Federal Government Mandates Offshore Drilling Restart in California
The U.S. federal government has ordered the restart of offshore oil drilling and associated pipeline operations along California's Central Coast, leveraging the Defense Production Act (DPA). The directive, issued by Energy Secretary Chris Wright on Friday, mandates Sable Offshore Corp. to resume operations of its Santa Ynez Unit and pipeline system off Santa Barbara County. This action follows a U.S. Department of Justice (DOJ) legal opinion asserting presidential authority to override state regulations.
The order comes amidst rising global fuel prices and an ongoing conflict impacting energy markets. California officials and environmental groups have expressed strong opposition and initiated legal challenges. Sable Offshore Corp. announced on Monday that oil flow had resumed through the pipelines.
The U.S. federal government has ordered the restart of offshore oil drilling and associated pipeline operations along California's Central Coast, leveraging the Defense Production Act (DPA).
Background: Sable Offshore Corp. and Pipeline History
The Santa Ynez Unit, which includes three offshore rigs in federal waters, an onshore processing facility (Las Flores Canyon Processing Facility), and associated pipelines, has been largely dormant since a 2015 oil spill. The incident involved a pipeline rupture, and the pipeline was subsequently found to be severely corroded. Sable Offshore Corp., a Houston-based firm, acquired this infrastructure in 2024 from ExxonMobil.
Since its acquisition, Sable has sought to reactivate the operations but has faced legal and regulatory challenges, including an inability to secure necessary permits and approvals from California state and local officials. State regulators have cited safety and environmental concerns, along with instances of alleged noncompliance by the company, as reasons for withholding approvals. A state judge had previously ruled that Sable must comply with state and local requirements for a restart, as outlined in a federal consent decree from the 2015 spill.
In January, California Attorney General Rob Bonta challenged a Trump administration decision to transfer regulatory oversight of Sable's oil pipelines from the state's fire marshal to the U.S. Pipeline and Hazardous Materials Safety Administration, characterizing it as an "unlawful power grab." California also initiated legal action against the federal government in January over its approval of Sable's plans, asserting the state's regulatory authority over pipelines within its counties.
The Federal Directive and Legal Justification
On Friday, President Trump's administration moved to compel the restart of operations. The U.S. Department of Justice's Office of Legal Counsel had previously issued a 22-page legal opinion, asserting that the President possesses the authority to override California laws and regulations impeding the operation.
The DOJ opinion stated that a presidential order under the Defense Production Act (DPA) of 1950 "would preempt the California laws currently impeding Sable from resuming production and operating the associated pipeline infrastructure," noting that such an order "may displace sanctions for non-compliance with a contrary consent decree."
The DPA grants the president broad powers to influence domestic industry for national defense or emergencies. Following this, U.S. Energy Secretary Chris Wright issued a directive invoking the DPA, ordering Sable Offshore Corp. to restore operations. Secretary Wright stated that the action aims to strengthen America’s oil supply and restore a pipeline system deemed vital for national security and defense, ensuring reliable energy for West Coast military installations.
The Department of Energy estimates that the Santa Ynez facilities could produce approximately 50,000 barrels of oil daily, potentially replacing nearly 1.5 million barrels of foreign crude each month. The federal action occurred amidst rising global fuel prices, with crude oil reaching $100 per barrel and average gas prices in California exceeding $5.40 per gallon. The International Energy Agency (IEA) recently ordered the largest release of government reserves in its history, and sources indicated that a conflict involving Iran was impacting approximately 20 million barrels per day from the Strait of Hormuz.
California's Strong Opposition and Legal Challenges
California officials have strongly opposed the federal directive.
Governor Gavin Newsom characterized the action as "an attempt to illegally restart a pipeline whose operators are facing criminal charges and prohibited by multiple court orders from restarting."
He pledged to initiate legal action against the executive order, stating that California would oppose attempts to compromise coastal communities, the environment, and the state's coastal economy.
On Saturday, the California Department of Parks and Recreation issued a notice demanding that Sable Offshore Corp. remove the pipeline from Gaviota State Park. The department formally denied the company’s application to operate the pipeline through the protected area, citing "excessive drain on state resources and incompatibility of their project with the park unit." Following Sable's announcement of resumed operations, the agency indicated it would take further action.
The California State Lands Commission convened an emergency meeting on Monday night to consider additional litigation concerning a potential violation of a federal consent decree that delegates pipeline oversight to specific state agencies.
Environmental Concerns and Criticisms
Environmental groups have voiced significant concerns and stated intentions to challenge the federal order. The Environmental Defense Center stated it is exploring options to challenge what it described as an "unlawful order" and an "abuse of executive power."
The Center for Biological Diversity characterized the use of the DPA as "radical and unprecedented," stating it misuses a Cold War-era law to assist an oil company in bypassing state laws protecting the coastline.
These groups have asserted that mandating the restart of these pipelines would not reduce gas prices but would increase the risk of another oil spill and reintroduce the largest single source of greenhouse gas emissions in Santa Barbara County. Concerns were also raised about the precedent this action could establish for bypassing safety requirements in other states.
Sable Offshore Corp. Resumes Operations Amid Legal Battle
Sable Offshore Corp. announced on Monday that it had resumed oil flow through its pipelines traversing Santa Barbara, San Luis Obispo, and Kern counties, marking the first such flow in over a decade. The company stated it is prioritizing California consumers by increasing the domestic supply of crude oil into the California market. Jim Flores, Sable's chief executive, indicated the company's intent to work with the Department of Energy to comply with the DPA.
Sable acknowledged the letter from California State Parks and subsequently filed a new lawsuit against the agency in federal court on Sunday, seeking confirmation of its right to operate through Gaviota State Park under the presidential executive order. The company stated it maintains that it has complied with all relevant California laws and regulations and claims the pipeline has been fully repaired.
Sable had resumed production at one of its three offshore oil platforms in May but faced impediments in transporting oil through onshore pipelines. As of the past weekend, the company reported 540,000 barrels of processed crude oil in storage. Sable plans to activate its two other offshore rigs by June and initiate sales by April 1, at a rate of 50,000 barrels per day. The ongoing legal challenges are expected to test the authority of the Defense Production Act to potentially override California laws, regulations, and a federal consent decree.