Offshore Wind Lease Buyouts: What is Happening? They Set a Potentially Dangerous Precedent, Say Former DOI Officials

      On March 23, 2026, it was announced that:

“TotalEnergies has signed settlement agreements with the U.S. Department of the Interior to "relinquish” two offshore wind leases worth nearly $1 billion off the coasts of North Carolina and New York and “will no longer develop offshore wind projects” in the U.S.”

     Some consider this buyout and others announced since then to be shocking and against the norms of business and capitalism as they are usually practiced. TotalEnergies would also be required to invest an equal amount of money into U.S. oil & gas production and processing, under the terms of the agreement. For the company, that is likely an economic boon, since oil and gas investments are significantly more profitable than wind investments and do not require any direct subsidization. The company said it will divert the $928 investment into U.S. LNG, drilling projects in the Gulf, and shale plays. They also noted that the diversion of funds would be beneficial since U.S. wind is expensive compared to European wind due to the lack of manufacturing and other support infrastructure for the fledgling U.S. wind industry.

“TotalEnergies’ studies on these leases have shown that offshore wind developments in the United States, unlike those in Europe, are costly and might have a negative impact on power affordability for U.S. consumers,” the company said. “Since other technologies are available to meet the growing demand for electricity ... in a more affordable way, TotalEnergies considers there is no need to allocate capital to this technology in the U.S.”

     The cancellation of the wind projects represents 4.2 GW of wind capacity. The projects had not begun construction yet. The Trump administration had tried and failed to block some of the offshore wind projects that were well underway with construction. Some of those have recently entered into service.

     On April 27, 2026, according to Utility Dive, the DOI announced that:

“Bluepoint Wind offshore New York and Golden State Wind offshore California “each separately agreed to voluntarily end their offshore wind leases” and not to pursue any new offshore wind projects in the United States. DOI put the value of the lease agreements and potential reimbursements at $765 million for Bluepoint and $120 million for Golden State.”

     The DOI cited costs to taxpayers and ratepayers in its decision, through both required subsidization and likely higher power costs, to buy out the leases. Others have criticized the administration for these actions and for using the Treasury Department’s Judgment Fund to finance the buyout.

     Former DOI officials, including former Bureau of Ocean Energy Management director Liz Klein and Tony Irish, a former associate solicitor with the Interior Department and now senior counsel at Public Employees for Environmental Responsibility, have criticized the buyouts, saying they create a dangerous precedent. Irish noted that if these buyouts 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.”

     He may have a point, but I am not sure. A DOI spokesperson explained the buyouts, and I generally agree with most of these points regarding affordability and practicality:

“Offshore wind projects across the country are collapsing under their own skyrocketing costs. Forcing taxpayers to prop them up is reckless, expensive, and irresponsible. Redirecting funds into American oil, gas and LNG infrastructure ensures reliable, affordable, domestically controlled energy instead of doubling down on one of the costliest and least dependable power sources on the market.”

     The total of the buyouts now represents 8.6 GW of wind power scrapped at a cost to the government of $1.8 billion. Klein questioned the legality of the agreements:

“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.”

“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.”

     No legal challenges have been announced yet, but Irish noted that if a federal judge were to declare the buyouts to be illegal, the likely outcome would be for the companies to resume the wind leases and the government to get its money back. He noted:

“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. 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.”    

     I wonder how many of these projects were initiated before inflation rose significantly post-COVID and the cost of borrowing skyrocketed, which really changed the economics of these projects. It's as if some of these companies may even be relieved to trade investments with difficult profitability for investments with likely higher profitability. I see the change in economic viability and profitability of these projects and the potential benefits to taxpayers/ratepayers as making the buyouts a pragmatic action, despite their difficult legal standing.

References:

 

Offshore wind lease buyouts create troubling precedent, say former DOI officials. Diana DiGangi. Utility Dive. April 30, 2026.  Offshore wind lease buyouts create troubling precedent, say former DOI officials | Utility Dive

TotalEnergies accepts $1B offshore wind buyout, pivots to oil and gas in US. Diana DiGangi. Utility Dive. March 23, 2026. TotalEnergies accepts $1B offshore wind buyout, pivots to oil and gas in US | Utility Dive

2 more offshore wind projects scrapped under Trump administration pressure. Meris Lutz. Utility Dive. April 28, 2026. 2 more offshore wind projects scrapped under Trump administration pressure | Utility Dive