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PRINTER'S NO. 637
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
589
Session of
2017
INTRODUCED BY SONNEY, CONKLIN, ENGLISH, A. HARRIS, W. KELLER,
KORTZ, LAWRENCE, MILLARD AND MURT, FEBRUARY 24, 2017
REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,
FEBRUARY 24, 2017
AN ACT
Authorizing the Department of General Services to lease
submerged lands in excess of 25 acres within Erie County for
the assessment, development, construction and operation of
utility scale offshore wind, solar or kinetic energy
generation facilities; providing for collection of certain
lease and royalty payments; establishing the Lake Erie Large-
Scale Energy System Development Fund; and providing for
distributions and transfers from the fund.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Lake Erie
Wind Energy Development Act.
Section 2. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Department." The Department of General Services of the
Commonwealth.
"Fund." The Lake Erie Large-Scale Energy System Development
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Fund established under this act.
"Large-scale energy system" or "system." A wind energy
generation system at more than 500 megawatts as measured by the
nameplate capacity of the system or a solar energy system of at
least 12 megawatts as measured by the nameplate capacity of the
system.
Section 3. Lands within the Lake Erie Basin.
(a) Legislative declaration.--The General Assembly declares
that the Commonwealth owns lands within the bed of Lake Erie,
all of which lands are located in Erie County.
(b) Authorization.--
(1) The department, acting on behalf of the
Commonwealth, may lease submerged lands equal to or greater
than 25 acres, but not in excess of 10,000 contiguous acres,
within the bed of Lake Erie in Erie County.
(2) The department shall develop a map designating the
areas of the bed of Lake Erie that may be leased for large-
scale energy system development. The department shall ensure
that the areas that may be leased are concentrated in the
central and western portion of Lake Erie, avoid development
in nearshore areas, avoid shipping lanes and avoid areas of
Lake Erie where migratory birds are concentrated.
(3) The department shall develop and implement a
competitive process for the leasing of submerged lands for
the development of large-scale energy systems to convert wind
or solar energy to electricity. The competitive process shall
include, at a minimum:
(i) A demonstration by the bidders of their
expertise, experience and financial capacity to conduct a
feasibility study and to develop such a system.
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(ii) A certification that the bidder has the
financial capability to cover all costs associated with
the feasibility study and interconnecting to an energy
distribution system.
(iii) A demonstration by the bidders of the benefits
to be accrued by the Commonwealth, including, but not
limited to:
(A) The number of full-time jobs to be created.
(B) The overall economic impact of the proposed
system.
(C) The environmental benefits of the system.
(D) The overall need for the system.
(E) The amount of power to be provided by the
proposed system.
(F) An initial assessment of community and
public acceptance of the proposed system.
Section 4. Lease conditions.
(a) Qualifications of lessees.--A lease and a subsequent
long-term lease approved under this act shall be restricted to
lessees who:
(1) Demonstrate the expertise and capability to develop
large-scale energy systems in a marine environment.
(2) Have been deemed to be the most qualified bidder
based upon the criteria listed in section 3(b)(3) and any
other additional criteria that may be developed by the
department.
(3) File with the department a bond payable to the
Commonwealth to cover the entire cost associated with the
removal of facilities developed pursuant to this act and
located in submerged lands of Lake Erie.
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(b) Waters of this Commonwealth.--A lease and any subsequent
long-term lease approved under section 3 shall ensure reasonable
accommodation for fishing, maritime commerce, energy
transmission rights-of-way and other current and future
commercial and recreational uses of the waters of this
Commonwealth held in the public trust.
(c) Term of lease.--
(1) The initial term of a lease shall be for a term of
up to seven years. The department may upon sufficient
justification renew the lease for an additional three-year
term.
(2) In the event the lessee does not develop the parcel
or contiguous parcels of submerged lands by installing a
large-scale energy system within the initial seven-year lease
period, the lease shall terminate.
(d) Term of long-term lease.--
(1) A person awarded a lease under this act may be
eligible to enter into a long-term lease for the facilities
to be constructed.
(2) The department, based upon satisfactory evidence
that the lessee is capable of long-term operation of the
large-scale energy system, may enter into a long-term lease
with an initial term of up to 35 years for the construction,
operation, maintenance and removal of a large-scale energy
system and any associated transmission facilities in Lake
Erie.
(3) The initial long-term lease may be extended for all
or any portion of the leased premises for additional terms of
up to 35 years.
(4) In addition to termination of the lease under
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subsection (c)(2), the long-term lease shall contain a
provision for termination if the lessee has not initiated
construction of the large-scale energy system within a
reasonable period of time to be established in the terms of
the lease.
(5) The department may permit, as an option to the long-
term lease, the ability of the lessee to lease contiguous
parcels. The department shall have the authority to determine
the size of the contiguous parcels but not to exceed
increments of 10,000 acres.
(e) Feasibility study.--
(1) Prior to commencing construction of the system, a
developer awarded a lease shall conduct a feasibility study
to assess the ability of the large-scale energy system to be
viable and to assess the environmental impacts and siting
considerations necessary to the successful development of
such a system.
(2) The environmental impacts to be addressed shall
include, but not be limited to, the impacts to fishing and
migratory bird and mammal routes.
(3) The siting considerations to be assessed shall
include, but not be limited to:
(i) Ice impacts.
(ii) Wind speed.
(iii) Ship traffic.
(iv) Viewshed impacts.
(4) The department shall utilize the results of the
feasibility study, as part of the review process associated
with the approval or disapproval, to proceed with the
construction of a large-scale energy system.
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(5) No feasibility study, construction, installation or
operation of large-scale energy systems or other related
structures on the lands subject to lease shall occur without
adherence to Federal and State laws and prior receipt of all
applicable Federal and State permits.
(f) Improvements.--Development of the parcels authorized to
be leased by this act shall be for large-scale energy systems,
including electrical collection and transmission facilities,
submerged electrical transmission cables and other related
structures.
(g) Regulations.--The department shall, for purposes of
leasing the bed of Lake Erie for large-scale energy system
development, adopt regulations which at a minimum:
(1) Determine minimum standards for the technology used
to construct large-scale energy systems on and to transmit
electricity from the areas of Lake Erie leased for that
purpose.
(2) Establish procedures for the conduct of feasibility
studies by large-scale energy system developers related to,
but not limited to, the siting, economics and environmental
issues of a system.
(3) Establish reasonable fees to cover the costs
incurred by the department and directly related to the
preparation, review, execution of lease or other agreements
associated with this act.
(4) Establish a process for the developer of the large-
scale energy system to demonstrate community and public
acceptance of the proposed system.
(5) Establish any other requirements that the department
determines are necessary to implement or administer this
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section.
(6) Prohibit lessees from entering into subleases.
(h) Covenants.--These conditions shall be covenants that run
with the land and shall be binding upon the lessee. Should the
lessee permit the parcels authorized to be leased under this
section, or any portion thereof, to be used in a manner
inconsistent with the conditions contained in this act, all
rights and interests in the lease authorized by this act shall
terminate immediately.
(i) Lease agreements.--
(1) Any lease and any other documents authorized by this
act shall be approved as to form and legality by the Attorney
General and the Office of General Counsel in accordance with
law and shall be executed by the department, which approvals
shall not be unreasonably withheld, in the name of the
Commonwealth.
(2) The lease shall grant the lessee the right to use
the premises in accordance with this act for the purposes of
conducting a feasibility study and development of large-scale
energy systems.
(j) Sublease by department prohibited.--The department may
not enter into subleases or nondisturbance agreements on any of
the submerged lands of this Commonwealth in accordance with this
act.
(k) Transfer of interest prohibited.--Except as provided in
section 3, this act does not authorize or otherwise allow for or
include any transfer of any mineral or other surface or
subsurface interest associated with Lake Erie submerged lands of
this Commonwealth.
Section 5. Construction.
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Except as provided in section 3, nothing in this act shall be
construed to affect or otherwise limit the provisions of the act
of November 26, 1978 (P.L.1375, No.325), known as the Dam Safety
and Encroachments Act, that may require further measures to
provide for public access and use of the land and adjacent
water.
Section 6. Interagency responsibilities.
The department shall work cooperatively with:
(1) The Department of Environmental Protection to ensure
that all of the systems meet all applicable environmental
standards and comply with all environmental permit
requirements.
(2) The Pennsylvania Public Utility Commission to
establish that the proposed large-scale energy system is
viable, both economically and from an energy production
perspective. The Pennsylvania Public Utility Commission shall
also assist the department in assessing the system's impact
on ratepayers, the ability of the proposed developer to have
sufficient resources and the ability to successfully complete
all the activities necessary for interconnection to the
electric distribution system.
Section 7. Royalty payments.
Each operator of a large-scale energy system shall be subject
to the payment to the Commonwealth of a 2% royalty on the gross
revenues of the system. The operator of the system shall submit
this payment annually unless an alternative payment schedule is
approved by the department. The operator shall submit the
initial royalty payment beginning on January 1 of the year
following the system's being placed into production.
Section 8. Lake Erie Large-Scale Energy System Development
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Fund.
(a) Establishment.--The Lake Erie Large-Scale Energy System
Development Fund is established in the State Treasury. The money
of the fund is hereby appropriated on a continuing basis for the
distributions and transfers provided under section 9.
(b) Deposits.--All royalty payments from the production of
electricity from large-scale energy systems situated on lands
owned by the Commonwealth in Lake Erie shall be deposited in the
fund.
Section 9. Distributions and transfers.
On the last business day of each calendar quarter, the State
Treasurer shall make the following distributions and transfers
from the fund:
(1) Twenty percent of the fund shall be distributed to
the department for payment to Erie County.
(2) Twenty percent of the fund shall be distributed to
the Pennsylvania Fish and Boat Commission for programs,
projects or other activities related to Lake Erie.
(3) Forty percent of the fund shall be distributed to
the Department of Environmental Protection for dam removal,
restoration and repair projects.
(4) Twenty percent of the fund shall be transferred to
the Conservation District Fund for distribution to county
conservation districts consistent with guidelines established
by the State Conservation Commission.
Section 10. Effective date.
This act shall take effect in 120 days.
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