California loses oversight as judge clears oil company to keep pumping

A fight over California’s oil coast

A federal judge allowed Sable Offshore Corp. to continue operating the onshore Santa Ynez Pipeline System, denied California’s request to block the federal Defense Production Act order, and found that the order preempts state actions that would conflict with pipeline operations.

The court also found Sable violated a consent decree and imposed a $1.449 million penalty.

Sable Offshore Corp. is continuing to revive and ramp up the Santa Ynez Unit, which was shut down after the 2015 Refugio spill and has since resumed operations in stages.

Related legal challenges filed by the California Attorney General raise broader questions regarding whether federal executive orders can override state environmental regulations and existing judicial consent decrees.

The company behind the project

Sable Offshore Corp. is based in Houston and holds operating interests in the Santa Ynez Unit off the Santa Barbara County coast.

The operation includes three offshore platforms (Harmony, Heritage, and Hondo) in federal waters, an onshore processing facility, and pipelines carrying crude to land.

The company has been attempting to restart operations following years of inaction and regulatory disputes.

Sable reported $137.1 million in total revenue for Q2 2026, which it described as its first full quarter of revenue generation and positive operating cash flow since inception.

Why the pipelines matter

The pipelines are a key part of the Santa Ynez Unit because they move crude from offshore production facilities to the California coast. Without that transportation system, the offshore operation cannot function as planned.

California officials and environmental groups have raised concerns about the condition and safety of the pipelines. The concerns have become especially important because the system has been connected to a long-running legal battle over permits, environmental protections and the company’s efforts to restart production.

The project has a troubled history

Sable’s offshore operation had been dormant since 2015, when a pipeline burst near Refugio State Beach. The incident caused one of California’s worst oil spills and became a major reason for continued scrutiny of the area’s oil infrastructure. Years later, Sable began pushing to bring the operation back.

Its restart plans faced resistance from California regulators and environmental groups. The company also became involved in several legal disputes involving permits and pipeline work, turning the Santa Barbara project into a closely watched fight over energy and environmental authority.

Little-known fact: NOAA says the 2015 Refugio spill released more than 100,000 gallons of crude, with at least 21,000 gallons reaching the Pacific Ocean.

Trump administration stepped in

The Trump administration played a major role in changing the situation. The U.S. Department of Energy issued an order directing Sable to begin pumping crude and invoked the Defense Production Act, citing national security interests.

Sable relied on that federal order as it moved to revive the offshore operation. The move created a direct clash with California officials, who argued that state laws and environmental requirements still applied.

The judge sided with federal authority

U.S. District Judge Stephen V. Wilson ruled across several related motions, allowing Sable to continue operating while finding that the company violated the consent decree by restarting without OSFM authorization.

Rather than ordering a shutdown, the court modified the decree so PHMSA replaces OSFM as the primary regulator for the onshore pipeline provisions.

Judge Wilson also denied California’s preliminary injunction request against the DOE’s DPA order and found that California had not shown serious questions on the merits at this stage.

California is not fully out

California’s challenges remain active, including litigation over PHMSA’s jurisdiction and permits and separate Coastal Commission disputes.

However, the federal court modified the consent decree so PHMSA, rather than OSFM, now serves as the primary regulator for Sable’s compliance with the onshore pipeline provisions.

The consent decree remains enforceable against Sable, but the court modified it by substituting PHMSA for OSFM as the primary oversight agency while leaving substantive pipeline standards largely in place.

Sable was fined $1.449 million

The ruling was not a complete win for Sable. Judge Wilson found that Sable violated the federal consent decree by restarting the onshore pipeline without the required OSFM authorization and restart plan approval. The court imposed a $1.449 million stipulated penalty instead of ordering a shutdown.

That finding is important because it shows the court did not give the company unlimited freedom. Linda Krop of the Environmental Defense Center said the ruling was disappointing in many respects, but she welcomed the judge’s finding that Sable had violated a court order and could not simply decide its own requirements.

Fun fact: The Refugio spill prompted a proposed $22 million restoration plan for damaged wildlife, habitats, and public recreation resources.

Sable has faced earlier penalties

The latest fine is not the first major financial penalty involving Sable. Last year, the company was fined more than $18 million for failing to obtain required permits from the California Coastal Commission before beginning repair work on its pipelines.

The company is also facing criminal charges tied to alleged environmental violations, including felony counts related to alleged discharges into nearby creeks and waterways.

In May 2026, Rep. Salud Carbajal and Sen. Adam Schiff launched an inquiry seeking records about Sable’s communications with the Trump administration related to the project restart.

Environmental groups remain concerned

Environmental groups have strongly opposed Sable’s project, pointing to concerns about pipeline safety and California’s ability to protect its coastline. The Environmental Defense Center, based in Santa Barbara, has played a leading role in challenging the company’s plans.

Linda Krop, the group’s chief counsel, criticized the federal government’s use of the Defense Production Act. She also noted that another federal judge recently took a narrower view of the law in a separate Sable-related case.

California plans to keep fighting

California officials have not indicated that the court ruling ends their legal efforts. A spokesperson for California Attorney General Rob Bonta said the state is reviewing its legal options and will continue challenging attempts to interfere with its authority.

The state has already filed multiple cases involving Sable’s offshore project in the U.S. 9th Circuit Court of Appeals.

An appeal of the latest ruling could allow a higher court to examine how far federal authority extends when it conflicts with state environmental protections.

The ruling could reach beyond California

The decision has attracted attention because its impact may not stop at the Santa Barbara coastline. Allan Marks, a UCLA law professor with an energy law background, said the ruling could provide a framework for future federal actions involving state environmental laws.

The bigger question is how emergency federal powers might be used in other energy disputes. If federal agencies can rely on the Defense Production Act to override conflicting state rules, similar arguments could appear in other states.

Discover why California lawmakers are pushing to make oil and gas companies help cover rising insurance losses tied to climate-driven disasters, as the state faces growing costs from wildfires and other extreme events.

What happens to Sable next

Sable continues its efforts to bring the Santa Ynez Unit back online following the U.S. 9th Circuit Court of Appeals’ denial of an emergency stay requested by environmental groups.

Sable’s operations remain tied to PHMSA approvals, the DOE’s Defense Production Act order, the modified consent decree, and ongoing appeals or related challenges by California and environmental groups.

Find out why California’s clean-shipping rules are facing a new national challenge, with opponents warning that regulatory changes could increase costs for shipping companies and consumers while supporters argue they are essential for cleaner ports.

What do you think about the court’s decision? Share your thoughts in the comments and let us know where you stand.

This slideshow was made with AI assistance and human editing.

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