The Trump administration will pay energy companies hundreds of millions of dollars to abandon their plans to build two wind farms off the U.S. coast, the Interior Department said Monday, in a repeat of a tactic the government used to cancel other offshore wind leases last month.
The firms will forfeit their leases in federal waters for the two wind farms, one of which would have been built off New York and New Jersey and the other off California. The government will reimburse the companies a combined $885 million, the amount they paid for the leases under the Biden administration.
In exchange, the companies have pledged to invest that money in oil and gas projects, including liquefied natural gas facilities along the Gulf Coast.
The deals are modeled after a similar agreement last month with the French energy giant TotalEnergies. TotalEnergies forfeited its leases for two wind projects planned off the coasts of New York and North Carolina, while committing to a range of fossil-fuel investments.
The agreements are extraordinary transfers of taxpayer dollars to private companies for the purposes of throttling offshore wind power, a source of clean energy that Mr. Trump has disparaged for decades. The president has claimed falsely that offshore wind turbines do not work and that they are killing whales.
The administration has pursued a shifting strategy for stifling the country’s nascent offshore wind industry. In December, Interior ordered a halt to construction of five wind farms off the East Coast, but federal judges have struck down those moves. By dealing directly with developers, the administration may be able to avoid legal challenges.
The first new agreement affects Bluepoint Wind, a wind farm in the early stages of development off New York and New Jersey. The project was proposed by Global Infrastructure Partners, a part of asset manager BlackRock, and Ocean Winds, which is itself a joint venture between Engie and EDP Renewables, two European clean-energy firms.
The second deal would cancel Golden State Wind, another early-stage venture off California’s central coast. Golden State Wind is a 50-50 partnership between the developers Ocean Winds and Reventus Power.
Both Bluepoint Wind and Golden State Wind agreed not to pursue any new offshore wind projects in the United States, although that pledge would not necessarily apply to the companies behind the ventures.
Ocean Winds has also been developing another giant wind farm known as SouthCoast Wind, off Martha’s Vineyard, Mass., that is much further along in the planning and permitting process. That project is not affected by Monday’s announcement, although it has essentially been paused since Mr. Trump took office last year.
“We did not take this decision lightly,” said Michael Brown, the chief executive of Ocean Winds North America. “But when the underlying conditions in a market change, we must adapt. In this case, receiving a refund for the lease payments we had invested and exiting on agreed terms was the right outcome for our shareholders and partners.”
In January 2020, Larry Fink, the chief executive of BlackRock, said he intended to use the trillions of dollars managed by the firm to combat climate change. But six years later, BlackRock and many other Wall Street institutions have walked back or dropped their sustainability commitments.
A spokesman for BlackRock, Curtis Chou, referred inquiries to Global Infrastructure Partners. Salim Samaha, the chair of midstream and liquefied natural gas at Global Infrastructure Partners, said in a statement that the firm had “very constructive” discussions about the deal with Interior Secretary Doug Burgum and it appreciated the “practical resolution.”
Mr. Burgum said the offshore wind projects had made more financial sense under the Biden administration, which offered lucrative tax credits for wind turbines, solar panels, electric cars and other green technologies. The Republican-controlled Congress eliminated those incentives last summer.
“The companies that bid for these offshore wind leases were basically sold a product in 2022 that was only viable when propped up by massive taxpayer subsidies,” Mr. Burgum said in a statement. “Now that hard-working Americans are no longer footing the bill for expensive, unreliable, intermittent energy projects, companies are once again investing in affordable, reliable, secure energy infrastructure.”
New York Gov. Kathy Hochul said the deal would be bad for the state.
“This is what we have been up against since Donald Trump returned to the White House, an overt and never-ending hostility toward offshore wind that hurts our ability to meet our energy needs, create good jobs, and reach our state’s emission reduction targets,” she said in a statement.
Legal experts and congressional Democrats have raised questions over the Interior Department’s attempts to buy back leases, saying that it is unclear whether the agency has the authority to voluntarily reimburse companies for lease payments.
This month two top House Democrats sent Mr. Burgum a letter asking for more details of the deal with TotalEnergies. “On its face, this agreement is an unprecedented use of taxpayer funds to pay a private company for voluntarily relinquishing legally obtained leases,” the lawmakers wrote. They added, “There is no clear legal basis for this closed-door settlement.”
It is also unclear how much the companies will actually invest in new fossil fuel infrastructure. In documents released this month, Interior revealed that it would count investments that TotalEnergies made before the deal toward its pledge, raising questions over whether the company had any obligations to make additional investments.
Maxine Joselow covers climate change and the environment for The Times from Washington.
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