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Proposed Rule2023-00668

Renewable Energy Modernization Rule

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Published

January 30, 2023

Issuing agencies

Interior DepartmentOcean Energy Management Bureau

Abstract

The first Outer Continental Shelf (OCS) renewable energy regulations were promulgated in 2009 by BOEM's predecessor, the Minerals Management Service (MMS). BOEM's renewable energy program has matured over the past 13 years, during which time BOEM conducted eleven auctions and issued and managed 27 active commercial leases. Based on this experience, the Department has identified opportunities to modernize its regulations to facilitate the development of offshore wind energy resources to meet U.S. climate and renewable energy objectives. This proposed rule contains reforms identified by the Department and recommended by industry since 2010, including proposals for incremental funding of decommissioning accounts; more flexible geophysical and geotechnical survey submission requirements; streamlined approval of meteorological (met) buoys; revised project verification procedures; reform of BOEM's renewable energy auction process; and greater clarity regarding safety requirements. This proposed rule would advance the Department of the Interior's (DOI) energy policies in a safe and environmentally sound manner that would provide a fair return to the U.S. taxpayer.

Full Text

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[Federal Register Volume 88, Number 19 (Monday, January 30, 2023)]
[Proposed Rules]
[Pages 5968-6052]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-00668]

[[Page 5967]]

Vol. 88

Monday,

No. 19

January 30, 2023

Part II

Department of the Interior

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Bureau of Ocean Energy Management

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30 CFR Part 585

Renewable Energy Modernization Rule; Proposed Rule

Federal Register / Vol. 88, No. 19 / Monday, January 30, 2023 /
Proposed Rules

[[Page 5968]]

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DEPARTMENT OF THE INTERIOR

Bureau of Ocean Energy Management

30 CFR Part 585

[Docket No. BOEM-2023-0005]
RIN 1010-AE04

Renewable Energy Modernization Rule

AGENCY: Bureau of Ocean Energy Management (BOEM), Interior.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The first Outer Continental Shelf (OCS) renewable energy
regulations were promulgated in 2009 by BOEM's predecessor, the
Minerals Management Service (MMS). BOEM's renewable energy program has
matured over the past 13 years, during which time BOEM conducted eleven
auctions and issued and managed 27 active commercial leases. Based on
this experience, the Department has identified opportunities to
modernize its regulations to facilitate the development of offshore
wind energy resources to meet U.S. climate and renewable energy
objectives. This proposed rule contains reforms identified by the
Department and recommended by industry since 2010, including proposals
for incremental funding of decommissioning accounts; more flexible
geophysical and geotechnical survey submission requirements;
streamlined approval of meteorological (met) buoys; revised project
verification procedures; reform of BOEM's renewable energy auction
process; and greater clarity regarding safety requirements. This
proposed rule would advance the Department of the Interior's (DOI)
energy policies in a safe and environmentally sound manner that would
provide a fair return to the U.S. taxpayer.

DATES: Submit comments regarding the substance of this proposed rule to
BOEM on or before March 31, 2023. Submit comments regarding the
information collection burden of this proposed rule to the Office of
Management and Budget (OMB) and to BOEM on or before March 1, 2023.
Comments received after these dates might not be considered.

ADDRESSES: You may send comments regarding the substance of this
proposed rule, identified by docket number BOEM-2022-0019 and
regulation identifier number (RIN) 1010-AE04, using any of the
following methods:
<bullet> Federal e-rulemaking portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments. Helpful search terms
are ``RIN 1010-AE04'' or ``BOEM-2022-0019.''
<bullet> U.S. Postal Service or other mail delivery service:
Address comments to Office of Regulations, Bureau of Ocean Energy
Management, Department of the Interior, Attention: Georgeann Smale,
45600 Woodland Road, Mailstop: DIR-BOEM, Sterling, VA 20166.
<bullet> Information Collection Addresses: Written comments and
recommendations for this particular proposed information collection
should be submitted within 30 days of this notice's publication to
<a href="https://www.reginfo.gov/public/do/PRAMain">https://www.reginfo.gov/public/do/PRAMain</a>. From this main web page, you
can find and submit comments on this particular information collection
by proceeding to the boldface heading ``Currently under Review,''
selecting ``Department of the Interior'' in the ``Select Agency'' pull
down menu, clicking ``Submit,'' then, checking the box ``Only Show ICR
for Public Comment'' on the next web page, scrolling to OMB Control
Number 1010-0176, and clicking ``Comment'' button at the right margin.
Or, you may use the search function on the main web page. Please
provide a copy of your comments to the Information Collection Clearance
Officer, Office of Regulations, Bureau of Ocean Energy Management,
Attention: Anna Atkinson, 45600 Woodland Road, Sterling, VA 20166; or
by email to <a href="/cdn-cgi/l/email-protection#dcbdb2b2bdf2bda8b7b5b2afb3b29cbeb3b9b1f2bbb3aa">[email&#160;protected]</a>. Please reference OMB Control Number
1010-0176 in the subject line of your comments.
Instructions: All comments submitted regarding this proposed rule
and its information collection requirements should reference the docket
number BOEM-2022-0019 or RIN 1010-AE04. All comments received by BOEM
will be reviewed and may be posted to <a href="https://www.regulations.gov">https://www.regulations.gov</a>,
including any personal information provided with the submission. For
further instructions on submitting comments and protecting personally
identifiable information, see ``What Should I Consider as I Prepare My
Comments?'' in section II.A under the SUPPLEMENTARY INFORMATION section
of this document.
Docket: To access this proposed rule's docket to read related
documents and public comments, visit <a href="https://www.regulations.gov">https://www.regulations.gov</a> and
enter the docket number BOEM-2020-0033 into the search engine.

FOR FURTHER INFORMATION CONTACT: Georgeann Smale, Renewable Energy
Modernization Rule Lead, Office of Regulations, BOEM, at telephone
number 703-544-9246 or email address <a href="/cdn-cgi/l/email-protection#ca8dafa5b8adafaba4a4e499a7aba6af8aa8a5afa7e4ada5bc">[email&#160;protected]</a>; or Karen
Thundiyil, Chief, Office of Regulations, BOEM, at telephone number 202-
742-0970, or email address <a href="/cdn-cgi/l/email-protection#145f7566717a3a407c617a707d6d7d7854767b71793a737b62">[email&#160;protected]</a>.
To obtain a copy of the information collection supporting
statement, contact: Information Collection Clearance Officer, Office of
Regulations, Bureau of Ocean Energy Management, Attention: Anna
Atkinson, 45600 Woodland Road, Sterling, VA 20166.

SUPPLEMENTARY INFORMATION:

Preamble Table of Contents

I. Executive Summary
II. General Information
A. What should I consider as I prepare my comments?
1. Contact Information
2. Public Availability of Comments
3. Information Collection Comments
4. Scope of Comments
5. Suggestions for Preparing Your Comments
III. Preamble Glossary of Abbreviations, Terms, and Acronyms
IV. Background
A. Statutory Authority
B. Existing Regulatory Framework
1. Conducting Renewable Energy Activities on the Outer
Continental Shelf
2. Issuing Competitive Leases and Grants
3. Administration of Leases and Grants
4. Payments and Financial Assurance
5. Plan Submittal and Review
6. Design, Fabrication, and Installation of Facilities
7. Facility Operations
8. Decommissioning
C. Need for Rulemaking
V. Analytical Overview of the Proposed Rule
A. Site Assessment Facilities
1. Existing Regulations
2. Why the Existing Regulations Should Be Updated
3. Proposed Changes
B. Project Design Envelope
C. Geophysical and Geotechnical Surveys
1. Existing Regulations
2. Why the Existing Regulations Should Be Updated
3. Proposed Changes
4. Solicitation of Comments Concerning a Potential New Permit
Requirement for Conducting Geological and Geophysical Surveys for
Renewable Energy Activities
D. Certified Verification Agent and Engineering Reports
1. Existing Regulations
2. Why the Existing Regulations Should Be Updated
3. Proposed Changes
E. Renewable Energy Leasing Schedule
1. Existing Regulations
2. Why the Existing Regulations Should Be Updated
3. Proposed Changes
F. Lease Issuance Procedures
1. Existing Regulations
2. Why the Existing Regulations Should Be Updated
3. Proposed Changes
G. Risk Management and Financial Assurance
1. Existing Regulations

[[Page 5969]]

2. Why the Existing Regulations Should Be Updated
3. Proposed Changes
H. Safety Management Systems
1. Existing Regulations
2. Why the Existing Regulations Should Be Updated
3. Proposed Changes
I. Inspections
1. Existing Regulations
2. Why the Existing Regulations Should Be Updated
3. Proposed Changes
J. Other Proposed Changes
1. Lease Structure
2. Lease Segregation and Consolidation
3. Civil Penalties
4. Standardize Annual Rental Rates for Grants
5. Technical Corrections and Clarifications
K. Potential Revisions to Regulations Governing Research
Activities
L. Potential Revisions to Regulations Governing Transmission
VI. Section-by-Section Analysis of Proposed Rule
A. 30 CFR Part 585, Subpart A--General Provisions
B. 30 CFR Part 585, Subpart B--The Renewable Energy Leasing
Schedule
C. 30 CFR Part 585, Subpart C--Issuance of OCS Renewable Energy
Leases
D. 30 CFR Part 585, Subpart D--Rights-of-Way Grants and Rights-
of-Use and Easement Grants for Renewable Energy Activities
E. 30 CFR Part 585, Subpart E--Lease and Grant Administration
F. 30 CFR Part 585, Subpart F--Payments and Financial Assurance
Requirements
G. 30 CFR Part 585, Subpart G--Plans and Information
Requirements
H. 30 CFR Part 585, Subpart H--Facility Design, Fabrication, and
Installation
I. 30 CFR Part 585, Subpart I--Environmental and Safety
Management, Inspections, and Facility Assessments for Activities
Conducted Under SAPs, COPs, and GAPs
J. 30 CFR Part 585, Subpart J--Decommissioning
K. 30 CFR Part 585, Subpart K--Rights-of-Use and Easement for
Energy- and Marine-Related Activities Using Existing OCS Facilities
VII. Procedural Matters
A. Statutes
1. National Environmental Policy Act of 1969
2. Paperwork Reduction Act of 1995
3. Regulatory Flexibility Act
4. Small Business Regulatory Enforcement Fairness Act
5. Unfunded Mandates Reform Act of 1995
6. Congressional Review Act
B. Executive Orders
1. Executive Order 12630--Takings Implication Assessment
2. Executive Order 12866--Regulatory Planning and Review; and
Executive Order 13563--Improving Regulation and Regulatory Review
3. Executive Order 12988--Civil Justice Reform
4. Executive Order 13132--Federalism
5. Executive Order 13175--Consultation and Coordination With
Indian Tribal Governments
6. Executive Order 13211--Effects on the Nation's Energy Supply
7. Presidential Memorandum of June 1, 1998, on Regulation
Clarity

I. Executive Summary

This proposed rule would facilitate the development of OCS
renewable energy and would promote U.S. climate and renewable energy
objectives in a safe and environmentally sound manner while providing a
fair return to the U.S. taxpayer. These important goals would be
accomplished by modernizing regulations, streamlining overly complex
and burdensome processes, clarifying ambiguous provisions, enhancing
compliance provisions, and correcting technical errors and
inconsistencies. Through these changes, the Department aims to reduce
administrative burdens for both developers and the Department's staff,
reduce developer \1\ costs and uncertainty, and introduce greater
regulatory flexibility in a rapidly changing industry to foster the
supply of OCS renewable energy to meet increasing demand, while
maintaining environmental safeguards. This proposed rule is a major
modernization of the regulations, reflects lessons learned from the
past 13 years, and is projected to save the renewable energy industry
$1 billion over 20 years.\2\
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\1\ As used in this preamble, the term ``developer'' includes
those interested in constructing, operating, and maintaining OCS
facilities to produce, transport, or support the generation of
energy from renewable resources. Developers may include applicants
seeking noncompetitive leases and grants, bidders in competitive
auctions, holders of BOEM-issued leases (lessees) and grants (grant
holders), and operators of facilities and support contractors.
\2\ For the supporting economic analyses, see section VII.B.2 of
this preamble, including the associated tables, that summarizes
BOEM's estimated 20-year compliance cost savings as well as the
initial regulatory impact analysis available in this proposed rule's
docket at <a href="https://www.regulations.gov/docket?D=BOEM-2020-0033">https://www.regulations.gov/docket?D=BOEM-2020-0033</a>. The
estimated cost reduction is expressed in net present value of 2022
dollars estimated over a 20-year period at a 7 percent discount
rate. The estimated annualized cost reduction at the 7 percent
discount rate is about $95 million. At a 3 percent discount rate,
the estimated cost reduction over a 20-year period is about $1.4
billion in net present value of 2022 dollars. The estimated
annualized cost reduction at the 3 percent discount rate is about
$93 million.
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These updates are necessary to ensure a durable and appropriate
process is in place to advance renewable energy on the OCS.
The proposed rule contains eight major components:
1. Eliminating unnecessary requirements for the deployment of
meteorological (met) buoys.
BOEM requires a site assessment plan (SAP) for data collection
activities that measure met conditions and that aid the siting and
design of an offshore renewable energy project. Such activities include
the use of met towers and buoys. BOEM first formulated the SAP
requirement in 2009, when the offshore wind industry gathered
meteorological data primarily from towers fixed in place by foundations
pile-driven into the seafloor. The industry has since transitioned to
buoys anchored to the seafloor that gather the same data at lower cost
and with less environmental impact.
The U.S. Army Corps of Engineers (USACE) permits scientific
measurement devices used for a variety of purposes deployed in U.S.
navigable waters and on the OCS, including met towers and met buoys.
The USACE permitting process is tailored to buoys and is subject to the
same Federal environmental laws \3\ as BOEM's SAP process. BOEM's
existing SAP process is well suited for the complexities involved with
installing met towers but has proven to be unreasonably burdensome for
simply anchoring met buoys on the seafloor and redundant with USACE's
process.
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\3\ E.g., National Environmental Policy Act, Endangered Species
Act, and National Historic Preservation Act.
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This proposed rule would eliminate both the SAP requirement for met
buoys and the limited lease requirement for installing off-lease met
towers and met buoys.\4\ Off-lease met towers and met buoys would
continue to require USACE permits, given that agency's jurisdiction
over obstructions deployed in U.S. navigable waters under section 10 of
the Rivers and Harbors Act.
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\4\ As used throughout this notice, ``off-lease'' means
activities occurring on the OCS that are conducted outside the
leasehold of a commercial lease issued by BOEM. ``On-lease'' means
activities occurring on the OCS within the boundaries of a
commercial lease issued by BOEM.
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2. Increasing survey flexibility.
Before constructing an offshore renewable energy project, lessees
and grant holders must conduct geotechnical, geophysical, and
archaeological surveys. The primary purposes of these surveys are to
ensure the site is suitable for construction, avoid seafloor hazards,
and identify historic and cultural resources. Currently, BOEM requires
detailed geotechnical survey data for each proposed wind turbine
location in the construction and operations plan (COP) submitted by the
lessee before project construction is authorized. However, the
Department has learned that the precise location of each wind turbine

[[Page 5970]]

may be uncertain at the COP submittal stage, and geotechnical data
collected primarily for engineering purposes are more relevant to the
review process after COP approval. Consequently, lessees have requested
permission to submit geotechnical data for each turbine location after
COP approval, but before construction.
This proposed rule would defer certain geotechnical survey
requirements, such as engineering site-specific surveys (e.g.,
boreholes, vibracores, grab samplers, cone penetrometer tests and other
penetrative methods). This proposed change would allow more time to
complete the required surveys and would provide greater flexibility in
designing projects. BOEM's guidelines for geotechnical surveys are
available online.\5\
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\5\ <a href="https://www.boem.gov/sites/default/files/documents/about-boem/GG-Guidelines.pdf">https://www.boem.gov/sites/default/files/documents/about-boem/GG-Guidelines.pdf</a>.
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3. Improving the project design and installation verification
process.
A certified verification agent (CVA) provides independent third-
party review of a project's design, fabrication, and installation. The
proposed rule would expand the CVA's role to include verification of
the design and commissioning of the critical safety systems to assist
the Department in meeting requirements of the Outer Continental Shelf
Lands Act (OCS Lands Act; 43 U.S.C. 1331 et seq.), and its implementing
regulations at 30 CFR 585.102(a), to ensure that any activities
authorized by BOEM are carried out safely. BOEM's regulations require
CVAs to ``certify'' projects, but CVAs have informed BOEM that the
proper industry standard is ``verification.'' This proposed rule would
change the regulatory language defining the CVA's role from ``certify''
and ``certification'' to ``verify'' and ``verification.'' This proposed
change likely would encourage additional firms to participate in
offshore renewable energy projects as CVAs. Industry also has suggested
changes that would enable BOEM to approve CVA nominations before COP
submittal and would allow separate facility design reports (FDRs) and
fabrication and installation reports (FIRs) for major project
components. These changes would encourage developers to seek CVA review
throughout their project design process and would permit the use of
specialized CVAs to verify specific project components.
4. Establishing a Public Renewable Energy Leasing Schedule.
This proposed rule would introduce a new commitment by the
Secretary of the Interior (Secretary) to publish a schedule of
anticipated lease sales that BOEM intends to hold in the subsequent 5
years. This provision is intended to provide advance notice to
stakeholders of areas being considered for future lease sales. The
proposed schedule for leasing would provide increased certainty and
enhanced transparency. This is intended to facilitate planning by
industry, the States, and other stakeholders. Comments on the timing
and scope of a scheduled lease sale can be made during the public
comment opportunities afforded by BOEM during the planning process for
each particular lease sale scheduled (e.g., Request for Interest, Call
for Information and Nominations, etc.). The proposed schedule would be
updated at least once every 2 years to reflect any changes. This
proposed schedule would include a general description of the area of
each proposed lease sale, the anticipated quarter of each sale, and
reasons for changes made to the previously issued leasing schedule, if
any.
5. Reforming BOEM's renewable energy auction regulations.
In response to lessons learned from eleven auctions, BOEM proposes
to reorganize and clarify its pre- and post-auction procedures. These
changes would also address the use of bidding credits, deter potential
bidder collusion, and more clearly outline auction processes and
requirements. They also would specify actions to be taken if a
provisional winner fails to meet its obligations, or if an existing
lease is relinquished, contracted, or cancelled. The proposed rule
would preserve the option to use multiple factor auctions.
6. Tailoring financial assurance requirements and instruments.
BOEM requires financial assurances from lessees and grant holders
to protect the U.S. taxpayer against potential liabilities arising from
any default on lessee or grant holder regulatory obligations. The
proposed rule would tailor the financial assurance requirements to
better align those requirements with actual risk by allowing
incremental funding of decommissioning accounts in accordance with a
BOEM-approved schedule during the lease term and by expanding the
acceptable categories of financial assurance instruments.
7. Clarifying safety management system regulations.
The proposed rule would clarify the information requirements for
safety management systems and would add two safety reporting
requirements. The proposed rule would incentivize lessees and grant
holders to obtain a safety management certification from an accredited
conformity assessment body (CAB) as a means to reduce the frequency and
intensity of regulatory oversight activities.
8. Revising other provisions and making technical corrections.
The proposed rule contains numerous additional provisions that do
not fit within the categories described above. The most significant of
these provisions would: restructure commercial lease terms into four
periods tied to activities required to develop the lease; explicitly
allow regulatory departures before and after a lease or grant is issued
or made; authorize civil penalties without either notice or a time
period for corrective action when violations cause or threaten to cause
serious, irreparable, or immediate harm or damage; add specific
procedures regarding lease segregation and consolidation; and
standardize the annual rental rate per acre across most grants. The
proposed rule would correct technical errors in the existing
regulations and would make corrections to ensure consistency between
the proposed changes and existing practice.
The Department has authority to promulgate OCS renewable energy
regulations under the OCS Lands Act. The proposed rule would be
consistent with and would advance DOI's energy policies as outlined in
various executive orders.

II. General Information

A. What should I consider as I prepare my comments?

1. Contact Information
Please include your name, address, and telephone number or email
address so BOEM can contact you with any questions regarding your
submission. BOEM will not consider anonymous comments.
2. Public Availability of Comments
Responses will be posted on <a href="https://www.regulations.gov">https://www.regulations.gov</a>. Your
entire comment will become publicly available after submission,
including your name, address, phone number, email address, and any
other personally identifiable information (PII) in your comment.
If you wish to protect the confidentiality of your comments,
clearly mark the relevant sections and request that BOEM treat them as
confidential. In order for BOEM to withhold from disclosure your PII,
you must identify any information contained in your comments that, if
released, would constitute a clearly unwarranted invasion of your
privacy. You must also briefly describe any possible harmful
consequences of the disclosure of information, such as embarrassment,
injury, or other harm.

[[Page 5971]]

Please label privileged or confidential information as ``Contains
Confidential Information,'' and consider submitting such information as
a separate attachment. Information that is not labeled as privileged or
confidential may be regarded by BOEM as suitable for public release.
While you can request that your PII be withheld from public view,
BOEM cannot guarantee that it will be able to do so.
3. Information Collection Comments
OMB is required to provide its comments concerning the information
collection in this proposed rule 30-60 days after publication of this
document in the Federal Register. Therefore, a comment to OMB is best
assured of being fully considered if OMB receives it by March 1, 2023.
This does not affect the deadline for public comments to BOEM on the
proposed rule. To review a copy of the information collection request
submitted to OMB, go to <a href="https://www.reginfo.gov">https://www.reginfo.gov</a>, select ``Information
Collection Review.'' Under the heading ``Currently Under Review,''
select ``Department of the Interior'' from the pull-down menu; click
``submit;'' check the box ``Only Show ICR for Public Comment'' on the
next web page; scroll to OMB Control Number 1010-0176; and click
``Comment'' button at the right margin. You may obtain a copy of the
supporting statement for this proposed information collection by
contacting BOEM's information collection clearance officer at (703)
787-1025.
4. Scope of Comments
BOEM seeks public comments on the changes in regulatory text and
interpretation contained in this proposed rule. As part of this
rulemaking, BOEM will consider whether this proposed rule or any
additional modifications would improve, clarify, or streamline its OCS
renewable regulations. BOEM also seeks comment on several specific
areas of inquiry for which it is not proposing regulatory text. Based
on comments received and its experience in administering the OCS
renewable energy programs, BOEM may include in the final rule revisions
to any provisions in part 585 that are a logical outgrowth of this
proposed rule, consistent with the Administrative Procedure Act.
5. Suggestions for Preparing Your Comments
(a) Label your comments on this proposed rule with RIN 1010-AE04 or
docket number BOEM-2020-0033.
(b) Organize your comments sequentially by the preamble section
heading or by the proposed rule section number when addressing specific
rule sections.
(c) Explain why you agree or disagree with specific provisions;
suggest alternative provisions or provide substitute language.
(d) Describe your assumptions, information, and data used in
formulating your comments.
(e) Provide specific examples to illustrate your concerns and
suggested alternatives.
(f) Explain your views clearly and succinctly.
(g) Ensure your comments are submitted by the deadline.

III. Preamble Glossary of Abbreviations, Terms, and Acronyms

The following abbreviations, terms, and acronyms are used in the
preamble:

ANCSA Alaska Native Claims Settlement Act
BOEM Bureau of Ocean Energy Management
BSEE Bureau of Safety and Environmental Enforcement
CAA Clean Air Act
CAB Conformity Assessment Body
Call Call for Information and Nominations
CFR Code of Federal Regulations
COP Construction and Operations Plan
CVA Certified Verification Agent
CZMA Coastal Zone Management Act
DNCI Determination of No Competitive Interest
DOE Department of Energy
DOI Department of the Interior
E.O. Executive Order
ESA Endangered Species Act
FDR Facility Design Report
FERC Federal Energy Regulatory Commission
FIR Fabrication and Installation Report
FR Federal Register
FSN Final Sale Notice
GAP General Activities Plan
Met Meteorological
MSA Magnuson-Stevens Act
MMPA Marine Mammal Protection Act
NEPA National Environmental Policy Act
NHPA National Historic Preservation Act
NMFS National Marine Fisheries Service
NOAA National Oceanic and Atmospheric Administration
NWP 5 U.S. Corps of Engineers Nationwide Permit 5
OCS Outer Continental Shelf
OCS Lands Act Outer Continental Shelf Lands Act
OIRA Office of Information and Regulatory Affairs
OMB Office of Management and Budget
ONRR Office of Natural Resources Revenue
OSHA Occupational Safety and Health Administration
PDE Project Design Envelope
PPA Power Purchase Agreement
PRA Paperwork Reduction Act
PSN Proposed Sale Notice
RIN Regulation Identifier Number
ROW Right-of-Way Grant
RUE Right-of-Use and Easement Grant
SAP Site Assessment Plan
Secretary Secretary of the Interior
SMS Safety Management System
USACE United States Army Corps of Engineers
U.S.C. United States Code
USCG United States Coast Guard
USEPA United States Environmental Protection Agency

IV. Background

A. Statutory Authority

Congress authorized the Secretary to grant OCS leases for renewable
energy activities when it enacted the Energy Policy Act of 2005, which
amended the OCS Lands Act by adding a new subsection 8(p).\6\ OCS Lands
Act subsection 8(p) authorizes the Secretary to award OCS leases,
right-of-way grants (ROWs), and right-of-use and easement grants (RUEs)
for activities not authorized by other applicable laws that produce, or
that support the production, transportation, or transmission of, energy
from sources other than oil and gas. Subsection 8(p) requires the
Secretary to competitively award such leases, ROWs, and RUEs unless the
Secretary determines following public notice that competitive interest
does not exist. Subsection 8(p) also authorizes the Secretary to issue
regulations to carry out the subsection's grant of authority. The
Secretary first delegated that authority to BOEM's predecessor, MMS.
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\6\ Codified at 43 U.S.C. 1337(p).
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On April 29, 2009, MMS promulgated regulations for leasing and
managing OCS renewable energy activities. On May 19, 2010, the
Secretary signed Secretary's Order 3299, dividing MMS into three
separate agencies: BOEM, the Bureau of Safety and Environmental
Enforcement (BSEE), and the Office of Natural Resources Revenue (ONRR).
Amendment 2 of Secretary's Order 3299 assigned BOEM all renewable
energy-related management functions--including resource evaluation,
planning, leasing, and safety and environmental enforcement functions--
until the ``Assistant Secretary--Land and Minerals Management
determines that an increase in activity justifies transferring the
inspection and enforcement functions to [BSEE].'' \7\ On October 18,
2011, BOEM's regulations were codified at 30 CFR chapter V, and its
renewable energy regulations were,

[[Page 5972]]

and remain, located in 30 CFR part 585.\8\
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\7\ Secretary's Order 3299, Amendment No. 2, August 29, 2011,
<a href="https://www.doi.gov/sites/doi.gov/files/elips/documents/3299a2-establishment_of_the_bureau_of_ocean_energy_management_the_bureau_of_safety_and_environmental_enforcement_and_the_office_of_natural_resources_revenue.pdf">https://www.doi.gov/sites/doi.gov/files/elips/documents/3299a2-establishment_of_the_bureau_of_ocean_energy_management_the_bureau_of_safety_and_environmental_enforcement_and_the_office_of_natural_resources_revenue.pdf</a> (last visited Mar. 6, 2019).
\8\ Reorganization of Title 30: Bureaus of Safety and
Environmental Enforcement and Ocean Energy Management, 76 FR 64432
(October 18, 2011).
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B. Existing Regulatory Framework

This section provides an overview of BOEM's existing renewable
energy regulatory framework.
1. Conducting Renewable Energy Activities on the Outer Continental
Shelf
BOEM's regulations specify that a lease, ROW, or RUE is required
before a person may construct, operate, or maintain a renewable energy
facility on the OCS. A lease authorizes the lessee to propose a plan
for development. Following review of the development plans and
associated consultations, BOEM may authorize installation and operation
of a renewable energy facility on a designated portion of the OCS. A
lease also confers the right to one or more project easements necessary
for the use of the lease, which in most cases is a corridor from the
facility to shore for one or more transmission cables.
BOEM may issue a commercial lease or a non-commercial (or limited)
lease for renewable energy activities, subject to obtaining the
necessary approvals. A commercial lease specifies the terms and
conditions for activities that generate, store, or transmit renewable
energy on the OCS for distribution, sale, or other commercial use.
These activities include facility construction and project
decommissioning.
A limited lease specifies the terms and conditions for activities
that support the production of energy on the OCS, but do not produce
energy for sale, distribution, or other commercial use exceeding a
limit specified in the lease. In addition to commercial and limited
leases, a lease may be issued to a Federal agency or a State for
research activities supporting future renewable energy development.
A ROW authorizes the installation and maintenance of cables,
pipelines, and associated facilities on the OCS that involve the
transportation or transmission of any energy product from renewable
energy projects. A RUE authorizes the operation of facilities or other
installations on the OCS that support the production, transportation,
or transmission of electricity or other energy product from any
renewable energy source, including shared transmission solutions. The
term `grant,' as used in this document, refers to ROWs or RUEs issued
pursuant to the regulations of part 585.
BOEM makes leases, ROWs, and RUEs available on a competitive basis,
unless BOEM determines that there is no competitive interest. When
competitive interest is absent, BOEM may issue leases, ROWs, and RUEs
noncompetitively.
BOEM has discretion to issue departures from its regulations. BOEM
may approve departures if they are documented in writing; are
consistent with the requirements of the OCS Lands Act; protect the
environment, public health, and safety; protect the rights of third
parties; and are necessary to facilitate activities on a lease or
grant, conserve natural resources, or protect life, property, the
environment, or archaeological resources.
2. Issuing Competitive Leases and Grants
Subpart B of 30 CFR part 585 describes the process for issuing a
renewable energy lease. BOEM may begin the leasing process by
publishing a request for interest to assess interest in leasing all or
part of a region of the OCS for renewable energy activities. The
request for interest is typically followed by a call for information
and nominations (Call) in the Federal Register. The Call requests that
respondents nominate OCS areas for commercial renewable energy
development. BOEM uses the feedback from the request for interest and
the Call to assess competitive interest in specified OCS areas.
BOEM also will consider unsolicited requests for a lease on a case-
by-case basis. If BOEM determines that competitive interest exists for
an area nominated through an unsolicited request, BOEM will use the
competitive process if it decides that a lease in that area is
appropriate.
After potential OCS renewable energy development areas are
identified, BOEM evaluates the potential impacts of leasing those areas
on the human, marine, and coastal environments under the OCS Lands Act
and consults with Federal agencies and affected States regarding the
requirements of other potentially applicable Federal statutes,
including the National Environmental Policy Act (NEPA), Coastal Zone
Management Act (CZMA), Endangered Species Act (ESA), Magnuson-Stevens
Act (MSA), Marine Mammal Protection Act (MMPA), and National Historic
Preservation Act (NHPA), National Marine Sanctuaries Act (NMSA), and
Native American Graves Protection and Repatriation Act (NAGPRA).
Under the competitive process, BOEM initiates a sale by publishing
a proposed sale notice (PSN) in the Federal Register detailing the
areas proposed for leasing and the competitive leasing process for
those areas, including auction procedures and lease provisions and
conditions. The PSN also invites public comment on the areas and
proposed auction procedures. BOEM assesses the comments received in
response to the PSN and may incorporate changes in the final sale
notice (FSN) in response to these comments. The FSN is published in the
Federal Register at least 30-calendar days before the auction date. The
FSN finalizes the areas offered for lease, auction procedures, and
lease provisions based on the PSN. The FSN also provides details
regarding a mock auction, which is an optional practice auction
intended to familiarize bidders with auction procedures.
BOEM may end the competitive process for a specific lease area at
any time before the FSN if it believes competitive interest no longer
exists. BOEM does so by issuing a notice and considering the responsive
comments to reassess competitive interest.
If BOEM concludes that competitive interest is absent in a lease
area, BOEM may publish a determination of no competitive interest
(DNCI) in the Federal Register. BOEM then may offer a noncompetitive
lease to the sole interested developer, if one exists, after consulting
potentially affected Federal agencies, State and local governments, and
federally recognized Tribes (Tribes), and, if applicable, Alaska Native
Claims Settlement Act (ANCSA) corporations, and after the interested
developer submits the requisite certifications, information, and
payments.
If BOEM concludes that competitive interest exists, BOEM may
proceed with an auction on the date specified in the FSN. Existing
regulations specify four auction types and six bidding systems from
which BOEM may choose to conduct its auctions. The auction format and
bidding system for a specific auction are specified in the FSN. Among
the auction types is multiple factor bidding, in which BOEM may allow
bids with a non-monetary component based on certain beneficial
attributes identified in the FSN, including technical merit, financing
and economics, and compatibility with State and local needs.
BOEM conducts an auction for the relevant lease areas in accordance
with the FSN. At the end of the auction, BOEM determines the winning
bidder for each area to be leased. BOEM may reject any bid if it
determines that the bid was inadequate, illegal, or the result of anti-
competitive behavior, administrative error, or the presence of unusual
bidding patterns.

[[Page 5973]]

Once a winning bidder has been identified, BOEM implements a
statutorily mandated 30-day antitrust review by the Department of
Justice and Federal Trade Commission. If the antitrust review does not
raise concerns and no appeals of the auction result are pending, BOEM
typically accepts the winning bid within 90-calendar days of the
auction and sends three unsigned copies of the lease to the winning
bidder. The winning bidder has 10-business days from date of receipt to
sign these copies, return them to BOEM, provide financial assurance,
and pay the balance due on its bid. BOEM may extend the deadline for
good cause. The winner must pay a sum equal to the first 12 months'
rent within 45-calendar days of receiving the unsigned copies of the
lease. After receiving the signed copies, BOEM executes the lease on
behalf of the United States, and sends one fully executed copy to the
winning bidder. BOEM reserves the right to withdraw an OCS area at any
time prior to lease execution, whereupon BOEM would refund the bid
deposit.
A bidder may appeal to the BOEM Director within 15-business days of
bid rejection to seek reconsideration. BOEM will send a response either
affirming or reversing the final bid decision.
Subpart C of 30 CFR part 585 describes the process for issuing ROWs
and RUEs. BOEM conducts the competitive process for awarding a ROW or
RUE using procedures similar to those for a lease. This would involve
publishing a public notice, describing the parameters of the project in
order to give affected and interested parties an opportunity to comment
on the proposed ROW grant or RUE grant area. If such interest exists,
BOEM would conduct a competitive auction for issuing the ROW grant or
RUE grant. The auction process for ROW grants and RUE grants, following
the same process for leases set forth in Sec. Sec. 585.211 through
585.225.
3. Administration of Leases and Grants
Subpart D of 30 CFR part 585 describes the various processes that
BOEM can use to enforce the terms of its leases and grants once they
have been issued. This subpart also describes the requirements for
transferring ownership interests and modifying the duration of a lease
or grant.
BOEM has broad enforcement discretion under this subpart and may
act whenever a lessee or grant holder has violated a term or condition
of a lease or grant, an order or approval, or a regulation. BOEM's
potential remedies include corrective actions, a cessation order, civil
penalties, and lease or grant termination.
Lessees and grant holders are allowed to designate an operator to
act on their behalf to perform activities on a lease or grant. Whenever
the regulations in part 585 require the lessee or grant holder to
conduct an activity in a prescribed manner, the lessee or grant holder
and the operator are jointly and severally responsible for complying
with the regulations. Lessees and grant holders may assign all or part
of their lease or grant interests using procedures set forth in this
subpart; assignors remain jointly and severally liable for liabilities
that accrued before BOEM approves the assignment. An assignee must be
legally, technically, and financially qualified to hold the lease or
grant under 30 CFR part 585.
BOEM's regulations contain several mechanisms for extending the
lease duration. The term of a lease or grant can be suspended through
request by a lessee or grant holder that is approved by BOEM, through a
BOEM order, or when necessary to comply with a judicial decree, avoid
an imminent threat of irreparable harm, or for reasons of national
security. A suspension has the effect of pausing the running of the
term of a lease, thereby extending the termination date by the same
length as the pause. In BOEM's discretion, a suspension of the lease
may also suspend lease payments. BOEM also may approve the renewal of a
lease or grant term requested by a lessee or grant holder based on an
enumerated set of criteria.
There are numerous means by which a lease or grant may be
terminated in whole or in part. First, it may be terminated through
expiration of the lease or grant term without a renewal. Second, BOEM
may cancel a lease or grant for reasons enumerated in the regulations,
including proof that the lease or grant was obtained fraudulently.
Third, BOEM may require a partial cancellation of a lease by reducing
the area of the leasehold. Fourth, a lessee or grant holder may
voluntarily relinquish some or all of its lease or grant, subject to
BOEM approval.
4. Payments and Financial Assurance
Lessees and grant holders are required to make regular payments to
the U.S. Treasury in exchange for use of their leases and grants. Under
the OCS Lands Act, BOEM is required to ensure that U.S. taxpayers
obtain a fair return from OCS renewable energy leases, ROWs, and
RUEs.\9\ Lessees and grant holders also must provide financial
assurance--in the form of a bond or other qualifying instrument--in an
amount sufficient to guarantee compliance with terms and conditions of
their leases and grants. Subpart E of BOEM's regulations detail these
respective obligations.
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\9\ 43 U.S.C. 1337(p)(2)(A).
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Before an entity may bid to acquire a lease or grant competitively,
it must submit a bid deposit that is applied to the winning bid and
refunded to unsuccessful bidders. Obtaining a lease (but not a grant)
noncompetitively requires the payment of an acquisition fee. Lessees
and grant holders must make annual rental payments that are calculated
according to the acreage of the lease or grant. Rental payments for
ROWs are based on the length of the right-of-way as well as the
acreage. Under a commercial lease, an operating fee replaces rental
payments when commercial operations begin. The operating fee is
calculated using a formula set forth in the regulations. The
regulations provide a mechanism for lessees and grant holders to
request a reduction or waiver of their payments. Under OCS Lands Act
section 8(g), BOEM will distribute offshore renewable energy revenue
among eligible coastal States for OCS projects that are wholly or
partially located within three miles seaward of a State's submerged
lands.
Financial assurance must be provided at various stages in the
commercial development process. A lessee must provide financial
assurance in the amount of $100,000 before acquiring a commercial lease
and supplemental financial assurance before approval of a site
assessment plan (SAP) and a construction and operations plan (COP), and
before commencement of construction. BOEM bases its financial assurance
requirements on calculations of the lessee's cumulative liabilities and
obligations, including payments due the following year, and the cost of
decommissioning facilities on the lease. Financial assurance
requirements for limited leases and grants are calculated in a similar
fashion, although the initial financial assurance requirement is
$300,000.
BOEM imposes several general requirements that must be met by any
financial assurance and provides guidance on acceptable financial
instruments. Such instruments include surety bonds, Treasury
securities, AAA-rated securities, insurance, self-insurance, third-
party guaranties, and decommissioning accounts funded on a schedule
approved by BOEM. Subpart E also sets forth procedures to follow if a
lessee's or grant holder's financial assurance lapses or reduces in
value or

[[Page 5974]]

if a surety prematurely terminates a lessee's or a grant holder's
financial assurance. This subpart also explains when and how BOEM will
call for forfeiture of financial assurance. BOEM requires the
maintenance of financial assurance until no less than 7 years after a
lease or grant ends.
5. Plan Submittal and Review
Once a lease has been issued, a lessee may, but is not required to,
conduct site assessment activities to assess the energy potential of a
commercial renewable energy project in the lease area and site
characterization surveys to inform project design and the preparation
of plans. Site assessment activities include the installation and use
of meteorological towers and buoys to gather oceanographic and
meteorological information. A lessee planning to install site
assessment facilities must submit a SAP to BOEM. The SAP must include
general structural, design, fabrication, and installation information
for each type of facility associated with the proposed site assessment
activities, and must also include information about the environment
gathered from geological and geophysical surveys, hazard surveys,
baseline environmental surveys, and archaeological surveys that the
lessee must conduct.
The lessee must submit its SAP or a combined SAP/COP no later than
12 months after the date of lease issuance. BOEM may approve or
disapprove the SAP or may approve it with modifications. A commercial
lease has a term of five years for the lessee to conduct site
assessment activities and to submit a COP; the five-year site
assessment term begins upon approval of the SAP. BOEM will determine if
the proposed facilities described in the SAP are complex or
significant. If BOEM determines that they are not complex or
significant, the lessee may begin its proposed site assessment
activities when BOEM approves the SAP. If BOEM determines the
facilities are complex or significant, the lessee must comply with
additional requirements in subpart G of 30 CFR part 585 before
beginning its proposed site assessment activities. Implementation of
activities described in the SAP, whether or not deemed complex or
significant, is required to follow a safety management system (SMS)
that accounts for and mitigates risks to personnel and the environment
associated with such activities. SAP approval does not authorize the
lessee to build and install facilities for commercial energy
production.
Before fabricating and installing any facility for commercial
operations, a lessee must submit a COP for BOEM review and approval.
The COP must be submitted at least 6 months before the five-year site
assessment term expires.
The COP must describe the facilities that a lessee will construct
or use for its commercial operations, including any project easements
and associated onshore and support facilities. The COP also must
describe all proposed activities the lessee intends to conduct on its
lease, including construction, commercial operations, and
decommissioning. The COP must include general structural and project
design, fabrication, and installation information for each type of
structure associated with the project, as well as the results of
geological, geotechnical, biological, and archaeological surveys
undertaken in support of the project. BOEM may approve or disapprove
the lessee's COP or may approve it with modifications.
Activities conducted under a limited lease, ROW, or RUE must be
approved by BOEM under a general activities plan (GAP). Like a SAP, the
GAP must be submitted no later than 12 months after the date of lease
or grant issuance. The GAP must describe the facilities that a lessee
or grant holder will construct or use for its proposed activities,
including any project easements and any associated onshore and support
facilities. The GAP must describe the design, fabrication,
construction, use, and decommissioning of those facilities. The GAP
also must include the results of geological, geotechnical, biological,
and archaeological surveys undertaken in support of the proposed
activities.
BOEM may approve or disapprove the lessee's GAP or may approve it
with modifications. BOEM also will determine if the proposed facilities
described in the GAP are complex or significant. If BOEM determines
that they are not complex or significant, the proposed activities may
begin when BOEM approves the GAP. If BOEM determines the facilities are
complex or significant, the lessee must comply with additional
requirements in subpart G of 30 CFR part 585 before beginning the
proposed activities.
6. Design, Fabrication, and Installation of Facilities
Subpart G requires detailed design, fabrication, and installation
information for each complex or significant facility that a lessee or
grant holder proposes to operate.\10\ The purpose of subpart G is to
ensure that facilities operate in a safe manner using accepted
engineering practices in conformance with approved plans.
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\10\ By definition, all facilities proposed in a COP are complex
or significant. BOEM makes a case-by-case determination about
whether facilities proposed in a SAP or GAP are complex or
significant.
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The regulations achieve this objective primarily by requiring an
independent assessment of a facility's design, fabrication, and
installation by one or more outside experts called certified
verification agents (CVAs). The CVA should be ``experienced in the
design, fabrication, and installation of offshore marine facilities or
structures, [and] will conduct specified third-party reviews,
inspections, and verifications.'' \11\ Although hired by a lessee or
grant holder, the CVA reports directly to BOEM. The CVA must not act in
a capacity that creates a conflict of interest or the appearance of a
conflict of interest. Subpart G outlines the circumstances
necessitating a CVA, the CVA nomination and waiver processes, and the
duties of the CVA. BOEM regulations contemplate that BOEM will approve
or disapprove the CVA nomination or waiver request during its review of
the SAP, COP, and GAP. If the CVA requirement is waived, the lessee's
or grant holder's project engineer must perform the same duties and
responsibilities as the CVA, except that the project engineer would not
be acting as an independent third-party reviewer.
---------------------------------------------------------------------------

\11\ 30 CFR 585.112.
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After obtaining BOEM's approval of the SAP, COP, or GAP, a lessee
or grant holder must submit an FDR to BOEM describing the final design
of all proposed facilities. The CVA must certify that the facilities
are designed to withstand the environmental and functional load
conditions appropriate for the intended service life at the proposed
location. The CVA must also use good engineering judgment and practice
in conducting independent assessments of the commissioning of critical
safety systems.
Before any fabrication (e.g., assembly) or installation of facility
components takes place on the OCS, a lessee or grant holder must submit
an FIR to BOEM describing how the facilities will be fabricated and
installed consistent with accepted industry standards, the approved
SAP, COP, or GAP, and the FDR. The FIR must also describe how
fabrication of facility components that took place outside of the OCS
(e.g., manufacturing) is consistent with accepted industry standards,
the approved SAP, COP, or GAP, and the FDR. However, fabrication of
facility components outside of the OCS does not

[[Page 5975]]

require the submittal of an FDR and FIR. The CVA must certify that the
facilities were fabricated and installed in such a manner. The lessee
or grant holder may begin approved activities 30-calendar days after
BOEM deems submitted the fabrication and installation certification
from the CVA, unless BOEM objects in the interim. If BOEM objects to
the CVA verification report, the lessee or grant holder must resolve
those objections to BOEM's satisfaction before commencing approved
activities.
7. Facility Operations
The conduct of lease or grant activities under an approved plan is
covered by subpart H. BOEM requires that approved activities be
conducted in a way that ensures safety, prevents undue harm or damage
to natural resources, uses trained personnel, and complies with
approved plans. Activities must comply with the various wildlife
protection statutes--particularly the MMPA and ESA. Lessees and grant
holders also must follow prescribed procedures if they encounter
potential archaeological resources while conducting approved
activities. This subpart contains numerous operational requirements,
including safety management systems, incident reporting, inspections,
and self-inspections.
8. Decommissioning
Except when otherwise authorized by BOEM, lessees and grant holders
must decommission (i.e., remove) all facilities and clear the seafloor
of all obstructions created by their activities within 2 years
following termination of their lease or grant or earlier if BOEM
determines a facility is no longer useful for operations. Subpart I
sets forth BOEM's decommissioning requirements and process.

C. Need for Rulemaking

The existing regulations were finalized in 2009, when the OCS
renewable energy industry in the United States was in its infancy. In
response to Executive Order (E.O.) 13610, the Department determined
that aspects of BOEM's renewable energy regulations could be made less
burdensome and costly while clarifying ambiguities and filling gaps
that have become apparent during the past 13 years. Through its
experience and engagement with industry and other stakeholders, the
Department has identified opportunities for reducing burdens, making
regulations more efficient, clarifying ambiguities, and correcting
errors. E.O. 14008, ``Tackling the Climate Crisis at Home and Abroad,''
states that it is the policy of the U.S. ``to organize and deploy the
full capacity of its agencies to combat the climate crisis to implement
a Government-wide approach that reduces climate pollution in every
sector of the economy; increases resilience to the impacts of climate
change; protects public health; conserves our lands, waters, and
biodiversity; delivers environmental justice; and spurs well-paying
union jobs and economic growth, especially through innovation,
commercialization, and deployment of clean energy technologies and
infrastructure.'' In furtherance of the goals of E.O. 14008, the
Departments of the Interior, Energy, and Commerce established a target
to deploy 30 gigawatts (30,000 megawatts) of offshore wind by 2030,
creating nearly 80,000 jobs.
These proposed revisions to BOEM's regulations would facilitate
safe and environmentally sound renewable energy production in offshore
waters and help the Biden-Harris Administration meet its offshore wind
energy commitment. This proposed rulemaking would implement reforms
identified by BOEM and BSEE or suggested by industry, align regulations
to practices that have evolved since 2009, and reduce regulatory
uncertainty. The proposed regulations are estimated to save lessees and
grant holders about $1 billion over a 20-year period.\12\ The proposed
changes would continue to protect environmental and cultural resources
and to ensure that U.S. taxpayers receive a fair return from OCS
renewable energy activities.
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\12\ See supra note 2.
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The Department also plans to issue another rule related to its OCS
renewable energy program. That rule would reorganize the current
renewable energy regulations between BOEM and BSEE consistent with
Secretary's Order 3299, as amended, and the Departmental Manual.
Specifically, that rule would move regulations pertaining to safety,
environmental oversight, and enforcement from BOEM to BSEE under 30 CFR
part 285. Following that rulemaking, any future OCS renewable energy
rulemaking, including any rule that finalizes the provisions of this
proposed rule, would reflect the reorganized regulations. The
Department will continue to work closely with both BOEM and BSEE in
finalizing provisions of this proposed rule within their respective
delegated authorities.

V. Analytical Overview of the Proposed Rule

The proposed rule contains seven main components that would
accomplish the following: (1) eliminate site assessment plan
requirements for met buoys; (2) adopt a flexible and performance-based
approach to geophysical and geotechnical surveying; (3) conform the CVA
review standard to industry practice and provide flexibility in the CVA
nomination and engineering report submittal process; (4) clarify
auction procedures; (5) align financial assurances with the risk to
U.S. taxpayers and permit incremental funding of decommissioning
accounts; (6) clarify and enhance safety management requirements; and
(7) make other revisions and technical corrections that would improve
BOEM's OCS renewable regulatory program and fix technical errors and
inconsistencies. These components are analyzed below.

A. Site Assessment Facilities

1. Existing Regulations
In its regulations and guidance documents, BOEM uses the term
``site assessment'' to describe the activities used to estimate the OCS
renewable energy resource and baseline ocean conditions before any
potential development occurs. BOEM's regulations currently contemplate
that a lessee will deploy at least one facility, typically a met tower
or buoy, to conduct site assessment activities before submitting a COP.
Data from these met buoys and towers are used to design the offshore
renewable energy project (e.g., the turbine array for a wind project)
for a particular OCS area, calculate its energy generation potential,
estimate its revenue potential, and obtain project financing. At the
time BOEM promulgated its regulations in 2009, the industry standard
for site assessment activities was fixed-bottom met towers pile-driven
into the seabed. BOEM crafted its requirements for the approval of site
assessment activities under the assumption that most lessees would
continue to install met towers.
Since 2009, the offshore wind industry has transitioned to met
buoys, which are both less costly and less environmentally impactful
than fixed bottom structures. Met buoys are typically between 6 and 12
meters in length, attached to the seabed with a chain and mooring
anchor, and deployed for no more than 5 years. Met buoys include
different types of instrumentation to collect a variety of data,
including wind speed and direction; air and water temperature; wave
height; water currents; ambient

[[Page 5976]]

noise; and the presence of benthic communities, fish, marine mammals,
birds, and bats.\13\ Scientific devices similar to met buoys are used
widely for research and commercial applications and by other Federal
agencies (e.g., National Oceanic and Atmospheric Administration and the
Department of Energy (DOE)).
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\13\ Dep't of Energy & Dep't Of Interior, National Offshore Wind
Strategy (2016) [hereinafter Offshore Wind Strategy], <a href="https://www.boem.gov/National-Offshore-Wind-Strategy">https://www.boem.gov/National-Offshore-Wind-Strategy</a>. At this time, met
buoys deployed for this purpose use Light Detection and Ranging
(LIDAR) technology, which is capable of collecting measurements to
the same height as a typical met tower and the hub height of
proposed wind turbines.
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Before installing any facilities for site assessment activities on
its commercial lease, a lessee must submit a SAP for BOEM approval.\14\
The SAP ``describes the activities (e.g., installation of [met] towers,
[met] buoys) [the lessee] plan[s] to perform for the characterization
of [its] commercial lease, including [its] project easement, or to test
technology devices.'' \15\ The SAP must include the information
required by 30 CFR 585.610 through 585.611.\16\ BOEM may request
additional information during its review and may specify terms and
conditions that must be incorporated into the SAP before approval. In
BOEM's experience, a lessee invests substantial time preparing the SAP
and awaiting BOEM's approval. BOEM requires SAP facilities to be
decommissioned under subpart I of the current part 585 and requires
financial assurance to cover the cost of their decommissioning.\17\
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\14\ 30 CFR 585.600(a).
\15\ 30 CFR 585.605(a).
\16\ To improve readability and avoid any confusion, all further
regulatory section references in the main body of this notice are to
30 CFR part 585 unless otherwise specified. Footnotes will contain
the complete citation.
\17\ 30 CFR 585.516(a)(2).
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If a developer wants to conduct site assessment activities at a
particular OCS location without a commercial lease, a limited lease may
be required. BOEM's regulations require a lease, easement, or ROW for
activities that ``support generation of electricity or other energy
product derived from a renewable energy resource on any part of the
OCS.'' \18\ BOEM has the discretion to determine whether an activity
``supports generation'' of electricity and, therefore, requires a
lease.\19\ BOEM issued leases for site assessment activities early in
the OCS renewable energy program, but has not received a formal request
for a limited lease for site assessment activities since its
regulations took effect in 2009.
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\18\ 30 CFR 585.104.
\19\ Office of Renewable Energy Programs, Bureau of Ocean Energy
Mgmt., Guidelines for Activities Requiring Authorization for
Renewable Energy Development on the Outer Continental Shelf Pursuant
to 30 CFR part 585 (2020), available at <a href="https://www.boem.gov/guidance">https://www.boem.gov/guidance</a>.
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If a limited lease is required, a developer must first notify BOEM
that it is requesting a lease for a specific portion of the OCS.\20\
BOEM then issues a public notice in the Federal Register to determine
whether competitive interest exists in the requested area. If there is
no such interest, BOEM may negotiate a limited lease with the
developer.\21\ If BOEM and the developer agree to terms, the developer
has 12 months to submit a GAP under Sec. Sec. 585.640 through 585.647
for BOEM's review and approval. BOEM may request additional information
during its review and may specify terms and conditions that must be
incorporated into the GAP before approval.\22\ Although BOEM has yet to
issue a limited lease, BOEM estimates that it could take 3 years
between the submission of a limited lease application and authorization
to conduct activities on the lease.
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\20\ 30 CFR 585.230.
\21\ 30 CFR 585.231.
\22\ 30 CFR 585.648.
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2. Why the Existing Regulations Should Be Updated
BOEM has determined that its regulations are overly burdensome for
authorizing met buoys for site assessment activities for the reasons
outlined below.
(a) Minimal Environmental Impacts of Meteorological Buoys
After 10 years of analyzing the environmental impacts of
deployment, operation, and removal of met buoys, BOEM has concluded
that, when properly sited, these buoys cause minimal harm to the
marine, coastal, and human environments.\23\ Given a met buoy's
surficial seabed disturbance during a limited deployment time and
BOEM's repeated analysis of these devices, BOEM has concluded that
their potential environmental effects are short-term and minimal,
assuming sensitive benthic habitat and archaeological sites are
avoided.\24\ Proper deployment will be ensured through the USACE
Nationwide Permit 5 (NWP 5), which is reasonably tailored to buoys and
is subject to the same applicable Federal environmental laws as BOEM's
authorization of met buoys. USACE's NWP 5 procedures may require a pre-
construction notification under the general conditions for permits,
depending on the presence of certain resources, e.g., listed species,
critical habitat, or essential fish habitat. These procedures are the
same for vast majority of buoys installed offshore; it is only the
renewable energy met buoys that require a SAP under the current BOEM
regulations.
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\23\ See, e.g., Office of Renewable Energy Programs, Bureau of
Ocean Energy Mgmt., Commercial Wind Lease Issuance and Site
Assessment Activities on the Atlantic Outer Continental Shelf
Offshore New Jersey, Delaware, Maryland, and Virginia, Final
Environmental Assessment (2012), available at <a href="https://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/Mid-Atlantic_Final_EA_012012.pdf">https://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/Mid-Atlantic_Final_EA_012012.pdf</a>; Office of Renewable Energy
Programs, Bureau of Ocean Energy Mgmt., Commercial Wind Lease
Issuance and Site Assessment Activities on the Atlantic Outer
Continental Shelf Offshore Massachusetts, Revised Environmental
Assessment (2014), available at <a href="https://www.boem.gov/Revised-MA-EA-2014/">https://www.boem.gov/Revised-MA-EA-2014/</a>); and Office of Renewable Energy Programs, Bureau of Ocean
Energy Mgmt., Commercial Wind Lease Issuance and Site Assessment
Activities on the Atlantic Outer Continental Shelf Offshore New
York, Revised Environmental Assessment (2016), available at <a href="https://www.boem.gov/NY-EA-FONSI-2016/">https://www.boem.gov/NY-EA-FONSI-2016/</a>.
\24\ See supra note 22; see also Offshore Wind Strategy, supra
note 12, at 31. Another concern is the potential for marine mammal
entanglement in anchor chains. However, the Army Corps of Engineers
will require mitigation of such risks pursuant to its consultations
with NMFS, regardless of any BOEM permit.
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BOEM determined in 2016 that met buoys meet the criteria for a
nondestructive data collection categorical exclusion from the potential
requirement to prepare an environmental impact statement under
NEPA.\25\ Consequently, BOEM's existing SAP (Sec. Sec. 585.605 through
585.618) and GAP (Sec. Sec. 585.640 through 585.657) requirements
governing on-lease and off-lease site assessment activities,
respectively, are disproportionate to the potential environmental
impacts caused by met buoys.
---------------------------------------------------------------------------

\25\ See 43 CFR 46.210(e).
---------------------------------------------------------------------------

(b) Duplicative Regulations
BOEM's regulation of site assessment activities is duplicative of
the USACE's permitting requirements under section 10 of the Rivers and
Harbors Act, which applies to obstructions in U.S. navigable waters,
including the OCS.\26\ The USACE typically authorizes data collection
buoys under its NWP 5 for scientific measurement devices, or its
equivalent, depending on the geographic district in which the buoy is
proposed. NWP 5 addresses the most critical impacts of met buoys--
environmental resources, archaeological resources, safety, and
navigation--while also requiring that such devices be removed ``to the
maximum extent practicable and the site restored to pre-construction
elevations.'' \27\ The

[[Page 5977]]

USACE's permitting process is subject to the same Federal laws
concerning environmental analyses and inter-agency consultations that
govern BOEM's authorization of met buoys--including NEPA, ESA, MMPA,
MSA, NMSA, and NHPA. To date, USACE has participated in BOEM's
environmental reviews as a cooperating agency under 40 CFR 1501.6.
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\26\ 33 U.S.C. 403.
\27\ U.S. Army Corps of Engineers, Nationwide Permit 5--
Scientific Measurement Devices (2017), available at <a href="https://www.swt.usace.army.mil/Portals/41/docs/missions/regulatory/NationwidePermits/Nationwide%20Permit%2005%20-%20Scientific%20Measurement%20Devices.pdf?ver=2017-03-31-150714-880">https://www.swt.usace.army.mil/Portals/41/docs/missions/regulatory/NationwidePermits/Nationwide%20Permit%2005%20-%20Scientific%20Measurement%20Devices.pdf?ver=2017-03-31-150714-880</a>).
---------------------------------------------------------------------------

The deployment of a met buoy or tower to collect data for potential
OCS renewable energy development is subject to two regulatory regimes--
BOEM's and USACE's--that largely analyze the same environmental
impacts. However, the same type of buoy or tower is subject to only
USACE's regime if deployed for other purposes. As discussed below, the
proposed rule would resolve this duplication of regulatory compliance
by eliminating BOEM's SAP requirement for met buoys.
(c) Requirement for Air Permits for Meteorological Buoys
Under the Clean Air Act (CAA), a party proposing to construct a
source of air pollution on the OCS that meets the CAA definition of an
``OCS source'' is required to apply for an air permit before
construction. The CAA definition of an ``OCS source'' of air pollution
includes those sources that have the potential to emit air pollutants,
are deployed on the OCS, and are regulated or authorized under the OCS
Lands Act.\28\ Met buoys to support renewable energy development,
authorized by BOEM, are currently included as OCS sources because some
contain backup diesel generators that emit air pollutants. These met
buoys frequently are required to have a CAA permit when deployed in OCS
areas under U.S. Environmental Protection Agency (USEPA) jurisdiction,
specifically offshore the U.S. Atlantic and Pacific coasts. While
emissions from buoy backup generators are minimal due to their limited
use, the CAA has no de minimis exception to the air permit requirement.
---------------------------------------------------------------------------

\28\ 42 U.S.C. 7627(a)(4)(C).
---------------------------------------------------------------------------

In some instances, obtaining OCS air quality permit for a met buoy
can take longer than obtaining SAP approval from BOEM. Under the
proposed rule, met buoys deployed in OCS areas solely under USEPA's
jurisdiction reasonably and appropriately would no longer require CAA
permits since they would neither be regulated nor authorized under the
OCS Lands Act and, consequently, would not meet the definition of an
``OCS source.'' This conclusion also takes into consideration that
these buoys are anticipated to have minimal emissions, there is a
significant time and cost associated with obtaining a CAA permit, and
similar buoys authorized under other statutes do not require a CAA
permit (e.g., scientific measurement devices permitted under NWP 5).
(d) European Practice
BOEM is aware that European countries with mature offshore wind
industries and permitting regimes have more streamlined permitting
processes for site assessment activities. In several European
countries, including Denmark and The Netherlands, the government will
typically undertake the site characterization and site assessment work
as part of its ``pre-development'' efforts before a tender offering
(i.e., lease sale in the U.S. model). In the U.K. model, which shares
similarities with the U.S. regulatory framework, the developer is
responsible for undertaking this work. Pre-construction site assessment
activities, including the deployment of met towers and buoys, are
described in a separate submission to the U.K. Marine Management
Organization following the developer's receipt of governmental
approval. Recent met buoy case files show that these site assessment
applications are typically approved in roughly 30-calendar days. BOEM
has received multiple comments from industry criticizing the length of
its present met buoy authorization process and urging BOEM to learn
from the European practice. The proposed rule would move the United
States closer to Europe's more efficient approach to site assessment
activities.
(e) Lack of Off-Lease Site Assessment
BOEM believes that public and private entities alike should be
encouraged to collect OCS meteorological and oceanographic data for
potential renewable energy development in areas not yet leased
commercially. BOEM is aware of only four met buoys (and no met towers)
that have been deployed on the OCS for such purposes: two off the east
coast and two research buoys managed by the DOE off the coast of
California. BOEM is concerned that the perceived difficulty of
obtaining a limited lease and subsequent GAP approval is deterring off-
lease site assessment activities.
3. Proposed Changes
The proposed rule would eliminate BOEM's duplicative authorizations
for on-lease site assessment facilities without an engineered
foundation (primarily met buoys) and all off-lease site assessment
facilities. BOEM proposes to retain its SAP process for facilities
installed on a commercial lease using an engineered foundation, such as
met towers.
(a) On-Lease Meteorological Buoys
The proposed rule would eliminate SAPs for site assessment
activities that do not use an engineered foundation, defined as a met
tower or other facility installed using a fixed-bottom foundation.\29\
Met buoys would be exempt from the SAP requirement unless deployed with
an engineered foundation, which BOEM expects will occur rarely. A SAP
would still be required for met towers and other site assessment
facilities with engineered foundations. BOEM would also recommend that
lessees consult with BOEM and other Federal agencies with jurisdiction
over submerged lands in off lease areas before deploying site
assessment facilities with novel anchoring technologies absent a BOEM-
approved SAP. Independent of the need to submit a SAP for approval, all
site assessment activities are required to be performed under an SMS
that accounts for and mitigates risks to personnel and the environment
associated with the assessment activities. In any case where an NMSA
permit may be required, NOAA may require certain financial assurances
for infrastructure removal activities potentially required under
permit.
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\29\ Unlike a simple anchor, a fixed-bottom foundation generally
requires professional engineering design and assessment of sediment,
meteorological, and oceanographic conditions. Examples of fixed
bottom foundations are monopiles, jackets with driven piles or
suction buckets, and gravity-based foundations.
---------------------------------------------------------------------------

The proposed rule also would amend the decommissioning regulations
in the proposed subpart J to ensure that lessees are not subject to
duplicative or conflicting requirements for the removal of met buoys.
Under the proposed rule, a lessee would decommission its met buoys
according to USACE requirements in lieu of submitting a decommissioning
plan for BOEM's approval. In the unlikely event that USACE did not
require site clearance, BOEM would retain the authority to require
decommissioning of the buoys under proposed Sec. 585.900(c) pursuant
to OCS Lands Act subsection 8(p)(6)(C) so that the United States can
fulfill its international treaty obligation to restore the lease
area.\30\ BOEM also would no

[[Page 5978]]

longer routinely require supplemental financial assurance for
decommissioning of met buoys. In most cases, the buoys are authorized
and installed pursuant to USACE regulations and USACE would assume
responsibility for ensuring that any required removal takes place; in
these circumstances, the USACE would be responsible for obtaining any
financial assurance necessary.
---------------------------------------------------------------------------

\30\ See 43 U.S.C. 1337(p)(6)(C) and article 5.5 of the
Convention on the Continental Shelf, T U.N. Doc. A/CONF. 13/L.55,
T.I.A.S. 5578 and 15 U.S.T. 471. Any installations which are
abandoned or disused must be entirely removed [emphasis added].
---------------------------------------------------------------------------

These changes should allow lessees to deploy met buoys in
substantially less time and at a reduced cost because a SAP would no
longer be required. Instead, lessees would deploy a met buoy under the
authorization of a USACE NWP 5 scientific device permit or the USACE
district equivalent. BOEM estimates one buoy would be permitted
annually, and this permitting change would save approximately $1.1
million of compliance costs in each instance.\31\ BOEM also anticipates
that this change could eliminate the need for lessees to obtain a CAA
air quality permit from the USEPA for on-lease met buoys with backup
diesel generators because these buoys would fall outside the CAA
definition of an ``OCS source.'' BOEM is not including the potential
savings for a CAA permit in its economic analysis because the
underlying burden arises from another Federal agency's regulatory
requirements (appropriately, USEPA could claim any CAA burden
reduction).
---------------------------------------------------------------------------

\31\ See infra part VII.B.2 for overview of this proposed rule's
economic analysis.
---------------------------------------------------------------------------

This approach likely would result in regulatory relief from the SAP
requirement for nearly all future development of OCS renewable
resources. Most current lessees have proposed conducting site
assessments with met buoys. BOEM expects that pattern to continue for
the foreseeable future. Off-lease site assessment activities would fall
outside BOEM's control, though remain within USACE's, and should they
occur within a national marine sanctuary or in the vicinity of a
national marine sanctuary, activities may require NMSA permits or
consultations.
BOEM proposes several conforming ancillary regulatory changes to
accommodate the SAP changes outlined in this section. These changes
include merging the preliminary and site assessment periods of the
lease (see the analysis of proposed changes to Sec. 585.235 in section
VI.C.), eliminating deadlines for SAP submittals, decoupling the
requirement to operate under an SMS from SAP submission (i.e., all site
assessment activities must be conducted under an SMS, regardless of
whether a SAP is required), and removing references to terminology that
relates primarily to buoys (e.g., anchors, chains, mooring) in the SAP
regulations.
For several reasons, this approach would not increase environmental
impacts and would be subject to the same environmental review and
consultations currently performed by BOEM. First, BOEM will prepare
environmental analysis under NEPA and will consult under the ESA prior
to a lease sale. That environmental analysis will include potential
impacts from activities that are expected to occur following lease
issuance after the sale (e.g., site characterization and site
assessment activities). Second, NWP 5 complies with current Federal
environmental laws and governs deployment of other scientific
measurement devices that result in no more than minimal individual and
cumulative adverse environmental impacts. Lessees must ensure that the
placement of met buoys and towers conforms with NWP 5. The USACE
general conditions for nationwide permits require interagency
consultations if warranted by the location and activities proposed.
USACE considers cumulative impacts in the re-issuance of the nationwide
permits every 5 years. Third, based on BOEM's experience in approving
SAPs to date, BOEM has already documented the environmental impacts of
met buoys to be minimal. Fourth, those who are conducting site
assessment activities are still required to conduct all such activities
under an SMS that accounts for and mitigates risks to personnel and the
environment. Fifth, BOEM would not disclaim all oversight of site
assessment activities. As noted above, the potential environmental
impacts of met towers and facilities with engineered foundations are
both more variable and more significant for certain marine resources.
Therefore, BOEM would continue to require SAPs for such facilities.
Finally, BOEM may consider adding stipulations to future leases
relating to site assessment activities not covered by a SAP. BOEM
anticipates that such stipulations would ensure BOEM is aware of
activities conducted on its lease and that such activities are required
to be performed in accordance with any applicable USACE requirements
and best industry practices.
BOEM notes that the proposed rule likely would require revisions to
BOEM's programmatic agreements with consulting parties under the NHPA.
Most of BOEM's existing agreements anticipate that it would review and
approve plans relating to all site assessment activities.
BOEM completed an informal programmatic section 7 consultation
under the Endangered Species Act with the National Marine Fisheries
Service (NMFS) in 2021. This informal consultation covered leasing,
site characterization, and site assessment activities. It is expected
to cover most, if not all, USACE NWP 5 permits issued for on-lease met
buoys in the three Atlantic Renewable Energy Regions (North Atlantic
Planning Area, Mid-Atlantic Planning Area, and South Atlantic Planning
Area). This consultation concluded that the activities considered are
not likely to adversely affect any ESA-listed species or critical
habitat.\32\ Activities are considered not likely to adversely affect
as long as they are within the scope of what was analyzed in the
consultation, meet the stated project design criteria and apply the
prescribed conservation measures. BOEM is conducting similar ESA
consultations for the Pacific and Gulf of Mexico regions.
---------------------------------------------------------------------------

\32\ See <a href="https://www.boem.gov/sites/default/files/documents/renewable-energy/OSW-surveys-NLAA-programmatic.pdf">https://www.boem.gov/sites/default/files/documents/renewable-energy/OSW-surveys-NLAA-programmatic.pdf</a>.
---------------------------------------------------------------------------

(b) Off-Lease Meteorological Buoys
The proposed rule would clarify that off-lease site assessment
facilities do not require a limited lease. BOEM proposes to accomplish
this by amending Sec. 585.104 to add a statement that, for purposes of
that section, site assessment activities neither produce, transport,
nor support the generation of any energy products.
In so doing, BOEM would cease its existing policy of making case-
by-case determinations about whether off-lease site assessment
activities require a lease.\33\ BOEM does not believe off-lease site
assessment activities support the production of energy within the
meaning of 43 U.S.C. 1337(p)(1)(C) because the nexus between such
activities and the commercial production of energy is too speculative
(e.g., the entity conducting site assessment may determine the energy
potential is insufficient for commercial operations, may not seek a
commercial lease for other reasons, or may not be the winning bidder in
a lease auction).\34\
---------------------------------------------------------------------------

\33\ See supra note 18.
\34\ In contrast, site assessment activities conducted on a
commercial lease are not subject to the same jurisdictional analysis
despite the proposed change to Sec. 585.104. BOEM may determine by
regulation which on-lease activities do and do not require a
separate BOEM approval. In the proposed rule, BOEM would determine
that site assessment activities under a commercial lease involving
an engineered foundation require a SAP given the likely
environmental impacts.

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

[[Page 5979]]

BOEM believes this change will substantially decrease the time and
expense required to obtain authorization to deploy a site assessment
facility on the OCS that is not tethered to a commercial renewable
energy lease. As a result, BOEM anticipates that more developers,
research institutions, and governmental entities may be interested in
collecting renewable energy resource data on the OCS--likely through
deployment of met buoys. Such increased data collection could, in turn,
aid in determining which areas are most suitable for future OCS
renewable energy leasing.
This clarification of BOEM's authority over off-lease site
assessment activities applies to both met buoys and met towers.
Although met towers have greater environmental impacts than met buoys,
BOEM does not believe this proposed regulatory change would increase
environmental risk. First, USACE would continue to permit facilities
associated with off-lease site assessment. USACE has already permitted
an off-lease met tower in connection with the Cape Wind project in
Nantucket Sound offshore Massachusetts. Second, BOEM believes it is
highly unlikely that anyone would undertake the considerable expense of
constructing a met tower absent the exclusive development rights
afforded by a commercial lease, particularly because met buoys have
become commonplace as the more cost-effective site assessment
alternative. Finally, this regulatory change would not have an
environmental impact because it would not substantially alter BOEM's
existing practice. BOEM presently has the authority not to require
limited leases for off-lease site assessment activities based on a
case-by-case determination that such activities do not support the
production of energy.

B. Project Design Envelope

The proposed rule would codify the use of project design envelopes
(PDE)--i.e., proposing a range of design parameters and construction
and operation activities--in COP submissions. The use of PDEs was first
introduced by BOEM in draft guidance in 2016 and is now being codified
in the regulations.
The proposed rule would add language throughout the proposed
subpart G that would clarify the ability of lessees and grant holders
to submit plans using a PDE. The PDE is a proven approach to provide
lessees and grant holders with flexibility throughout the permitting
process while still complying with NEPA and other statutory and
regulatory obligations. As detailed in BOEM's draft guidance,\35\ the
PDE is ``a permitting approach that allows a project proponent the
option to submit a reasonable range of design parameters within its
permit application, allows a permitting agency to then analyze the
maximum impacts that could occur from the range of design parameters,
and may result in the approval of a project that is constructed within
that range.'' \36\ BOEM recognizes that a PDE should not be overly
broad to avoid not defining the project well enough for meaningful
analysis. BOEM's NEPA analysis will continue to include reasonable
alternatives that meet the purpose and need of the project. As a
result, the NEPA analysis would be sufficient to avoid a delay in
review by BOEM or other agencies.
---------------------------------------------------------------------------

\35\ See ``Draft Guidance Regarding The Use Of A Project Design
Envelope In A Construction And Operations Plan,'' (January 12,
2018), U.S. Department of the Interior, Bureau of Ocean Energy
Management, Office of Renewable Energy Programs, available at
<a href="https://www.boem.gov/guidance">https://www.boem.gov/guidance</a>.
\36\ Id. at 1.
---------------------------------------------------------------------------

Here is an illustrative example:
<bullet> Lessee X has determined that jacket and monopile
foundations are both technically feasible options for its project. Its
ultimate foundation choice could depend on several factors that are not
typically known at the time of COP submittal, such as the cost of steel
at the time of procurement, contract negotiations with foundation
fabricators, and the availability of novel pile-driving technologies.
<bullet> Lessee X proposes in its COP that it will use a foundation
PDE consisting of three scenarios: all jacket foundations, all monopile
foundations, and half each.
<bullet> In its environmental analysis, BOEM will assume the
maximum design scenario (i.e., the scenario with the greatest impacts)
for each affected resource. For benthic habitat, BOEM could analyze 100
percent use of jacket foundations because that scenario disturbs the
most seabed.
<bullet> BOEM may ultimately approve the full PDE for foundations,
meaning Lessee X would have the flexibility to construct its project
using either or both foundations. Alternatively, BOEM could find that
the environmental impacts of one foundation type are unacceptable and
approve the use of only the other foundation type, meaning Lessee X
could only construct its project using the approved foundation type.
In its draft PDE guidance, BOEM set out ``its support of, and
preliminary recommendations for the voluntary use of the PDE in the
submission and review of COPs for offshore wind energy facilities.''
\37\ In preparing to issue its draft guidance, BOEM contracted a
yearlong study of PDE use in the United Kingdom and its potential use
in the United States.\38\
---------------------------------------------------------------------------

\37\ Id.
\38\ Office of Renewable Energy, Bureau of Ocean Energy Mgmt.,
Phased Approaches to Offshore Wind Developments and Use of Project
Design Envelope, Final Technical Report (2017), <a href="https://www.boem.gov/Phased-Approaches-to-Offshore-Wind-Developments-and-Use-of-Project-Design-Envelope/">https://www.boem.gov/Phased-Approaches-to-Offshore-Wind-Developments-and-Use-of-Project-Design-Envelope/</a>.
---------------------------------------------------------------------------

BOEM has concluded that use of the PDE would be beneficial to OCS
renewable energy development because that approach provides reasonable
latitude to make site-specific design and engineering decisions after
plan approval without having to reopen the permitting review process.
Though BOEM's existing regulations allow a PDE, BOEM believes that
it can clarify the process for lessees and other stakeholders by
explicitly integrating PDE principles into its regulatory text--
primarily by referencing ``ranges'' of design parameters or locations.
It should be noted, however, that the range of parameters in a PDE
could involve non-design attributes, such as installation methods or
mitigation measures. BOEM believes these proposed changes (and other
related modifications described in the part VI section-by-section
analysis of the proposed rule) would not substantively alter its
existing regulatory framework, or its required consultations with other
agencies, but would be helpful to lessees and the general public.

C. Geophysical and Geotechnical Surveys

1. Existing Regulations
BOEM regulations require a lessee's COP to include, among other
things, survey data characterizing the seabed and sub-seabed that would
be disturbed by the proposed project. BOEM uses this information to
inform its environmental analysis of the project, its related
consultations (particularly involving historical resources and
essential fish habitat), and its review of the project's technical
feasibility. These data are derived from surveys that are typically
divided into two categories: geophysical surveys that use acoustic and
magnetic sensing techniques to map and model the composition of the
seafloor where ground-disturbing activities will take place, and to
identify natural and manmade hazards as well as potential
archaeological resources; and geotechnical surveys that use boreholes,
vibracores, grab samplers, and other

[[Page 5980]]

penetrative methods to determine the actual geological composition of
the subsurface and, in certain cases, identify potential archaeological
resources.
BOEM's regulations require a commercial lessee to submit a COP with
geotechnical survey data that include the results of a testing program
used to investigate the stratigraphic and engineering properties of the
sediment that may affect foundations or anchoring systems; in situ
testing, boring, and sampling at each foundation location; and at least
one deep boring (with soil sampling and testing) at each edge of the
project area and within the project area as needed to determine the
vertical and lateral variation in seabed conditions.\39\ Thus, lessees
are currently obligated to conduct their full suite of geotechnical
surveys before COP submittal.
---------------------------------------------------------------------------

\39\ 30 CFR 585.626(a)(4).
---------------------------------------------------------------------------

The FDR, which is submitted following COP approval, requires the
submittal of a ``summary of environmental data used for design'' as
well as a ``summary of the engineering design data,'' \40\ both of
which could include additional geotechnical surveys. Lessees must apply
for a regulatory departure under Sec. 585.103 if they wish to defer in
situ testing, boring, and sampling at each foundation location until
the FDR stage.
---------------------------------------------------------------------------

\40\ 30 CFR 585.701(a)(5)-(6).
---------------------------------------------------------------------------

A lessee's COP also is required to include ``[t]he results of the
archaeological resource survey with supporting data.'' \41\ BOEM,
therefore, requires the results of all archaeological surveys to be
submitted with the COP.
---------------------------------------------------------------------------

\41\ 30 CFR 585.626(a)(5).
---------------------------------------------------------------------------

2. Why the Existing Regulations Should Be Updated
BOEM has learned that its existing COP data submittal regulations
lack sufficient flexibility to accommodate both the lessees' needs and
BOEM's statutory and regulatory mandate. The amount and type of data
that BOEM needs from lessees in order to conduct its environmental and
technical reviews and reach a decision on a COP may vary depending on
the size and design of the project as well as site conditions in the
proposed project area. Lessees may use various techniques to gather
this data, depending on the intended use of the data. The surveys are
costly (generally in the tens of millions of dollars, depending on the
size of the area and the desired resolution); time-consuming
(individual surveys can each take several months to complete); and
challenging to schedule due to limitations on the availability of
survey vessels and equipment, weather, and seasonal restrictions.
(a) Existing Survey Requirements
The current regulations at 30 CFR 585.626(a)(1)-(3), (5), and (6)
require robust information on shallow hazard, geological survey
results, biological survey results, archeological resources, and an
overall site investigation before COP submission. The current
regulations also require geotechnical surveys and borings of all
locations where foundations are expected to be installed in order to
inform the engineering properties of the sediment. Frequently, the
exact locations of foundations change between the time of COP
submission and installation, requiring the lessee to repeat the same
survey and boring work at new locations.
The geophysical and geotechnical survey requirements in BOEM's
renewable regulations are largely built upon the framework for offshore
oil and gas energy facilities, which have a smaller footprint and
different geologic data needs than OCS renewable energy projects. The
detailed engineering survey data that BOEM's offshore renewable
regulations require early in the authorization process do not align
with existing renewable industry practices. Requiring geotechnical
sampling at each turbine location and engineering-specific geophysical
survey data--several years before the turbines are procured and before
the final layout is known--is unnecessary for BOEM's review of the COP.
Equally important, this data requirement for COP submissions creates
major logistical difficulties for lessees, hinders their ability to
modify the project design during and after COP review, and is the
subject of frequent industry criticism and regulatory departure
requests under Sec. 585.103. This information can instead be reviewed
with the FDR once siting has been finalized.
Offshore wind projects are complex and have a development timeline
that may last as much as 7 years from lease issuance to commencement of
construction. During that time, technologies likely will evolve. The
collection of geotechnical and, to a lesser extent, geophysical data is
more logically performed in stages as the process evolves from planning
and permitting to preliminary and final designs, with the appropriate
level of survey data provided at each stage. This staged data
collection and design process allows lessees to take advantage of the
newest technologies and to make project modifications responsive to
BOEM and stakeholder concerns, rather than locking the project into a
detailed design years in advance of completion.
The current lack of flexibility is also at odds with the
development and use of PDE discussed above in section V.B, entitled
``Project Design Envelope.'' The PDE's benefits cannot be fully
realized without additional flexibility regarding the timing of
engineering survey data submittal. If a lessee is required to conduct
all of its engineering surveys (and potentially its most detailed
archaeological surveys) before COP submittal, it may be constrained
from adjusting the project design based on the availability of new
technologies, stakeholder input, or other emergent factors. Likewise, a
lack of flexibility in data submittal requirements could indirectly
constrain BOEM's ability to consider NEPA alternatives that might
modify the proposed project design. Such design changes might result in
additional survey costs and project delays that may, in turn,
jeopardize electricity offtake agreements or otherwise render the
project nonviable. Revising the geophysical and geotechnical survey
timing and data submittal requirements would codify and increase the
utility of the PDE.
(b) European and Industry Practices
Based on BOEM's conversations with various European regulators of
offshore wind energy projects, many European governments that have
authorized offshore wind development allow for the final engineering-
related surveys to occur after project approval given the widespread
use of design envelopes, which are discussed in section V.B. Performing
geotechnical investigations in phases is a common approach for offshore
wind projects in Europe and for most large and complex land-based
developments. Experienced offshore wind developers and consultants are
accustomed to this approach and have informed BOEM of its
advantages.\42\
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\42\ See, e.g., Soc'y for Underwater Tech., Guidance Notes for
the Planning and Execution of Geophysical and Geotechnical Ground
Investigations for Offshore Renewable Energy Developments 12 (Mick
Cook ed., 2014), <a href="https://www.sut.org/wp-content/uploads/2014/07/OSIG-Guidance-Notes-2014_web.pdf">https://www.sut.org/wp-content/uploads/2014/07/OSIG-Guidance-Notes-2014_web.pdf</a>.
---------------------------------------------------------------------------

Moreover, this staged method of data submittal has been recommended
by experienced geotechnical consultants in various publications and in
geotechnical guidelines published by offshore wind classification
societies.
Based on BOEM's experience and stakeholder feedback, the Department
has concluded that allowing the submittal of certain geophysical and
geotechnical data and analysis in stages would not adversely affect our
ability to

[[Page 5981]]

execute the statutory mandate to provide for environmental protection
and safety on the OCS. We have learned that the precise location of
each wind turbine may be uncertain at the COP submittal stage and that
the geotechnical survey data, in particular, collected primarily for
engineering purposes, are more relevant to the facility design and
review process, which follows COP approval.
The Department and BOEM acknowledge that the level of data required
for fulfilling its statutory mandate may be different than the level of
data required to satisfy the mandates of other agencies. Under the
proposed rule, the COP must still contain information sufficient to
define the baseline geological conditions of the seabed, develop a
geologic model,\43\ assess geologic hazards, and determine the
feasibility of the proposed site for the proposed facility. At the COP
review stage, lessees would still be required to provide the data
necessary to conduct the required consultations.
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\43\ The geologic model brings together bathymetric data,
surficial data imagery, sub-bottom data imagery, and sediment
samples.
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The non-geotechnical survey data included in the COP submittal are
more than adequate to assess impacts to the human, marine, and coastal
environment, to conduct necessary statutory consultations, and to show
technical feasibility of all proposed foundation types. BOEM's oil and
gas program takes a similar approach. Non-geotechnical survey data are
used to assess plans, and geotechnical surveys occur after plan
approval. Over the last 10 years, over 2,600 oil and gas plans have
been approved; in none of these cases have subsequent geotechnical
surveys identified any potential impact that required supplementation
of an EIS or reinitiation of consultation. Because of this, we are
confident that the proposed change is unlikely to undermine the
environmental review done as part of the COP approval process. Even if
a geotechnical survey after COP approval caused a change in the
approved action or environmental assessment, we would expeditiously
analyze the requisite changes and update the environmental assessment
and record of decision.
The information from the deferred geotechnical surveys is not
necessary to perform the requisite environmental reviews and
consultations for COP approval or CZMA consistency reviews. Instead,
the detailed information is necessary for engineering specifications
associated with the design of the project. Furthermore, to ensure BOEM
has sufficient information for its requisite technical reviews,
environmental analysis, and interagency consultations, BOEM conducts a
sufficiency review after receipt of a COP and notifies the lessee of
any information shortfalls that must be filled before the COP review is
complete.
3. Proposed Changes
(a) COP Data Requirements
The proposed rule would address the concerns with the existing
regulations primarily by providing more flexibility (and clarifying
existing flexibility) in the COP requirements.\44\ For clarity, the
proposed rule would reorganize the data requirements by topic. The
first proposed topic, ``geological and geotechnical,'' would encompass
the types of surveys required in existing Sec. 585.626(a)(1), (2),
(4), and (6). The survey and data collection requirements would shift
from the largely prescriptive standards in the existing regulation to
performance-based standards. These performance-based standards would
give lessees the leeway to demonstrate that their selected combination
of geotechnical and geophysical surveys provide BOEM the data that it
needs at the COP review stage to determine whether the project as
designed can be constructed safely in the proposed range of locations--
assuming industry standard engineering practices are used at subsequent
phases. Lessees could strike their own balance between geotechnical and
geophysical surveys at the COP stage, so long as BOEM deems that data
sufficient for BOEM's review as well as the required consultations or
authorizations of other agencies. BOEM would still ensure that the COP
contains information sufficient to complete its environmental review
and required consultations, through a COP sufficiency determination.
BOEM has issued guidelines elaborating its recommended best practices
for such surveys.\45\ These guidelines will be revised as needed based
on the regulatory text of the final rule. BOEM could recommend, as a
best practice, that developers coordinate early with relevant agencies
on applicable site characterization plans, before surveys occur.
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\44\ See 30 CFR 585.626(a).
\45\ See Office of Renewable Energy, Bureau of Ocean Energy
Mgmt., Guidelines for Providing Geophysical, Geotechnical, and
Geohazard Information Pursuant to 30 CFR part 585 (2020), available
at <a href="https://www.boem.gov/guidance">https://www.boem.gov/guidance</a>. See also Bureau of Ocean Energy
Mgmt., Data Gathering Process: Geotechnical Departures for Offshore
Wind Energy (2018), <a href="https://www.boem.gov/Data-Gathering-Process/">https://www.boem.gov/Data-Gathering-Process/</a>.
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The proposed rule would no longer require that COPs contain the
results of in situ boring and sampling at each foundation location.
Instead, the proposed rule would allow submission of geotechnical data
for an engineering assessment of the proposed turbine foundations with
a lessee's FDR.
The proposed rule also would grant the Department the flexibility
to allow a lessee to submit certain subsea archaeological surveys with
the FDR on a case-by-case basis, subject to terms and conditions of COP
approval. We recognize that deferring subsea archaeological data
submission until after COP submittal could introduce some degree of
uncertainty and risk into a project by extending the timeline for
BOEM's review and consultations under section 106 of the NHPA and its
implementing regulations. This could delay a lessee's clearance to
commence construction. This risk may be reduced, however, through the
development of programmatic agreements or memoranda of agreement among
the section 106 consulting parties that could establish procedures for
avoiding or mitigating impacts discovered after COP approval.
BOEM estimates that a geotechnical investigation costs on average
$200,000 per turbine location and assumes that deferring survey work by
2 years would result in time value of money savings to a lessee. BOEM
also estimates a 10 percent reduction in the number of geotechnical
investigations by adding flexibility to the existing requirement of a
core analysis at each individual turbine location.\46\
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\46\ See infra Part VII.B.2 for overview of this proposed rule's
economic analysis.
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It is important to consider what these proposed rule changes would
not do. First, the proposed rule would not prevent BOEM from obtaining
COP data sufficient for an adequate impact analysis of a proposed
project under the OCS Lands Act, NEPA, and other statutory authorities.
The COP sufficiency review will ensure the necessary data is submitted
to complete BOEM's and other agencies' analyses. The COP must still
have the information sufficient to define the baseline geological
conditions of the seabed and provide sufficient data to develop a
geologic model, assess geologic hazards, and determine the feasibility
of the proposed site. Changing when lessees must submit data from each
foundation-specific boring does not impact the sufficiency review that
BOEM uses to ensure that a COP has sufficient detail to support all
consultations that accompany BOEM's environmental

[[Page 5982]]

review under NEPA. The vast majority of the data that would be deferred
to the FDR and FIR stage is used solely for engineering purposes. Any
deferred data would be subject to terms and conditions of COP approval
that would allow the Department to halt or require modifications to
further activities if the data is inconsistent with the analysis upon
which BOEM based its COP approval. If the COP needs to be modified as a
result of information gathered from the deferred surveys, such as if
the deferred survey data reveals likely effects that were not
considered previously, the Department would require the lessee to
revise the COP under the regulations at Sec. 585.634. The Department
also retains the authority to halt or require modifications to the
deferred surveys themselves, if necessary, through the lease suspension
authority at Sec. 585.417(a)(2). The Department believes the
flexibility attained by these proposed changes would enhance the
Department's (and lessees') ability to respond to environmental and
ocean user concerns raised during its environmental reviews by
modifying the project design.
Second, the proposed rule would not prevent the Department from
obtaining engineering-related survey data sufficient to analyze the
safety and feasibility of the final design before the lessee installs
facilities, as provided in Sec. 585.701. Such data would instead be
reviewed at the FDR and FIR stage rather than the COP stage. Put
differently, the Department would be able to obtain the same data under
the proposed rule as it obtains now before the commencement of
construction. Therefore, the Department anticipates that this element
of the proposed rule would have no environmental and safety impacts,
and no socioeconomic impacts beyond the potential cost savings to
lessees.
(b) Limited Leases and Grants
Extending the reasoning articulated above in sections V.B, entitled
``Project Design Envelope,'' and V.C.3(a), entitled ``COP Data
Requirements,'' the proposed rule would make similar changes to the GAP
requirements for limited leases and grants.
4. Solicitation of Comments Concerning a Potential New Permit
Requirement for Conducting Geological and Geophysical Surveys for
Renewable Energy Activities
Section 11 of OCSLA (43 U.S.C. 1340) addresses exploration for
minerals (which include oil and gas) and subsection (g) requires that
any exploration permit ``will not be unduly harmful to aquatic life in
the area, result in pollution, create hazardous or unsafe conditions,
unreasonably interfere with other uses of the area, or disturb any
site, structure, or object of historical or archeological
significance.'' However, geological and geophysical exploration permits
for minerals, including oil and gas, are required only for off-lease
surveys, i.e., on unleased lands or on lands under lease to a third
party.\47\ On-lease surveys are governed by separate regulations and
require only that the lessee notify BOEM at least 30 days prior to
conducting such activities.\48\ BOEM reviews such notices to ensure the
activities described do not cause undue or serious harm or damage to
the human, marine, or coastal environment.
---------------------------------------------------------------------------

\47\ See 30 CFR 551.4
\48\ See 30 CFR 550.207 through 550.210.
---------------------------------------------------------------------------

BOEM's existing renewable energy regulations do not expressly
govern survey activities. However, subsection 8(p) of OCSLA, which
authorizes BOEM to ``issue any necessary regulations to carry out this
subsection,'' also requires that activities authorized under this
subsection be carried out in a manner that provides for ``safety . . .
protection of the environment . . . [and] consideration of . . . any
other use of the area, including use for a fishery . . . .'' OCSLA
8(p)(4).
Although BOEM requires a lessee to submit the results of certain
surveys to BOEM in order to obtain approval of its COP, those
regulations do not require BOEM's approval of a permit for such
surveys. Instead, BOEM has provided guidance on conducting such surveys
\49\ and also includes terms and conditions in renewable energy leases
that require lessees to submit survey plans to BOEM for review in
advance of their survey activities.\50\ BOEM's review of the plans,
while not an approval process, does provide BOEM an opportunity to
communicate with lessees to ensure the lessees' survey results will
meet BOEM's information needs and to ensure certain environmental
conditions are met in conducting the surveys.
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\49\ Guidelines for Providing Information on Fisheries Social
and Economic Conditions for Renewable Energy Development on the
Atlantic Outer Continental Shelf Pursuant to 30 CFR part 585 (2020)
available at <a href="https://www.boem.gov/sites/default/files/documents/about-boem/Social%20%26amp%3B%20Econ%20Fishing%20Guidelines.pdf">https://www.boem.gov/sites/default/files/documents/about-boem/Social%20%26amp%3B%20Econ%20Fishing%20Guidelines.pdf</a>.
\50\ Refer to stipulation 3.1.2.1 in Addendum C of commercial
leases auctioned by BOEM in recent lease sales (e.g., available at
<a href="https://www.boem.gov/sites/default/files/documents/renewable-energy/state-activities/Lease%20OCS-A%200537_0.pdf">https://www.boem.gov/sites/default/files/documents/renewable-energy/state-activities/Lease%20OCS-A%200537_0.pdf</a>.
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BOEM is considering whether there is a need for a future rulemaking
intended to regulate surveys associated with OCS renewable energy
activities. To that effect, BOEM is soliciting comments on the
following questions:
<bullet> What additional protections might be gained through
rulemaking that cannot be achieved by way of the lease stipulations?
<bullet> Should BOEM establish a permit-based mechanism to regulate
how, when (pre-lease, post-lease), and where (on- and off-lease)
surveys are conducted? And to what extent, if any, should that permit
program differ from the permit requirements of the oil and gas program
and marine minerals program?
<bullet> Is there another method, other than a permit-based
mechanism, that could aid in the confirmation of any damage to fishing
gear as well as the identification of responsible parties for any such
damage from survey activities?
<bullet> To what extent should BOEM require additional public
reporting and notice of any anticipated OCS survey activities, beyond
the current lease stipulation requirements of two weeks' advance notice
to applicable ocean users of lessee geological and geophysical surveys?
Is there a greater need for specific advance notice requirements,
extending beyond geological and geophysical surveys, to include the
location, dates, and times in which other OCS surveys will be
conducted?
<bullet> To what extent should BOEM identify and track OCS survey
activities related to renewable energy program activities?
<bullet> How can BOEM improve the current procedures for reporting
by and reimbursement of any party that is harmed as a result of the
activities of a company engaged in renewable energy survey activities?
Can these improvements replace the need to promulgate regulations
governing OCS surveys for renewable energy projects?
<bullet> Should BOEM require advance coordination of survey
activities with other lessees operating on the OCS?
<bullet> Are there other policies or requirements that BOEM should
consider in order to minimize the adverse interaction between other
users of the OCS and those conducting surveys that support renewable
energy activities on the OCS?
Please see the Addresses caption at the beginning of this notice to
send responses to these questions and any other comments that you have.
If you have any data or information that could be used to evaluate the
extent of this problem, or potential costs or benefits of instituting
additional procedures to address it, please provide that information as
well. Please see the For Further Information Contact caption at the
beginning of this notice if you

[[Page 5983]]

have questions or comments regarding this topic.

D. Certified Verification Agent and Engineering Reports

1. Existing Regulations
As discussed above, the current subpart G of BOEM's regulations
governs the design, fabrication, and installation of offshore wind
facilities following plan approval--as well as the process by which
independent third-party CVAs are nominated, selected, and tasked with
duties for project engineering review.
2. Why the Existing Regulations Should Be Updated
The existing regulations use terminology to describe the role of
the CVA that is not consistent with industry practices. They also are
inexplicit regarding the flexibility that lessees or grant holders are
afforded in the timing and composition of their FDRs and FIRs, and
ambiguous regarding what procurement and fabrication activities lessees
or grant holders can carry out before BOEM's review of these reports.
3. Proposed Changes
(a) Certified Verification Agent Roles and Flexibility
BOEM and the Bureau of Safety and Environmental Enforcement (BSEE),
concurrently review reports for design and construction of the
facilities. However, rather than relying solely on agency engineering
expertise, the bureaus also require lessees to use a CVA to provide
independent third-party review of a project's FDR and FIR. The CVA
plays an integral role in BOEM's determination that a proposed OCS
renewable energy facility will be designed and constructed safely using
best engineering practices in accordance with Sec. 585.700(a)(1). The
CVA also is expected to monitor fabrication and installation activities
and to submit a final report to BOEM before the start of commercial
operations or other approved activities in accordance with Sec.
585.700(a)(2). So that the Department is able to ``ensure that any
activities . . . are carried out in a manner that provides for safety''
as required by Sec. 585.102(a), the Department proposes to add a
requirement that the CVA verify the facility's design, taking human
safety into appropriate consideration. In addition, the CVA would be
required to evaluate the commissioning of any critical safety systems.
Critical safety systems would be defined as safety systems and
equipment designed to prevent or ameliorate major accidents that could
result in harm to health, safety, or the environment associated with
facilities.
The Department proposes to change all ``certification'' references
in the proposed subpart H to ``verification.'' This modification would
align the regulations with industry standards.\51\
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\51\ Panel on Certification of Offshore Structures, National
Research Council, Verification of Fixed Offshore Oil and Gas
Platforms 8-9 (1977), <a href="https://www.nap.edu/read/18431/chapter/1">https://www.nap.edu/read/18431/chapter/1</a>
(opining that ``verification'' is the preferred description of the
procedure assuring stakeholders that appropriate environmental and
operating factors have been duly considered in the design,
construction, and installation of offshore oil and gas platforms);
see also Transportation Research Board, Nat'l Academies of Sciences,
Engineering, and Medicine, Structural Integrity of Offshore Wind
Turbines, Oversight of Design, Fabrication, and Installation 96-108
(2011) (discussing role of third party oversight and certified
verification agents in the offshore wind industry).
---------------------------------------------------------------------------

The proposed rule also would add flexibility to the CVA nomination
process. Currently, a lessee or a grant holder must submit its CVA
nominations with its SAP, COP, or GAP.\52\ BOEM approves or disapproves
CVA nominations as part of its plan review.\53\ Multiple lessees have
expressed a desire to have approved CVAs in place before COP submittal
so the CVA may provide third-party review of design concepts in the
COPs. This reasoning also supports CVA review of SAPs and GAPs before
submittal. The Department believes that integrating CVA review into the
earliest stages of the design and permitting process is consistent with
its policy goals of encouraging safety and best engineering practices.
We also recognize that a lessee or a grant holder may need to nominate
new CVAs as the project progresses (for instance, if a design parameter
changes at a late stage) or to request the replacement of an approved
CVA if that CVA is ineffective or can no longer perform its duties. As
a result, the proposed rule would provide flexibility for the
Department, lessees, and grant holders by decoupling the CVA nomination
and approval process from plan submittal and approval. The proposed
rule also clarifies that a lessee or a grant holder may nominate
separate CVAs to review different components of a project.
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\52\ For COP requirements, see 30 CFR 585.626(b)(20), 706(a).
For SAP and GAP requirements, see 30 CFR 585.610(a)(9) and
585.645(c)(5), respectively. CVA nominations are required in a SAP
and a GAP if BOEM determines the facilities proposed in those plans
require an FDR and FIR because they are complex and significant. See
30 CFR 585.700(a), 705, 706(a).
\53\ 30 CFR 585.706(e).
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(b) Staged Submittal of the Facility Design Report and Fabrication and
Installation Report
The Department recognizes that the construction of an offshore
renewable energy facility is complex and that the procurement and
installation of components depends on a wide range of project-specific
factors that may change over time. These factors include availability
of port facilities and installation vessels, weather conditions,
seasonal construction restrictions, project financing, and approval of
permits and authorizations. Requiring a lessee or a grant holder to
submit only one FDR and FIR ignores that time-dependent complexity and
could lead to unnecessary inefficiencies and delays. Indeed, lessees
have already requested permission to submit separate, staged reports
for discrete major project components. If the Department approves such
requests, those lessees could begin fabricating and installing certain
components while other components are being verified by a CVA. We
acknowledge that some major project components may require analysis
upfront to ensure safety and adherence to best engineering practices
but believes that more flexibility is warranted in the timing of
component review.
The Department believes that allowing staged submittal of FDRs and
FIRs addresses this complexity and provides appropriate flexibility
without compromising its project review. Though BOEM's existing
regulations permit staged FDR and FIR submittal, this proposed rule
would clarify that authority and would better define the circumstances
under which staged submittal would be allowed. Importantly, staged
submittals would be allowed only if the lessee or grant holder could
explain how the constituent major components would function together in
an integrated manner and could demonstrate that a CVA has verified such
integration. The Department believes these two qualifications would
minimize the risk that a lessee or grant holder would have to modify
completed fabrications or installations based on any subsequent
Department or CVA objections to later-reviewed components of the
project.
(c) Definition of ``Fabrication,'' and Early Fabrication of Facility
Components
Because of the long lead times for the procurement or fabrication
of some components for offshore wind energy facilities, numerous
lessees have expressed interest in the procurement or

[[Page 5984]]

fabrication of facility components before submittal of their COPs,
FDRs, and FIRs. This ``early fabrication of facility components'' would
take place outside of the OCS (e.g., onshore manufacturing).
The existing regulations provide that a lessee or a grant holder
may begin to fabricate and install approved facilities only after BOEM
notifies the lessee or grant holder that it has received the FDR and
FIR and has no objections.\54\ BOEM has previously read this provision
conservatively and required lessees to obtain departures before they
``begin'' any fabrication prior to BOEM's notification that it has no
objection to their FDR and FIR, even if the fabrication, i.e.,
manufacture, does not occur on the OCS. Lessees have asked BOEM to
clarify what constitutes ``fabrication'' because they want to
accelerate timelines by proceeding with procurement or fabrication
activities outside of the OCS prior to receiving BOEM's non-objection
to the FDR and FIR or the end of BOEM's 60-day review of the FDR and
FIR without objections.
---------------------------------------------------------------------------

\54\ 30 CFR 585.700(b). BOEM is also ``deemed'' to have no
objections if BOEM does not object within 60 days of receiving the
reports.
---------------------------------------------------------------------------

The Department has determined that the term ``fabrication,'' as
used in the current subpart G, is arguably ambiguous and, therefore,
further clarifying this term would be useful for the regulated
community. BOEM has granted departures from the requirements of Sec.
585.700(b) on a case-by-case basis,\55\ provided that the departure
request meets the requirements in BOEM's regulations and the lessee or
grant holder assumes all business risk associated with fabrication
activities that occur as a result of the departure. Whenever granting a
departure for early fabrication, BOEM reserved the right to object to
the fabrication methodologies described in the submitted FDR and FIR
before the lessee began installation of facility components on the OCS.
The Department has now concluded that the regulation in question
prohibits only the fabrication and installation of facility components
that take place on the OCS (e.g., assembly, construction, or
installation). Therefore, the fabrication of facility components that
does not take place on the OCS may be carried out prior to the
submittal of an FDR, FIR, or any plans under the regulations, and such
activities do not require the prior issuance of a departure. However,
the fact that fabrication activities outside the OCS can commence prior
to the submittal of an FDR, FIR, or any plans does not prevent the
Department from objecting to the installation of such components on the
OCS if their fabrication is inconsistent with accepted industry or
engineering standards, the approved SAP, COP, or GAP, or the FDR or
FIR, or regulations. To codify this policy, the Department proposes to
amend the existing regulations to remove any doubt that only
fabrication activities that take place on the OCS are prohibited prior
to the Department non-objection of the FDR and FIR or the end of the
60-day review period without objections.
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\55\ See BOEM's record of departure requests at <a href="https://www.boem.gov/departure-request">https://www.boem.gov/departure-request</a>.
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The Department also proposes to include in 585.112 a definition for
the term ``fabrication,'' which would be defined as ``cutting, fitting,
welding or other assembly of project elements of a custom design
conforming to project-specific requirements,'' and would exclude from
this definition the procurement of discrete parts of the project that
are commercially available in standardized form (such as electrical
components, magnets, and gears) and type-certified components (such as
nacelles and blades).\56\
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\56\ Component type-certification (for type-certified
components) provides independent proof that critical main components
of a wind turbine meet relevant international standards and codes
for performance and safety. Component type-certification differs
from project certification, which assesses the performance of a
group of wind turbines on a specific project site.
---------------------------------------------------------------------------

Consequently, the proposed rule would reduce the number of
components that are considered ``fabricated'' through the definition.
The proposed rule would clarify that fabrication activities that do not
take place on the OCS can commence before the submittal of the FDR,
FIR, or any plans required under regulations. This proposed change
would not in any way limit BOEM's ability to conduct a robust
environmental review during the plan approval process; BOEM's
consideration of alternatives and mitigations would be unaffected. The
rule would also clarify that all facility components procured or
fabricated (regardless of where they were fabricated) would be subject
to CVA verification. This requirement would reduce the risk of a lessee
or grant holder seeking short-term cost savings to the detriment of
safety and accepted engineering practices. The lessee or grant holder
assumes any business risk associated with the procurement or
fabrication of facility components prior to plan approval or the
Department non-objection to the FDR and FIR or the end of the 60-day
review period without objections. In order to avoid the business risk
of objections to the fabrication of facility components prior to
installation, developers can always opt not to fabricate until their
FDR and FIR have gone through the 60-day review period without
objections or received a non-objection to the FDR and FIR. Although
such procurement and fabrication activities are not prohibited by the
regulations, the proposed rule would clarify that the Department
reserves the right, during its FDR and FIR reviews, to object to the
installation of previously procured or fabricated facility components
if said components are inconsistent, or were not fabricated in
accordance with, accepted industry or engineering standards, the
approved SAP, COP, or GAP, or the FDR or FIR, or BOEM's regulations.
Clarifying that the regulations do not prohibit all procurement or
fabrication activities prior to the submittal of the FDR and FIR
provides maximum flexibility to the industry, while still allowing the
goals of the regulation to be met (i.e., to prevent the installation of
facility components on the OCS if the Department has objections to
their fabrication or the installation methodologies proposed in the
FIR).

E. The Renewable Energy Leasing Schedule

1. Existing Regulations
The existing regulations do not address the preparation of a
renewable energy leasing schedule. Under the existing regulations, BOEM
announces lease sales individually as each is scheduled.
2. Why the Existing Regulations Should Be Updated
BOEM proposes to add a new section to the regulations, entitled
`The Renewable Energy Leasing Schedule' to indicate BOEM's intent to
publish a proposed five-year leasing schedule for the OCS renewable
energy program. This would provide greater transparency to the leasing
process by giving stakeholders as much advance notice as possible of
proposed lease sales.
The Secretary provided a preview of such a schedule on October 13,
2021, by announcing plans for BOEM to potentially hold up to 7 new
offshore lease sales by 2025 in the Gulf of Maine, New York Bight,
Central Atlantic, and Gulf of Mexico, as well as offshore the
Carolinas, California, and Oregon. The proposed regulation would
require a proposed leasing schedule and periodic updates to the
schedule. Through a proposed schedule, BOEM would provide increased
certainty and

[[Page 5985]]

enhanced transparency, and facilitate planning by industry, the States,
and other stakeholders. With this change, DOI can lay out an ambitious
roadmap to confront climate change, create good-paying jobs, and
accelerate the nation's transition to a cleaner energy future.
3. Proposed Changes
The proposed rule would include a new section describing the
renewable energy leasing schedule. This proposed schedule would include
a list of locations under consideration for leasing and a leasing
schedule that BOEM intends to follow in announcing its future renewable
energy lease sales. According to this proposal, at least once every two
years, the Secretary would publish a schedule of proposed lease sales.
As a proposed schedule, it would not obligate BOEM to offer all sales
on the schedule; BOEM would adjust the schedule as necessary through
the scheduled updates. The first published schedule would be issued for
the five-year period following the effective date of this rulemaking,
and subsequent schedules will cover the five-year period after each
update. This schedule would include a general description of the area
of each proposed lease sale, the calendar year in which each lease sale
is projected to occur, and the reasons for any changes made to the
previous schedule. Every time the schedule is updated, BOEM would
identify those lease sales that are being considered for the following
5-year period.
The Inflation Reduction Act (IRA), Public Law 117-169, requires
that, during the 10-year period beginning on August 16, 2022, BOEM may
not issue an OCS wind lease unless an OCS oil and gas lease sale has
been held during the 1-year period ending on the date of the issuance
of the wind lease and the sum total of acres offered for lease in OCS
oil and gas lease sales during that 1-year period is at least 60
million acres. BOEM will comply with the requirements of the IRA.
This Renewable Energy Leasing Schedule would differ substantially
from the Five Year Oil and Gas Leasing Program, described in the oil
and gas regulations in 30 CFR part 556. Compared to the Five Year Oil
and Gas Leasing Program, which is mandated under section 18(a) of the
OCS Lands Act, the proposed Renewable Energy Leasing Schedule would be
much less complicated and would not constitute a final action
enforceable or challengeable administratively or in the courts. The
proposed regulations would not have requirements for public meetings,
comment periods, or iterative proposals, and would not include a list
of factors that must be considered other than those already enumerated
in Sec. 585.102. Any proposed lease sale covered by the schedule would
be subject to all applicable regulations, including area
identification, coordination with relevant parties, and applicable
environmental reviews.
BOEM seeks comment on its proposal to publish a proposed Renewable
Energy Leasing Schedule and what information should be provided as part
of this schedule. BOEM is soliciting comments specifically on the
content and the timing of the schedule updates, as well as generally on
how best to provide a schedule to improve transparency of renewable
energy development on the OCS.

F. Lease Issuance Procedures

1. Existing Regulations
During the past 10 years, the existing lease issuance procedures
have been criticized for being too prescriptive in some aspects and
unclear in others. The existing procedures constrain flexibility by
prescribing auction formats, processes, systems, and variables. BOEM
has determined that the lease issuance process requires added
flexibility, transparency, and clarity and that its regulations should
address possible consequences when the provisional winner fails to
execute a lease, a lessee relinquishes a lease, or BOEM contracts or
cancels a lease.
2. Why the Existing Regulations Should Be Updated
BOEM proposes to revise several aspects of its lease issuance
procedures primarily for simplification, clarification, and conformance
with existing agency practice.
3. Proposed Changes
(a) Pre- and Post-Auction Procedures
This proposed rule would reorganize, simplify, and clarify the
sections of BOEM's regulations that detail the steps leading to an OCS
renewable energy auction. The proposed rule would introduce a new term,
``provisional winner,'' to describe the bidder that BOEM determines has
submitted the winning bid at the close of the auction, pending
completion of the government's post-auction reviews and the lease award
reconsideration process. The provisional winner becomes the winning
bidder upon favorable completion of these reviews and appeals. The
proposed rule would consolidate the reconsideration and appeal
provisions into a single section while retaining separate processes for
seeking the review of a decision selecting a provisional winner and for
appealing all other final decisions under this part. The proposed rule
would simplify and clarify post-auction procedures by outlining what
BOEM and a provisional winner must do between the auction and lease
execution. The proposed rule would eliminate the term ``request for
interest'' and replace it with the broader term ``request for
information.'' Finally, the proposed rule would change the due date for
payment of the first 12 months' rent to 45-calendar days after the
winning bidder receives a copy of the executed lease.
(b) Auction Processes and Rules
BOEM recognizes that the auction formats and bidding systems
described in the existing Sec. Sec. 585.220 and 585.221 are difficult
to understand and overly prescriptive, although they allow for
customization of each auction. This proposed rule would simplify and
clarify the auction regulations, replacing the currently enumerated
auction formats, bid systems, and bid variables with a more flexible
process to better accommodate an emerging industry while allowing for
auctions to be customized based on circumstances. The proposed rule
would meet the fundamental policy objectives to have a process that is
objective, fair, reasonable, and competitive; awards leases to the
highest bidder; and provides a fair return to the U.S. taxpayer.
Consistent with BOEM's existing practice, the PSN would propose the
specific format and procedures for an upcoming auction, and the public
would have an opportunity to submit comments that would inform BOEM's
final decisions regarding format and procedures. BOEM would publish the
final auction format and procedures in the FSN. This proposed rule
would allow BOEM greater flexibility to tailor each auction to fit the
particular circumstances.
(c) Multiple Factor Auctions and Bidding Credits
BOEM proposes to continue to implement multiple factor auctions,
through the use of bidding credits, to allow the competitive lease
award process to take into consideration various priorities, such as
advancing a domestic supply chain or requiring workforce development
agreements, relating to orderly development of OCS renewable energy
resources. The multiple factor auction format ascribes a value,
expressed in monetary terms, to the factors or actions demonstrated or
committed to by a bidder at a lease auction during the competitive
lease

[[Page 5986]]

award process. In each round of the auction, a bid may have a non-
monetary component represented by the bidding credit as well as a
monetary (cash) component.
A multiple factor auction using bidding credits would be expected
to proceed along the lines of the following example. We assume there
are three qualified bidders in an ascending bid clock auction, which is
the same auction format traditionally used for BOEM's wind energy lease
sales. Bidder A has met the requirements for a bidding credit of 10
percent of the cash component by having obtained a power purchase
agreement (PPA); Bidder B has met the requirements for a bidding credit
of 20 percent of the cash component by having committed to appropriate
workforce or supply chain development agreements; and Bidder C has not
earned or made the requisite commitments to earn a credit.
The auction begins with an opening bid of $100 with subsequent $10
bidding increments per round. The auction continues for seven rounds.
Bidder C submitted an exit bid in Round 6 and is ineligible to continue
bidding. The auction concludes when Bidder B bids the asking price in
Round 7 and Bidder A submits an exit bid less than the asking price.
Bidder B wins the auction with its lower cash bid combined with its
commitment to workforce training and supply chain development. The
example bidding results are shown in the following table.

Table--Offshore Wind Auction Example
----------------------------------------------------------------------------------------------------------------
BOEM's asking
Bidding round price (combined Bidder A (10 Bidder B (20 Bidder C (no credit)
bid) percent credit) percent credit)
----------------------------------------------------------------------------------------------------------------
1............... $100 $90.90 cash + $9.10 $83.30 cash + $100.00.
credit. $16.70 credit.
2............... $110 $100 cash + $10 $91.67 cash + $110.00.
credit. $18.33 credit.
3............... $120 $109.09 cash + $100 cash + $20 $120.00.
$10.91 credit. credit.
4............... $130 $118.18 cash + $108.33 cash + $130.00.
$11.82 credit. $21.67 credit.
5............... $140 $127.27 cash + $116.67 cash + $140.00.
$12.73 credit. $23.33 credit.
6............... $150 $136.36 cash + $125 cash + $25 $145.00 (exit bid).
$13.64 credit. credit.
7............... $160 Exit bid of $140 $133.33 cash + [ineligible to bid].
cash + $14 credit $26.67 credit =
= $154.00. $160.00 (winner).
----------------------------------------------------------------------------------------------------------------

Before the auction, BOEM will determine each bidder's eligibility
for bidding credits in accordance with the specifications of the FSN;
however, such eligibility may be established either for actions that
the bidder has already undertaken or for actions which it has committed
to undertake in the future, provided that BOEM has agreed to the terms
by which such a commitment will be made. Eligibility for bidding
credits would be tied to specific actions defined in the FSN that
facilitate OCS renewable energy development by increasing the
likelihood or pace of development--for instance, a PPA--or by advancing
other public policy goals reflected in the OCS Lands Act. The FSN would
contain the rules governing the eligibility of parties to obtain
bidding credits, as well as the application process, use, and value of
bidding credits in a specific auction. As it has done in the past, BOEM
would consider the enforceability of commitments made by bidders during
the design of the auction credits to be offered in specific lease
sales. In the past, this was not much of a concern because BOEM mostly
offered credits for commitments and achievements previously made. This
proposed rule would clarify that a bidder may be eligible for bidding
credits based on actions the bidder has already undertaken or for
commitments to future actions. However, in proposed 30 CFR 585.225,
this rule would also provide that, in the event that a lessee does not
meet the commitments it made to obtain any bidding credits, the lessee
would be required to repay the value of the bidding credits that it
received, adjusted for inflation. BOEM would also reserve the right to
impose civil penalties pursuant to the provisions of subpart N of 30
CFR 550 for failure to comply with the terms or provisions of a lease,
easement, or right-of-way.
According to the provisions of this proposed rule, a multiple
factor auction may take one or more non-monetary factors into
consideration, including: (1) power purchase agreements; (2)
eligibility for, or applicability of, renewable energy credits or
subsidies; (3) development agreements by a potential lessee that
facilitate shared transmission solutions and grid interconnection; (4)
technical merit, timeliness, financing and economics, environmental
considerations, public benefits, or compatibility with State and local
needs; (5) agreements or commitments by the developer that would
facilitate OCS renewable energy development or other OCS Lands Act
goals; or (6) any other factor or criteria to further development of
offshore renewable energy in a sustainable and environmentally sound
manner, as identified by BOEM in the PSN and FSN.
(d) Solicitation of Comments
BOEM seeks comments on the use of bidding credits and multiple
factor auctions as a method of advancing important priorities, such as
promoting workforce development or supply chain enhancement, consistent
with the goals of the OCS Lands Act. It is BOEM's goal to ensure that
there is adequate flexibility to the leasing process to achieve public
policy goals and any comments or suggestions as to how BOEM could best
achieve this objective would be welcome. Specifically, BOEM is
interested in obtaining comments on how bidding credits or factors
might be tailored to mitigate possible adverse, project-related
impacts. For example, BOEM is interested in receiving comment on what
impacts a project could have on underserved communities and how bidding
credits or multiple factor auctions can be used to promote mechanisms
such as community benefit agreements that could address those impacts
and provide benefits to the underserved communities. Comments on
alternative means to achieve public policy goals, such as through lease
stipulations, are also sought.
(e) Improper or Inappropriate Bidder Communications
The proposed rule would explicitly prohibit a bidder from
disclosing its auction strategies and economic valuations of a lease
area to other bidders in a particular auction in any manner that might
prevent the United States from obtaining a fair return on a prospective
lease. Such practices have been prohibited in recent FSNs.
This proposal would outline the rules applicable to all auctions
and the

[[Page 5987]]

processes BOEM would use to disqualify a bidder that no longer meets
qualification requirements or who engages in specified improper
conduct. The proposed rule would specify how a disqualified bidder
might seek to be re-qualified as a bidder.
(f) Provisional Winner Obligations
This proposed rule would define the term ``provisional winner'' and
would outline consequences if a provisional winner fails to sign the
lease agreement, provide the requisite amount of financial assurance,
or tender the outstanding bid balance. The proposed rule would provide
a list of actions that BOEM is authorized to take if a provisional
winner fails to fulfill its obligations. In addition, because the
proposed rule would allow a provisional winner to become a lessee
before it has completed all obligations for which it obtained bidding
credits, an additional provision has been added to proposed Sec.
585.225, specifying that a lessee that has obtained bidding credits for
prospective performance obligations that were not fulfilled at the time
of the lease award, are subject to repayment in the event that those
performance obligations are not ultimately met prior to a specified
deadline or event. BOEM would also reserve the right to impose civil
penalties pursuant to the provisions of subpart N of 30 CFR 550 for
failure to comply with the terms or provisions of a lease, easement, or
right-of-way.
(g) Re-Offering Leases at Auction or When a Lease Area Is Relinquished,
Contracted or Cancelled
The proposed rule would provide clear authority for BOEM to offer a
lease to the next highest bidder if a provisional winner of a lease
auction fails to fulfill its obligations before lease execution or is
otherwise unable to execute a lease. Similarly, if a lessee
relinquishes its lease or BOEM contracts or cancels a lease in whole or
in part, BOEM may re-offer the area previously covered by the lease.

G. Risk Management and Financial Assurance

1. Existing Regulations
As discussed above, under the current subpart E of part 585, BOEM
requires lessees and grant holders to provide financial assurance, in
the form of a bond or other instrument, in an amount sufficient to
guarantee compliance with terms and conditions of their leases and
grants.
2. Why the Existing Regulations Should Be Updated
The existing financial assurance regulations lack flexibility and
clarity in several key areas, as explained below.
3. Proposed Changes
This proposed rule would revise BOEM's risk management and
financial assurance requirements in the proposed subpart F. The
revisions are intended to facilitate OCS renewable energy development
while continuing to protect the U.S. taxpayer against risks of default.
The proposed rule would accomplish both goals through four key changes.
Other minor proposed changes are addressed in section VI.F. BOEM also
seeks comment on additional potential changes that would better align
financial assurances to risk discussed in subsection 3(e) below.
(a) Elimination of COP Approval Financial Assurance Requirement
The proposed rule would eliminate the supplemental financial
assurance currently required before COP approval.\57\ This requirement
was intended to protect the U.S. taxpayer against liability from
defaulted lease obligations that accrue after COP approval.\58\
However, decommissioning liabilities do not accrue from COP approval;
such liabilities accrue only with the commencement of approved
activities on the OCS.\59\ BOEM's regulations require--and this
proposed rule would continue to require--supplemental financial
assurance before OCS installation starts in order to cover those
liabilities, i.e., anticipated decommissioning costs. Therefore, BOEM
proposes to eliminate as unnecessary the requirement for supplemental
financial assurance before COP approval. In the unforeseen event that a
COP approval does, by itself, cause the accrual of new obligations,
BOEM retains the authority to assess supplemental financial assurance
on a case-by-case basis under Sec. 585.517.\60\
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\57\ 30 CFR 585.516(a)(3).
\58\ See Renewable Energy and Alternate Uses of Existing
Facilities on the Outer Continental Shelf Final Rule, 74 FR 19637
(Apr. 29, 2009), available at <a href="https://www.boem.gov/Renewable-Energy-Program/FinalRenewableEnergyRule-pdf.aspx">https://www.boem.gov/Renewable-Energy-Program/FinalRenewableEnergyRule-pdf.aspx</a>.
\59\ Under both the existing regulations and the proposed rule,
OCS installation of approved facilities may begin only after the
lessee addressed all CVA and BOEM concerns raised during their FDR
and FIR reviews to their satisfaction.
\60\ Where a permit under the National Marine Sanctuaries Act
may be required, NOAA's Office of National Marine Sanctuaries may
require certain financial assurances for infrastructure removal
activities potentially required under the permit.
---------------------------------------------------------------------------

(b) Revision of Lease-Specific Financial Assurance Amount
The proposed rule would simplify the requirements for financial
assurance during the early stages of a commercial lease. Currently,
before BOEM will execute a commercial lease, the lessee is required to
provide lease-specific financial assurance in the amount of $100,000 to
guarantee compliance with the lease terms and conditions. BOEM
recognizes, however, that annual rental payment is the only financial
obligation accrued at lease execution and before installation
activities on the OCS are authorized. BOEM currently assesses financial
assurance for 12 months of rent when it makes its first request for
supplemental financial assurance--typically during SAP review.\61\ This
practice leaves BOEM under-bonded for the preliminary term of a lease
if annual rent exceeds $100,000, which it generally does.
---------------------------------------------------------------------------

\61\ 30 CFR 585.516(a)(2).
---------------------------------------------------------------------------

BOEM, therefore, proposes to replace the $100,000 lease-specific
financial assurance with financial assurance in the amount of 12
months' rent, due before lease execution. This amendment would ensure
that BOEM and U.S. taxpayers are adequately bonded throughout the early
stages of the lease. Combined with the proposed elimination of
financial assurance for met buoy decommissioning, this amendment would
simplify financial assurance by eliminating the need for supplemental
financial assurance in addition to 12 months' rent before installation
of BOEM-approved facilities on the OCS. The amendment is not expected
to have a financial impact on lessees.\62\
---------------------------------------------------------------------------

\62\ As discussed in section V.A above, BOEM proposes to
eliminate SAPs for met buoys, which have become the predominate
facilities for OCS site assessment activities.
---------------------------------------------------------------------------

Additionally, BOEM's regulations allow periodic adjustments to the
$100,000 lease-specific financial assurance based on the Consumer Price
Index-All Urban Consumers or equivalent index. With the proposed
replacement of the $100,000 lease-specific financial assurance, BOEM
proposes to eliminate these adjustment provisions as obsolete. BOEM
seeks comments on the extent to which additional modifications or
enhancements to the financial assurance might be appropriate.
Extending the reasoning in this section, the proposed rule also
would change the financial assurance requirement prior to issuance of
limited leases and grants from $300,000 to an amount equal to 12
months' rent.

[[Page 5988]]

(c) Additional Authorized Financial Assurance Instruments
The proposed rule would provide greater flexibility regarding the
financial assurance instruments that BOEM would accept. While BOEM's
regulations list types of acceptable financial assurance instruments,
BOEM's regulations permit it to accept other instruments that meet the
general requirements for financial assurance in 30 CFR 585.525. Several
lessees have expressed an interest in using letters of credit, which
are accepted as financial assurance across a range of industries. The
proposed rule explicitly would allow letters of credit as permissible
financial assurance instruments and would set forth evaluation criteria
for their use. The proposed rule would add catch-all provisions
clarifying that BOEM may accept instruments not explicitly listed as
well as combinations of different instruments; however, these
instruments would need to meet BOEM's general requirements for
financial assurance as noted above. These changes would provide greater
flexibility to a lessee and a grant holder, but still protect the
United States against default.
The proposed rule also would provide lessees and grant holders with
greater flexibility when using a third-party guaranty by allowing
guarantors to cap their liability. BOEM's existing regulations require
a third-party guaranty to cover the full amount of all lease and grant
obligations. The proposed rule would grant BOEM the discretion to
approve a third-party guaranty for a specific amount. This modification
would provide lessees and grant holders with the flexibility to use a
third-party guaranty up to a certain dollar amount and to satisfy the
remainder of their financial assurance obligations through other
acceptable instruments. Given that BOEM would retain the ability to
approve all proposed financial assurance instruments and that the
criteria for such instruments would remain unchanged, BOEM believes
these changes would not increase the risk to U.S. taxpayers.
(d) Staged Funding of Decommissioning Accounts
The proposed rule would allow staged funding of decommissioning
accounts during the operations period of a lease or grant to satisfy
financial assurance requirements for decommissioning. BOEM's existing
regulations require full funding of a decommissioning account for each
renewable energy facility, such as a wind turbine generator, before its
installation on the OCS. This places a significant upfront capital
burden on a lessee or a grant holder.
BOEM strives to develop a financial assurance framework for the
renewable energy sector that accomplishes the same goal of protecting
the taxpayer as does the financial assurance framework governing the
oil and gas sector. BOEM also recognizes that there are key differences
between the renewable energy and oil and gas sector that necessitate
different approaches. Notably, offshore renewable energy is projected
to maintain consistent levels of power production over the life of a
project, as opposed to production decline curves associated with oil
and gas production from offshore wells. In addition, the risk that
predicted levels of oil and gas reserves may be overstated is also not
a concern with offshore renewable energy projects. Additionally,
renewable energy projects often have legally binding PPAs, which ensure
an ongoing revenue source over a significant time horizon and eliminate
another major risk factor faced by the oil and gas sector: commodity
price volatility. This relatively consistent production, combined with
PPAs that often guarantee a market for power at predictable prices over
15 to 20 years, allows BOEM to receive revenue and make profitability
projections with a much greater degree of certainty than for
conventional energy assets.
BOEM's proposal to set a scheduled and staged implementation of a
decommissioning trust account or other financial assurance funding
mechanism is also appropriate given that the funding schedule is
established at the beginning of the operations period, significantly
before decommissioning is scheduled to occur, as opposed to after the
assets have been operating for years and may be approaching or past
scheduled end-of-life. The proposed rule would allow BOEM to approve a
schedule for funding decommissioning accounts during a lease's or
grant's operations period on a case-by-case basis.\63\ In all
instances, the decommissioning account would be required to be fully
funded by the time a lessee or grant holder is obligated to
decommission the applicable facility. This proposed change would align
BOEM's financial assurance regulations with common European practices.
---------------------------------------------------------------------------

\63\ The operations period for a commercial lease is defined at
Sec. 585.235(a)(4); for a limited lease, Sec. 585.236(a)(2); and
for a grant, Sec. 585.303(b).
---------------------------------------------------------------------------

BOEM believes the risk of this proposed change to U.S. taxpayers is
negligible. First, the proposed rule would not commit BOEM to allowing
staged funding of a decommissioning account in all instances. If BOEM
believes that a particular project poses a high financial risk, BOEM
could require full funding of the decommissioning account before OCS
installation. Second, the European industry has a strong history of
solvency that BOEM believes would extend to the U.S. industry because
the lessees and projects share many of the same characteristics. Third,
BOEM anticipates that even if a lessee became insolvent during its
commercial operations period, it would likely be able to transfer a
functioning OCS renewable energy facility to a solvent entity because
the revenues would be expected to exceed operating costs.
(e) Other Financial Assurance Provisions
BOEM is considering additional changes to its existing financial
assurance framework. In December 2015, the Government Accountability
Office highlighted risks in BOEM's financial assurance procedures
applicable to the offshore oil and gas industry and recommended that
BOEM complete its planned financial assurance revisions ``including the
use of alternative measures of financial strength.'' \64\ Subsequently,
BOEM is considering a new rulemaking to revise the financial assurance
regulations for its offshore oil and gas program while continuing to
protect U.S. taxpayers against defaulted obligations incurred by
lessees and grant holders.\65\
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\64\ Government Accountability Office, GAO-16-40, Offshore Oil
and Gas Resources, Action Needed to Better Protect Against Billions
of Dollars in Federal Exposure to Decommissioning Liabilities 34
(2015), <a href="https://www.gao.gov/products/GAO-16-40">https://www.gao.gov/products/GAO-16-40</a>.
\65\ Risk Management, Financial Assurance and Loss Prevention,
85 FR 65904 (Oct. 16, 2020).
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The oil and gas rulemaking initiative could consider reliance on
credit ratings with a specific regulatory credit rating threshold for
BOEM's evaluation of the financial strength and reliability of a
lessee, grant holder, or third-party guarantor. In all cases, BOEM
could retain the discretion to require supplemental financial assurance
in situations where it is warranted.
Similarly, in its renewable energy program, BOEM is considering use
of a minimum credit threshold rating to help determine the necessity
for financial assurance. BOEM is not proposing regulatory text
implementing this concept and is not specifying a credit rating
threshold in this rulemaking. BOEM does seek comments on the merits of
this concept for potential inclusion in the final rule for the
renewable energy program. Regulatory

[[Page 5989]]

text implementing this proposal likely would result in BOEM replacing
many of the factors that currently guide BOEM's determination of a
lessee's or grant holder's financial strength in the existing Sec.
585.527, or adding provisions outlining additional methods for
determining financial strength.
(i) Credit Ratings
Currently, BOEM requires a commercial lessee to provide
supplemental financial assurance before installing facilities included
in the approved COP.\66\ Under existing regulations, BOEM may allow a
lessee or grant holder to use its financial strength and reliability to
cover its financial assurance based on an evaluation of audited
financial statements; business stability; reliability; and a record of
compliance with laws, regulations, and contracts.\67\ Based on a
similar evaluation of a guarantor, BOEM also may allow a lessee or
grant holder to use a third-party guarantee to meet its financial
assurance requirements.\68\
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\66\ 30 CFR 585.516(a)(4). BOEM may adjust the amount of the
supplemental financial assurance as cumulative obligations increase
or decrease during the lease. 30 CFR 585.517(c). On a grant or
limited lease, BOEM may require supplemental financial assurance as
activities progress and obligations accrue. 30 CFR 585.521(a).
\67\ 30 CFR 585.527(a).
\68\ 30 CFR 585.528(b).
---------------------------------------------------------------------------

These factors primarily assess past performance as a proxy for
future financial strength and reliability. In dynamic electricity
markets, however, such backward-looking factors may lead to inaccurate
and inconsistent assessments of financial strength and reliability.
A forward-looking assessment would be more reliable because the
financial situation of a lessee, grant holder, or third-party guarantor
can worsen quickly despite its past performance. Credit ratings provide
such forward-looking assessments by taking into account relevant
factors, such as cash flow, debt-to-income ratios, and debt-to-funds
from operation.
BOEM seeks comment on whether it should alter its assessment of
financial strength and reliability by replacing the use of several
current factors with a credit rating from a nationally recognized
statistical rating organization (NRSRO), as identified by the U.S.
Securities and Exchange Commission under the Credit Rating Agency
Reform Act of 2006 and its implementing regulations,\69\ or a proxy
credit rating determined by BOEM using audited financial statements.
Based on BOEM's experience in the oil and gas industry, BOEM has
concluded credit ratings are the most reliable predictor of future
ability to meet obligations.\70\ The use of credit ratings would align
BOEM's assessment with widely accepted risk evaluation methods within
the banking and financial industry.
---------------------------------------------------------------------------

\69\ See 17 CFR parts 240 and 249.
\70\ Credit ratings are part of current reliability criteria
discussed in existing Sec. 585.527(a)(3).
---------------------------------------------------------------------------

BOEM believes that an NRSRO credit rating greater than or equal to
investment grade from Standard & Poor's Ratings Service (S&P) or from
Moody's Investor Service would be a sufficient indicator of future
reliability to allow a lessee or grant holder to use its financial
strength to meet its requisite financial assurances. BOEM also proposes
to use the same credit rating criteria to evaluate the financial
strength and reliability of a lessee's or grant holder's proposed
third-party guarantor. If a lessee, grant holder, or guarantor lacks an
NRSRO credit rating, it would be allowed to submit audited financial
statements--which generally include an income statement, balance sheet,
statement of cash flows, and auditor's certificate--prepared in
accordance with generally accepted accounting principles. Based on
these audited financial statements, BOEM then would determine a proxy
credit rating using the S&P Credit Analytics credit model or a similar
widely accepted credit rating model. BOEM has concluded that such a
model, used in conjunction with audited financial statements, can
generate a proxy credit rating comparable to that of an NRSRO.
(ii) Joint and Several Liability
Currently, co-lessees and co-grant holders are jointly and
severally liable for lease or grant obligations accruing during their
tenancy, including decommissioning.\71\ When a lease or grant is
assigned, the assignor remains liable for unmet obligations that
accrued before BOEM's approval of the assignment.\72\ The assignee is
liable for obligations that accrued before and after BOEM's approval of
the assignment.\73\ Moreover, the assignee is required to provide
requisite financial assurance.\74\ This joint and several liability
significantly reduces the risk of non-performance if any liable party
has adequate financial strength and reliability.
---------------------------------------------------------------------------

\71\ 30 CFR 585.406(a).
\72\ 30 CFR 585.410.
\73\ 30 CFR 585.411(b).
\74\ 30 CFR 585.408(b)(8).
---------------------------------------------------------------------------

BOEM seeks comment on whether it should explicitly rely on the
financial strength and reliability of these other liable parties,
including any current or predecessor lessees and grant holders, when
determining the need for, and amount of, financial assurance necessary
to cover all accrued lease or grant obligations.

H. Safety Management Systems

An SMS is a combination of policies, procedures, and control
mechanisms designed to meet an organization's safety objectives in a
disciplined and continually improving manner. BOEM regulations require
a lessee or a grant holder to develop an SMS for COP-approved renewable
energy facilities and for SAP- and GAP-approved facilities that BOEM
deems complex and significant. The SMS must be functional when a lessee
or grant holder begins its approved activities and throughout the
project.
1. Existing Regulations
BOEM's existing SMS regulations are brief and general, having been
promulgated in 2009 when construction and operation activities were
years in the future. The regulations require a lessee or a grant holder
to submit a general description of safety measures and capabilities,
emergency procedures, and testing protocols. Multiple Federal statutes
authorize various safety oversight activities by different agencies for
facilities on the OCS, including renewable energy facilities. BOEM
recognizes that duplicative enforcement of similar statutes by multiple
agencies is likely to be confusing and cause unneeded cost and delay.
Consequently, BOEM and BSEE have coordinated with the Occupational
Safety and Health Administration (OSHA) and the United States Coast
Guard (USCG)--the Federal agencies primarily responsible for OCS
facility safety management--to assure coordination and consistency with
the safety management responsibility of these agencies for OCS
facilities. BOEM's SMS requirements will become the primary tool to
ensure human and environmental safety with respect to renewable energy
development on the OCS. This rule is intended to clarify the
expectations of the SMS for the regulated community. It is also
designed to clarify the expected content of an SMS and support the
assessment by other Federal regulators that an SMS performance-based
approach to risk management will establish a reasonable regulatory
framework.
2. Why the Existing Regulations Should Be Updated
With construction and operation activities expected to commence
soon, OCS wind lessees and contractors have

[[Page 5990]]

informally asked BOEM to clarify its expectations regarding SMS
standards. The proposed rule would address those inquiries, incentivize
SMS certification from a recognized accreditation organization, add two
safety reporting requirements, and clarify that lessees and grant
holders would be required to have and use an SMS for all OCS activities
undertaken pursuant to a lease, from site assessment through
decommissioning.
Additionally, the proposed changes would reflect the recent DOI
policy statement clarifying that 30 CFR part 585 contains the primary
workplace health and safety regulations for OCS renewable energy
operations.\75\
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\75\ Notification of policy statement, 84 FR 55861 (Oct. 18,
2019).
---------------------------------------------------------------------------

3. Proposed Changes
The Department proposes a performance-based approach that would
promote flexibility in determining the best way to ensure personnel
safety on and near OCS renewable energy facilities during activities
covered by the SMS. The proposed SMS changes are consistent with
industry's safety management best practices. The proposed amendments
would allow a lessee or grant holder to adopt U.S. and international
workplace health and safety standards as its SMS framework.
Under the proposed rule, upon SMS receipt, the Department would
engage with the lessee or grant holder to understand the risks the
safety system was designed to mitigate and how the system would
function. The proposed rule would provide transparency regarding the
types of information that the Department considers necessary in a
satisfactory SMS and would clarify that the Department expects the
lessee or grant holder to design, implement, and maintain the SMS
according to widely accepted standard practices. This clarification
would help prospective OCS renewable energy developers understand the
Department's SMS expectations.
The proposed rule would provide incentives for a lessee or grant
holder to obtain certification of its SMS from a recognized safety and
environmental management system CAB. A lessee or grant holder whose SMS
has been certified would be eligible for streamlined oversight in
recognition of the increased rigor in the development and
implementation of its SMS. While such certifications would not be
required and cannot guarantee streamlined oversight in all instances,
BOEM anticipates that most lessees and grant holders would pursue
certification as a best practice.
The proposed rule would add two reporting requirements. One report
would require an annual summary of how the SMS performed, normalized to
work hours and energy generation. This report would allow the
Department to verify SMS functionality and track continual
improvements.\76\ The second would be a triannual report summarizing
the results of the most recent SMS audit, the corrective actions
implemented, and a description of any changes made to the SMS since the
prior report. Data from these reports could be used to generate annual
industry-wide comparisons of safety performance.
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\76\ This report also would close a known reporting gap between
BOEM and OSHA, which requires annual reporting of workplace injury
and illness data.
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Finally, the proposed rule would provide that a lessee must have a
functional SMS before beginning any activity on the OCS pursuant to a
lease, and must use its SMS for all such activities, including site
assessment work. This would clarify the Department's expectations
regarding the stages at which an SMS must be functional and used,
including prior to the SAP, COP, or GAP.

I. Inspections

1. Existing Regulations
Existing regulations state that BOEM will inspect facilities and
vessels engaged in renewable energy activities to verify compliance
with applicable terms, conditions, laws and regulations, and to
determine whether safety equipment has been properly installed and
operated. The existing regulations that require the lessee to conduct
self-inspections are limited to inspections of structures, mooring
systems, and monitoring of corrosion protection.
2. Why the Existing Regulations Should Be Updated
OCS Lands Act section 1834(c) requires the Department to promulgate
regulations to provide for scheduled onsite inspection, at least once a
year, of each facility on the outer Continental Shelf. As currently
written, BOEM's regulations require BOEM to perform a scheduled on-site
inspection of all renewable energy facilities on the OCS and inspect
all safety equipment designed to prevent or ameliorate fires, spills,
or other major accidents.
To ensure that the OCS Lands Act mandate of an annual onsite
inspection is met, the Department proposes to update its regulations to
require the lessee conduct annual onsite self-inspections. The lessee
would also be required to maintain records of its self-inspections and
to provide these records to the Department upon request. This would
make the lessee accountable for ensuring safety and protection of the
environment. In addition, the Department would retain the ability to
conduct inspections at any time.
This update would allow for DOI to focus resources on conducting
inspections, both scheduled and unscheduled, based on designated
criteria, such as operational risk severity and risk probability,
industry trends, incident data, analytical data, safety management
system implementation and audits, and other observations.
This proposal would also reduce logistical and human resource
burdens on the operators by allowing them to schedule the annual self-
inspections with maximum efficiency by incorporating the inspections
into scheduled onsite activities.
3. Proposed Changes
(a) BOEM Inspection Requirement
The proposed rule would revise BOEM's requirement ``to conduct'' an
inspection on OCS facilities or any vessels engaged in renewable
activities to state that BOEM ``may conduct'' an inspection on an OCS
facility or any vessel engaged in renewable activities.
(b) Self-Inspection Requirements
The proposed rule would require that, once a facility has commenced
commercial operations, the lessee would conduct an onsite inspection of
its facility at least annually, including all safety equipment designed
to prevent or ameliorate fires, spillages, or other major accidents, to
satisfy the annual onsite inspection requirement of the OCS Lands Act.
The proposed rule would also require the lessee to maintain records of
the facility inspections, summarize the results of those inspections
and provide the records and the summary of the results to BOEM upon
request.

J. Other Proposed Changes

The Department proposes other regulatory changes that fall outside
the eight categories previously discussed. The most significant of
these proposed changes are summarized here. Other changes correct
technical errors or clarify inconsistencies arising from this proposed
rule. All these proposed changes and their rationales are discussed
further in section VI.

[[Page 5991]]

1. Lease Structure
The proposed rule would change the default lease terms in Sec.
585.235 by merging the existing preliminary and site assessment terms
into one preliminary period; establishing new lease periods for COP
review and for design and construction that can vary in length based on
the duration of the COP review and the design and construction process;
and converting the existing 25-year operations term that commences at
COP approval into a 30-year operations period commencing at the
commercial operations date. These proposed changes recognize most
lessees will not submit SAPs, account for the time required for permit
review and construction, and provide certainty to a lessee regarding
the operations period of its renewable energy project.
2. Lease Segregation and Consolidation
BOEM has received requests from lessees to segregate single leases
into multiple leases, held by different subsidiaries, as well as to
consolidate multiple adjacent leases into a single lease. BOEM
regulations allow such segregations and consolidations, and the
proposed rule would clarify the existing regulations by establishing
specific procedures.
3. Civil Penalties
BOEM's renewable energy regulations do not explicitly provide for
assessing immediate civil penalties for violations that constitute(d) a
threat of serious, irreparable, or immediate harm or damage to life,
property, or the marine, coastal, or human environment, without notice
and an opportunity to correct. However, the authority for doing so is
set forth in the OCS Lands Act. This proposed rule would amend the
Department's regulations to ensure that its civil penalty regulations
are coextensive with its statutory authority.
4. Standardize Annual Rental Rates for Grants
The proposed rule would standardize the annual rental rate for most
grants. Under the proposed rule, BOEM would apply a $5 per acre annual
rental rate for both ROWs and RUEs.
5. Technical Corrections and Clarifications
Finally, the proposed rule would make numerous minor technical
changes. These technical revisions maintain consistency with proposed
changes elsewhere in the regulations, clarify ambiguities, correct
technical errors, and improve organization. Examples of proposed
changes in this category include:
<bullet> Clarifying that under 30 CFR 585.103(a)(1), regulatory
departures may be granted when necessary to facilitate programmatic
activities before, during and after lease termination.
<bullet> Replacing reference to the Immigration and Naturalization
Service, which no longer exists, with ``appropriate Federal immigration
authority.''
<bullet> Eliminating the paper copy submission requirement for
plans, applications, reports, and notices to modernize procedures and
to promote responsible stewardship of resources.
<bullet> Replacing ``BOEM'' with ``ONRR'' in certain provisions to
reflect that ONRR is the correct payee for all lease and grant
payments.
<bullet> Revising the cross-reference to BSEE's 30 CFR part 254
regulations in BOEM's oil spill response plan requirement for COPs,
because the majority of 30 CFR part 254 does not apply to offshore
renewable energy.
<bullet> Modifying the air quality provisions to reflect Congress'
2011 amendments to the CAA.

K. Potential Revisions to Regulations Governing Research Activities

BOEM requests public comments on whether the lease process for
research activities in existing Sec. 585.238 warrants amendment. This
proposed rule does not contain changes to this section, but BOEM is
interested in receiving comments on the following: whether it should
create a specific regulatory framework for research leases and
planning; whether it should expand the criteria for who can hold
research leases; whether the DNCI requirement can or should be relaxed
for research activities; and whether any other aspects of this section
deter OCS renewable energy research. Note that for one of the two
leases issued under this section to date, BOEM used its discretion to
require the submittal of a Research Activities Plan containing
information substantially the same as what is required to be included
in a COP.\77\
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\77\ See letter from Bureau of Ocean Energy Mgmt. to John
Warren, Dir., Va. Dep't Mines, Minerals & Energy (Mar. 23, 2016),
<a href="https://www.boem.gov/Approval-of-VOWTAP-Research-Activities-Plan/">https://www.boem.gov/Approval-of-VOWTAP-Research-Activities-Plan/</a>.
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L. Potential Revisions to Regulations Governing Transmission

BOEM recognizes a need to minimize impacts to the environment and
natural and cultural resources and maximize the utility of land-based
points of interconnection. BOEM is continuing efforts to explore a
coordinated approach to transmission, which could include the shared
use of cable corridors or other shared transmission solutions, such as
regional transmission systems, meshed systems, and the development of
an offshore grid. Accordingly, BOEM seeks comment on the types of
regulatory changes that would be appropriate to better accommodate
these options and to minimize impacts to environmental, natural, and
cultural resources. For example, should 30 CFR 585.200(b) be modified
to allow BOEM to encourage or require use of such options where they
are available and allow for full enjoyment of the lease? What
approaches or options should BOEM consider advancing in 30 CFR
585.200(b) to facilitate interconnection for lessees, while minimize
impacts to important resources?

VI. Section-by-Section Analysis of Proposed Rule

A. 30 CFR Part 585, Subpart A--General Provisions

Sec. 585.102 What are BOEM's responsibilities under this part?
Section 585.102(a) specifies that BOEM will authorize renewable
energy activities in accordance with OCS Lands Act subsection 8(p)(4),
as enumerated in Sec. 585.102(a)(1) through (12). BOEM is amending
this regulation to clarify that none of the enumerated requirements is
intended to outweigh or supplant any other. The purpose of this change
is to clarify that BOEM takes all of these relevant factors into
consideration in planning its renewable energy program and that no one
factor or consideration, by itself, should outweigh the other relevant
considerations.
Sec. 585.103 When may BOEM prescribe or approve departures from the
regulations in this part?
Section 585.103 was promulgated to allow BOEM to maintain
programmatic flexibility while adapting to a new and changing industry
by approving departures from regulatory requirements under certain
limited circumstances.\78\
---------------------------------------------------------------------------

\78\ See supra note 51, at 19653.
---------------------------------------------------------------------------

The proposed rule would modify Sec. 585.103(a) introductory text
and (a)(1) to specify that BOEM may prescribe or approve a departure
from the regulations when BOEM deems the departure necessary because
the applicable provision(s) as applied to a specific circumstance are
impractical or unduly burdensome and the departure is necessary to
achieve the intended objectives of the renewable energy program. In
this way BOEM would maintain flexibility to adapt the regulations to
the unique circumstances of this new and evolving industry while

[[Page 5992]]

retaining the consistency and integrity of the regulations as a whole.
The existing departure provisions of this section are limited in
scope to those regulatory provisions that apply to existing lease and
grant holders. However, BOEM has applied departures not only to
activities ``on a lease or grant,'' but also to activities that occur
before lease issuance (e.g., BOEM's planning and lease sale processes)
and after lease termination (e.g., decommissioning, release of
financial assurance). The proposed changes would allow for such
departures.
Minor updates to the provisions paragraphs (a)(2) through (4) were
made for consistency with the new language in Sec. 585.103(a). No
changes are proposed to Sec. 585.103(b) which lists the requirements
that an approved departure and its rationale must be consistent with
subsection 8(p) of the OCS Lands Act, protect the environment and
public health and safety, not impair the rights of third parties, and
be documented in writing.
Sec. 585.104 Do I need a BOEM lease or other authorization to produce
or support the production of electricity or other energy product from a
renewable energy resource on the OCS?
Section 585.104 traces the statutory language of the OCS Lands Act
in establishing that a lease, ROW, or RUE issued under this part is
required in order to construct, operate, or maintain facilities that
``produce or support production, transportation, or transmission of
energy from sources other than oil and gas.'' \79\ The proposed rule
would clarify that for purposes of this section, site assessment
activities are not considered to produce, transport, or support the
generation of any energy products; and, therefore, such activities do
not, by themselves, require a lease, easement or ROW. As discussed
above in section V.A of this preamble, this revision is intended to
clarify that an entity does not require a lease from BOEM to deploy a
met buoy or tower for site assessment activities that are not located
on an existing commercial lease. Under the proposed rule, BOEM would
not require a separate lease for the deployment of such facilities.\80\
The USACE would be the lead Federal permitting agency for such
facilities under its existing legal authority, though other agencies
may also have permitting or consultation requirements, such as NOAA
under the NMSA (for any off-lease site assessment activities that may
occur within a national marine sanctuary or in the vicinity of a
national marine sanctuary).
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\79\ 43 U.S.C. 1337(p)(1)(C).
\80\ BOEM would nonetheless require a commercial lessee, that
seeks to install a met tower, to submit a SAP in addition to the
USACE permit, given the potential impacts that might be caused by
such towers.
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Sec. 585.105 What are my responsibilities under this part?
BOEM is proposing a minor modification to strengthen the
requirement for lessees to comply with all applicable laws,
regulations, other requirements, the terms of the lease or grant under
this part, reports, notices, approved plans, and any conditions imposed
by BOEM. This would expand, strengthen, and clarify the language found
in current Sec. 585.105(d), requiring compliance only with the
``terms, conditions, and provisions of all reports and notices
submitted to BOEM, and of all plans, revisions, and other BOEM
approvals, as provided in this part.''
Sec. 585.106 Who can acquire or hold a lease or grant under this part?
BOEM proposes several changes to its qualification requirements.
First, the proposed rule would replace the word ``hold'' with
``acquire or hold'' throughout this section to clarify that the
qualification requirements of Sec. 585.106 are intended to apply both
to the acquisition and retention of both OCS lease and grant interests.
BOEM does not require automatic forfeiture of a party's existing lease
and grant interests if the lessee or grant holder no longer meets the
criteria in this section; rather, the cancellation provisions at Sec.
585.437 would be the appropriate vehicle for revoking a lease.
Second, the proposed rule would correct Sec. 585.106(a) to list
the citizenship qualifications in the disjunctive and not the
conjunctive by substituting ``or'' for ``and'' in Sec. 585.106(a)(6).
Third, the proposed rule would add criteria that may disqualify a
party from acquiring a lease or grant interest under this part and,
consequently, from participation in the lease and grant issuance
processes. The proposed rule would prevent a party that has been
disqualified from acquiring a lease or grant interest (because it
either lacks the basic regulatory qualifications or has engaged in
certain enumerated misconduct) from participating in any lease or grant
issuance processes under this part. This provision closes a loophole by
prohibiting a party disqualified from acquiring a lease or grant
interest from entering into commercial agreements to participate in the
lease or grant issuance processes on behalf of a third party. This
provision also would clarify BOEM's authority to disqualify a party
from an auction, which is not explicitly set forth in the existing
regulations. These proposed provisions are intended primarily to deter
current and potential lessees and grant holders from engaging in
conduct that is illegal or detrimental to BOEM's renewable energy
program and to the fair conduct of its auctions.
A party under consideration for disqualification would receive
written notice from BOEM of the basis for the disqualification and
would be provided an opportunity to be heard before BOEM issues a
final, appealable decision. BOEM also may instruct that party regarding
what remedial actions, if any, would restore its qualification. Until
such remedial actions are completed to BOEM's satisfaction or until
qualification is otherwise restored, a disqualified party would be
ineligible to acquire a lease or grant under this part or to otherwise
participate in BOEM's competitive and noncompetitive lease or grant
issuance processes.
Sec. 585.107 How do I show that I am qualified to be a lessee or grant
holder?
BOEM proposes a technical correction to paragraph (b) to reflect
that the Immigration and Naturalization Service no longer exists and to
avoid the need for future technical corrections in the event of another
change in the name of the relevant Federal immigration authority.
Sec. 585.110 How do I submit plans, applications, reports, or notices
required by this part?
BOEM proposes to eliminate its paper copy requirement and rely
primarily on electronic submissions. The paper requirement has proven
unwieldy for voluminous plan submittals that contain multiple
appendices and may be subject to multiple revisions before they are
finalized.
BOEM proposes to reserve the authority to require paper copies of
certain documents (such as maps and charts) if necessary.\81\ The
proposed rule also would eliminate the specific BOEM mailing address to
avoid the need for future technical corrections if BOEM's mailing
address changes again. Instead, the mailing addresses for BOEM
submissions would be listed for the appropriate contacts on BOEM's
website.
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\81\ BOEM proposes to retain the paper copy requirement for
assignment applications given the importance of having an original
signed version. See discussion infra VI.E Sec. 585.408.
---------------------------------------------------------------------------

Sec. 585.112 Definitions
The proposed rule would add a new definition for ``bidding
credits.'' Bidding

[[Page 5993]]

credits are defined as the value assigned by BOEM, expressed in
monetary terms, to the factors or actions demonstrated, or committed
to, by a bidder at a BOEM lease auction during the competitive lease
award process. The regulations further specify that the types and
values of any bidding credits awarded to any given bidder will be set
forth in the FSN.
The proposed rule would modify the definition of ``commercial
activities'' to state that such activities are conducted ``under''
leases and grants. This modification would maintain consistency with
the proposed revisions to Sec. 585.104 by clarifying that site
assessment activities that are not conducted on a commercial lease (and
thus do not require a lease) are excluded from the definition of
``commercial activities.''
The proposed rule would modify the definition of ``commercial
operations'' to state that the term means the generation of electricity
or other energy product for commercial use, sale, and distribution on a
commercial lease, but does not mean either generation needed to prepare
a final FIR or generation for testing purposes, provided the
electricity generated for such testing is not sold on a commercial
basis.
The proposed rule would add a new definition for ``Critical Safety
System'' to mean safety

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