California has initiated legal action against the Trump administration and Golden State Wind following a federal decision to cancel an offshore wind project planned off the state’s Central Coast.
The suit challenges an agreement where Golden State Wind would receive a $120m reimbursement from the federal government and commit to investing an equivalent amount in fossil fuel projects outside California.
The cancelled project stemmed from a 2022 auction in which Golden State Wind secured a lease for an offshore wind site in the Morro Bay Wind Energy Area, originally valued at $120m.
In addition, the developer had pledged more than $30m towards workforce training, supply chain initiatives, and support for local communities, according to California officials.
The Department of the Interior (DOI) announced the termination of the lease in April 2026, citing national security concerns.
The arrangement also requires Golden State Wind to exit future offshore wind ventures in California and redirect its investment into out-of-state fossil-fuel developments.
State representatives argue that the cancellation occurred despite years of federal review and prior approvals involving the Department of Defense.
In the lawsuit, California contends that federal officials exceeded their authority under the Outer Continental Shelf Lands Act and improperly used the Judgment Fund Act, as the payment was not part of any legal settlement from ongoing litigation.
The state asserts the decision undermines California’s commitments to climate and clean energy targets and threatens significant economic activity, including over 174,750 jobs and upwards of $100m already invested in port and transmission infrastructure to support offshore wind.
Attorney General Rob Bonta and the California Energy Commission (CEC) have asked the court to halt implementation of the agreement and restore the lease.
They maintain that cancelling the project could reverse progress towards the state’s strategic plan to generate 25GW of offshore wind power by 2045, which is intended to power up to 25 million homes and contribute as much as 13% of the state’s electricity supply.
Attorney General Bonta said: “The Trump Administration’s backroom buyout with Golden State Wind to stop offshore wind development in favour of gas and oil drilling is, unfortunately, a classic playbook for them to line the pockets of their Big Oil donors.
“Let’s be clear: California will continue to aggressively fight back against the Trump administration's outrageous abuse of taxpayer dollars to abandon offshore wind investments that could have delivered union-paying jobs and reliable clean energy to Californians.”
The CEC has also sought further documentation regarding the deal through administrative subpoenas as it presses its challenge in court.
