Offshore wind advocates are continuing their legal battle against the Trump administration, following its shift in strategy against the industry two months ago to allow developers to back out of leases signed in the Biden era if they agree to funnel past payments into oil and gas investments.
Seven states led by New York sued the Trump administration on June 2, alleging that its March $928 million purchase agreement with French offshore wind developer TotalEnergies to cancel pre-project ocean leases in that state and North Carolina in exchange for funneling refunds to Texas oil drilling and gas plant investments is “blatantly illegal” and should annulled
Just In—Court Restores Wind-Solar Project Tax Credit Tracks
Four days later, a federal district court judge in Washington, DC ruled that the Internal Revenue Service’s rules for using federal tax credits for investment and production in energy projects larger than 1.5 GW, used for more than a decade, cannot be restricted to wind and solar power developers. The rules added the fine print to restrictions included in the 2025 budget bill that President Donald Trump signed into law on July 4, which no longer allowed a company to start work on one of these projects and claim credits incurring costs of 5 percent or more, known as the “safe harbor.” Developers could only lock in credits by showing proof of starting “physical work of a significant nature”.
Judge Christine Kollar-Kotelly wrote that excluding the 5% safe harbor only for these sectors had no explanation in any federal documents, calling it “arbitrary and capricious.”
A plaintiff in the lawsuit, the Oregon Environmental Council, called the decision “a huge victory for clean energy development,” and called the IRS’s guidance a “barrier … another example of the federal administration causing chaos in the energy market.” But industry lawyers warn that use may be limited because the amended rules do not change the other key tax credit deadline of July 4, 2026 for wind or solar project work to begin to avoid the late 2027 mandate from running. Trump administration spokesmen did not comment on the status of an appeal, but this action and other changes may not cancel out all risks, the attorney noted.
“This decision has significant implications for developers, investors and other stakeholders in the renewable energy sector, but given the short time before the start of the July 4 construction deadline” and other pending issues, “it is not advisable to rely on” the 5% safe harbor for wind and solar projects, Foley & Lardner lawyers said.
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Assuming TotalEnergies Buyout
The June 2 legal battle aims to overturn a deal that would allow TotalEnergies to revoke a $795 million lease to develop two Attentive Energy wind projects in an area of the federal ocean between New York and New Jersey, as well as a $133 million pact in North Carolina, New Jersey, as Connecticut, Maine, Massachusetts and the District of Washington DC, Rhode Island, Washington DC have also sought to the agreement of cancellation and liquidation of vacant lease.
ENR could not verify at the time of publication of the story whether this ruling would force TotalEnergies to build a project on its leased site, which it had previously said it would pause in light of the Trump administration’s policies.
“After repeatedly losing in court, this administration cooked up a sham deal to pay a foreign energy company hundreds of millions of taxpayer dollars to abandon offshore wind and invest in oil and gas,” said New York Attorney General Letitia James. Gov. Kathy Hochul described the TotalEnergies deal as a “pay-for-no-play scheme” and “an outrageous abuse of taxpayer dollars that hurts our ability to meet our energy needs, create good jobs and help ensure America’s energy independence while reducing emissions.”
Trump administration officials, including Interior Secretary Douglas Burgum, have defended the TotalEnergies deal as voluntary.
Separately, a coalition of renewable energy groups filed a complaint in a federal district court in Oregon last month challenging the U.S. Department of Defense’s actions in failing to complete national security reviews of onshore wind projects on private land, with an estimated 160 project approvals stalled. Department officials have said the delay in the review process is related to its complexity.
Meanwhile, more than 50 environmental groups and non-governmental organizations are moving to stop new developer deals, according to reports. Friends of the Earth says the groups have written to Markus Krebber, chief executive of German energy developer RWE, asking the company to halt its rumored negotiations with the administration to return more than $1 billion in offshore wind lease payments to reinvest in gas sector projects it says would pose a “very real financial risk to your company and shareholders.”
Industry participants and observers are also watching the trajectory of the 2027 Interior and Environment spending bill, which a House appropriations subcommittee advanced in May. It seeks to impose a series of inspection fees on offshore wind projects that analysts and Democrats say could be far higher than what offshore oil companies pay for their turbine inspection projects.
The Virginia Offshore Wind Project in Virginia Beach will have 176 turbines when it’s completed next year. Annual fees for offshore oil and gas operations under the bill are not charged on a per-well basis. “The lack of clarity and predictability around inspection fees for offshore wind is troubling,” said Pasha Feinberg, offshore wind strategist at the Natural Resources Defense Council.
