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Offshore Wind Lease Buyouts Draw California Lawsuit
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California has filed suit against the U.S. Department of the Interior and Golden State Wind to overturn a $120 million federal buyout of an offshore lease in the Morro Bay Wind Energy Area. The complaint, brought by Attorney General Rob Bonta and the California Energy Commission, argues the 27 April cancellation and payment violated the Outer Continental Shelf Lands Act and the Judgment Fund Act. The lease in question, purchased in 2022, covered a proposed two-gigawatt project that Golden State Wind said would have supplied roughly 1.1 million homes and included $30 million in local workforce and community commitments. The state seeks a court ruling to set the buyout aside and to block similar federal actions elsewhere.
The Trump Administration’s backroom buyout with Golden State Wind to stop offshore wind development in favor of gas and oil drilling is, unfortunately, a classic playbook for them to line the pockets of their Big Oil donors.
Rob Bonta, California Attorney General
Key takeaways
- California Attorney General Rob Bonta and the California Energy Commission sued the U.S. Department of the Interior and Golden State Wind over a $120 million buyout of the Morro Bay lease.
- Golden State Wind's 2022 lease for the Morro Bay Wind Energy Area was for a proposed two-gigawatt project intended to power about 1.1 million homes and included $30 million in local commitments.
- The state has also signalled legal action over Invenergy's $111 million lease refund and RWE's $1.22 billion cancellation, and says the federal government has spent $2.6 billion nationwide buying back offshore wind leases.
- California warns the buyouts jeopardize thousands of jobs, more than $100 million in state offshore-wind investments and its plan to develop 25 gigawatts by 2045.
Table of contents
What California says the federal buyouts did
The complaint filed by Attorney General Rob Bonta and the California Energy Commission challenges the Department of the Interior’s decision to terminate the Golden State Wind lease and reimburse the company $120 million. The state contends the payment was not a genuine settlement and that the DOI lacked authority under the Outer Continental Shelf Lands Act to cancel the lease in the manner it did.
California’s filing also targets the use of the Judgment Fund to make the payment, arguing that the $120 million disbursement did not resolve any preexisting litigation and therefore was an unlawful application of those funds. The state calls the arrangement secretive and says it effectively reverses years of federal review that had cleared the lease area after consulting the Department of Defense.
The DOI, for its part, cited unspecified national security concerns in announcing the April 27 termination; that justification and the legal basis for the Judgment Fund payment are central issues the state asks a court to examine and set aside.
Which projects and sums are now in dispute
Golden State Wind bought its Morro Bay lease in 2022 and proposed a two-gigawatt installation the company said would serve about 1.1 million homes while committing $30 million to workforce training and local supply-chain development. State filings say those local commitments and broader regional economic plans were undercut when the lease was cancelled.
Beyond Morro Bay, California has signalled legal challenges over other buyouts. Invenergy accepted a $111 million reimbursement to abandon its lease in the Morro Bay area, and RWE U.S. Offshore received $1.22 billion to cancel projects off Humboldt County and elsewhere, according to the state. The Attorney General’s office also states that, nationwide, the DOI has committed $2.6 billion of federal funds to buy back offshore-wind leases.
Those numbers feed directly into the California Energy Commission’s planning assumptions: the CEC’s strategy aims for 25 gigawatts of offshore capacity by 2045, a target the state says will be harder to reach if lease cancellations continue and key staging ports such as Humboldt are removed from the buildout map.
Voices on the ground and in industry
Rob Bonta framed the buyouts as a federal move that uses public dollars to favour fossil-fuel interests; he described the agreement with Golden State Wind as a backroom deal and criticised its effect on the state’s clean-energy plans. Santa Barbara’s congressional representative Salud Carbajal also publicly condemned the action, calling the cancellation a lost opportunity for regional jobs and energy security.
Carmen Rhodes, executive director of the UCSB Community Labor Center, praised the Morro Bay investments for promising good-paying jobs and supply-chain work for Central Coast communities. Ocean Winds North America chief executive Michael Brown defended his company’s decision, saying the refund of lease payments was driven by current market conditions and was the right outcome for shareholders and partners.
Local and state leaders emphasise the economic and training commitments at stake, while developers point to shifting market realities. Those competing accounts will shape the litigation and any political response moving forward.
Legal and policy implications for offshore wind
If a court accepts California’s arguments, it could limit the Department of the Interior’s ability to use the Judgment Fund to buy back leases and make cancellation of developer-backed projects more legally fraught. The state’s complaint cites specific federal statutes to frame its case that the DOI exceeded its authority and that payments were not lawful settlements.
On the other hand, if courts defer to the DOI’s national-security rationale and the executive branch’s use of the Judgment Fund, the ruling could set a precedent that makes federal lease buyouts an available tool to curtail projects. That in turn would raise policy questions about the stability of long-term offshore planning and private investment in U.S. waters.
Either outcome will affect port investments, workforce training pipelines, turbine staging plans and the timing of projects—factors the California Energy Commission says are necessary to hit the 25-gigawatt by 2045 goal and the associated economic benefits the state has modelled.
| Leaseholder | Lease area | Buyout paid | Project notes |
|---|---|---|---|
| Golden State Wind | Morro Bay Wind Energy Area | $120 million | Proposed 2 GW project; 1.1 million homes; $30 million local commitments |
| Invenergy | Morro Bay Wind Energy Area | $111 million | Lease refunded; state has filed notice of intent to sue |
| RWE U.S. Offshore | Humboldt County and others (LA, NY) | $1.22 billion | Projects cancelled; state alleges majority will be reinvested in fossil-fuel interests |
How this could play out
The case for
- A court could rule the Judgment Fund payment unlawful, which would restore legal protections for offshore leases and discourage similar federal buyouts.
- Developers such as Equinor might choose to retain leases and proceed with permitting and port investments, sustaining supply-chain commitments and job training plans.
The case against
- Courts could accept the DOI’s national-security justification and uphold the buyouts, creating legal precedent that makes lease cancellations an available federal tool.
- More companies could opt to accept reimbursements, shortening the development pipeline and reducing the number of projects available to meet state targets such as 25 gigawatts by 2045.
What to be careful about
- A legal ruling that endorses the DOI’s use of the Judgment Fund could allow executive-branch cancellations of leases without clear judicial review.
- Cancellation of leases removes commercial certainty for ports and supply-chain investments, threatening planned staging and assembly infrastructure in places like Humboldt County.
- Workforce and community commitments tied to cancelled leases—including the cited $30 million commitments—may not be realised if developers accept buyouts.
- California’s 25-gigawatt by 2045 target and the state’s more than $100 million in offshore-wind investments face delay or downsizing if multiple lease cancellations proceed.
The bottom line
The dispute over federal buyouts has turned into a focused legal battle between California and the Department of the Interior that will test how far the executive branch can go in cancelling offshore-wind leases and using the Judgment Fund. The state has placed specific statutes and dollar figures at the centre of its case—$120 million for Golden State Wind, $111 million for Invenergy, $1.22 billion for RWE—and framed the issue as one of economic and planning harm to Central Coast communities and state energy targets. The court’s response, Equinor’s next move and any CEC adjustments will determine whether these buyouts are a temporary setback or a structural obstacle to the state’s offshore-wind programme.
What to watch
- Watch for a court filing on California's complaint and whether a hearing is scheduled; no hearing date has been set.
- Watch whether Equinor confirms it will keep its Morro Bay lease and announce next steps; no timetable has been announced.
- Watch for any formal CEC update to its 25-gigawatt by 2045 plan in response to litigation; no schedule has been set.
Frequently asked questions
What did the Department of the Interior pay Golden State Wind?
The DOI reimbursed Golden State Wind $120 million when it terminated the Morro Bay lease on April 27, according to the state’s complaint.
Which other companies accepted buyouts and for how much?
The state says Invenergy accepted a $111 million refund for a Morro Bay-area lease and that RWE received $1.22 billion to cancel projects off Humboldt County and other coasts.
How do these actions affect California’s offshore-wind target?
California’s Energy Commission plans for 25 gigawatts by 2045; the state says the buyouts and port removals make achieving that 25 GW target more difficult and imperil related investments and jobs.
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