PRINTER'S NO.  2562

  

THE GENERAL ASSEMBLY OF PENNSYLVANIA

  

HOUSE BILL

 

No.

180

Session of

2011

  

  

INTRODUCED BY SONNEY, HORNAMAN, BARBIN, BRENNAN, BURNS, CALTAGIRONE, COHEN, CONKLIN, DALEY, DEASY, FABRIZIO, GEIST, GIBBONS, HARKINS, KAMPF, KOTIK, MAHONEY, MILLARD, MURPHY, M. O'BRIEN, ROSS, SANTONI, SCHRODER, VULAKOVICH AND YOUNGBLOOD, OCTOBER 18, 2011

  

  

REFERRED TO COMMITTEE ON STATE GOVERNMENT, OCTOBER 18, 2011  

  

  

  

AN ACT

  

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Authorizing the Department of General Services to lease

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submerged lands in excess of 25 acres within Erie County, for

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the assessment, development, construction and operation of

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utility scale offshore wind, solar or kinetic energy

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generation facilities; providing for collection of certain

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lease and royalty payments; establishing the Lake Erie Large

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Scale Energy System Development Fund; and providing for

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transfers and distributions from the fund.

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The General Assembly of the Commonwealth of Pennsylvania

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hereby enacts as follows:

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Section 1.  Short title.

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This act shall be known and may be cited as the Lake Erie

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Wind Energy Development Act.

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Section 2.  Definitions.

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The following words and phrases when used in this act shall

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have the meanings given to them in this section unless the

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context clearly indicates otherwise:

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"Department."  The Department of General Services of the

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Commonwealth.

 


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"Fund."  The Lake Erie Large Scale Energy System Development

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Fund established by this act.

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"Large scale energy system" or "system."  A wind energy

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generation system at more than 500 megawatts as measured by the

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nameplate capacity of the system or a solar energy system of at

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least 12 megawatts as measured by the nameplate capacity of the

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system.

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Section 3.  Lands within the Lake Erie Basin.

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(a)  Legislative declaration.--The General Assembly declares

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that the Commonwealth owns lands within the bed of Lake Erie,

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all of which lands are located in Erie County.

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(b)  Authorization.--

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(1)  The Department of General Services, acting on behalf

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of the Commonwealth, may lease submerged lands equal to or

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greater than 25 acres, but not in excess of 10,000 contiguous

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acres, within the bed of Lake Erie in Erie County.

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(2)  Develop a map designating the areas of the bed of

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Lake Erie that may be leased for large scale energy system

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development. The department shall ensure that the areas that

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may be leased are concentrated in the central and western

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portion of Lake Erie, avoid development in nearshore areas,

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avoid shipping lanes and avoid areas of Lake Erie where

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migratory birds are concentrated.

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(3)  The department shall develop and implement a

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competitive process for the leasing of submerged lands for

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the development of large scale energy systems to convert wind

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or solar energy to electricity. The competitive process shall

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include, at a minimum:

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(i)  A demonstration by the bidders of their

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expertise, experience and financial capacity to conduct a

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feasibility study and to develop such a system.

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(ii)  A certification that the bidder has the

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financial capability to cover all costs associated with

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the feasibility study and interconnecting to an energy

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distribution system.

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(iii)  A demonstration by the bidders of the benefits

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to be accrued by the Commonwealth, including, but not

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limited to:

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(A)  The number of full-time jobs to be created.

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(B)  The overall economic impact of the proposed

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system.

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(C)  The environmental benefits of the system.

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(D)  The overall need for the system.

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(F)  The amount of power to be provided by the

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proposed system.

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(G)  An initial assessment of community and

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public acceptance of the proposed system.

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Section 4.  Lease conditions.

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(a)  Qualifications of lessees.--A lease and a subsequent

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long-term lease approved under this act shall be restricted to

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lessees who:

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(1)  Demonstrate the expertise and capability to develop

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large scale energy systems in a marine environment.

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(2)  Have been deemed to be the most qualified bidder

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based upon the criteria listed in section 3(b)(3) and any

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other additional criteria that may be developed by the

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department.

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(3)  File with the department a bond payable to the

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Commonwealth to cover the entire cost associated with the

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removal of facilities developed pursuant to this act and

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located in submerged lands of Lake Erie.

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(b)  Waters of this Commonwealth.--A lease and any subsequent

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long-term lease approved under section 3 shall ensure reasonable

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accommodation for fishing, maritime commerce, energy

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transmission rights-of-way and other current and future

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commercial and recreational uses of the waters of this

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Commonwealth held in the public trust.

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(c)  Term of lease.--The initial term of a lease shall be for

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a term of up to seven years. The department may upon sufficient

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justification renew the lease for an additional three-year term.

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In the event the lessee does not develop the parcel or

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contiguous parcels of submerged lands by installing a large

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scale energy system within the initial seven-year lease period,

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the lease shall terminate.

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(d)  Term of long-term lease.--

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(1)  A person awarded a lease under this act may be

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eligible to enter into a long-term lease for the facilities

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to be constructed.

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(2)  The department, based upon satisfactory evidence

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that the lessee is capable of long-term operation of the

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large scale energy system, may enter into a long-term lease

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with an initial term of up to 35 years for the construction,

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operation, maintenance and removal of a large scale energy

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system and any associated transmission facilities in Lake

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Erie.

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(3)  The initial long-term lease may be extended for all

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or any portion of the leased premises for additional terms of

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up to 35 years.

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(4)  The long-term lease shall contain a provision for

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termination if the lessee has not initiated construction of

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the large scale energy system within a reasonable period of

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time to be established in the terms of the lease.

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(5)  The department may permit, as an option to the long-

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term lease, the ability of the lessee to lease contiguous

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parcels. The department shall have the authority to determine

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the size of the contiguous parcels but not to exceed

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increments of 10,000 acres.

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(e)  Feasibility study.--

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(1)  Prior to commencing construction of the system, a

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developer awarded a lease shall conduct a feasibility study

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to assess the ability of the large scale energy system to be

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viable and to assess the environmental impacts and siting

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considerations necessary to the successful development of

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such a system.

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(2)  The environmental impacts to be addressed shall

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include, but not be limited to, the impacts to fishing,

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migratory bird and mammal routes.

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(3)  The siting considerations to be assessed shall

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include, but not be limited to:

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(i)  Ice impacts.

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(ii)  Wind speed.

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(iii)  Ship traffic.

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(iv)  View shed impacts.

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(4)  The department shall utilize the results of the

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feasibility study, as part of the review process associated

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with the approval or disapproval, to proceed with the

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construction of a large scale energy system.

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(5)  No feasibility study, construction, installation or

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operation of large scale energy systems or other related

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structures on the lands subject to lease shall occur without

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adherence to Federal and State laws and prior receipt of all

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applicable Federal and State permits.

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(f)  Improvements.--Development of the parcels authorized to

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be leased by this act shall be for large scale energy systems,

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including electrical collection and transmission facilities,

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submerged electrical transmission cables and other related

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structures.

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(g)  Regulations.--The department shall, for purposes of

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leasing the bed of Lake Erie for large scale energy system

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development, adopt regulations which at a minimum:

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(1)  Determine minimum standards for the technology used

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to construct large scale energy systems on and to transmit

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electricity from the areas of Lake Erie leased for that

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purpose.

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(2)  Establish procedures for the conduct of feasibility

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studies by large scale energy system developers related to,

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but not limited to, the siting, economics and environmental

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issues of a system.

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(3)  Establish reasonable fees to cover the costs

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incurred by the department and directly related to the

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preparation, review, execution of lease or other agreements

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associated with this act.

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(4)  Establish a process for the developer of the large

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scale energy system to demonstrate community and public

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acceptance of the proposed system.

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(5)  Establish any other requirements that the department

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determines are necessary to implement or administer this

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section.

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(6)  Prohibit lessees from entering into subleases.

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(h)  Covenants.--These conditions shall be covenants that run

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with the land and shall be binding upon the lessee. Should the

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lessee permit the parcels authorized to be leased under this

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section, or any portion thereof, to be used in a manner

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inconsistent with the conditions contained in this act, all

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rights and interests in the lease authorized by this act shall

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terminate immediately.

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(i)  Lease agreements.--

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(1)  Any lease and any other documents authorized by this

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act shall be approved as to form and legality by the Attorney

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General and the Office of General Counsel in accordance with

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law and shall be executed by the department, which approvals

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shall not be unreasonably withheld, in the name of the

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Commonwealth.

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(2)  The lease shall grant the lessee the right to use

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the premises in accordance with this act for the purposes of

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conducting a feasibility study and development of large scale

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energy systems.

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(j)  Sublease by department prohibited.--The department may

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not enter into subleases or nondisturbance agreements on any of

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the submerged lands of this Commonwealth in accordance with this

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act.

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(k)  Transfer of interest prohibited.--Except as provided in

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section 3, this act does not authorize or otherwise allow for or

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include any transfer of any mineral or other surface or

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subsurface interest associated with Lake Erie submerged lands of

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this Commonwealth.

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Section 5.  Other applicable law.

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Except as provided in section 3, nothing in this act shall be

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construed to affect or otherwise limit the requirements of the

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provisions of the act of November 26, 1978 (P.L.1375, No.325),

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known as the Dam Safety and Encroachments Act, which may require

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further measures to provide for public access and use of the

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land and adjacent water.

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Section 6.  Interagency responsibilities.

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The department shall work cooperatively with:

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(1)  The Department of Environmental Protection to ensure

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that all of the systems meet all applicable environmental

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standards and comply with all environmental permit

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requirements.

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(2)  The Pennsylvania Public Utility Commission to

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establish that the proposed large scale energy system is

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viable, both economically and from an energy production

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perspective. The Pennsylvania Public Utility Commission shall

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also assist the department in assessing the system's impact

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on ratepayers, and the ability of the proposed developer to

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have sufficient resources and the ability to successfully

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complete all the activities necessary for interconnection to

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the electric distribution system.

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Section 7.  Royalty payments.

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Each operator of a large scale energy system shall be subject

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to the payment to the Commonwealth of a 2% royalty on the gross

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revenues of the system. The operator of the system shall submit

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this payment annually unless an alternative payment schedule is

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approved by the department. The operator shall submit the

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initial royalty payment beginning on January 1 of the year

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following the system being placed into production.

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Section 8.  Lake Erie Large Scale Energy System Development

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Fund.

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(a)  Establishment.--The Lake Erie Large Scale Energy System

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Development Fund is established in the State Treasury.

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(b)  Deposits.--All royalty payments from the production of

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electricity from large scale energy systems situated on lands

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owned by the Commonwealth in Lake Erie shall be deposited in the

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fund.

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Section 9.  Transfers and distributions.

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On the last business day of each calendar quarter the State

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Treasurer shall make the following transfers and distributions

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of the moneys from the fund:

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(1)  Twenty percent shall be distributed to Erie County.

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(2)  Twenty percent shall be distributed to the

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Pennsylvania Fish and Boat Commission to be used for

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programs, projects or other activities related to Lake Erie.

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(3)  Forty percent shall be distributed to the Department

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of Environmental Protection, which shall be used for dam

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removal, restoration and repair projects.

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(4)  Twenty percent shall be transferred to the

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Conservation District Fund for distribution to county

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conservation districts pursuant to the guidelines established

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by the State Conservation Commission.

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Section 10.  Effective date.

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This act shall take effect in 120 days.

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