Nine states sue as offshore wind buyouts near $4 billion booked to a lawsuit fund

The charge: settlements with no lawsuit

On 22 September, attorneys general from New York and seven neighboring states filed two federal suits↗ against Interior Department deals with Bluepoint Wind and Invenergy, and California filed a third over an Invenergy lease off Morro Bay ¹². Together they target more than $1.5 billion in reimbursements. Governor Kathy Hochul called the arrangement an unlawful "pay-to-not-play scheme" ¹.

The money is booked to the Judgment Fund, a Treasury account Congress reserved for legitimate legal claims against the government, with no spending cap ¹². Neither developer had sued; the states say that leaves no claim to settle ¹³.

Six deals, $3.93 billion

Counted deal by deal, the program has agreed to return $3.93 billion to developers since March. TotalEnergies struck first, two leases redirected into Rio Grande LNG and Gulf oil and gas ⁴. Bluepoint followed in April, in line to recover up to its full 2022 New York Bight bid as its BlackRock-linked co-owner commits the same amount to a US LNG plant, plus a pledge never to pursue US offshore wind again ⁵¹. Golden State Wind's cancellation came the same month ⁵.

Invenergy signed in June, four leases redirected into gas plants across five Midwestern states and western geothermal↗ ⁴. Duke followed in July, surrendering a Carolina lease it had paid $155 million for in 2022↗ ⁶. RWE's August exit is the largest↗, pairing a $900 million Louisiana LNG stake with a $300 million turbine order; before it, the administration had agreed to return about $2.7 billion across nine leases ⁷.

Eight gigawatts out while the AI buildout bids

The leases in the new suits were expected to generate more than 8 GW, enough for more than four million homes, and New York counted $16 billion of investment and 2,800 jobs on the two projects off its coast ¹. Those turbines were 2030s power, not this decade's: RWE, which struck the same kind of exit, says its projects were early-stage and not due online until the 2030s ⁷.

Even so, the exits land on a grid Morgan Stanley expects to run 33 GW short through 2028 on data-center demand↗, a residual gap inside 97 GW of incremental need ⁸. New York's planners project demand up 8% by 2030 and 24% by 2040, driven partly by data centers ¹. Eight gigawatts were subtracted from a grid already expected to run short.

Interior: common sense, not subsidies

Interior calls the agreements voluntary settlements that steer capital toward energy it considers reliable and affordable↗; Secretary Doug Burgum said Americans deserve "an energy system built on common sense, not one dependent on costly subsidies" ⁷². RWE says permitting left its projects with no path forward ⁷. The department also argues the canceled leases raised national security concerns ³⁹.

Courts asked to unwind $4 billion of exits

The new cases are pending in federal courts in New York, Maine and California, according to Law Commentary↗ ³. Seven states are already challenging the TotalEnergies deal, and California has signaled a challenge to RWE ⁷². The states want the cancellations voided ¹. The question before the courts is narrow and large at once: whether a fund built to pay judgments can be spent to buy an energy policy.