Renewable Energy Modernization Rule

Federal RegisterJan 30, 2023

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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.

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:

•

Federal e-rulemaking portal:

https://www.regulations.gov.

Follow the instructions for submitting comments. Helpful search terms are “RIN 1010-AE04” or “BOEM-2022-0019.”

•

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.

•

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

https://www.reginfo.gov/public/do/PRAMain.

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

anna.atkinson@boem.gov.

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

https://www.regulations.gov,

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

https://www.regulations.gov

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

Georgeann.Smale@boem.gov;

or Karen Thundiyil, Chief, Office of Regulations, BOEM, at telephone number 202-742-0970, or email address

Karen.Thundiyil@boem.gov.

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

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

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.

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.

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

https://www.regulations.gov/docket?D=BOEM-2020-0033.

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.

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:

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

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.

E.g.,

National Environmental Policy Act, Endangered Species Act, and National Historic Preservation Act.

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.

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.

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.

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

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.

https://www.boem.gov/sites/default/files/documents/about-boem/GG-Guidelines.pdf.

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.

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.

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.

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.

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.

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

https://www.regulations.gov.

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.

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

https://www.reginfo.gov,

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).

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.

Codified at 43 U.S.C. 1337(p).

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].”

On October 18, 2011, BOEM's regulations were codified at 30 CFR chapter V, and its renewable energy regulations were,

and remain, located in 30 CFR part 585.

Secretary's Order 3299, Amendment No. 2, August 29, 2011,

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

(last visited Mar. 6, 2019).

Reorganization of Title 30: Bureaus of Safety and Environmental Enforcement and Ocean Energy Management, 76 FR 64432 (October 18, 2011).

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.

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 §§ 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.

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.

43 U.S.C. 1337(p)(2)(A).

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

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.

The purpose of subpart G is to ensure that facilities operate in a safe manner using accepted engineering practices in conformance with approved plans.

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.

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.”

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.

30 CFR 585.112.

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

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.

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.

See supra

note 2.

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

noise; and the presence of benthic communities, fish, marine mammals, birds, and bats.

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)).

Dep't of Energy & Dep't Of Interior, National Offshore Wind Strategy (2016) [hereinafter Offshore Wind Strategy],

https://www.boem.gov/National-Offshore-Wind-Strategy.

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.

Before installing any facilities for site assessment activities on its commercial lease, a lessee must submit a SAP for BOEM approval.

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.”

The SAP must include the information required by 30 CFR 585.610 through 585.611.

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.

30 CFR 585.600(a).

30 CFR 585.605(a).

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.

30 CFR 585.516(a)(2).

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.”

BOEM has the discretion to determine whether an activity “supports generation” of electricity and, therefore, requires a lease.

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.

30 CFR 585.104.

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 https://www.boem.gov/guidance.

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.

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.

If BOEM and the developer agree to terms, the developer has 12 months to submit a GAP under §§ 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.

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.

30 CFR 585.230.

30 CFR 585.231.

30 CFR 585.648.

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.

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.

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.

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 https://www.boem.gov/uploadedFiles/BOEM/Renewable_Energy_Program/Smart_from_the_Start/Mid-Atlantic_Final_EA_012012.pdf;

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 https://www.boem.gov/Revised-MA-EA-2014/

); 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 https://www.boem.gov/NY-EA-FONSI-2016/.

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.

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.

Consequently, BOEM's existing SAP (§§ 585.605 through 585.618) and GAP (§§ 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.

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.

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.”

The

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.

33 U.S.C. 403.

U.S. Army Corps of Engineers, Nationwide Permit 5—Scientific Measurement Devices (2017),

available at 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

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.

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.

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.

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.

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.

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 § 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.

BOEM also would no

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.

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.

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).

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 § 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.

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.

See

https://www.boem.gov/sites/default/files/documents/renewable-energy/OSW-surveys-NLAA-programmatic.pdf.

(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 § 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.

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).

See supra

note 18.

In contrast, site assessment activities conducted on a commercial lease are not subject to the same jurisdictional analysis despite the proposed change to § 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.

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,

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.”

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.

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 https://www.boem.gov/guidance.

Id.

at 1.

Here is an illustrative example:

• 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.

• 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.

• 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.

• 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.”

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.

Id.

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),

https://www.boem.gov/Phased-Approaches-to-Offshore-Wind-Developments-and-Use-of-Project-Design-Envelope/.

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

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.

Thus, lessees are currently obligated to conduct their full suite of geotechnical surveys before COP submittal.

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,”

both of which could include additional geotechnical surveys. Lessees must apply for a regulatory departure under § 585.103 if they wish to defer

in situ

testing, boring, and sampling at each foundation location until the FDR stage.

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.”

BOEM, therefore, requires the results of all archaeological surveys to be submitted with the COP.

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 § 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.

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),

https://www.sut.org/wp-content/uploads/2014/07/OSIG-Guidance-Notes-2014_web.pdf.

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

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,

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.

The geologic model brings together bathymetric data, surficial data imagery, sub-bottom data imagery, and sediment samples.

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.

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 § 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.

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.

See 30 CFR 585.626(a).

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

https://www.boem.gov/guidance.

See also Bureau of Ocean Energy Mgmt., Data Gathering Process: Geotechnical Departures for Offshore Wind Energy (2018),

https://www.boem.gov/Data-Gathering-Process/.

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.

See infra

Part VII.B.2 for overview of this proposed rule's economic analysis.

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

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 § 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 § 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 § 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.

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.

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.

See 30 CFR 551.4

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

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.

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.

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 https://www.boem.gov/sites/default/files/documents/about-boem/Social%20%26amp%3B%20Econ%20Fishing%20Guidelines.pdf.

Refer to stipulation 3.1.2.1 in Addendum C of commercial leases auctioned by BOEM in recent lease sales (

e.g., available at https://www.boem.gov/sites/default/files/documents/renewable-energy/state-activities/Lease%20OCS-A%200537_0.pdf.

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:

• What additional protections might be gained through rulemaking that cannot be achieved by way of the lease stipulations?

• 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?

• 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?

• 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?

• To what extent should BOEM identify and track OCS survey activities related to renewable energy program activities?

• 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?

• Should BOEM require advance coordination of survey activities with other lessees operating on the OCS?

• 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

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 § 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 § 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 § 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.

Panel on Certification of Offshore Structures, National Research Council, Verification of Fixed Offshore Oil and Gas Platforms 8-9 (1977),

https://www.nap.edu/read/18431/chapter/1

(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.

BOEM approves or disapproves CVA nominations as part of its plan review.

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.

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).

30 CFR 585.706(e).

(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.

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

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.

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.

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 § 585.700(b) on a case-by-case basis,

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.

See BOEM's record of departure requests at

https://www.boem.gov/departure-request.

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).

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

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 § 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 §§ 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.

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

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

Bidding round

BOEM's

asking price

(combined bid)

Bidder A

(10 percent credit)

Bidder B

(20 percent credit)

Bidder C

(no credit)

$100

$90.90 cash + $9.10 credit

$83.30 cash + $16.70 credit

$100.00.

$110

$100 cash + $10 credit

$91.67 cash + $18.33 credit

$110.00.

$120

$109.09 cash + $10.91 credit

$100 cash + $20 credit

$120.00.

$130

$118.18 cash + $11.82 credit

$108.33 cash + $21.67 credit

$130.00.

$140

$127.27 cash + $12.73 credit

$116.67 cash + $23.33 credit

$140.00.

$150

$136.36 cash + $13.64 credit

$125 cash + $25 credit

$145.00 (exit bid).

$160

Exit bid of $140 cash + $14 credit = $154.00

$133.33 cash + $26.67 credit = $160.00 (winner)

[ineligible to bid].

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

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 § 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.

This requirement was intended to protect the U.S. taxpayer against liability from defaulted lease obligations that accrue after COP approval.

However, decommissioning liabilities do not accrue from COP approval; such liabilities accrue only with the commencement of approved activities on the OCS.

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 § 585.517.

30 CFR 585.516(a)(3).

See

Renewable Energy and Alternate Uses of Existing Facilities on the Outer Continental Shelf Final Rule, 74 FR 19637 (Apr. 29, 2009),

available at

https://www.boem.gov/Renewable-Energy-Program/FinalRenewableEnergyRule-pdf.aspx.

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.

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.

This practice leaves BOEM under-bonded for the preliminary term of a lease if annual rent exceeds $100,000, which it generally does.

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.

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.

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.

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.

The operations period for a commercial lease is defined at § 585.235(a)(4); for a limited lease, § 585.236(a)(2); and for a grant, § 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.”

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.

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),

https://www.gao.gov/products/GAO-16-40.

Risk Management, Financial Assurance and Loss Prevention, 85 FR 65904 (Oct. 16, 2020).

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

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 § 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.

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.

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.

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).

30 CFR 585.527(a).

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,

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.

The use of credit ratings would align BOEM's assessment with widely accepted risk evaluation methods within the banking and financial industry.

See 17 CFR parts 240 and 249.

Credit ratings are part of current reliability criteria discussed in existing § 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.

When a lease or grant is assigned, the assignor remains liable for unmet obligations that accrued before BOEM's approval of the assignment.

The assignee is liable for obligations that accrued before and after BOEM's approval of the assignment.

Moreover, the assignee is required to provide requisite financial assurance.

This joint and several liability significantly reduces the risk of non-performance if any liable party has adequate financial strength and reliability.

30 CFR 585.406(a).

30 CFR 585.410.

30 CFR 585.411(b).

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 comp

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