California v. U.S. Department of the Interior

On September 22, 2026, California filed a suit challenging the cancellation of Invenergy California Offshore LLC’s (Invenergy's) 80-418-acre lease located approximately 22 miles off California’s central coast. The federal defendants canceled the lease via a settlement pursuant to which Invenergy agreed to the termination of its lease and agreed to invest the amount paid for the lease in eligible “conventional energy projects” such as “liquefied natural gas” and “non-renewable based electricity” in exchange for a payment of the same amount. California asserted that the lease cancellation was arbitrary and capricious, including because the defendants did not provide a reasoned explanation, instead relying on the “bare invocation of ‘national security issues,’” and because the defendants failed to justify their changes in position; failed to consider or weigh California’s financial, environmental, and sovereign reliance interests, which included investment of over $100 million to support offshore wind development in support of economic growth, new jobs, and progress toward clean energy and climate policy goals; and failed to consider alternatives or to provide a “genuine justification” for cancellation. In addition, California asserted violations of the Outer Continental Shelf Lands Act, including its limits on compensation for lease cancellation, and the Coastal Zone Management Act. California also asserted that cancellation of the lease constituted a major federal action that should have undergone review under the National Environmental Policy Act. The complaints also asserted that the settlement agreements presented “multiple abuses of federal appropriations process,” including violations of the Judgment Fund Act, the Administrative Procedure Act, the Antideficiency Act, the Purpose Statute, and the Miscellaneous Receipts Act, as well as the separation of powers doctrine and the Spending and Appropriations Clauses of the Constitution. In addition, California asserted that the lease cancellations and settlement agreements were ultra vires actions.