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The Trump Administration's campaign against offshore wind has escalated in 2026 with the announcement of multiple negotiated lease cancellations. However, this settlement strategy is set to face significant legal challenges from California as early as late August.
California Attorney General Rob Bonta and the California Energy Commission jointly issued Notices of Intent to Sue Federal Authorities on June 23 and July 16, respectively (the “Notices”). The Notices signaled the state's intent to challenge recently announced buyouts of leases for areas off the California coast. Industry participants will be watching closely as the results of the potential cases could impact the Administration's settlement strategy.
The Notices were released approximately one week after a separate legal victory for a multistate coalition, including California, that challenged key portions of President Trump's "Day One" Executive Memorandum halting federal approvals necessary for offshore wind lease development. In that case, the U.S. Court of Appeals for the First Circuit granted the Trump Administration's own motion to dismiss its appeal of a U.S. District Court for the District of Massachusetts judgment on June 15, therefore invalidating the Memorandum.
The claims set out in the Notices therefore represent a continuation of California's broader strategy of legal action to combat the Administration’s anti-offshore wind policies.
Because the underlying settlement agreements have not been made publicly available, the statutory basis for the Administration's actions remains unclear. This lack of transparency appears to have led AG Bonta to cast a wide net of potential claims in the Notice. The claims raised under the Outer Continental Shelf Lands Act and its implementing statutes include:
- No hearing before cancellation — in violation of 43 U.S.C. § 1334(a)(2)(A)
- No five-year suspension prior to cancellation — in violation of 43 U.S.C. § 1334(a)(2)(B)
- No notification or coordination with governors of affected states — in violation of 43 U.S.C. §§ 1334(h) and 1337(p)(7)
- Failure to consider required statutory priorities — under 43 U.S.C. § 1337(p)(4) and 30 C.F.R. § 585.102
- Failure to follow lease relinquishment regulations — under 30 C.F.R. § 585.435
- Violation of the amended lease agreement itself (Section 8), which required any cancellation predicated on a threat of harm to include a finding by BOEM of particularized harm that can only feasibly be averted by suspension
- Compensation in excess of the statutory formula — in violation of 43 U.S.C. §§ 1334(a)(2)(C) and 1341(d)
Given applicable statutory notice requirements, the initial formal filing is expected on or around August 24, 2026. While it is not entirely clear from the Notices, the state is presumably intending that the settlements be invalidated, which would lead to reinstatement of the leases. However, even if reinstated, developers may be reluctant to invest in lease development while the current Administration remains in place.
The Sheppard team will continue to monitor events in the offshore wind space.
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