THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

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

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

transfers and distributions 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

Fund established by 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 of General Services, 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)  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.

(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.

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

proposed system.

(G)  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.

(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.--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.

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)  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,

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)  View shed 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.

(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

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.  Other applicable law.

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

construed to affect or otherwise limit the requirements of the

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

known as the Dam Safety and Encroachments Act, which 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, and 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 being placed into production.

Section 8.  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.

(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.  Transfers and distributions.

On the last business day of each calendar quarter the State

Treasurer shall make the following transfers and distributions

of the moneys from the fund:

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

(2)  Twenty percent shall be distributed to the

Pennsylvania Fish and Boat Commission to be used for

programs, projects or other activities related to Lake Erie.

(3)  Forty percent shall be distributed to the Department

of Environmental Protection, which shall be used for dam

removal, restoration and repair projects.

(4)  Twenty percent shall be transferred to the

Conservation District Fund for distribution to county

conservation districts pursuant to the guidelines established

by the State Conservation Commission.

Section 10.  Effective date.

This act shall take effect in 120 days.