Regular Session 2019-2020 House Bill 0685 P.N. 0698

PRINTER'S NO. 698

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

685

Session of

2019

INTRODUCED BY SONNEY, DeLUCA, HARKINS, LAWRENCE, MILLARD AND

ZIMMERMAN, MARCH 1, 2019

REFERRED TO COMMITTEE ON ENVIRONMENTAL RESOURCES AND ENERGY,

MARCH 1, 2019

AN ACT

Authorizing the Department of General Services to lease

submerged lands within Erie County for the assessment,

development, construction and operation of utility scale

offshore wind or solar energy generation facilities;

providing for collection of royalty payments; establishing

the Lake Erie Large-Scale Energy System Development Fund; and

providing for distributions and transfers from the fund.

TABLE OF CONTENTS

Chapter 1. Preliminary Provisions

Section 101. Short title.

Section 102. Legislative declaration.

Section 103. Definitions.

Chapter 3. Leasing of Submerged Lands

Section 301. Authority and duties of department.

Section 302. Qualifications of lessees.

Section 303. Waters of this Commonwealth.

Section 304. Term of lease.

Section 305. Lease agreements.

Section 306. Feasibility study.

Section 307. Improvements.

Section 308. Covenants.

Section 309. Federal and State law and permits.

Chapter 5. Administration

Section 501. Regulations.

Section 502. Sublease by department prohibited.

Section 503. Transfer of interest prohibited.

Section 504. Construction.

Section 505. Interagency responsibilities.

Chapter 7. Royalty Payments and Distributions

Section 701. Royalty payments.

Section 702. Lake Erie Large-Scale Energy System Development

Fund.

Section 703. Distributions and transfers.

Chapter 21. Miscellaneous Provisions

Section 2101. Effective date.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

PRELIMINARY PROVISIONS

Section 101. Short title.

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

Energy Development Act.

Section 102. 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.

Section 103. 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:

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"Department." The Department of General Services of the

Commonwealth.

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

Fund established under section 702.

"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.

CHAPTER 3

LEASING OF SUBMERGED LANDS

Section 301. Authority and duties of department.

(a) Authorization.--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.

(b) Areas to be leased.--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:

(1) concentrated in the central and western portion of

Lake Erie;

(2) avoid development in nearshore areas;

(3) avoid shipping lanes; and

(4) avoid areas of Lake Erie where migratory birds are

concentrated.

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

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process shall include, at a minimum:

(1) A demonstration by the bidders of their expertise,

experience and financial capacity to conduct a feasibility

study and to develop such a system.

(2) 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.

(3) A demonstration by the bidders of the benefits to be

accrued by the Commonwealth, including, but not limited to:

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

(ii) The overall economic impact of the proposed

system.

(iii) The environmental benefits of the system.

(iv) The overall need for the system.

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

proposed system.

(vi) An initial assessment of community and public

acceptance of the proposed system.

Section 302. Qualifications of lessees.

A lease and a subsequent long-term lease approved under this

act shall be restricted to a lessee who:

(1) Demonstrates the expertise and capability to develop

large-scale energy systems in a marine environment.

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

based upon the criteria listed in section 301(c) and any

other additional criteria that may be developed by the

department.

(3) Files 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

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located in submerged lands of Lake Erie.

Section 303. Waters of this Commonwealth.

A lease and any subsequent long-term lease approved under

this act 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.

Section 304. Term of lease.

(a) Term of initial 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 a 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.

(b) Term of long-term lease.--

(1) A lessee under subsection (a) 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

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up to 35 years.

(4) In addition to termination of a lease under

subsection (a)(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.

Section 305. Lease agreements.

(a) Approvals.--A 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.

(b) Lessee rights under lease.--A 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.

Section 306. Feasibility study.

(a) General rule.--Prior to commencing construction of the

system, a lessee 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.

(b) Environmental impact.--The environmental impacts to be

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addressed shall include, but not be limited to, the impacts to

fishing and migratory bird and mammal routes.

assessed shall include, but not be limited to:

(1) Ice impacts.

(2) Wind speed.

(3) Ship traffic.

(4) Viewshed impacts.

(d) Use of study.--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.

Section 307. 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.

Section 308. Covenants.

The conditions imposed under this act 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

act, 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.

Section 309. Federal and State law and permits.

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

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State permits.

CHAPTER 5

ADMINISTRATION

Section 501. 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 act.

(6) Prohibit lessees from entering into subleases.

Section 502. Sublease by department prohibited.

The department may not enter into subleases or nondisturbance

agreements on any of the submerged lands of Lake Erie.

Section 503. Transfer of interest prohibited.

Except as provided in section 301, this act does not

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authorize or otherwise allow for or include any transfer of any

mineral or other surface or subsurface interest associated with

the submerged lands of Lake Erie.

Section 504. Construction.

Except as provided in section 301, 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 505. 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

assist the department in assessing all of the following:

(i) The system's impact on ratepayers.

(ii) Whether a bidder has sufficient resources.

(iii) Whether a bidder has the ability to

successfully complete all of the activities necessary for

interconnection to the electric distribution system.

CHAPTER 7

ROYALTY PAYMENTS AND

DISTRIBUTIONS

Section 701. Royalty payments.

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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

the royalty 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 702. Lake Erie Large-Scale Energy System Development

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 703.

(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 703. 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

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the Conservation District Fund for distribution to county

conservation districts consistent with guidelines established

by the State Conservation Commission.

CHAPTER 21

MISCELLANEOUS PROVISIONS

Section 2101. Effective date.

This act shall take effect in 120 days.

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