Dive Brief:
- Deals made by the Trump administration to cancel offshore wind leases and “reimburse” the developers once they’ve made equal investments in fossil fuel infrastructure lack legal precedent, and in fact create new precedent that could be abused in the future, two former U.S. Department of the Interior officials told Utility Dive.
- “You wouldn't want to create a situation where you are allowing companies, for instance, to buy up leases for anti-competitive purposes and just not do anything on them for a period of time and then give them back and get their money back,” said Liz Klein, director of domestic policy programs at the University of Pennsylvania’s Penn Washington and former director of the Bureau of Ocean Energy Management.
- If these deals go unchallenged legally, “there's nothing to stop a future Democratic administration from pursuing similar types of arrangements where they claim they're going to sue conventional oil and gas, or deepwater drillers in the Gulf Coast,” said Tony Irish, a former associate solicitor with the Interior Department and now senior counsel at Public Employees for Environmental Responsibility.
Dive Insight:
The Department of the Interior did not immediately respond to a request for comment. In a release announcing the latest agreements, Associate Attorney General Stanley Woodward Jr. said they serve the U.S. and the American people, as “protracted litigation benefits neither.”
”These historic agreements provide dollar-for-dollar reimbursement for offshore wind leases that have been impractical to develop without relying on taxpayer subsidies,” the release said.
The Interior Department has announced agreements with the developers of four leases totaling up to about 8.6 GW of potential capacity, in exchange for a total of $1.8 billion in reimbursement payments.
The first agreement between DOI and TotalEnergies was announced in March. Two more agreements this week with Bluepoint Wind offshore New York and Golden State Wind offshore California follow a similar model, the department said in a Monday release.
The exact details of these two recent agreements have not been made public. While DOI cast them as “voluntary,” EDP, a Portuguese company with stakes in both projects, said it had “agreed to settle imminent claims.”
Under the terms of the agreements, Global Infrastructure Partners has committed to invest up to $765 million — the original amount it paid for the Bluepoint Wind lease offshore New York and New Jersey — into a U.S.-based liquefied natural gas facility.
Golden State Wind “will be eligible to recover approximately $120 million in lease fees after an investment has been made of an equal amount in the development of U.S. oil and gas assets, energy infrastructure,” or LNG projects along the Gulf Coast, Interior said.
Klein, a Biden appointee who left Interior with the change in administration in 2025, said the agreements are illegal.
“There is no legal basis for the scheme that they have put together to provide what they're calling reimbursement for the offshore wind lease amounts in exchange for conventional energy related activities that these companies were planning on doing anyway, by all indications,” Klein said in an interview.
“No agency has authority to just give money away to companies, in exchange for those companies to invest in various energy projects that themselves are generating profits for those companies,” she added.
So far no party has challenged the agreements in court, but Democratic lawmakers have said they plan to investigate their legality.
Rep. Jared Huffman, D-Calif., and Rep. Jamie Raskin, D-Md., said in a Wednesday letter to TotalEnergies that the deal “bypasses the system Congress created to prevent corruption” and “created a payment arrangement that is likely illegal.”
Klein declined to speculate on what parties might be considering litigation, but said the arrangement is harmful to states like New York which had anticipated offshore wind generation would be developed in those lease areas.
Irish, who left a decadeslong career at DOI last year after clashing with the current administration, said that if a federal judge were to rule these agreements were illegal, the likely outcome would be for the leases to be placed back in the hands of the developers and the reimbursed funds returned to the U.S. Treasury.
If the agreement were to be found lawful, Irish said he sees broad potential for abuse.
“There are all sorts of policy issues that can be ‘resolved’ in one way or another through these backdoor settlements of non-existent agency actions in both directions,” he said. “It really should be chilling to all the aspects of industry, particularly those that engage with the public lands ... It removes the risk from the businesses and places it completely on the federal government and ultimately the taxpayer, because it will just enable anyone who no longer believes in their investment to cut bait and get a full refund without any risk.”
Klein said that this decision “seems to be sending a signal of, ‘Come collude with us and we'll pay you off, we'll just hand you money to engage in actions that you're already going to take anyway.’”
