This post concerns one of three Investor-State disputes hiding in plain sight in U.S. District Courts in Washington DC and Virginia. The State involved, a defendant in each instance, is the United States of America (acting through its Department of the Interior). The Investor in the first of the three cases is a Danish company called Orsted, a wind farm developer, operating in the U.S. through U.S. affiliates and joined by a joint venture partner. The Investor in the second case in DC is a Norwegian company called Equinor.
Last week, Orsted scored a victory (of unknown duration) when the U.S. District Court in Washington suspended a Department of the Interior “Stop Work Order” issued at year-end 2025, the desired effect of which was to prevent completion in the coming weeks of an 87% complete wind farm off the Rhode Island shore, fully permitted by the U.S. and located in ocean waters leased from the U.S. The Stop Work Order, purporting to be effective for 90 days and renewable, claimed “national security concerns,” but provided nearly no supporting detail of any such concerns that had not already been addressed in the extensive regulatory/permitting process that took place over more than a decade — on the basis of which Orsted (and partner) had spent $5 billion to bring the Rhode Island wind farm to near completion and had made power purchase agreements to sell its megawattage to electric utilities in Connecticut and Rhode Island.
It is widely understood in our arbitration world that Investor-State disputes are notoriously difficult to settle through mediation, in large part because States find it difficult to back down from – or be seen as backing down from — a public policy position. Imagine how difficult mediation might be if the Defendant is essentially a proxy for the incumbent President of the United States.
That is the challenge I set for myself as your Commentator here. How might the mediator proceed, if this DC case (or any of the related cases now awaiting decision) were to be mediated, thus involving an attempt to talk the President of the United Stares into cutting a deal to permit at least one if not all the wind farms in these three cases to complete construction and begin operations?
I now take you to the (mock!!) first breakout session of the Mediator with Counsel for the Department of the Interior (a Zoom session, while Orsted’s counsel awaits…). I note preliminarily the actual status of the case: the January 12 preliminary injunction suspends the December Stop Work Order but the USA could appeal, or issue a new Stop Work Order, or take other measures to interfere with the progress of work. Also the ongoing case involves large damages claims, for investment costs plus lost profits, based on an alleged 5th Amendment taking without due process and/or violations of the Administrative Procedure Act by arbitrary and capricious agency action.
With that introduction, we take you now to the Mock Mediation:
The Mediator: First Bill (may I call you Bill?) I want to thank you for securing your clients’ agreement to the confidentiality stipulations in my engagement agreement. Much appreciated by me and I’m sure by Plaintiff.
Bill: Happy to do what is in my power to do, Marc. And I’m confident you understand what I mean.
The Mediator: I do. Now a big part of my job here is to listen. And of course I have carefully read your pre mediation statement and thanks for that. But why don’t you walk me through your version of how this should come out, what your client wants to achieve here .
Bill: It’s pretty simple Marc. My client wants these ugly windmills pulled out of the water and removed, the entire installation pulled out and de commissioned. They can present a bill to the USA for the de commissioning, capped at $2.5 million . We don’t owe Orsted a penny of their $5 billion investment- they took a chance and knew very well that windmills would be finished in this country on Day 1 if President Trump was re elected. And lost profits is a non-starter. These windmills are money losers.
The Mediator: I’m willing to share that proposal with Plaintiff, Bill, but if I do this mediation might be very short and unsuccessful. I’m not sure that’s good for your client.
Bill: Then when you report it to Plaintiff tell them also that they can either accept it or my client will have the de commissioning done by the Coast Guard and the Navy. They have this planned out and costed out with a team of engineers in Newport .
The Mediator: I hear you Bill. But if you don’t mind I’d like to share a couple of thoughts. Maybe sooner than your client would like but would you indulge me?
Bill: You seem like a sensible person Marc. Go ahead.
The Mediator: OK thanks. So … I don’t think Plainitff is looking for the USA to make any change in the President’s opposition to wind-generated electric power. They are looking just to finish their wind farm off Block Island and meet their commitments to sell megawatts from the wind farm to Rhode Island and Connecticut. It’s about the Government honoring its contracts and I think your client is willing to see it that way. He more or less said so. He said some stupid person working for Biden made a commitment. And whether that person was stupid or not – which is to say whether wind power is good or bad public policy – it’s certainly good for your client to stand by USA contracts with Orsted just like it would with anyone else . Maybe these contracts benefit “blue states” Rhode Island and Connecticut. But maybe your client has more to lose by being seen as breaking government contracts that he has to gain by breaking contracts for a small gain in ridding the country of wind power.
Bill: You make a lot of sense Marc . At least to me. But I don’t know what my client would say. I can imagine he will be worried about Orsted and the Governors of Rhode Island and CT spinning this as a litigation victory for wind power.
The Mediator: Maybe 🤔 there could be a Joint Statement and that could be the end of it. No other statements. Everyone claims they did well for the workers and the whales and the fish and the people in cold states who want heat in the winter, and Orsted re-commits to the promises it has made about how to respond if there is ever a national security issue like radar interference .
Bill: Marc why don’t you draft something I can share with the Secretary and the White House. I will report on our conversation in the meantime.
The Mediator: Let me run this by Plaintiff counsel and see if there is traction
Bill: OK. Let me know. Thanks Marc
