backThe first year of President Trump’s second term in office was marked by notable regulatory actions enacted in pursuit of the administration’s political goals, which included an effort to stymie the momentum of the wind energy industry. The latest high-impact development in these efforts occurred on December 22, 2025, when the U.S. Department of Interior (“DOI”) suspended construction on five offshore wind projects along the Atlantic coast. This followed the U.S. Department of Energy’s October announcement that it had terminated 321 financial awards supporting 223 energy projects, as well as a stop-work order issued against Orsted’s offshore wind project, Revolution Wind, in August 2025. Representatives of the administration have variously cited national security concerns, permit noncompliance, environmental concerns, and economic viability as some of the reasons for the stop-work orders and award terminations, leaving foreign and domestic investors in these projects to grapple with the shifting and uncertain bases underlying changes to the U.S. investment landscape.
Investors in these projects have responded in part by filing lawsuits against the administration in U.S. federal courts. In September 2025, the Danish multinational energy company Orsted sued the administration for the stop-work order against Revolution Wind, alleging that it was arbitrary and capricious and seeking an injunction to block enforcement of the order, which was ultimately granted. The DOI’s latest work suspension has prompted additional litigation against the government brought by domestic energy companies Dominion Energy and OSW Project LLC, and it remains possible that other affected investors may follow suit.
While federal courts are a viable forum to seek recourse against costly regulatory changes, foreign investors may also have access to Investor-State Dispute Settlement (“ISDS”) depending on the presence and terms of the bilateral or multilateral investment treaties and trade protection agreements between the U.S. and the investor’s home country. ISDS allows investors to bring disputes before a neutral tribunal, i.e., outside the domestic court system of either the U.S. or the investor’s home country, for State actions that violate the investor protections included in the treaty. ISDS clauses, which are found within the treaty articles governing the settlement of disputes, may establish conditions to filing an international arbitration – such as requiring attempts at amicable settlement or pursuit of local remedies – and often include reference to arbitral institutions that may administer the dispute.
While the substantive terms within each treaty differ, they typically include protections against unlawful expropriation of investments and mandate that the State provide Fair and Equitable treatment (“FET”) and Full Protection and Security (“FPS”) to investments. Regulatory instability, characterized by regulations that fail to serve a legitimate public purpose and are otherwise arbitrary, unreasonable, inconsistent, discriminatory, or contrary to the investor’s legitimate expectations relating to the investment environment, frequently serves as the impetus for successful investor claims that a State has breached the FET protection of a treaty. International arbitration tribunals assessing such claims recognize that States are entitled to some deference for the right to regulate, particularly on matters of national security; however, it is well-established that this deference is not unlimited, and States cannot, therefore, adopt measures for a purpose other than the stated protection of the State’s security interests. 1See, e.g., Qatar Pharma et al. v. Saudi Arabia, ICC Case No. 25830/A YZ/ELU, Final Award, 23 October 2024, ¶ 861.
Where the administration’s actions violate the FET and other protections contained within a treaty, and where the treaty contains a provision for ISDS, an investor may initiate international arbitration proceedings under the terms of the ISDS clause. In light of recent regulatory shifts, it is important that foreign investors with ongoing projects in the U.S. and those who are contemplating investing in the U.S. dust off their country’s treaties with the U.S. and understand whether and to what extent they are protected under international investment treaty law. Importantly, many of the bilateral Friendship, Commerce, and Navigation (“FCN”) treaties that remain in force between the U.S. and some European countries do not contain ISDS provisions, and alternative recourse must be sought through other means.
The wind energy industry is but one target of recent executive measures that have cost foreign and domestic investors millions of dollars in delayed construction and completion of projects. As foreign direct investment continues to proliferate in the U.S., companies in all industries and sectors who are contemplating an investment opportunity should examine the investment treaties at their disposal and evaluate all means to ensure their investment’s protection, should the regulatory winds blow in their disfavor.