U.S. Buys Back Offshore Wind Leases for $4 Billion as Eight States Sue

The U.S. government has agreed to pay roughly $4 billion since the spring of 2026 for energy companies to walk away from a dozen offshore wind leases. On August 28, California became the eighth state to challenge that buyback practice in federal court, according to Canary Media, which reported the news on September 1.

The scheme returns to developers the money they paid at lease auctions in exchange for abandoning their projects, in several cases with a commitment to reinvest those funds in liquefied natural gas (LNG) and other fossil fuels. The deal that prompted California's lawsuit is the Golden State Wind agreement, which had planned a 2-gigawatt (GW) floating offshore wind farm off Morro Bay; in April, the Department of the Interior agreed to return $120 million in exchange for canceling the lease. California Attorney General Rob Bonta and the state's Energy Commission filed the challenge on August 28, according to Utility Dive, arguing that the state had invested more than $100 million in ports and transmission infrastructure for that industry.

California's challenge joins the lawsuit that New York and six other states filed against the Interior Department over the TotalEnergies deal, the first in the program, signed in March, according to Canary Media; the French company relinquished leases off the coasts of New York and North Carolina, according to Utility Dive. The California lawsuit calls the Golden State Wind deal patently illegal and questions whether the Interior Department used the federal Judgment Fund, created by Congress to settle litigation, to finance voluntary agreements. Experts and former officials from the Bureau of Ocean Energy Management had already questioned whether the agency had the authority to return proceeds from lease auctions. Canary Media also reported payments of $1,220 million to RWE for leases off California, Louisiana, and New York.

Federal court rulings on the California and eastern-state lawsuits will determine whether the Interior Department can reimburse lease holders using the Judgment Fund. The outcome will also signal how energy infrastructure capital in the region prices the regulatory risk of projects that depend on federal permits.

This article was drafted with artificial intelligence assistance based on verified sources and reviewed by a human editor before publication.