California sues Trump administration over offshore wind ‘extortion racket’

The state alleges the Trump administration “abuses its authority” by diminishing the value of offshore wind energy leases before it makes an “unrefusable offer” to developers.

California Attorney General Rob Bonta and the California Energy Commission filed a lawsuit Friday against the Trump administration and the developer of Golden State Wind over the “buy back” agreement the two parties reached for an offshore wind lease off the state’s central coast.

Golden State Wind’s lease area in Morro Bay, OCS-P 0564, had an estimated 2 GW of installation capacity. The Canada Pension Funds Investment Board and Ocean Winds, a joint venture owned by Engie and EDP Renewables, submitted the $150.3 million winning bid for that lease. In April the developers reached an agreement with the Trump administration to receive $120 million in exchange for the lease being cancelled.

The Trump administration has made similar deals with several offshore wind developers, starting with a March deal with TotalEnergies, a French multinational energy and petroleum company. Under that deal, TotalEnergies agreed to “relinquish” two offshore wind leases off the coasts of North Carolina and New York with a combined capacity of 4.2 GW in exchange for $928 million. 

“This ‘TotalEnergies model’ of buyout operates with the cynical logic of an extortion racket,” said California’s lawsuit filing. “The Trump administration first abuses its authority to make the offshore wind energy leases worth significantly less than what the developer paid at auction; then, offering the original bid amount in exchange for lease cancellation works as the proverbial unrefusable offer given these companies’ fiduciary responsibilities to their investors.”

The lawsuit also criticized the deals the Trump administration has struck with these developers for the lease proceeds to be reinvested into other forms of energy generation — for instance, TotalEnergies agreed to invest the $928 million into U.S. oil, natural gas, and liqueified natural gas production.

The administration also reached an agreement with Invenergy to cancel its 1.5-GW-capacity Morro Bay lease. The lawsuit said that in anticipation of the wind projects under development off its coast, California invested over $100 million to support them, “including creating a statewide offshore wind strategic plan and developing its ports and transmission facilities to support offshore wind.”

“California expected that these investments would yield economic growth, new jobs, significant progress toward its clean energy and climate policy goals, and a powerful clean energy source to diversify its grid,” the lawsuit said. “[The Bureau of Ocean Energy Management] has proceeded with no regard for California’s significant reliance interests in Lease OCS-P 0564, including millions of dollars invested with the support of Congress, the Department of the Interior, and California voters to develop the State’s offshore wind industry.”

Several other parties have criticized the Trump administration’s method of buying back leases. In a June Sierra Club release, Senior Advisor Nancy Pyne called the agreements “shady backroom deals.” Liz Klein, former director of the Bureau of Ocean Energy Management, said in April that the deals are creating a concerning precedent. 

“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,” Klein said.