Agreements by the Trump administration to cancel offshore wind leases and reimburse developers in exchange for fossil fuel investments are drawing sharp criticism from former federal officials, who warn the deals could establish a troubling legal precedent for future energy policy.
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The U.S. Department of the Interior has announced agreements tied to roughly 8.6 GW of offshore wind capacity, offering a total of $1.8 billion in reimbursements to developers. In return, companies are expected to invest equivalent amounts in oil, gas or liquefied natural gas infrastructure.
Former Interior officials say the approach lacks clear legal grounding and could open the door to misuse.
“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, former director of the Bureau of Ocean Energy Management.
The agreements have been framed by federal officials as pragmatic solutions to avoid prolonged legal disputes and address challenges facing offshore wind development.
“These historic agreements provide dollar-for-dollar reimbursement for offshore wind leases that have been impractical to develop without relying on taxpayer subsidies,” officials said in a statement.
An Interior Department spokesperson defended the policy, stating, “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.”
However, critics argue the agreements bypass established legal frameworks. Klein said the deals are unlawful and exceed agency authority.
“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.
“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.
Additional agreements involve projects such as Bluepoint Wind off New York and New Jersey and Golden State Wind off California. While the Interior Department described the arrangements as voluntary, at least one developer indicated it agreed to settle potential claims.
Under one deal, Global Infrastructure Partners committed to invest up to $765 million — matching its original lease payment — into a U.S.-based LNG facility. Another project could recover about $120 million in lease fees after investing an equal amount into domestic fossil fuel or energy infrastructure projects.
Former Interior attorney Tony Irish warned that if courts uphold the agreements, they could create opportunities for future administrations to use similar mechanisms across different energy sectors.
“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,” Irish said.
He added that the broader implications could be significant if the practice becomes normalized.
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“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,” Irish 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.”
Legal challenges have not yet been filed, but Democratic lawmakers have signaled plans to investigate the agreements. Some have argued the deals “bypass the system Congress created to prevent corruption” and may be unlawful.
Klein also warned the policy could have ripple effects for states that had expected offshore wind development in leased areas.
“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,’” she said.
Originally reported by Diana DiGangi, Reporter in Utility Dive.
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