Information'' and 
consider submitting such information as a separate attachment. BOEM 
will not disclose such information, except as required by FOIA. 
Information that is not labeled as privileged or confidential will be 
regarded by BOEM as suitable for public release. Further, BOEM will not 
treat as confidential aggregate summaries of otherwise confidential 
information.

    Dated: January 10, 2017.
Walter D. Cruickshank,
Acting Director, Bureau of Ocean Energy Management.
[FR Doc. 2017-01059 Filed 1-17-17; 8:45 am]
 BILLING CODE 4310-MR-P