SAN FRANCISCO (KEYT) – Attorney General Rob Bonta filed a lawsuit Tuesday challenging the legality of a the deal struck between a California-based offshore wind company and the Trump Administration to abandon a local offshore wind energy project for an over $111 million taxpayer buyout.
"For almost a decade, the State of California has worked closely with the U.S. Department of the Interior's Bureau of Ocean Energy Management (BOEM), under both the first Trump administration and the Biden administration, to develop offshore wind energy projects in federal waters off California's coast," opened Tuesday's filing in U.S. District Court for the Northern District of California. "Having spent most of 2025 issuing arbitrary 'stop-work' orders to offshore wind energy projects, which courts uniformly struck down as unlawful, the Trump administration has turned to a new tactic to circumvent the courts altogether: buying out developers' offshore wind energy leases through collusive settlements."
On June 17, 2026, the Department of the Interior announced an agreement to buyout Invenergy California Offshore LLC.'s federal leases for large-scale offshore wind energy projects at the Morro Bay Wind Energy Area, in the New York Bight, and in the Gulf of Maine.
According to a press statement from Invenergy, it would receive a partial refund of capital it previously paid to the government for the leases and be required to make investments into domestic natural gas and geothermal projects as part of the deal.
In July of this year, Attorney General Bonta sent a Notice of Intent to Sue, providing a 60-day window for the Trump Administration to cure any potential violations without court proceedings.
"At a time when we need more reliable, clean energy, President Trump is trying to send $111 million to his fossil fuel industry friends and wants taxpayers and working families to cover the tab. This outrageous abuse of taxpayer dollars will damage the offshore wind industry and create unnecessary obstacles to clean and reliable energy powering our homes and economies," stated Attorney General Bonta in a press release about Tuesday's filing. "California is not here to foot the bill — we have the receipts and we're asking the court to strike down this blatantly unlawful deal."
The deal matched other offshore wind energy companies that agreed to terminate their respective wind-based, energy-generating projects in exchange for investments into other forms of energy approved by the Trump Administration.
The image below shows the successful bidders in 2022 for two large offshore wind energy projects along the California coast.
Golden State Wind previously agreed to abandon its lease within the Morro Bay Wind Energy Area and could recover around $120 million from the Trump Administration, but only after the company makes an investment of, "an equal amount in the development of U.S. oil and gas assets, energy infrastructure, and/or LNG projects along the Gulf Coast" stated the Interior Department, a condition matched in the July deal with Invenergy.
"This ostensible 'settlement' represented that BOEM [Bureau of Ocean Energy Management] intended to issue a stop-work order and purported to settle the claims that Invenergy would have brought in response to such an order. That order would have 'suspend[ed] construction and operations of this project indefinitely due to national security issues, similar to' suspension orders BOEM had issued to other projects—and which had been successfully enjoined and vacated by the courts," explained Tuesday's lawsuit. "The terms of that buyout agreement require Invenergy to cause its corporate affiliates to invest up to $111,769,231—the value of its winning bid for Lease OCS-P 0565, minus the value of the bid credits—in fossil fuel and geothermal energy projects. Id. at 4. According to the Department of the Interior, these projects include gas-fired power plants in Indiana, Wisconsin, Iowa, Kansas, and Missouri, i.e., not projects serving California, and not even within BOEM’s jurisdiction over the outer continental shelf. The agreement then requires the United States to pay the same amount to Invenergy from the Judgment Fund, a permanent appropriation for the payment of judgments and settlements against the United States
The details of the deal are of acute interest to both law enforcers and lawmakers.
Prior offshore wind deals, including an almost $1 billion deal with French energy giant TotalEnergies, to terminate its offshore wind projects are subject to Congressional investigation.
In April of this year, the Trump Administration announced it was paying TotalEnergies $928,333,333 to not pursue two offshore wind energy projects in the Atlantic Ocean and instead invest in domestic fossil fuel projects.
According to Ranking Member Huffman of the House Natural Resources Committee and House Judiciary Committee Ranking Member Raskin in April, the Trump Administration drew the almost $1 billion payment to TotalEnergies from the Judgement Fund, an account created by Congress in 1956 to pay court-ordered judgements and settlements against the government and the origin of the latest payments to Invenergy.
"When Secretary [of the Interior] Burgum signed the settlement agreements in March 2026, the agreements' own recitals framed it a settlement agreement. After coming under fire, he abandoned that characterization entirely," noted a letter issued to TotalEnergies' CEO by Congressmembers Huffman and Raskin. "He [Secretary of the Interior Burgum] now publicly describes the settlement agreement as a refund. Neither characterization is legally sufficient to gift TotalEnergies with nearly $1 billion taxpayer dollars. Nor can Secretary Burgum cure one defect by retreating to another."
The difference between categorizing the payments as a refund for a lease terminated by the federal government or a subsidized investment is a serious legal question.
Article I, Section 9, Clause 7 of the U.S. Constitution states, "No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law".
Ranking Members Raskin and Huffman argued that using the Judgement Fund, which is managed by the Treasury Department and funded by Congress, to settle, reimburse, or to subsidize a future investment would violate the above appropriations clause as it was not approved by Congress, an argument echoed by Attorney General Bonta this week.
"The benefit that the buyout agreement actually confers on the federal government is not the dismissal of any genuine litigation claims but the funding of the Trump administration's preferred fossil-fuel energy projects, paid for by virtue of public funds never appropriated for that purpose," noted Tuesday's lawsuit. "The Executive Branch has no authority to provide offshore wind leaseholders 'partial reimbursement' of their lease fees: once deposited into the United States Treasury (Treasury), the lease fees became part of a general pool of monies expendable only by Congress's appropriation. Nor may the Executive Branch direct that $111,769,231 refund to energy projects that have nothing to do with federal waters, much less the offshore wind leasing program that Congress funded BOEM [Bureau of Ocean Energy Management] to administer. Because Congress never appropriated such sum for this purpose, Defendants' expenditure is contrary to the Spending and Appropriations Clauses. By arrogating spending authority constitutionally delegated to Congress, Defendants have also acted ultra vires and violated the constitutional separation of powers."
When Your News Channel reached out for more information about the TotalEnergies deal and the claims made by members of Congress, the Department of the Interior responded in a statement in late April and referred to the payments as "monies refunded" and "not taxpayer dollars" and that the "settlement" was "approved by the Department of Justice".
Those claims are now subject to Freedom of Information Act requests filed by Your News Channel.
"The constitutional stakes are greater than a single improper payment," stated a letter from the Ranking Members to TotalEnergies in April. "The Judgment Fund has no annual cap, and individual disbursements receive no congressional review. Congress designed it that way because court judgments are involuntary; if a judge orders the government to pay, then it must pay. However, that logic does not extend to voluntary deals the executive branch chose to enter, on terms it negotiated, with counterparties it selected. Applied to those transactions, the Judgment Fund becomes the ultimate political slush fund."
July's announcement from the Department of the Interior also characterized the deal with Invenergy as a "settlement agreement" as well as a "partial reimbursement" and also used money from the Judgment Fund.
"[T]he Settlement Agreement presents multiple abuses of federal appropriations process. First, by providing for payment from the Judgment Fund, the Settlement Agreement violates both the Judgment Fund Act, 31 U.S.C. § 1304, and the Antideficiency Act, 31 U.S.C. § 1341," argued Attorney General Bonta in this week's filing. "[A]lthough the Judgment Fund may be used to satisfy a 'compromise settlement[] . . . for defense of imminent litigation,' 28 U.S.C. § 2414; see 31 U.S.C. § 1304(a)(3)(A), that condition cannot be satisfied by backroom deals over phantom controversies. The litigation described in the Settlement Agreement was never 'imminent' but rather couched within nested conditionals: the agreement purports to resolve the suit that Invenergy could have filed if BOEM had issued a suspension order described only in abstract. The Judgment Fund cannot be used to resolve a sequence of hypotheticals."
Tuesday's filing also noted that on Oct. 5, 2022, the Bureau of Ocean Energy Management announced it had completed an environmental review of the Morro Bay offshore wind energy project that reflected a consultation with the Department of Defense about potential national security issues with the proposal.
The use of the Treasury Department's Judgement Fun isn't the only issue with the payments identified by members of Congress in April.
The Ranking Members also noted that under the Outer Continental Shelf Lands Act, when the federal government cancels an offshore energy lease, the lessee is "entitled to receive the lesser of two amounts: the fair value of the cancelled rights as of the date of cancellation, or the excess of the lessee's total expenditures on the lease over revenues received."
"This 'TotalEnergies model' of buyout operates with the cynical logic of an extortion racket: 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," explained Attorney General Bonta in this week's filing in federal court. "Worse still, the administration coerces these companies into channeling the settlement funds toward the administration's own political goals, thereby extracting benefits it could not achieve through the lawful appropriations processes. The Trump administration further strong-arms these companies into agreeing to exit the United States offshore wind market indefinitely."
Notably, Invenergy, like other offshore wind energy companies subject to the same deal-making process, "exists only to develop the Morro Bay offshore wind energy project, the agreement requires Invenergy to direct the required fossil-energy investment through its corporate parents or their subsidiaries."
"To date, the Federal Defendants have directed nearly $4 billion from the Judgment Fund toward cancelling twelve offshore wind energy projects, including three of the five federal leases that would serve California's power grid," added Tuesday's filing. "On information and belief, none of the fossil fuel investments announced in these buyouts would generate energy for California."
Attorney General Bonta noted the extensive investments made by both the federal government and California into the anticipated energy project.
"California, including through CEC [California Energy Commission], has invested over $100 million tosupport Lease OCS-P 0565 and the other offshore wind leases," stated Tuesday's suit. "California expected these investments to yield long-term benefits for the State. California's Offshore Wind Energy Strategic plan estimated that 10 gigawatts of offshore wind development could create $45 billion in short-term economic benefits to the state. CEC, Assembly Bill 525 Offshore Wind Energy Strategic Plan (AB 525 Plan), Volume I: Overview Report, at 9-10. Another study found that developing the Humboldt and Morro Bay WEAs would generate 169,000 construction job years, around 5,750 annual and maintenance jobs, and over $15 billion in local wages by 2040."
Attorneys general of New York, Connecticut, Delaware, Maine, Massachusetts, New Jersey, Rhode Island, and Vermont filed joint lawsuits challenging the offshore wind energy lease buyouts.
"California seeks an order declaring the Settlement Agreement and lease cancellation unconstitutional and unlawful under the APA [Administrative Procedure Act], OCSLA [Outer Continental Shelf Lands Act], and other relevant statutes; vacating and setting aside the Settlement Agreement and lease cancellation; compelling compliance with OCSLA; and enjoining Defendants from taking any further action with respect to the Settlement Agreement or lease cancellation and enjoining Defendants from entering into similar agreements with any other California offshore wind lessees," concluded Tuesday's filing in federal court.
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