Justice Department Paves Way for Federal Oversight in Contentious California Pipeline Restart

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Written by Eric Funderburk for IIR News Intelligence (Sugar Land, Texas)

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Summary

Last week, the Department of Justice cleared the way for President Donald Trump to order the restart of the Santa Ynez production and pipeline system off the coast of Santa Barbara, California, which spilled more than 100,000 gallons of oil in 2015.

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Latest Ruling Comes from Feds

After much legal wrangling between the federal government and California's regulators, the U.S. Department of Justice has issued its opinion that U.S. President Donald Trump can override California state regulations and law and allow Texas company Sable Offshore to restart an oil pipeline and production platforms off the coast of Santa Barbara. The facilities were closed in 2015, following a spill of more than 100,000 gallons (some estimates range much higher), including 21,000 gallons into the Pacific Ocean, affecting 1,500 acres of shoreline and 2,200 acres of marine habitat.

The Justice Department said that under the 1950s-era Defense Production Act, typically meant for emergency situations but increasingly dusted off to speed U.S. industrial development, President Trump can bypass California regulators and order the restart of the units in order to help meet U.S. needs for defense and emergency preparedness.

The Back & Forth

At the time of the 2015 oil spill, the Santa Ynez platforms were owned by Exxon Mobil Corporation, while the ruptured pipeline was owned by Plains All American. The platforms and pipeline have remained closed since 2015, with little changing until 2024, when both the pipeline and associated production system were acquired by another Houston-headquartered company, Sable Offshore, which since that time has attempted to restart the Santa Ynez system.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Pipelines and Production Project Databases can learn more by viewing the related project reports, which include reports on the restart of three offshore platforms and an associated processing plant, as well as pipeline work.

However, that attempted restart has hit multiple roadblocks from California officials, including some agreements made with Plains All American. State regulators say Sable has not sufficiently repaired the corrosion that resulted in the spill.

Sable has called on the Trump administration to help it bypass state regulations using federal law. In December, the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) reclassified the pipeline as being under federal jurisdiction and issued a waiver for Sable to restart operations.

But the fight between the state and the feds still wasn't finished. Despite being under federal auspices, an injunction was issued against the restart until Sable received clearance from the Office of the State Fire Marshal. Sable argued that the injunction on the restart didn't apply as it was agreed with Plains All American, had owned the pipeline at the time of the agreement.

Late last month, Judge Donna Geck of the Santa Barbara County Superior Court disagreed, ruling that despite originating with Plains, the March 2020 agreement regarding fire marshal permission was passed on to Sable with the ownership of the system. In her ruling, Geck added that despite being taken over by the PHMSA, the state fire marshal still had to sign off on the project.

The decision prompted Linda Krop, the Environmental Defense Center's chief counsel, to say, "From a legal standpoint, this project is stuck in the mud," according to Santa Barbara County's Noozhawk. "Not only does Sable still need approvals from the state fire marshal, but it has failed to get other necessary approvals, including an easement to operate through Gaviota State Park and a new coastal development permit from the California Coastal Commission," she said.

Department of Justice Opinion

However, less than a week after Judge Geck's decision in the county's Superior Court, the U.S. Department of Justice stepped in, potentially taking away most of California's authority upholding the restart, including the fire marshal's permission and the state park easement, and putting much more oversight of the project into the hands of the much more permissive federal government.

Last week, the Justice Department issued the opinion that it was within Trump's power to employ the Defense Production Act to order the restart of the pipeline, potentially negating most state oversight.

The Fire Marshal's office said it was reviewing the Justice Department's opinion, but as Krop told the Santa Barbara Independent, "The stakes are huge. This would allow the feds to ignore any and all the environmental protections and all the health and safety protections imposed by the state to approve this project." Krop suggested the federal government would dictate how the land was classified within the state park.

A Pending Showdown

The government of California doesn't appear ready to accept the decision and see the last vestiges of its authority pried from the state's regulators. A call to the State Fire Marshal from the Independent resulted in what the news outlet called a "caustic and combative" emailed reply from Anthony Martinez, who works in the press office for California Governor Gavin Newsom. "Restarting Sable would contribute about 0.05 percent to crude oil production--a drop in the bucket that would have zero impact on the oil prices that have sky-rocketed because of Donald Trump's Iran war," Martinez wrote. "The Trump Department of Justice opinion on his emergency power is as lawless as his emergency tariffs that the Supreme Court just struck down. If Trump thinks he can override California law and an existing court order with the stroke of his pen, we look forward to hearing what the federal court he's defying has to say."

As expected, federal decisions regarding the pipeline will apparently not go unchallenged by California.

The Defense Production Act

The Defense Production Act has been brought out of obscurity in recent years and employed by both former President Joe Biden and current President Trump to facilitate industrial movement in directions their administrations have deemed appropriate. Biden used it in 2022 to help boost domestic production of critical minerals. In 2023, he again used the act to facilitate the production of heat pumps, solar panels and to enhance grid security.

Trump also has invoked the act to increase minerals production, although with different definitions of what constitutes "critical minerals." The president most recently used the act last month to facilitate increased domestic production of glyphosate, the active ingredient of Roundup herbicide and the subject of multiple lawsuits claiming that the chemical causes non-Hodgkin's lymphoma. In 2018, Monsanto, the maker of Roundup, was found guilty of suppressing its knowledge that the chemical causes cancer.

Action Still in the Cards

While the Justice Department's decision on the Defense Production Act arrived last week, Trump has yet to take any major actions facilitating Sable's restart of the platforms and pipeline that constitute that Santa Ynez Unit. However, under Trump's second administration, the U.S. government has been very supportive and seemingly unrelenting in facilitating the pipeline's restart, and the Justice Department's opinion seems to have opened the door for the federal government to take the reins on the project, which will almost certainly not go unchallenged by California.

Key Takeaways

• The Justice Department has ruled that President Trump can order the restart the Santa Ynez oil production and pipeline unit in California using the Defense Production Act.
• California state regulators contend the pipeline has not been repaired sufficiently and that the project needs to be signed off by the state fire marshal.
• The platforms and pipeline have been dormant since 2015 after a pipeline rupture spilled more than 100,000 gallons of crude oil, much of it going into the Pacific Ocean.
• Sable Offshore acquired the production facilities and pipeline in 2024 with an aim to restart them.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).