A federal judge has ruled that a Texas-based oil firm can continue to pump oil through pipelines along the Santa Barbara County coast under an emergency order from the Trump administration. He also transferred much of the regulatory authority over the oil operation to federal officials, stripping the state of its oversight.
It’s a blow for California officials and environmental activists who have fought the controversial oil project from Sable Offshore Corp. for months, citing concerns about pipeline safety — and comes as the Trump administration continues to push efforts that could undermine the state’s ability to protect its treasured coastline.
U.S. District Judge Stephen V. Wilson, however, also chastised and fined Sable, ordering the Houston-based company to pay the state almost $1.5 million for violating a federal consent decree that outlined specific regulations for restart, which Sable didn’t abide by.
The sweeping Wednesday ruling provides the most in-depth judicial review yet of the Trump administration’s intervention in the offshore project, in particular a U.S. Department of Energy order that called on Sable to begin pumping crude and invoked the Defense Production Act in the interest of national security. Sable executives, who have continued to court the Trump administration, relied on that order to revive the decades-old oil operation, which had been dormant since a pipeline burst near Refugio State Beach in 2015, causing one of the state’s worst oil spills. Prior to that, Sable’s efforts to restart drilling had been stalled for months as the company continued to clash with California regulators.
“The [Defense Production Act] Order does, as a matter of law, preempt the enforcement of any state law that conflicts with Sable’s ability to operate the onshore pipeline,” Wilson wrote in his 45-page ruling filed Wednesday in U.S. District Court in California’s Central District.
Although the ruling will likely face appeal, legal experts said it could have implications for how the current administration intervenes in other energy projects or tries to supersede other state laws and regulations.
“It’s not just a California issue,” said Allan Marks, a professor at UCLA’s law school who has a background in energy law. “What this kind of lays the groundwork for is the federal government — the Department of Energy or the Department of the Interior — [to use] … the Defense Production Act as an excuse to run roughshod over state environmental law.”
The judge did make clear that the new oversight system would still include all state requirements for the pipeline, but that compliance would be regulated by the U.S. Pipeline and Hazardous Materials Safety Administration, instead of state agencies. The ruling called the new setup a balance between “protecting energy security and the ecology of California’s coast.”
Although California loses its direct oversight of the pipelines, Sable will still have to share biannual reports with the state, the ruling said, and “if California identifies noncompliance, it can vindicate its interest before this court.”
The ruling came as the court considered “issues relevant to the legality and consequences of actions by … Sable” from four consolidated cases, most notably requests by California to enforce the long-settled consent decree, and federal government to terminate those terms, the decision said.
Linda Krop, chief counsel for the Santa Barbara-based Environmental Defense Center, said she was disappointed by much of the ruling, namely that it “allows the federal government to usurp the state’s authority.”
But Krop, whose organization has been leading the fight against the Sable project, said the judge took a “broad interpretation” of the federal government’s actions and application of the Defense Production Act. But she pointed out that U.S. District Judge Dolly M. Gee recently penned a more narrow reading of the act in another Sable-related lawsuit, and said she hoped an appeals court would do the same.
She did, however, commend the judge for finding “that Sable should not have violated a court order.”
“They cannot unilaterally decide what the requirements are, because that has been their pattern,” Krop said.
Last year, Sable was fined more than $18 million for failing to obtain necessary permits from the California Coastal Commission before it began repair work on its pipelines. It is also facing criminal charges that it violated state environmental law, a congressional investigation into the company’s practices and lawsuits related to claims of insider trading.
Representatives for Sable did not immediately respond to a request for comment.
A spokesperson for California Atty. Gen. Rob Bonta — who has already filed at least two cases with the U.S. 9th Circuit Court of Appeals related to Sable’s offshore project — declined to comment on specifics from the ruling or how its office might respond. But in a statement, the spokesperson said that the “Trump Administration continues to allow Sable to profit at the expense of our environment and public health.”
“California will continue to fight back against attempts to interfere with our sovereign authority and we’re reviewing all of our legal options,” the statement said.
Sable reported almost $1.4 million in revenue from this year’s second quarter, according to the company’s most recent SEC filing, selling about 38,000 barrels of oil a day in July. It owns and operates the entire Santa Ynez Unit, which includes three offshore platforms in federal waters, an onshore processing plant and pipelines that transport the crude onshore and for sale.
