After failing to stop multiple offshore wind projects from moving forward on the East Coast, the Trump administration is trying a new tactic: paying companies not to build wind farms.
Last week, the government announced that it would pay TotalEnergies approximately $1 billion to give up on building two planned offshore wind farms in the U.S. and to invest in oil, gas, and LNG production instead. But experts say that the federal government can’t legally spend taxpayer money this way. And Total was already planning to build new fossil fuel projects before striking the deal.
In the past, when energy companies decided to give up offshore leases, they ate the loss. Other companies, for example, have given up offshore oil and gas leases in Alaska.
“They may or may not have spent a lot of money on the lease, but they routinely will expire, and the companies are not going to ask for reimbursement because they’re not going to get it,” says David Hayes, a law professor at Stanford who worked on climate policy in the Biden administration. “That money has gone into the U.S. Treasury. The Interior Department can’t simply on its own say to the U.S. Treasury, ‘Please give that money back because the company decided it doesn’t want to proceed with the lease.’”
The French company TotalEnergies bought two leases for planned wind farms in 2022: one off the coast of North Carolina, for more than $133 million, and one off the coast of New York for $795 million. Then Trump took office, and started to attack wind farms. The president has a longstanding grudge against offshore wind; his allies in the fossil fuel industry also don’t want competition from large wind projects.
Last year, the Trump administration ordered five large offshore wind projects that were already under construction to stop work. The administration cited unspecified national security concerns, though all of the projects had already been thoroughly vetted by the military. The energy companies sued and each won in court. The government didn’t appeal the verdicts, in a sign that it knew it wouldn’t win. (Separately, the government is also now using military reviews to delay more routine approvals for wind farms on land.)
Earlier this month, one of the offshore projects, Vineyard Wind, finished construction. Revolution Wind, another project, started delivering power. Last week, Coastal Virginia Offshore Wind also started delivering power to the grid. When that project is fully complete, it will power around 660,000 homes; Dominion, the utility building it, says that it will save customers $3 billion on fuel costs over its first decade.
Those companies lost millions because of the delays and had to battle to keep going. In TotalEnergies’ case, instead of struggling to begin new projects in the face of a hostile administration, the company decided to pull out. The CEO has said that he approached the administration to make the new deal. (Neither TotalEnergies nor the Department of the Interior responded to Fast Company‘s requests for comment.)
But experts say the deal, as described, isn’t legally viable. The Bureau of Ocean Energy Management “does not have the authority to give a so-called refund if an entity that is holding a lease wants to relinquish the lease,” says Elizabeth Klein, who led the agency under Biden and is now director of domestic policy programs at Penn Washington. BOM also doesn’t have the funds. Klein says that its annual budget is only around $200 million. “BOM is not sitting on a billion dollars,” she says.
The administration may reportedly use the Judgment Fund to pay—but that fund is supposed to be used for settlements when the government has been sued and is likely to lose in court. In this case, Total never tried to start building the wind farms, the government never tried to stop it, and Total never sued.
“The government hasn’t taken any action to cancel those leases,” says Klein. “There is no litigation. “In my view, it’s as if the government is saying, you know, we were about to break the law, and instead of breaking the law, we’re going to pay you the money out.”
In a press release about the deal, the Department of the Interior cited the Rio Grande LNG plant that Total plans to expand in Texas as part of the new fossil fuel work that the federal government will reimburse “dollar for dollar.” But Total had already committed to that work. Even if it were legal to use, the money isn’t incentivizing anything new.
Congress could object to the misuse of taxpayer money. “These are U.S. funds that are being inappropriately applied, without Congressional approval, for liability that does not exist,” says Hayes. The states that were supposed to get the power, New York and North Carolina, could also potentially sue, since residents there will lose out on clean power that could have helped lower energy bills.
