Trump’s $1B deal sinking offshore wind draws legal scrutiny

Can the Interior Department voluntarily refund lease payments? Some legal experts say no, but it’s unclear who could sue.

The Trump administration's deal with TotalEnergies to nix two East Coast offshore wind projects is drawing criticism from some legal experts and Democratic lawmakers who say the payout is likely illegal.

The Interior Department last month agreed to pay back the French energy company the nearly $1 billion it spent on leases for its New York Bight and Carolina Long Bay projects.

Interior Secretary Doug Burgum has called the deal a win for energy affordability, as he panned offshore wind as expensive and unreliable.

But the possible pathways for Interior to reach an agreement with Total don't allow the department to voluntarily reimburse the company, said Elizabeth Klein, who led Interior's Bureau of Ocean Energy Management under the Biden administration.

"There is no existing statutory or regulatory authority for BOEM to just return money," Klein said.

She warned that the administration's "backdoor agreement" would set a worrisome precedent.

"You would not want to create a system where someone could successfully obtain [a lease], sit on it for years and years, and do nothing, and prevent other entities from doing something on that lease and then get your money back," Klein said.

New lease settlement agreements released by the agency late last week confirmed speculation from some legal experts that Interior planned to tap the Treasury Department's Judgment Fund to finance the deal. The department planned to return $133 million for the North Carolina project and $795 million for the New York project.

"The posting of these agreements affirms what many of us have been concerned about, namely that DOI intended to violate the law by canceling Total’s offshore wind leases and is now instead paying them off with an enormous, unprecedented amount of taxpayer money," Klein said.

Federal agencies use the fund, which is administered by the Justice Department, to settle lawsuits brought in federal court or formal proceedings brought before an agency.

The nearly $1 billion the administration agreed to pay would also far exceed a typical payment from the fund to settle an Interior dispute.

According to an internal analysis of Interior's legal settlements conducted during the first Trump administration, the department's total reimbursements from the fund over a five-year period — between Jan. 1, 2012, and Jan. 19, 2017 — was $4.4 billion with an average settlement of less than $10 million.

The deal with Total, by contrast, totals $928 million.

It is rare for an agency to reach a settlement without any active proceedings, said Tony Irish, a former Interior attorney, although he noted that the fund can be used to resolve an "imminent threat" of litigation.

At the time the deal was announced in March, there was no known record of the company and the agency seeking to resolve an existing or pending legal dispute.

In the lease settlement agreements published late last week, the agency stated that it would have issued an order to suspend construction and operations due to national security issues, which would have prompted Total to claim a breach of contract and file a suit before the United States Court of Federal Claims.

The department had previously noted in its lease cancellation decision for the Carolina Long Bay project that the decision was in the public interest. Interior stated it would not have issued the lease to Total if it had been aware of "sensitive information that it recently learned from the Department of War."

The statement refers to the Pentagon's classified report late last year citing national security concerns with offshore wind projects along the Eastern Seaboard. The agency had issued several stop-work orders for other wind projects that were currently under construction, but the orders were universally blocked by federal district courts.

Klein, who led BOEM when the agency approved Total's leases, said that to the extent there were any national security concerns about the projects, they were evaluated extensively at the time. She argued the Defense Department report in November did not reveal any new information.

"The very notion that that would be what they would attempt to cancel the lease is the very definition of arbitrary and capricious decision-making," she said. "The department had no basis to try to stop the projects that were under construction and similarly here they have no basis to cancel these leases."

Irish also noted in a post on LinkedIn flagging the cancellation of the Carolina Long Bay lease last week that, according to amended leases for the two projects signed on Jan. 16, 2025, the leases can't be canceled under federal law unless they complied with certain provisions that require a lease be continuously suspended for five years or if the company requested a shorter term.

The two leases had not been under suspension. And if TotalEnergies had requested a shorter term for suspending the lease, then there would not be a controversy for the agency to settle with a monetary payment and no imminent threat of a lawsuit, he continued.

"In my view, particularly in combination with the lease amendments, it makes the lease cancellations more patently unlawful and enhances my concerns," Irish said in an email to POLITICO's E&E News.

In a follow-up LinkedIn post after the release of the settlement agreements, Irish also found it noteworthy that that the settlements included Total investments made as early as Nov. 18, 2025.

He suggested that could mean Interior and company had reached an agreement before that date, which could undercut the agency's national security argument. The department had previously stated in litigation that it had not accessed the classified DOD report until Nov. 26, Irish said, and the agency had stated it had not been briefed on the report until December.

"While it is possible others accessed the information sooner, it seems unlikely," Irish wrote.

Congressional inquiry

President Donald Trump's deal has also prompted questions from members of Congress, who are demanding that Total CEO Patrick Pouyanné provide details of the agreement, including any previously filed litigation or administrative proceedings involving the offshore wind leases, by the middle of next week.

Reps. Jamie Raskin of Maryland, the top Democrat on the House Judiciary Committee, and Jared Huffman of California, the ranking Democrat on the House Natural Resources Committee, sent a joint letter to Pouyanné earlier this month asking for more details about the settlement by April 20.

The lawmakers warned that if Interior was funding the deal "without a valid appropriation or settlement authority, every dollar it spends is unlawful."

Sen. Sheldon Whitehouse, a Rhode Island Democrat, has also sent his own letter requesting information from Total's CEO, setting an April 23 deadline.

In his letter to Total's CEO, Whitehouse said the Government Accountability Office has stated that litigation cannot be considered imminent "merely because a claimant will sue if the agency does not pay."

Instead, he said, there has to be a "legitimate dispute" over the payment amount or liability.

Interior did not respond to a request for comment on the legal concerns about the deal with Total.

In a recent emailed statement, a Total= spokesperson said the deal was returning the company's "own money" that it gave to Treasury in 2022. The company did not answer questions from E&E News about the details of its agreement with Interior.

Total said in a March statement immediately following the deal's announcement that the company had signed settlement agreements with Interior to give up its Carolina Long Bay and New York Bight leases that were awarded in 2022.

"Considering that the development of offshore wind projects is not in the country’s interest, we have decided to renounce offshore wind development in the United States, in exchange for the reimbursement of the lease fees,” Pouyanné said at the time.

He also said that he planned to redirect the funds to Rio Grande LNG, a Texas fossil fuel project the company invested in last year.

Pouyanné noted the importance of growing U.S. liquefied natural gas exports, both for helping supply Europe and responding to booming data center development.

Who can sue?

Even if the Trump administration's actions do violate the law, it's unclear who would have legal standing to bring Interior to court.

The most likely parties would be New York or North Carolina, which were relying on the projected energy to serve their electrical grids. The offices of the attorneys general for both states could not be reached for comment on whether they are considering litigation.

Congress could eventually choose to have the GAO review the appropriations, but that response would likely take time, said Irish.

A future administration could also bring criminal charges under the Antideficiency Act against responsible federal officials and attempt to recover the payment from Total, Irish said. The law bars federal officials from spending money before it is appropriated by Congress.

That would be a novel use of the statute, he said.

"Unfortunately, I think the most likely mechanisms to accountability are ones that won't occur until some time in the future," Irish said.

By:  Niina H. Farah
Source: Politico Energywire

• Print
• Email
• Tweet