Common use of Multiple-Factor Bidding Auction Clause in Contracts

Multiple-Factor Bidding Auction. As authorized under 30 CFR 585.220(a)(4) and 585.221(a)(6), BOEM proposes to use a multiple-factor auction format for this lease sale. Under ▇▇▇▇’s proposal, the bidding system for this lease sale would be a multiple-factor combination of monetary and non-monetary factors. The bid made by a particular bidder in each round would represent the sum of the monetary factor (cash bid) and the value of any non-monetary factors in the form of bidding credits. ▇▇▇▇ proposes to start the auction using the minimum bid price for the Lease Areas and to increase these prices incrementally until only one bidder remains bidding on each Lease Area in the auction. ▇▇▇▇ is proposing to grant bidding credits to bidders that commit to one or both of the following: i. Supporting workforce training programs for the offshore wind industry or developing a domestic supply chain for the offshore wind industry, or a combination of both; or ii. Establishing and contributing to a fisheries compensatory mitigation fund or contributing to an existing fund to mitigate potential negative impacts to commercial and for-hire recreational fisheries caused by OCS offshore wind development in the Gulf of Mexico. These bidding credits are intended to: i. Enhance, through training, the offshore wind workforce and/or enhance the establishment of a domestic supply chain for offshore wind manufacturing, assembly, or services, both of which will contribute to the expeditious and orderly development of offshore wind resources on the OCS; ii. Support the expeditious and orderly development of OCS resources by mitigating potential direct impacts from proposed projects and encouraging the investment in infrastructure germane to the offshore wind industry; and iii. Minimize potential economic effects on commercial fisheries impacted by potential offshore wind development, as cooperation with commercial fisheries impacted by OCS operations will enable development of the Lease Area to advance. i. If a bidder decides to bid on a different Lease Area in a subsequent round of the auction, it may submit a bid for the Lease Area it bid on in the previous round and, simultaneously, submit a bid for another Lease Area. This allows a bidder the option to switch to another Lease Area if the price of the first Lease Area exceeds the specified bid price. ii. Provisional winners will no longer be determined using a two-step process. The auction rules are implemented in a way such that, when the auction concludes, the bidder who remains on a Lease Area after the final round becomes its provisional winner. There will be no additional processing to determine whether any other Lease Areas can be awarded to other bidders. iii. The auction will use a “second price” rule. A given Lease Area will be won by the bidder that submitted the highest bid amount for the Lease Area, but the winning bidder will pay the highest bid amount at which there was competition (i.e., the “second price”). iv. If the FSN allows bidders to bid for and potentially acquire two or more Lease Areas, any bid for two or more Lease Areas will be treated as independent bids for those Lease Areas, rather than as a package bid. v. Each bidder’s bidding credit will be expressed directly as a percentage of the final price for the lease. All potential bidders should review the complete Auction Procedures for Offshore Wind Lease Sales (Version 1) located at: ▇▇▇▇▇://▇▇▇.▇▇▇▇.▇▇▇/renewable-energy/lease- and-grant-information Lease I-1 OCS-G 37962 102,500 $5,125,000 Lease I-2 OCS-G 37963 96,786 $4,839,300 Lease J-1 OCS-G 37964 108,230 $5,411,500 Lease K-1 OCS-G 37965 102,544 $5,127,200 BOEM is proposing to allow each qualified bidder to bid for and potentially acquire as many Lease Areas as are offered in the GOMW-2 sale. The possible alternatives to the proposed unlimited eligibility would be a specified limit on the number of Lease Areas in each region that a bidder can bid for and potentially win, or a specified overall limit on the number of Lease Areas in the GOMW-2 sale that a bidder can bid for and potentially win. The auction will be conducted in a series of rounds. Before each round, the auction system will announce the prices for each Lease Area offered in the auction. In Round 1, there is a single price for each Lease Area equal to the minimum bid price (also known as the ‘opening price’ or ‘clock price of Round 1’). Each bidder can bid, at the opening prices, for as many Lease Areas as allowed by the FSN and the bidder’s bid deposit. After Round 1, the bidder’s processed demand is one for each Lease Area for which the bidder bid in Round 1. The bidder’s eligibility for Round 2 equals the number of Lease Areas for which the bidder bid in Round 1. Starting in Round 2, each Lease Area is assigned a range of prices for the round. The start-of-round price is the lowest price in the range, and the clock price is the highest price in the range. A bidder still eligible to bid after the previous round can either continue bidding at the new round’s clock price(s) for the same Lease Area(s) for which the bidder’s processed demand is one or submit bid(s) to reduce demand for one (or more) Lease Area(s) at any price(s) in the range(s) for that round. A bid to reduce demand at some price indicates that the bidder is not willing to acquire that Lease Area at a price exceeding the specified bid price. A bidder that bids to reduce demand for Lease Areas can optionally bid on up to the same number of other Lease Areas. If an eligible bidder does not place a bid during the round for the Lease Area for which the bidder’s processed demand is one, the auction system will consider this a request to reduce demand for that Lease Area at the round’s start-of-round price.2 That bidder can nonetheless win that Lease Area if it is the last remaining bidder for that Lease Area. After each round, the auction system processes the bids and determines each bidder’s processed demand for each Lease Area and the posted prices for the Lease Areas. The bidder’s eligibility for the next round would equal the number of Lease Areas for which the bidder had a processed demand of one. If, after any round, a bidder’s 2 When the round ends and the bidder still has not placed a bid, the system will process the bid as if the bidder is asking to leave that lease area at any price above the start-of- round price for that lease area that it previously bid on. processed demand is zero for every Lease Area, the bidder’s eligibility drops to zero and the bidder can no longer bid in the auction. The posted price is the price determined for each Lease Area after processing of all bids for a round. If only one bidder remains on a Lease Area, the posted price reflects the “second price” (i.e., the highest price at which there was competition for the Lease Area).3 The posted price for a Lease Area after each round becomes the start-of-round price for that Lease Area in the next round. If, after the bids for the round have been processed, there is no Lease Area with excess demand, the auction will end. When this occurs, each bidder with a processed demand of one for a Lease Area will become the provisional winner for that Lease Area. Otherwise, the auction will continue with a new round in which the start-of-round price for each Lease Area equals the posted price of the previous round. The increment by which the clock price exceeds the start-of-round price will be determined based on several factors including, but not necessarily limited to, the expected time needed to conduct the auction and the number of rounds that have already occurred. BOEM reserves the right to increase or decrease the increment as it deems appropriate. The provisional winner of each Lease Area will pay the final posted price (less any applicable bidding credit), or risk forfeiting its bid deposit. A provisional winner will be disqualified if it is subsequently found to have violated auction rules or BOEM regulations, or otherwise engaged in conduct detrimental to the integrity of the competitive auction. If a bidder submits a bid that BOEM determines to be a provisionally winning bid, the bidder must sign the applicable lease documents, post financial assurance, and submit the outstanding balance (if any) of its winning bid (i. e., winning monetary bid minus the applicable bid deposit and the value of bidding 3 The Auction Procedures for Offshore Wind Lease Sales provides details on how bids are prioritized and processed. credits, as applicable) within 10-business days of receiving the lease copies, pursuant to 30 CFR 585.224. ▇▇▇▇ reserves the right to not issue the lease to the provisionally winning bidder if that ▇▇▇▇▇▇ fails to: timely execute three copies of the lease and return them to BOEM, timely post adequate financial assurance, timely pay the balance of its winning bid, or otherwise comply with applicable regulations or the terms of the FSN. In any of these cases, the bidder will forfeit its bid deposit and BOEM reserves the right to offer a lease to the next highest eligible bidder as determined by BOEM. ▇▇▇▇ will publish the names of the provisional winners of the Lease Areas and the associated prices shortly after the conclusion of the sale. Full bid results, including round-by-round results of the entire sale, will be published on ▇▇▇▇’s website after a review of the results and announcement of the provisional winner. Additional Information Regarding the Auction Format:

Multiple-Factor Bidding Auction. As authorized under 30 CFR 585.220(a)(4) and 585.221(a)(6), BOEM proposes to use a multiple-factor auction format format, with a multiple-factor bidding system, for this lease sale. Under ▇▇▇▇’s proposal, the bidding system for this lease sale would be a multiple-factor combination of monetary and non-monetary factors. The bid made by a particular bidder in each round would represent the sum of the monetary factor (cash bid) and the value of any non-monetary factors in the form of bidding credits. ▇▇▇▇ proposes to start the auction using the minimum bid price for the Lease Areas Area and to increase these prices incrementally until only no more than one active bidder remains bidding on each per Lease Area remains in the auction. ▇▇▇▇ is proposing to grant bidding credits to bidders that commit to one or both of the following: i. Supporting workforce training programs for the offshore wind industry or developing a domestic supply chain for the offshore wind industry, or a combination of both; or ii. Establishing and contributing to a fisheries compensatory mitigation fund or contributing to an existing fund to mitigate potential negative impacts to commercial and for-hire recreational fisheries caused by OCS offshore wind development in the Gulf of MexicoCentral Atlantic. These bidding credits are intended to: i. Enhance, through training, the offshore wind workforce and/or enhance the establishment of a domestic supply chain for offshore wind manufacturing, assembly, or services, both of which will contribute to the expeditious and orderly development of offshore wind resources on the OCS; ii. Support the expeditious and orderly development of OCS resources by mitigating potential direct impacts from proposed projects and encouraging the investment in infrastructure germane to the offshore wind industry; and iii. Minimize potential economic effects on commercial fisheries impacted by potential offshore wind development, as cooperation with commercial fisheries impacted by OCS operations will enable development of the Lease Area to advance. i. If a bidder decides to bid on a different Lease Area in a subsequent round of the auction, it may submit a bid for the Lease Area it bid on in the previous round and, simultaneously, submit a bid for another Lease Area. This allows a bidder the option to switch to another Lease Area if the price of the first Lease Area exceeds the specified bid price. ii. Provisional winners will no longer be determined using a two-step process. The auction rules are implemented in a way such that, when the auction concludes, the bidder who remains on a Lease Area after the final round becomes its provisional winner. There will be no additional processing to determine whether any other Lease Areas can be awarded to other bidders. iii. The auction will use a “second price” rule. A given Lease Area will be won by the bidder that submitted the highest bid amount for the Lease Area, but the winning bidder will pay the highest bid amount at which there was competition (i.e., the “second price”). iv. If the FSN allows bidders to bid for and potentially acquire two or more Lease Areas, any bid for two or more Lease Areas will be treated as independent bids for those Lease Areas, rather than as a package bid. v. Each bidder’s bidding credit will be expressed directly as a percentage of the final price for the lease. All potential bidders should review the complete Auction Procedures for Offshore Wind Lease Sales (Version 1) located at: ▇▇▇▇▇://▇▇▇.▇▇▇▇.▇▇▇/renewable-energy/lease- and-grant-information Lease I-1 OCS-G 37962 102,500 $5,125,000 Lease I-2 OCS-G 37963 96,786 $4,839,300 Lease J-1 OCS-G 37964 108,230 $5,411,500 Lease K-1 OCS-G 37965 102,544 $5,127,200 BOEM is proposing to allow each qualified bidder to bid for and potentially acquire as many Lease Areas as are offered in the GOMW-2 sale. The possible alternatives to the proposed unlimited eligibility would be a specified limit on the number of Lease Areas in each region that a bidder can bid for and potentially win, or a specified overall limit on the number of Lease Areas in the GOMW-2 sale that a bidder can bid for and potentially win. The auction will be conducted in a series of rounds. Before each round, the auction system will announce the prices for each Lease Area offered in the auction. In Round 1, there is a single price for each Lease Area equal to the minimum bid price (also known as the ‘opening price’ or ‘clock price of Round 1’). Each bidder can bid, at the opening prices, for as many Lease Areas as allowed by the FSN and the bidder’s bid deposit. After Round 1, the bidder’s processed demand is one for each Lease Area for which the bidder bid in Round 1. The bidder’s eligibility for Round 2 equals the number of Lease Areas for which the bidder bid in Round 1. Starting in Round 2, each Lease Area is assigned a range of prices for the round. The start-of-round price is the lowest price in the range, and the clock price is the highest price in the range. A bidder still eligible to bid after the previous round can either continue bidding at the new round’s clock price(s) for the same Lease Area(s) for which the bidder’s processed demand is one or submit bid(s) to reduce demand for one (or more) Lease Area(s) at any price(s) in the range(s) for that round. A bid to reduce demand at some price indicates that the bidder is not willing to acquire that Lease Area at a price exceeding the specified bid price. A bidder that bids to reduce demand for Lease Areas can optionally bid on up to the same number of other Lease Areas. If an eligible bidder does not place a bid during the round for the Lease Area for which the bidder’s processed demand is one, the auction system will consider this a request to reduce demand for that Lease Area at the round’s start-of-round price.2 That bidder can nonetheless win that Lease Area if it is the last remaining bidder for that Lease Area. After each round, the auction system processes the bids and determines each bidder’s processed demand for each Lease Area and the posted prices for the Lease Areas. The bidder’s eligibility for the next round would equal the number of Lease Areas for which the bidder had a processed demand of one. If, after any round, a bidder’s 2 When the round ends and the bidder still has not placed a bid, the system will process the bid as if the bidder is asking to leave that lease area at any price above the start-of- round price for that lease area that it previously bid on. processed demand is zero for every Lease Area, the bidder’s eligibility drops to zero and the bidder can no longer bid in the auction. The posted price is the price determined for each Lease Area after processing of all bids for a round. If only one bidder remains on a Lease Area, the posted price reflects the “second price” (i.e., the highest price at which there was competition for the Lease Area).3 The posted price for a Lease Area after each round becomes the start-of-round price for that Lease Area in the next round. If, after the bids for the round have been processed, there is no Lease Area with excess demand, the auction will end. When this occurs, each bidder with a processed demand of one for a Lease Area will become the provisional winner for that Lease Area. Otherwise, the auction will continue with a new round in which the start-of-round price for each Lease Area equals the posted price of the previous round. The increment by which the clock price exceeds the start-of-round price will be determined based on several factors including, but not necessarily limited to, the expected time needed to conduct the auction and the number of rounds that have already occurred. BOEM reserves the right to increase or decrease the increment as it deems appropriate. The provisional winner of each Lease Area will pay the final posted price (less any applicable bidding credit), or risk forfeiting its bid deposit. A provisional winner will be disqualified if it is subsequently found to have violated auction rules or BOEM regulations, or otherwise engaged in conduct detrimental to the integrity of the competitive auction. If a bidder submits a bid that BOEM determines to be a provisionally winning bid, the bidder must sign the applicable lease documents, post financial assurance, and submit the outstanding balance (if any) of its winning bid (i. e., winning monetary bid minus the applicable bid deposit and the value of bidding 3 The Auction Procedures for Offshore Wind Lease Sales provides details on how bids are prioritized and processed. credits, as applicable) within 10-business days of receiving the lease copies, pursuant to 30 CFR 585.224. ▇▇▇▇ reserves the right to not issue the lease to the provisionally winning bidder if that ▇▇▇▇▇▇ fails to: timely execute three copies of the lease and return them to BOEM, timely post adequate financial assurance, timely pay the balance of its winning bid, or otherwise comply with applicable regulations or the terms of the FSN. In any of these cases, the bidder will forfeit its bid deposit and BOEM reserves the right to offer a lease to the next highest eligible bidder as determined by BOEM. ▇▇▇▇ will publish the names of the provisional winners of the Lease Areas and the associated prices shortly after the conclusion of the sale. Full bid results, including round-by-round results of the entire sale, will be published on ▇▇▇▇’s website after a review of the results and announcement of the provisional winner. Additional Information Regarding the Auction Format: