In the Sable pipeline appeal, the Ninth Circuit will test how far the Defense Production Act reaches

The Trump administration says its Defense Production Act order to restart a Santa Barbara County oil pipeline protects fuel supplies for West Coast military bases, California says the order goes beyond what the law allows, and the government’s and Sable’s answers are now due Nov. 20.

By Rosalind Achterberg

SAN FRANCISCO — The Trump administration’s case for restarting the Santa Ynez pipeline system rests on a simple proposition: energy supply is a matter of national defense, and California, home to a dense concentration of military bases and dependent on imported crude, cannot be allowed to keep a domestic source of oil shut in.

That argument, which a federal judge in Los Angeles accepted in August, is now before the U.S. Court of Appeals for the Ninth Circuit in State of California v. Wright, No. 26-5409. The appeal will decide whether Energy Secretary Chris Wright could use the Defense Production Act, a Korean War-era statute, to order Sable Offshore Corporation to carry oil through a pipeline that had been idle since a 2015 rupture, and whether that order overrides the state laws California says still keep it closed.

The briefing schedule has moved. On Oct. 19, the court granted an unopposed motion by Sable to extend the deadline for answering briefs, which are now due Nov. 20, according to the docket. California filed its opening brief on Oct. 2, and friend-of-the-court briefs followed in October.

The administration’s case

Secretary Wright issued the order on March 13 under Sections 101(a) and 101(c) of the act, which let the president or his delegate prioritize contracts and “allocate materials, services, and facilities” for the national defense or to maximize domestic energy supplies. The order relies on President Trump’s executive order declaring a national energy emergency and directs Sable to “immediately commence performance,” moving crude from the three offshore platforms of the Santa Ynez Unit through onshore lines to the Pentland pump station in Kern County. It stays in force “until such time as the conditions necessitating the issuance of this order abate.” Sable began moving oil the next day, according to the law firm Vinson & Elkins.

In Energy Department memoranda quoted in California’s brief, the secretary wrote that the state’s “concentration of defense-related activities and personnel require sufficient fuel access to enable military ships and planes to operate at home and abroad,” and pointed to the risk of relying on foreign imports while Iran was attacking tankers in the Strait of Hormuz.

The Justice Department has made the same case in public. The pipeline carries more than a million barrels of domestically produced crude a month and is essential to stable fuel supplies for more than 32 military installations on the West Coast, the department said on Aug. 21. “Energy security is national security,” said Associate Attorney General Stanley E. Woodward Jr. “And the Department of Justice will continue unleashing American energy to support an affordable and reliable supply of energy necessary for our national and economic security.”

What the district court decided

On Aug. 19, Judge Stephen V. Wilson of the Central District of California denied California’s request for a preliminary injunction. He held that the Wright order is a valid allocation order and that the act preempts state laws that would prevent compliance with it. He declared that California’s Department of Parks and Recreation may not bring trespass or other actions to stop the pipeline from running beneath state parkland, and he modified the consent decree that followed the 2015 spill to put the federal Pipeline and Hazardous Materials Safety Administration, rather than the State Fire Marshal, in charge of the line during the emergency.

The ruling was not a clean sweep for Sable. Judge Wilson found that the company violated the original decree by restarting without state approval, held that the act’s liability shield does not cover penalties for violating a federal court order, and imposed $1.449 million in stipulated penalties. He also sent a related state-court case back to Santa Barbara County because Sable removed it too late.

California’s argument

California’s opening brief, filed by lawyers in Attorney General Rob Bonta’s office, attacks the order at its foundation. To “allocate,” the state argues, means to apportion a resource among competing users, and to “prioritize” means to put one contract ahead of another. Neither, it says, allows the government to order a shuttered pipeline to start up.

The state also argues that the order does not do what it claims. The order directs Sable to supply all purchasers, civilian or military, and so does nothing to ensure military access to fuel, the brief argues, and the volume is “miniscule in relation to California’s total energy needs.” The state calls the defense rationale a pretext.

“Defendants’ arguments to the contrary represent a vast expansion of executive power, subject to dangerous abuses,” the brief says, warning that state laws protecting “worker health, property rights, public safety, and the environment could be cast aside for politically favored industries.”

The friends of the court

One brief came from scholars who say they support the statute. Anjali Datta, Joseph Dodge, Sharon Fazili and Ashley Harrell wrote that they favor “a robust and flexible interpretation of the DPA,” but called the Wright order “an unprecedented extension of Title I of the DPA to compel new production.” “If the district court’s approval of that reading is affirmed,” they wrote, “the Executive will have the power to compel private companies to make or transport anything they want.”

Twenty states and the District of Columbia, led by New York, focused on preemption. Their brief says a Justice Department Office of Legal Counsel opinion prepared for the case advanced “a new and expansive theory of DPA preemption” that would replace the presumption against preemption “with a presumption of preemption in any situation where the President finds a state law inconvenient.”

Senator Sheldon Whitehouse of Rhode Island and other members of Congress, a software and information industry group, and a coalition of environmental organizations also filed briefs; The Inquirer was not able to review those filings.

The Senate clock

The case is unfolding against a deadline in Congress. Under the act as amended through Public Law 119-103 in September, the Title I powers Secretary Wright used are set to expire on Dec. 11 unless lawmakers extend them, though the liability shield in Section 707, which the district court read as the source of preemption, does not expire.

The House Financial Services Committee approved the DPA Modernization Act, H.R. 7688, by a vote of 41-0 in March. As reported, it would extend the authorities and allow Title I powers to direct civilian-market distribution only to address a declared national emergency, a federal disaster or a public-health emergency. The Wright order already rests on a declared emergency, so it is not clear the change would affect a case like Sable’s. In the Senate, the act falls under the Banking Committee.

Leaders of the Senate Energy and Natural Resources Committee are pursuing energy infrastructure by other means. Senators Mike Lee of Utah, the committee’s Republican chairman, and Martin Heinrich of New Mexico, its ranking Democrat, joined Senators Shelley Moore Capito and Mr. Whitehouse of the Environment and Public Works Committee on Sept. 30 to introduce the Bipartisan American Affordability and Jobs Act, a permitting overhaul. Mr. Heinrich said it “will help us get to ‘yes’ or ‘no’ on energy projects faster, while protecting important environmental safeguards.” The Inquirer found no public statement from either senator on the Sable order. Senator Alex Padilla is the committee’s California member.

What is at stake for California

For Santa Barbara County, the question is whether the pipeline tied to the 2015 Refugio spill runs under federal rather than state supervision. For Sacramento, it is whether a cabinet secretary can set aside state permits, easements and court orders by invoking national defense. For the administration and Sable, it is whether domestic oil from off the California coast can reach California refineries in a state that, the Energy Department says, leans on foreign imports.

The appeal, which The Inquirer covered last week, will sharpen on Nov. 20, when the government and Sable lay out their defense of the order in full. California’s reply will follow.