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Rule

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

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Information about this document as published in the Federal Register.

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AGENCY:

Minerals Management Service (MMS), Interior.

ACTION:

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

SUMMARY:

The MMS is publishing final regulations to establish a program to grant leases, easements, and rights-of-way (ROW) for renewable energy project activities on the Outer Continental Shelf (OCS), as well as certain previously unauthorized activities that involve the alternate use of existing facilities located on the OCS; and to establish the methods for sharing revenues generated by this program with nearby coastal States. These regulations will also ensure the orderly, safe, and environmentally responsible development of renewable energy sources on the OCS.

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

DATES:

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

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FOR FURTHER INFORMATION CONTACT:

Final rule: Maureen Bornholdt, Program Manager, Office of Alternative Energy Programs, at (703) 787-1300 or maureen.bornholdt@mms.gov; or Amy C. White, Regulations and Standards Branch, at (703) 787-1665 or amy.white@mms.gov.

Environmental Assessment: James F. Bennett, Chief, Branch of Environmental Assessment, at (703) 787-1660 or James.F.Bennett@mms.gov.

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SUPPLEMENTARY INFORMATION:

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

Background

Mandate of Energy Policy Act of 2005 (EPAct)

The EPAct amended the OCS Lands Act to authorize the Secretary to issue leases, easements, or ROWs on the OCS for activities that:

(i) Support exploration, development, production, or storage of oil or natural gas, except that a lease, easement, or right-of-way shall not be granted in an area in which oil and gas preleasing, leasing, and related activities are prohibited by a moratorium;

(ii) Support transportation of oil or natural gas, excluding shipping activities;

(iii) Produce or support production, transportation, or transmission of energy from sources other than oil and gas; or

(iv) Use, for energy-related or other authorized marine-related purposes, facilities currently or previously used for activities authorized under the OCS Lands Act.

This new authority does not apply to activities that are otherwise authorized by law, including those covered by the OCS Lands Act, the EPAct, the Deepwater Port Act of 1974, and the Ocean Thermal Energy Conversion Act of 1980. On March 20, 2006, the Secretary of the Interior delegated to the MMS the new authority that was conferred by the EPAct. Under this authority, MMS will regulate the generation of electricity or other forms of energy from sources other than oil and natural gas on OCS facilities and the transmission on project easements and ROWs issued under this part. The MMS will not regulate sales of electricity or other forms of energy. The MMS will not regulate the transmission of electricity or other forms of energy on State lands.

In addition, the EPAct requires the Secretary to share with nearby coastal States a portion of the revenues received by the Federal Government from authorized renewable energy and alternate use projects on certain areas of the OCS. This final rule implements this mandate and describes the methods MMS will use for identifying what projects are covered by this requirement, determining which States are eligible to receive shares of the revenues, and—if two or more States are eligible to receive revenues from the same project—allocating the appropriate share to each eligible State.

The EPAct included a requirement that the Secretary develop any necessary regulations to implement the new authority. This final rule applies to the activities described in (iii) and (iv) previously (i.e., those relating to production, transportation, or transmission of energy from sources other than oil and gas, and to the use of existing OCS facilities for energy-related or other authorized marine-related purposes). Regulations for activities described in (i) and (ii) previously (i.e., those relating to oil and gas) will be promulgated separately in appropriate parts of the existing MMS oil and gas regulations.

While the MMS is the lead agency for authorizing OCS renewable energy and alternate use activities, we recognize that other Federal agencies have regulatory responsibility in such activities. The new authority does not expressly supersede or modify existing Federal laws, and all activities must comply fully with such laws. For instance, FERC has exclusive jurisdiction to issue licenses for hydrokinetic projects under Part I of the Federal Power Act and issue exemptions from licensing under Section 405 and 408 of the Public Utility Regulatory Policies Act of 1978 for the construction and operation of hydrokinetic projects on the OCS. However, no FERC license or exemption for a hydrokinetic project on the OCS shall be issued before MMS issues a lease, easement, or right-of-way. The MMS possesses the exclusive authority to issue leases, easements, and rights-of-way for renewable energy projects on the OCS.

In addition to providing the authority to issue leases, easements, and ROWs, the EPAct included a requirement that any activity permitted under this authority be “carried out in a manner that provides for—

(A) Safety;

(B) Protection of the environment;

(C) Prevention of waste;

(D) Conservation of the natural resources of the outer Continental Shelf; Start Printed Page 19639

(E) Coordination with relevant Federal agencies;

(F) Protection of national security interests of the United States;

(G) Protection of correlative rights in the outer Continental Shelf;

(H) A fair return to the United States for any lease, easement, or right-of-way under this subsection;

(I) Prevention of interference with reasonable uses (as determined by the Secretary) of the exclusive economic zone, the high seas, and the territorial seas;

(J) Consideration of—

(i) The location of, and any schedule relating to, a lease, easement, or right-of-way for an area of the outer Continental Shelf; and

(ii) Any other use of the sea or seabed, including use for a fishery, a sealane, a potential site of a deepwater port, or navigation;

(K) Public notice and comment on any proposal submitted for a lease, easement, or right-of-way under this subsection; and

(L) Oversight, inspection, research, monitoring, and enforcement relating to a lease, easement, or right-of-way under this subsection.”

The MMS addresses these items, as appropriate, in this rulemaking.

MMS and Federal Energy Regulatory Commission (FERC) MOU

Until March 2009, regulatory uncertainty existed regarding which Federal agencies had authority to regulate wave and current energy development on the outer Continental Shelf (OCS). Both MMS and the Federal Energy Regulatory Commission (FERC) claimed this authority based on differing interpretations of Part I of the Federal Power Act (FPA) and section 8(p) of OCSLA, as amended by EPAct. However, on March 17, 2009, the Secretary of the Interior and the Acting Chairman of the Federal Energy Regulatory Commission issued a joint statement on the development of renewable energy resources on the OCS. In this joint statement, the Secretary and the Acting Commissioner requested that MMS and FERC staff prepare a Memorandum of Understanding (MOU) to describe the process by which authorizations related to renewable energy resources in offshore waters will be developed.

The MMS and FERC finalized this MOU on April 9, 2009. This agreement clarifies jurisdictional understandings regarding renewable energy projects on the OCS in order to develop a cohesive, streamlined process that would help accelerate the development of wind, solar, and hydrokinetic energy projects. Specifically, the MOU recognizes that (1) MMS has exclusive jurisdiction with regard to the production, transportation, or transmission of energy from non-hydrokinetic alternative energy projects on the OCS, including renewable energy sources such as wind and solar; (2) MMS has exclusive jurisdiction to issue leases, easements, and rights-of-way regarding OCS lands for hydrokinetic projects; and (3) the Commission has exclusive jurisdiction to issue licenses and exemptions for hydrokinetic projects located on the OCS.

Under this new agreement, those entities interested in operating a hydrokinetic project on the OCS must first obtain a lease from MMS. The MMS will issue a public notice to determine whether competitive interest exists in the area, and will proceed with either the competitive or noncompetitive lease issuance process depending on responses received to this public notice. The MMS will conduct the NEPA analysis necessary for the lease issuance and any site assessment activities that will occur on the lease. After an applicant acquires a lease from MMS, FERC may issue a license or exemption for the hydrokinetic project, and conduct any necessary NEPA analysis. After a license is issued, construction and operations of the project may begin as per the terms of the license. To facilitate efficient processing of the lease and license applications, it may be helpful for potential lessees to apprise both MMS and FERC of their interest in hydrokinetic development at the start of the process.

Further, the MOU states that MMS and FERC will work together to the extent practicable to develop policies and regulations with respect to OCS hydrokinetic projects, and coordinate to ensure that hydrokinetic projects meet the public interest, including the adequate protection, mitigation, and enhancement of fish, wildlife, and marine resources and other beneficial public uses. The MOU ensures that the interests of both agencies are adequately represented and that the process of developing renewable energy on the OCS happens efficiently, in an environmentally responsible manner, and with appropriate benefit to the people of the United States.

Importantly, the agreement addresses the issue of potential site-banking by developers on the OCS by eliminating redundant regulatory processes for acquiring use of OCS lands. In addition, by eliminating dual regulatory processes, the agreement addresses the potential for granting conflicting awards of OCS sites to developers by the two agencies. Specifically, FERC has agreed not to issue preliminary permits for hydrokinetic activities on the OCS, and MMS has agreed that FERC will have the primary responsibility to issue licenses for these activities. The Federal Government has effectively eliminated the opportunity for abuse by entities seeking to reserve, block, or acquire for speculative purposes large portions of the OCS. These concerns were raised by many commenters on the REAU rulemaking. The DOI/FERC MOU creates a unified, coherent process for the authorization of hydrokinetic activities on the OCS, ensuring that U.S. resources on the OCS will not be subject to a “land rush,” and will be developed in the most efficient manner possible.

Regulatory Process

On December 30, 2005, the MMS issued an Advance Notice of Proposed Rulemaking (ANPR) (70 FR 77345) requesting comments on the program requirements.

The ANPR requested public comments on five major program areas:

(1) Access to OCS lands and resources;

(2) Environmental information, management, and compliance;

(3) Operational activities;

(4) Payments and revenues; and

(5) Coordination and consultation.

The MMS provided a summary of the comments received on the ANPR in the Notice of Proposed Rulemaking (NPR) (73 FR 39376) published on July 9, 2008. The NPR is available on the Regulations.gov Web site.

Programmatic Environmental Impact Statement (PEIS) Summary

The MMS prepared a final PEIS in support of the establishment of a program for authorizing renewable energy and alternate use activities on the OCS. The final PEIS examines the potential environmental effects of the program on the OCS and identifies policies and best management practices that may be adopted for the program. The PEIS examined three alternatives, as well as the no action alternative. The three alternatives were: (1) The proposed action which would establish the program; (2) a case-by-case alternative that would evaluate each project individually without the benefit of a comprehensive program; and (3) the preferred alternative, which consisted of a combination of the first two alternatives, thus allowing MMS to review projects during the interim while the program and regulations are being established.

Given the rapidly evolving nature of this nascent industry, the MMS cannot reasonably anticipate and assess the Start Printed Page 19640potential environmental impacts of all of the various technologies and potential OCS locations where these renewable energy and alternate use projects could someday be proposed. Accordingly, this PEIS is focused on renewable energy technologies and areas on the OCS that industry has expressed a potential interest in and ability to develop or evaluate from 2007 to 2014. The PEIS proposed policies and best management practices based on the analyses in the PEIS. As the program evolves and more is learned, the mitigation measures may be modified or new measures developed. Each project developed under this new program will be subject to environmental reviews under the National Environmental Policy Act (NEPA), and each project may have additional project-specific mitigation measures.

A Record of Decision (ROD) was published on January 10, 2008. The preferred alternative was selected as well as interim policies and best management practices that were recommended in the PEIS. The PEIS and ROD are available at: http://ocsenergy.anl.gov/​.

Environmental Assessment

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

Notice of Proposed Rulemaking

Summary of Comments

The MMS published a NPR (73 FR 39376) on July 9, 2008. The proposed rule was accompanied by a 60-day public comment period that ended September 8, 2008.

In response to the request for comments, MMS received 280 letters from a range of entities, including, but not limited to, Non-Governmental Organizations, State and local governments, industry, and the general public. A list of commenters is included at the end of the summary. The following table illustrates the segmentation of comment letter submissions received by organization type:

No single issue dominated the comments, which were divergent and wide-ranging. In general, comments were supportive of renewable energy developments on the OCS and reuse of existing OCS facilities. Commenters advised MMS to provide as much certainty as possible in the final rule to support the burgeoning offshore renewable energy industry, while also providing flexibility to allow industry to meet the necessary requirements. The MMS was also urged to advocate for early and consistent stakeholder involvement in both the program and with individual project permitting.

The most common topics addressed by commenters included: Aquaculture, State and local consultation, bonding, confidentiality, alternate-use liability transference, jurisdiction, revenue sharing, and environmental review processes. These topics and others are addressed further in the sections that follow.

Access to OCS Lands and Procedures for Leasing

With regard to timeframes for activities required by the proposed rule, several commenters requested this rule provide clear and defined timelines for MMS's responsibilities. Some suggested that timelines should be set for the issuance of the public notice to determine developer interest. Others suggested that a timeline be set for the comment evaluation period following the deadline for public comments in response to a public notice. Some suggested that a timeline be set for the determination of competitive interest. Other commenters proposed a timeline be set for MMS action on lease-suspension requests.

With regard to jurisdiction, one commenter raised the question about whether MMS has jurisdiction over the cables associated with a renewable energy project even if these cables were used for a nonrenewable energy project at the end of the original lease term.

Some commenters requested that due-diligence requirements be established to ensure that the applicant is financially and technically sound when being considered as a potential leaseholder.

Some comments suggested that additional clarification is needed on a number of elements in the rule, including on what constitutes competitive interest, the ROW and right-of-use and easement (RUE) grant process, and activity cessation and suspension orders and the activities that these orders affect.

A large number of comments related to the process for renewing leases. Some of these comments requested that the renewal process begin earlier, and others asked that while a lease renewal request is pending, the rule make it clear that the lease term will be automatically extended until MMS makes a decision. Start Printed Page 19641

Some commenters expressed concern with the concept of lease area contractions, suggesting that MMS could contract leases capriciously. Other commenters suggested MMS should reconsider allowing for the scaling of projects to ensure fairness and ease of market entry. The MMS should also consider additional strategies beyond diligence requirements to ensure that individual developers could not tie up large areas of the OCS, thereby prohibiting other development interests and, potentially, other uses.

Many commenters suggested that MMS should permit lessees of limited leases to have priority consideration when considering a commercial lease application. For instance, if a lessee is already operating on a limited lease in a given area, and that same area is opened up for a commercial lease sale, that lessee should be given priority over other competitors for that lease area.

With regard to the issuance of limited leases for the purpose of research, some commenters supported the idea of having Department of Energy supported research access rights expanded to include State governments and academic institutions.

Several comments urged MMS to consider and establish a multi-factor evaluation process when considering a project proposal in a competitive lease sale.

Environmental Information, Management, and Compliance Programs

Several commenters suggested that the environmental review process proposed by MMS would be overly burdensome and redundant. Some commenters suggested that the NEPA process proposed by MMS goes far beyond what NEPA requires and what other agencies require to implement NEPA in order to demonstrate the extent of environmental impact. Some commenters suggested that the NEPA process is far too cumbersome as set out in the proposed rule. Having the Site Assessment Plan (SAP), Construction and Operations Plan (COP), and lease sale Environmental Impact Statement (EIS) undergo NEPA is burdensome and unnecessary.

With regard to the environmental review process, several comments pertained to the division of cost burden, requesting clarification, or changes to the designation of responsible parties with regard to payment. Some commenters suggested that MMS should allow companies the option of developing the required environmental documents instead of having MMS staff and its contractors develop them for projects.

With regard to the Coastal Zone Management Act (CZMA) review process, several commenters requested clarification on how the process would work. Some commenters suggested that it is unclear in the proposed rule regarding exactly what is required under a noncompetitive lease sale versus a competitive lease sale. Other commenters were unclear on what parts of CZMA applied to these types of lease sales.

Many commenters expressed concern with minimizing the environmental impacts of leases, easements, and ROWs. With regard to cumulative impacts and monitoring, several commenters proposed that projects be closely monitored for their overall impacts on the environment, both beneficial and adverse. Some commenters suggested that the proposed rule did not adequately address the need for consideration of potential impacts on commercial fishing. Other commenters advocated that monitoring activities should not only encompass the proposed project area, but also those areas directly adjacent to projects. Some commenters suggested that the guidelines for monitoring should clarify that States reserve the right to impose additional requirements as needed. The MMS also received comments suggesting that cumulative effects should be required as part of an applicant's SAP, COP, and initial project proposal. The cumulative effects should also be considered as part of the lease-sale evaluation process.

With regard to adaptive management, several commenters proposed that the requirements and process for adaptive management are unclear in the proposed rule and need to be clarified. Some suggested that the lease instrument should be site specific and clearly specify the scope of the adaptive management activities MMS might require. Some comments pointed to the approach employed by the U.S. Fish and Wildlife Service for specifying adaptive management, where the terms and obligations are negotiated upfront. Some suggest that adaptive management should be included as a standard component of the SAP, General Activities Plan (GAP), and COP.

Several commenters advocate that MMS apply categorical exclusions for certain data gathering activities. Some comments suggest that categorical exclusions could apply to most, if not all, resource evaluation activities, the installation of monitoring devices, and activities conducted prior to the approval of plans while on a lease. Some comments point to the policy currently employed by the U.S. Bureau of Land Management (BLM) for granting these exclusions.

Facility Design, Fabrication, and Installation

With regard to facility design and engineering, the majority of comments pertained to the proposed requirement that the lessee use a Certified Verification Agent (CVA). Many commenters suggested that the required use of a CVA is redundant, expensive, and not effective where such design, fabrication, installation, repairs, and modifications are done under the direction of a licensed engineer. Some commenters pointed out that because construction of offshore wind facilities consist of repeated installation of numerous, nearly identical units, requiring the CVA to verify, witness, survey, or check most, if not all, of a wind farm installation is burdensome and unnecessary.

With regard to the engineering and design standards by which offshore renewable energy facilities are aligned, many commenters suggested it was unclear in the proposed rule to what standard(s) the CVA would compare individual projects, as there is no governing body approving such designs, nor does MMS state specific standards in the rule. Some commenters urged MMS to adopt internationally accepted standards wherever possible. Other commenters suggested that MMS consider a phased approach in the facility design, fabrication, and installation requirements, thereby proposing that MMS rely on existing standards while proceeding with the analysis of all standards to determine what modifications might be justified in a second phase of the program. In addition, because there are no set standards or governing body, some commenters proposed that MMS provide training to prospective CVAs to meet the safety requirements that MMS will impose.

Regulation of Operational and Decommissioning Activities

With regard to site-assessment activities, some commenters expressed a desire to have the ability to conduct site-assessment activities before a lease has been issued. Other commenters suggested that the SAP and COP be combined into a single plan, while others recommended that MMS create a categorical exclusion for site-assessment activities.

With regard to information requirements, many commenters requested additional clarification regarding various information requirements under the lease, including Start Printed Page 19642those required during the application phase, within the plans, during the environmental reviews, and during the technical evaluation of a proposed project.

A large number of comments addressed the topic of the proposed notification requirements. Some commenters suggested that the 3-day notification requirement, as explained in subpart H, should be restated to address equipment or failures that pose significant risk to the environment, personnel, or property. Some commenters suggested that the notification requirement may not be appropriate for routine repair work, and would be better suited to emergency repairs only or those that would require environmental documentation. As stated in the proposed rule, the notification requirements are unclear regarding what activities would require notification; because there are a range of activities that could take place, such as changing light bulbs, this provision needs to be better defined.

Several comments addressed the topic of inspections. Some commenters pointed out that renewable energy facilities, like wind farms, will be unmanned and, as such, should not be subject to the same inspection requirements that the oil and gas industry are subject to. Certain commenters suggested that offshore wind turbines be classified as unmanned for safety purposes, as these facilities are unmanned during normal operations. Unscheduled inspections to the actual wind turbines or energy generating facilities would be better served with visits to the 24-hour shoreside monitoring station, where real-time information on the condition and operation of the facility would be available. Some commenters advocated unscheduled inspections should be coordinated with the developer to minimize possible safety risks to the inspector.

A large number of comments pertained to the decommissioning obligations set out in the proposed rule. Some suggested that allowing structures to remain in place at the end of a lease makes more sense than removal, both from a financial perspective and from an environmental perspective. Facility components, such as a turbine foundation, scour protection equipment, and cabling could cause greater harm to the surrounding ecology during and after removal than if left in place. Some commenters suggested that these structures could benefit the local ecology by continuing to serve as artificial reefs. Some comments requested that MMS require CZMA review as part of the decommissioning application. Others advocated having decommissioning requirements be determined on a case-by-case basis in the COP, by considering site-specific characteristics. On the side of those that support removal of all structures, some commenters suggested that the final rule should include a requirement that the development site be returned to the ecological baseline that existed prior to the installation of the energy project. Other commenters suggested that the requirements incorporate a presumption that all facilities, cables, and other obstructions be removed, as submarine cables and other components can pose a long-term obstruction for much of the fishing gear used on the OCS.

Some comments suggested that the specifics of the decommissioning requirements should be modified. Some suggested that the removal of structures to the seabed depth specified in the rule is unnecessary. Some pointed to requirements employed in Europe, where the common removal depth for a wind turbine foundation is no more than 2 meters or 6 feet.

Payments, Royalties, Fees, and Bonds

The majority of comments regarding payments and financial assurance requirements urged MMS to expand the range of financial assurance options available to the lessee, including allowing the use of a third-party guaranty, audited financial statements, power purchase or other sale agreements, insurance, or other alternatives approved by MMS.

Another point raised in a large volume of comments addressed the topic of decommissioning costs. Some commenters suggested MMS should separate financial assurance for decommissioning costs from financial assurance for other regulatory obligations, while others suggested that the rule be crafted in a way that ensured the final bonding costs will remain within reason and are reviewed carefully to cover only the necessary costs. A number of commenters suggested MMS should revise the provisions to provide more cost-effective protection against defaults on decommissioning obligations. Some commenters shared concern regarding MMS's ability to use bonding for cleanup and recovery activities once a lease term has ended. Some commenters suggested the decommissioning obligation under a limited lease, with a meteorological tower cited as an example, should not accrue—at a minimum—until after the development lease is awarded and MMS has approved the plan.

At least one commenter mentioned the uncertainty in the requirements and in the process of granting and overseeing ROWs and RUEs will impact the feasibility for the developer to obtain financing.

With regard to operating fees, many commenters recommended that operating fees under a commercial lease be deferred until the leaseholder is either generating energy or has begun construction on the lease. One suggestion was made to have the operating fees deferred until the CVA approves the COP.

With regard to bidding, some commenters recommended MMS establish minimum bids and allow for the rejection of high bids in certain circumstances.

Some commenters suggested the leasing fees, royalties, and rent in the proposed rule were set too low in light of the value of existing fisheries that could be displaced by renewable energy projects.

Coordination and Consultation

Many commenters urged early and consistent consultation and coordination with relevant State and Federal agencies. A few commenters suggested the establishment of standing inter-agency advisory and planning committees to allow for continuous dialogue with multiple stakeholders during the lease issuance process. Some commenters requested they be specifically mentioned as a consulting entity in the rule.

With regard to State competitions for offshore development, some commenters requested MMS recognize the results of State competitions and grants for renewable energy development offshore their States when considering potential lessees in Federal waters.

With regard to consultation during specific stages in the lease issuance process, some commenters suggested the rule require applicants consult with affected State and local governments during the area identification stage and throughout the remaining SAP and COP review processes. Some suggested MMS work more closely with the Federal Energy Regulatory Commission to avoid duplication in coastal EAs and reviews, while others suggested MMS work just as closely with State agencies during the coastal zone management processes. Other comments from industry suggested that renewable energy developers should also confer with local oil and gas project planners to ensure compatibility. Some commenters advocated that MMS express, in the final rule, a process for MMS to Start Printed Page 19643coordinate with States, tribes, and local governments in adjusting mitigation and monitoring requirements.

A common thread running through the comments on coordination and consultation is the desire to establish and use planning and coordination mechanisms to facilitate appropriate siting of OCS renewable energy activity and to develop meaningful priorities. Some commenters recommended establishing new mechanisms, and others suggested working with existing means. The MMS believes that such approaches may be accommodated under the final rule, and we are committed to reaching out to stakeholders, and local, state, and Federal government agencies as we implement the rule.

We began outreach to officials and organizations at the national, regional, state, and local levels when we began the rulemaking process, and we have received valuable input throughout the process. We have participated in existing regional planning mechanisms, such as the West Coast Governors Agreement and the Northeast Regional Ocean Council, which are working toward properly balanced uses of the ocean through a regionally coordinated approach to relevant issues, including renewable energy development. We recognize and support new efforts, such as the one under way jointly by the States of New York, New Jersey, Delaware, Maryland, and Virginia to convene a Mid-Atlantic Ocean Summit, as well as the U.S. Offshore Wind Collaborative's proposed New England and Mid-Atlantic States Joint Planning Agreement. We also have been working with individual States, localities, and tribes in the implementation of the MMS interim policy on resource assessment and technology testing and hope to build on those efforts in the establishment of joint task forces addressing commercial renewable energy development opportunities as provided under the final rule.

Two States—New Jersey and Rhode Island—are well along in planning efforts that will help to determine appropriate areas of the OCS for development, and MMS has been an active partner with those States. Such efforts—supported by MMS environmental study and technical research initiatives, as well as the Coordinated OCS Mapping Initiative mandated by EPAct—will contribute significantly as MMS implements this final rule.

Section 388 of EPAct 2005 requires that any activity permitted under this authority be carried out in a manner that provides for, among other things, protection of the environment, conservation of the natural resources of the outer continental shelf; coordination with relevant Federal agencies; protection of national security interests of the United States, prevention of interference with reasonable uses and functions of the exclusive economic zone, the high seas, and the territorial seas, and consideration of any other use of the sea or seabed, including, but not limited to fisheries, protection of biodiversity and ecosystem function, sealanes, potential siting of deepwater ports, or navigation. Consistent with this statutory direction, MMS understands that this rule will be applied in conjunction with interagency-led planning activities that are undertaken to avoid conflicts among users and maximize the economic and ecological benefits of the OCS. These activities will include multifaceted spatial planning effort that will incorporate ecosystem based science and stewardship along with socioeconomics, research, and modeling in the context for demands for other ocean uses and functions. It is anticipated that the Council on Environmental Quality will help coordinate this interagency effort, with the National Oceanic and Atmospheric Administration (NOAA) playing a key role, along with MMS. Through this type of coordination and advance planning, we expect to be able to speed the process of developing renewable energy projects in the OCS.

This final rule is designed to be implemented both within the existing federal framework of multi-agency management of ocean activities, as well as to adapt to alternative ocean governance regimes that could be developed in the future. MMS will coordinate closely with all relevant federal and state agencies both on the implementation of this rule, through actualization and operation to termination and decommissioning, as well as on the development of any broader governance structure to address the many competing demands and interests facing our oceans.

The MMS is responsible for ensuring that the decisions made within this comprehensive regulatory structure are supported by environmental analysis, documents, and other decision support resources. We will ensure that environmental analysis for OCS renewable energy proposals is proportional to the scope and scale of each proposal, is effectively tiered to programmatic NEPA documents, and efficiently incorporates other publicly available information by reference. The MMS will ensure timely and efficient coordination of the development and review of environmental documents with all agencies that have jurisdiction or special expertise to provide the decisionmakers. We will ensure that mitigation and monitoring information informs future decisionmaking processes.

Management of renewable energy activities by MMS under this rule is founded on many years of experience in administering OCS energy and mineral programs and will be supported by extensive investigation and information gathering under the MMS Environmental Studies and the Technology Assessment and Research Programs. Both of these programs will play a significant role to ensure the safe and environmentally-responsible use of OCS renewable energy resources. Several initiatives examine real offshore renewable energy activity experiences in Europe that will provide useful information in considering similar activity in U.S. waters as well as opportunities to form close partnerships with and learn from international governments and developers possessing offshore renewable energy expertise. As we implement our regulatory framework to harness these new and exciting ocean renewable energy opportunities, we will draw on partnerships among the Federal, state, and local governments entities to share critical information, and agency expertise, and to foster better communication between different arms of the Federal Government

The MMS believes that all of these efforts and others will be extremely helpful in deciding where and when to pursue development of renewable energy on the OCS. They will help government at all levels to commit resources appropriately and will provide developers with information to facilitate proper and efficient project proposals. Most importantly, MMS coordination and consultation with regional, state, and local planning mechanisms will give those entities that will be most affected by renewable energy activity a proper voice in the development of priorities.

Reuse of Existing Facilities

The vast majority of comments pertaining to alternate use addressed the concern that MMS would authorize mariculture activities on the OCS in the absence of express Federal mariculture legislation (such as the National Offshore Aquaculture Act that has been debated in Congress but never passed). Several commenters argued that MMS did not have the legal authority under subsection 8(p) of the OCS Lands Act to authorize Alternate Use RUEs for Start Printed Page 19644mariculture activities that involved the use of an existing OCS facility.

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

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Overview of the MMS Alternative Energy and Alternate Use Program

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

Approach to Rulemaking

The MMS developed these regulations to provide a regulatory framework for leasing and managing OCS renewable energy project activities and authorizing activities that involve the alternate use of OCS Lands Act-permitted facilities. These regulations are also intended to encourage orderly, safe, and environmentally responsible development of renewable energy sources on the OCS. The MMS expects that renewable energy projects in the near term will involve the production of electricity from wind, wave, and ocean current. In the future, other types of renewable energy projects may be pursued on the OCS, including solar energy and hydrogen production projects. These regulations were developed to allow for a broad spectrum of renewable energy development, without specific requirements for each type of energy production.

Following the publication of these regulations, MMS will publish a guidance document to support the regulations. This guidance document will provide more details on the program and will describe the type of information that we are looking for in various plan submittals. As we gain experience with renewable energy development on the OCS, we will update our regulations to include energy-resource-specific provisions and incorporate by reference appropriate documents.

This final rule (30 CFR part 285) applies to all aspects of the Alternative Energy and Alternate Use Program except for the procedures applying to appeals of MMS decisions or orders, which are covered in 30 CFR part 290, subpart A. The MMS is revising § 290.2 to clarify our decisions on bids under this program that are exempt from the appeals process at 30 CFR part 290 and are covered under § 285.118(c). This section describes the procedures for a bidder whose high bid was rejected to apply for reconsideration by the Director of MMS (Director) for renewable energy leases, ROW grants, RUE grants, or Alternate Use RUE. Start Printed Page 19647

Overview of the Project Development Process

General Overview

Types of Access Rights

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

Commercial and Limited Leases

The MMS will issue two types of leases: (1) Commercial or (2) limited. A commercial lease would convey the access and operational rights necessary to produce, sell, and deliver power through spot market transactions or a long-term power purchase agreement. A commercial lease provides the lessee full rights to apply for and receive the authorizations needed to assess, test, and produce renewable energy on a commercial scale over the long term (approximately 30 years). A commercial lease will include the right to a project easement, which will be issued to allow the lessee to install gathering, transmission, and distribution cables to transmit electricity; pipelines to transport other energy products (i.e., hydrogen); and appurtenances on the OCS, as necessary, for the full enjoyment of the lease. The project easement will be issued upon approval of the COP (for commercial leases) or GAP (for limited leases).

A limited lease will convey access and operational rights for activities on the OCS that support the production of energy, but do not result in the production of electricity or other energy product for sale, distribution, or other commercial use exceeding a limit specified in the lease. In a change from the proposed rule, MMS has decided to permit limited leases that generate power during technology testing to sell that power within limits set in the lease instrument. For example, a limited lease could include in its terms and conditions the authorization to sell electricity produced during the testing of experimental ocean current turbine generators of up to 5 megawatts (MW) total installed capacity, thereby allowing the lessee to recoup some of the expenses entailed in its limited lease activities. Limited leases may be issued for site-assessment purposes only or for site assessment and development and testing of new or experimental renewable energy technology. Limited leases will be issued for a short term, 5 years. Under the provisions of these regulations, limited leases may be renewed, but they cannot be converted to commercial leases. If the holder of a limited lease wished to pursue commercial development on the OCS, the leaseholder will need to obtain a new commercial lease through the leasing process, as defined in these regulations.

RUE Grants and ROW Grants

The MMS will issue RUE grants authorizing the use of a designated portion of the OCS to support renewable energy activities on a lease or other approval not issued under this part (e.g., on a State-issued lease).

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

Alternate Use RUEs

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

Obtaining Access Rights

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

Federal Compliance for the Leasing Process

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

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National Environmental Policy Act Compliance

The NEPA process helps public officials make decisions based on an understanding of environmental consequences and take actions that protect, restore, and enhance the environment. It provides the tools to carry out these goals by mandating that every Federal agency prepare an in-depth study of the impacts of “major federal actions significantly affecting the quality of the human environment” and alternatives to those actions, and by requiring that each agency make that information an integral part of its decisions. The NEPA also requires that agencies make a diligent effort to involve the interested and affected public before they make decisions affecting the environment.

The MMS is the lead Federal agency for NEPA compliance for renewable energy and alternate use activities on the OCS. Some of the information we request under this part are in support of other Federal agencies' information requirements associated with compliance with the laws and regulations that they enforce. —

Coastal Zone Management Act Compliance

Each coastal State has a federally-approved coastal management plan (CMP). In compliance with CZMA mandates found at section 307(c)(1), when MMS conducts a competitive lease sale for leases or grants under this part, MMS will determine if the sale activity is reasonably likely to affect any land or water use or natural resource of a State's coastal zone. If such effects are reasonably foreseeable, the MMS must submit a consistency determination (CD) to the affected State(s) at least 90 days before the lease sale. This CD will include a detailed description of the proposed activity, its expected coastal effects, and an evaluation of how the proposed activity is consistent with applicable enforceable policies in the State's CMP. If the affected State(s) agree with MMS's determination, MMS may proceed with the competitive sale. If the affected State(s) disagree, MMS will follow the procedures as outlined in 15 CFR part 930, subpart C.

In their CMP, the State lists Federal licenses and permits which are reasonably likely to affect coastal uses or resources and requires a Federal consistency review. Listed activities must be conducted in a manner that is consistent with the enforceable policies of the State's CMP, and the applicant must submit a Federal consistency certification to the State and approving Federal agency. Also, the State may ask the NOAA ORCM for permission to review, for consistency, activities that are not listed in its CMP. If NOAA approves the request, the applicant is required to submit a consistency certification for the unlisted Federal license/permit. In compliance with CZMA mandates, MMS will not issue noncompetitive leases or approve noncompetitive grants or plans under this part if: (1) Consistency has not been conclusively presumed; or (2) the State objects to the applicant's consistency certification, and the Secretary of Commerce has not found that the permitted activities are consistent with the objectives of the CZMA or are otherwise necessary in the interest of national security. Table 1 summarizes the NEPA and CZMA compliance requirements for leases and grants.

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Development Process

Developing Leases and Grants

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

For a commercial lease, after you perform site assessment activities, you will be required to submit and receive MMS approval of a COP before you may begin any development and production activities on your lease. Like the SAP, the COP will undergo the appropriate NEPA reviews and may require either an EIS or an EA. Like the SAP, the COP must also comply with relevant Federal statutes.

For limited leases, ROW grants, and RUE grants, you will be required to submit a GAP, which covers all activities on the lease or the grant including site assessment, development, operations, and decommissioning. Like the SAP and COP, the GAP will undergo the appropriate NEPA reviews and must comply with relevant Federal Statutes.

Revenue Sharing

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

Operations

The regulations that address operations cover environmental management, safety management, inspections, facility assessments, and decommissioning. The regulations on operations are designed to ensure safety and prevent or minimize the likelihood of harm or damage to the marine and coastal environments. The structure of the regulations is based on adaptive management. The company will be required to monitor activities and demonstrate that its performance satisfies specified standards in its approved plans. In addition, the Start Printed Page 19653company will be required to comply with regulations regarding air quality, safety, maintenance and shutdowns, equipment failure, adverse environmental effects, inspections, facility assessments, and incident reporting.

Alternate Use of Existing Facilities

These regulations establish general requirements for how MMS will consider proposals for activities that involve the alternate use of existing OCS facilities. This includes general provisions that explain how we will approve and regulate such alternate use activities on the OCS. We will authorize such activities through the issuance of an Alternate Use RUE.

These regulations explain how applicants can request an Alternate Use RUE; how MMS will decide whether to issue Alternate Use RUEs; how Alternate Use RUEs will be competitively issued (if we determine that competitive interest exists); the terms of such authorizations; required payments to MMS; necessary financial assurance; other administrative issues such as assignment, suspension, and termination; and decommissioning of approved alternate use structures.

In addition to the provisions in subpart J, MMS will make associated revisions to our existing oil and gas decommissioning regulations found in 30 CFR part 250, subpart Q, to clarify the oil and gas platform owner's obligations for decommissioning in the event we approve alternate uses of the platform.

Subpart-by-Subpart Discussion

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

Subpart A—General Provisions

Subpart B—Issuance of OCS Renewable Energy Leases

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

Subpart D—Lease and Grant Administration

Subpart E—Payments and Financial Assurance Requirements

Subpart F—Plans and Information Requirements

Subpart G—Facility Design, Fabrication, and Installation

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

Subpart I—Decommissioning

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

Subpart A—General Provisions

Overview

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

Approach

The OCS Lands Act requires MMS to ensure that the activities permitted under these regulations are carried out in a manner that provides for safety, protection of the environment, oversight, and enforcement (43 U.S.C. 1337(p)(4)). This subpart lays the foundation for these responsibilities. The responsibilities of the lessee, applicant, operator, or holder of a ROW grant, RUE grant, or Alternate Use RUE grant are based on ensuring that projects under these regulations are designed and conducted in a safe and environmentally sound manner.

Departures from the regulations were selected as a way of allowing MMS to maintain flexibility within the program and to be able to adapt to this new and changing industry. Requirements and qualifications for lessees and grant holders are based on section 8 of the OCS Lands Act and are designed to deter nuisance and speculative interference with the leasing process. Appeal rights are modeled after those established for offshore oil and gas operations.

This subpart provides for participation of State and local governments in task forces or other joint planning agreements with MMS. The joint planning provision is modeled after § 281.13 of this subchapter, which pertains to the use of task forces when considering leasing of minerals in the OCS other than oil, gas, and sulphur. We envision that such task forces could be useful and applicable to any phase of the OCS Alternative Energy Program, from preliminary studies and lease sale formulation, through site assessment and construction, to decommissioning. We may invite any affected State Governor or local government executive to join in establishing a task force or other joint planning or coordination agreement if we are considering to offer or issue leases (or grants) under this part. Participation in a task force will give the parties opportunities to contribute to the planning process and access to nonproprietary information. The task force or other such arrangements will be constituted and conducted, as agreed to by the participants, consistent with Federal law and these regulations. The task force may make recommendations and may be requested to conduct or oversee research, studies, or reports. However, MMS is not limited to using just task forces for coordination and consultation. Throughout the lease, grant issuance, and project development processes, MMS will work with affected State, local, and tribal governments and other planning and oversight organizations.

Section-by-Section Discussion of Subpart A

Authority (§ 285.100)

This section restates MMS's authority to issue regulations and oversee access and development on the OCS for renewable energy and alternate use of existing facilities. The authority statement is included to inform the affected public and other interested parties of the basis for establishing these regulations. The authority for these regulations was granted to the Secretary of the Interior in amendments to subsection 8 of the OCS Lands Act (43 U.S.C. 1337), as set forth in section 388(a) of the EPAct (Pub. L. 109-58).

With regard to hydrokinetic projects on the OCS, MMS possesses the exclusive authority to issue leases, easements, and rights-of-way for such projects, but will not duplicate the operational approvals granted by FERC when it issues licenses and exemptions for the construction and operation of hydrokinetic projects on the OCS.

The MMS revised this section from the NPR to state that the Secretary of the Interior delegated to MMS the authority to regulate activities under section 388(a) of the EPAct. These regulations will address activities that: (a) Produce or support production, transportation, or transmission of energy from sources other than oil and gas; or (b) use, for energy-related purposes or for other authorized marine-related purposes, facilities currently or previously used for activities authorized under the EPAct.

What is the purpose of this part? (§ 285.101)

This section describes MMS's objectives for this rule. Our objectives include: (1) Establishing procedures for issuance of leases, ROW grants, and RUE grants and for administration of operations for activities permitted under this part; (2) informing applicants and third parties of their obligations under this part; and (3) ensuring that these Start Printed Page 19654activities are conducted in a safe and environmentally sound manner, in conformance with applicable laws and regulations, and the terms of the lease or grant. However, this part does not convey access rights for oil, gas, or other minerals.

We did not make any changes to the section.

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

This section describes MMS's responsibilities, which are derived from section 8(p)(4) of the OCS Lands Act (43 U.S.C. 1337(p)(4)). These responsibilities include ensuring activities are carried out in a manner that provides for:

  • Safety;
  • Protection of the environment;
  • Prevention of waste;
  • Conservation of the natural resources of the OCS;
  • Coordination with relevant Federal agencies;
  • Protection of national security interests of the United States;
  • Protection of the rights of other authorized users of the OCS;
  • A fair return to the United States;
  • Prevention of interference with reasonable uses (as determined by the Secretary or Director) of the exclusive economic zone, the high seas, and the territorial seas;
  • Consideration of the location of and any schedule relating to a lease or grant under this part for an area of the OCS, and any other use of the sea or seabed;
  • Public notice and comment on any proposal submitted for a lease or grant under this part; and
  • Oversight, inspection, research, monitoring, and enforcement of activities authorized by a lease or grant under this part.

To enforce these responsibilities, MMS will require compliance with all applicable laws, regulations, other requirements, the terms of your lease or grant under this part, and approved plans. We will also establish practices and procedures to govern the collection of all payments due to the Federal Government, including any service recovery fees, rents, operating fees, and other fees or payments. We will coordinate and consult with the Governor of any affected State and executive of any affected local government or Indian tribe. As part of coordination and consultation with State and local governments, we may invite any affected State Governor, representative of an affected Indian tribe, and affected local government executive to join a task force or other joint planning or coordination agreement.

Based on comments received on the NPR, we added affected Indian tribes to this section. In addition, we added text in paragraph (a)(5) to emphasize coordination with Federal agencies involved in planning activities that are undertaken to avoid conflicts among users and maximize the economic and ecological benefits of the OCS, including multifaceted spatial planning efforts.

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

This section establishes times when MMS may approve departures from the requirements established in the regulations. We will consider a departure when it is needed to:

  • Facilitate the proper development of a lease or grant under this part;
  • Conserve natural resources;
  • Protect life (including human and wildlife), property, or the marine, coastal, or human environment; or
  • Protect sites, structures, or objects of historical or archaeological significance.

A departure must be consistent with subsection 8(p) of the OCS Lands Act and must protect the environment and safety to the same degree as if there was no approved departure from the regulations.

We did not make any changes to the section.

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

This section explains that, except as otherwise authorized by law, it is unlawful for any person to construct, operate, or maintain any facility to produce, transport, or support the generation of electricity or other energy product derived from a renewable energy resource on any part of the OCS, except under and in accordance with the terms of a lease, easement, or ROW issued pursuant to the OCS Lands Act. If you intend to construct and operate a hydrokinetic facility on OCS lands, you will first need a lease from MMS and later be required to seek a license from FERC.

It should be noted that with the final rule MMS is clarifying that authorization of geological and geophysical and related site assessment surveys will be the responsibility of the U.S. Army Corps of Engineers. In many instances these types of activities may be verified under the Corps' Nationwide Permit Program. We have revised the regulation at subpart F to remove MMS approval of these types of surveys and the requirement to describe the design of such surveys in relevant plans. Although MMS will not be the permitter for such surveys—either before or after issuance of a lease or grant—we strongly urge that those conducting surveys coordinate with MMS and the Corps to ensure that proposed activities meet both Corps permitting requirements and MMS information requirements described in subpart F relating to lease or grant issuance and plan approval.

We did not make any changes to the section.

What are my responsibilities under this part? (§ 285.105)

This section describes the general responsibilities of a lessee, applicant, operator, or holder of a ROW grant, RUE grant, or Alternate Use RUE grant under these regulations. These responsibilities include:

  • Designing projects and conducting operations in a safe manner to minimize adverse effects to the coastal and marine environments, including their physical, atmospheric, and biological components to the extent practicable, and taking measures to prevent the discharge of pollutants, including marine trash and debris;
  • Submitting requests, applications, plans, notices, modifications, and supplemental information as required by this part; following up any oral request or notification in writing within 3 business days;
  • Complying with the terms and conditions of the applications, plans, notices, and modifications; making payments on time;
  • Complying with the Department of the Interior's (DOI) nonprocurement debarment regulations; including the requirement to comply with 2 CFR part 1400 in all contracts and transactions related to a lease or grant under this part; and
  • Responding to requests from the Director in a timely manner.

We added measures to prevent the discharge of pollutants, including marine trash and debris, to this section to clarify that adverse effects to the environment include pollutants, trash, and debris. Also, while hydrokinetic projects will entail obligations and responsibilities relating to FERC regulation under licenses and exemptions, the holder of a hydrokinetic lease must comply with all terms and conditions set forth in the MMS-issued lease including MMS' right to access data and information for all activities conducted on leases issued under this part to meet our statutory responsibilities as lessor. Start Printed Page 19655

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

This section details the qualifications of a lessee or grant holder. To qualify for a lease or grant, you must be either a citizen or a national of the United States; an alien lawfully admitted for permanent residence in the United States; a private, public, or municipal corporation organized under the laws of the United States, any of its States or territories, or the District of Columbia; or an association of any of the parties described previously. In addition, you may be excluded from becoming a lessee or grant holder if you are excluded or disqualified from participating in transactions covered by the Federal nonprocurement debarment and suspension system, you have failed to meet or exercise due diligence under any OCS lease or grant, or you remained in violation of the terms and conditions of any lease or grant issued under the OCS Lands Act for a period extending longer than 30 days after MMS directed you to comply.

Based on comments received on the NPR, MMS added a requirement to this section that in order to qualify to become a lessee or a grant holder, the applicant must demonstrate the technical and financial capabilities to construct, operate, maintain, and terminate/decommission projects for which you are requesting authorization. We also deleted § 285.106(b)(4) because it was redundant with § 285.106(b)(2).

The MMS also received comments requesting that we limit ownership of leases and grants to United States citizens and companies. The requirements for lease and grant holders limit ownership to United States citizens, lawfully admitted aliens, and United States companies. Another comment stated that it is not clear if private universities and research institutions are eligible to hold leases or grants under this part. Private universities and research institutions could be qualified to hold leases or grants under these regulations, under paragraph (a)(4), as an “association”.

In addition, we added Federal agencies to the list of entities qualified to hold a lease. After the proposed rule was published, MMS received inquiries from the U.S. Navy concerning the acquisition of areas of the OCS as set-asides for renewable energy development to meet requirements imposed by the Energy Independence and Security Act of 2007 and EPAct that pertain to improved energy performance in the federal sector. By adding Federal agencies to the qualification list, MMS could issue a lease to the Navy or other Federal agency that would authorize OCS renewable energy development to provide electrical generation for its installations and facilities.

As with hydrokinetic commercial leases issued to private entities, a Federal or state agency holding an MMS lease cannot construct or operate an hydrokinetic project without a FERC-approved license or exemption.

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

This section describes the evidence you must submit to MMS to establish qualification to hold a lease, ROW grant, or RUE grant. For an individual, this evidence includes documents that demonstrate citizenship or lawful admittance of permanent residence. For an association, the acceptable evidence includes a certified statement indicating the State in which it is registered and that it is authorized to hold leases and grants on the OCS, or an appropriate reference to statements or records previously submitted to an MMS OCS office. A corporation must submit a statement certified by the corporate Secretary or Assistant Secretary over the corporate seal showing the State in which it was incorporated, and that it is authorized to hold leases and grants on the OCS, or an appropriate reference to statements or records previously submitted to an MMS OCS office (including material submitted in compliance with prior regulations), and evidence of the authority of the persons signing to bind the corporation. If MMS has qualified you to hold a renewable energy lease, RUE, or ROW in one OCS Region, it is our intent that you will be qualified to hold a renewable energy lease, RUE, or ROW in the other OCS Regions. We will provide more information in the implementation guidance that we intend to issue after the final rule is approved.

Based on comments received on the NPR and to conform with changes made to § 285.106, we added a description of the documentation that you may provide to MMS to demonstrate the technical and financial capabilities to construct, operate, maintain, and terminate/decommission projects for which you are requesting authorization.

We also added some documentation requirements for local, state, and federal entities that are comparable to those for associations and corporations.

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

If any action is filed alleging that a company, operating under these regulations, is insolvent or bankrupt, the company must notify MMS within 3 days of learning of the action.

We did not make any changes to the section.

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

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

We did not make any changes to the section.

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

You must submit all plans, applications, reports, or notices to MMS at the address provided in this section.

We changed this section, requiring that, unless otherwise noted, applicants must submit one paper copy and one electronic copy of all plans, applications, reports, or notices required by this part.

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

This section provides that MMS may charge processing fees for applications or requests filed under this part, on a case-by-case basis. The MMS may charge processing fees if the preparation of a document or study is necessary for MMS to evaluate or process an application or request. For example, MMS may charge processing fees for the preparation of a project-specific study, EA, or EIS.

The Independent Offices Appropriations Act (31 U.S.C. 9701), the Omnibus Appropriations Bill (Pub. L. 104-133, 110 Stat. 1321, April 26, 1996), and the Office of Management and Budget (OMB) Circular A-25, authorize Federal agencies to recover the full cost of services that confer special benefits. Under the Department of the Interior's (DOI) implementing policy, the Minerals Management Service (MMS) is required to charge the full cost for services that provide special benefits or privileges to an identifiable non-Federal recipient above and beyond those that accrue to the public at large. An application or request filed under this regulation conveys special benefits to recipients beyond those accruing to the general public and are subject to service fees. Start Printed Page 19656

There may be other authorities that MMS may use to recover costs depending on the particular circumstances of the project and the nature of the evaluation or processing needed. Such authorities may include the Regulations for Implementing the Procedural Provisions of the National Environmental Policy Act (40 CFR 1506.5), Public Law 99-591 (title I, section 101), and Public Law 110-161 (division F, title I, section 121).

The MMS intends to recover those costs that we incur following the decision that the document processing will have a unique processing cost. We will not charge for costs that MMS incurred before that decision was made. In cases where we may charge a case-by-case processing fee, we will provide the applicant with a written estimate of the processing costs that may include a standard overhead rate, or the closest estimate we have based on previous work, which is similar in nature. The case-by-case processing fees provided for in this rule relate to the documents that an applicant must submit to satisfy various statutory and regulatory requirements pertaining to actions authorized by this regulation. For example, MMS statutory responsibilities require that we independently review any analysis performed by an outside contractor. This review is necessary before a decision can be rendered on the application. Processing fees charged by MMS will include contract oversight and efforts to review and approve documents prepared by contractors, whether the contractors are paid directly by the applicant or through MMS. The applicant may comment on the proposed fee or request approval to directly pay a contractor for the document, study, or other activity. If warranted, based on information provided, we will re-estimate our reasonable processing costs following the procedure established in this section.

The MMS made several edits to this section. We expanded and clarified this section regarding the following issues: (1) That if a study or other document such as an EA or EIS is not required, MMS will not charge a processing fee at this time, (2) that MMS document review and approval and contract oversight will be recoverable costs, (3) that processing costs will include a standard bureau overhead rate or an estimate that will take projected costs into account, and (4) that payment instructions and terms will be provided in the final cost estimate.

Based on comments, we changed the citation for 43 CFR part 4, subpart J, to just 43 CFR part 4. The 43 CFR part 4, subpart J is “Special Rules Applicable to Appeals Concerning Federal Oil and Gas Royalties and Related Matters.” The 43 CFR part 4 covers all DOI appeals.

Definitions (§ 285.112)

This section provides definitions of terms used throughout the 30 CFR part 285 regulations. Some of the definitions used in this part are definitions that were established in legislation or contained in other regulations (i.e., 30 CFR part 250). For example, the definition of archaeological resource is almost identical to the definition used by MMS for oil and gas operations in the 30 CFR part 250 regulations. This definition mirrors that in the Archaeological Resource Protection Act, and was adopted in response to comments from the Advisory Council on Historic Preservation and the Departmental Consulting Archaeologist on our original rule on archaeology. It is consistent with the definitions in other Federal laws and regulations.

We received comments on various definitions in this section. We revised the following definitions to reflect the comments:

Commercial activities—we added, “for renewable energy leases and grants,” to the definition to clarify that this does not apply to alternate use of existing OCS facilities.

Eligible State—we revised this definition to conform with changes we made concerning revenue sharing. We clarified that eligible States must be no more than 15 miles from the geographic center of a qualified project area.

Geographic center of a project—we made minor edits to the definition to conform with the final rule's revenue sharing provisions.

Income—we made minor, grammatical edits to the definition; the original meaning of the term has not changed.

Lease—we changed the definition from an “authorization” to an “agreement authorizing” the use of a designated portion of the OCS for activities allowed under this part.

Lessee—we clarified the definition.

Natural resources— we made minor edits to the definition.

Person—we added “Federal agency” to the definition, since MMS may issue leases, RUEs, or ROWs to another Federal agency.

Project—we clarified the definition.

Project area—we clarified the definition.

Qualified project—this definition was removed because the term is explained in the regulations for revenue sharing.

Qualified project area—this definition was removed because the term is explained in the regulations for revenue sharing.

Revenues—we changed the meaning of revenues to clarify that it does not include administrative fees.

Right-of-use and easement (RUE) grant—we made minor edits to the definition.

Right-of-way (ROW) grant—we made minor edits to the definition.

Significant archeological resource—we made minor edits to the definition.

Site assessment activities—we removed “physical characterization studies” and “baseline collection studies” as examples of the types of site assessment activities, and we added technology testing as a type of site assessment activity. We added “involving the installation of bottom-founded facilities,” since surveys can be performed using an ACOE permit.

You and your—we made minor edits to the definition.

We, us and our—we made minor edits to the definition.

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

This section describes how MMS will handle data and information submitted to the MMS, including public disclosure and nondisclosure. The MMS will follow the applicable requirements of the Freedom of Information Act (FOIA) (5 U.S.C. 552) and protect data and information to the extent allowed by law. In response to comments we received regarding the protection and release of proprietary data and information, we clarified how we will protect data and information under this part and when MMS will release that data and information.

As set forth in § 285.113, MMS will not release data and information that we have determined to be exempt under exemption 4 of FOIA. However, the passage of time may erode the protections offered by exemption 4 of FOIA. To accommodate for this possibility, MMS has set forth a schedule in this section that we will follow to review such data and information, and any objections by the submitter, to determine whether release at that time would result in substantial competitive harm or disclosure of trade secrets. If MMS determines that the release of such data and information will not result in substantial competitive harm or disclosure of trade secrets, then MMS will release it. If it is determined that release will result in substantial competitive harm or disclosure of trade secrets, then the data and information will not be released at that time, but will be subject to further Start Printed Page 19657review every 3 years thereafter. Nothing in this section is intended to displace or supersede MMS's obligations under 43 CFR part 2.23.

Paperwork Reduction Act Statements—Information Collection (§ 285.114)

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

Documents Incorporated by Reference (§ 285.115)

This section lists the industry standard documents MMS will incorporate by reference into the 30 CFR part 285 regulations.

We did not make any changes to the section. In the future, we will incorporate new documents after MMS has thoroughly reviewed them and determined that they are needed and appropriate.

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

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

In response to comments, MMS edited this section to include “regulatory matters” as an additional issue that such information requests may entail. We also deleted the last sentence in paragraph (a) of this section.

Reserved Section (§ 285.117)

Section 285.117 is reserved.

What are my appeal rights? (§ 285.118)

This section describes when a decision made by MMS under this part may be appealed and who may appeal. Most decisions made under this part may be appealed according to the regulations found in 30 CFR part 290, subpart A. A bidder whose bid is rejected may apply for reconsideration by the MMS Director. If your lease is issued in order to obtain a FERC license or exemption, you may only appeal those decisions made by MMS under the authority of this subpart.

Based on comments, we changed the citation in § 285.118(b) from 43 CFR 4.21 to 43 CFR part 4, since multiple sections of 43 CFR part 4 apply to appeals.

Subpart B—Issuance of OCS Renewable Energy Leases

Overview for Subpart B

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

Types of Leases

Leases will be required for any type of renewable energy activity on the OCS. We will issue two types: (1) Commercial leases and (2) limited leases. Although we also will convey access to areas of the OCS for research under some form of negotiated lease agreement as provided in § 285.238, this discussion of types of leases focuses on the commercial or limited leases that we will issue directly to lessees on a competitive or noncompetitive basis.

A commercial lease will provide the access and operational rights, subject to necessary approvals, to produce, sell, and deliver power on a commercial scale through spot market transactions or a long-term power purchase agreement. A commercial lease will be issued over the long term (i.e., up to approximately 30 years, with possible renewals) and will convey preferential rights to project easements on the OCS for the purpose of installing transmission and distribution systems. A commercial lease will not include a limit on the amount of energy to be produced and sold.

A limited lease will be issued for a shorter term (i.e., up to 5 years, with possible renewals). It will provide the access rights necessary to conduct activities, such as site assessment and technology testing that support production of renewable energy, and may provide the right to produce and sell power within limits set by the terms and conditions of the lease. Limited leases are not intended to authorize long-term or large-scale commercial operations. As provided in the proposed rule, operations on a limited lease may interconnect to electricity or other power distribution systems for testing and information gathering purposes. In response to comments on the proposed rule recommending authorization of the sale of power generated from limited leases to offset site assessment and technology testing expenses, we have changed relevant definitions and text in the final rule to allow limited amounts of electricity to be sold from such leases. Also, since we anticipate only small amounts of power (e.g., 5 MW) to be generated for a relatively short duration (less than 5 years), we do not propose to charge an operating fee for the sale of power from limited leases. We will charge only rentals for limited leases.

In issuing limited leases authorizing use of the OCS for hydrokinetic activity, it will be necessary to coordinate early with the FERC licensing process. For example, if MMS entertains a proposal for a limited lease a determination from FERC will be necessary as to whether an exemption or license is required. Should FERC determine that a license or exemption would not be required for such a proposal, MMS would proceed with the limited lease issuance. However, if FERC determines that a license or exemption would be required, MMS would not proceed with limited lease issuance but would instead proceed with commercial lease issuance.

As originally proposed, a limited lease will not convey any preferential rights to obtain a commercial lease to develop the leased area. Several comments on the proposed rule recommended that limited leases be set up to allow conversion to commercial leases or at least to give the lessee some sort of preference in subsequently pursuing a commercial lease for the same leasehold. Although we have not changed the text of the rule to provide an express commercial right preference, we believe that there will be ways to recognize the limited lessee in the commercial sale process under the final Start Printed Page 19658rule. For example, at the time a limited lease is offered, whether competitively or noncompetitively, MMS will be able to indicate in the lease terms and conditions that acquiring a particular limited lease will give weight to the lessee in any subsequent conveyance of commercial rights. Such details will be established through the leasing process and published in the associated public notices. Also, the level of NEPA analysis for such leases will have to be commensurate with the type and scope of potential activities entailed with the lease rights conveyed. We believe that this approach for limited lessees will be best accommodated under a multiple-factor competitive process, which the rule has been revised to include as an available approach.

The MMS believes that by offering the two types of lease, commercial and limited, the rule provides a developer the flexibility to pursue a lease that will be best suited for its needs. If a developer testing a technology for demonstration purposes is uncertain as to whether full-scale commercial activities will ultimately be conducted on the lease, including long-term sale of power to the grid to generate revenues, then a commercial lease can be obtained instead of a limited lease to assure full and unlimited operational rights to produce, sell, and deliver power. In the event that the demonstration facility is not technically feasible for commercial operations, the lessee is not obligated for the full term of the lease and may relinquish the lease pursuant to § 285.435.

We continue to believe that offshore renewable energy companies generally will prefer to acquire commercial leases rather than limited leases. However, we believe that providing for the issuance of limited leases will give all companies, including smaller entities, an opportunity to pursue renewable energy activities without the commitments and expenses entailed by a long-term commercial lease. Even if the rule provided for limited leases to be issued with a preference for subsequent commercial rights, competition for those competitive rights still will be required under subsection 8(p) of the OCS Lands Act, as amended, and NEPA compliance could require some analysis of a commercial development scenario.

The most important factor for an applicant to consider in deciding whether to pursue a commercial lease or a limited lease is the assured right to full-scale commercial development of the leased site, and such right is included only in a commercial lease under the final rule. Thus, if a renewable energy project applicant is interested in demonstrating a particular renewable energy technology, but is unsure that it will ultimately lead to commercial production, we encourage that applicant to pursue a commercial lease because it reserves the full right to commercially develop the OCS site. Technology testing can be conducted during the site assessment term of a commercial lease. Pursuing a commercial lease will not obligate the lessee to remain on a lease for the full term of the lease. As provided in subpart D, if the lessee no longer intends to commercially develop the leasehold (e.g., results of testing prove unsatisfactory), a commercial lease may be relinquished by the lessee.

Alternatively, if a company obtained a limited lease to initiate technology testing activities and subsequently determined that full-scale commercial development of the OCS area is possible, that company may receive some advantage in pursuing the right to develop that site commercially, for example as a consideration in a multi-factor competitive process, but the issuance of a commercial lease would be subject to the statutory requirements concerning competition. Thus, the subsequent full commercial lease right is not assured to a holder of a limited lease. For these reasons, we anticipate that most project applicants will pursue commercial leases to ensure that all necessary rights for future development are reserved should initial testing activities show that a commercial project could be viable.

The types of leases and the activities authorized are intended to provide for both long-term, large scale commercial production of renewable energy and for short-term, smaller scale activities in support of renewable energy production, such as site assessment and technology testing activities, including the limited sale of power generated.

One commenter recommended providing for issuance of combined limited and commercial leases to facilitate necessary site assessment and authorize such activities in advance of the issuance of commercial rights. We believe such an approach is possible under the rule. It will require a developer to simultaneously request both a limited lease (e.g., for a meteorological tower) and a commercial lease. We anticipate that the limited lease could be processed and issued in a relatively short time (perhaps 6 months), allowing construction and operation of the meteorological tower while the commercial lease is processed over a longer time (1-2 years). Some renewable energy interests, especially wind developers, view such a process as a more timely and efficient approach to leasing and development. We will work with project proponents and stakeholders to pursue this approach if requested, and we plan to describe it in detail in the guidance document we intend to issue after the rule is promulgated.

Issuing Leases

It is the goal of MMS to issue renewable energy leases through a simple and straightforward process and in a fair and equitable manner. The OCS Lands Act requires that leases, easements, and ROWs be issued competitively, unless after publication, MMS determines that there is no competitive interest.

We anticipate that initial leasing of renewable energy sites on the OCS may be driven by unsolicited applications from project proponents, rather than by an MMS-initiated request for interest in an area. A formal Request for Interest will be part of the process for confirming that there is no competitive interest in the area identified in the unsolicited application. The process for the issuance of OCS renewable energy leases when no competitive interest exists is based on the requirements of the OCS Lands Act and is patterned after the existing MMS process for issuing noncompetitive negotiated agreements for the conveyance of OCS sand and gravel.

Any leasing process for OCS renewable energy activity must comply with the applicable requirements of NEPA and other Federal laws. Table 1, which is presented in the discussion titled, OVERVEW OF THE PROJECT DEVELOPMENT PROCESS, under the Federal Compliance for the leasing process, describes the NEPA requirements for steps in the OCS renewable energy process, including the lease issuance step.

The competitive sale process for renewable energy leases is similar to long-standing Federal and State processes for conveying mineral rights. It provides several opportunities for input from interested and affected parties—notably State and local governments and affected Indian tribes—to develop appropriate lease sale terms and conditions including mitigation measures. The process is outlined in the following sections.

Call for Information and Nominations (Call)

Once MMS decides to initiate a competitive leasing process, which will usually occur following a Request for Interest, the first step in the sale process will be to publish in the Federal Start Printed Page 19659Register a Call for Information and Nominations (Call). Comments are due 45 days after the Call. The Call informs the public of the area under consideration for leasing; it solicits comments from all interested parties on areas or subjects that should receive special attention and analysis; it invites potential bidders to indicate areas and levels of interest; and it invites public input regarding possible advantages and disadvantages of potential leasing and development to the region and the Nation.

Along with the Call, MMS will announce how it plans to document compliance with the requirements of NEPA. We believe that at the outset of the OCS Alternative Energy Program, it is likely that an EIS will be required for a competitive lease sale. However, it is possible, especially as the program matures, that less-costly environmental documentation, an EA, may be appropriate.

Area Identification

After the comment period for the Call closes, MMS will use the information received to develop, evaluate, and recommend options for continued environmental analysis and for consideration of leasing. This process step is known as Area Identification, and it determines the geographical area of the proposed action to be analyzed in an ensuing environmental analysis document (e.g., EIS, EA), any alternatives to the proposed action, and mitigation measures and other issues to be analyzed and considered further. The MMS will strive to resolve as many issues as possible at this step to prevent unnecessary conflicts throughout the remainder of the process. Early resolutions of such issues serve to reduce the level of public controversy and help industry and the Federal Government (and ultimately the taxpayer) focus on promising acreage and avoid needless expense.

In identifying the area to be studied in the environmental analysis, consideration is given to the level of industry interest; comments from State and local governments, Federal agencies, affected Indian tribes, environmental groups, and other interested parties; geologic and geophysical information; environmental conditions and effects of development; and other economic and social considerations. At this stage, the area considered for leasing will be more closely identified based on relevant considerations such as use conflicts. Public notice of the area identified usually will be provided with a press release and a fact sheet that includes a map of the proposed sale area.

NEPA Documentation

The MMS will prepare draft environmental documentation that includes, but is not limited to, a description of the lease sale proposal, including the renewable energy resource to be developed and a projection of the site assessment, construction, and generation activities that might occur; reasonable alternatives to the leasing proposal; a description of the existing environment; a detailed analysis of possible effects on the environment, including socioeconomic and cumulative effects; a description of the assumptions on which the analysis is based; potential mitigation measures; any unavoidable adverse environmental effects; the relationship between short-term uses and long-term productivity; any irreversible or irretrievable commitment of resources; and the records of consultation and coordination with others in preparation of the document. This document may also describe the technology assumed or deemed necessary for site assessment and commercial development and operations in the proposed lease sale area. Pertinent published and unpublished investigations from academic and other institutions and organizations and from other Federal and State agencies are reviewed during the preparation of the NEPA document. When the draft is complete, it is made available for public review. In the case of a draft EIS, the document is filed with the EPA and a Notice of Availability is published in the Federal Register, providing for a 60-day public comment period.

No sooner than 30 days after publication of a draft EIS, but within the 60-day comment period, one or more public hearings will be held in the vicinity of the proposed lease area for the purpose of receiving comments on the draft EIS. The MMS will announce the time and location in the Federal Register at least 30 days before the public hearings.

The comments and data received through the public hearings and the official review process are analyzed along with any newly acquired information and, when appropriate, are incorporated into the final EIS or EA. At this stage, new stipulations or other measures to protect sensitive areas, or biological or other types of resources, may be included after comments from affected States and affected Indian tribes are reviewed. In some cases, new deferral options are developed and incorporated into the final EIS. Under typical circumstances, 3 to 5 months after the public hearing, a final EIS is filed with EPA and a Notice of Availability is published in the Federal Register.

Coastal Zone Management Consistency Determination

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

Proposed Sale Notice

The Proposed Sale Notice is the public announcement of the terms and conditions of a proposed competitive lease sale, including the proposed provisions of the lease(s) to be issued. Generally, the Proposed Sale Notice will be issued after (1) completion of the final NEPA documentation; (2) preparation of the CD; and, (3) preparation of various in-house analyses of proposed lease sale economic terms and conditions. Information from these completed documents and analyses is consolidated in an executive decision memorandum that summarizes all proposed lease sale issues that may relate to State, local government, and/or affected Indian tribe comments and recommendations; environmental concerns; coastal zone consistency conflicts; economic benefits and costs; operational or legal constraints; multiple-use conflicts; or any other subject of concern. This memorandum also evaluates any prelease mitigation measures that are available or appropriate to resolve conflicts, issues, and concerns. On the basis of this memorandum and all supporting materials, decisions are made on the proposed terms and conditions of the sale. An attempt is made to balance the various economic, social, and environmental factors including those raised by the affected States, local governments, and affected Indian tribes, as well as other Federal agencies and the general public. A Notice of Availability of the Proposed Sale Notice is published in the Federal Register approximately 4 to 6 months prior to the proposed sale date. The Notice of Availability informs the public where copies of the actual Proposed Sale Notice may be obtained. Start Printed Page 19660

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

Final Sale Notice

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

Bid Evaluation

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

Issuance of a Lease

When a high bid is deemed acceptable by MMS, the submitter is immediately notified of the decision and is provided a set of official lease forms for execution. The successful bidder must pay within 10 days the remaining 80 percent of the bonus bid and file the required financial assurance. Upon receipt of the required payments and properly executed lease forms, a lease is issued to the successful bidder. Leases usually are effective the first day of the month following the date they are signed by an MMS official. Within 45 days after you receive the lease copies, you must pay the first 6 months rent.

Under the lease, the Federal Government conveys certain exclusive rights to the lessee and reserves other rights to the Government. The lease further spells out requirements for surety bonds, operating fee payments, rent payments, and assignment or other transfers.

Following the competitive process outlined previously, a lease sale for renewable energy activities may be held for one type of activity (e.g., wind) or for various activities (e.g., wind, wave, ocean current, etc.). We will determine the scope of competing renewable energy activities based on responses to initial public notices (Request for Information, Call for Information and Nominations, or other Federal notices) issued during the leasing process, and we will clearly state that scope (e.g., wind, wave, ocean current, etc.) early in that process and the subsequent Proposed and Final Sale Notices. If we decide to limit competition to one type of activity (e.g., ocean current), we will not consider bids for any other type of activity, and the lease will be limited to that activity. If we decide to open competition to more than one type of activity (e.g., wind, wave, ocean current, etc.), we will consider all bids for one or more of those activities, and the lease may authorize one or more of those activities.

Noncompetitive Lease Process

The MMS will first determine competitive interest in processing an unsolicited request in order to decide whether to proceed with leasing under a competitive or noncompetitive process. If we find that there is competitive interest in the lease area, we will proceed with a competitive lease process. If we determine that there is no competitive interest, then we will issue a notice of such determination. This section also states that if MMS processes a proposed lease area on a competitive basis, no unsolicited requests for leasing in that area will be considered for as long as that process is pending. Thus, once an area is subject to a lease sale process, the only way to pursue a lease within that area is through that competitive process until that process concludes. After the process concludes, and if acreage within the area that had been considered for lease remains unleased, unsolicited requests will again be considered for that acreage.

If we determine that there is a competitive interest, we will proceed with a competitive process and will apply your acquisition fee to any bid you submit. If you choose not to bid, we will not refund your acquisition fee. We believe retention of your fee in this case is appropriate in order to discourage all but serious requests and because of the costs associated with processing your original request. If you submit a qualified bid that does not win, we will refund your deposit, including the amount of the acquisition fee.

Paragraph (d) describes how MMS will proceed if it determines there is no competitive interest. Within 60 days after we issue a finding that there is no competitive interest, the prospective lessee must submit either a SAP for a commercial lease or a GAP for a limited lease. We will review the plan and conduct NEPA and other required analyses before simultaneously issuing the lease or grant and approving the SAP or the GAP.

Lease Terms

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

Section-by-Section Discussion for Subpart B

General Lease Information

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

We may issue OCS leases for any renewable energy source. Paragraph (a) of this section identifies the types of renewable energy leases that we will make available and describes the rights that come with a lease issued under these regulations. In general, a lease issued under this part conveys the right to install and operate facilities on a designated portion of the OCS for the purpose of conducting commercial (production) activities or limited (noncommercial) activities supporting the production of energy from renewable energy sources. All rights are subject to compliance with requirements to secure approvals of, and then comply with, applicable plans (i.e., SAP, COP, and GAP) that are set forth in subpart F.

Paragraph (a) clarifies that an MMS lessee cannot construct or operate a hydrokinetic project without a FERC-Start Printed Page 19661approved license or exemption. This revision was made to conform with provisions in the April 2009 MOU signed by the Department of the Interior and FERC. Under that MOU, construction and operations of hydrokinetic projects on the OCS cannot commence without a license or exemption from FERC, except in circumstances where FERC has notified MMS that a license or exemption is not required. OCS wind energy projects are not required to obtain a FERC license.

Under paragraph (b) of this section, leases generally include the right to one or more project easements without further competition for the purpose of installing lines through the OCS (i.e., extending to the State/Federal boundary) for gathering, transmission, and distribution of electricity; as well as pipelines for transporting other energy products (i.e., hydrogen); and appurtenances on the OCS as necessary to conduct operations. These may include the OCS segment of cables, pipelines, and other structures necessary to transmit electricity or transport other energy products produced from the OCS to shore. The lessee will apply to MMS for the project easement as part of the COP or GAP. When we approve the proposed plan and project easement, an addendum covering the project easement will be incorporated in the lease. Additional project easements and revisions may be authorized through the plan revision process. One commenter recommended that easements be identified earlier in the process (i.e., in the lease or in the SAP). We believe such an approach would be premature at this stage in the process and impractical, but we will work with applicants and stakeholders as we implement the rule. Also, project easements that run through other leases or grants may be accommodated under the rule, and such situations will be addressed in the implementation guidance we intend to issue after the rule is approved.

Ancillary activities that are not associated with an OCS renewable energy lease (e.g., a transmission line or support structure located in Federal waters to support a project in State waters or a commonly shared line supporting multiple leases) will be permitted and managed as a separate ROW grant or RUE grant under subpart C.

Paragraph (c) of this section provides for phased lease development. The commercial lease framework will accommodate multi-phase project development as is commonly used for onshore utility-scale wind projects (see §§ 285.200(c) and 285.629). The lease applicant must inform us of its intent to develop a project in multiple phases and would need to lease from the outset all of the acreage necessary for the planned full build-out. If the applicant for a commercial lease phases in operations, the applicant must pay rent on the portion of the lease that is not generating electricity and operating fees on the portion of the lease that is generating electricity. We may waive the rent for the acreage on which activities are deferred, as provided by subpart E, on a case-by-case basis for any lease issued under this part. As additional acreage is developed, operating fees would be charged in place of rentals, as appropriate. If the lessee decides not to develop the additional acreage, it may relinquish that acreage, or MMS may contract the lease, as provided in §§ 285.435 and 285.436. Multi-phased project development will have to comply with NEPA, CZMA, and other applicable laws.

We did not make any changes to this section.

How will MMS issue leases? (§ 285.201)

As required by subsection 8(p) of the OCS Lands Act, MMS must issue leases, easements, or ROWs for OCS renewable energy activities on a competitive basis unless we determine after public notice that there is no competitive interest. If we determine that there is competitive interest, we will conduct a fair and open competition process. When we receive an unsolicited request for a lease, we will make a determination if a competitive interest exists by first issuing a public notice of the proposed lease. In the public notice, we may offer additional areas for leasing. After considering the comments received on the notice, as required by the OCS Lands Act, section 8(p), we will issue a determination that there is, or is not, competitive interest in the proposed lease. If two or more project proponents express interest in leasing the same area of the OCS (overlapping partially or completely), we will conclude that competitive interest exists and conduct a competitive lease sale.

We are aware that instances of partially overlapping interests may occur and requested comments on this issue. For example, if proposed Project A entails 10,000 acres for generation of 500 MW and Project B entails 2,000 acres for 100 MW, and there is an overlap of 1,000 acres, we will have to determine whether there is competitive interest in all or part of the acreage requested. The following six alternative approaches for addressing such a situation were offered for comment with the proposed rule.

(1) Offer both the Project A and Project B areas and award a lease for one or the other to the high bidder. If a cash bonus is a bid variable, it could be based on either the total or the amount per acre, and if an operating fee is a bid variable, it could be based on the total or the amount per MW of proposed capacity.

(2) Offer and award a lease through competition for only the overlapping 1,000-acre area and then follow with a noncompetitive lease issuance for the remaining 9,000 acres under Project A and 1,000 acres under Project B.

(3) Offer to lease individual tracts covering the area of interest, designated as legal subdivisions of a standard OCS lease block of 9 square miles. Bidders that value specific tracts most highly could win leases through a simultaneous tract offering, and subsequently propose operations on multiple 1/16 legal subdivisions (a 1/4 1/4 of a lease block) to obtain possible synergies.

(4) Offer the combined Project A and B areas as one lease and award the lease to the high bidder (the winning lessee could then relinquish excess acreage).

(5) Offer standard block sizes or legal subdivisions of those block sizes and allow bidders to “package” those blocks in a bidding unit (package bidding). Identify the various features of the auction, e.g., bidder eligibility to compete and to remain active in various rounds, information to be released between rounds, rules for ending the auction, method for choosing the provisional high bidders, restrictions on bidding in subsequent rounds, etc.

(6) Rely on coordination and consultation efforts with State and local governments to identify one preferable project area to be offered and awarded to the high bidder.

The consensus of the comments we received is that all of these approaches are reasonable. Some commenters recommended an additional approach that would give the competing project proponents the opportunity to adjust their areas of interest to eliminate overlapping proposed lease areas. We have not adopted this recommendation due to potential adverse effects on competition.

We also are aware that there will be other instances in which multiple projects could be proposed in the same general area with no actual geographic overlap, but the number of lease tracts may need to be limited based on regional or local needs and concerns. For example, a State or locality may identify a need for a certain amount of renewable energy generation from an OCS source. If the number of Start Printed Page 19662prospective leases proposed for an area greatly exceeded the projected demand, we may limit the number of tracts that could be offered. Such a case could be addressed by proceeding with an intertract competition in which multiple tracts could be offered for lease in the auction formats described in the section-by-section summary (see §§ 285.220 through 285.223), but the number of tracts to be awarded would be limited. Although it would be our preference to use consultation—notably with the affected States and local communities, as well as the applicants—to identify the appropriate tract or set of tracts to be offered for sale, we have decided to preserve the option for conducting intertract competitive auctions. Such an approach is authorized under the rule, so we have not changed the regulatory text.

Generally, we believe that priority should be given to leasing tracts for commercial operations. We may consider only issuing limited leases in areas in which there is no interest in commercial leasing.

Once we make the determination about competitive interest, we will proceed with issuing leases under the appropriate process described in this subpart. The competitive process is set forth in §§ 285.210 through 285.225, and the process for issuing leases when no competition exists is set forth in §§ 285.230 and 285.231. The MMS will prepare an OCS renewable energy lease form and provide or reference such a lease form in a public notice. The approved lease form (or forms) for OCS renewable energy will be developed separately from the rulemaking and in consultation with interested and affected parties. This approach is designed to give us the flexibility to accommodate all possible renewable energy activities and adapt forms as necessary.

What types of leases will MMS issue? (§ 285.202)

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

We did not make any changes to this section.

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

As directed by subsections 8(p)(4) and (7) of the OCS Lands Act or by other relevant Federal statutory requirements (e.g., ESA and Magnuson-Stevens Fishery Conservation and Management Act (MSA)), MMS will coordinate and consult with relevant Federal agencies (including the Department of Defense and those agencies involved in planning activities that are undertaken to avoid conflicts among users and maximize the economic and ecological benefits of the OCS, including multifaceted spatial planning efforts), the Governor of any State, the executive of any local government that may be affected by a renewable energy lease, and affected Indian tribes. As provided in § 285.102(e), we may invite any Governor of an affected State or government executive of an affected local government to participate in a joint task force or other joint planning or coordination agreement if we are considering offering or issuing leases (or grants). Participation in a task force would give the parties opportunities to contribute to the planning process and access to nonproprietary information. This section has been revised to include affected Indian tribes. In response to comments, we have also revised this section to differentiate between general consultation and coordination under this rule and the consultations with Federal agencies that are mandated by other laws (e.g., ESA).

We urge project proponents that plan to pursue renewable energy activities on the OCS to conduct preliminary outreach early in the process by contacting interested and affected parties about their proposals. We believe that it is particularly important for project proponents that plan to produce and deliver electricity to existing onshore distribution systems to consult with involved States and localities to establish power generation needs and to become aware of pertinent regulatory requirements before pursuing OCS commercial development and production rights. Early communication between project proponents and the States and localities that would be most affected by any project development and that would regulate associated onshore facilities, may ensure that the project will be compatible with and support any renewable portfolio standards, policies on the location of transmission and other support facilities, and any other relevant factors.

What areas are available for leasing consideration? (§ 285.204)

We intend to consider offering for lease any area of the OCS that is appropriately platted, except areas prohibited from leasing. Subsection 8(p)(10) of the OCS Lands Act prohibits renewable energy leasing in any area of the OCS within the exterior boundaries of any unit of the National Park System, National Wildlife Refuge System, National Marine Sanctuary System, or any National Monument. In administering this program, the Secretary will take into account other uses and may decide not to offer portions of the OCS for leasing under this part or may restrict operations.

The areas we actually make available for renewable energy leasing are likely to be determined through a process that assesses different types of renewable energy resources and potential environmental impacts and other relevant information on a national, regional, or more area-specific basis. The assessment process will include coordination and consultation with Federal, State, and local governments; affected Indian tribes; and other interested and affected parties and may entail the establishment of task forces as discussed previously. The MMS will consider input from the task forces—as well as other national, regional, local, and tribal planning and coordination mechanisms—in determining appropriate siting of renewable energy projects and leasing priorities. Based on such assessments, we have the discretion when making the determination whether to offer areas for leasing. We intend to use our existing system of OCS regions, planning areas, official protraction diagrams, and lease blocks to designate, delineate, and describe areas of the OCS under the OCS Alternative Energy Program. Start Printed Page 19663

We did not make any changes to this section.

How will leases be mapped? (§ 285.205)

This section states that MMS will prepare and use necessary leasing maps and official protraction diagrams as it does for mineral leasing on the OCS (e.g., 30 CFR part 256.8)

We did not make any changes to this section.

What is the lease size? (§ 285.206)

We will determine the size for each lease on a case-by-case basis to ensure that it is an appropriate size to accommodate the anticipated activities. The lease size will accommodate buffers or setbacks as necessary. The process for the issuance of all leases will provide public notice of the lease size. We plan to delineate leases by using mapped OCS blocks, portions of such blocks, or aggregations of such blocks. For example, a limited lease supporting a small data gathering or technology testing facility might require only a small part of a 3-mile by 3-mile OCS block. In such a case, the lessee could acquire (or retain after originally acquiring a larger area) an aliquot part as small as a quarter-quarter (i.e., 1/16) of a block. On the other hand, it is likely that a typical commercial-scale renewable energy project would result in the issuance of one lease encompassing several contiguous OCS blocks.

We did not make any changes to this section.

Reserved Sections (§§ 285.207 through 285.209)

Sections 285.207 through 285.209 are reserved.

Competitive Lease Process

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

This section establishes a process for us to solicit proposals to develop the renewable energy potential on the OCS. We may use a general Request for Interest to gauge interest in renewable energy leasing anywhere on the OCS or a specific Request for Interest to assess interest in specific areas after receiving an unsolicited leasing proposal. Any Request for Interest will be published in the Federal Register.

Depending on the level and extent of interest and review of comments, we may formulate a nationwide or regional program schedule of lease sales, or we may initiate individual competitive lease sales on a case-by-case basis without an overarching program schedule. Once a determination is made to offer an area(s) for leasing, we would initiate a renewable energy lease sale process.

We did not make any changes to this section.

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

This section lays out the discrete steps we propose to follow in preparing for and holding a lease auction and issuing leases. These steps include a Call for Information and Nominations (Call), an Area Identification, a Proposed Sale Notice, and a Final Sale Notice as explained in the description of the competitive leasing process presented previously.

We received several comments recommending that we provide for accepting the results of competitive processes conducted by States and utilities to select developers of offshore wind generation projects. Notably, during the time that MMS has been promulgating this rule, the States of Delaware, New Jersey, and Rhode Island have conducted competitive processes and have selected companies to develop wind resources on the OCS. We believe that the pre-existing State processes are relevant to the competitive processes that MMS is required to conduct following approval of this rule. We intend to do so by using a competitive process that considers, among other things, whether a prospective lessee has a power purchase agreement or is the certified winner of a competitive process conducted by an adjacent State. We also may consider a similar approach to recognize the winners of competitions held by States in the future. There is additional discussion of this issue in our explanation of multiple-factor bidding provided in the next section.

In response to a comment pointing out a typographical omission from the proposed rule, we have revised § 285.211(b)(2) to say, “* * * human, marine, and coastal environments * * *”

We have also added time periods for the steps in the competitive lease issuance process, and we have cited affected Indian tribes in paragraph (b).

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

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

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

This section describes the type of information we seek from potential lessees in response to a Request for Interest or a Call. We may issue a broad request for interest to be used as a basis for developing a national or regional schedule of renewable energy lease sales, or we may issue a tract-specific request to be used to determine competitive interest in a particular area that has been proposed for leasing. We will issue a Call as the first step in a competitive lease sale process to elicit information from all interested and affected parties concerning proposed leasing activities and the existing conditions that may affect or be affected by those activities. In all cases—responding to a general or specific Request for Interest or a Call—we will require prospective lessees to submit the same types of information. That information will include: The area of interest for a possible lease; a general description of objectives and the facilities needed to achieve those objectives; a general schedule of proposed activities, including those leading to commercial production or other approved operations; available and pertinent data and information concerning renewable energy resources and environmental conditions in the area of interest, including energy and resource data and information used to evaluate the area of interest; devices and infrastructure involved; anticipated power production and likely purchasers; a statement that the proposed activity conforms with State and local energy planning requirements, initiatives or guidance, as appropriate; documentation showing that the applicant is qualified to hold a lease; Start Printed Page 19664and any other information specifically requested in the Federal Register notice.

We believe that this information is necessary for MMS in developing leasing schedules, determining competitive interest for unsolicited proposals, and proceeding with renewable energy lease sales. We also believe that such information should be readily available from prospective lessees and that this requirement poses no undue burden. In cases where a prospective lessee has already submitted the required information, we will not require it to be submitted subsequently. For example, if a project proponent responds to a broad or specific Request for Interest for an area that MMS subsequently decides to offer in a lease sale, that project proponent will not have to resubmit information in response to the Call for that sale. Only those that have not previously expressed interest and submitted information will be expected to provide the required information in response to the Call.

In addition to the items listed, we believe that information relating to potential power markets that could be served, and proposed conventional and renewable energy projects that are located onshore and offshore and could serve those markets, is important. Also, environmental, technical, and economic information on similar projects elsewhere in the world that may be relevant to your proposed area(s) may be necessary for our deliberations.

Some comments indicated that this section meant that MMS may require a response to a Request for Information or a Call. Clearly, MMS cannot mandate such responses, but we can specify the information we need from those who opt to respond and participate in the leasing process. We believe the respondents should recognize that it is also in their best interest to submit complete and accurate information about their leasing intentions to enable proper consideration by MMS.

We have made two changes to this section. We added to § 285.213(d) a statement that we will withhold trade secrets and commercial or financial information that is privileged or confidential from public disclosure under exemption 4 of the FOIA. Also, we deleted § 285.213(e) and renumbered subsequent sections because we can expect affected State(s), rather than the prospective lessee, to submit information communicating the State perspective on proposed projects and associated leasing.

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

This section states that we will use the information we receive to identify lease areas, develop options for conducting environmental analysis and adopting lease provisions, and prepare documentation to satisfy relevant Federal requirements, such as NEPA, CZMA, ESA, and MSA.

For purposes of Federal consistency, we will treat renewable energy competitive lease sales as Federal agency activities and follow the requirements of subsection 307(c)(1) of the CZMA. That means we must determine if the effects to any land or water use or natural resource of a State's coastal zone from the competitive lease offering are reasonably foreseeable and comply with the appropriate Federal consistency regulations in 15 CFR part 930, subpart C.

We did not make any changes to this section.

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

Under this section, the areas we will offer for lease will be those identified pursuant to § 285.211(b). However, the offered area could be subsequently reduced through the lease sale process. This section also states that no further nominations for a lease sale will be accepted after the Call for Information and Nominations closes. Comments on this provision asked for clarification that such areas will be available for nomination in subsequent nomination and leasing processes. We believe that, as written, this section should be understood to mean that nominations are required to be submitted during the comment period following a Call for a particular lease sale process. After that particular lease sale process concludes, parties may submit unsolicited nominations for areas that were within the scope of that sale, and MMS will give them full consideration under the processes outlined.

We did not make any changes to this section.

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

We will publish Proposed Sale Notices and Final Sale Notices in the Federal Register for each lease sale. Proposed Sale Notices and Final Sale Notices will provide information pertaining to:

  • The area offered for leasing;
  • Proposed and final lease terms and conditions including lease size, lease term, payment and financial assurance requirements, performance requirements, and site-specific lease stipulations;
  • Auction details including bidding procedures and systems, the bid variable and minimum bid, the bid deposit, the place and time for filing bids, and the place, date, and hour for opening bids;
  • The official MMS lease form to be used or a reference to that form;
  • Bid evaluation criteria we will use and how the criteria will be used in decision-making for awarding a lease;
  • Award procedures including how and when we will award leases and how we will handle rejected bids or applications;
  • Procedures for appealing the lease issuance decision; and
  • Execution of the lease.

The Proposed Sale Notice will invite comments from all interested and affected parties. We expect that the use of such a notice in the process of offering leases for development of OCS renewable energy sources will provide a valuable opportunity for us to consult on the selection of appropriate competitive leasing procedures and the formulation of the details of the leases to be issued. After considering comments on the Proposed Sale Notice, we will revise and publish a Final Sale Notice. The final steps in the leasing process will be conducting the auction and awarding the leases.

We received comments recommending that we should delete the regulatory reference to minimum bids and provide additional guidance as to the bid evaluation criteria MMS might announce and apply. We have decided to retain the regulatory reference. The MMS will set a minimum bid to inform auction participants of the smallest bid amount that could be accepted in a sealed bid auction or to set the level for opening bids in an ascending bid auction. Potential lessees should find this information helpful when making financial preparations prior to participating in an auction. Further, minimum bids can serve as a deterrent to speculative bidding from companies who either are less financially sound than is desirable, do not plan to undertake investments in an expeditious manner, or whose main goal is to make a profit by re-selling the property rights. We will address bid evaluation procedures generally in implementation guidance that we intend to issue after the rule is approved, and we will publish the details of bid evaluation criteria in the sale notices. Start Printed Page 19665

We did not make any changes to this section.

Reserved Sections (§§ 285.217 Through 285.219)

Sections 285.217 through 285.219 are reserved.

Competitive Lease Award Process

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

This section, as well as the following two sections, describes the auction formats and bidding systems that will be available to MMS for awarding renewable energy leases on a competitive basis. In the proposed rule, we set forth three auction formats: Sealed bidding, ascending bidding, and two-stage bidding. In response to comments, we have added a fourth auction format that considers multiple factors relating to proposed OCS renewable energy projects. This additional format is described in detail in the next section. The concept of package bidding, introduced in § 285.220 and applicable to all the auction formats described in this section, is also detailed in this section.

The sealed bidding format is mandated for oil and gas lease sales by subsection 8(a) of the OCS Lands Act. In contrast, no particular auction format is required for renewable energy lease sales conducted under subsection 8(p) of the OCS Lands Act.

For each auction, we will establish a sale area or sale areas based on information received in response to Request for Interest and Call notices, and establish a bid variable, a minimum acceptable bid, and the criteria for bid acceptance. We will include specific details of the selected auction format in notices published in the Federal Register including the Proposed Sale Notice and the Final Sale Notice. The sale notices will include details on the bidding process, such as the auction format, bidder eligibility, bidder deposits, bid variable, minimum bid amounts, bid increments, criteria for ending or continuing the auction, method for determining the provisional winning bidder(s), and bid adequacy considerations. A general description of the four auction formats from which we propose to choose follows.

Sealed Bidding will consist of a single round of bidding and provide for each lease sale participant to submit a single bid by post or email, after which we will publicly announce the high bidder. We will specify in the Call either a cash bonus or an operating fee rate for the bid variable. This auction format is administratively compatible with the application of a ranking and filtering procedure to identify the set of highest bids per tract before MMS decides which of those tracts to lease. This ranking of high bids can serve as a bid adequacy mechanism for determining which high bids to accept. It also has the advantage of creating competition for lease rights across tracts when competition for individual leases is absent. This procedure is known as “intertract competition.”

Ascending Bidding involves multiple rounds of bidding and provides for participants to submit increasing sequential bids over a specific time period. Again, we will specify either a cash bonus or an operating fee rate for the bid variable. Bids may be submitted orally or electronically (e.g., internet). If bidding activity continues until the deadline, the time period for bidding may be extended if warranted by additional bidding activity.

Two-stage Bidding combines the previous two formats, sealed and ascending bidding. Generally, we will require interested bidders to offer a minimum cash bonus to join the auction. In the most likely process formulation, participants are expected to submit ascending bids (e.g., operating fee rate, cash bonus, etc.) in the first stage until all but two bidders drop out or more than one bidder offers to pay the maximum bid amount specified by MMS. The auction will then move to the second stage, where the remaining participants typically will offer a sealed bid on a bid variable not employed in stage one. However, we reserve the option to conduct the two-stage auction using sealed or ascending bidding in either or both stages, and to select the bid variables in each stage.

Multiple-factor Auction may be employed to rank proposals, resulting in a lease award to the bidder making what MMS perceives is the best offer. Single or multiple financial bid variables may be considered (e.g., rental rate, operating fee, variable cash bonus, or combination). Nonmonetary variables may also be considered including technical merit, timeliness, financing and economics, the environment, public benefits, consistency with State and local needs and requirements, or other factors.

Subject to the bid adequacy requirements referenced in § 285.222, typically the qualified bidder offering the highest cash bonus or the highest fee rate, depending on which deciding bid variable is used, will win the lease. When there are multiple leases, intertract competition could be used to decide which of the high bids to accept under the category of bid adequacy.

We received numerous comments on this section of the rule, many recommending more subjective lease issuance processes. We revised the rule at §§ 285.220 through 285.224, and § 285.501, to accommodate a multiple factor auction format for competitive lease award. A method of assessing multiple factor bids may be employed to rank proposals, resulting in a lease award to the bidder making what MMS perceives is the best offer. Single or multiple financial bid variables may be considered along with nonmonetary variables, such as technical merit, timeliness, financing and economics, the environment, public benefits, consistency with State and local needs and requirements, or other factors. While we have included the multiple factor auction format as an option, we are concerned that this format would not meet the objective under the mandate of subsection 8(p)(3) of the OCS Lands Act (43 U.S.C. 1337(p)(3)), which is to issue renewable energy leases through a simple and straightforward process in a fair and equitable manner. This auction format is likely to be less transparent to the public and more susceptible to favoritism and manipulation by selected parties than other auctioning formats. However, MMS is willing to work with States and other interested organizations to develop a procedure that would meet the OCS Lands Act mandate.

Some entities submitted a preference for sealed bidding rather than ascending bidding. In their view, a single round of bidding is a more equitable process than ascending bidding and is the simplest, most straight forward method. One comment related a sealed bidding auction format as proposed by MMS to procedures for placing a bid in response to a request for proposal (RFP). Another comment explained that, to the extent there is competitive interest, ascending bidding will assure MMS that it is receiving the maximum amount each of the participants is willing to bid for a lease and help satisfy MMS's concerns regarding a “fair return.” Other commenters criticized the sealed bid process because of the risk that one of the bidding parties will offer an unnecessarily high bonus bid, depriving that entity of important capital that it will need to develop the lease and potentially other leases. We recognize that under certain conditions, a sealed bid auction may yield better results than an ascending bid auction. It is also true that if different conditions prevail, an ascending auction may maximize the public's expected revenue. The MMS will make a determination regarding the Start Printed Page 19666type of auction to be used based on whether the choice would encourage companies to participate in the auction and result in leasing to developers that have the financial and technical means to successfully develop a renewable energy project. The MMS will review information received in response to a Request for Interest and a Call before announcing a sale design and auction format in a Proposed Sale Notice.

On the issue of package bidding, the general consensus of the comments supported such an approach, although there were some concerns expressed about its complexity. This approach was possible under the rule as proposed, and MMS believes that package bidding should be available under the final rule. Package bidding used in the auction formats described in this section would allow project proponents to identify possible synergies between tracts, then delineate a lease area comprised of those tracts, and bid the value of those tracts based on the development potential of the overall proposed project. Before making the decision to hold an auction that featured the option to submit package bids, MMS would analyze information submitted in response to the competitive lease process given in §§ 285.210 through 285.215 to determine if it was in the public's interest. If utilizing such an approach is beneficial and selected, MMS may choose among different approaches to implement package bidding. For example, a simultaneous ascending auction could be held, where MMS believes that package bidding would provide the best means by which bidders may compete for leases they need for project development. Bidders would submit a bid consisting of multiple lease blocks whereby the bid value would represent the total value of those lease blocks. The determination of winning packages can be made through the application of a software algorithm that maximized the sum of the package bids submitted in successive rounds. As a simpler, alternate approach, a bidder's choice ascending auction could be held in which the high bidder in each round earns the right to choose one tract, or multiple tracts to form a logical development unit, from all tracts offered.

We did not make any changes to this section other than the addition of the multiple-factor auction format.

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

A bidding system is composed of various elements, the most important of which are the bid variable(s) and the payment requirements. The bid variable is generally subject to a minimum bid level and potentially to a reservation price, both established by MMS. The minimum bid level represents the entry level of the bid, i.e., the smallest bid amount that MMS would consider acceptable. Usually the same minimum bid level will be set across certain classes of tracts. The reservation price is a tract-specific measure that represents an estimate of the underlying value of the tract when used for a specific purpose. In cases where sufficient competition is deemed to exist, a reservation price typically will not be needed to ensure that a fair return is obtained in the auction for the individual tract. For a renewable energy lease, we will choose from six different bid systems:

(1) A cash bonus with a constant fee rate (decimal);

(2) A constant operating fee rate with a fixed cash bonus;

(3) A sliding operating fee rate with a fixed cash bonus;

(4) A cash bonus and a constant operating fee rate;

(5) A cash bonus and a sliding operating fee rate; or

(6) A multiple-factor combination of nonmonetary and monetary factors.

The fee rate in this context is analogous to a royalty rate used in oil and gas leasing. If a cash bonus is the bid variable, the operating fee each year will be based on the formula in subpart E. If the fee rate is the bid variable, the cash bonus will be fixed, and the operating fee will be calculated using the fee rate offered by the winning bidder as a part of the formula in subpart E of this regulation. The two-bid variable systems, cash bonus and operating fee rate, either constant or as a sliding scale, will be used only in a two-stage auction.

The resulting annual operating fee in these two-stage bidding auctions will be derived from the formula established in subpart E of this part which is based, in part, on megawatts of installed capacity and the prevailing market rates for electricity sold in the consuming region targeted by the lease. Values for the formula components, excluding the fee rate when it is used as the bid variable, will be established in the Final Sale Notice or in the final public notice in the case when no competitive interest exists for a proposed lease.

For limited leases, the cash bonus will be the only permissible bid variable. The MMS imposes no operating fee for limited leases because such leases could produce and sell power only within limits set by the terms and conditions of the lease; limited leases will not authorize long-term or large-scale commercial operations. Since we anticipate only small amounts of power (e.g., 5 MW) being generated for relatively short duration (less than 5 years), we do not propose to charge an operating fee for the sale of power from limited leases. We will charge only rentals for limited leases. This also means we will not be using a two-stage auction format for issuing limited leases.

One renewable bidding system that we considered but rejected in the proposed rule is a multiple-factor system. Such a system consists of many different bid variables as factors, both quantitative and qualitative, in determining the winning bid in a competitive process. This is the approach used in Denmark, which has the most developed offshore wind program in the world and issues licenses based on multiple factors (e.g., project design, operator experience, etc.).

However, we received numerous comments recommending that we reconsider the multiple-factor approach, and based on those comments, we revised the rule at §§ 285.220 through 285.224, and § 285.501, to accommodate a multiple-factor auction format for competitive lease award. The multiple-factor auction format may be employed to rank proposals, resulting in a lease award to the bidder making what MMS perceives is the best offer. Single or multiple financial bid variables that may be considered include a rental rate and operating fee, with a fixed or variable cash bonus or a fixed entry fee. Nonmonetary variables may also be considered including technical merit, timeliness, financing and economics, the environment, public benefits, consistency with State and local needs and requirements, or other factors.

Under the multiple-factor auction format, MMS will publish criteria for winning bid determinations in the Final Sale Notice. A panel made up of members selected by MMS, or members from MMS, would assess and rank the proposals. Possibly, a quantitative framework may be devised that would weigh the importance of each factor and provide a rating scheme for bids placed on the factors. Further, it is possible that a negotiation stage may be included in the bid assessment criteria, to be used if it becomes necessary to modify a proposal prior to acceptance. The MMS will coordinate with States and other stakeholders, as appropriate, to establish procedures that are best designed to assure that the winning proposal will result in the selection of the most Start Printed Page 19667worthy offer and provide a fair return to the public.

Multiple factor bidding may be useful if MMS identifies a market failure in a purely monetary auction format. In certain circumstances, nonmonetary factors involving important public policy matters may not be reflected in auctions where a fiscal term measure is applied to determine the winning bidder. Examples of such market failure include situations where public benefits could accrue from innovative research and technology development or situations where public benefits could accrue from the abatement of existing or potential carbon emissions.

In the first example, two or more project proponents want to prove a new project concept using technology that is not available on a commercial scale. The expected value of this type of project is marginal; so the proponents would seek the minimal initial cost of obtaining access rights, perhaps to a level even lower than the cost of obtaining a lease when no competition exists, in order to have more capital for facility expenses. When more than one project proponent indicates an interest in acquiring leases to develop resources in the same area, MMS might hold a multiple-factor auction to encourage the advancement of the technology. The MMS could design the bidding factors specifically for the type of project proposed, giving consideration to the estimated resource potential. It is possible that MMS could give the winning bidder, in a multiple-factor auction, an opportunity to prove the project concept and profitability before requiring payment of a significant share of the cash flow. The Government would take on the role of supporting a promising project concept impeded by financing difficulties for public policy reasons. While MMS originally chose to exclude this option from the proposed rule, comments indicated that this method of lease award may advance the development in wave energy technology, and so it has been added to the auction format regulations in this rule.

In the second example, MMS may choose to use a multiple-factor auction to advance the synchronization of State and Federal regulatory processes that have different but compatible conceptual goals, e.g., a State administered RFP to supply electricity under a power purchase agreement in conjunction with an MMS competitive renewable energy commercial lease offering. This situation may arise when a State announces an RFP for a power purchase agreement that would help a utility company meet growing demand for electricity within its customer base. Proposals would be assessed based on factors such as technical merit, timeliness, financing and economics, the environment and public benefits, or other factors. The RFP could specifically state that consideration in awarding leases would be given to potential emission reduction benefits to the public and could request that bidders submit a lease bonus bid payable to MMS for its preferred site in any proposal to develop an OCS renewable energy project. The lease bonus bid would be one of the multiple factors published in the RFP, to be assessed by the State and MMS jointly to determine the winning proposal. A primary concern would be that the interests of the Federal Government might not coincide with that of the power purchaser and the State, resulting in a bid factor weighting and assessment process that does not lead to a fully satisfactory selection process. In such cases, the proposal receiving the highest ranking may not be the proposal that is the highest valued, thus negatively impacting the return to the United States and the State(s) when revenues are shared. The MMS will coordinate with States and interested organizations to establish procedures that assure competition and a fair return to the United States.

Several commenters expressed concerns about inviting possible sham bidding and speculation, especially with the use of bidding systems based on fee rate as the variable. We understand these concerns and agree that a combination of bonus, rental, and operating fee payments should be balanced in a way that encourages participation by serious project proponents. We will analyze energy market conditions through the competitive lease process, beginning with the analysis of information available after a request for interest is published, and continuing through the Call and the Proposed Sale Notice. We will endeavor to hold auctions that will tend to award leases to bidders who value the tracts the most. We anticipate that renewable energy lease sales will be focused on sites where the resource potential can be assessed with a relatively high level of certainty before the auction. This could allow MMS to set the minimum bid at a level that potential bidders who do not have the financial and technical capability to develop a lease would not be willing to pay. As a result, speculative bidders should not be able to compete effectively for renewable energy leases against legitimate project proponents. However, to provide additional assurance, MMS intends to defer from using bidding systems incorporating the fee rate, as used in the formula found in § 285.506, until the technology for the development of the given renewable energy source has been commercially proven.

What does MMS do with my bid? (§ 285.222)

The MMS will open sealed bids at the place, date, and hour specified in the Final Sale Notice for the sole purpose of publicly announcing and recording the bids. However, we will not accept or reject any bids at that time. We will determine whether to accept a high bid as a winning bid based on the following factors.

With sealed bidding, bid acceptance criteria typically rely on (1) minimum bid levels we establish, with bids above that level being acceptable if there is a sufficient level of competition or if the lease area is not considered to be viable, or (2) assessments of the adequacy of the high bids for a specific lease area in comparison to calculated reservation prices for the property rights that are the object of the bidding. Whereas a minimum bid reflects a publicized level below which bids are not deemed satisfactory or competitive and thus will not be considered, the reservation price reflects an unpublished estimate of the value of the tract, and thus generally the lowest bid level at which we would award the lease. In this context, the term “reservation price” could also refer to the lowest operating fee at which we would award the lease, if the operating fee is used as the deciding bid variable. The calculation of the reservation price compensates for insufficient market competition, so if enough competition for the tract materializes, there is less of a need to rely on a reservation price. However, when there is little competition for specific acreage, the reservation price becomes critical if the absence of competition is known to the potential bidder. An additional factor we may consider in calculating the reservation price is the value of other uses of the area that are incompatible with the renewable energy project.

Due to the competitive aspects of the ascending bidding procedure, bid acceptance ordinarily would be less dependent on application of a reservation price and instead would rely solely on the bidding results to ensure receipt of fair market value. The ascending bid framework has been used by the BLM for allocating the property ROWs for wind energy projects. If we conclude that ascending bidding is the preferred auction format for many proposed renewable energy leases, then Start Printed Page 19668sale procedures for ascending auctions could differ substantially from the customary OCS sealed bid model.

With a two-stage auction format, the bid acceptance considerations are the same as those that apply to the format for the final stage that was used (i.e., sealed and/or ascending bidding).

One way to reduce reliance on a calculated reservation price in sealed bidding or two-stage bidding could be to apply the auction format to multiple areas employing intertract competition. Intertract competition may be needed in areas with high industry interest in a number of OCS leases, but where expected demand per tract is limited or constrained. In addition to enhancing competition, the object of intertract competition would be to provide signals through the bids, which serve to assist us in leasing areas providing access to the most valuable sources of energy.

Our goal is to accept or reject all sealed bids within 90 days after the sale date, although we may extend that time if necessary. In the case of ascending bidding, we may be able to determine the winning bidder once we confirm that the high bidder is a qualified bidder. Nevertheless, we reserve the right to reject any and all bids, regardless of the amount offered or bidding system employed. We will send a written notice to each high bidder, accepting or rejecting the bid or informing the bidder of tied high bids.

One comment on this section recommended that a 30-day deadline for acceptance or rejection of the high bid be set for MMS. This commenter and others also recommended revisions to establish meaningful bidder competence requirements. They suggested that the proposed § 285.222(b) be changed to provide that MMS review the high bidders' qualifications as they relate to the bidders capabilities to make productive use of renewable energy leases. This review should take place prior to awarding the lease and should substitute for conducting a bid adequacy review. The commenter further stated that MMS's authority under this section to nullify an auction, because the competitively determined value of a lease falls short of a minimum value that MMS has placed on it, is misguided.

We have decided to establish a bidder competence requirement in § 285.107. To ensure a fair return, MMS intends to rely primarily on area-specific minimum bid levels and auction designs that encourage competitive bids. Where competition clearly prevails, MMS expects to make high bid acceptance and rejection decisions within 30 days following the sale, absent the presence of unusual bidding patterns. This amount of time may be necessary to ensure that MMS has selected the proper allocation of leases to high bidders when (1) package bidding is employed, (2) one or more package bids overlap, and (3) determination of the appropriate set of winning packages requires application of a software algorithm.

The 90-day postsale evaluation period is generally intended to apply in those unusual cases where bid adequacy procedures must be used. Bid adequacy considerations will be used where bidding evidences certain anomalies that indicate anti-competitive, illegal, or unauthorized behavior, where bidding is expected to be sparse, or when bids submitted for a tract are otherwise not a good indicator of true market competition. Legal bids would be bids submitted in compliance with the MMS regulations at 30 CFR part 285 and the Final Sale Notice. Anti-competitive or unauthorized behavior includes any form of collusion, or attempts to manipulate MMS auction rules to obtain an improper advantage over competitors. In cases where there are multiple tracts of interest but few bidders per lease, MMS may choose to employ intertract competition to assess bid adequacy. Under this approach, the high bids would be ranked, and a subset of those high bids would be accepted subject to the bid adequacy conditions that applied. If MMS decides that a tract should undergo evaluation to determine if fair value has been received, or there is a wide variation among bids, a reservation price may be calculated. A wide variation in bidder values could be caused by asymmetric information concerning the resource potential on a tract or tracts, or dissimilar bidding strategies. Bid adequacy would be used if MMS has reasonable confidence in its ability to accurately estimate project value in conjunction with the bids for the project.

Several commenters took issue with our proposed approach to determining and assuring fair return for renewable energy rights. Some commenters stated that our approach misapplies elements of the approach taken to determine fair market value for oil and gas resources. We agree that there are significant differences among the market conditions for oil and gas exploration and development and renewable energy siting and development, but we believe that a competitive lease process is compatible with assuring that the United States receives a fair return for issuance of a renewable energy lease. Conceptually, the MMS renewable energy lease program will be different from an oil and gas lease program due to resource risk considerations. We anticipate that renewable energy lease offerings will be focused on sites where the resource potential can be more accurately assessed before the auction than during typical oil and gas lease offerings. Further, costs to measure renewable energy resource potential are relatively low in comparison to the cost of oil and gas exploratory drilling. While it is not known whether oil and gas accumulations exist on most oil and gas tracts offered in MMS sales, there is a significant amount of OCS renewable energy resource information available to the public. In light of these differences, renewable energy developers should not need to assemble the type of extensive lease portfolios typical of an oil and gas exploration company in order to identify a site suitable for development. As a result, the minimum bid set by MMS could more closely relate to the value of the tract to the project proponent, than, for example, the value to an investor that hoped to re-sell the lease rights on the secondary market. This factor could make it more difficult for speculative bidders to compete effectively for renewable energy leases against legitimate project proponents.

We have made changes to this section relating to the addition of the multiple-factor approach and the rationale for rejecting bids.

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

In response to comments objecting to the proposed approach of breaking ties by lot, we have revised the text of § 285.223(a) to authorize an additional round of bidding when more than one bidder on a lease submits the same high bid amount. If the highest bids are tied, we will notify the tied bidders. The winning bidder will be determined from the tied bidders by a final round of ascending or sealed bidding. This section does not apply to bids at the end of stage one of a two-stage bidding format.

One commenter suggested that creditworthiness be considered in breaking ties. We did not adopt this approach because it would introduce unnecessary complexity into the determination of a winner by requiring MMS to establish a measure to differentiate one bidder from another through the analysis of financial information that may not be readily accessible to MMS.

What happens if MMS accepts my bid? (§ 285.224)

This section explains the responsibilities of the successful bidder. Start Printed Page 19669Our acceptance notice will include three copies of the lease to be executed by the bidder. The proposed rule required execution of the lease, payment of the first 6 months' rental, payment of the balance of the winning or fixed bonus, and filing of required financial assurance within 10 business days. Numerous commenters recommended increasing this 10-day timeframe. We believe this timeframe is reasonable for lease execution, payment of the balance of the bonus bid, and filing of financial assurance, and we have retained it for those actions. Also, we may extend this deadline upon request if we find a delay is due to events beyond the control of the successful bidder.

Based on experience with our interim policy for issuing limited leases, and in response to comments on the proposed rule, we have increased to 45 days the timeframe for providing the first 6 months' rental. This will give lessees the opportunity to relinquish unwanted acreage before having to pay a rental that is based on the total amount of acreage under lease. While the rental requirement will be deferred for 45 days, the payment will cover the first 6 months of the lease, beginning on the effective date of the lease.

After three executed copies of the lease are returned to MMS, we will execute the lease on behalf of the United States and send one fully executed copy to the lessee. If the bidder fails to execute the lease or otherwise fulfill requirements, the bidder's deposit will be forfeited, and no lease will be issued.

If, before the lease or grant is executed on behalf of the United States, the offer to the lease is withdrawn or restricted from leasing, we will not issue a lease and will refund the deposit. We reserve this right to rescind a lease offering in situations where new environmental or other concerns about the prospective area, operation, or need for the facility surface after the lease sale. If the awarded lease or grant is executed by an agent acting on behalf of the bidder, the bidder must submit with the executed lease evidence that the agent is authorized to act on behalf of the bidder.

We also made changes to this section to accommodate addition of the multiple-factor approach.

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

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

We did not make any changes to this section.

Reserved Sections (§§ 285.226 Through 285.229)

Sections 285.226 through 285.229 are reserved.

Noncompetitive Lease Award Process

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

Anyone qualified to hold an OCS lease under § 285.106 may request a renewable energy lease from us at any time, except in areas otherwise proposed for competitive lease offerings or excluded by statute from leasing. Such an unsolicited request for a lease may be submitted to conduct either commercial or noncommercial activities authorized in this part. To be valid, the request must include information equivalent to that required under § 285.213 in response to a Call for Information and Nominations. Specifically, the unsolicited request must contain a depiction of the area requested for lease; a general description of the objectives of the project and the facilities that would be used; a general schedule of proposed activities, including those leading to commercial production or other approved operations; available and pertinent data and information concerning renewable energy resources and environmental conditions in the area of interest; a statement that the proposed activity conforms with State and local energy planning requirements, initiatives, or guidance, if any; and documentation that you are qualified to be a lessee as specified in § 285.107. In response to comments, we have changed § 285.230(e) to refer to a statement rather than certification in order to eliminate any confusion that this provision is alluding to CZMA compliance.

In addition, your request must include an acquisition fee of $0.25 per acre for the area requested as required by § 285.502. This fee is at a level intended to be high enough to discourage speculation but low enough not to inhibit interest, allowing lessees to establish a low ratio of lease acquisition costs to total project costs.

We have revised this section by adding to paragraph (d) a statement that we will withhold trade secrets and commercial or financial information that is privileged or confidential from public disclosure under exemption 4 of the FOIA.

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

Paragraphs (a), (b), and (c) of this section state that MMS will first determine competitive interest in processing an unsolicited request in order to decide whether to proceed with leasing under a competitive or noncompetitive process. If we find that there is competitive interest in the lease area, we will proceed with a competitive lease process. If we determine that there is no competitive interest, then we will issue a notice of such determination. This section also states that if MMS processes a proposed lease area on a competitive basis, no unsolicited requests for leasing in that area will be considered for as long as that process is pending. Thus, once an area is subject to a lease sale process, the only way to pursue a lease within that area is through that competitive process until that process concludes. After the process concludes, and if acreage within the area that had been considered for lease remains unleased, unsolicited requests will again be considered for that acreage.

If we determine that there is a competitive interest, we will proceed with a competitive process and will apply your acquisition fee to any bid you submit. If you choose not to bid, we will not refund your acquisition fee. We believe retention of your fee in this case is appropriate in order to discourage all but serious requests and because of the costs associated with processing your original request. If you submit a qualified bid that does not win, we will refund your deposit, including the amount of the acquisition fee.

Paragraph (d) describes how MMS will proceed if it determines there is no competitive interest. Within 60 days after we issue a finding that there is no competitive interest, the prospective lessee must submit either a SAP for a commercial lease or a GAP for a limited lease. We will review the plan and conduct NEPA and other required analyses before simultaneously issuing the lease or grant and approving the SAP or the GAP. As explained in the preamble discussion of plans in subpart F, a combined SAP and COP may be submitted for commercial leases. For hydrokinetic projects early coordination with the FERC licensing process will be necessary, but no COP will be required. Start Printed Page 19670

Our process for conveying OCS sand and gravel by negotiated noncompetitive lease under Public Law 103-421 is a relevant model for the process for issuing renewable energy leases when no competitive interest exists. The sand and gravel process starts with a request to MMS for a noncompetitive lease. If we determine that the request has potential, we require a NEPA analysis (EIS or EA). We inform the requestor of the type of environmental analysis required and provide an estimated schedule for completing the analysis and making the decision on whether or not to issue a lease. As part of the NEPA analysis, we undertake or participate in endangered species consultations with NOAA and the FWS. We may ask the requestor to fund the NEPA analysis. After the NEPA analysis is completed, we decide whether or not to issue a lease. If the decision is made to issue a lease, the specific terms and conditions (e.g., mitigating measures, size and length of lease) are discussed with the requestor and included in the noncompetitive agreement (lease) that we offer. The requestor must sign that agreement to complete acquisition of the lease.

We will follow the requirements of subsection 307(c)(3)(A) of the CZMA and 15 CFR part 930, subpart D, as shown in Table 1 for noncompetitive lease issuance and SAP or GAP. Under the CZMA and its implementing regulations, an OCS plan is any plan for the exploration or development of, or production from, any area leased under the OCS Lands Act that is submitted to the DOI, which describes in detail Federal license or permit activities. The SAP or GAP cannot qualify as an “OCS Plan” under the CZMA implementing regulations for leases issued when no competitive interest exists, because the lease and the SAP or GAP will be processed simultaneously. For leases issued competitively, the SAP or GAP would be submitted and processed after the lease has been issued, and in those instances, the SAP or GAP would be processed as an “OCS Plan” (as defined by 15 CFR 930.73), following the requirements of subsection 307(c)(3)(B) of the CZMA and 15 CFR part 930, subpart E.

In response to comments, we have added provisions to this section that address public notification and participation in the noncompetitive leasing process. We also have revised this section by adding procedures and timeframes for executing leases issued noncompetitively that are analogous to those for competitive leases.

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

This is a new section that describes the process that MMS will follow to consider issuing a lease noncompetitively, if an area of interest was submitted by only one interested party, in response to the Request for interest or Call. The MMS may inform you that there does not appear to be competitive interest and ask if you wish to proceed with acquiring a lease. If you wish to proceed with acquiring a lease, you must submit your acquisition fee as specified in § 285.502. After receiving the acquisition fee, MMS will follow the process outlined in §§ 285.231(b) through (i).

We added this section in recognition that §§ 285.230 and 285.231 of the proposed rule did not explicitly address situations in which a Request for Interest or Call for Information and Nominations results in no overlapping or otherwise competing indications of interest. The new section clarifies that in such a situation the prospective lessee may pursue the leasing process set forth in § 285.231, leading to either competitive or noncompetitive lease issuance.

Reserved Sections (§§ 285.233 Through 285.234)

Sections 285.233 through 285.234 are reserved.

Commercial and Limited Lease Terms

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

This section describes the duration terms for a commercial lease. Commercial leases issued competitively would have three separate phases of lease activity: Preliminary term, site assessment term, and operations term. For commercial leases issued competitively, the preliminary term extends for the initial 6 months during which the lessee must submit a SAP or a combined SAP/COP in accordance with subpart F. If the commercial lease is issued when no competitive interest exists, there is no preliminary term because lease issuance and SAP or SAP/COP approval occur simultaneously. The site assessment term for all commercial leases would begin on the date that we approve the lessee's SAP or SAP/COP and extend for a term of 5 years in most cases to allow the lessee to conduct the approved activities proposed in the SAP. Unless the lessee has submitted a SAP/COP and received MMS approval, the lessee is required to submit a COP, in form and content satisfactory to us, before the end of this 5-year term to keep the lease in effect. A commercial lease would expire at the end of the site assessment term unless the lessee submits a COP, in form and content satisfactory to us, before the end of the 5-year term. The preliminary and site assessment terms are automatically extended as necessary to allow review and approval of plans.

The operations term will follow, beginning on the date that we approve the lessee's COP, and will be for a period of 25 years to allow development, construction, and ultimately commercial production activities. If you submit a COP, your operations term begins on the date we approve it. If you submit a SAP/COP, your operations term begins 5 years after we approve it or when fabrication and installation commence, whichever is earlier. An operations term longer than 25 years could be established if applicable parties determine that such a term is warranted (e.g., the lessee and project proponent negotiate a power purchase agreement with a 30-year term before the lease is issued). While we revised the timing of the operating fee requirement in response to comments (see subpart E), this change does not alter the lease terms that originally were proposed. As provided in subpart D, the operations term may be renewed.

For hydrokinetic commercial leases the COP in the previous discussion would be replaced with a FERC license application. In cases where a combined SAP/license application is submitted, MMS would review, approve, and regulate the SAP activities, and FERC would review, approve, and regulate the license activities. The preliminary and site assessment terms will be the same for all commercial leases, but the operations term for commercial hydrokinetic leases will coincide with the term of the FERC license.

The MMS revised this section to clarify that the term of a lease renewal will be the same as the original term of the lease, unless a longer term is negotiated by applicable parties.

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

Limited leases issued competitively will have two phases: Preliminary term and operations term. For limited leases issued competitively, the preliminary term will be the initial 6 months during which the lessee must submit a GAP in accordance with subpart F. If the limited lease is issued when no competitive interest exists, there is no Start Printed Page 19671preliminary term because lease issuance and GAP approval occur simultaneously. The operations term for all limited leases will begin on the date that we approve the GAP and continue for a term of 5 years to allow the lessee to conduct the approved activities proposed in the GAP.

For hydrokinetic activity MMS will only issue limited leases if FERC determines that a license or exemption is not required. If a FERC license or exemption is required, MMS will issue a commercial lease.

We did not make any changes to this section.

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

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

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

This section describes how renewable energy research activities might be conducted on the OCS. This provision was developed following discussions with Department of Energy (DOE) officials who cited a need for an offshore research area or areas patterned after the European Marine Energy Center, an offshore wave and tidal energy technology testing site in the United Kingdom. This section describes the process for MMS to issue leases, ROWs, and RUEs to Federal agencies and States for testing all types of offshore renewable energy technology, after giving public notice and determining that there is no competitive interest in the area and complying with all relevant Federal statutes (e.g., ESA, NEPA, MSA, etc.). In response to comments from States recommending that they be allowed to establish and manage OCS renewable energy research areas, we have broadened this provision to apply to States and other Federal agencies in addition to DOE.

We believe that such research areas should not preempt potential commercial development and should be only offered to a Federal agency or a State if there is no competitive interest. The purposes, issue process, and terms of this kind of lease or grant may be established by MMS and a Federal agency or a State on a case-by-case basis, or pursuant to a framework established by a Memorandum of Agreement. These leases or grants would not be available to private project proponents seeking to conduct either commercial or noncommercial activities. Leases and grants issued to a Federal agency and a State for research activities are different from the limited leases issued for renewable energy activities through the competitive or noncompetitive process. In further response to comments, we have clarified this section.

When FERC determines that any OCS-sited hydrokinetic research activities will not require a license or exemption, the MMS has the discretion to authorize such research activities under this section. This is consistent with the April 2009 MOU which provides that when FERC has determined that a license or exemption is not required, MMS may authorize hydrokinetic construction and operation activities related to noncommercial projects. It is anticipated that FERC could find hydrokinetic research activities do not require a license or exemption and therefore the lessee must comply with the requirements of § 285.238. However, if FERC determines that a license or exemption is required for a research project, then MMS would not consider that project to be a research activity under this section and would initiate the commercial leasing process.

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

Overview

Applicability

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

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Example 1:

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

Example 2:

The MMS will issue a RUE grant under this part for activities involving the placement and operation of a facility on the OCS that supports a renewable energy project located on State submerged lands.

The provisions include general requirements for ROW grant and RUE grant applicants, as well as application and issuance procedures. These provisions are similar to the provisions for issuing OCS renewable energy leases.

The MMS will not issue ROW grants and RUE grants for installing site assessment facilities (e.g., meteorological towers) on the OCS. If a company intends to install site assessment facilities, it must acquire a lease under this part.

Commenters raised questions concerning the issuance of ROWs for transmission lines that mix electricity generated from renewable energy sources and nonrenewable energy sources. After serious consideration, MMS has decided the following: (1) MMS will authorize renewable energy ROWs for transmission of energy from sources other than oil and gas; (2) MMS will not authorize renewable energy ROWs that solely support the transmission of energy from oil or gas sources; and (3) MMS will consider, on a case-by-case basis, renewable energy ROWs supporting the transmission of energy from oil or gas sources that is combined with energy from sources other than oil or gas, provided that renewable energy generated from sources other than oil and gas is primarily what is being transmitted. Start Printed Page 19672

Competitive and Noncompetitive Processes

As required by subsection 8(p) of the OCS Lands Act, MMS must issue ROW grants and RUE grants through a competitive process unless MMS determines after public notice that there is no competitive interest. This subpart provides for public notice of applications for ROW grants and RUE grants to allow potential competitors and other interested and affected parties to comment on proposals and possibly compete for the ROW grants and RUE grants. However, due to the nature of potential operations on ROW grants and RUE grants, as well as the areal requirements involved, it is unlikely that there will be much, if any, competition. It appears that, in most cases, even separate geographically overlapping proposals for ROWs and RUEs will not be mutually exclusive. It is therefore unlikely that MMS will conduct an auction of ROW grants or RUE grants. The noncompetitive process for granting ROWs and RUEs will be similar to the noncompetitive leasing process described in subpart B, except there is no acquisition fee, and a GAP is required in lieu of a SAP.

In the unlikely event that MMS did determine there is competition for a ROW or RUE, we will follow the process outlined in subpart B for competitive issuance of leases, with the ultimate terms and conditions of the grant established in a Final Sale Notice. As noted in the discussions of subparts A and B, we have changed the qualification requirements for lessees and grantees to discourage nuisance indications of interest. Also, in instances where a competitive process for the issuance of an ROW or RUE is pursued, MMS may choose to recognize companies selected by State or utility competitions in developing the terms and conditions of the auction and the grant, as explained in the subpart B discussion. While the rule provides the means necessary to conduct fair and efficient competitions for ROWs and RUEs, we continue to believe it is more likely that we will receive unsolicited proposals that will be processed after a public notice and determination that no competitive interest exists. As explained previously in the discussion of subpart B, because of the competition requirement set forth in section 8(p) of the OCS Lands Act, MMS decided to authorize transportation and other ancillary activities associated with an OCS renewable energy lease through the issuance of a project easement as part of the lease rather than providing for separate grants of ROWs and RUEs.

Data and Information

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

Coordination and Consultation

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

CZMA Compliance

For purposes of Federal consistency, MMS will treat ROW grants and RUE grants issued through a competitive process as direct Federal agency activities and follow the subsection 307(c)(1) procedures of the CZMA. The MMS will determine if the ROW grant or RUE grant is reasonably likely to affect any land or water use or natural resource of a State's coastal zone and comply with the appropriate Federal consistency regulations under 15 CFR part 930 subpart C.

The MMS will treat ROW grants and RUE grants issued noncompetitively as Federal licenses or permits, which will follow requirements of CZMA subsection 307(c)(3)(A) and 15 CFR part 930 subpart D. For ROW grants and RUE grants issued noncompetitively, MMS requires the applicant to submit a proposed GAP simultaneously with the application for the ROW or RUE grant. The GAP is a Federal license or permit under current CZMA regulations since it will describe activities and operations proposed to be undertaken in areas of the OCS that are not under a lease; and therefore, does not qualify as an OCS plan (as defined by 15 CFR 930.73).

Areas Available for ROW Grants and RUE Grants

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

ROW and RUE Sizes

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

ROW and RUE Term

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

Other ROW and RUE Provisions

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

Section-by-Section Discussion for Subpart C

ROW Grants and RUE Grants

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

This section explains what ROW grants and RUE grants authorize, which includes activities relating to the production, transportation, or transmission of electricity or energy from any renewable energy resource that is not produced or generated on an OCS renewable energy lease issued under this part. It further clarifies that you do not need a ROW grant or RUE grant for a project easement authorized under subpart B of this part however, there may be cases when a ROW grant or RUE grant is more appropriate than a project. Start Printed Page 19673

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

Section 285.301 What do ROW grants and RUE grants include?

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

We did not make any changes to this section.

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

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

We did not make any changes to this section.

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

This section states in general terms the duration of ROW grants and RUE grants.

We did not make any changes to this section.

Reserved Section (§ 285.304)

Section § 285.303 is reserved.

Obtaining ROW Grants and RUE Grants

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

This section addresses how to apply for a new or modified ROW grant or RUE grant. A separate application is required for each ROW grant or RUE grant requested. It lists the information the application must contain, including the area requested, objectives, facilities projected to achieve those objectives, a general schedule of proposed activities, and environmental conditions in the area of interest.

We did not make any changes to this section.

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

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

We did not make any changes to this section.

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

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

We did not make any changes to this section.

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

This section describes how an auction will be held if MMS determines there is competitive interest for ROW grants and RUE grants. The grant auction process is similar to the auction process for leases.

We did not make any changes to this section.

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

This section describes the circumstances under which MMS will issue a grant. The MMS will issue a grant if we approve your GAP and you accept all terms and conditions of the grant.

We did not make any changes to this section.

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

The effective date of an ROW grant or RUE grant is established by MMS in the ROW grant or RUE grant.

We did not make any changes to this section.

Reserved Sections (§§ 285.311 Through 285.314)

Sections 285.311 through 285.314 are reserved.

Financial Requirements for Row Grants and Rue Grants

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

This section cites the deposit requirements of § 285.501 pertaining to ROW grant and RUE grant auctions, and provides for the return of your deposit when a bid is rejected. It also states that a written statement of reason will be provided if the high bid is rejected.

We did not make any changes to this section.

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

This section lists the payments required in order for MMS to issue the ROW grant or RUE grant. It states the balance on an accepted high bid and the first year annual rental as specified in § 285.507 (the greater of $5 per acre per year or $450 per year), must be paid before MMS will issue the ROW grant or RUE grant.

We did not make any changes to this section.

Subpart D—Lease and Grant Administration

Overview

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

Noncompliance

The requirements that the lessee or grantee must meet to maintain a lease or grant in effect include plan and Start Printed Page 19674reporting requirements (subpart F); payment obligations (subpart E); and procedures for conducting, stopping, and resuming operations or receiving appropriate suspensions from MMS (subpart D). In an instance of noncompliance, MMS may issue a notice of noncompliance that will specifically cite how you failed to comply and will prescribe corrective action. In an instance of noncompliance that poses an imminent threat, MMS may issue a cessation order directing the lessee or grantee to cease an activity or activities. Likewise, failure to take corrective action prescribed in a noncompliance order may lead to the issuance of a cessation order. A cessation order does not lengthen the term of the lease or grant or relieve any payment obligations. Also, noncompliance may lead to the assessment of civil or criminal penalties. The MMS believes the noncompliance provisions, in conjunction with the regulatory requirements, are essential to ensure prompt, efficient, and responsible renewable energy activities on a lease or grant.

Designation of Operator

The provisions governing designation of an operator to perform activities on a lease or grant are patterned after the regulations at 30 CFR 250.143 through 250.146.

Assignment

The provisions governing assignment of leases or grants are patterned after the regulations at 30 CFR 256.62, including assignor and assignee responsibilities, procedures for filing transfers, and the effects of an assignment on a particular lease or grant. The MMS believes such requirements are appropriate for all OCS renewable energy leases and grants.

Suspension

The rule provides for lease or grant suspensions that will lengthen the duration of the lease or grant to allow completion of activities or continuation of operations. Extensions relating to MMS technical and environmental review of required plans will be automatic. The lessee or grant holder could request suspensions for other purposes, and these will be subject to Director approval.

Renewal

The rule provides that a lessee or grantee may request a renewal to conduct activities substantially similar to those that were originally authorized, and MMS, at its sole discretion, may approve such requests. The renewal provisions also provide timeframes and information requirements associated with renewal requests, as well as guidance on making payments and suspending activities while a renewal request is pending. The length of a renewal will be set by MMS on a case-by-case basis. As explained previously in the discussion of lease term provisions in subpart B, MMS retains discretion relating to lease terms and renewals in order to ensure the efficient use of OCS resources.

Termination, Relinquishment, and Cancellation

The MMS may cancel leases or grants for failure to comply with the OCS Lands Act and other applicable laws, regulations, and lease requirements; for fraudulent acquisition; and for a continuing and undiminished threat to marine life, property, natural resources, national security or defense, or the marine, coastal, or human environment. Provisions governing terminations and relinquishments of a lease or parts of a lease are also included.

Section-by-Section Discussion for Subpart D

Noncompliance and Cessation Orders

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

This section states that MMS can take appropriate corrective action if you fail to comply with applicable provisions of Federal law, the regulations in this part, other applicable regulations, or MMS orders. The MMS may issue you a notice of noncompliance if it has determined there has been a violation. A notice of noncompliance will tell you how you failed to comply, and will specify what you must do to correct the noncompliance and when you must act. This section also states that if you do not follow a notice of noncompliance, or any other regulation of this part, MMS may issue a cessation order, cancel your lease or grant, and assess civil penalties. In addition, you may be subject to criminal penalties.

The MMS received a comment requesting that we consider reducing civil penalties for small businesses regulated under this part. If a civil penalty is assessed, the company may submit a request to modify the payment schedule to the Office of Financial Management, within MMS's Mineral Revenue Management program. We will include information on the Small Business Regulatory Enforcement Fairness Act and payment schedules in the guidance document we intend to issue after the rule is published.

We did not make any changes to this section.

When may MMS issue a cessation order? (§ 285.401)

This section specifies that a cessation order may be issued if you fail to comply with any law or regulation under this part. The cessation order will have a timeframe for you to correct the noncompliance and set forth what measures you are required to take in order to resume activities on your lease or grant.

We did not make any changes to this section.

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

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

Another commenter asked that the process for lifting a cessation order be specified in the rule. We believe this is already addressed in the previous section of the rule, which states that a cessation order will indicate the actions that lessees or grantees must take to resume ceased activities.

Reserved Sections (§§ 285.403 Through 285.404)

Sections 285.403 through 285.404 are reserved.

Designation of Operator

How do I designate an operator? (§ 285.405)

Under this section, you must identify the operator in your specific plan (SAP, COP, or GAP) if you intend to designate an operator who is not the lessee or grant holder. Once approved in your plan, the designated operator is Start Printed Page 19675authorized to act on your behalf and authorized to perform activities necessary to fulfill your obligations under laws and regulations in this part. This section requires you to keep MMS informed if there is any change of status with your designated operator. If you are the designated operator, you must comply with all regulations governing those activities and are responsible for any noncompliance. Designation of an operator does not relieve the lessee or grantee of its obligations. We received a comment recommending we provide a timeframe for notification of a change in designated operator rather than requiring one immediately. We have revised paragraph (e) to provide 72 hours for such notification.

Another commenter asked for clarification of the information that must be included in a written change of designated operator. We have revised paragraph (e) to require that written notification be provided on a form approved by MMS that will specify the information required.

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

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

We did not make any changes to this section.

Reserved Section (§ 285.407)

Section 285.407 is reserved.

Lease or Grant Assignment

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

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

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

This section contains additional details of the assignment requirements.

We did not make any changes to this section.

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

You are liable for all obligations that accrued under your lease or grant before MMS approves your assignment. If your assignee fails to perform any obligation, you may be responsible for corrective action.

We did not make any changes to this section.

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

The assignee is liable for all obligations once MMS has approved the assignment. The assignee will be responsible to comply with all lease or grant terms and conditions, as well as all applicable regulations.

We did not make any changes to this section.

Reserved Sections (§§ 285.412 Through 285.414)

Sections 285.412 through 285.414 are reserved.

Lease or Grant Suspension

What is a lease or grant suspension? (§ 285.415)

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

We did not make any changes to this section.

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

To request a suspension, you must submit a request to MMS containing the details explained in this section.

We did not make any changes to this section.

When may MMS order a suspension? (§ 285.417)

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

We did not make any changes to this section.

How will MMS issue a suspension? (§ 285.418)

The MMS may initially issue a suspension order orally, but will follow up with a written order. The written explanation will describe the effect of the suspension order on your lease or grant and any associated activities. The order may also include authorization of certain activities during the period of the suspension.

We did not make any changes to this section.

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

You must take action to comply fully with the terms of a suspension order upon receipt.

We did not make any changes to this section.

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

You must make all payments on your original term obligations until MMS authorizes/orders the suspension. Once the suspension has been issued, MMS may waive your payments during the suspension period. We received a comment recommending an automatic waiver of payment obligations for a suspension requested by a lessee or grantee, or in the absence of such a waiver, the criteria on which MMS will base decisions about payment obligations under such suspensions. We do not believe that automatic waivers should be granted for a suspension requested by a lessee or grantee because Start Printed Page 19676a suspension may be necessitated by circumstances created or significantly contributed to by the lessee or grantee. It is important that MMS have discretion in deciding the circumstances under which payment obligations will continue under suspensions; therefore, we have not added criteria on which to base such decisions in the text of the rule.

We did not make any changes to this section.

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

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

We did not make any changes to this section.

Reserved Sections (§§ 285.422 Through 285.424)

Sections 285.422 through 285.424 are reserved.

Lease or Grant Renewal

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

The MMS may approve a renewal request to conduct substantially similar activities that were authorized under the original lease or grant. The MMS will not approve a renewal request that involves development of renewable energy not originally authorized in the lease or grant. We received several comments recommending automatic renewals. We have not adopted those recommendations because we are concerned that continuation of inefficient or obsolete operations could result.

We also received a recommendation to adopt the following criteria for considering lease renewals that were offered for comment in the proposed rule:

(1) Design life of existing technology;

(2) Availability and feasibility of new technology;

(3) Environmental and safety record of the lessee;

(4) Operational and financial compliance record of the lessee; and

(5) Competitive interest and fair return considerations.

We have adopted these criteria in § 285.429 along with an additional criterion suggested by the commenter. Application of these criteria will be addressed in the implementation guidance that we plan to issue after the rule is published.

Specific procedures detailing how an entity operating a FERC-licensed hydrokinetic project on an MMS-issued lease may obtain a lease renewal will need to be developed, and will be proposed at a later time. In accordance with the terms of the April 2009 DOI/FERC MOU, the MMS and FERC will work together to establish an efficient process to allow lessees to obtain such renewals.

We did not make any changes to this section.

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

This section specifies when you must request a renewal. You must submit your request for a renewal no later than 180 days before the termination date of your limited lease or grant, and no later than 2 years before the termination date of the operations term of your commercial lease. We received a comment requesting clarification that a lessee would be allowed to upgrade equipment and apply for a lease renewal much earlier (e.g., 15 years into the lease). This approach is possible under the rule and will be addressed in the guidance document that we intend to issue after the rule is published.

We did not make any changes to this section.

How long is a renewal? (§ 285.427)

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

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

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

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

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

Reserved Sections (§§ 285.430 Through 285.431)

Sections 285.430 through 285.431 are reserved.

Lease or Grant Termination

When does my lease or grant terminate? (§ 285.432)

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

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

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

Reserved Section (§ 285.434)

Section 285.434 is reserved.

Lease or Grant Relinquishment

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

To surrender a lease or grant, you must submit a relinquishment application to MMS. The application will include the information required in this section such as identifying information and contact information. You are responsible for all payment obligations until the relinquishment is in effect.

We did not make any changes to this section. Start Printed Page 19677

Lease or Grant Contraction

Can MMS require lease or grant contraction? (§ 285.436)

The MMS may review your lease or grant area, at intervals no more frequent than every 5 years, to determine whether the lease or grant area is larger than needed to develop the project and manage activities in a manner that is consistent with the provisions of this part. The MMS will notify you of our proposal to contract the lease or grant area and give you the opportunity to present, orally or in writing, information demonstrating that you need the area in question to manage lease activities consistent with these regulations. Prior to taking action to contract the lease or grant area, MMS will issue a decision addressing your contentions that the area is needed. We received several comments expressing concern that MMS might act arbitrarily or overreach in applying this section. We believe this section appropriately safeguards the rights of lessees and grantees by providing notification and opportunity to challenge contraction decisions.

We did not make any changes to this section.

Lease or Grant Cancellation

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

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

Two commenters stated that the rule should expressly provide for affected States and Federal agencies to recommend cancellation. We believe that any interested or affected party may approach MMS with a recommendation to cancel a lease or grant under the rule. Another commenter requested that compensation for cancellation be specified in the rule.

We made the changes described previously to this section.

Subpart E—Payments and Financial Assurance Requirements

Overview

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

Financial Assurance Requirements

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

The financial assurance portion of the rule is divided into four general areas:

(1) Basic financial assurance requirements for commercial leases;

(2) Financial assurance for limited leases, ROW grants, and RUE grants;

(3) Requirements for financial assurance instruments; and

(4) Changes in financial assurance.

Basic Financial Assurance Requirements for Commercial Leases

The financial assurance requirements for commercial leases ensure the performance of the following lease obligations:

(a) Rents and other payments due the Government over the next 12 months;

(b) Any past due rents and/or other payments;

(c) Other monetary obligations; and

(d) Project decommissioning and lease cleanup.

Before MMS will issue a commercial lease, the prospective lessee must provide either a lease-specific $100,000 bond; alternative financial assurance that the Regional Director determines protects U.S. interests to the same extent as the bond; or evidence that your designated lease operator has provided commensurate financial assurance.

Additional bonds/financial assurance are required before MMS will approve a SAP or a COP. The amount of this additional bond/financial assurance will be determined by MMS and will be based upon the type and number of facilities to be used in your planned activities.

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

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

Requirements for Financial Assurance Instruments

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

This portion of the final rule also provides guidance on the types of financial instruments that MMS will accept. Start Printed Page 19678

Changes in Financial Assurance

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

Revenue Sharing

This portion of the final rule addresses the requirements related to section 8(p)(2)(B) of the OCS Lands Act (43 U.S.C. 1337(p)(2)(B)), which describes how revenues received by the Federal Government as a result of payments from renewable energy projects or alternate uses of existing facilities are to be shared, in some cases, with affected States. Sections 285.540 through 285.543 set forth a process for implementing revenue sharing from renewable energy projects.

We will share 27 percent of revenues from a project that is within 3 miles of State submerged lands with all States within 15 miles of the geographical center of the project. The proportion of revenues to be shared by an eligible State depends on the distance from the geographical center of the qualified project area to the nearest point of the State's coastline. The MMS will base State revenue sharing eligibility and proportionate shares due the eligible States on the objective measure of the lease area active at the end of the fiscal year in which MMS collects the sharable revenue. The configuration of the area on the last day of the fiscal year will be used to determine eligible State payments for that year regardless of when during that year a change may have occurred in the dimensions of the lease or grant. This procedure combines the objective basis for revenue sharing with the need to make adjustments due to changes in project area over the life cycle of a project. The fiscal year-end is an administratively efficient point for establishing revenue shares from all renewable energy projects.

At the time MMS published the NPR, we had not fully resolved whether a State was eligible for revenue sharing if part of the project area is located within 3 nautical miles of the seaward boundary of that coastal State but the nearest point on that State's coastline was more than 15 miles from the geographical center of the qualified project area. Although the proposed regulatory text stipulated that in this scenario such a State would be eligible for revenue sharing, we included a question in the NPR asking whether our interpretation of the statutory language in subsection 388 of the EPAct was reasonable and provided the most equitable distribution of the revenue to coastal States. In response to this question, MMS received one comment requesting clarification on the provisional MMS interpretation that a State farther than 15 miles from the geographic center of the qualified project area would be eligible for revenue sharing.

We have re-examined the statutory language in subsection 388 of the EPAct and have concluded that allowing a State to be eligible for revenue sharing when its nearest coastal point is farther than 15 miles from the geographic center of the project area would not be consistent with the statutory language. Accordingly, we have revised the final rule to reflect a more literal reading of the statute. Therefore, revenues from a project will not be shared with a State if the nearest point on its coastline is not within 15 miles of the geographic center of a qualified project area, even if a portion of the qualified project area is located within 3 nautical miles of that State's seaward boundary.

A project is qualified (its revenues may be shared with States) if the project is located wholly or partially within the area extending 3 nautical miles seaward of State submerged lands. The MMS will determine and announce the project area (for each qualified project) and its geographic center at the time it grants or issues a lease, easement, or ROW on the OCS for the purpose of a specific qualified project. The distance between the closest point on a State's coastline to the geographic center of the qualified project area is the sole determinant of whether or not a State or any State is eligible for sharing the revenues from that qualified project. States having the nearest point along their coastlines within 15 miles of the geographic center of the qualified project area will be eligible for revenue sharing, while those States not satisfying this criterion will not be eligible. Consideration of whether or not a qualified project area extends into a State's 8(g) zone will not be used to determine a State's eligibility for revenue sharing. Location within 3 miles of some State's submerged lands is only relevant to determining if a project is subject to revenue sharing under subsection 388 of the EPAct 2005.

Areas granted for transmission cables and other off-lease infrastructure on project easements will not be considered part of the project area for purposes of determining the geographic center of the project or whether the project is within 3 miles of State submerged lands. However, revenues from project easements will be shared as revenues of the qualified project to which they appertain. Only proximity of a State's coastline to the geographic center of the qualified project area would be a factor in allocating revenues among eligible States, should more than one State be eligible. If a qualified project area changes in size or shape as a result of contraction or modification of the lease or grant, MMS will re-determine the geographic center of the project area to re-determine eligibility and to adjust the allocations among States.

We received a number of comments with respect to disproportionate effects due to activity on a given lease. The MMS considered, but rejected, the option of defining a special project area that differs from the lease area to try to account for situations when proximity might not be a good surrogate for effects that could be compensated by revenue sharing payments. The MMS rejected this idea because the statute requires us to base the allocation formula solely on proximity to the project. To respond to such situations, we will adjust lease acreage as the project evolves, re-determine the geographic center of the project area, identify eligible States, and determine the eligible State proportionate shares in a timely manner.

We received comments indicating that the inverse distance formula does not equitably distribute revenue among eligible States as additional factors other than proximity should be used to determine the impact the lease's project would have on States. However, subsection 388 of the EPAct requires that equitable distribution of revenues among States be determined by a formula that is based on the proximity of the eligible States to the project.

The MMS also received comments recommending that mitigation costs, such as civil penalties for environmental damages, be considered as revenue eligible for distribution as part of State revenue sharing. The rule provides that MMS collect payments in the form of bonuses, acquisition fees, rentals, and operating fees to ensure the receipt of fair value for the acreage that MMS leases to generate power from renewable energy resources on the OCS.

As a commenter suggests, it is possible that the leaseholder or operator may provide a State or other entity compensation for impacts; however any agreement would not be facilitated by the DOI, and the funds would not be subject to revenue sharing. The revenue resulting from these payments under section 8(p)(2)(A) of the OCS Lands Act are the types of receipts that qualify for Start Printed Page 19679State revenue sharing. Other types of revenues, not constituting payment for the use of Federal property, such as the proceeds from forfeiture of a surety bond or other form of financial assurance, cost recovery fees, and civil penalties, are not subject to revenue sharing. The MMS may assess civil penalties as authorized under the OCS Lands Act and referenced in § 285.400(f) of this regulation. However, any civil penalties levied for noncompliance of lease obligations, including civil penalties for environmental damage, are excluded under the State revenue sharing provisions since they are not revenue from payments under section 8(p)(2)(A) of the OCS Lands Act. Accordingly, we have added language to the definition of “revenues” in § 285.112 to clarify this distinction between payments that do and do not qualify for State revenue sharing.

As a commenter suggests, it is possible that the leaseholder or operator may provide a State or other entity compensation for impacts; however, any such compensation would not be revenues received by the DOI subject to revenue sharing.

Section-by-Section Discussion for Subpart E

Payments

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

This section explains how persons would submit application and filing fees, as well as payments due under the provisions of leases, easements, and ROW grants. Some payments will be made electronically through the Pay.Gov Web site at: https://www.pay.gov/​paygov/​. Other payments will be made directly to the Minerals Revenue Management office in Denver, Colorado. We plan to promulgate subsequent regulations to describe specific payment procedures for the Alternative Energy and Alternate Use Program.

Depending on the method of award we select for issuing a lease or grant, project proponents that seek a lease, easement, or ROW on the OCS for renewable energy activities may be required to submit a bonus or other up-front cash payment for a lease or grant issued competitively, or an acquisition fee for a lease or grant issued noncompetitively. Lessees will pay rent during the preliminary and site assessment terms. During the operations term, after commercial generation begins, commercial leaseholders would pay operating fees or a rent. We are not requiring operating payments for limited leases, easements, and ROW grants because they would not be issued for the purposes of commercial generation. Only rent would be paid by limited leaseholders for each year of a specified lease term, and would be paid by grantees for as long as an easement or ROW is in effect.

We did not make any changes to this section.

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

This section provides the deposit requirements for persons submitting a bonus or other cash payments on a competitive lease, ROW grant, or RUE grant. Sealed bids would be offered with a deposit of 20 percent of the bid amount, unless otherwise specified in the Final Sale Notice. Bidders participating in ascending auctions would deposit a cash payment as established in the Final Sale Notice. Procedures for submitting the balance owed on accepted high bids would also be established in the Final Sale Notice. We require a 20 percent deposit on sealed bids submitted in oil and gas sales to assure bids are genuine, but through the lease sale process, we will consider proposals for setting a different deposit requirement for renewable energy lease sales as they are scheduled. Successful bidders that fail to execute the lease within the prescribed time will forfeit their deposits. The MMS is implementing a similar requirement for renewable energy competitive auctions.

We did not make any changes to this section.

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

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

If, after public notice we make the determination that there is competitive interest, a lease or grant sale would be held. If the applicant submits a qualified bid, the acquisition fee would be applied to the applicant's bid for the lease. If the applicant does not bid for or acquire the lease, we would not refund the acquisition fee.

We will not require an acquisition fee payment when applying for a noncompetitive ROW grant or RUE grant.

We did not make any changes to this section.

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

This section provides a rent rate of $3 per acre per year for a commercial lease, unless we specify a different rate in the Final Sale Notice for leases issued on a competitive basis. When we issue a commercial lease noncompetitively, the elements of the rent and any adjustments to it would be stated in the lease instrument. Rent for the first 6 months, or preliminary term, would be due 45 days after we issue your lease. Rent for the next 12 months and for each subsequent year during the site assessment term would be due at the beginning of the year for the entire lease area until commercial generation begins under an approved COP, which begins the operations term and when the obligation to pay operating fees would begin. We will apply an interest charge to late rent from renewable energy leases as we do to other late payments under 30 CFR 218.54.

We may specify the payment of rent during part, or all, of the operations term, instead of or in addition to operating fees, in the Final Sale Notice for leases issued on a competitive basis. We reserve this right partly to make any adjustments that may be needed in connection with the operating fee structure in § 285.506.

For example, when a lease is developed in phases, both rent and operating fees may be due on different parts of the commercial lease during the same time period. Rent would be paid on portions of the lease not authorized for commercial development, and operating fees could be required for the portion of the lease with commercial operations.

A variety of considerations are behind our baseline $3-per-acre rent value, subject to change in the Final Sale Notice for competitively issued leases. In general, a rent payment serves several purposes. It provides a fair return to the United States for the opportunity cost of precluding other incompatible uses of Start Printed Page 19680the OCS area. Also, it serves as a holding cost that encourages the lessee to expedite development of the project on the area. Under some circumstances, we may determine that charging progressively higher rents over time would be desirable to obtain a fair return and to encourage diligent operations. In those cases, we may adopt a rent rate schedule instead of a constant rent rate.

The baseline commercial renewable energy lease rent rate of $3 per acre is less than 1/2 of the rental rate of $6.25 per acre for oil and gas leases in shallow waters of the Gulf of Mexico issued in 2007. Rents, as well as operating fees, in these regulations for commercial renewable energy leases are lower than those for other uses of the OCS, such as oil and gas development, in part to encourage industry to invest in offshore renewable energy technology. Another reason for setting lower payment rates is the lower environmental costs of generating electricity with renewable energy, rather than fossil fuels such as oil, gas, and coal, as discussed in the Overview to this part. Since external costs of electricity generated from renewable energy are much lower than external costs of electricity generated from fossil fuels, we provide for relatively lower payments by renewable energy developers to encourage investment.

Based on comments MMS received, we modified this section to require that the payment of the operating fee starts when commercial generation begins, instead of with the approval of the COP.

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

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

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

This section provides a $3-per-acre per year rent rate for a limited lease, unless a different rate is specified in the Final Sale Notice for leases issued on a competitive basis. When we issue a limited lease noncompetitively, the rent and any adjustments to it would be established in the lease instrument. Rent for the first 6 months will be due when MMS issues the lease. Rent for the next 12 months and for each subsequent year will be due at the beginning of the year for the entire lease area through the end of the lease term. We will apply an interest charge to late rents from renewable energy leases as we apply under 30 CFR 218.54. These rent requirements are equivalent to those on a commercial renewable energy lease during the preliminary and site assessment terms, before commercial generation begins. We also have added a statement that no operating fee will be charged for the authorized sale of power from limited leases.

We renumbered this section to accommodate a new section, § 285.504. We did not make any other changes to this section.

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

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

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

The operating fee rate r, like a royalty rate, is one element in the formula. The other elements serve as reasonable and easily observable proxy measures of the output and price related to a specific operation.

Based on the comments that we have received regarding the timing of the operating fee payment, the operating fee rate will be set at 2 percent for each year of the operating term, beginning at the time that the generating facility starts generating electricity commercially, unless we specify otherwise in the Final Sale Notice for competitively issued leases. We may set a time limit as to when the rent payments, following approval of the COP, would cease and the operating fee payment would commence, and/or we may increase the rental fee during this time in order to ensure that the construction and commercial operations specified in the lessee's approved COP are done in a timely manner. For example, we may fix a date of 2 years after the time when the COP would have likely been approved under normal circumstances, when the operating fee would commence regardless of whether the generating facility actually begins producing electricity. Alternatively, we may not set a time limit but rather provide that the rent fee escalate for each year of construction, such that the rent fee rate would be $3/acre/year in the first year after the COP is approved, $6/acre/year in the next year, etc. Any adjustments to the rent fee and/or the inclusion of a fixed date when operating fees would commence will be specified in the Final Sale Notice or the lease. We will establish initial values for the other elements in the formula, such as the power price and capacity factor, in the lease and provide for the periodical revision of the initially selected values based on new information. When we issue a commercial lease noncompetitively, the elements of the operating fee and any adjustments will be set forth in the lease.

Using these payment terms, lease revenues for a commercial lease in any given year would depend on the phase of the project and the relevant prices as designated by MMS for electricity in the State. The lease rent and operating fee payments can be illustrated with the following example for wind energy. An offshore wind lease, issued noncompetitively, on 12,000 acres of the OCS would be required to pay $36,000 annually based on a charge of $3 per acre in rent during the site assessment term under § 285.503. Once we approve the COP and the generating facility begins generating electricity commercially, the operating fees will be payable. For a lease with an installed capacity of 200 MW and an operating capacity factor of 0.38, i.e., 38 percent, the operating fee would be $666,000 annually if the applicable wholesale power price was $50 per megawatt hour. Additionally, if the approved project Start Printed Page 19681plan has easements covering 2,000 acres, an additional $10,000 in rents ($5.00 per acre) would be collected per year under § 285.506.

Although a number of comments we received recommended that a production-based operating fee be used, we were not persuaded with such arguments and did believe a change from the proposed capacity-based operating fee was warranted. During the production phase of a project, a capacity-based operating fee, rather than a production amount or value-based fee, has several advantages. The capacity-based fee avoids detailed audits of production sales accounts and lessens the likelihood of subsequent disagreements and legal challenges.

The MMS believes that there are good reasons for requiring a higher rental rate or operating fee higher during the operating period than the charges imposed during the preliminary and site assessment period. First, a lease with proven resource potential is likely more valuable and should command a higher payment. Second, the lessee will be using the leased area more intensively during the construction work phase. While there is no depletion of a public asset, as there is with oil or gas, they are causing increased disturbances of the seabed.

Prior to holding a lease sale, a high level of uncertainty may exist in the estimation of the amount of energy a given facility may generate based upon the resource potential and technology. In the interest of reducing uncertainty and stimulating investment in renewable energy projects, we may initially use a 2-percent fee rate for commercial renewable energy leases. However, although there is a baseline 2-percent fee rate in the regulation subject to revisions in the Final Sale Notice, we reserve the right to adjust the rate.

For leases issued competitively, a renewable energy lease on the OCS may be issued, depending on the bidding system, with a constant or sliding operating fee rate. However, in response to the number of comments received recommending deferral of more complex bidding system, we will likely use a bidding system that is relatively simple and straightforward for the first lease sales, such as using a cash bonus as the bid variable and setting a constant operating fee rate. If the operating fee rate is constant, it may only vary from one year to the next if MMS approves a request for reduction or waiver.

With a sliding fee rate, the operating fees may automatically change over the life of a lease according to a sliding scale schedule specified in the Final Sale Notice and/or lease. The term sliding in this context applies generally to any change in the operating fee rate over time or other increment. A sliding fee rate may provide for future adjustments based on the analysis of either market data or actual project data. It may also provide that the fee rate used to calculate the operating fee changes in a specific manner at predetermined time intervals. If a sliding operating fee rate is used as a bid variable in an auction, MMS would specify a mathematical function to determine changes to the value of the operating fee over time, and the function variable which would be bid. The sliding operating fee in any year would be the amount derived from this function in conjunction with the operating fee formula.

We received comments expressing concern that MMS would make unilateral adjustments to the components of the operating fee formula, which would result in increased uncertainty for project proponents. Adjustments maybe made to the power price and capacity factor components of the operating fee formula without a reduction or waiver application, as specified in § 285.510. We will specify how the adjustments will be made in the Final Sale Notice and the lease instrument.

Based on the number of comments that we have received recommending the use of the wholesale power price for the State where the transmission makes landfall in the operating fee formula, we have accepted that recommendation and made the appropriate changes in the final rule. The power price component will be adjusted on an annual basis using publicly available information from an independent outside source, the Department of Energy, Energy Information Agency (EIA), to reflect prevailing conditions. However, we retain the authority to adjust that published value to reflect variations by State within a region, as well as current market conditions that may be better captured in the published retail power price. For example, if the published wholesale power price for a State is 2 years old, we may use the retail power price, which may be just a year old, to scale the wholesale power price for that State. We also retain the flexibility to use more timely or disaggregated wholesale power price indices.

We reserve the right to review relevant capacity factor information as it relates to the formula, established in subpart E, and adjust the value used in the operating fee formula accordingly. Upon the completion of the first year of commercial operations on the lease, MMS may adjust the capacity factor (representing a comparison of actual production over a given period of time with the amount of power a facility would have produced if it had run at full capacity) to reflect operating experience during that first production year. The MMS may also retain the initial capacity factor if it is determined to be a reasonable value, and defer an adjustment of the capacity factor to a subsequent year. Thereafter, MMS may adjust the capacity factor no earlier than every 5 years from the most recent year that MMS adjusts the capacity factor. The process by which MMS will adjust the capacity factor, including any calculations, will be specified in the lease instrument. For example, a generating facility may have an initial capacity factor set at 35 percent in the lease, but at the end of the first full year of operations, the actual capacity utilization for the generating facility was 34 percent. The MMS may adjust the capacity factor and lower it to 34 percent for the next 5 years in order to reflect more accurately future production of the generating facility in the annual operating fee formula. Alternatively, if MMS determines that the existing capacity factor is a better representation of future use than was evidenced by actual utilization in year one, then MMS may leave the original capacity factor in place for a number of years, say in this example for 4 years. Following the end of that year, the process is repeated in 5-year intervals thereafter, with MMS choosing whether to keep the existing capacity factor in place, or to rely on experience during the most recent 5-year period.

If MMS chooses to rely on actual experience, it must select the rolling average capacity utilization of the most recent experience between the timing of price adjustment decisions. To facilitate the adjustment of the capacity factor, the lessee will be required to submit to MMS the gross annual generation of electricity by the generating facility on the lease, using the appropriate form provided by EIA to collect the generation information or a form otherwise required by MMS. In either the case of a competitively or noncompetitively issued lease, we may reduce or waive fee rates under the process given in § 285.510.

We would establish operating fees for activities not related to the generation of electricity, such as the generation of hydrogen, on a case-by-case basis through the lease sale process. Operating fees and other payment requirements for activities conducted as an alternate use of an OCS facility, such as an oil and gas platform, previously authorized under the OCS Lands Act, Start Printed Page 19682are explained in subpart J of these regulations.

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

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

This section provides an annual rent rate of $5 per acre for project easements, or a minimum of $450 per year, which will be due initially upon approval of the COP or GAP. Subsequent payments will be made on an annual basis, probably in conjunction with payments due under § 285.505, unless we specify otherwise in the lease for the associated commercial project. The width of the area covered by a project easement for a cable or pipeline would be 200 feet. The area covered by an installation, outside of the cable or pipeline corridor, would be limited to the areal extent of anchor chains, other devices, or facilities associated with the installation.

We grant ROW easements for electrical cables and pipelines under the existing oil and gas program, similar to project easements under the Alternative Energy Program. Rent rates for grants issued through the oil and gas program are specified by regulation and provide a precedent. The level of compensation due to the government for grants issued under the oil and gas program is an appropriate analog for uses under the program. Accordingly, we will charge project easement holders a constant rent rate equal to $5 per acre, commencing with our approval of your COP or GAP and continuing until lease termination.

We renumbered this section to accommodate a new section, § 285.504. We did not make any other changes to this section.

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

This section provides the rent rates for ROW grant and RUE grants. Rent rates for renewable energy ROWs parallel rents considered fair and reasonable for oil and gas ROWs, and will be due in the amount of $70 per statute mile that a ROW crosses. For sites outside the main corridor, MMS will charge an additional rent of $5 per acre, or a minimum of $450 per year. Likewise, rent rates for a renewable energy RUE parallel those for oil and gas RUEs, and will be charged at an annual rent rate of $5 per acre, or a minimum of $450 per year. The first rent payment will be due when the ROW or RUE request is filed. Subsequent payments must be made on an annual basis, for a 5 year period or for multiples of 5 years. We apply the same interest charge to late rents due on ROW grants or RUE grants for renewable energy projects as we do to late payments from oil and gas ROWs and RUEs under 30 CFR 218.54.

ROW authorizations approved under the oil and gas program are granted for electrical cables and pipelines, and similar requests will also be approved under the Alternative Energy Program. The value of compensation due to the government for ROW grants issued under the oil and gas program, which also appears to be an appropriate analog for renewable energy activities, forms a useful precedent. As discussed in the last paragraph of the preceding section on project easements, the rent requirements for a renewable energy RUE are related to the payment requirements for oil and gas RUEs.

We renumbered this section to accommodate a new section, § 285.504. We did not make any other changes to this section.

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

For each lease, easement, ROW or RUE, one person, designated as payor, will be responsible for making all payments. All lessees and the payor must maintain auditable records in accordance with regulations in subpart A. We may also issue guidance related to recordkeeping.

We renumbered this section to accommodate a new section, § 285.504. We did not make any other changes to this section.

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

This section provides that the MMS Director has the authority to reduce or waive a rent or operating fee, including components of the operating fee such as the fee rate or capacity factor, when necessary to encourage continued or additional activities. Applications to modify lease payment terms must include information that demonstrates that continued or additional activity would not be economic without the reductions or waiver requested. No more than 6 years of your operations term will be subject to a full waiver of the operating fee.

It is our intent to use relevant electricity market and operating information to set the initial values for the power price and capacity factor of the operating fee formula, and to revise the same parameters after a lease is issued, as discussed in §§ 285.506(c)(2) and (3). Beyond that mechanism for revising payment requirements, the Director may consider a reduction or waiver of payments. In practice, we anticipate that most requests for reduced payments would involve a reduction in the fee rate of the operating fee formula. The Director may authorize such reductions if an applicant can show that market or operating conditions have changed significantly in a way that reduces project cash flows to uneconomic levels.

We renumbered this section to accommodate a new section, § 285.504. We did not make any other changes to this section.

Reserved Sections (§§ 285.511 Through 285.514)

Sections 285.511 through 285.514 are reserved.

Financial Assurance Requirements for Commercial Leases

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

Before MMS will issue a commercial lease, the applicant must provide either a $100,000 basic lease-specific bond or another MMS-approved financial assurance. You may also satisfy this requirement by providing proof that your designated lease operator provided the bond or approved financial assurance.

We changed the word “security” to “financial assurance.” We did not make any other changes to this section.

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

Minimum financial assurance requirements for each stage of lease development are presented in this section. A $100,000 basic bond or other financial assurance is required at lease issuance. A second bond or pledged financial instrument, in an amount determined by MMS, is due before the MMS will approve your SAP. And a third bond or pledged financial instrument, in an amount determined by MMS, is due before the MMS will approve your COP or before FERC issues a license for a hydrokinetic project.

As the rule was proposed, the COP supplemental bond would cover all obligations on a lease accrued after the approval of the COP, including decommissioning costs. However, based on comments, we modified this provision to add a separate bond Start Printed Page 19683specifically to cover decommissioning costs. Before you install facilities under your approved COP or FERC license, you must provide a decommissioning bond or other approved assurance. The amount of the decommissioning bond will be based on the anticipated decommissioning costs. The MMS may allow you to provide the decommissioning bond in stages, based on the schedule for facility installation. The MMS must approve the schedule for providing this bond.

We made conforming changes throughout this section to reflect FERC's role in regulating hydrokinetic activity.

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

The MMS will determine the amount required for each bond by considering projected amounts of rents and other payments due the government over the next 12 months; any past due rents or other payments; and the costs of lease abandonment and cleanup. You may increase an existing bond or use a combination of existing bonds and other approved forms of financial assurance to satisfy your requirements.

We made minor edits to this section, including conforming changes to reflect FERC's role in regulating hydrokinetic activity.

Reserved Sections (§§ 285.518 Through 285.519)

Sections 285.518 through 285.519 are reserved.

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

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

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

We revised parts of this section to conform with changes we made to bonding requirements in §§ 285.526 through 285.529.

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

The MMS may require you to provide additional financial assurance as activities on your lease progress to cover projected liabilities of rents and other payments due the government over the next 12 months; any past due rents or other payments; and the costs of lease abandonment and cleanup increase.

We revised paragraph (a)(4) to make it consistent with § 285.517. We also added a new paragraph to add the option for a separate decommissioning bond or other form of financial assurance, as we did with commercial leases.

Reserved Sections (§§ 285.522 Through 285.524)

Sections 285.522 through 285.524 are reserved.

Requirements for Financial Assurance Instruments

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

All bonds and other forms of financial assurance must be payable to MMS upon demand and be in a form approved by MMS. Your surety bonds must be issued by a certified surety listed in the current Treasury Circular 570. This section also provides instructions on executing your bond and when your surety must notify you and the MMS due to changes in its Treasury certification status, insolvency, or bankruptcy.

We did not make any changes to this section.

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

You may utilize alternative financial assurance instruments when MMS determines that they protect the interests of the U.S. Government to the same extent as a bond. If using an alternative financial assurance instrument, you must monitor its value and must provide the authority for MMS to sell it and use the proceeds if the MMS determines that you have failed to satisfy any lease obligation.

Based on comments that we received, requesting more financial assurance options, MMS added options for:

  • Negotiable U.S. Government, State, and Municipal securities or bonds;
  • Investment-grade rated securities; or
  • Insurance.

These security instruments must protect MMS to the same extent as a surety bond.

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

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

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

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

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

The MMS may authorize you to establish a decommissioning account in a federally insured institution with certain limitations to satisfy that portion of your financial assurance obligation that is for decommissioning. Funds may not be withdrawn without prior MMS approval, and must be pledged to meet your decommissioning and site clearance obligations. This section also discusses how interest paid on the account must be treated and when we may allow the use of Treasury Securities to satisfy the obligation to make payments into the account.

We did not make any changes to the regulatory text of this section; however, we renumbered this section from § 285.527 to § 285.529 to accommodate new sections. Start Printed Page 19684

Changes in Financial Assurance

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

This section discusses the steps you must take if your surety loses Treasury certification, becomes insolvent, or has its charter suspended, or if your approved financial assurance expires. You must promptly notify MMS and provide new financial assurance.

We did not make any edits to this section.

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

This section requires that additional financial assurance be provided whenever the value of the current assurance falls below the required amount.

We did not make any changes to this section.

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

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

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

The MMS will release a bond or allow a surety to cancel a bond only when all obligations covered by the bond have been completed satisfactorily or MMS accepts a replacement bond or alternative form of financial assurance that covers the existing liabilities from the period covered by the bond to be cancelled. This section describes when your period of liability ends, when your financial assurance will be released by MMS, and how the MMS may approve a reduction in the amount of your approved financial assurance if portions of your lease obligations have been satisfactorily completed.

We did not make any changes to this section.

When may MMS cancel my bond? (§ 285.534)

This section presents a comprehensive table which displays the different types of bonds required in this subpart, and when the period of liability ends. The table further displays when the bond will be released under a variety of circumstances.

We did not make any changes to this section.

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

The MMS may call for forfeiture of your bond if you default on any of the conditions under which you accepted your bond or refuse or fail to comply with any term or condition of your lease or grant.

We did not make any changes to this section.

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

This section specifies that you and your surety will be notified in writing of the call for forfeiture and will be provided the reasons for the MMS action. The MMS will also advise you and your surety in writing of the actions you must take within 10 days to avoid forfeiture.

We did not make any changes to this section.

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

This section explains that you and any co-lessee or co-grant holders are jointly and severally liable for the full cost of corrective actions on your lease or grant, even if they exceed the amount collected under your bond. The MMS may take or direct action to recover all costs in excess of the forfeited bonds.

We did not make any changes to this section.

Reserved Sections (§§ 285.538 Through 285.539)

Sections §§ 285.538 through 285.539 are reserved.

Revenue Sharing With States

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

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

This section provides the procedure for calculating the State shares of revenue. To determine each eligible State's share of the 27 percent of the revenues received by the Federal Government for a qualified project, MMS will use the inverse distance formula, based on the shortest distance between State coastlines and the geographic center of the qualified project area. This is the formula used for the same purpose under the Coastal Impact Assistance Program administered by MMS.

We made minor changes to this section to clarify that revenues do not include administrative fees such as service fees and those assessed for civil penalties and forfeiture of bond or other surety obligations.

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

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

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

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

Example of How the Inverse Distance Formula Works (§ 285.543)

This is a revised section that illustrates several examples of how the inverse distance formula works.

Example (a). A qualified project area is located partially within the zone extending 3 miles seaward of State A's submerged lands. The geographic center of the qualified project area is more than 15 miles from the coastline of any State. In this scenario, no State would be eligible for payment of Federal revenues from that qualified project. This is the case because the distance from the geographic center of the qualified project area to the nearest point on each of the States' coastline is greater than 15 miles, which is the only determinant as to whether or not a State is eligible for payment of revenues.

Example (b). A qualified project area is located partially within the zone extending 3 nautical miles seaward of State A's submerged lands. The geographic center of the qualified project area is within 15 miles of State B's coastline, but is farther than 15 miles from State A's coastline. In this scenario, State B would receive the entirety of the 27 percent of revenues to be shared from the project. This is the case because State A's proximity to the Start Printed Page 19685geographic center of the qualified project area is greater than 15 miles, even though the qualified project area is located partially within the zone extending 3 miles seaward of State A's submerged lands. Again, the location of the project area within 3 nautical miles of a State's submerged lands is only used to determine if a project is subject to revenue sharing (i.e., is a qualified project) and is not used to determine any State's eligibility for payment of revenue from a qualified project.

Example (c). A qualified project area is located partially within the zone extending 3 nautical miles seaward of State C's submerged lands. The geographic center of the qualified project area is within 15 miles of both State A's and State B's coastline, but is farther than 15 miles from any other States' coastline, including State C. In this scenario, State A and State B would split the 27 percent of revenues to be shared from the project. The sharing between these two States would be based on their proximity to the geographic center of the qualified project area. To elaborate, assume that the geographic center of the qualified project area lies 12 miles from the closest point on State A's coastline and 4 miles from the closest point on State B's coastline. Pursuant to the inverse distance formula, eligible States with coastlines that are farther from the geographic center of a qualified project area would get proportionally lower revenue shares from the project.

State A's proportion = [(1/12) ÷ (1/12 + 1/4)] = 1/4

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

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

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

State A's share = $270,000 × 1/4 = $67,500.

State B's share = $270,000 × 3/4 = $202,500.

Subpart F—Plans and Information Requirements

Overview

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

Types of Plans

Three types of plans are required, depending on the type of instrument held and the activity to be conducted:

(1) Site Assessment Plan (SAP),

(2) Construction and Operations Plan (COP), and

(3) General Activities Plan (GAP).

The SAP and the COP will be used for commercial leases, while the GAP will be used for limited leases and grants.

As originally proposed, MMS would not allow a lease or grant holder to conduct any activities on the OCS without proper plan submittal and MMS approval. Based on comments received on the proposed rule, MMS has determined that geophysical and geological surveys, hazards surveys, archaeological surveys, and baseline collection studies (e.g., biological) conducted for the purpose of preparing SAPs, COPs, and GAPs may be permitted under the authority of the U.S. Army Corps of Engineers (ACOE). In many instances, these types of activities may be verified under the ACOE's Nationwide Permit program. We have revised the regulation to remove the requirement for MMS approval of these types of surveys and the requirement to describe the survey designs in a SAP, COP, or GAP. Companies may now conduct these surveys pre- or post-lease/grant, subject to ACOE verification under the Nationwide Permit program or other appropriate authorization and other applicable Federal law. However, MMS strongly encourages applicants to coordinate any pre- or post-lease/grant survey activities with MMS and the ACOE prior to their conduct to ensure that the activities being proposed meet the conditions of the Nationwide Permits. Certain Nationwide Permits require that an applicant notify the ACOE and receive verification that an activity is covered under a Nationwide Permit prior to start of construction. Applicants will be required to submit the results of their surveys as part of their SAP, COP, or GAP. The data collected from these surveys must meet the technical requirements that MMS will set forth in guidance to be published after the promulgation of this rule. By making this change, MMS believes that applicants will be able to complete their plans more efficiently. Any construction activities (e.g., installation of a meteorological tower, a meteorological buoy) or the testing of technology devices needs to be proposed in the SAP, COP, or GAP. We have changed the text of the rule to reflect these changes.

Based on comments, we have reduced the number of NEPA and CZMA reviews for a commercial lease issued competitively from three to two by combining the lease sale and site assessment activities into one review. This, in combination with the elimination of MMS approval of surveys (e.g., geophysical, geological, archaeological, and biological), should greatly reduce the review time for commercial leases issued competitively. The MMS will prepare a NEPA document and a consistency determination to cover the lease sale and site assessment activities. The MMS may review the effects of geophysical, geological, archaeological, and biological surveys in the NEPA documentation for the lease sale, as well.

Also based on comments received on the proposed rule, we will now include technology testing as an activity that may be conducted under a SAP or a GAP. We have changed the definition of site assessment activities to “those initial activities conducted to characterize a site on the OCS, such as resource assessment surveys (e.g., meteorological and oceanographic) or technology testing.”

Prior to conducting site assessment activities on a commercial lease, a lessee will be required to submit a SAP. The SAP describes the activities (e.g., installation of meteorological towers, meteorological buoys) a lessee plans to perform for the characterization of their commercial lease, including the project easement, or to test technology devices. The SAP must include data from: (1) Physical characterization surveys (e.g., geological and geophysical surveys or hazards surveys); and (2) baseline environmental surveys (e.g., biological or archaeological surveys). If you propose to construct a facility or combination of facilities, which MMS determines to be complex or significant, you must also comply with the requirements of subpart G.

A COP will be required before a lessee may begin construction and/or operations on a commercial lease, including a project easement. The COP describes the construction, operations, and conceptual decommissioning activities the lessee plans to undertake. Start Printed Page 19686

A GAP will be required before a lessee or grantee may begin activities on a limited lease (including a project easement, as applicable) or ROW grant or RUE grant. The GAP describes the site assessment and/or development activities. The GAP must describe: (1) Resources assessment surveys (e.g., meteorological and oceanographic data collection); (2) technology testing; and (3) construction activities, operations, and conceptual decommissioning plans for all planned facilities. The GAP must include the data from: (1) Physical characterization surveys (e.g., geological and geophysical surveys or hazards surveys); (2) baseline environmental surveys (e.g., biological, archaeological, or socioeconomic surveys); and (3) construction activities, operations, and conceptual decommissioning plans for all planned facilities.

The rule requires two plans for a commercial lease (SAP and COP) and one plan (GAP) for limited leases and ROW grants or RUE grants. We chose this approach for a commercial lease because there are two distinct phases for commercial development for renewable energy projects: (1) A site assessment phase, where a lessee may install a meteorological or marine data collection facility to assess renewable energy resources; and (2) a generation of power phase, which includes construction, operations, and decommissioning. As described previously, physical characterization studies (e.g., geological and geophysical surveys, hazard and archaeological surveys) and baseline collection studies (e.g., biological) may be permitted under the ACOE Nationwide Permit program and other applicable Federal law. Therefore, the survey designs will not need to be included in a SAP, COP, or GAP, nor will they need to receive approval from MMS prior to implementation.

Limited leases are limited to resource measurements or technology testing and are not for the commercial generation of power. Therefore, only one phase exists, and only one plan, a GAP, is required for this phase. Having only one plan for one phase allows for a simple process to conduct resource evaluation or technology testing. The same reasoning was used for ROW grants and RUE grants—these grants do not involve commercial power generation activities on the OCS.

Overview of Required Plans

The two plans for commercial development are a SAP and a COP. These plans should clearly describe the general approach to the project and include detailed technical and environmental information. The two-plan approach for commercial activities sets two defined times for conducting NEPA analysis and CZMA reviews. These plans must include all the information needed to conduct appropriate NEPA analysis and for compliance with other Federal laws. Based on comments received on the proposed rule, we have revised the rule to clarify the CZMA reviews for SAPs, COPs, and GAPs. For purposes of Federal consistency, MMS will treat plans (COPs and GAPs) associated with competitively-issued commercial and limited leases as OCS plans which must comply with requirements of CZMA subsection 307(c)(3)(B) and 15 CFR part 930, subpart E. The applicant must submit one copy of their CZMA consistency certification with each plan. The MMS will prepare a consistency determination for a competitive lease sale and site assessment activities.

The MMS will treat SAPs and GAPs associated with noncompetitively-issued commercial and limited leases as Federal licenses and permits which must comply with requirements of CZMA subsection 307(c)(3)(A) and 15 CFR part 930, subpart D. The applicant will be required to prepare a consistency certification and concurrently submit it to the affected State's CZM agency and MMS along with the proposed SAP or GAP and all supporting information required in 15 CFR part 930, subpart D. The details of the CZMA process are described under “CZMA Compliance for Plans.” This approach includes a predictable schedule for development and milestones for plan submittals.

The SAP covers resource, other data gathering activities (e.g., meteorological, oceanographic), and the testing of technology devices that would be conducted to gather information needed to develop the project. The SAP includes the results and data collected from physical characterization surveys (e.g., geological and geophysical surveys or hazards surveys) and baseline environmental surveys (e.g., biological and archaeological surveys) conducted prior to the preparation of the SAP and under the authority of the ACOE and other Federal laws. However, MMS strongly encourages applicants to coordinate any pre- or post-lease/grant survey activities with MMS and the ACOE prior to their conduct. Applicants will be required to submit the results of their surveys as part of their SAP, COP, or GAP. The data collected from these surveys must meet the technical requirements that MMS will set forth in guidance to be issued after the rule is final. The data gathered under the SAP would be used to develop the COP for the project. The site assessment activities may include resource assessment surveys (e.g., meteorological and oceanographic data collection), and the testing of technology devices. Additionally, a SAP may include the construction of simple facilities for data collection, such as meteorological towers. However, if you are constructing a facility or a combination of facilities deemed by MMS to be complex or significant, you must comply with the requirements of subpart G and submit a Safety Management System. The SAP expires when MMS approves the COP. To conduct site assessment type activities after a COP is approved, the applicant would need to include those activities in the COP.

To facilitate development of a commercial lease, an applicant may choose to submit to MMS a COP with the SAP. In this case, the NEPA analysis, CZMA review, and compliance with other relevant laws would be done at one time. If the applicant decides to submit the COP and SAP simultaneously, then sufficient data and information must be submitted with the COP for MMS to conduct needed technical, NEPA, and other required reviews. If new information becomes available after the applicant completes the site assessment activities, then the COP may require revision. Furthermore, MMS may need to conduct additional reviews, including NEPA, CZMA, and other Federal reviews, on any new information.

The COP describes the construction and operations for the project itself, covering all planned facilities, including onshore and support facilities, and all anticipated project easements needed for the project. It also describes the actual activities related to the project including construction, commercial operations, maintenance, and decommissioning. The COP does not need to repeat information that was previously submitted in the SAP, but should reference such material. The COP includes the results of the activities conducted under the SAP. The COP must demonstrate to MMS that the operator has planned and is prepared to conduct the proposed activities in a manner that conforms to their responsibilities under these regulations. It also must demonstrate that the project:

  • Will conform to all applicable laws, implementing regulations, lease provisions and stipulations, or conditions of the commercial lease;
  • Is safe;
  • Does not unreasonably interfere with other uses of the OCS, including Start Printed Page 19687those involved with national security or defense;
  • Does not cause undue harm or damage to natural resources, life (including human and wildlife), property, or the marine, coastal, or human environment;
  • Does not cause undue harm or damage to sites, structures, or objects of historical or archaeological significance;
  • Will use best available and safest technology, will use best management practices, and will employ properly trained personnel.

Limited leases, ROW grants, and RUE grants will require approval of a GAP. The GAP includes components of both the SAP and the COP. However, we expect that limited leases, ROWs, and RUEs would involve less extensive activities than those planned for a commercial lease. The applicant may include multiple scenarios in the GAP to address the potential outcome of the site assessment activities, so that multiple locations would be evaluated as part of the NEPA analysis. If, after evaluating the site, the initially planned location of a facility needs to be relocated, additional NEPA would not be required since alternative locations were evaluated in the NEPA for the GAP.

Site Assessment Plan (SAP)

The SAP describes the activities (e.g., installation of meteorological towers, meteorological buoys) a lessee plans to perform for the characterization of their commercial lease, including testing technology devices. These activities would take place during the site assessment term of a commercial lease. The data obtained during site assessment is used to develop a COP and is included in the COP. The activities proposed in a SAP may include the installation of facilities (including vessels) attached to the sea floor, such as meteorological towers to measure winds, radars to assess avian resources, or marine data collection facilities to measure waves or currents; or the testing of technology devices. The MMS expects that the applicant would conduct physical characterization surveys and baseline environmental surveys prior to the preparation of the SAP, and include the results and supporting data from those surveys in the SAP. Information contained in the SAP must provide sufficient detail for MMS to adequately assess the proposed activities and ensure compliance with NEPA and other relevant Federal laws.

The MMS must approve the SAP before the operator can begin conducting any proposed activities. If MMS approves the SAP, the operator may begin conducting activities, including the installation of facilities. However, if you are constructing a facility or a combination of facilities deemed by MMS to be complex or significant, you must comply with the requirements of subpart G and submit a Safety Management System before construction may begin.

When MMS receives the applicant's COP for technical and environmental review, MMS may extend the site-assessment term during the review period, if necessary. The SAP expires when MMS approves the COP. Therefore, if an applicant anticipates conducting site assessment activities anytime during the COP period, those activities must be described in the COP, and the applicant must receive MMS approval of the COP before conducting the activities.

Subpart F outlines what issues the applicant must address in the SAP such as legal requirements, safety, other uses of the OCS, environmental protection, technology, best management practices, and the use of properly trained personnel. The provisions also outline the information that the applicant must submit with the SAP as well as additional information that must be submitted if the SAP includes activities that require the installation of bottom-founded facilities. The MMS envisions that most such facilities would be relatively simple and temporary. However, if an operator proposes to install a facility that the MMS determines is significant or complex, additional information would be required. If MMS makes such a determination, you must submit a Facility Design Report and a Facility Fabrication and Installation Report, as described in subpart G, and a Safety Management System, as described in subpart H, before any construction may begin. The Facility Design Report provides MMS with a detailed description of the proposed facility or facilities and locations on the OCS. The Fabrication and Installation Report describes the lessee/operator's or grant holder's plans for both the facility's fabrication and installation process. The MMS will review these reports prior to each stage of these operations.

One commenter suggested that applicant preparation and MMS review and approval of the Facility Design Report and Fabrication and Installation Report should proceed in parallel with MMS's preparation of the EIS and review of the COP. The commenter suggested that proceeding in parallel could reduce the overall project development timeline by 4-6 months. The regulations bind the Facility Design Report and the Fabrication and Installation Report to the approved COP. This is necessary to ensure that these two reports cover the activities and facilities as approved. As written, the regulations do not prevent an applicant from submitting the Facility Design Report or the Fabrication and Installation Report with the COP. However, we envision that there will be changes to the COP during its review and that such changes could result in revisions to the Facility Design Report and the Fabrication and Installation Report. If that situation occurs, the applicant would have to revise and resubmit the two required reports. We do not see that submittal of the Facility Design Report and Fabrication and Installation Report with the COP saves much, if any, time leading up to the installation of facilities, but we will not prevent an applicant from doing so.

For commercial leases acquired noncompetitively, you must submit the SAP within 60 days after the MMS determination of no competitive interest. The MMS will not issue the lease until the SAP is approved. If you acquired a commercial lease competitively, you must submit the SAP within 6 months of the date of lease issuance. A commenter raised the concern that these time periods may not provide enough time to conduct the needed assessments and incorporate them into a plan. We believe that the time period is adequate to prepare a SAP. However, if more time is needed, the lessee may request a suspension under § 285.416(c) after acquiring the lease. We will conduct technical and environmental reviews. In this case, the NEPA and CZMA reviews would be completed at the lease sale stage. However, if new information from the SAP submittal showed changes in impacts identified at the lease sale stage, the SAP could be subjected to further environmental review. If the lease was obtained noncompetitively, the applicant will be required to prepare a consistency certification and concurrently submit it to the affected State's CZM agency and MMS along with the proposed SAP or GAP, as well as all supporting information required in 15 CFR part 930, subpart D. After the reviews are complete, MMS would approve, disapprove, or approve with modifications the SAP. Based on comments received on the proposed rule, we have revised the rule to clarify our process for when a State objects to the consistency certification. When a State objects to the consistency certification, MMS will not approve the plan if: (1) Consistency has not been Start Printed Page 19688conclusively presumed; or (2) the State objects to the applicant's consistency certification, and the Secretary of Commerce has not found that the permitted activities are consistent with the objectives of the CZMA or are otherwise necessary in the interest of national security.

In response to a comment asking how MMS will determine “affected States” for CZMA purposes, MMS will coordinate with the appropriate CZMA agencies and consult with regional task forces. The MMS will specify the terms and conditions of the approval, and you must incorporate these into your SAP. If the SAP is approved or approved with modifications, the applicant must conduct all site assessment activities in accordance with the provisions of the approved plan. The MMS may require the applicant to certify compliance with certain of the terms and conditions as identified by the MMS. If MMS does not approve the SAP, we will provide an explanation of our disapproval, and the applicant may modify and resubmit the revised SAP.

One commenter asked us to identify the type of document MMS will issue as its final decision on a SAP or COP. The MMS will issue decision letters for a SAP, COP, and GAP. In addition, where an EIS is prepared, a ROD will be issued. In cases where an EA is prepared, either a Finding of No Significant Impact would be prepared (in addition to the decision letter), or, depending on the outcome of the environmental review, an EIS could be prepared.

One commenter stated that the proposed rule is unclear as to the process available to States or other stakeholders to address and remedy disagreements arising from the content of the SAP, GAP or COP, other than that offered by the comment review process. The commenter stated that this process is particularly important where a ROW easement crosses the State territorial sea. The commenter recommends that MMS develop language to include such a process. The MMS will work closely with affected States and local governments to coordinate and consult on such activities to ensure that related issues and concerns are addressed. For competitive leases, MMS addresses potential impacts from a subsea cable route through State waters in the lease sale, COP, and GAP NEPA documentation. The MMS may consider performing this assessment with an affected State in a joint environmental document. Since MMS's authority is limited to the OCS (outside of State waters), the affected State would have full authority to decide on access issues within State waters.

If you want to conduct activities not directly addressed in the approved SAP, you must provide MMS with a written description of the proposed activities and receive approval from MMS before conducting the activities. We will determine whether the activities are within the scope of the approved SAP or if the SAP needs to be revised. If MMS determines that you must revise the SAP, then MMS must approve the revised SAP before you can conduct the activities.

Construction and Operations Plan (COP)

The COP describes the construction, operations, and conceptual decommissioning plans for the operations term of any project under a commercial lease, including your project easement. Your plan should describe all operations and facilities (onshore and offshore) that would be installed and used to test, gather, transport, transmit, or generate and distribute energy from the lease. The COP should include:

  • Nominations of CVAs for MMS approval or request of an exemption, where required;
  • Preliminary plans for project design, facility fabrication and installation, and production transportation and transmission;
  • Plans for safety management, inspection, maintenance, and monitoring systems; and
  • The decommissioning concept.

The rule outlines the process for preparing, submitting, processing, and implementing a COP or a combined SAP/COP. The MMS must approve the COP or the combined SAP/COP before you can construct any facilities for commercial operation.

As with the SAP, the provisions of the rule outline what a COP must contain and demonstrate, as well as how the COP is submitted, processed, and authorized. The MMS may require additional specific information for submittal with the COP, to aid in the appropriate reviews of the project by external agencies and to assist in compliance with all relevant Federal laws and regulations (e.g., NEPA, CZMA, ESA, and MMPA). We may request additional information if the information provided is insufficient. However, the COP does not need to repeat information that was previously submitted in the SAP, but should reference such material.

For commercial leases acquired noncompetitively and competitively, you must submit a COP within 5 years after MMS approves your SAP. The MMS will extend the term of the SAP, if necessary, while conducting the technical and environmental reviews of your COP. We will conduct these technical and environmental reviews of your COP, including NEPA analysis, and, for leases issued competitively, will forward the plan, your consistency certification and information required pursuant to 15 CFR part 930, subpart E to affected States for CZMA review. For leases issued in a noncompetitive process, you will be required to prepare a consistency certification and concurrently submit it to the affected State's CZM agency and MMS along with the proposed COP and all supporting information required in 15 CFR part 930, subpart D. After the reviews are complete, MMS would approve, disapprove, or approve with modifications the COP. Based on comments received on the proposed rule, we have revised the rule to clarify our decision process when a State objects to the consistency certification. When a State objects to the consistency certification, MMS will not approve the plan if: (1) Consistency has not been conclusively presumed; or (2) the State objects to the applicant's consistency certification, and the Secretary of Commerce has not found that the permitted activities are consistent with the objectives of the CZMA or are otherwise necessary in the interest of national security. The MMS will specify the terms and conditions of the approval, and they would be incorporated into your COP. If MMS approves the COP or approves the COP with modifications, the applicant must conduct all of the proposed activities in accordance with the provisions of the approved plan and certify compliance with those terms and conditions identified by the MMS. If MMS does not approve the COP, we will provide an explanation of our disapproval, and the applicant may modify and resubmit the revised COP.

If MMS approves your project easement, we will issue an addendum to your lease specifying the terms of the easement. The project easement will provide for areas off the original lease areas for cable, pipeline, or associated facilities. Areas for cable and pipelines may not exceed 200 feet (61 meters) in width, unless safety and environmental factors during construction and maintenance of the associated cables or pipelines require a greater width. For associated facilities, the area is limited to the area reasonably necessary for power stations for electricity or Start Printed Page 19689pumping stations for other energy products such as hydrogen.

You may propose in your COP to develop your lease in phases. You must clearly provide details as to the portions of the lease that will be initially developed for commercial operations, and the portions of the lease that will be reserved for subsequent phased development.

If MMS approves your COP, you must commence construction by the date given in your construction schedule, as stated in the approved COP. The MMS may approve a deviation from this schedule. However, before you may construct and install facilities under the approved COP, you must submit to MMS a Facility Design Report and a Fabrication and Installation Report. You may commence commercial operations 30 days after the CVA or project engineer has submitted the final Fabrication and Installation Report to MMS. The activities described in these two reports must fall within the scope of the approved COP, or you will be required to submit a revision to the COP for approval before commencing the activity.

A COP may require further revisions and potentially require additional or new environmental and regulatory reviews. You must notify MMS in writing before you conduct any activities not described in your approved COP, describing in detail the activities you propose to conduct. The MMS will determine whether the proposed activities may be conducted under your existing COP or will require a revision to the COP. We may request that you provide additional information to us to make this determination. The MMS will periodically review an approved COP and may determine, based on the significance of any changes in information and environmental conditions affecting activities, that revisions are necessary. The revisions may require new environmental and technical reviews.

Any time you cease commercial operations without an MMS approved suspension, you must notify MMS. The MMS may cancel your lease, and you must start the decommissioning process if you cease commercial operations for a period longer than 6 months.

When you complete the commercial operations under your approved COP, you must start the decommissioning process described in subpart I of this part.

General Activities Plan (GAP)

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

NEPA Compliance for Plans

The MMS action on the SAP, COP, and GAP would require the preparation of appropriate NEPA documentation. We anticipate that, initially, all commercial development projects will require an EIS for the COP. Also, we anticipate that limited leases and RUE and ROW grants will initially require an EIS. After the impacts and related mitigation of renewable energy activities on the OCS are better understood, it is possible that projects may require an EA. As the program matures, MMS will review the impacts from the program and make a determination whether we can recommend categorical exclusions for certain activities to the Council on Environmental Quality. For competitively issued commercial leases, MMS will prepare a lease sale and site assessment NEPA review to include the SAP activities. The applicant must provide MMS with the data necessary to complete the required NEPA documentation for other types of plans. This would include a description of those resources, conditions, and activities that could be affected by your proposed activities, or that could affect the activities proposed in your plan, including associated construction and decommissioning activities. An applicant may reference information that was included in the MMS NEPA review prepared for the lease. The required information would include, but is not limited to, information on the following:

  • Hazard information including meteorology, oceanography, or manmade hazards;
  • Water quality including turbidity and total suspended solids from construction;
  • Biological resources including benthic communities, marine mammals, sea turtles, coastal and marine birds, fish and shellfish, plankton, barrier islands, beaches, dunes, wetlands, seagrasses and plant life;
  • Threatened or endangered species including critical habitats, as defined by the Endangered Species Act of 1973;
  • Sensitive biological resources or habitats including essential fish habitat, refuges, preserves, special management areas identified in coastal management programs (CMPs), sanctuaries, rookeries, hard bottom habitats, chemosynthetic communities, and calving grounds;
  • Archaeological resources including historic and prehistoric archaeological resources to meet the requirements of the National Historic Preservation Act of 1966, as amended, and associated regulations;
  • Social and economic information, including employment, existing offshore and coastal infrastructure (including major sources of supplies, services, energy, and water), land use, subsistence resources and harvest practices, recreation, recreational and commercial fishing (including typical fishing seasons, location, and type), minority and lower income groups, coastal zone management programs, and viewshed;
  • Coastal and marine uses including military activities, vessel traffic, and mineral exploration or development; and
  • Other resources, conditions, and activities as identified by MMS.

The MMS may decide to use a third party to prepare the NEPA document. However, you may ask for our approval to perform, or to directly pay a contractor for, the NEPA document (see subpart A, § 285.111).

One commenter suggested that in order for States and local governments to use the MMS NEPA document for their “equivalent” environmental process, several analyses and information needs would need to be included. The MMS will work closely with affected States and local governments to coordinate and consult on activities proposed under this program to ensure efficient preparation of environmental reviews. These reviews may be conducted jointly by MMS and other appropriate agencies or separately.

The MMS received numerous comments regarding cumulative impacts. It was stated that, as more renewable energy projects are developed on the OCS, the cumulative effects of those projects may compound individual effects and put an additional strain on the ecology of the marine environment. The MMS shares the concerns of the commenters regarding cumulative effects. We will work closely Start Printed Page 19690with Federal agencies, affected States, local governments, and other stakeholders to coordinate and consult on activities proposed under this program and to identify critical issues including their cumulative effects. Cumulative effects will be assessed at each stage of environmental review of projects, including lease sales, in order to identify such effects and to recommend appropriate mitigation measures and monitoring.

One commenter requested that MMS incorporate the requirement of adaptive management into the rule. We designed the structure of the regulations to reflect the approach of adaptive management. Operating companies are required to demonstrate and validate their performance. The MMS will set forth terms and conditions to be incorporated into plans and will determine when to require adjustments to mitigation and monitoring activities based on operating experience. Lessees are required to certify compliance with certain of those terms and conditions. Also, refer to the preamble discussion in subpart H.

CZMA Compliance for Plans: Based on comments received on the proposed rule, we have clarified the rule with respect to CZMA compliance. For purposes of Federal consistency, MMS will treat plans (COPs, and GAPs) associated with competitively-issued commercial and limited leases as OCS plans which must comply with requirements of CZMA subsection 307(c)(3)(B) and 15 CFR part 930, subpart E. The MMS will treat COPs associated with noncompetitively-issued commercial leases as OCS plans which must comply with requirements of CZMA subsection 307(c)(3)(B) and 15 CFR part 930, subpart E. The plans must describe all federally licensed or permitted activities and operations proposed on the MMS-issued lease, ROW grant, or RUE grant. The lease or grant holder will be required to prepare a consistency certification to submit to MMS with the proposed plan. The MMS will send one copy of the plan, supporting information, and consistency certification to the affected State CZM agency. The State agency will then determine whether the supplied information is adequate for its review. When the State agency has adequate information, it will begin its consistency review and either concur with or object to the consistency certification. For SAPs submitted under a competitive lease, MMS will prepare a consistency determination that will cover the lease sale and site assessment activities.

The MMS will treat SAPs and GAPs associated with noncompetitively-issued commercial and limited leases as Federal licenses and permits which must comply with requirements of CZMA subsection 307(c)(3)(A) and 15 CFR part 930, subpart D. The applicant will be required to prepare a consistency certification and concurrently submit it to the affected State's CZM Agency and MMS along with the proposed SAP or GAP and all supporting information required in 15 CFR part 930, subpart D. The State agency will then determine whether the supplied information is adequate for its review. When the State agency has adequate information, it will begin its consistency review and either concur with or object to the consistency certification.

The MMS will treat a combined COP and SAP associated with a noncompetitive commercial lease as a Federal license and permit which must comply with requirements of CZMA subsection 307(c)(3)(A) and 15 CFR part 930, subpart D.

Subsequent consistency reviews for revisions for SAPs, COPs, and GAPs are not required unless MMS determines that the revisions: (1) Result in a significant change in the impacts previously identified and evaluated; (2) require any additional Federal authorizations; or (3) involve activities not previously identified and evaluated.

For CZMA compliance purposes, when a State objects to the consistency certification, MMS will not approve the plan if: (1) Consistency has not been conclusively presumed; or (2) the State objects to the applicant's consistency certification, and the Secretary of Commerce has not found that the permitted activities are consistent with the objectives of the CZMA or are otherwise necessary in the interest of national security.

NEPA and CZMA Compliance for Additional Reports and Approvals

The NEPA and CZMA compliance for a project will be addressed in the MMS decision process for the SAP, COP, or GAP. The reports and applications that are required relating to facility design, fabrication, installation, and decommissioning are intended to provide MMS with specific technical details on the project as approved in the SAP, COP, or GAP. If these documents present activities that fall outside the scope of your approved SAP, COP, or GAP, then you will be required to submit a revision to your SAP, COP, or GAP. Additional NEPA or CZMA review may be required if the revisions for facility design, fabrication, installations, or decommissioning:

(1) Result in a significant change in the impacts previously identified and evaluated;

(2) Require any additional authorizations; or

(3) Propose activities not previously identified and evaluated.

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

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

For limited leases, two NEPA and two CZMA reviews would be required for a competitive limited lease and one review for a noncompetitive limited lease. The reviews for the competitive limited lease would be conducted on the lease sale action and the GAP, while Start Printed Page 19691the noncompetitive limited lease would have a simultaneous review of the lease issuance and the GAP.

We envision that all ROW grants and RUE grants would likely be noncompetitive. The ROW/RUE issuance action and the GAP would be reviewed under NEPA and CZMA simultaneously. In the unlikely case of a competitive ROW/RUE grant, a separate NEPA and CZMA review would be conducted on the ROW/RUE sale and the GAP.

Section-by-Section Discussion for Subpart F

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

This section describes the three different types of plans that are required to be submitted to MMS for approval. The type of plan that you would submit depends on the type of instrument held and the type of activity to be conducted: SAP, COP, and GAP. The SAP and the COP are used for commercial leases, while the GAP is used for limited leases and grants. Prior to conducting site assessment activities (e.g., resource data collection, technology testing) on a commercial lease, a lessee is required to submit a SAP to MMS for review and approval. A COP is required to be submitted to MMS for review and approval before a lessee may begin construction and/or operations on a commercial lease, including a project easement. A GAP is required to be submitted to MMS for review and approval before a lessee may begin activities on a limited lease or ROW grant or RUE grant including, if applicable, a project easement.

A commenter suggested that the proposed rule was unclear when a SAP and COP or a GAP is required. The comment states, “The SAP and the COP are used for commercial leases, while the GAP would be used for limited leases and grants. However, § 285.640(a) notes that the GAP may be applicable to the project easement.” We believe the rule clearly states the requirements for submitting the appropriate plan for a lease, easement, or ROW. A GAP is used if your limited lease includes a project easement. In such a case, the proposed activities for the project easement associated with your limited lease would be described in a GAP.

We did not make any changes to this section.

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

The timing for the submission of your plans depends on whether your lease or grant is issued on a competitive or noncompetitive basis (refer to subpart B for leases or subpart C for grants for further discussion of these types of conveyance). The timing is as follows:

  • Competitively issued lease or grant: You must submit your SAP or GAP within 6 months of issuance.
  • Noncompetitive lease or grant: You must submit your SAP or your GAP within 60 days after the Director issues a determination that there is no competitive interest for your lease or grant.
  • Operations for commercial lease: You must submit a COP or a FERC license application at least 6 months before the end of your site assessment term if you intend to continue your commercial lease with an operations term for your commercial lease.

The MMS allows you to submit your COP with your SAP. However, you must submit the necessary data and information with your COP to allow MMS to complete its technical and environmental reviews. In an effort to make the process as streamlined as possible, some commenters suggested that the MMS combine both the SAP and COP into one step or plan, or at least allow the environmental analysis to be completed at one time, thereby reducing the burden on project proponents. They stated that, in some cases, it may be desirable for the lessee to go through both steps, but in others, a lessee may be ready to proceed with commercial operations. It was proposed that MMS would greatly facilitate development by combining the SAP and COP and their required environmental reviews where appropriate and desirable. Section 285.601(d) states that you may submit your COP with your SAP. The NEPA analyses could be performed on both submittals simultaneously.

For hydrokinetic commercial leases you may submit your FERC license application with your SAP. Although details for joint processing of such documents have not yet been developed, MMS and FERC will strive to establish an efficient process to accomplish review and approval, Start Printed Page 19692including NEPA analysis. The MMS will be responsible for regulating approved site assessment activities, and FERC will be responsible for regulating approved construction and operations activities.

We made conforming changes to this section relating to FERC's role in regulating hydrokinetic activity.

Based on comments, we have reduced the number of NEPA and CZMA reviews for a commercial lease issued competitively from three to two by combining the lease sale and site assessment activities into one review. This, in combination with the elimination of MMS approval of site assessment surveys (e.g., geophysical, archaeological, biological), should greatly reduce the review time for commercial leases issued competitively, and would allow applicants to conduct site assessment surveys sooner.

One commenter noted that it is unclear why MMS has proposed to give the applicant only 60 days to prepare the GAP/SAP and all required environmental documentation for a noncompetitive lease, while holders of competitive leases are given 6 months to produce this documentation. The commenter stated that noncompetitive lease applicants should be given at least 6 months as well, noting that the physical impacts to be evaluated in a SAP or GAP will be the same whether a project is leased competitively or noncompetitively. We believe that since an unsolicited request for a noncompetitive lease is initiated by the applicant, 60 days after the publication of a notice of no competitive interest is a sufficient time period to prepare the SAP/GAP. The applicant should have ample time to gather information prior to application for a lease and during the time it takes MMS to make a determination of no competitive interest. However, if more time is needed, the lessee may request a suspension under § 285.416(c) after acquiring the lease. No changes have been made to this section.

What records must I maintain? (§ 285.602)

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

Reserved Sections (§§ 285.603 Through 285.604)

Sections 285.603 through 285.604 are reserved.

Site Assessment Plan and Information Requirements for Commercial Leases

What is a Site Assessment Plan (SAP)? (§ 285.605)

This section describes a SAP. A SAP contains the plans for conducting data gathering and other activities, such as technology testing, to characterize a commercial lease, including the project easement. A SAP must include the results and supporting data from surveys such as physical characterization surveys and baseline surveys. It includes additional requirements for both simple and complex facilities. This section has been substantially revised. Based on comments received on the proposed rule, MMS has determined that geophysical and geological surveys, hazards surveys, archaeological surveys, and baseline collection studies (e.g., biological) conducted for the purpose of preparing SAPs, COPs, and GAPs may be permitted under the authority of the ACOE. In many instances, these types of activities may be verified under the ACOE's Nationwide Permit program. We have revised the regulation to remove the MMS approval of these types of surveys and the requirement to describe the survey designs in a SAP, COP, or GAP. Project proponents and lessees may now conduct these surveys pre- or post-lease/grant, subject to ACOE verification under the Nationwide Permit program or other appropriate approval and other applicable Federal law. However, MMS strongly encourages applicants to coordinate any pre- or post-lease/grant survey activities with MMS and the ACOE prior to their conducting such activities to ensure that the activities being proposed meet the conditions of the Nationwide Permits. Certain Nationwide Permits require that an applicant notify the ACOE and receive verification that an activity is covered under a Nationwide Permit prior to start of construction. Additionally, for competitively issued commercial leases, we will now prepare a NEPA document and a consistency determination that covers both the lease sale and site assessment activities. Applicants and lessees will be required to submit the results of their surveys and supporting data as part of their SAP, COP, or GAP. The data collected from these surveys must meet the technical requirements that MMS will set forth in guidance to be published after the rule is promulgated.

We also added language stating that MMS will withhold trade secrets and commercial or financial information that is privileged or confidential from public disclosure under exemption 4 of the FOIA and in accordance with the terms of § 285.113. This text was added in response to commenters who were concerned about the confidentiality of certain proprietary information in their plans.

One commenter did not believe the construction of two or three identical meteorological towers should trigger additional requirements, which will add significantly to the time and expense of SAP submission, and requested that § 285.605(c) be revised. The MMS revised § 285.605(d) to clarify the requirement. This section now states that an applicant must comply with the requirements of subpart G when they propose to construct a facility or combination of facilities that MMS determines to be complex or significant.

What must I demonstrate in my SAP? (§ 285.606)

This section provides details on the requirements for a SAP. The SAP must demonstrate how a lessee will conform to all applicable laws, implementing regulations, lease provisions, and stipulations. The activities conducted under a SAP must:

  • Conform to all applicable laws, implementing regulations, lease provisions and stipulations;
  • Be safe;
  • Not unreasonably interfere with other uses of the OCS, including those involved with national security or defense;
  • Not cause undue harm or damage to natural resources, life (including human and wildlife); property; or the marine, coastal, or human environment; or sites, structures, or objects of historical or archaeological significance;
  • Use best available and safest technology;
  • Use best management practices; and
  • Use properly trained personnel.

One revision was made to this section—to state that the SAP must demonstrate that the planned site assessment activities will collect the necessary information and data required for the COP. One commenter requested that MMS not require the exact language, “Best Available and Safest Technology.” The commenter stated that this requirement is overly Start Printed Page 19693restrictive and inappropriate for a new industry where the economics are challenging, the technology is new and evolving, and there are no accepted design standards. Instead, the commenter suggested, the MMS should require use of “reasonably available and safe technology,” noting that these facilities will be unmanned during most of their operation. Also, the commenter stated that the proposed § 285.606(a)(2) already requires that proposed activities be “safe,” and this is sufficient to address safety concerns. The commenter concluded that subsection (a)(5) be omitted until and unless a sufficient record of scientific measurement studies demonstrates a need for a tighter safety standard. We kept the requirement of “Best Available and Safest Technology,” in § 285.606(a)(5), as it is required for activities conducted pursuant to the OCS Lands Act (43 U.S.C. 1347(b), et seq.).

One commenter strongly supports the use of best management practices to ensure that potential adverse impacts associated with the development of renewable energy resources on the OCS are minimized to the greatest extent practicable. We were requested to publish the applicable best management practices in a specific guidance document, which would be updated on a regular basis to reflect recent adaptive management strategies, technology development, and monitoring results. The MMS prepared a Record of Decision (ROD) in December 2007, for its Programmatic EIS on the Alternative Energy Program. The EIS identified initial mitigation measures for the new program by adopting 15 interim policies and 52 initial best management practices. The ROD is published at http://ocsenergy.anl.gov/​documents/​docs/​OCS_​PEIS_​ROD.PDF. New measures will be identified as appropriate. The MMS will provide guidance to applicants after the promulgation of this rule. This guidance will incorporate these best management practices and interim policies.

How do I submit my SAP? (§ 285.607)

This section requires you to submit a paper copy and an electronic copy of the SAP to MMS at the address in § 285.110.

We did not make any changes to this section.

Reserved Sections (§§ 285.608 Through 285.609)

Sections 285.608 through 285.609 are reserved.

Contents of the Site Assessment Plan

What must I include in my SAP? (§ 285.610)

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

This section was revised to state the requirements for survey results and supporting data and to provide descriptions of any technology testing activities. We also made conforming revisions relating to FERC's role in regulating hydrokinetic activity.

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

This section requires the applicant to submit information needed to assist MMS in preparing compliance documents related to NEPA (EIS or EA) and other relevant laws, including MSA, ESA, and CZMA, that are required for SAP approval. As stated previously, MMS will prepare a NEPA review and consistency determination to cover both the lease sale and site assessment activities. If the action proposed under a competitively issued commercial lease does not change from that described in the environmental reviews conducted for the lease sale and site assessment activities, then no further environmental review would be required for a SAP. However, if MMS determines that the action has changed to the extent that the previously conducted environmental reviews do not cover the activities, then MMS would notify the applicant that additional information and reviews would be required. In this case, and for noncompetitively issued commercial leases, this includes information on resources, conditions, and activities listed in this section that may be affected by or may affect activities proposed and approved in your SAP.

This section also requires the applicant for a noncompetitively issued lease, or if notified by MMS for a competitive commercial lease, to submit a consistency certification for CZMA. The consistency certification must state that the proposed activities covered in the SAP comply with the State(s) approved CMP and that the applicant will conduct these activities in a manner consistent with such a program. For leases issued noncompetitively, the consistency certification must also include “information” and “analysis” as required by 15 CFR part 930, subpart D.

When leases are issued competitively, the consistency certification must also include “information” and “analysis” as required by 15 CFR part 930, subpart E.

We revised this section based on comments requesting us to clarify the NEPA and CZMA requirements.

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

This is a new section that explains that processing your SAP will be dependent upon how your commercial lease was issued. When your commercial lease is competitively issued, MMS will prepare a consistency determination for the lease sale and site assessment activities. If the action proposed under a competitively issued commercial lease does not change from that described in the environmental reviews conducted for the lease sale and site assessment activities, then no further environmental review would be required for a SAP. However, if MMS determines that the action has changed to the extent that the previously conducted environmental reviews do not cover the activities, then MMS would notify the applicant that additional information and reviews would be required. When your commercial lease is noncompetitively issued, you must furnish your SAP, consistency certification, and other information and analysis required by 15 CFR part 930, subpart D, to the State CZM agency and MMS concurrently. This section was added in response to comments requesting clarification of the CZMA process. Start Printed Page 19694

How will MMS process my SAP? (§ 285.613)

This section describes the MMS review process for a SAP. The MMS will review the SAP and determine if it contains all of the required information needed to complete the technical and environmental reviews. Multiple commenters suggested that, in order to help prevent regulatory delays, the MMS should include language that requires the MMS to determine completeness of the GAP/SAP/COP within a specific timeframe (e.g., 30 days for the SAP/GAP and 60 days for the COP). We did not include specific timeframes in the rule, since section 8(p) of the OCS Lands Act does not require them. However, in response to comments, after the final rule is published, we will issue guidance setting target deadlines for MMS processes.

After MMS has all of the information needed for its reviews, we will prepare appropriate NEPA documentation.

We will consult with relevant Federal, State, and local agencies and affected Indian tribes and provide to other Federal, State, and local agencies and affected Indian tribes relevant nonproprietary data and information pertaining to the proposed site assessment activities, as directed by subsections 8(p)(4) and (7) of the OCS Lands Act and by other relevant Federal statutory requirements (e.g., ESA and MSA). We may request additional information during the review and approval process; if you do not provide this information, MMS may disapprove your application.

After MMS completes the technical and environmental reviews, we may approve, disapprove, or approve with modifications your SAP. When a State objects to the consistency certification, MMS will not approve the plan if: (1) Consistency has not been conclusively presumed; or (2) the State objects to the applicant's consistency certification, and the Secretary of Commerce has not found that the permitted activities are consistent with the objectives of the CZMA or are otherwise necessary in the interest of national security. If we disapprove your SAP, we will provide the reasons for the disapproval, and you will have an opportunity to revise and resubmit your SAP. If we approve your SAP, it will be subject to terms and conditions set by MMS. We will specify these terms and conditions, and they will be incorporated into your SAP. Examples of the types of terms and conditions we may require include, but are not limited to, terms and conditions from an ESA incidental take statement; conservation recommendations resulting from essential fish habitat (EFH) consultations; and other safety, operational, or environmental protection measures. Also, you must certify compliance with certain terms and conditions identified by MMS. The certification would include summary reports, a description of mitigation measures and monitoring, the effectiveness of the mitigation measures, and new proposed mitigation measures.

We revised this section in response to comments requesting us to clarify the CZMA process that will be followed and requests to include affected Indian tribes in our consultation process. We also renumbered this section.

Activities Under an Approved SAP

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

After MMS approves the SAP, the applicant may begin to conduct approved activities. However, if you are constructing a facility or a combination of facilities deemed by MMS to be complex or significant, as provided in § 285.613(a)(1), you must comply with the requirements of subpart G and submit your Safety Management System, required by § 285.810, before construction may begin.

This section was revised to state that a lessee may begin approved activities that are not deemed by MMS to be complex or significant following approval of the SAP. In the proposed rule, MMS did not allow site assessment activities to be performed prior to approval of a SAP. Now those surveys may be conducted under the verification of the ACOE and other applicable Federal law, as described previously. However, MMS strongly encourages applicants to coordinate with MMS and the ACOE prior to conducting any pre- or post-lease/grant survey activities. Applicants will be required to submit the results of their surveys as part of their SAP, COP, or GAP.

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

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

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

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

Reserved Section (§ 285.616)

Section 285.616 is reserved.

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

The lessee or operator must notify MMS in writing, including a detailed description, prior to conducting any activities not described in the SAP, and we will determine if those activities require a revision to the approved SAP. We will also conduct periodic reviews of the activities being conducted under an approved SAP to ensure that they fall within the scope of the SAP. The SAP will likely be required to be revised if the applicant plans to:

  • Conduct activities not described in the approved SAP,
  • Change the size or type of facility or equipment used,
  • Change the surface location of a facility or structure,
  • Add another facility or structure not contemplated in the approved SAP,
  • Change the location of the onshore support base from one State to another or to a new base requiring expansion, or
  • Change the location of bottom disturbances by 500 feet (152 meters), or changes to any other activity specified by MMS.

A revision to the SAP may require NEPA, CZMA, and other reviews if MMS determines that the proposed revision could result in a significant change in impacts previously identified and evaluated; require any additional Federal authorizations; or involve activities not previously identified and evaluated.

The MMS may approve the revision to the SAP if the revision is designed to prevent or minimize adverse effects to the coastal and marine environments, including their physical, atmospheric, and biological components to the extent practicable; and if the revision is otherwise consistent with the provisions of subsection 8(p) of the OCS Lands Act.

We did not make any changes to this section.

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

After completing activities under the approved SAP, the lessee must initiate Start Printed Page 19695the decommissioning process for any facilities built for conducting SAP activities. However, if you submit a COP to MMS, you may leave the facilities in place while MMS reviews the COP. You are not required to start decommissioning if the facilities are authorized to remain in place under your approved COP. However, if MMS determines that the facilities built for conducting SAP activities may not remain in place, then the decommissioning process described in subpart I of this part must be initiated. Upon the termination of your lease, you must initiate this same decommissioning process for all facilities authorized by your approved COP.

We made conforming revisions to this section relating to FERC's role in regulating hydrokinetic activity.

Reserved Section (§ 285.619)

Section 285.619 is reserved.

Construction and Operations Plan for Commercial Leases

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

This section provides the basic requirements for the COP. The COP describes your construction, operations, and conceptual decommissioning plans under your commercial lease, including your project easement. The COP must include the location of the operations and facilities; the land, labor, material, and energy requirements associated with such operations and facilities; and the environmental and safety safeguards. The COP must cover all proposed activities and operations, including activities associated with constructing and maintaining project easements. The MMS must approve the COP before any construction and operation can begin.

It should be noted that COPs are required only for OCS renewable energy activities other than hydrokinetic activity. Since construction and operations relating to OCS hydrokinetic activity are regulated under the FERC licensing process, the construction and operations information for hydrokinetic commercial leases will be submitted to FERC in the form of a license application.

This section was revised to include a provision that MMS will withhold trade secrets and commercial or financial information that is privileged or confidential from public disclosure under exemption 4 of the FOIA and in accordance with the terms of § 285.113.

What must I demonstrate in my COP? (§ 285.621)

This section describes what the lessee must demonstrate in the COP. The COP must demonstrate how proposed activities conform to all applicable laws, implementing regulations, lease provisions and stipulations or conditions of the commercial lease. In addition, the COP must demonstrate that the proposed activity is:

  • Safe;
  • Does not unreasonably interfere with other uses of the OCS;
  • Does not cause undue harm or damage;
  • Uses best available and safest technology;
  • Uses best management practices; and
  • Uses properly trained personnel.

We did not make any changes to this section. One commenter requested that MMS not require the strict language “Best Available and Safest Technology.” The commenter stated that this requirement is overly restrictive and inappropriate for a new industry where the economics are challenging, the technology is new and evolving, and there are no accepted design standards. Instead, the commenter suggested, the MMS should require use of “reasonably available and safe technology,” noting that these facilities will be unmanned during most of their operation. Further, the commenter stated that the proposed § 285.606(a)(2) already requires that proposed activities be “safe,” which is sufficient to address safety concerns. The commenter suggested that subsection (a)(5) could be omitted until and unless a sufficient record of scientific measurement studies demonstrates a need for a tighter safety standard. We kept the requirement of “Best Available and Safest Technology,” as it is required for activities conducted pursuant to the OCS Lands Act. Best available and safest technologies are those that are economically feasible for use when failure of equipment would have a significant effect on safety, health, or the environment. We believe this is a reasonable requirement.

How do I submit my COP? (§ 285.622)

This section provides the requirements for submitting the COP and future revisions. The lessee must submit one hard copy and one electronic version of the COP to MMS. The lessee may submit information to cover the project easement with the original submission of the COP, or at a later time as a revision to the COP.

We did not make any changes to this section.

Reserved Sections (§§ 285.623 Through 285.624)

Sections 285.623 through 285.624 are reserved.

Contents of the Construction and Operations Plan

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

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

What must I include in my COP? (§ 285.626)

This section lists the project-specific information that must be included in the COP. We incorporated proposed § 285.625 to this section so that all of the information that is required in the COP is located together.

Before MMS will approve the site of the commercial facilities proposed for the project, you must submit the results of the listed surveys with supporting data to MMS in your COP. The required surveys and activities include:

  • Shallow hazard surveys;
  • Geological surveys;
  • Geotechnical surveys;
  • Archaeological resource surveys;
  • Biological surveys; and
  • An overall site investigation.

You should conduct these surveys and activities prior to the preparation of your SAP.

This section was revised to state the requirement to include the results and supporting data from the listed surveys in your COP. Results and supporting data from any socioeconomic surveys that you might conduct should be submitted with your COP, pursuant to § 285.627, to assist MMS in complying with NEPA and other Federal laws. The COP does not need to repeat information that was previously submitted in the SAP, but should reference such material.

Additional required information includes:

  • Identifying information;
  • The construction and operation concept;
  • Designation of an operator;
  • Lease stipulation and compliance information;
  • A location plat;
  • General structural and project design, fabrication, and installation information; including how you will use a CVA to review and verify each stage of the project (if required);
  • All cables and pipelines, including lines on project easements; Start Printed Page 19696
  • A description of the deployment activities;
  • A list of solid and liquid wastes generated;
  • A listing of chemical products used;
  • A description of any vessels, vehicles, and aircraft that will be used to support the activities;
  • A general description of the operating procedures and systems;
  • Decommissioning and site clearance procedures;
  • A listing of all Federal, State, and local authorizations, approvals, or permits that are required;
  • Proposed measures for avoiding, minimizing, reducing, eliminating, and monitoring environmental impacts;
  • A summary of information incorporated by reference;
  • A list of entities with whom you communicated, or with whom you will communicate, regarding potential impacts associated with the proposed activities;
  • Reference information;
  • Financial assurance statements;
  • CVA nominations (if required);
  • Construction schedule;
  • Air quality information as described in § 285.659; and
  • Any other information required by MMS.

This section was revised to change the word “consulted” to “communicated” and the word “consulting” to “communicate.” This clarifies our intent to require communication, not consultation, concerning the potential impacts of your proposed activities. Previously, the air quality requirements were in subpart F, and we integrated the air quality requirements into this section. The MMS will clearly describe all plan requirements in guidance to applicants after promulgation of the rule. The MMS also plans to hold workshops to explain the provisions of the rule following publication.

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

This section discusses additional submittal requirements to assist MMS in complying with NEPA and other relevant laws, including MSA, ESA, and CZMA. The information must include the resources, conditions, and activities listed in this subpart that could be affected by proposed activities or that could affect proposed construction, operation, and decommissioning activities. A lessee may reference information that was included in the MMS NEPA review prepared for the lease. The lessee must include one copy of the consistency certification for the project to verify compliance with each State's approved CMP, including required “information” and “analysis” per § 285.627(a)(9). Also, the lessee must submit an oil spill response plan and the Safety Management System for the project.

This section was expanded in response to comments requesting more detail on the information requirements for MMS compliance with NEPA and other relevant laws. We included a new table that describes this information more clearly. Additionally, MMS will prepare guidance to applicants after the rule is promulgated and will hold workshops on the final rule. This section was also modified to clearly state that MMS will require a lessee to submit an electronic version of its consistency certification so that MMS will be able to easily provide it to State CZM agencies.

How will MMS process my COP? (§ 285.628)

This section discusses how MMS will review the submitted COP and determine if it contains the information necessary to conduct the technical and environmental reviews. The MMS will notify the applicant if the COP lacks any information needed for the reviews. We will prepare appropriate NEPA documentation and forward one copy of the COP, consistency certification, and associated data and information under the CZMA to the State's CZM agency. When appropriate, we will coordinate and consult with, and provide relevant, nonproprietary data and information to, relevant State, Federal, and local agencies and affected Indian tribes, as directed by subsections 8(p)(4) and (7) of the OCS Lands Act and by other relevant Federal statutory requirements (e.g., ESA and MSA) and Executive Orders. We may request additional information during the review and approval process; if you do not provide this information, MMS may disapprove your COP.

After MMS completes the technical and environmental reviews, we may approve, disapprove, or approve with modifications your COP. When a State objects to the consistency certification, MMS will not approve the plan if: (1) Consistency has not been conclusively presumed; or (2) the State objects to the applicant's consistency certification, and the Secretary of Commerce has not found that the permitted activities are consistent with the objectives of the CZMA or are otherwise necessary in the interest of national security. If we approve your COP, it will be subject to terms and conditions set forth by MMS. The lessee must certify compliance with certain terms and conditions required under § 285.633(b). If MMS disapproves your COP, we will inform you of the reasons, and you will have an opportunity to resubmit a revised plan making the necessary corrections. The MMS may suspend the term of your lease, as appropriate, to allow this to occur. If a project easement is approved, MMS will issue an addendum to the lease specifying the terms of the project easement.

We revised this section to include coordination and consultation with affected Indian tribes. We also revised the section based on comments requesting that we clearly state how MMS's decision process will take place when a State objects to a consistency certification.

May I develop my lease in phases? (§ 285.629)

In the COP, the lessee may request to develop the commercial lease in phases. To support this request, the lessee must provide details about the portions of the lease that will be initially developed for commercial operations, and those portions of the lease that will be reserved for subsequent phased development.

This option to develop a lease in phases applies only for non-hydrokinetic lease activities. Those lessees conducting hydrokinetic activities requiring a FERC license may only develop their project per the terms of their license.

We did not make any changes to this section.

Reserved Section (§ 285.630)

Section 285.639 is reserved.

Activities Under an Approved COP

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

After MMS approves the COP, the lessee must commence construction by the date given in the construction schedule, and included as a part of your approved COP, unless MMS approves a deviation from the schedule.

We did not make any changes to this section.

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

This section describes documents that must be submitted to MMS for review, before construction and installation of facilities may begin under an approved COP. This includes a Facility Design Report and a Fabrication and Installation Report for facilities proposed for commercial operations. The requirements for these reports are Start Printed Page 19697found in § 285.701 and 702. The activities described in these reports must fall within the scope of the approved COP. If they are not within the scope of the approved COP, the lessee will be required to submit a revision to the COP for MMS approval, before commencing the activity.

We did not make any changes to this section.

How do I comply with my COP? (§ 285.633)

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

We did not make any changes to this section.

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

The lessee or operator must notify MMS in writing, including a detailed description, prior to conducting any activities not described in the COP, and we will determine if those activities require a revision to the approved COP. We will also conduct periodic reviews of the activities being conducted under an approved COP to ensure that they fall within the scope of the COP. The COP will likely be required to be revised if the lessee plans to:

  • Conduct activities not described in the approved COP;
  • Change the size or type of facility or equipment used;
  • Change the surface location of a facility or structure;
  • Add another facility or structure not contemplated in the approved COP;
  • Change the location of the onshore support base from one State to another or to a new base requiring expansion;
  • Change the location of bottom disturbances by 500 feet (152 meters);
  • Respond to structural failure of one or more facilities; or
  • Make changes to any other activity specified by MMS.

A revision to the COP may require NEPA, CZMA, and other reviews if MMS determines that the proposed revision could result in a significant change in impacts previously identified and evaluated; require any additional Federal authorizations; or involve activities not previously identified and evaluated.

The MMS may approve the revision to the COP if the revision is designed to prevent or minimize adverse effects to the coastal and marine environments, including their physical, atmospheric, and biological components to the extent practicable; and the revision is otherwise consistent with the provisions of subsection 8(p) of the OCS Lands Act.

Commenters recommended that a distinct recovery plan to address structural failure of one or more facilities, regardless of the cause, be a mandatory component in the rule rather than a general description of operating procedures in case of emergencies. In response to this comment, the rule requires that the lessee submit to MMS a revised COP (see § 285.634(c)(7)) to describe its response to a structural failure of one or more facilities. The MMS will conduct a NEPA evaluation of the proposed revision to the COP and develop specific terms and conditions of approval for the project. The MMS requires certification of compliance with certain terms and conditions of plans.

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

The lessee must notify MMS any time commercial operations are ceased without an MMS approved suspension. We may cancel the lease if activities are ceased for an indefinite period that is longer than 6 months, and you must initiate the decommissioning process described in subpart I of this part.

We did not make any changes to this section.

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

The lessee must notify MMS, in writing, of the following events within the time periods provided:

  • No later than 30 days after commencing activities associated with the placement of facilities on the lease area under a Fabrication and Installation Report;
  • No later than 30 days after completion of construction and installation activities under a Fabrication and Installation Report; and
  • At least 7 days before commencing commercial operations.

We did not make any changes to this section.

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

For non-hydrokinetic projects (i.e., wind), the lessee may commence commercial operations 30 days after the CVA or project engineer has submitted to MMS the final report for the fabrication and installation review.

If the lessee's proposed activities require a FERC license or exemption (i.e., hydrokinetic activities), then the terms of the license or exemption govern when the lessee may begin commercial operations.

We changed the rule to now allow a CVA or a project engineer to submit the fabrication and installation review to MMS and to acknowledge FERC license requirements relating to initiation of commercial hydrokinetic operations. These revisions were in response to comments.

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

After completing operations on your lease, you must initiate the decommissioning process as set forth in subpart I of this part. If your project activities are instead governed by a FERC license, then the terms of your FERC license and MMS requirements will dictate your decommissioning activities.

We made conforming revisions to this section relating to FERC's role in regulating hydrokinetic activity.

Reserved Section (§ 285.639)

Section 285.639 is reserved.

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

What is a General Activities Plan (GAP)? (§ 285.640)

The GAP describes proposed activities and operations for the assessment and development of a limited lease or grant including, if applicable, a project easement. A GAP contains the plans for resource data gathering, operations, and the testing of technology devices to characterize a limited lease or grant. A GAP must include the results and supporting data from surveys such as physical characterization surveys and baseline surveys. It includes requirements for construction, activities, and Start Printed Page 19698decommissioning plans for all planned facilities, including onshore and support facilities that you will construct and use for your project including project easements. It includes additional requirements for both simple and complex facilities, or if you intend to apply for a project easement. You must receive MMS approval of your GAP before you can begin activities on your lease or grant. For a ROW grant or RUE grant that is issued competitively, you must submit your GAP within 6 months of issuance. For a ROW grant or RUE grant issued noncompetitively, you must submit your GAP within 60 days of the determination of no competitive interest. The MMS will evaluate your request for a noncompetitive grant and GAP simultaneously.

This section has been substantially revised. Based on comments received on the proposed rule and a re-interpretation of subsection 8(p) of the OCS Lands Act, as amended, MMS has determined that geophysical and geological surveys, hazards surveys, archaeological surveys, and baseline collection studies (e.g., biological) conducted for the purpose of preparing SAPs, COPs, and GAPs are permitted under the authority of the ACOE. In many instances, these types of activities may be verified under the ACOE Nationwide Permit program. We have revised the rule to remove the MMS approval of these types of surveys and the requirement to describe the survey designs in a SAP, COP, or GAP. Project proponents may now conduct these surveys pre- or post-lease/grant, subject to ACOE verification under the Nationwide Permit program or other appropriate authorization and other applicable Federal law. However, MMS strongly encourages applicants to coordinate any pre- or post-lease/grant survey activities with MMS and the ACOE prior to their conduct to ensure that the activities being proposed meet the conditions of the Nationwide Permits. Certain Nationwide Permits require that an applicant notify the ACOE and receive verification that an activity is covered under a Nationwide Permit prior to start of construction. Lessees will be required to submit the results of their surveys and supporting data as part of their SAP, COP, or GAP.

We also added provisions in this section stating that MMS will withhold trade secrets and commercial or financial information that is privileged or confidential from public disclosure under exemption 4 of the FOIA and in accordance with the terms of § 285.113. This text was added in response to commenters who were concerned about the confidentiality of certain proprietary information in their plans.

One commenter did not believe the construction of two or three identical meteorological towers should trigger additional requirements, which will add significantly to the time and expense of a GAP submission, and requested that proposed § 285.640(b) be revised. The MMS revised the rule to clarify the requirement. We revised § 285.645(c) to state that a lessee must comply with the requirements of subpart G if the lessee proposes to construct a facility or combination of facilities which MMS determines to be complex or significant.

What must I demonstrate in my GAP? (§ 285.641)

The GAP must demonstrate that the applicant plans and is prepared to conduct the proposed activities in a manner that:

  • Conforms to all applicable laws (e.g., NEPA, MSA, ESA, and CZMA), implementing regulations, lease provisions, and stipulations;
  • Is safe;
  • Does not unreasonably interfere with other uses of the OCS, including those involved with national security or defense;
  • Does not cause undue harm or damage to natural resources; life (including human and wildlife); property; the marine, coastal, or human environment; or sites, structures, or objects of historical or archaeological significance;
  • Uses best available and safest technology;
  • Uses best management practices; and
  • Uses properly trained personnel.

We did not make any changes to this section. One commenter requested that MMS not require the strict language “Best Available and Safest Technology.” The commenter stated that this requirement is overly restrictive and inappropriate for a new industry where the economics are challenging, the technology is new and evolving, and there are no accepted design standards. Instead, the commenter suggested that the MMS should require use of “reasonably available and safe technology,” noting that these facilities will be unmanned during most of their operation. The commenter stated that proposed § 285.641(e) already requires that proposed activities be “safe,” and this is sufficient to address safety concerns. The commenter recommended that subsection (a)(5) be omitted until and unless a sufficient record of scientific measurement studies demonstrates a need for a tighter safety standard. We kept the requirement of “Best Available and Safest Technology,” as it is required for activities conducted pursuant to the OCS Lands Act.

How do I submit my GAP? (§ 285.642)

This section provides the requirements for submitting the GAP. The lessee must submit one paper copy and one electronic version of the GAP to MMS. The lessee may submit information to cover the project easement with the original submission of the GAP, or at a later time as a revision to the GAP.

We did not make any changes to this section.

Reserved Sections (§§ 285.643 Through 285.644)

Sections 285.643 through 285.644 are reserved.

Contents of the General Activities Plan

Section 285.645 What must I include in my GAP?

This section lists the project-specific information that must be included in the GAP.

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

For the installation of any facilities (e.g., meteorological tower, meteorological buoy, technology testing Start Printed Page 19699device, anchored vessels, transmission substations), you are required to also include survey results and supporting data from: Geotechnical, shallow hazards, archaeological, geological, and biological surveys.

This section was revised to state the requirement for survey results and supporting data and descriptions of any technology testing activities.

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

This section discusses the information that must be submitted with the GAP to assist MMS in complying with NEPA and other relevant laws. For NEPA compliance, the lessee or grantee must provide information on resources, conditions, and activities listed in this section that could be affected by or could affect your proposed activities. In addition, the lessee or grantee must submit information for CZMA compliance including one copy of the consistency certification required by CZMA and required “information” and “analysis” as required in § 285.646.

This section was expanded in response to comments requesting more detail on the information requirements for MMS compliance with NEPA and other relevant laws. We included a new table that describes this information more clearly. Some commenters requested us to describe in the rule the specific requirements for baseline information. The MMS will prepare guidance to applicants after the rule is promulgated and will hold workshops on the final rule.

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

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

How will MMS process my GAP? (§ 285.648)

This section discusses how MMS will review the submitted GAP and determine if it contains the information necessary to conduct our technical and environmental reviews. The MMS will review the submitted GAP and determine if it contains all the required information necessary to conduct our technical and environmental reviews. If the GAP lacks information needed for the reviews, we will notify the applicant and request the necessary information. We will prepare appropriate NEPA documentation. When appropriate, we will coordinate and consult with relevant State and Federal agencies as directed by subsections 8(p)(4) and (7) of the OCS Lands Act and by other relevant Federal statutory requirements (e.g. ESA and MSA), and provide to other State and Federal agencies relevant data and information pertaining to the proposed site assessment activities. We may request additional information during the review and approval process; if you do not provide this information, MMS may disapprove your application.

After MMS completes the technical and environmental reviews, MMS may approve, disapprove, or approve with modifications your GAP. When a State objects to the consistency certification, MMS will not approve the plan if: (1) Consistency has not been conclusively presumed; or (2) the State objects to the applicant's consistency certification, and the Secretary of Commerce has not found that the permitted activities are consistent with the objectives of the CZMA or are otherwise necessary in the interest of national security. If we disapprove your GAP, we will provide the reasons for the disapproval, and you will have an opportunity to revise and resubmit your GAP. If we approve your GAP, it will be subject to terms and conditions set forth by MMS. We will specify these terms and conditions, and they will be incorporated into your GAP. Examples of the types of terms and conditions we may require include, but are not limited to: (1) Terms and conditions from an ESA incidental take statement; (2) conservation recommendations resulting from EFH consultations; and (3) other safety, operational, or environmental protection measures. Also, you must certify compliance with certain of these terms and conditions as identified by MMS. The certification would include summary reports, a description of mitigation measures and monitoring, the effectiveness of the mitigation measures, and new proposed mitigation measures. If a project easement is approved, MMS will issue an addendum to the lease specifying its terms.

This section was revised in response to comments to clarify the CZMA process for a GAP.

Reserved Section (§ 285.649)

Section 285.649 is reserved.

Activities Under an Approved GAP

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

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

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

After MMS approves the GAP, the lessee may begin to conduct approved activities. However, the lessee also must comply with the requirements of subpart G and submit your Safety Management System, required by § 285.810, before construction may begin, if the lessee is applying for a project easement, or installing a facility or a combination of facilities deemed by MMS to be complex or significant as provided in § 285.648(a)(1).

Additionally, in the proposed rule, MMS did not allow site assessment activities to be performed prior to approval of a GAP. Now those surveys may be conducted under the authority of the ACOE and other applicable Federal law, as described previously. However, MMS strongly encourages applicants to coordinate any pre- or post-lease/grant survey activities with MMS and the ACOE prior to conducting such activities. Lessees will be required to submit the results of their surveys as part of their SAP, COP, or GAP. The data collected from these surveys must meet the technical requirements that MMS will set forth in guidance to be issued after the rule is promulgated.

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

For a limited lease, after MMS approves the GAP, the lessee must conduct the approved activities within 5 years unless MMS renews the term. For an ROW grant or RUE grant, the time for conducting approved activities is provided in the terms of the grant.

We did not make any changes to this section. Start Printed Page 19700

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

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

We did not make any changes to this section.

Reserved Section (§ 285.654)

Section 285.654 is reserved.

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

The lessee or grantee must notify MMS in writing prior to conducting any activities not documented in the GAP. The MMS will determine if those activities require a revision to the approved GAP. We will also conduct periodic reviews of the activities being conducted under an approved GAP to ensure that they fall within the scope of the GAP. The GAP will likely be required to be revised if you plan to:

  • Conduct activities not described in the approved GAP;
  • Change the size or type of facility or equipment used;
  • Change the surface location of a facility or structure;
  • Add another facility or structure not contemplated in the approved GAP;
  • Change the location of the onshore support base from one State to another or to a new base requiring expansion;
  • Change the location of bottom disturbances by 500 feet (152 meters);
  • Respond to structural failure of one or more facilities; or
  • Change to any other activity specified by MMS.

Revisions to the GAP will require NEPA and other reviews if MMS determines that the proposed revision could result in a significant change in impacts previously identified and evaluated; could require any additional Federal authorizations; or could involve activities not previously identified and evaluated.

The MMS may approve the revision to the GAP if the revision is designed not to cause undue harm or damage to natural resources; or to sites, structures, or objects of historical or archaeological significance; and the revision is otherwise consistent with the provisions of subsection 8(p) of the OCS Lands Act.

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

The lessee or grantee must notify the MMS upon ceasing activities under an approved GAP without an approved suspension. If activities are ceased for an indefinite period that exceeds 6 months, MMS may cancel the lease or grant under § 285.437, and the lessee or grantee must initiate the decommissioning process, as set forth in subpart I of this part.

We did not make any changes to this section.

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

After completing the activities approved under the GAP, the lessee or grantee must initiate the decommissioning process, as required in subpart I of this part.

We did not make any changes to this section.

Cable and Pipeline Deviations

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

This section discusses the requirements related to the construction of cables, pipelines, and facilities so as to minimize deviations from the approved plan under the limited lease or grant.

If MMS determines that significant changes have occurred requiring an adjustment to your lease or grant before construction of a cable or pipeline, it will consider modification to your ROW grant, RUE grant, or lease addendum for a project easement in connection with your COP or GAP. This section has been revised to make clear that modifications to your grant or lease addendum would require MMS and you to agree on such modification. If MMS determines that a deviation occurred after you have constructed your cable or pipeline, you would be required to notify affected lessees or ROW/RUE grant holders, and you would be required to relinquish the unused portion of the lease or grant. Substantial deviations could result in the cancellation of the lease or grant.

We did not make any changes to this section.

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

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

Subpart G—Facility Design, Fabrication, and Installation

Overview

As indicated in the discussion of subpart F, your plan (SAP, COP, or GAP) would include general descriptions for project design and facility fabrication and installation. Subpart G describes the various detailed technical reports that the MMS will require lessees, operators, and grant holders to submit that address the final design, fabrication, and installation of facilities on a lease or grant. These reports will be submitted after MMS approves the SAP, COP, or GAP, as applicable.

Subpart G also describes a third-party verification process that will require lessees, operators, and grant holders to use a CVA to verify and certify that projects are designed, fabricated, and installed in conformance with accepted engineering practices and with the submitted reports. However, MMS may waive the requirement to use a CVA, under certain conditions. If you are not required to use a CVA, your project engineer will perform functions similar to the CVA.

Certified Verification Agent (CVA)

The CVA is responsible for conducting an independent assessment of the facility design and the fabrication and installation processes to ensure that facilities are designed, fabricated, and installed in conformance with accepted engineering practices and the approved plans and applications. Start Printed Page 19701

The CVA will also ensure that repairs and major modifications are completed in conformance with accepted engineering practices. The CVA will certify and report to the lessee, operator, or grant holder and MMS on the status of each phase included in the Facility Design Report and the Fabrication and Installation Report. The CVA must submit interim reports, as required by the Director, and a final report covering the adequacy of each phase.

The MMS received comments requesting that we either remove the CVA requirement or only require CVAs on high-impact or high-risk projects. Concerns with cost, redundancy, and the fact that most projects will be developed under a project-financing structure, with the lender providing an independent engineer to review design and construction, were cited as reasons for forgoing the CVA. In response to these concerns, MMS is including a provision that will allow the lessee, grant holders, or operators to request a waiver of the CVA requirement.

The MMS will consider waivers on a case-by-case basis. Requests for waivers must be submitted with the SAP, COP, or GAP, and we will provide a decision on the waiver, along with the decision on the SAP, COP, or GAP. However, if MMS waives the CVA requirement, the project engineer will be expected to perform the same duties and responsibilities as the CVA.

To receive a waiver, the company must demonstrate to MMS the following:

  • For design of the structure, you must demonstrate that the facility will be of a standardized design that has been used successfully in a similar environment and the installation will be designed in conformance with accepted engineering practices.
  • For the fabrication of your structure(s), you must demonstrate that the facility manufacturer has successfully manufactured similar facilities and the facility will be fabricated in conformance with accepted engineering practices.
  • For the installation of your structure(s), you must demonstrate that the contractor has successfully installed similar facilities in a similar offshore environment and your structure(s) will be installed in conformance with accepted engineering practices.
  • For repairs and major modifications of a structure, you must demonstrate that the repairs and major modifications are completed in conformance with accepted engineering practices.

Facility Design Report

This report provides MMS with a detailed description of the proposed facility or facilities and locations on the OCS. The lessee, operator, or grant holder is required to provide to MMS a complete set of structural drawings, structural loading information, detailed design criteria, and foundation information including mooring or tethering systems in the case of a floating facility. The CVA, nominated in your plan, will conduct an independent assessment of the design of the facility and ensure that it is designed to withstand the environmental and functional load conditions appropriate for the intended service life at the proposed location. The CVA must submit interim reports, as required by the Director, and a final report covering the adequacy of the design phase.

Fabrication and Installation Report

Under the final rule, Fabrication and Installation Reports will be combined. The Fabrication and Installation Report describes the plans for both the facility's fabrication (including the manufacture, assembly, and construction) and installation process. The report will include a schedule for fabrication and installation as well as detailed engineering and environmental information. The CVA, nominated in the SAP, COP or GAP, or the project engineer, will conduct an independent assessment of the fabrication and installation phases. The CVA or project engineer must use good engineering judgment and practices in conducting an independent assessment of fabrication and installation activities and ensure that these activities are conducted according to the approved applications. The CVA or project engineer must submit interim reports, as required by the Director, and a final report covering the adequacy of the fabrication and installation phase.

After fabrication and installation activities are completed, the CVA or project engineer must submit a certification statement certifying that the fabrication and installation were conducted in accordance with accepted engineering practices.

Section-by-Section Discussion for Subpart G

Reports

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

This section lists two reports required prior to installing facilities: (1) Facility Design Report; and (2) Fabrication and Installation Report. The MMS has 60 days to review these reports and notify the applicant of any objections. If MMS does not have any objections, the applicant may begin to construct and install the facilities at the end of the 60-period.

If there are any objections, MMS will notify you either verbally or in writing within 60 days of receipt. After notification of objections, MMS may follow up with written correspondence outlining its specific objections to the report and identifying certain actions necessary to resolve the agency's objections. You cannot commence activities addressed in such report until all objections are resolved to MMS's satisfaction.

The MMS did not make any changes to this section.

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

The Facility Design Report provides specific details of the design of all facilities, including cables and pipelines, outlined in your approved SAP, COP, or GAP. This report must demonstrate that the design conforms to the responsibilities of a lessee contained in these regulations. This section includes a list of required contents for the report and details the required contents of each element of the report. The report must include:

  • A cover letter;
  • A location plat;
  • Front, side, and plan view drawings;
  • A complete set of structural drawings;
  • A summary of environmental data used for design;
  • A summary of the engineering design data;
  • A complete set of design calculations;
  • Project-specific studies used in the facility design or installation;
  • Description of the loads imposed on the facility;
  • A geotechnical report; and
  • A certification statement and location of records.

In response to comments, we added a provision to this section that clarifies that MMS will withhold trade secrets and commercial or financial information that is privileged or confidential from public disclosure under exemption 4 of the FOIA and in accordance with the terms of § 285.113.

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

The Fabrication and Installation Report describes how facilities will be Start Printed Page 19702fabricated and installed in accordance with the design criteria identified in the Facility Design Report, the approved SAP, COP, or GAP; and generally accepted industry standards and practices. The Fabrication and Installation Report must demonstrate how your facilities will be fabricated and installed in a manner that conforms to the responsibilities of a lessee contained in these regulations. This section includes a list of required contents for the report, and details the required contents of each element of the report. The report must include:

  • A cover letter;
  • A schedule for fabrication and installation;
  • Fabrication information;
  • Installation process information;
  • Federal, State, and local permits (e.g., EPA, ACOE);
  • Environmental information; and
  • Project easement design.

In response to comments, we added a provision to this section that clarifies that MMS will withhold trade secrets and commercial or financial information that is privileged or confidential from public disclosure under exemption 4 of the FOIA and in accordance with the terms of § 285.113. We also added a provision that will allow MMS to waive the requirement for a CVA for the Fabrication and Installation Report, based on criteria added to § 285.705.

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

This section requires a report from the lessee on major repairs and modifications to certify that the repairs and modifications to the project conform with accepted engineering practices. The report must also identify the location of all records pertaining to the major repairs or major modifications.

A major repair is a corrective action involving structural members affecting the structural integrity of a portion of or all the facility. A major modification is an alteration involving structural members affecting the structural integrity of a portion of or all the facility.

We moved this section from § 285.711, because we changed the requirement to always use a CVA for project modifications and repairs. We revised this section to state that MMS may require the lessee to use a CVA for project modifications and repairs.

Reserved Section (§ 285.704)

Section 285.704 is reserved.

Certified Verification Agent

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

This section details the responsibilities of the CVA. The CVA must ensure that facilities are designed, fabricated, and installed in conformance with accepted engineering practices, the Facility Design Report, and the Fabrication and Installation Report, and ensure that repairs and major modifications are completed in conformance with accepted engineering practices. The CVA must provide reports of all incidents that affect the design, fabrication, and installation of the project and its components.

In response to comments, we added a provision to this section that allows MMS to waive the requirement to use a CVA. The new provision describes the criteria that MMS will use to decide whether to waive the CVA; this revision was made in conjunction with those in §§ 285.701 and 285.702. In addition, we changed the title of this section from “What is the function of a Certified Verification Agent (CVA)?” to “When must I use a Certified Verification Agent (CVA)?” to reflect the changes made in the purpose of this section. Even if MMS waives the requirement that you use a CVA, the project engineer must perform the same duties and responsibilities as the CVA.

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

A CVA must be nominated in the SAP, COP, or GAP, as applicable. This section describes the process for nominating the CVA and the information that must be included in the qualifications statement. The section also requires that the verification be conducted by or under the direct supervision of registered professional engineers and prohibits a CVA from functioning in a way to create a conflict of interest.

We did not make any changes to this section.

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

The CVA must certify to MMS that the facility is designed to withstand the environmental and functional load conditions for the intended life at the proposed location. This section lists those elements of the design phase that the CVA must independently assess. These elements include:

  • Planning criteria;
  • Operational requirements;
  • Environmental loading data;
  • Load determinations;
  • Stress analyses;
  • Material designations;
  • Soil and foundation conditions;
  • Safety factors; and
  • Other pertinent parameters of the proposed design.

For floating facilities, the CVA must ensure that any requirements of the U.S. Coast Guard for structural integrity and stability (e.g., verification of center of gravity, etc.) are met.

We did not make any changes to this section.

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

The CVA or project engineer must certify to the MMS that the facilities are fabricated and installed as proposed in the approved Facility Design Report and the Fabrication and Installation Report. This section details the monitoring and inspection functions of the CVA or project engineer during this phase of the project. It also requires the CVA or project engineer to inform the lessee when procedures or design specifications are changed.

For the fabrication and installation review, the CVA or project engineer must:

  • Use good engineering judgment and practice in conducting an independent assessment of the fabrication and installation activities;
  • Monitor the fabrication and installation of the facility;
  • Make periodic onsite inspections while fabrication is in progress;
  • Make periodic onsite inspections while installation is in progress; and
  • Certify in a report that project components are fabricated and installed in accordance with accepted engineering practices, the approved COP, SAP, or GAP, and the Fabrication and Installation Report.

The report must identify the location of all records pertaining to fabrication and installation. The lessee or grantee may commence commercial operations or other approved activities 30 days after MMS receives the certification report, unless MMS notifies the applicant within that time period of objections to the certification report.

The CVA or project engineer must monitor the fabrication and installation of the facility to ensure that it is built and installed according to the Facility Design Report and Fabrication and Installation Report. If the CVA or project engineer finds that fabrication and installation procedures are changed or design specifications are modified, the CVA or project engineer must inform the applicant.

We made minor edits to this section to include the applicable project engineer functions. Start Printed Page 19703

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

The CVA or project engineer must make periodic onsite inspections while fabrication of the facility is in progress. The CVA or project engineer must verify the following items during these inspections:

  • Quality control by lessee (or grant holder) and builder;
  • Fabrication site facilities;
  • Material quality and identification methods;
  • Fabrication procedures specified in the Fabrication and Installation Report, and adherence to such procedures;
  • Welder and welding procedure qualification and identification;
  • Structural tolerances specified, and adherence to those tolerances;
  • The nondestructive examination requirements, and evaluation results of the specified examinations;
  • Destructive testing requirements and results;
  • Repair procedures;
  • Installation of corrosion-protection systems and splash-zone protection;
  • Erection procedures to ensure that overstressing of structural members does not occur;
  • Alignment procedures;
  • Dimensional check of the overall structure, including any turrets, turret-and-hull interfaces, any mooring line and chain and riser tensioning line segments; and
  • Status of quality-control records at various stages of fabrication.

For any floating facilities, the CVA or project engineer must ensure that any requirements of the U.S. Coast Guard for structural integrity and stability (e.g., verification of center of gravity, etc.) have been met. The CVA or project engineer must also consider foundations, foundation pilings and templates, and anchoring systems and mooring or tethering systems.

We made minor revisions to this section to include the applicable project engineer functions.

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

The CVA or project engineer must make periodic onsite inspections while installation is in progress. The CVA or project engineer must verify, survey, witness, or check the following items during facility installation:

  • Loadout and initial flotation procedures;
  • Towing operations procedures to the specified location, and review the towing records;
  • Launching and uprighting activities;
  • Submergence activities;
  • Pile or anchor installations;
  • Installation of mooring and tethering systems;
  • Final deck and component installations; and
  • Installation at the approved location according to the Facility Design Report and the Fabrication and Installation Report.

For a fixed or floating facility, the CVA or project engineer must verify that proper procedures were utilized during the loadout of the jacket, decks, piles, or structures from each fabrication site; the actual installation of the facility or major modification; and the related installation activities.

For a floating facility, the CVA or project engineer must verify that proper procedures were utilized during the loadout of the facility; the installation of foundation pilings and templates, and anchoring systems; and the installation of the mooring and tethering systems.

The CVA or project engineer must conduct an onsite survey of the facility after transportation to the approved location. The CVA or project engineer must spot-check the equipment, procedures, and recordkeeping as necessary to determine compliance with the applicable documents incorporated by reference and the regulations under this part.

In response to comments, MMS changed this section to require the CVA or project engineer to verify that proper procedures were followed during the operations addressed in the section. This change no longer requires the CVA or project engineer to witness all of the activities, but rather to verify that proper procedures were used.

Reserved Section (§ 285.711)

Section 285.711 is reserved.

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

This section details when the CVA or project engineer must submit reports to MMS and the lessee or grantee, including interim reports, as requested by the MMS. For each report, the CVA or project engineer must submit one electronic copy and one paper copy to MMS. In each report, the CVA or project engineer must:

  • Give details of how, by whom, and when the CVA or project engineer activities were conducted;
  • Describe the CVA's or project engineer's activities during the verification process;
  • Summarize the CVA's or project engineer's findings; and
  • Provide any additional comments that the CVA or project engineer deems necessary.

We made minor revisions to this section to include the applicable project engineer functions.

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

After receiving confirmation of compliance with the Fabrication and Installation Report from the CVA or project engineer, the lessee or grantee must notify MMS within 10 business days after commencing commercial operations.

We made minor edits to this section to include the applicable project engineer functions.

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

This section provides requirements for records that the lessee must maintain for the duration of the project, until MMS releases the required financial assurance. The lessee or grantee must compile, retain, and make these records available to MMS representatives. These records include:

  • The as-built drawings;
  • The design assumptions and analyses;
  • A summary of the fabrication and installation examination records;
  • The inspection results; and
  • Records of repairs not covered in the inspection report.

The lessee or grantee must record and retain the original material test results of all primary structural materials during all stages of construction. The lessee or grantee must provide MMS with the location of these records in the certification statement.

We did not make any changes to this section.

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

Overview

This subpart describes requirements to prevent or minimize the likelihood of harm or damage to the marine and coastal environments and to promote safe operations, including their physical, atmospheric, and biological components. The MMS intends to use adaptive management practices to help ensure that renewable energy activities are conducted safely. Such a system relies on demonstrating and validating actual operating performance. The MMS then will require adjustments to Start Printed Page 19704mitigation and monitoring activities on a case-by-case basis based on operating experiences. You must certify compliance with certain terms and conditions that the MMS will specify and incorporate into the SAP, COP, or GAP.

We retitled this subpart to reflect FERC's role in regulating hydrokinetic activity. Since FERC will regulate construction and operations activity on hydrokinetic commercial leases, this subpart applies only to the renewable energy activities that will be regulated by MMS under approved SAPs, COPs, and GAPs.

Air Quality

The air quality requirements were moved to subpart F.

Safety Management System

The safety management system would include, as applicable:

  • Remote monitoring, control, and shutdown capabilities;
  • Emergency response procedures;
  • Fire suppression equipment;
  • Testing procedures; and
  • Training.

These safety management provisions also cover maintenance and equipment shutdowns, including reporting and notification requirements, as well as requirements relating to both MMS and operator self inspections. The safety management system would be required to be submitted as part of the COP.

Maintenance and Shutdowns

This section describes when operators are required to notify MMS of shutdowns. Notification is required when safety equipment is taken out of service for more than 12 hours. If safety equipment is removed from service for more than 60 days, the operator must submit a written notice to MMS. The operator must also notify MMS when the equipment is returned to service.

Equipment Failure and Adverse Environmental Affects

These provisions address equipment failure and adverse effects of environmental or other conditions. Operators are required to notify MMS and repair any equipment failure, including pipelines and cables, as soon as practicable. The MMS may require an analysis to determine the cause of the failure. The final rule has been revised to clarify what repairs must be reported to MMS. The rule also states that MMS may require a lessee to revise its COP depending on the magnitude of the damages to facilities. If environmental or other conditions adversely affect a cable, pipeline, or facility, the operator must submit a corrective action plan to MMS; take the actions described in the plan; and submit a report to MMS of the actions taken.

Inspections

The MMS will conduct periodic scheduled and unscheduled inspections of OCS renewable energy facilities. The purpose of an MMS inspection is to ensure that an operator is conducting operations in accordance with all laws, regulations, and MMS-approved plans and to verify that proper safety equipment is correctly installed and working properly.

Operators are required to develop a self-inspection program for all facilities that covers all structures including all parts above and below the waterline. Each operator must inspect for corrosion and other factors affecting the structural integrity of the facility. Operators also must submit annually a summary of inspections, including how they conducted the inspections; what equipment was used; what repairs were made, if any; and the structural condition.

With regard to hydrokinetic activity regulated under FERC license, MMS will retain a role in inspections under the MOU adopted by FERC and MMS. We may inspect to ensure compliance with any provision of a lease, easement, or right-of-way we issue. The MMS will coordinate such inspections with FERC.

Facility Assessments

This subpart also contains the requirements for facility assessments, incorporating sections 17.2.1 through 17.2.5 of the American Petroleum Institute Recommended Practice 2A-WSD (API RP 2A-WSD), as they relate to initiating facility assessments. This proposed provision would also require mitigation if a facility did not pass the assessment process described in API RP 2A-WSD. We selected the API RP 2A-WSD because there is a lack of standards for offshore renewable energy facilities, and this standard has proven to be an effective assessment tool for other OCS structures in U.S. waters. This relates to the structure only and does not include production or transmission equipment.

Incident Reporting

This final rule will require that operators report immediately to the Director certain significant incidents associated with activities regulated under this part. An initial report must be followed within 15 days by a written report. Significant incidents that require immediate notification are identified, and include any incidents resulting in fire, explosions, or that involve a fatality. In addition, MMS requires submission of a written incident report within 15 days following certain types of incidents, including those involving injuries that result in the injured not being able to resume all duties the following day.

Section-by-Section Discussion for Subpart H

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

This section states the performance requirements for using trained personnel and technologies, precautions, and techniques to prevent or minimize the likelihood of harm or damage to human life and the environment. In addition, you must certify compliance with those terms and conditions identified in your approved SAP, COP, or GAP.

We did not make any changes to this section.

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

This section describes the actions you must take if there is reason to believe that protected species or designated critical habitat may be affected by your operations. If there is reason to believe that a threatened or endangered species may be present or designated critical habitat may be affected while you conduct your MMS-approved activities, you must notify MMS, and we will consult with appropriate agencies and, after consultation, shall identify whether, and under what conditions, you may proceed. If there is reason to believe that marine mammals or threatened or endangered species may be incidentally taken as a result of your MMS-approved activities, you must agree to secure an authorization from NOAA or the FWS for incidental taking, including taking by harassment, which may result from your actions. This section also includes provisions related to mitigating and monitoring measures you may be required to take.

We deleted the references to the SAP, COP, and GAP to clarify that this section applies to conducting activities under an approved plan and not to the information requirements for those plans.

How must I protect archaeological resources? (§ 285.802)

This section was removed from the final rule. The details about how a lessee or grant holder should protect Start Printed Page 19705archaeological resources will be included in a guidance document that MMS will develop after the rule is final.

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

This section describes the procedures that must be followed if a potential archaeological resource is discovered while conducting any activity related to a project. It also includes additional requirements MMS may impose after such a discovery, such as conducting additional archaeological investigations. If a potential archaeological resource is discovered, you must immediately halt all seafloor disturbing activities within the area of the discovery; notify the Director of the discovery within 72 hours; and keep the location of the discovery confidential and not take any action that may adversely affect the archaeological resource until MMS has made an evaluation and tells you how to proceed.

The MMS may require additional investigations to determine if the resource is eligible for listing in the National Register of Historic Places under 36 CFR 60.4. This will be required if either the site has been impacted by your project activities or if impacts to the site or to the area of potential effect cannot be avoided. If these investigations indicate that the resource is potentially eligible to be listed in the National Register of Historic Places, MMS will tell you how to protect the resource or how to mitigate adverse effects to the site. Under section 110(g) of the National Historic Preservation Act, MMS may charge reasonable costs for carrying out preservation responsibilities under the OCS Lands Act.

The MMS changed the title from, “What must I do if I discover a potential archaeological resource?” to “What must I do if I discover a potential archaeological resource while conducting my approved activities?” to clarify that this section addresses activities under approved plans, not information requirements for the SAP, COP, or GAP.

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

This section addresses the actions that MMS and you must take if, during the conduct of approved activities, MMS finds an EFH or habitat areas of particular concern that may be adversely affected by your approved activities. The MMS will consult with NMFS, and the lessee or grant holder will be required to adopt mitigation measures designed to avoid or minimize the adverse effects. The MMS may require additional surveys to define boundaries and avoidance distances. If MMS requires additional surveys, we will specify the requirements at that time.

The MMS renamed this section from, “How must I protect essential fish habitats identified and described under MSA?” to “How must I conduct my approved activities to protect essential fish habitats identified and described under the Magnuson-Stevens Fishery Conservation and Management Act?” to clarify that this section addresses activities under approved plans, not information requirements for the SAP, COP, or GAP.

Reserved Sections (§ 285.804 Through § 285.806)

Sections 285.804 through 285.806 are reserved.

Air Quality

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

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

Reserved Sections (§ 285.808 Through § 285.809)

Sections 285.808 through 285.809 are reserved.

Safety Management Systems

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

You must submit a Safety Management System with the SAP, COP, or GAP. The Safety Management System must describe the following for all aspects of the project:

  • How you will ensure the safety of personnel;
  • Remote monitoring, control, and shutdown capabilities;
  • Emergency response procedures;
  • Fire suppression equipment, if needed;
  • How and when you will test your Safety Management System; and
  • How you will demonstrate that personnel are properly trained.

This section also requires that you demonstrate compliance, identify any impacts and any mitigation measures that are not effective, and make recommendations for new mitigation measures.

We did not make any changes to this section.

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

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

Reserved Section (§ 285.812)

Section 285.812 is reserved.

Maintenance and Shutdowns

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

This section requires you to notify MMS when equipment necessary for implementing an approved plan is taken out of service for more than 12 hours. It also requires that MMS be notified after the repairs are complete.

We revised this section, based on comments that stated that the section was unclear as to the requirement for reporting when safety equipment is removed from service. We clarified that the lessee/operator must report the removal of any equipment that is necessary for implementing the approved plan.

Reserved Section (§ 285.814)

Section 285.814 is reserved.

Equipment Failure and Adverse Environmental Affects

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

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

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

If environmental or other conditions adversely affect a cable, pipeline, or facility, this section requires you to submit a plan of corrective action to Start Printed Page 19706MMS. In addition, the lessee or grantee must take the remedial action described in the plan, and submit a report of the remedial action taken.

We did not make any changes to this section.

Reserved Sections (§§ 285.817 Through 285.819)

Sections 285.817 through 285.819 are reserved.

Inspections and Assessments

Will MMS conduct inspections? (§ 285.820)

The MMS conducts inspections of OCS facilities and any vessels engaged in activities authorized under this part to verify that the applicant is operating in accordance with the OCS Lands Act, the regulations, lease stipulations, conditions of the grant, approved plans, and other applicable laws and regulations, and to determine whether the proper safety equipment is installed and operating properly.

We did not make any changes to this section.

Will MMS conduct scheduled and unscheduled inspections? (§ 285.821)

The MMS will conduct both scheduled and unscheduled inspections of your facilities.

We did not make any changes to this section.

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

These regulations require you to make the area of the lease or grant; all facilities on the lease or grant; and records of design, construction, operation, maintenance, repairs, or investigations available to MMS for inspection. You must retain all records as required, and certain records must be retained until MMS releases your financial assurance.

We did not make any changes to this section.

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

Upon request, MMS will reimburse your reasonable expenses for the expenses related to food, quarters, and transportation provided for MMS representatives while they inspect the project facilities.

We did not make any changes to this section.

How must I conduct self inspections? (§ 285.824)

This section requires the lessee or grantee to develop an annual self inspection plan describing both above-water and below-water structural inspections and describing how corrosion protection will be monitored. It also requires that you submit an annual report that summarizes the results of the inspections.

We did not make any changes to this section.

When must I assess my facilities? (§ 285.825)

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

We did not make any changes to this section.

Reserved Sections (§§ 285.826 Through 285.829)

Sections 285.826 through 285.829 are reserved.

Incident Reporting and Investigation

What are my incident reporting requirements? (§ 285.830)

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

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

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

We did not make any changes to this section.

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

This section describes what you must do for incidents that require immediate notification. You must notify the Director orally immediately after aiding the injured and stabilizing the situation. This section also describes the information required in the notification.

We did not make any changes to this section.

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

This section describes the specific information regarding incidents that must be reported in writing to the MMS. It allows you to submit a form prepared for another agency to fulfill the requirement as long as it contains all the information required by MMS. The MMS may subsequently require additional information about an incident on a case-by-case basis.

We did not make any changes to this section.

Subpart I—Decommissioning

Overview

This subpart describes requirements for decommissioning OCS renewable energy facilities and associated structures including the submission of advance plans, applications, and notices to the MMS. Co-lessees and co-grant holders are all jointly and severally responsible for meeting decommissioning obligations on their respective leases or grants. All facilities, including pipelines, cables, and other structures and obstructions, must be removed when they are no longer used for operations but no later than 2 years after the termination of the lease, ROW grant, or RUE grant.

The MMS made conforming changes to the 30 CFR, part 250, subpart Q regulations regarding decommissioning requirements as they apply to oil and gas facilities that could be left in place for alternate use. We removed the phrase “or other use” from § 250.1730 because the EPAct amended the OCS Lands Act (43 U.S.C. 1337(p)(1)(D)) to give DOI authority to allow the use of OCS oil and gas platforms for other authorized marine-related purposes. For uses that MMS authorizes, the structure would no longer need to meet the requirements of § 250.1730(a). Start Printed Page 19707

Section-by-Section Discussion for Subpart I

Decommissioning Obligations and Requirements

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

Co-lessees and co-grant holders are jointly and severally responsible for the decommissioning responsibilities for facilities on a lease or grant, including all obstructions.

We did not make any changes to this section.

When do I accrue decommissioning obligations? (§ 285.9010)

Decommissioning obligations accrue when the lessee or grant holder installs; constructs; or acquires a facility, cable, or pipeline; or creates an obstruction.

We did not make any changes to this section.

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

This section provides a general overview of the decommissioning process:

  • After your lease terminates, the lessee or grant holder has 2 years to decommission and clear the seafloor of all obstructions created by activities on the lease or grant.
  • Before decommissioning, the lessee or grant holder must submit a decommissioning application. This can be submitted at any time, but no later than 2 years before any intended decommissioning operation.
  • Once MMS approves the decommissioning application, a decommissioning notice is required before beginning any decommissioning activity. The decommissioning notice is required to keep MMS informed of decommissioning activities.
  • If an archaeological resource is discovered while decommissioning, activities around the resource must stop, and the lessee or grantee must inform MMS.
  • Biologically sensitive features and items of archaeological interest must be avoided and protected during decommissioning and site clearance activities.
  • If biologically sensitive features or items of archaeological interest are found, MMS will direct the lessee or grantee on what action to take.
  • The MMS added a provision to document early efforts made by the applicant to coordinate with affected State, local, and tribal governments. This was added to remind project operators of the importance of coordinating early with affected entities.

Lessees decommissioning FERC-licensed facilities are not required to comply with this section.

Based on comments received, we changed the time to complete decommissioning on a lease or grant from 1 year after termination to 2 years after termination.

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

This is a new section addressing the decommissioning requirements for FERC-licensed hydrokinetic facilities on the OCS. FERC license holders must comply with the conditions of their MMS-issued lease, including decommissioning requirements.

If you fail to comply with the requirements, then MMS may call for the forfeiture of your bond or other financial assurance and take enforcement action under § 285.400 of this part. Further, you remain liable for removal or disposal costs and responsible for accidents or damages that might result from such failure.

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

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

Decommissioning Applications

When must I submit my decommissioning application? (§ 285.905)

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

We did not make any changes to this section.

What must my decommissioning application include? (§ 285.906)

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

The MMS revised this section to require that the decommissioning application include a description of measures to prevent unauthorized discharge of pollutants including marine trash and debris into the offshore waters.

How will MMS process my decommissioning application? (§ 285.907)

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

After completing the technical and environmental reviews, MMS may approve, approve with conditions, or disapprove the decommissioning application. If MMS disapproves decommissioning application, the operator must resubmit the application to address the concerns identified by MMS. Start Printed Page 19708

We did not make any changes to this section.

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

This section describes what needs to be included in the decommissioning notice. A decommissioning notice is separate from the decommissioning application and can only be submitted after MMS approves the decommissioning application. The decommissioning notice is submitted at least 60 days before you plan to begin decommissioning activities. The decommissioning notice includes any changes from your decommissioning application and your decommissioning schedule. The MMS will evaluate your decommissioning notice and may require additional changes to your decommissioning application before you can begin decommissioning activities.

We did not make any changes to this section.

Facility Removal

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

In the decommissioning application, the operator may request that certain facilities authorized in the lease or grant remain in place for other activities authorized in this part, elsewhere in this subchapter, or by other applicable Federal laws. The MMS will approve such requests on a case-by-case basis considering potential impacts to the marine environment; competing uses of the OCS; impacts on marine safety and national defense; maintenance of adequate financial assurance; and other factors determined by the Director.

If MMS authorizes facilities to remain in place, the former lessee or grantee under this part remains jointly and severally liable for decommissioning the facility unless satisfactory evidence is provided to MMS showing that another party has assumed that responsibility and has secured adequate financial assurances. In the decommissioning application, the operator may request that certain facilities authorized in the lease or grant be converted to an artificial reef or otherwise toppled in place.

We did not make any changes to this section.

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

All facilities must be removed to a depth of 15 feet below the mudline, and you must verify to MMS that you have cleared the site within 60 days after you remove a facility.

We did not make any changes to this section.

Reserved Section (§ 285.911)

Section 285.911 is reserved.

Decommissioning Report

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

Within 30 days after removing a facility, the operator must submit a written report to MMS summarizing removal operations. The report must include a summary of the removal activities including the date it was completed; a description of any mitigation measures you took; and, if explosives were used, a statement signed by an authorized representative that certifies that the types and amount of explosives used in removing the facility were consistent with those in the approved decommissioning application.

We did not make any changes to this section.

Compliance With an Approved Decommission Application

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

If the lessee, grantee, or operator fails to comply with the approved decommissioning plan or application, MMS may call for the forfeiture of your bond or other financial guarantee, and the lessees or grantee remain liable for removal or disposal costs and responsible for accidents or damages that might result from such failure.

We did not make any changes to this section.

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

Overview

This subpart establishes general requirements for how MMS will consider proposals for activities that involve the alternate use of existing OCS facilities. This subpart also includes general provisions that explain how MMS will approve and regulate such alternate use activities on the OCS. We will authorize such activities through the issuance of an Alternate Use Right-of-Use and Easement (Alternate Use RUE).

This subpart explains how applicants request an Alternate Use RUE, how MMS will decide whether to issue Alternate Use RUEs, and how Alternate Use RUEs will be competitively issued (if MMS determines that competitive interest exists). Once an Alternate Use RUE is issued by MMS, this subpart provides details on the term of such authorizations; required payments to MMS; necessary financial assurance; as well as other administrative issues such as assignment, suspension, and termination of Alternate Use RUEs.

This subpart also includes provisions regarding decommissioning of approved alternate use facilities. In addition to the provisions in this subpart J, MMS has associated revisions to MMS's existing oil and gas decommissioning regulations found in 30 CFR part 250, subpart Q, that clarify and expand on an oil and gas platform owner's obligations for decommissioning, and when such decommissioning obligations may be suspended for approved alternate uses.

The statutory authority for this subpart is paragraph 8(p)(1)(D) of the OCS Lands Act (43 U.S.C. 1337(p)(1)(D)). Under this authority, as delegated by the Secretary, the MMS may approve activities that use, for energy or other marine-related purposes, facilities that are currently or were previously used for other activities authorized under the OCS Lands Act.

We received numerous comments on the proposed rule pertaining to the use of OCS facilities for aquaculture purposes. We wish to clarify that this rule does not authorize aquaculture operations. A different agency would be responsible for permitting and managing actual aquaculture activity under any RUE that is granted. In the event that legislation is enacted that regulates OCS aquaculture, we will reassess this issue and ensure coordination will be accomplished with all relevant agencies.

Section-by-Section Discussion for Subpart J

Regulated Activities

What activities does this subpart regulate? (§ 285.1000)

This provision describes the scope of activities regulated by this subpart. The authority for Alternate Use Rights-of-Use and Easements (Alternate Use RUEs) was established in paragraph 8(p)(1)(D) of the OCS Lands Act (43 U.S.C. 1337(p)(1)(D)). Under this authority, as delegated by the Secretary, the MMS may approve activities that use, for energy or other marine-related purposes, facilities that are currently or were previously used for other activities authorized under the OCS Lands Act. However, the MMS may not approve alternate use activities under subsection 8(p)(1)(D) of the OCS Lands Act if those activities are authorized by another statutory authority, including: The OCS Lands Act, the Deepwater Port Act of 1974 (33 U.S.C. 1501 et seq.), the Ocean Start Printed Page 19709Thermal Energy Conversion Act of 1980 (42 U.S.C. 9101 et seq.), or other applicable law.

To illustrate the types of activities that will be subject to this subpart, examples such as the following are useful. In the first example, an individual seeks to use an existing oil and gas platform in the Gulf of Mexico as an offshore emergency rescue training facility. Utilizing an existing OCS facility for such activities is not currently authorized by any other statutory authority. Therefore, MMS may authorize the use of an existing facility for such emergency rescue training activities using an Alternate Use RUE. In another example, an individual seeks to convert an existing oil and gas platform in the Gulf of Mexico to a deepwater port. Activities associated with the construction and operation of a deepwater port on the OCS are authorized under the Deepwater Port Act of 1974, as amended, and regulated jointly by the U.S. Coast Guard and U.S. Maritime Administration. Since such deepwater port activities are authorized by the Deepwater Port Act, the activities do not require an Alternate Use RUE under this subpart. While the MMS may not issue an Alternate Use RUE for deepwater port activities (or other activities that are authorized by other Federal law) that would use an existing OCS structure, MMS approvals may be required under either part 250 or part 282 of this subchapter for activities that could impact existing MMS-approved operations on an existing facility, as well as for deferring decommissioning requirements upon the termination of an OCS lease.

Use of the term “existing facility” or “existing platform” in this subpart is not intended to limit such facilities to those that are currently in place as of the time of publication of this rule. Any facility that, at the time of an alternate use proposal, is situated on the OCS and has been authorized by MMS under the OCS Lands Act is potentially eligible for consideration under this subpart. Therefore, such “existing facilities” may include oil and gas facilities, facilities constructed in association with sand, gravel, sulfur or any other mineral resource development approved under the OCS Lands Act, as well as renewable energy facilities pursuant to this part.

As stated in § 285.1000(c), MMS has the discretion to authorize alternate use activities on existing OCS structures that are currently in active operation, or limit alternate use activities to existing OCS structures that are no longer in operation and would otherwise be subject to removal. The MMS will consider these issues on a case-by-case basis taking into account the unique operating considerations for each proposed alternate use activity as well as the associated operations on the existing OCS platform. As explained previously, MMS does not intend to implement an aquaculture program under subpart J.

We did not make any changes to this section.

Reserved Sections (§§ 285.1001 Through 285.1003)

Sections 285.1001 through 285.1003 are reserved.

Requesting an Alternate Use RUE

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

Before submitting a request to the MMS for issuance of an Alternate Use RUE, the applicant must contact the owner of the existing OCS facility as well as the current lessee of the area in which the facility is located and reach preliminary agreement regarding the alternate use of the structure. Since the platform or other facility is the private property of the owner, MMS could not issue an Alternate Use RUE unless the alternate use was tentatively agreed to by the owner of the facility. If the alternate use applicant is also the lessee and owner of the existing OCS facility, a preliminary agreement regarding alternate use is not needed.

This provision does not require the owner of the facility and lessee of the area in which the facility is located to give a final, unconditional approval for the proposed alternate use. This initial agreement among the parties need only state that the owner and lessee are aware of the proposed alternate use activity, and have no immediate objections to such activities. This preliminary agreement does not need to be in any specific prescribed form.

We did not make any changes to this section.

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

The MMS will consider requests for an Alternate Use RUE on a case-by-case basis, provided such requests comply with the requirements of this provision. An applicant's request for an Alternate Use RUE must include a summary of the proposed activities that would involve use of the existing OCS facility; a statement affirming that the proposed activities are not otherwise authorized by other MMS regulations or any other Federal law; and satisfactory evidence that the applicant qualifies to hold a lease, ROW, or RUE on the OCS. When summarizing the proposed activities under an Alternate Use RUE, the applicant must include all of the information identified in § 285.1005(a). Any request to MMS for an Alternate Use RUE must also include the signatures of the alternate use applicant, the owner of the existing OCS facility, and the lessee of the area in which the existing facility is located.

If an existing OCS facility proposed for an Alternate Use RUE is in operation on an active OCS lease, the alternate use applicant as well as the lessee or owner of the structure must consider what approvals and plan modifications may be required under part 250 or part 282 of this subchapter with respect to impacts on operations regulated by those parts.

We did not make any changes to this section.

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

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

We did not make any changes to this section.

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

Paragraph 8(p)(3) of the OCS Lands Act requires that Alternate Use RUEs be issued on a competitive basis unless the Secretary determines, after public notice of the proposed Alternate Use RUE, that there is no competitive interest. Start Printed Page 19710

Before initiating the competitive process, the MMS will first determine whether an applicant's proposal contains the information necessary to be deemed acceptable, as set forth in § 285.1005. The MMS will then determine whether the proposed activity that would involve the use of an existing OCS facility is one that is (1) subject to MMS authority under paragraph 8(p)(1)(D) of the OCS Lands Act, and (2) the type of activity that the MMS has the necessary expertise and resources to regulate effectively. If the answer is yes to both (1) and (2), the MMS will issue a public notice in the Federal Register to determine if there is competitive interest in using the facility for other alternate use activities. The MMS will specify a time period (e.g., 30 days) from the date of issuance of the public notice for those who are interested in the use of that facility to respond to MMS indicating that interest. Indications of competitive interest are not required to provide all the information required in § 285.1005. If there is no expression of competitive interest within the timeframe expressed in the public notice, the MMS will presume that there is no competitive interest and will commence review of the applicant's proposal for an Alternate Use RUE.

If there are indications of competitive interest received by the MMS within the timeframe in the public notice, the MMS will proceed with a competitive offering. The MMS will request that each competing applicant submit a description of the types of activities proposed for the existing facility, as well as satisfactory evidence that the competing applicant qualifies to hold a lease, ROW, or RUE on the OCS. The MMS may impose a time period to submit the requested information, but one that would allow sufficient time for competing applicants to prepare the necessary information requested. The MMS may subsequently request additional information to adequately evaluate competing proposals. At this stage, competing applicants are not required to seek or obtain the consent of the lessee or owner of the existing OCS facility.

The MMS will evaluate the competing proposals to determine whether the proposed activities appear to be compatible with existing operations at the facility and are activities that it has the expertise and resources available to regulate effectively. If more than one proposal initially appears feasible, the MMS may commence an environmental review under NEPA, where each of the proposals is analyzed. Based on its NEPA analysis, the MMS may select one or more of the alternative proposals as potentially acceptable.

Once the MMS has chosen one or more acceptable proposals for activities involving the alternate use of an existing OCS facility, it will notify the competing applicants and submit each acceptable proposal to the lessee and owner of the existing OCS facility. The lessee and owner of the existing OCS facility may accept any one of the proposals deemed acceptable by the MMS. If the lessee and owner of the facility agree to accept one of the proposals through a written acknowledgement submitted to MMS, the MMS will complete efforts to issue an Alternate Use RUE. If the lessee and owner of the facility are unwilling to accept any of the proposals deemed acceptable by the MMS, the MMS will not issue an Alternate Use RUE.

Activities under subpart J will include full analysis as required by NEPA and other applicable laws. Compliance with the CZMA will follow 15 CFR part 930, subpart C, for competitive RUE offerings and 15 CFR part 930, subpart D, for noncompetitive RUE offerings.

We did not make any changes to this section.

Reserved Sections (§§ 285.1008 Through 285.1009)

Sections 285.1008 through 285.1009 are reserved.

Alternate Use RUE Administration

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

This provision explains that MMS will determine the duration of Alternate Use RUEs on a case-by-case basis considering pertinent factors including the size, scale, and type of the proposed alternate use activities. Considering the scope of potential alternate use activities that could reasonably occur on the OCS, MMS does not believe that it is appropriate to set a specific term in the regulations for Alternate Use RUEs.

This provision also provides that MMS will consider requests for renewal of an Alternate Use RUE on a case-by-case basis, at MMS's discretion.

We did not make any changes to this section.

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

This provision provides that MMS will determine rentals or other charges on a case-by-case basis, and such rentals or other charges will be set forth in the Alternate Use RUE. The MMS will charge rentals or other charges for Alternate Use RUEs to ensure a fair return to the United States, as required by subsection 8(p)(2) of the OCS Lands Act (43 U.S.C. 1337(p)(2)). There are many different potential alternate uses of the OCS that could be authorized (e.g., training, research, education, and recreation), and each of these potential uses could have different effects in terms of the exclusion of other valuable uses of the OCS area. Certain alternate use activities could require that a significant portion of an OCS area be excluded from other potentially valuable uses. The MMS will consider such exclusivity requirements for a potential alternate use activity in determining a fair return to the United States. The MMS will calculate the rentals or other charges for Alternate Use RUEs taking into account the areal extent of the alternate use activity, the MMS resources needed for regulating such activities, and the exclusion in that area of competing uses.

We did not make any changes to this section.

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

This provision makes clear that MMS will require that holders of Alternate Use RUEs provide financial assurance in an amount sufficient to cover all obligations under the Alternate Use RUE, including decommissioning obligations. Holders of Alternate Use RUEs will be required to retain such financial assurance until MMS determines that all obligations have been fulfilled to MMS satisfaction. The provision also provides that MMS may increase or decrease required financial assurance amounts, as appropriate, provided that financial assurance will always be required in an amount necessary to satisfy all obligations under the authorizing instrument.

The MMS has not defined in the regulations what specific forms of financial assurance will be deemed acceptable. The MMS will consider all forms of financial assurance that are deemed acceptable by MMS under its other regulatory programs, and will consider other proposals for financial assurance on a case-by-case basis.

Unlike the provisions for renewable energy under this part, and what is established for oil and gas leasing under part 256, MMS has determined that the regulations for alternate use activities should not set specific minimum levels for financial assurance. Considering the range of potential activities that could be approved for an Alternate Use RUE, MMS has determined that it is more appropriate to set required financial assurance levels on a case-by-case basis.

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Is an Alternate Use RUE assignable? (§ 285.1013)

This provision provides that Alternate Use RUEs may be assigned to eligible assignees. This provision sets forth the requirements that must be satisfied for MMS to approve an assignment request. At this time, it is not clear to what extent Alternate Use RUEs will be requested and approved by MMS. Therefore, we are not creating a standard MMS form for assignments at this time.

In §§ 285.1013(d) and (e), we describe to what extent assignors and assignees are responsible for obligations associated with an Alternate Use RUEs arising both before and after MMS approval of an assignment. This provision is intended to be consistent with other MMS regulatory precedent (See 30 CFR 256.62(d) and (e)).

We did not make any changes to this section.

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

This section explains that MMS may suspend activities authorized under an Alternate Use RUE and describes when such a suspension may be ordered. It is important to note that MMS may suspend activities authorized under an Alternate Use RUE even if there has been no finding of fault by the grantee. The holder of an Alternate Use RUE may be in full compliance with the terms and conditions of the grant, but other circumstances outside the control of the grantee may require MMS to suspend activities in order to comply with judicial decrees, for reasons of national security or defense, to avoid unsafe activities or interference with lessee's operation, and to protect against potential environmental damage. For this reason, any such suspension will extend the term of the Alternate Use RUE for the period of the suspension.

We did not make any changes to this section.

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

This provision explains that the holder of an Alternate Use RUE may relinquish its grant at any time provided it complies with the requirements of this section. The MMS will officially approve any relinquishment after it has determined that the requestor has complied with all necessary requirements, including the payment of any outstanding rentals (or other payments) and fines. The relinquishment will take effect on the date that MMS officially approves the request.

We did not make any changes to this section.

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

This provision explains under what circumstances MMS may cancel an Alternate Use RUE. The provisions of this section are similar to the cancellation provisions under subpart D of this part, but include an additional provision for cancellation when continued activity under an Alternate Use RUE is determined to be adversely impacting ongoing lease activities on the existing OCS facility (e.g., an associated oil and gas production platform on which alternate use activities have been authorized).

Commenters to the proposed rule expressed concern that this provision did not provide for notice and opportunity to be heard prior to cancellation of an Alternate Use RUE. The MMS agrees with these comments and added a provision to the rule concerning notice and an opportunity to be heard.

Reserved Section (§ 285.1017)

Section 285.1017 is reserved.

Decommissioning an Alternate Use RUE

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

This provision explains that the holder of an Alternate Use RUE will be responsible for removing all structures and completing all other decommissioning activities associated with an approved alternate use activity. The Alternate Use RUE will set forth specific requirements for decommissioning, as determined by the MMS based on the approved alternate use activity.

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

We did not make any changes to this section.

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

This provision explains that decommissioning requirements for Alternate Use RUEs will be established on a case-by-case basis after considering the specific alternate use proposal. These specific decommissioning requirements will be set forth in detail in the grant authorizing instrument. This provision also explains that all decommissioning activities will be required to be completed within 1 year of termination of the Alternate Use RUE.

We did not make any changes to this section.

Comments on the Proposed Rule and MMS Responses

We reviewed all the comments on the preamble and proposed rule. We categorized and summarized similar comments and then responded to those comments by subpart subject matter. We organized the comments and our responses in a table for each subpart as follows.

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Specific Comment Areas Identified in the Proposed Rule

The preamble of the proposed rule (73 FR 39440) requested public comments or all aspects of the proposed rule. In addition, the preamble requested comments on specific areas in the proposed rule that were of particular interest to MMS and to the regulated Start Printed Page 19791community and other interested parties. We planned to use the comments on these specific areas as the starting place for responding to comments. However, we found that very few commenters responded directly to the specific areas identified in the preamble. Instead, the vast majority of commenters provided comments on a subpart-by-subpart and section-by-section basis. All comments that touched on the issues raised by the specific areas we identified are addressed in our response to comments in the comment table. In addition, any changes to the rule as a result of comments are discussed in the subpart-by-subpart and section-by-section discussions.

Procedural Matters

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

This final rule is a significant rule as determined by the Office of Management and Budget (OMB) and is subject to review under E.O. 12866. We have made the assessments required by E.O. 12866, and the results are as follows:

(1) The final rule will not have an annual effect on the economy of $100 million or more for the first 15 years or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities. The final regulations are made necessary by compelling public need in that they will be used to oversee the nascent offshore renewable energy industry consistent with the EPAct.

The final rule does two things: (1) It sets forth clear regulatory requirements; and (2) it institutes payments to the Government as a fair return for use of public lands. Discussions between MMS and OMB resulted in a determination that the appropriate analysis of the rulemaking is one that focuses on the financial impacts of the rule over a 20-year period (2008-2027). While financial revenues (i.e., the revenues the Federal Government will receive due to economic activity that occurs under this rule) are traditionally considered a transfer payment, in this analysis they are treated as a “benefit.” The cost side of the analysis comprises the Federal Government's costs to implement the program that will administer the rules. While the program will generate new receipts for the U.S. Government primarily in the form of cash bonuses, acquisition fees, rentals, and operating fees, the aggregate annual amounts of these payments, as estimated in the fiscal cost-benefit study supporting this rulemaking, were found to be below $100 million for at least the next 15 years, and then slightly above that level only in intermediate and high case scenarios. Any projections beyond that time horizon should be considered highly speculative given the early stage of development in this industry on the OCS. Any economic effects characterized by the EA are predicated upon the assumption that there is available transmission capacity to carry the energy generated on the OCS to demand centers. The payments to Federal agencies represent a transfer of money from one set of entities to another, not the anticipated effect of the regulations on real resources in the economy. The MMS finds that the benefits of this rule, when weighed against the potential payments that may exceed $100 million, justify this regulation because it will establish a new regulatory program intended to encourage safe, efficient, and environmentally sound development of renewable energy sources on the OCS. The MMS included a detailed discussion of the results of the Final Technical report on the “Fiscal Cost-Benefit Analysis to Support the Rulemaking Process for 30 CFR Part 285 Governing Alternative Energy Production and Alternate Uses of Existing Facilities on the Outer Continental Shelf,” MMS 2007-050, February 2008, by Industrial Economics, Incorporated, in the NPR, published in the Federal Register on July 9, 2008 (73 FR 39376). The NPR and the Final Technical report are available on the Regulations.gov Web site.

(2) The rule will not create a serious inconsistency or otherwise interfere with the actions taken or planned by any other agency. Until March 2009, regulatory uncertainty existed regarding which Federal agencies had authority to regulate wave and current energy development on the outer Continental Shelf (OCS). Both MMS and the Federal Energy Regulatory Commission (FERC) claimed this authority based on differing interpretations of Part I of the Federal Power Act (FPA) and section 8(p) of OCSLA, as amended by EPAct. However, on March 17, 2009, the Secretary of the Interior and the Acting Chairman of the Federal Energy Regulatory Commission issued a joint statement on the development of renewable energy resources on the OCS. In this joint statement, the Secretary and the Acting Commissioner requested that MMS and FERC staff prepare a Memorandum of Understanding (MOU) to describe the process by which authorizations related to renewable energy resources in offshore waters will be developed.

The MMS and FERC finalized this MOU on April 09, 2009. This agreement clarifies jurisdictional understandings regarding renewable energy projects on the OCS in order to develop a cohesive, streamlined process that would help accelerate the development of wind, solar, and hydrokinetic energy projects. Specifically, the MOU recognizes that (1) MMS has exclusive jurisdiction with regard to the production, transportation, or transmission of energy from non-hydrokinetic alternative energy projects on the OCS, including renewable energy sources such as wind and solar; (2) MMS has exclusive jurisdiction to issue leases, easements, and rights-of-way regarding OCS lands for hydrokinetic projects; and (3) the Commission has exclusive jurisdiction to issue licenses and exemptions for hydrokinetic projects located on the OCS.

Under this new agreement, those entities interested in operating a hydrokinetic project on the OCS must first obtain a lease from MMS. The MMS will issue a public notice to determine whether competitive interest exists in the area, and will proceed with either the competitive or noncompetitive lease issuance process depending on responses received to this public notice. The MMS will conduct the NEPA analysis necessary for the lease issuance and any site assessment activities that will occur on the lease. After an applicant acquires a lease from MMS, FERC may issue a license or exemption for the hydrokinetic project, and conduct any necessary NEPA analysis. After a license is issued, construction and operations of the project may begin as per the terms of the license. To facilitate efficient processing of the lease and license applications, it may be helpful for potential lessees to apprise both MMS and FERC of their interest in hydrokinetic development at the start of the process.

Further, the MOU states that MMS and FERC will work together to the extent practicable to develop policies and regulations with respect to OCS hydrokinetic projects, and coordinate to ensure that hydrokinetic projects meet the public interest, including the adequate protection, mitigation, and enhancement of fish, wildlife, and marine resources and other beneficial public uses. The MOU ensures that the interests of both agencies are adequately represented and that the process of developing renewable energy on the OCS happens efficiently, in an environmentally responsible manner, and with appropriate benefit to the people of the United States. Start Printed Page 19792

Importantly, the agreement addresses the issue of potential site-banking by developers on the OCS by eliminating redundant regulatory processes for acquiring use of OCS lands. In addition, by eliminating dual regulatory processes, the agreement addresses the potential for granting conflicting awards of OCS sites to developers by the two agencies. Specifically, FERC has agreed not to issue preliminary permits for hydrokinetic activities on the OCS, and MMS has agreed that FERC will have the primary responsibility to issue licenses for these activities. The Federal Government has effectively eliminated the opportunity for abuse by entities seeking to reserve, block, or acquire for speculative purposes large portions of the OCS. These concerns were raised by many commenters on the REAU rulemaking. The DOI/FERC MOU creates a unified, coherent process for the authorization of hydrokinetic activities on the OCS, ensuring that U.S. resources on the OCS will not be subject to a “land rush,” and will be developed in the most efficient manner possible.

(3) This final rule would not alter the budgetary effects of entitlements, grants, user fees or loan programs, or the rights or obligations of their recipients. The rule does not contain any requirements or regulations that will alter the budgetary effects of entitlements, grants, user fees or loan programs, or the rights or obligations of their recipients.

(4) This final rule raises novel legal or policy issues because the rulemaking establishes a new regulatory program for the development of renewable energy on the OCS and to allow for alternate uses of existing OCS facilities. For these reasons, OMB determined that this is a significant rule.

Prior to the passage of the EPAct, the Federal Government lacked the authority to oversee all aspects of renewable energy project development on the OCS, including siting, construction, operation, and decommissioning. Additionally, prior to the passage of the EPAct, the Federal Government lacked the authority to seek payments from private interests for use of our Nation's OCS for purposes other than oil and gas production. These regulations will provide the framework for MMS's management of the Alternative Energy-Alternate Use Program. This program will create a system that provides a degree of regulatory certainty to those proposing, planning, or potentially financing an offshore renewable energy project on the OCS, as it will address lease and grant issuance, activity authorization, payment collection, financial assurance, and project decommissioning.

As described previously, MMS conducted an economic (“benefit-cost”) analysis of this rulemaking because it was determined to be a significant regulatory action, as defined in E.O. 12866. Discussions between MMS and OMB resulted in a determination that the appropriate analysis of the rulemaking is one that focuses on the financial impacts of the rule over a 20-year period (2008-2027). While financial revenues (i.e., the revenues the Federal Government will receive due to economic activity that occurs under this rule) are traditionally considered a transfer payment, in this analysis they are treated as a “benefit.” The cost side of the analysis comprises the Federal Government's costs to implement the program that will administer the rules. In addition, as required by the Regulatory Flexibility Act (RFA) of 1980 (as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) and E.O. 13272 (“Proper Consideration of Small Entities in Agency Rulemaking”), this analysis considers whether the financial payments made by the developers of regulated projects to MMS will significantly affect a substantial number of small entities. The MMS included a detailed discussion of the analysis in the NPR published in the Federal Register on July 9, 2008 (73 FR 39376). The NPR is available on the Regulations.gov Web site.

Regulatory Flexibility Act (RFA)

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

Discussion of the Regulatory Flexibility Act Analysis

Number of Small Entities to Which the Rule Will Apply

The North American Industry Classification System (NAICS) code for the industry affected by the rule is 221119 (Other Electric Power Generation). The definition for this code is:

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

An entity within this classification is “small” if it is “primarily engaged in the generation, transmission, and/or distribution of electric energy for sale and its total electric output for the preceding fiscal year did not exceed four million megawatt hours” (MWh). Some new companies may be created solely to develop one or more offshore renewable energy projects that combined will not have a total electric output greater than 4 million MWh. Some companies, either through a combination of projects or through the incorporation of offshore renewable energy projects into a larger portfolio of electricity generating stations, will exceed the 4 million MWh threshold.

Given the newness of the offshore renewable energy industry, it is difficult to develop an accurate count of the number of entities that will or may be subject to this rule in order to determine whether the rule will affect a “substantial” number of small entities. Several companies have formally or informally expressed interest in being granted access to the OCS for electricity generation purposes. At least 40 to 50 entities are identifiable as potential project or technology developers with a focus on utilizing offshore wind, wave, or ocean current resources. The U.S. Census Bureau's 2002 Economic Census reported 411 entities within NAICS Code 221119. However, for the purposes of this analysis MMS assumes that most of the relevant entities will be considered “small,” and therefore, can conclude that a substantial number of small entities will be affected.

It is possible that the final rule may eventually govern hydrogen production, affecting entities that fall under NAICS Code 325120, Industrial Gas Manufacturing. The definition for this code is:

Start Printed Page 19793

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

However, it is unlikely that hydrogen will be produced on the OCS in significant amounts during the next 20 years, given the lack of proposals for projects that would produce hydrogen, and MMS has no means to predict what kinds of entities would likely be involved in OCS hydrogen production.

Impacts of This Rule on Small Businesses

We believe that most affected companies will be small businesses according to the size standard. While large power/energy companies may engage in offshore renewable energy, we do not see that company size plays a factor in the economic impact of our rulemaking.

Both large and small business will be subject to the same regulations because we do not believe it is necessary to have different regulations for large and small companies.

For example, the payments for a commercial lease are rentals and operating fees. Rentals (during the preliminary and site assessment terms) are based on the size of the leased area. The operating fee is based on the potential generation capacity of a commercial project. The lease area needed will be determined by the size of the project, and the operating fee is determined by capacity of the actual installed project. The applicant determines the project size. As a result, the applicant's project size determines the fee the applicant pays without respect to its business size. Both small and large entities bear the equal burden of selecting a project for MMS' consideration and submitting all appropriate payments. The greater the project's ability to produce, the greater the fee, but also the greater the potential income from the project to the developer.

One factor that could influence a company's ability to deal with these new regulations will be its experience and knowledge in working in the offshore environment. This knowledge is not size dependent, as evidenced by the size of the companies that own leases and operate oil and gas facilities on the OCS. The vast majority of companies that operate oil and gas facilities on the OCS (70 percent) are considered to be small companies according the size standards.

Due to the significant costs involved to develop, construct, and produce energy in the offshore environment, a project would need to generate a significant amount of electricity or energy to be economical. There are provisions in the rule for short-term leases that would allow a company to do preliminary site work and research without the same level of commitment as a commercial production lease. This is one way a small company could approach offshore development without committing extensive resources to a project.

In addition, the costs of operating in an offshore environment are significantly higher than the costs of complying with this regulation. For example, this final rule will require the use of CVAs, in some cases. Although this is an additional cost to project developers, the cost of the CVA is small in comparison to the cost of designing and engineering the projects. In addition, we added a provision to the final rule that will allow a project developer to request a waiver of the CVA requirement. Much of the data required for this final rule will need to be gathered by the project developers anyway (i.e., site surveys). The rule requires the data be provided to MMS to ensure protection of the environment and endangered species.

The MMS also has provisions that allow for departures from the requirements in this rule. The MMS can evaluate, on a case-by-case basis, if any part of this final regulation places an unnecessary burden on a small business and can make adjustments to the requirements, as appropriate. However, MMS cannot waive requirements to comply with other Federal laws, such as NEPA and CZMA.

Small Business Regulatory Enforcement Fairness Act (SBREFA)

The final rule is not a major rule under 5 U.S.C. 804(2) of the Small Business Regulatory Enforcement Fairness Act. This final rule:

a. Will not have an annual effect on the economy of $100 million or more, as discussed previously under the Regulatory Planning and Review section.

b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. This rule will allow greater production of energy from the OCS and will make more energy available in the United States.

c. Will not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. Leasing on the U.S. OCS is limited to residents of the United States or companies incorporated in the United States under this final rule. This final rule will encourage competition, employment, investment, productivity, and innovation, and will not have an adverse impact on the ability of U.S.-based companies to compete with foreign-based enterprises. This rule will allow production of energy (e.g., electricity) in areas where there is no production at this time. It will encourage companies to explore new avenues for generating electricity and other energy from sources other than oil and gas. The final rule includes a competitive process for leasing. New developments and projects will create new jobs and investment. Since this is a nascent industry in the United States, it will also encourage the development of new technology.

The MMS received a comment on the NPR requesting that we consider reducing or waiving civil penalties for small businesses regulated under this part. If a civil penalty is assessed, the company may submit a request to modify the payment schedule to the Office of Financial Management, with the Mineral Revenue Management Program of the MMS. This did not require any changes to the final rule.

Unfunded Mandates Reform Act of 1995

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

Takings Implication Assessment (E.O. 12630)

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

Federalism (E.O. 13132)

Under the criteria in E.O. 13132, this final rule does not have sufficient federalism implications. This final rule will not substantially and directly affect the relationship between the Federal and State governments. To the extent Start Printed Page 19794that State and local governments have a role in OCS activities, this rule will affect that role. A Federalism Assessment is not required.

Civil Justice Reform (E.O. 12988)

This rule complies with the requirements of E.O. 12988. Specifically, this rule:

(a) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

(b) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

Consultation With Indian Tribes (E.O. 13175)

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

Paperwork Reduction Act (PRA)

This rule contains new information collection (IC) requirements; therefore, a submission to OMB under the PRA is required. The OMB has approved the IC for the final rulemaking and assigned OMB Control Number 1010-0176, expiration 4/30/2012, for a total of 31,124 burden hours and $3,816,000 non-hour cost burdens.

The title of the collection of information is “30 CFR 285—Renewable Energy and Alternate Uses of Existing Facilities on the Outer Continental Shelf.” Respondents primarily will be an estimated 15-25 Federal OCS companies that submit unsolicited proposals, lessees and designated operators, and ROW or RUE grant holders. Other potential respondents are companies or States and local governments that submit information or comments relative to renewable energy-related uses of the OCS; CVAs; and surety or third-party guarantors. The frequency of response varies depending upon the requirement. Responses to this collection of information are mandatory or are required to obtain or retain a benefit. The MMS will protect proprietary information according to the Freedom of Information Act (5 U.S.C. 552), its implementing regulations (43 CFR part 2), and 30 CFR 285.112 through 285.114.

Between the proposed and final rule, there have been some changes to the numbering of sections requiring the collection of information, as well as some clarifications. The final regulations also are more specific with respect to several reporting requirements. The changes were all based on comments received, approximately seven that affected IC, and were included in the subsequent information collection submission that OMB approved. The comments are addressed in detail in the preamble of this rulemaking.

The following is a description of the revisions to the IC in the final rule:

  • § 285.223(a)—Revised section eliminates a reporting requirement for tied bidders who will now be allowed to resubmit revised bids (−4 burden hours).
  • § 285.506(c)(4)—Added requirement to allow MMS the ability to verify that the numbers we use in our formula are accurate to determine the operating fee (+1 burden hour).
  • § 285.516(a)(4)—Added requirement to provide a separate decommissioning bond or other financial assurance (+3 burden hours).
  • § 285.526(c)—Added annual reporting requirement for new option to allow more choices for financial assurance security instruments (+1 burden hour).
  • § 285.527—Added options to allow respondents to demonstrate financial strength and reliability instead of submitting a bond (+10 burden hours).
  • § 285.528—Added option to allow a third-party guaranty to meet financial assurance requirements (+10 burden hours).
  • § 285.612(b)—Clarified CZMA process (+4 burden hours).
  • § 285.614—Removed requirement as the activities may be conducted under U.S. Army Corps of Engineers regulations (−180 burden hours).
  • § 285.705(b)—Added option to allow respondents to request a CVA requirement waiver (+40 burden hours).
  • § 285.802(a), (b)—Revised section eliminates a reporting requirement on the protection of archaeological resources (−10 burden hours).
  • § 285.815(b)—Revised section eliminates requirement to report equipment and facility repairs to MMS (−2 burden hours).

The following table provides a breakdown of the hour burden and non-hour cost estimates.

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An agency may not conduct or sponsor, and you are not required to respond to, a collection of information unless it displays a currently valid OMB control number. The public may comment, at any time, on the accuracy of the IC burden in this rule and may submit any comments to the Department of the Interior; Minerals Management Service; Attention: Regulations and Standards Branch; Mail Stop 4024; 381 Elden Street; Herndon, Virginia 20170-4817.

National Environmental Policy Act (NEPA) of 1969

The MMS has analyzed this rule under the criteria of the National Environmental Policy Act. This rule meets the criteria set forth in 516 Departmental Manual 3.2 A for the preparation of an “Environmental Assessment.” The MMS prepared an EA analyzing the regulations for the MMS Alternative Energy and Alternate Use program. The EA incorporates by reference the PEIS, Programmatic Environmental Impact Statement for Alternative Energy Development and Production and Alternate Use of Facilities on the Outer Continental Shelf, Final Environmental Impact Statement, October 2007.

Based on the analysis in the EA, and the PEIS that it tiers off of, we have determined that the rule would not significantly affect the quality of the human environment (40 CFR 1508.27) and will not cause “undue or serious harm or damage to the human, marine, or coastal environment.” Therefore, the MMS has made a determination that results in a Finding of No Significant Impact. The EA and the PEIS are available on the MMS Web site at: http://www.mms.gov/​offshore/​AlternativeEnergy/​RegulatoryInformation.htm.

Data Quality Act

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

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

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

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List of Subjects

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Dated: April 21, 2009.

Richard T. Cardinale,

Acting Assistant Secretary—Land and Minerals Management.

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

End Amendment Part Start Part

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

End Part Start Amendment Part

1. The authority citation for

End Amendment Part Start Authority

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

End Authority Start Amendment Part

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

End Amendment Part
What are the general requirements for decommissioning?
* * * * *

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

* * * * *
Start Amendment Part

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

End Amendment Part
When do I have to remove platforms and other facilities?

(a) * * * Other activities include those supporting OCS oil and gas production and transportation, as well as other energy-related or marine-related uses (including LNG) for which adequate financial assurance for decommissioning has been provided to a Federal agency which has given MMS a commitment that it has and will exercise authority to compel the performance of decommissioning within a time following cessation of the new use acceptable to MMS. The approval will specify:

(1) Whether you must continue to maintain any financial assurance for decommissioning; and

(2) Whether, and under what circumstances, you must perform any decommissioning not performed by the new facility owner/user.

* * * * *
[Amended]
Start Amendment Part

4. In § 250.1730, amend the introductory text by removing the words “or other use”.

End Amendment Part Start Amendment Part

5. Add § 250.1731, to read as follows:

End Amendment Part
Who is responsible for decommissioning an OCS facility subject to an Alternate Use RUE?

(a) The holder of an Alternate Use RUE issued under part 285 of this subchapter is responsible for all decommissioning obligations that accrue following the issuance of the Alternate Use RUE and which pertain to the Alternate Use RUE. See 30 CFR part 285, subpart J, for additional information concerning the decommissioning responsibilities of an Alternate Use RUE grant holder.

(b) The lessee under the lease originally issued under 30 CFR part 256 will remain responsible for decommissioning obligations that accrued before issuance of the Alternate Use RUE, as well as for decommissioning obligations that accrue following issuance of the Alternate Use RUE to the extent associated with continued activities authorized under this part.

(c) If a lease issued under 30 CFR part 256 is cancelled or otherwise terminated under any provision of this subchapter, the lessee, upon our approval, may defer removal of any OCS facility within the lease area that is subject to an Alternate Use RUE. If we elect to grant such a deferral, the lessee remains responsible for removing the facility upon termination of the Alternate Use RUE and will be required to retain sufficient bonding or other financial assurances to ensure that the structure is removed or otherwise decommissioned in accordance with the provisions of this subpart.

Start Amendment Part

6. Add

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

Subpart A—General Provisions
285.100
Authority.
285.101
What is the purpose of this part?
285.102
What are MMS's responsibilities under this part?
285.103
When may MMS prescribe or approve departures from these regulations?
285.104
Do I need an MMS lease or other authorization to produce or support the production of electricity or other energy product from a renewable energy resource on the OCS?
285.105
What are my responsibilities under this part?
285.106
Who can hold a lease or grant under this part?
285.107
How do I show that I am qualified to be a lessee or grant holder?
285.108
When must I notify MMS if an action has been filed alleging that I am insolvent or bankrupt?
285.109
When must I notify MMS of mergers, name changes, or changes of business form?
285.110
How do I submit plans, applications, reports, or notices required by this part?
285.111
When and how does MMS charge me processing fees on a case-by-case basis?
285.112
Definitions.
285.113
How will data and information obtained by MMS under this part be disclosed to the public?
285.114
Paperwork Reduction Act statements—information collection.
285.115
Documents incorporated by reference.
285.116
Requests for information on the state of the offshore renewable energy industry.
285.117
[Reserved]
285.118
What are my appeal rights?
Subpart B—Issuance of OCS Renewable Energy Leases General Lease Information
285.200
What rights are granted with a lease issued under this part?
285.201
How will MMS issue leases?
285.202
What types of leases will MMS issue?
285.203
With whom will MMS consult before issuance of a lease?
285.204
What areas are available for leasing consideration?
285.205
How will leases be mapped?
285.206
What is the lease size?
285.207-285.209
[Reserved]
Competitive Lease Process
285.210
How does MMS initiate the competitive leasing process?
285.211
What is the process for competitive issuance of leases?
285.212
What is the process MMS will follow if there is reason to believe that competitors have withdrawn before the Final Sale Notice is issued?
285.213
What must I submit in response to a Request for Interest or a Call for Information and Nominations?
285.214
What will MMS do with information from the Requests for Information or Calls for Information and Nominations?
285.215
What areas will MMS offer in a lease sale?
285.216
What information will MMS publish in the Proposed Sale Notice and Final Sale Notice?
285.217-285.219
[Reserved]
Competitive Lease Award Process
285.220
What auction format may MMS use in a lease sale? Start Printed Page 19808
285.221
What bidding systems may MMS use for commercial leases and limited leases?
285.222
What does MMS do with my bid?
285.223
What does MMS do if there is a tie for the highest bid?
285.224
What happens if MMS accepts my bid?
285.225
What happens if my bid is rejected, and what are my appeal rights?
285.226-285.229
[Reserved]
Noncompetitive Lease Award Process
285.230
May I request a lease if there is no Call?
285.231
How will MMS process my unsolicited request for a noncompetitive lease?
285.232
May I acquire a lease noncompetitively after responding to a Request for Interest or Call for Information and Nominations under § 285.213?
285.233-285.234
[Reserved]
Commercial and Limited Lease Terms
285.235
If I have a commercial lease, how long will my lease remain in effect?
285.236
If I have a limited lease, how long will my lease remain in effect?
285.237
What is the effective date of a lease?
285.238
Are there any other renewable energy research activities that will be allowed on the OCS?
Subpart C—Rights-of-Way Grants and Rights-of-Use and Easement Grants for Renewable Energy Activities ROW Grants and RUE Grants
285.300
What types of activities are authorized by ROW grants and RUE grants issued under this part?
285.301
What do ROW grants and RUE grants include?
285.302
What are the general requirements for ROW grant and RUE grant holders?
285.303
How long will my ROW grant or RUE grant remain in effect?
285.304
[Reserved]
Obtaining ROW Grants and RUE Grants
285.305
How do I request an ROW grant or RUE grant?
285.306
What action will MMS take on my request?
285.307
How will MMS determine whether competitive interest exists for ROW grants and RUE grants?
285.308
How will MMS conduct an auction for ROW grants and RUE grants?
285.309
When will MMS issue a noncompetitive ROW grant or RUE grant?
285.310
What is the effective date of an ROW grant or RUE grant?
285.311-285.314
[Reserved]
Financial Requirements for ROW Grants and RUE Grants
285.315
What deposits are required for a competitive ROW grant or RUE grant?
285.316
What payments are required for ROW grants or RUE grants?
Subpart D—Lease and Grant Administration Noncompliance and Cessation Orders
285.400
What happens if I fail to comply with this part?
285.401
When may MMS issue a cessation order?
285.402
What is the effect of a cessation order?
285.403-285.404
[Reserved]
Designation of Operator
285.405
How do I designate an operator?
285.406
Who is responsible for fulfilling lease and grant obligations?
285.407
[Reserved]
Lease or Grant Assignment
285.408
May I assign my lease or grant interest?
285.409
How do I request approval of a lease or grant assignment?
285.410
How does an assignment affect the assignor's liability?
285.411
How does an assignment affect the assignee's liability?
285.412-285.414
[Reserved]
Lease or Grant Suspension
285.415
What is a lease or grant suspension?
285.416
How do I request a lease or grant suspension?
285.417
When may MMS order a suspension?
285.418
How will MMS issue a suspension?
285.419
What are my immediate responsibilities if I receive a suspension order?
285.420
What effect does a suspension order have on my payments?
285.421
How long will a suspension be in effect?
285.422-285.424
[Reserved]
Lease or Grant Renewal
285.425
May I obtain a renewal of my lease or grant before it terminates?
285.426
When must I submit my request for renewal?
285.427
How long is a renewal?
285.428
What effect does applying for a renewal have on my activities and payments?
285.429
What criteria will MMS consider in deciding whether to renew a lease or grant?
285.430-285.431
[Reserved]
Lease or Grant Termination
285.432
When does my lease or grant terminate?
285.433
What must I do after my lease or grant terminates?
285.434
[Reserved]
Lease or Grant Relinquishment
285.435
How can I relinquish a lease or a grant or parts of a lease or grant?
Lease or Grant Contraction
285.436
Can MMS require lease or grant contraction?
Lease or Grant Cancellation
285.437
When can my lease or grant be canceled?
Subpart E—Payments and Financial Assurance Requirements Payments
285.500
How do I make payments under this part?
285.501
What deposits must I submit for a competitively issued lease, ROW grant, or RUE grant?
285.502
What initial payment requirements must I meet to obtain a noncompetitive lease, ROW grant, or RUE grant?
285.503
What are the rent and operating fee requirements for a commercial lease?
285.504
How are my payments affected if I develop my lease in phases?
285.505
What are the rent and operating fee requirements for a limited lease?
285.506
What operating fees must I pay on a commercial lease?
285.507
What rent payments must I pay on a project easement?
285.508
What rent payments must I pay on ROW grants or RUE grants associated with renewable energy projects?
285.509
Who is responsible for submitting lease or grant payments to MMS?
285.510
May MMS reduce or waive my lease or grant payments?
285.511-285.514
[Reserved]
Financial Assurance Requirements for Commercial Leases
285.515
What financial assurance must I provide when I obtain my commercial lease?
285.516
What are the financial assurance requirements for each stage of my commercial lease?
285.517
How will MMS determine the amounts of the supplemental and decommissioning financial assurance requirements associated with commercial leases?
285.518-285.519
[Reserved]
Financial Assurance for Limited Leases, ROW Grants, and RUE Grants
285.520
What financial assurance must I provide when I obtain my limited lease, ROW grant, or RUE grant?
285.521
Do my financial assurance requirements change as activities progress on my limited lease or grant?
285.522-285.524
[Reserved]
Requirements for Financial Assurance Instruments
285.525
What general requirements must a financial assurance instrument meet?
285.526
What instruments other than a surety bond may I use to meet the financial assurance requirement?
285.527
May I demonstrate financial strength and reliability to meet the financial assurance requirement for lease or grant activities?
285.528
May I use a third-party guaranty to meet the financial assurance requirement for lease or grant activities?
285.529
Can I use a lease- or grant-specific decommissioning account to meet the financial assurance requirements related to decommissioning? Start Printed Page 19809
Changes in Financial Assurance
285.530
What must I do if my financial assurance lapses?
285.531
What happens if the value of my financial assurance is reduced?
285.532
What happens if my surety wants to terminate the period of liability of my bond?
285.533
How does my surety obtain cancellation of my bond?
285.534
When may MMS cancel my bond?
285.535
Why might MMS call for forfeiture of my bond?
285.536
How will I be notified of a call for forfeiture?
285.537
How will MMS proceed once my bond or other security is forfeited?
285.538-285.539
[Reserved]
Revenue Sharing With States
285.540
How will MMS equitably distribute revenues to States?
285.541
What is a qualified project for revenue sharing purposes?
285.542
What makes a State eligible for payment of revenues?
285.543
Example of how the inverse distance formula works.
Subpart F—Plans and Information Requirements
285.600
What plans and information must I submit to MMS before I conduct activities on my lease or grant?
285.601
When am I required to submit my plans to MMS?
285.602
What records must I maintain?
285.603-285.604
[Reserved]
Site Assessment Plan and Information Requirements for Commercial Leases
285.605
What is a Site Assessment Plan (SAP)?
285.606
What must I demonstrate in my SAP?
285.607
How do I submit my SAP?
285.608-285.609
[Reserved]
Contents of the Site Assessment Plan
285.610
What must I include in my SAP?
285.611
What information must I submit with my SAP to assist MMS in complying with NEPA and other relevant laws?
285.612
How will my SAP be processed for Federal consistency under the Coastal Zone Management Act?
285.613
How will MMS process my SAP?
Activities Under an Approved SAP
285.614
When may I begin conducting activities under my approved SAP?
285.615
What other reports or notices must I submit to MMS under my approved SAP?
285.616
[Reserved]
285.617
What activities require a revision to my SAP, and when will MMS approve the revision?
285.618
What must I do upon completion of approved site assessment activities?
285.619
[Reserved]
Construction and Operations Plan for Commercial Leases
285.620
What is a Construction and Operations Plan (COP)?
285.621
What must I demonstrate in my COP?
285.622
How do I submit my COP?
285.623-285.625
[Reserved]
Contents of the Construction and Operations Plan
285.626
What must I include in my COP?
285.627
What information and certifications must I submit with my COP to assist the MMS in complying with NEPA and other relevant laws?
285.628
How will MMS process my COP?
285.629
May I develop my lease in phases?
285.630
[Reserved]
Activities Under an Approved COP
285.631
When must I initiate activities under an approved COP?
285.632
What documents must I submit before I may construct and install facilities under my approved COP?
285.633
How do I comply with my COP?
285.634
What activities require a revision to my COP, and when will MMS approve the revision?
285.635
What must I do if I cease activities approved in my COP before the end of my commercial lease?
285.636
What notices must I provide MMS following approval of my COP?
285.637
When may I commence commercial operations on my commercial lease?
285.638
What must I do upon completion of my commercial operations as approved in my COP or FERC license?
285.639
[Reserved]
General Activities Plan Requirements for Limited Leases, ROW Grants, and RUE Grants
285.640
What is a General Activities Plan (GAP)?
285.641
What must I demonstrate in my GAP?
285.642
How do I submit my GAP?
285.643-285.644
[Reserved]
Contents of the General Activities Plan
285.645
What must I include in my GAP?
285.646
What information and certifications must I submit with my GAP to assist MMS in complying with NEPA and other relevant laws?
285.647
How will my GAP be processed for Federal consistency under the Coastal Zone Management Act?
285.648
How will MMS process my GAP?
285.649
[Reserved]
Activities Under an Approved GAP
285.650
When may I begin conducting activities under my GAP?
285.651
When may I construct complex or significant OCS facilities on my limited lease or any facilities on my project easement proposed under my GAP?
285.652
How long do I have to conduct activities under an approved GAP?
285.653
What other reports or notices must I submit to MMS under my approved GAP?
285.654
[Reserved]
285.655
What activities require a revision to my GAP, and when will MMS approve the revision?
285.656
What must I do if I cease activities approved in my GAP before the end of my term?
285.657
What must I do upon completion of approved activities under my GAP?
Cable and Pipeline Deviations
285.658
Can my cable or pipeline construction deviate from my approved COP or GAP?
285.659
What requirements must I include in my SAP, COP, or GAP regarding air quality?
Subpart G—Facility Design, Fabrication, and Installation Reports
285.700
What reports must I submit to MMS before installing facilities described in my approved SAP, COP, or GAP?
285.701
What must I include in my Facility Design Report?
285.702
What must I include in my Fabrication and Installation Report?
285.703
What reports must I submit for project modifications and repairs?
285.704
[Reserved]
Certified Verification Agent
285.705
When must I use a Certified Verification Agent (CVA)?
285.706
How do I nominate a CVA for MMS approval?
285.707
What are the CVA's primary duties for facility design review?
285.708
What are the CVA's or project engineer's primary duties for fabrication and installation review?
285.709
When conducting onsite fabrication inspections, what must the CVA or project engineer verify?
285.710
When conducting onsite installation inspections, what must the CVA or project engineer do?
285.711
[Reserved]
285.712
What are the CVA's or project engineer's reporting requirements?
285.713
What must I do after the CVA or project engineer confirms conformance with the Fabrication and Installation Report on my commercial lease?
285.714
What records relating to SAPs, COPs, and GAPs must I keep?
Subpart H—Environmental and Safety Management, Inspections, and Facility Assessments for Activities Conducted Under SAPs, COPs and GAPs
285.800
How must I conduct my activities to comply with safety and environmental requirements?
285.801
How must I conduct my approved activities to protect marine mammals, threatened and endangered species, and designated critical habitat?
285.802
What must I do if I discover a potential archaeological resource while conducting my approved activities?
285.803
How must I conduct my approved activities to protect essential fish habitats identified and described under the Magnuson-Stevens Fishery Conservation and Management Act?
285.804-285.809
[Reserved] Start Printed Page 19810
Safety Management Systems
285.810
What must I include in my Safety Management System?
285.811
When must I follow my Safety Management System?
285.812
[Reserved]
Maintenance and Shutdowns
285.813
When do I have to report removing equipment from service?
285.814
Reserved
Equipment Failure and Adverse Environmental Effects
285.815
What must I do if I have facility damage or an equipment failure?
285.816
What must I do if environmental or other conditions adversely affect a cable, pipeline, or facility?
285.817-285.819
[Reserved]
Inspections and Assessments
285.820
Will MMS conduct inspections?
285.821
Will MMS conduct scheduled and unscheduled inspections?
285.822
What must I do when MMS conducts an inspection?
285.823
Will MMS reimburse me for my expenses related to inspections?
285.824
How must I conduct self-inspections?
285.825
When must I assess my facilities?
285.826-285.829
[Reserved]
Incident Reporting and Investigation
285.830
What are my incident reporting requirements?
285.831
What incidents must I report, and when must I report them?
285.832
How do I report incidents requiring immediate notification?
285.833
What are the reporting requirements for incidents requiring written notification?
Subpart I—Decommissioning Decommissioning Obligations and Requirements
285.900
Who must meet the decommissioning obligations in this subpart?
285.901
When do I accrue decommissioning obligations?
285.902
What are the general requirements for decommissioning for facilities authorized under my SAP, COP, or GAP?
285.903
What are the requirements for decommissioning FERC-licensed hydrokinetic facilities?
285.904
Can I request a departure from the decommissioning requirements?
Decommissioning Applications
285.905
When must I submit my decommissioning application?
285.906
What must my decommissioning application include?
285.907
How will MMS process my decommissioning application?
285.908
What must I include in my decommissioning notice?
Facility Removal
285.909
When may MMS authorize facilities to remain in place following termination of a lease or grant?
285.910
What must I do when I remove my facility?
285.911
[Reserved]
Decommissioning Report
285.912
After I remove a facility, cable, or pipeline, what information must I submit?
Compliance With an Approved Decommissioning Application
285.913
What happens if I fail to comply with my approved decommissioning application?
Subpart J—Rights of Use and Easement for Energy and Marine-Related Activities Using Existing OCS Facilities Regulated Activities
285.1000
What activities does this subpart regulate?
285.1001-285.1003
[Reserved]
Requesting an Alternate Use RUE
285.1004
What must I do before I request an Alternate Use RUE?
285.1005
How do I request an Alternate Use RUE?
285.1006
How will MMS decide whether to issue an Alternate Use RUE?
285.1007
What process will MMS use for competitively offering an Alternate Use RUE?
285.1008-285.1009
[Reserved]
Alternate Use RUE Administration
285.1010
How long may I conduct activities under an Alternate Use RUE?
285.1011
What payments are required for an Alternate Use RUE?
285.1012
What financial assurance is required for an Alternate Use RUE?
285.1013
Is an Alternate Use RUE assignable?
285.1014
When will MMS suspend an Alternate Use RUE?
285.1015
How do I relinquish an Alternate Use RUE?
285.1016
When will an Alternate Use RUE be cancelled?
285.1017
[Reserved]
Decommissioning an Alternate Use RUE
285.1018
Who is responsible for decommissioning an OCS facility subject to an Alternate Use RUE?
285.1019
What are the decommissioning requirements for an Alternate Use RUE?
Start Authority

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

End Authority

Subpart A—General Provisions

Authority.

The authority for this part derives from amendments to subsection 8 of the Outer Continental Shelf Lands Act (OCS Lands Act) (43 U.S.C. 1337), as set forth in section 388(a) of the Energy Policy Act of 2005 (EPAct) (Pub. L. 109-58). The Secretary of the Interior delegated to the Minerals Management Service (MMS) the authority to regulate activities under section 388(a) of the EPAct. These regulations specifically apply to activities that:

(a) Produce or support production, transportation, or transmission of energy from sources other than oil and gas; or

(b) Use, for energy-related purposes or for other authorized marine-related purposes, facilities currently or previously used for activities authorized under the OCS Lands Act.

What is the purpose of this part?

The purpose of this part is to:

(a) Establish procedures for issuance and administration of leases, right-of-way (ROW) grants, and right-of-use and easement (RUE) grants for renewable energy production on the Outer Continental Shelf (OCS) and RUEs for the alternate use of OCS facilities for energy or marine-related purposes;

(b) Inform you and third parties of your obligations when you undertake activities authorized in this part; and

(c) Ensure that renewable energy activities on the OCS and activities involving the alternate use of OCS f