California Moves to Sue Trump Administration, RWE Over Deal to Cancel Floating Wind Project

Sept. 2 (offshoreWIND.biz) California has notified the US Department of the Interior (DOI) and RWE of the intention to sue over the USD 1.22 billion (around EUR 1.05 billion) agreement to cancel three offshore wind leases, including one in federal waters off California. A separate 60-day pre-suit period is also running over the USD 111 million (around EUR 96 million) Invenergy lease buyout in the state.

The State Attorney General Rob Bonta and the California Energy Commission (CEC) sent a Notice of Intent to Sue to DOI and RWE on 1 September, challenging the agreement announced in August, under which DOI would cancel RWE affiliates’ offshore wind leases off the coasts of California, Louisiana and New York in exchange for USD 1.22 billion in settlement funds, which RWE is required to reinvest in LNG infrastructure and natural gas projects across the country.

California’s pending lawsuit concerns Lease OCS-P 0561 in the Humboldt Wind Energy Area, which RWE Offshore Wind Holdings acquired in a competitive lease sale in 2022 and assigned to its wholly owned subsidiary Canopy Offshore Wind in 2024. The lease site off northern California can support up to 1.6 GW of floating offshore wind capacity.

For the California lease, the agreement between DOI and RWE provides for USD 121.3 million (around EUR 105 million) in reimbursement to Canopy, equivalent to the amount paid for the lease minus USD 36.4 million (around EUR 31 million) in bid credits that would have supported workforce training, domestic supply chain development, and community benefits in California.

California says that the RWE buyout violates the Outer Continental Shelf Lands Act (OCSLA), which the State says gives California a role in the federal offshore wind leasing process.

In the Notice, California says the federal government did not hold a hearing before cancelling the lease, did not suspend it for five years before cancellation, and did not notify or coordinate with the governors of affected states. The State also said that the federal government failed to consider statutory priorities for offshore renewable energy development, did not follow regulations governing lease relinquishment, and did not comply with provisions of the lease governing cancellation.

California further argues that the agreement provides compensation exceeding the statutory formula for lease cancellations and suspensions, in violation of OCSLA.

The notice states that the agreement and lease cancellation are causing ongoing harm to California and that the State is therefore required to take judicial action to compel compliance with OCSLA.  

The Notice of Intent to Sue gives DOI and RWE 60 days to cure the alleged violations before California files a lawsuit.

RWE’s cancellation agreement is the third of the federal offshore wind lease buyouts that California is challenging.

The Attorney General and the CEC announced their intention to sue shortly after filing a lawsuit over the USD 120 million (around EUR 103 million) Golden State Wind lease buyout in the Morro Bay Wind Energy Area, for which a Notice was sent to DOI and Golden State Wind LLC on 23 June this year.

On 16 July, Bonta and CEC sent a Notice of Intent to Sue over DOI’s agreement with Invenergy, which would cancel Invenergy’s offshore wind lease in the Morro Bay Wind Energy Area off California’s Central Coast.

Under that agreement, announced on 17 June, DOI would pay more than USD 111 million to an Invenergy subsidiary to abandon the lease, with the company making an equivalent investment in fossil fuel or geothermal projects.

In the Notice from 16 July, California said that the Invenergy deal also violated OCSLA, giving DOI and Invenergy 60 days to address the alleged violations before a lawsuit is filed.

The Invenergy lease covers Lease OCS-P 0565 in the Morro Bay Wind Energy Area, where Invenergy had planned a floating wind project of up to 2 GW.

California says both the RWE and Invenergy agreements threaten its offshore wind development and the more than USD 100 million it has invested in ports, transmission systems and industries in preparation for the sector. The state’s offshore wind strategic plan calls for 25 GW of offshore wind capacity by 2045, which California says could provide enough electricity to power roughly 25 million homes and account for about 13 per cent of the state’s electricity supply.