Seven Democratic-led states have sued the Trump administration over its decision to cancel a major offshore wind lease off the coast of New York and reimburse French energy giant TotalEnergies up to $795 million for abandoning the project, escalating the legal battle over the administration’s efforts to curb offshore wind development in the United States.

The lawsuit, filed on June 2 in the U.S. District Court for the District of Columbia, is led by New York and joined by Connecticut, Maine, Massachusetts, New Jersey, Rhode Island and Vermont. The states are seeking to overturn a March agreement between the U.S. Department of the Interior and TotalEnergies that terminated offshore wind lease OCS-A 0538 in the New York Bight.

Under the agreement, TotalEnergies agreed to surrender the lease and invest approximately $795 million in oil and gas projects, while the federal government would reimburse the company for the same amount it paid to acquire the lease in a 2022 federal auction. The administration also said TotalEnergies pledged not to develop new offshore wind projects in the United States.

New York Governor Kathy Hochul condemned the arrangement, describing it as a “pay-not-to-play scheme” designed to pressure a private company to abandon offshore wind development in favor of fossil fuel investments.

“This pay-not-to-play scheme pressuring a foreign company to forego planned offshore wind projects in America in favor of gas and oil drilling is an outrageous abuse of taxpayer dollars that hurts our ability to meet our energy needs, create good jobs, and help secure American energy independence while reducing emissions,” Hochul said.

New York Attorney General Letitia James argued that the administration had repeatedly failed in court to halt offshore wind projects and had instead crafted an unlawful agreement to achieve the same objective.

“The Trump administration is once again trying to kill clean energy projects and destroy good-paying jobs for New Yorkers,” James said. “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 instead.”

The lease area covered more than 84,000 acres in the New York Bight, a shallow-water region between Long Island and the New Jersey coast. According to the complaint, projects planned for the site were expected to have a combined capacity of more than 2.7 GW, enough to power over 1.3 million homes in New York and New Jersey.

The development was expected to support two projects: Attentive Energy One, which would have supplied electricity directly to New York City, and Attentive Energy Two, intended to serve New Jersey. New York officials estimate the project could have generated $25.6 billion in economic benefits over its lifetime, including around $10 billion in energy bill savings and more than 1,700 jobs.

In their complaint, the states argue that the cancellation undermines long-term energy planning, threatens grid reliability and jeopardizes state climate targets. They contend that offshore wind has been incorporated into energy strategies and statutory clean energy mandates across the Northeast for years.

The lawsuit also challenges the administration’s justification for terminating the lease on national security grounds.

According to the complaint, federal agencies conducted years of analysis and consultation before awarding the lease in 2022. The states argue that the Department of the Interior failed to demonstrate that continued development posed a legitimate threat to national security and did not follow the procedures required under federal law before canceling the lease.

The complaint points to a broader pattern of actions taken by the Trump administration against the wind industry since the president returned to office in January 2025. On his first day back in office, Trump halted federal approvals for wind energy projects and withdrew offshore areas from consideration for future leasing. Courts later ruled against several of those measures.

The states also cite public statements by President Donald Trump and Interior Secretary Doug Burgum criticizing wind energy. According to the filing, Trump declared that his goal was “not to build any windmills in this country,” while Burgum stated that offshore wind had “no future” under the administration.

At the center of the legal challenge is whether the federal government had the authority to cancel the lease and use the Judgment Fund to reimburse TotalEnergies.

The attorneys general argue that the agreement violates the Outer Continental Shelf Lands Act because Interior did not hold a required hearing, did not adequately justify the cancellation and failed to coordinate with affected states. They further contend that the payment is not a legitimate legal settlement and therefore cannot be financed through the Judgment Fund, which is generally reserved for resolving actual legal claims against the federal government.

The coalition is asking the court to declare the agreement unlawful, vacate both the settlement and the lease cancellation, and prevent the administration from taking any further steps to implement the deal.

The case represents the latest clash between Democratic-led states and the Trump administration over the future of offshore wind, a sector that many Northeastern states view as essential for meeting rising electricity demand, strengthening energy security and achieving long-term decarbonization goals.