Posted on September 2, 2026
The Trump administration has agreed to fork over nearly $4 billion since the spring to get major energy firms to abandon a dozen leases for U.S. offshore wind projects.
The controversial maneuver to return lease payments to developers — often in exchange for their investing in fossil fuels — is part of President Donald Trump’s broader strategy to stymie the clean energy resource, which coastal states have been depending on to meet their growing need for reliable and affordable electricity. The buyouts began as Trump’s earlier efforts to halt in-progress offshore wind farms largely failed under scrutiny from federal judges.
Now the unprecedented lease-refund approach is increasingly facing legal blowback of its own. Late last week, California became the eighth state to challenge the practice, arguing that it jeopardizes the state’s investments and resulting jobs in offshore wind.
The U.S. offshore wind industry had already been struggling before Trump began issuing stop-work orders, freezing permitting, and rolling back tax credits. High inflation, rising interest rates, and supply-chain constraints in recent years threatened to derail a handful of projects along America’s coastlines.
That’s why it’s all the more bizarre that the federal government is proactively paying developers to walk away from beleaguered, undeveloped projects, James Sallee, a business professor at the University of California, Berkeley, recently argued in the Energy Institute Blog. He likened the buyouts to spending billions in taxpayer dollars “to shoot a corpse.”
But for states that were banking on gigawatts of offshore wind power to shore up their grids and hoping the industry could rebound after Trump leaves office in 2029, the agreements are like salt in their wounds — particularly given the deals’ legally questionable nature. Here’s the latest on states’ legal challenges and congressional pushback.
California calls buyout “blatantly unlawful”
California’s new lawsuit focuses on the agreement between the U.S. Department of the Interior and the company Golden State Wind, which paid $120 million in 2022 to lease waters along California’s Central Coast through a competitive bidding process.
Golden State Wind had planned to develop a 2-gigawatt offshore wind farm using floating turbine technologies in a large swath near Morro Bay. The company is owned by Ocean Winds North America — a joint venture of the European firms Engie and EDP Renewables — and the U.K. offshore wind developer Reventus Power.
In late April, Interior said it would return the $120 million to Golden State Wind. In exchange, the developer agreed to invest the same amount of money in U.S. liquified natural gas facilities and other fossil-fuel projects. Ocean Winds also struck a similar deal that month to get back the $765 million it paid to lease water for Bluepoint Wind, a fixed-bottom project near New York and New Jersey.
California’s challenge — filed by state Attorney General Rob Bonta (D) and the California Energy Commission — asks a federal court to strike down the agreement with Golden State Wind, saying the deal is “blatantly unlawful.”
Offshore wind experts and former Interior officials have previously questioned whether Interior’s Bureau of Ocean Energy Management has the legal authority to return the funds it collects from leasing federally controlled waters. They noted that when oil major Royal Dutch Shell relinquished its offshore leases near Alaska in 2022, the company simply ate the $2.1 billion loss.
California raises the same concerns in its lawsuit and claims Interior improperly tapped the federal Judgment Fund, which Congress intended to be used to settle lawsuits, not to pay for voluntary agreements like this one.
“Offshore wind presents an opportunity for our state to scale up an innovative new clean energy industry that reduces pollution while providing new jobs and investment for the people of our state,” David Hochschild, chair of the California Energy Commission, said in an Aug. 28 news release. “We will not let the Trump administration’s reckless actions turn back the clock.”
