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California’s latest complaint challenges a June 17 agreement under which the Interior Department would provide Invenergy more than $111 million after the company “voluntarily terminate[s]” four offshore wind leases, including OCS-P 0565 in Morro Bay. Invenergy’s corporate affiliates would make qualifying investments in other energy projects, and the federal government would pay Invenergy an equivalent amount from the Judgment Fund. The Department of the Interior officially canceled the lease on July 10, 2026.

California alleges that the agreement and cancellation bypassed procedures under the Outer Continental Shelf Lands Act, including provisions giving affected states a role in federal offshore-energy decisions. The state also argues that the Judgment Fund cannot be used for the payment because the agreement did not settle an existing or imminent lawsuit. Rather, it addressed claims Invenergy might have brought had the federal government issued a suspension order.

California is asking the U.S. District Court for the Northern District of California to invalidate the agreement and prevent its implementation.

Invenergy won the lease in the federal government’s 2022 California offshore wind auction. Its $145.3 million bid included approximately $33.5 million in commitments for workforce training, supply-chain development, and community benefits. The lease was one of five offshore wind developments proposed for California federal waters, with two leases in Humboldt and three in Morro Bay.

The federal government has since moved to unwind multiple offshore wind leases.

The case adds to litigation over federal agreements to end California offshore wind leases. Its outcome could affect the Invenergy lease and the federal government’s ability to use similar agreements for other California leases.

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The action challenges the California portion of a $1.22 billion settlement between the U.S. Department of the Interior and RWE U.S. Offshore covering three offshore wind leases. California alleges that federal officials violated the Outer Continental Shelf Lands Act by failing to follow statutory procedures for canceling the lease.

The notice of intent to sue gives the federal government 60 days to address the alleged violations before California may file a lawsuit.

Which Humboldt offshore wind lease is affected?

The dispute involves federal lease OCS-P 0561 in the Humboldt Wind Energy Area off California’s North Coast.

RWE acquired the 63,338-acre lease in the federal government’s 2022 California offshore wind auction and assigned it to its Canopy Offshore Wind subsidiary in 2024. The area was expected to support up to 1.6 gigawatts of floating offshore wind generation.

RWE paid approximately $157.7 million for the lease. The bid included $36.4 million in credits for workforce training, domestic supply-chain development and community benefits.

How the RWE offshore wind settlement works

RWE announced on August 6 that it had reached a $1.22 billion settlement with the Interior Department covering leases off California, Louisiana and New York.

Under the California portion, Canopy or its affiliates would invest approximately $121.3 million in other domestic energy projects. The federal government would then reimburse Canopy for the same amount and cancel the Humboldt lease.

RWE separately announced a $900 million investment for an indirect 16% interest in the Louisiana LNG project and a $300 million agreement to reserve natural-gas turbines for a planned portfolio of 15 generating projects.

RWE said it concluded that its offshore wind projects had no foreseeable path to federal permits and that the settlement would allow it to redirect capital toward projects with greater development certainty.

California alleges violations of federal offshore-energy law

California contends that the Interior Department violated the Outer Continental Shelf Lands Act by cancelling the lease without first holding a hearing or suspending it for five years. The state also alleges that federal officials failed to coordinate with affected governors, follow lease-relinquishment regulations, or consider the statutory factors governing offshore energy development.

California contends that the Interior Department cannot cancel the lease through the negotiated agreement without complying with the Outer Continental Shelf Lands Act and its implementing regulations.

California also argues that the proposed $121.3 million reimbursement exceeds the compensation permitted under federal law.

California cites offshore wind investments and targets

California says it has invested more than $100 million in ports, transmission planning and other infrastructure intended to support offshore wind development.

The state’s strategic plan calls for as much as 25 gigawatts of offshore wind capacity by 2045, which the CEC estimates could provide approximately 13% of California’s electricity. Cancellation of the Humboldt lease reduces the federal acreage available to support that goal and creates additional uncertainty for planned port and transmission investments on the North Coast.

California expands its offshore wind legal challenges

The Humboldt notice is California’s third formal legal challenge to federal agreements involving offshore wind leases off the state’s coast.

California has also challenged agreements involving Golden State Wind and Invenergy in the Morro Bay Wind Energy Area. On August 28, the state filed a lawsuit seeking to block the Golden State Wind lease cancellation and a related $120.24 million federal payment.

The Humboldt dispute could test whether the Interior Department may use negotiated settlements to terminate offshore wind leases without following the suspension, consultation and cancellation procedures California says federal law requires.

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The complaint, filed in the U.S. District Court for the Northern District of California, alleges that the Department of the Interior and Bureau of Ocean Energy Management exceeded their authority under federal offshore-energy law and improperly committed money from the federal Judgment Fund.

California is asking the court to invalidate the agreement and prevent federal officials from implementing the lease cancellation and payment.

What California’s offshore wind lawsuit challenges

Golden State Wind acquired wind lease OCS-P 0564 in the federal government’s December 2022 California offshore wind auction. The lease covers 80,418 acres approximately 22 miles northwest of Morro Bay. The lease area could support approximately 1.5 to 2 gigawatts of floating offshore wind generation, according to the complaint.

The lease is one of three awarded in the Morro Bay Wind Energy Area. Golden State Wind’s winning bid totaled $150.3 million. That included $120.24 million in cash and approximately $30.1 million in commitments for workforce training, supply-chain development and community benefits.

California argues that canceling the lease would jeopardize those commitments and hinder development of the state’s offshore wind market. California’s strategic plan calls for offshore wind capacity of up to 25 gigawatts by 2045.

How the Golden State Wind buyout would work

The Interior Department announced the agreement with Golden State Wind on April 27, 2026. Under its terms, Golden State Wind would relinquish the Morro Bay lease after its corporate affiliates make up to $120.24 million in qualifying U.S. energy investments. According to the complaint, those investments may include oil and gas assets, energy infrastructure and liquefied natural gas projects along the Gulf Coast.

The federal government would then reimburse Golden State Wind by paying an equivalent amount from the Judgment Fund, a permanent federal appropriation used to pay certain judgments and settlements against the United States.

The agreement also restricts Golden State Wind and certain affiliated entities from pursuing other U.S. offshore wind projects.

BOEM’s Golden State Wind lease page states that the Interior Department will cancel and rescind the lease after the investments in U.S. oil and gas development have been made.

California challenges the use of the Judgment Fund

The complaint alleges violations of the Judgment Fund Act and the Antideficiency Act, which restrict federal agencies from spending or committing funds without legal authority.

California argues that the agreement does not resolve actual or imminent litigation because the Interior Department had not issued the contemplated order suspending the lease and Golden State Wind had not filed a lawsuit challenging such an order.

The state contends that the agreement is not a settlement eligible for payment from the Judgment Fund.

California alleges Interior Department bypassed offshore lease procedures

California also argues that the Interior Department and BOEM failed to follow the procedures governing the suspension, cancellation or relinquishment of an offshore wind lease under the Outer Continental Shelf Lands Act. The complaint alleges that the federal government bypassed requirements involving lease suspension, consultation, hearings and consideration of state interests.

The lawsuit also alleges violations of the Administrative Procedure Act. California argues that the agreement was arbitrary and capricious because the federal government did not adequately explain its decision or consider the state’s reliance on the lease.

Lawsuit includes coastal and environmental-review claims

The lawsuit also raises claims under the Coastal Zone Management Act and National Environmental Policy Act.

California argues that canceling the lease could affect the state’s coastal resources, ports, transmission plans and energy policies. It alleges that federal agencies did not complete the consultation and environmental-review procedures applicable to decisions affecting offshore development and the coastal zone.

The state is asking the court to vacate the federal actions approving the agreement and prevent the government from canceling the lease or making the proposed payment.

California cites more than $100 million in offshore wind investment

California says it has invested more than $100 million in offshore wind planning and infrastructure, including port preparation, transmission development, workforce programs and environmental review.

The state argues that cancellation of the Golden State Wind lease could reduce the value of those investments and delay development of the broader California offshore wind market.

Lawsuit follows state investigation

The California Energy Commission opened an investigation into the agreement in May and served Golden State Wind with an administrative subpoena seeking information about the proposed buyout.

The Attorney General and CEC sent the federal government a notice of intent to sue in June. The August 28 complaint moves the dispute into federal court. The case is California v. U.S. Department of the Interior, No. 3:26-cv-09123.

Interior Department has pursued other offshore wind lease settlements

The Golden State Wind agreement is part of a broader federal effort to terminate offshore wind leases through negotiated settlements.

BOEM’s California offshore wind activities page identifies additional settlements affecting California leases formerly held by Invenergy and RWE-related entities. Some cancellations have been completed, while the Golden State Wind cancellation remains contingent on satisfaction of the investment provisions in its agreement.

Ruling could affect California’s remaining offshore wind market

The lawsuit could determine whether the Interior Department may use negotiated settlements and Judgment Fund payments to terminate offshore wind leases before projects reach construction.

A ruling for California could prevent the Golden State Wind cancellation and limit similar federal agreements. A ruling upholding the agreement could allow the Interior Department to complete the buyout and further reduce the federal offshore acreage available for development off California.

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The company said it determined that there was “no path forward to permit these projects in the U.S. for the foreseeable future.” The deal marks the first lease relinquishment in the Humboldt Wind Energy Area and expands the federal retreat from California offshore wind development beyond the Morro Bay area. The proposed Canopy Offshore Wind project had an estimated potential capacity of approximately 1.6 GW.

The agreement with the U.S. Department of the Interior covers RWE offshore wind leases off California, New York and Louisiana. The company plans to redirect approximately $900 million toward an investment in a liquefied natural gas project in Louisiana and another $300 million to support natural gas generation projects in the United States.

The California lease, OCS-P 0561, is held by RWE subsidiary Canopy Offshore Wind LLC and covers approximately 63,338 acres in federal waters off Humboldt County. RWE won the lease in the Bureau of Ocean Energy Management’s December 2022 California offshore wind auction and subsequently assigned it to Canopy Offshore Wind.

BOEM awarded five California offshore wind leases in 2022—three in the Morro Bay Wind Energy Area and two in the Humboldt Wind Energy Area. At the time of the auction, BOEM estimated that the five lease areas collectively had the potential to support more than 4.6 GW of offshore wind generation. Subsequent state planning estimates have placed the potential capacity of the five lease areas at approximately 4.5 to 7.6 GW as projects and technology have developed.

California has established a planning goal of developing up to 25 GW of offshore wind capacity by 2045. The California Energy Commission (CEC) estimates that offshore wind could provide approximately 10% to 15% of the state’s electricity needs.

Three of those original five leases are now subject to federal agreements to remove them from development.

In April 2026, Golden State Wind LLC agreed to relinquish its Morro Bay lease in exchange for a $120 million federal payment. The lease had been intended to support a proposed 2-GW floating offshore wind project.

In June, Invenergy agreed to relinquish four offshore wind leases, including its Morro Bay lease, under a $765 million federal agreement. Invenergy had estimated that its California lease could support approximately 1.5 GW of capacity.

California has challenged both Morro Bay lease relinquishment agreements. Attorney General Rob Bonta and the CEC have issued notices of intent to sue the Interior Department, arguing that the federal government violated the Outer Continental Shelf Lands Act and improperly circumvented California’s role in offshore energy decisions.

The RWE agreement could now provide the basis for a third California challenge, although the state has not yet announced a notice of intent to sue over the Humboldt lease.

The Humboldt withdrawal could also have broader consequences than the two Morro Bay cancellations because California has been planning significant infrastructure investments around development of an offshore wind industry along its northern coast.

The state has spent more than $100 million preparing ports, transmission systems and other infrastructure for offshore wind development. The CEC has also funded planning and improvements at Humboldt Bay as part of a broader effort to create port infrastructure capable of supporting floating offshore wind projects.

The loss of the Canopy project leaves only one of the two original Humboldt leases in the development pipeline and raises questions about the scale and timing of the commercial offshore wind industry needed to support those investments.

It also further complicates California’s 25-GW target, as the CEC’s offshore wind strategic plan would likely have required additional federal lease areas to reach the state’s 2045 goal.

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Attorney General Rob Bonta announced June 23 that California will challenge the federal action in court, contending the administration violated the Outer Continental Shelf Lands Act (OCSLA) and failed to follow required federal administrative procedures when terminating the leases. The state also argues the decision jeopardizes thousands of anticipated jobs, significant port and supply-chain investments, and California’s ability to meet its climate and clean electricity targets.

The dispute marks the latest escalation in the growing conflict between California and the Trump administration over energy policy. While the administration has prioritized expanding domestic oil and gas production and scaling back federal support for offshore wind, offshore wind is a key component of California’s long-term decarbonization strategy. The state’s goal of 100% clean electricity by 2045 includes the development of two to five gigawatts (GW) of floating offshore wind capacity by 2030 and 25 GW by 2045.

Golden State Wind’s 2-gigawatt offshore wind project in the Morro Bay Wind Energy Area was one of five offshore wind developments proposed for California federal waters. In April, Golden State Wind LLC agreed to voluntarily end its lease and to forego future offshore wind development in exchange for a repayment of $120 million in lease fees. The California Energy Commission (CEC) issued an administrative investigative subpoena to Golden State Wind LLC, seeking records on its agreement with the U.S. Department of the Interior.

On June 17, 2026, the Department of the Interior announced that Invenergy will “voluntarily terminate” four offshore wind leases, including OCS-P 0565 in Morro Bay. Invenergy estimated that the lease had 1.5 GW in capacity. The CEC has also subpoenaed a copy of the settlement agreement.

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Golden State Wind LLC agreed to voluntarily end Lease OCS-P 0564 in the Morro Bay Wind Energy Area and to forego future offshore wind development in exchange for a repayment of $120 million in lease fees. The company will receive the payment after it makes equal oil and gas investment outside of California.

California is evaluating potential legal action related to the lease buyouts, marking a significant escalation in tensions between California and the Trump administration over energy policy and offshore wind development along the Pacific Coast.

Golden State’s lease buyout is part of the Trump administration policy to stop offshore wind energy development. In January 2025, President Donald Trump temporarily withdrew the Federal Outer Continental Shelf (OCS) from offshore wind leasing and calls for a review of the Federal government’s leasing and permitting practices for wind energy projects. In August 2025, the Trump administration issued a series of orders to end offshore wind leasing in U.S. federal waters. A group of states challenged these actions.

The investigation over the lease buyout indicates the growing concern within California that federal actions could undermine the state’s long-term clean energy and climate objectives. Offshore wind is part of the CEC’s strategic plan to meet the state’s goal of 100% clean electricity by 2045. That plan calls for two to five gigawatts (GW) of floating offshore wind capacity by 2030 and 25 GW by 2045.

Golden State Wind had planned a 2-gigawatt offshore wind project in the Morro Bay Wind Energy Area capable of supplying electricity to approximately 1.1 million homes. The project was one of five offshore wind developments proposed for California federal waters. The lease areas were part of the Biden administration’s national target of 30 GW of offshore wind by 2030.

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Transportation Secretary Sean Duffy announced the withdrawal on August 29, 2025, stating that “[w]asteful, wind projects are using resources that could otherwise go towards revitalizing America’s maritime industry.”

There are five federal offshore wind leases off of California’s coast, including two sites for 1.5 GW of wind energy in the Humboldt Wind Energy Area (WEA). The lease areas were part of the Biden administration’s national target of 30 GW of offshore wind by 2030. The Humboldt Bay Heavy Lift Terminal was to be used to assemble and launch floating wind turbines for the Humboldt WEA.

Offshore wind is part of the California Energy Commission’s (CEC) strategic plan to meet the state’s goal of 100% clean electricity by 2045. The plan calls for two to five gigawatts (GW) of floating offshore wind capacity by 2030 and 25 GW by 2045.

The Trump administration has withdrawn support for offshore wind. In January, President Donald Trump withdrew the Federal Outer Continental Shelf (OCS) from offshore wind leasing and called for a review of the Federal government’s leasing and permitting practices for wind energy projects.

California and other states are challenging Trump’s pause on wind energy development. A coalition of states filed a lawsuit that seeks to block Trump’s withdrawal of the OCS from offshore wind leasing.

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The orders likely do not affect lease areas that have been awarded. There are five federal offshore wind leases off of California’s coast. This includes three sites for 3 GW of wind energy in the Morro Bay Wind Energy Area (WEA) and two sites for 1.5 GW of wind energy in the Humboldt Wind Energy Area (WEA).

Ending “Preferential Treatment” for Wind Energy

On July 29, 2025, U.S. Secretary of the Interior Doug Burgum issued Order No. 3437, “Ending Preferential Treatment for Unreliable, Foreign-Controlled Energy Sources in Department Decision-Making,” which directs the Department of the Interior to “end preferential treatment for unreliable energy sources like wind.” The order calls for identifying policies biased in favor of wind and solar energy and halting support for foreign-controlled energy supply chains. The Department will also review its policies to “identify and remove favoritism toward unreliable energy,” and will issue a report of recommended reforms under President Donald Trump’s July 7, 2025 Executive Order 14315 on “Ending Market Distorting Subsidies for Unreliable, Foreign Controlled Energy Sources.”

• Withdrawing Onshore Lands: The Department, according to Burgum’s statement, will also consider withdrawing onshore areas with “high potential for wind energy development to ensure compliance with legal requirements for multiple use and sustained yield of public lands.” The Department states that this means “balancing energy development with other important uses—such as recreation and grazing—and protecting BLM-managed lands, as envisioned by Congress.”

• Enhancing Stakeholder Engagement for Offshore Wind Development: The Department will also “strengthen its guidance to ensure more meaningful consultation regarding offshore wind development, especially with tribes, the fishing industry, and coastal towns.” The statement noted that the construction and operation of offshore wind turbines “have disproportionate impacts on these stakeholders, from disrupting commercial fishing to driving away tourism.”

• Reviewing the Consequences of Developing Wind Turbines on Migratory Birds: The Department will also conduct a review of “avian mortality rates associated with the development of wind energy projects located in migratory flight paths.” It will also determine whether such impacts are “incidental" takings of birds under the Migratory Bird Treaty Act and related laws. According to the statement, the Department will also review the applicable regulations “to determine the appropriate approach to permitting these activities, identifying violations of the applicable statutes, and related penalties.”

Rescinding Offshore Wind Energy Areas

On July 30, 2025, the Bureau of Ocean Energy Management (BOEM) announced that it is rescinding all designated Wind Energy Areas (WEAs) on the U.S. Outer Continental Shelf (OCS). The action is in accordance with Order No. 3437 and Trump’s January 20, 2025 order Temporary Withdrawal of All Areas on the OCS from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects.

The action ends the federal practice of designating large areas of the OCS for speculative wind development. It also terminates the more than 3.5 million acres offshore that the Biden administration designated as WEAs in the Gulf of America, Gulf of Maine, the New York Bight, California, Oregon, and the Central Atlantic. The Secretary’s memo stated that by terminating these Wind Energy Areas, “we are safeguarding our coastal environments and local economies from unchecked development, while ensuring our power grids are not underpinned by unreliable, subsidized energy sources.” The order likely does not affect lease areas that have been awarded, including those in the Humboldt WEA and the Morro Bay WEA.

Considering “Capacity Density” in Project Approvals

On August 1, 2025, Burgum issued Order No. 3438, which directs Department of the Interior agencies to consider a project’s “capacity density when assessing the project’s potential energy benefits to the nation and impacts to the environment and wildlife.” The Department is ordered to permit only energy projects “that are the most appropriate use of the federal land and resources.” The order is seen as an obstacle for wind and solar projects.

The order states that is will “more efficiently manage our nation’s energy resources by permitting projects that optimize energy generation while minimizing their environmental impact.” The order states that “[m]assive, unreliable energy projects, such as wind and solar, are inefficient uses of federal lands when compared to other energy sources with much smaller footprints, like nuclear, gas and coal.”

Reviewing Offshore Wind Regulations

On August 7, 2025, the Department of the Interior announced that it is launching a full review of offshore wind energy regulations to “ensure alignment with the Outer Continental Shelf Lands Act and America’s energy priorities under President Donald J. Trump.” This includes reviewing the Renewable Energy Modernization Rule, financial assurance requirements, and decommissioning cost estimates for offshore wind projects. The Department states that it wants to “ensure federal regulations do not provide preferential treatment to unreliable, foreign-controlled energy sources over dependable, American-made energy.” The review supports Order 3437, Order 3438, Trump’s memorandum on wind energy, and Executive Order 14315 on identifying and eliminating favoritism toward unreliable energy sources.

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The attorneys general argue that Trump does not have the authority to stop permitting and that agencies violate the related statutory authority in implementing the order. They also argue that the directive and the agencies implementation “jeopardize the continued development of a power source critical to the States’ economic vitality, energy mix, public health, and climate goals…”

“This reckless directive will not only reverse America’s progress in clean energy initiatives, but our communities will also suffer the economic consequences of the President’s misguided lawlessness,” Bonta said in a statement.

“The President has promised that his actions would lower energy costs, but instead, energy prices have only gone up and will continue to skyrocket,” Bonta said. “In California, we will continue to hold the President accountable for breaking the law and protect our significant progress in expanding cleaner, cheaper energy for American families.”

The coalition includes Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, New York, Oregon, Rhode Island, Washington and Washington, D.C.

There are five federal offshore wind leases off of California’s coast. This includes three sites for 3 GW of wind energy in the Morro Bay Wind Energy Area (WEA) and two sites for 1.5 GW of wind energy in the Humboldt Wind Energy Area (WEA).

The California lease areas were part of the Biden administration’s national target of 30 GW of offshore wind by 2030.

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The memorandum does not immediately affect rights under existing leases in the withdrawn areas but calls for a “comprehensive review of the ecological, economic, and environmental necessity of terminating or amending” existing wind energy leases.

The order requires the review to consider “the environmental impact of onshore and offshore wind projects upon wildlife, including, but not limited to, birds and marine mammals.” The assessment must also “consider the economic costs associated with the intermittent generation of electricity and the effect of subsidies on the viability of the wind industry.”

Shift from Biden Policy

Trump’s policy is a dramatic shift from the Biden administration’s efforts to promote offshore wind. Upon taking office in January 2021, President Joe Biden issued an executive order that set the goal of “doubling offshore wind” by 2030. The administration later announced a set of initiatives to increase offshore wind energy and set a national target of 30 GW of offshore wind by 2030.

More specific to California, the administration announced in September 2022 a multi-department effort to support the deployment of 15 GW of power by 2035 through new floating offshore wind platforms. The support for floating wind turbines was critical to California, as a steep continental shelf and increased wind speeds make floating turbines the primary technically feasible option along the west coast. (see Biden Administration to Support 15 GW of Floating Offshore Wind.)

Progress on offshore wind in federal waters proceeded apace during the Biden administration. In May 2022, the Bureau of Ocean Energy Management (BOEM) proposed an offshore wind lease sale for three offshore wind energy areas on the Outer Continental Shelf off the California coast: Humboldt, Morro Bay, and Diablo Canyon. In December 2022, BOEM auctioned five wind leases across the three areas, and in December 2024, BOEM released its draft environmental impact review of the projects.

Impact of Withdrawal on California Federal and State Projects

Trump’s withdrawal order poses a risk to the completion of the five federal leases off the coast of California. These leases could be subject to the proposed “ecological, economic, and environmental” review of existing leases, as stated in the order, further delaying projects that are already behind schedule.

The halt to Federal projects will likely disrupt the development of a U.S.-based supply chain for offshore wind that would serve both state and federal projects. This could impact California’s strategic plan to develop two to five gigawatts (GW) of floating offshore wind in state waters by 2030 and 25 GW by 2045.

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The report reviews the effects of the two leases in northern California off Humboldt County and three leases in Central California near Morro Bay. It discusses ways to mitigate the impacts on local communities, marine life, and the environment and the mitigation measures that BOEM might require for project approval.

Each leaseholder is required to submit their project plan for approval, and BOEM will subject each plan to an environmental review process. None of the leaseholders has released a project proposal.

The leases are part of the Biden administration’s national target of 30 GW of offshore wind by 2030. (see Offshore Wind Makes Initial Advancements in California.) The Biden administration also announced a multi-department effort to support the deployment of 15 GW of power by 2035 through new floating offshore wind platforms. (see Biden Administration to Support 15 GW of Floating Offshore Wind.)

In May 2022, the Department of the Interior issued a proposed offshore wind lease sale off the California coast, three years after BOEM identified three possible offshore wind energy areas on the Outer Continental Shelf off the California coast: Humboldt, Morro Bay, and Diablo Canyon.

In December 2022, BOEM auctioned the five wind leases, receiving bids totaling $757.1 million for five lease areas that total approximately 373,268 acres. The lease areas could produce more than 4.5 GW of electricity from floating offshore wind facilities.

In April 2024, the Department of Interior announced additional auction rounds for wind leases with a potential California lease in 2028.

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These grants are intended for these communities to engage in the process of offshore wind energy development, including activities related to consultation, participation in project planning and development, programs connecting members of tribal nations and underrepresented communities to careers in science, technology, engineering, and math, and the development and implementation of local and tribal benefit agreements.

The bill would require certain offshore wind developers to provide financial assistance to fund those activities and grants for the three-year period after the offshore wind entity executes an offshore wind lease. The bill would make a continuous appropriation by expanding uses for which program funds can be allocated.

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In addition to offshore wind, the plan includes 1 GW of power from geothermal power plants in the Imperial Valley and 2 GW of long-duration storage in San Diego County.

The decision implements AB 1373, which authorizes the state Department of Water Resources (DWR) to serve as a central procurement entity to procure diverse and clean energy resources until 2035. The procurement function is intended to help the state meet its renewable and zero-carbon energy resources and reliability goals. (Clean Energy Procurement Mechanism Enacted.)

Central procurement is critical to the state’s goal to achieve 100 percent zero-carbon and renewable energy resources by 2045. It is particularly critical to offshore wind development, as developers have not moved projects forward since the offshore lease auction in December 2022 and are waiting for a procurement plan.

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The three-volume report is the last of four reports required under Assembly Bill (AB) 525, which requires CEC to “evaluate and quantify the maximum feasible capacity of offshore wind to achieve reliability, ratepayer, employment, and decarbonization benefits” along with megawatt offshore wind planning goals for 2030 and 2045.

The three volumes cover:

• Volume I: Overview of AB 525 Strategic Plan

• Volume II: AB 525 Strategic Plan

• Volume III: Appendices for AB 525 Strategic Plan

The report incorporates three prior requirements of AB 525: (1) establish planning goals of 2,000 to 5,000 MW by 2030 and 25 GW by 2045; (2) provide a preliminary assessment of the economic benefit of offshore wind; and (3) provide a conceptual permitting roadmap.

The CEC and partner agencies will advance the strategic plan by “advancing and exploring the recommendations and strategies developed in the strategic plan.

Proposed Procurement Mechanism

In April, the California Public Utilities Commission (CPUC) requested comment on the need and process for centralized procurement of renewable energy resources with long lead times, including offshore wind. The CPUC is scheduled to publish a proposal in July for offshore wind procurement for the state.

AB 1373 authorized the state Department of Water Resources (DWR) to serve as a central procurement entity to procure diverse and clean energy resources until 2035. (see Clean Energy Procurement Mechanism Enacted.) Supporters of central procurement see it as critical to offshore wind, which is facing challenges to profitability from inflation, supply chain bottlenecks, and increasing financing costs. Offshore wind developers have not moved projects forward since the offshore lease auction in December 2022 and are waiting for California legislators to develop a procurement plan.

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The Safe Drinking Water, Wildfire Prevention, Drought Preparedness, and Clean Air Bond Act of 2024 would authorize bonds for safe drinking water, drought, flood, and water resilience, wildfire and forest resilience, coastal resilience, extreme heat mitigation, biodiversity and nature-based climate solutions, climate-smart, sustainable, and resilient farms, ranches, and working lands, park creation and outdoor access, and clean air programs. (See below.)

More specific to clean energy, the bill would authorize $850 million for “clean air” distributed for the following purposes:

• $325 million to the California Infrastructure and Economic Development Bank, CEC, or other organization for the public financing of clean energy transmission projects to meet the state’s clean energy goals;

• $50 million to CEC for grants or loans to support the Long-Duration Energy Storage Program; and

• $475 million to CEC to support certain activities related to offshore wind generation, including the expansion and improvement of port infrastructure.

Port Upgrades for Offshore Wind

Industry coalition Offshore Wind California requested $1 billion in bond funding for port infrastructure as “an important down payment” in the needed investment for port upgrades.

State legislators wrote Newsom and legislative leaders in March 2024 to urge them to include $1 billion in bond funding for port infrastructure as “a necessary step to launch this new industry, leverage federal funding and private investment, and – ultimately – sustain it through ongoing operation and maintenance of floating offshore wind structures.” Industry coalition Offshore Wind California requested $1 billion in bond funding for port infrastructure as “an important down payment” in the needed investment for port upgrades.

In urging Newsom to sign the bill, the coalition later wrote that that state’s goals for offshore wind “are at risk without a substantial funding commitment to jumpstart offshore wind port infrastructure projects, which will cost at least $12 billion to get the necessary port infrastructure ready for full scale build out…”

Offshore Wind California stated that the $475 million “is a critical next step to making California offshore wind a reality, which will ensure turbines can start spinning in time to deliver on the technology’s promise of providing grid reliability, helping address clean air, providing affordable energy once built to scale, and creating new family-wage jobs to meet our labor and workforce development goals.” The coalition also noted that the funding would “catalyze state and federal funding, in addition to leveraging private dollars that will help stimulate responsible floating offshore wind development while bringing this technology online. “

Distribution of $10 Billion

The $10 billion would be distributed for the following purposes:

• $3.8 billion for safe drinking water, drought, flood, and water resilience programs;

• $1.5 billion for wildfire and forest resilience programs;

• $1.2 billion for coastal resilience programs;

• $450 million for extreme heat mitigation programs;

• $1.2 billion for biodiversity protection and nature-based climate solution programs;

• $300 million for climate-smart, sustainable, and resilient farms, ranches, and working lands programs;

• $700 million for park creation and outdoor access programs;

• $850 million for clean air programs.

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Chumash Heritage National Marine Sanctuary

The Northern Chumash Tribal Council proposed the CHNMS in 2015, and the NOAA began the designation process in 2021. The sanctuary would cover 134 miles of coastline from Montaña de Oro State Park in San Luis Obispo County to Naples, California, along the Gaviota Coast in Santa Barbara County and would encompass 5,617 square miles of water. The CHNMS, however, conflicts with the Morro Bay wind lease areas, which are at the northern boundary of the proposed sanctuary area.

Under the preliminary agreement, the northern boundary of the CHNMS would initially be located south of Diablo Canyon, and north of Port San Luis and Avila Beach. The CHNMS boundary would later expand to connect to the Monterey Bay National Marine Sanctuary. This phased approach would allow for both the establishment of the marine sanctuary and for the continued development of offshore wind in the area.

This phased approach is meant to “foster this compatibility with environmentally sound offshore wind development and operation,” according to an agreement letter. The National Oceanic and Atmospheric Administration (NOAA), which last year proposed to remove permanently from the sanctuary an area that would allow developers to lay power lines on the seafloor, is expected to designate the area by mid-2024.

Offshore Wind in Morro Bay

As early as 2016, developers viewed Morro Bay as a possible area for offshore wind, as it is one of only two areas where offshore developers can connect cables to the power grid. In 2019, the Bureau of Ocean Energy Management (BOEM) identified Humboldt, Morro Bay, and Diablo Canyon as three possible offshore wind energy areas on the Outer Continental Shelf off the California coast.

In 2021, the Biden administration outlined its initiatives for a national goal of 30 GW of offshore wind by 2030. In May 2022, the administration issued a proposed offshore wind lease sale off the California coast for the Humboldt, Morro Bay, and Diablo Canyon wind energy areas. (see Offshore Wind Makes Initial Advancements in California.)

In December 2022, the administration auctioned three leases in the Morro Bay WEA, which covers approximately 240,898 acres (376 square miles) that could supply up to 3 GW of electricity. Equinor Wind US, LLC, Golden State Wind LLC, and Invenergy California Offshore LLC are the leaseholders for the three sites. The developments will install 1,000-foot-tall floating turbines anchored to the sea floor by cables located 20 to 30 miles off the coast.

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The California Energy Commission is required to develop a strategic plan for offshore wind energy off the California coast in federal waters. The strategic plan must include a plan to improve waterfront facilities that could support a range of floating offshore wind energy development activities. (See CEC Draft Strategic Plan for Offshore Wind Reports Significant Cost Estimates.)

Legislators and the governor are negotiating on $16 billion in climate bonds to be put before the voters. SB 867, a climate bond introduced in 2023, includes $2 billion for “clean energy projects,” but does not specify offshore wind.

California has set its offshore wind development target at 2 to 5 GW by 2030 and 25 GW by 2045. (see also California Increases Offshore Wind Targets)

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The draft report estimated the cost of transmission upgrades ranging from $7.51 billion to $41.35 billion by 2045. It also estimated that $11 billion to $12 billion is needed to upgrade existing port infrastructure at Humboldt and Long Beach to meet the 2045 goals. The report also projected that the industry could bring between 6,300 and 18,600 jobs, depending on the level of policy support.

The three-volume report is the last of four reports required under Assembly Bill (AB) 525, which requires CEC to “evaluate and quantify the maximum feasible capacity of offshore wind to achieve reliability, ratepayer, employment, and decarbonization benefits” along with megawatt offshore wind planning goals for 2030 and 2045.

The three volumes cover:

• Volume I: Overview of AB 525 Strategic Plan

• Volume II: AB 525 Strategic Plan

• Volume III: Appendices for AB 525 Strategic Plan

The CEC raised its development goals for offshore wind in 2022 after. The agency approved its final report on its development goals for offshore wind in California and raised its target to 2 to 5 GW by 2030 and 25 GW by 2045. The draft report set the targets at 3 GW by 2030 and 10 to 15 GW by 2045. (see also California Increases Offshore Wind Targets)

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The central procurement entity is intended to help the state meet its renewable and zero-carbon energy resources and reliability goals. Supporters of central procurement see it as critical to offshore wind, which is facing challenges to profitability from inflation, supply chain bottlenecks, and increasing financing costs. Offshore wind developers have not moved projects forward since the offshore lease auction in December 2022 and are waiting for California legislators to develop a procurement plan.

Additional Support

The law also provides other benefits for offshore wind developers. It would authorize the CEC to allocate funds to the Voluntary Offshore Wind and Coastal Resources Protection Program for workforce development grants. The legislation also requires that at least $6 million from the General Fund is available for the 2024-25 fiscal year to support comprehensive, regional baseline environmental monitoring and research into the impacts of prospective offshore wind energy development.

Offshore Permitting

The law would also state the intent of the legislature to appropriate additional resources for offshore wind permitting as required in SB 122. That law, a budget trailer bill, expresses the intent of the legislature that the administration conduct an assessment of offshore wind energy permitting and related resource needs across applicable state entities.

Accelerated Transmission Permitting

In addition to the central procurement of clean energy, the bill also accelerates permitting for electric transmission projects and strengthens the strategic reliability reserve to help prevent its misuse of the new Strategic Reliability Reserve. The agreement follows the recently signed infrastructure streamlining package that aims to accelerate construction timelines on the projects necessary to achieving the state’s clean energy goals. (see Newsom Signs CEQA Reform Bill into Law.)

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The lease areas included three sites for 3 GW of wind energy in the Morro Bay Wind Energy Area (WEA) and two sites for 1.5 GW of wind energy in the Humboldt Wind Energy Area (WEA). California’s steep continental shelf and increased wind speeds make floating turbines the primary technically feasible option along the west coast. More than 40 companies bid for the leases. The auction winners do not have approval to construct wind energy facilities but must first undergoes environmental reviews and project approvals.

The California lease areas part of the Biden administration’s national target of 30 GW of offshore wind by 2030. (see Offshore Wind Makes Initial Advancements in California.) In May 2022, the Department of the Interior issued a proposed offshore wind lease sale off the California coast, three years after BOEM identified three possible offshore wind energy areas on the Outer Continental Shelf off the California coast: Humboldt, Morro Bay, and Diablo Canyon.

Leases and Provisional Winners  

• Humboldt (OCS-P 0561): RWE Offshore Wind Holdings, LLC is the provisional winner of the 63,338-acre lease with a bid of $157,700,000.

• Humboldt (OCS-P 0562): California North Floating, LLC is the provisional winner of the 69,031-acre lease with a bid of $173,800,000.

• Morro Bay (OCS-P 0563): Equinor Wind US, LLC is the provisional winner of the 80,062-acre lease with a bid of $130,000,000.

• Morro Bay (OCS-P 0564): Central California Offshore Wind, LLC is the provisional winner of the 80,418-acre lease with a bid of $150,300,000.

• Morro Bay (OCS-P 0565): Invenergy California Offshore LLC is the provisional winner of the 80,418-acre lease with a bid of $145,300,000.

Credit for Workforce Training and Supply Chain Development

The lease sale included a 20-percent credit for bidders who committed to making financial contributions to programs or initiatives that support workforce training programs or to the development of a U.S. domestic supply chain for the floating offshore wind energy industry.

Credit for Community Benefit Agreements

The auction also included 5 percent credits for bidders who committed to entering community benefit agreements (CBAs). The first type of CBA is “with communities, stakeholder groups, or Tribal entities whose use of the lease areas or use of the resources harvested from the lease areas is expected to be impacted by offshore wind development.” The second type of CBA is a General CBA with “communities, Tribes, or stakeholder groups that are expected to be affected by the potential impacts on the marine, coastal or human environment from lease development.”

Communication Requirements

Lessees are required to engage with “Tribes, ocean users, and local communities” that may be affected by their lease activities. This engagement must allow for “early and active information sharing, focused discussion of potential issues, and collaborative identification of solutions.” The engagement activities must be reported to BOEM.