Sable Offshore Gets Green Light to Restart Pipeline from Feds

Three days before Christmas, the federal agency responsible for pipeline safety, the Pipeline and Hazardous Materials Safety Administration (PHMSA), issued Sable Offshore a notably brief letter granting the company authorization to restart Sable’s two offshore pipelines that have been at the heart of the prolonged and bitter regulatory battle putting the Houston-based oil company with a myriad of state oversight agencies.

At issue has been the safety and reliability of repairs the company made without permits of a badly corroded pipeline that sprung a major leak in May 2015 along the Gaviota Coast. That leak effectively shut down all oil production along the coast.

Monday’s action by PHMSA comes on the heels of last Wednesday’s decision by the same federal agency to take regulatory authority for restarting the pipeline away from the state agency — the Office of the State Fire Marshal — that since 2016 had been vested with safety oversight authority over the pipeline. In so doing, PHMSA had acted in response to a request from Sable Offshore, which owns and has repaired the corroded pipelines, to give the federal agency the last word on pipeline safety. 

Sable’s request came not long after the State Fire Marshal had put Sable on notice that the much contested repair work the company had done so far was not up to the Fire Marshal’s standards. According to the Fire Marshal, those repairs failed to comply with the margins of error that the Fire Marshal required. The company’s restart application would go nowhere, the Fire Marshal explained, until those objections had been addressed. Sable objected and took its case to the federal agency, where, because of the Trump administration’s aggressively pro-oil stance, the company might expect to elicit a more receptive and amenable response.

As of Tuesday morning, no officials with the County of Santa Barbara or the State of California appeared to know whether Sable has already recommenced production.

Sable executive Steve Rusch declined to say, stating only, “The only news is the news you’re reading right now. All we’re discussing is what you read this morning.”

Jim Hosler of the State Fire Marshal’s Office stated, “Really, we have no comment. We don’t have anything. Was Sable pumping? I’m not aware of it. But they don’t have to tell us anything anymore now,” he said. When asked if his office challenged PHMSA’s assertion of regulatory authority, Hosler replied, “We’re not going to court. Anything like that would be up to the Governor’s Office or the Department of Justice.”

On Tuesday, State Senator Monique Limón responded to the news with the following statement: “This pipeline was shut down because it was spewing oil into the ocean and onto our beaches, killing wildlife, disrupting the fishing, tourism, and recreation jobs that are critical to our coastal economy and way of life. The pipeline should not be allowed to restart operations without proper safety review and oversight by the state. It is clear this reclassification is yet another attempt by this administration to circumvent state law, putting millions of Californians at risk. I am continuing to work with our state agencies and the Governor’s Office to pursue options to ensure our laws are followed and that this pipeline will not cause yet another disaster in our community.”

According to off-the-record sources, the Attorney General’s office has been contacted and has expressed an eager interest in taking the case. Should Rob Bonta’s office take the case, his attorneys would presumably argue that the consent decree entered into in 2020 detailing what steps must be undertaken to restart the pipeline and who was responsible for what has been violated. The consent decree stated explicitly that the Fire Marshal had to authorize any pipeline restart.

The document PHMSA released was exceptionally brief and provided no details or explanation of what safety thresholds Sable has met. Instead, it cited five documents PHMSA had reviewed. These included a contact list for the pipeline, two letters from Sable requesting the removal of certain unspecified pressure restrictions, another document detailing the startup procedures, and another detailing what’s known as pipeline line-fill positioning plan assignments. In addition, the statement, signed by PHMSA Western Regional Director Dustin Hubbard, noted that PHMSA had conducted “a field inspection with Sable Offshore to discuss its process and safety procedures for the pipeline restart.”

Based on this, Hubbard concluded, “PHMSA has reviewed these documents and hereby approves the submitted Restart plan. This approval is valid from the date of this letter.” The letter was signed at 1:19 p.m. on December 22.

Linda Krop, lead attorney with the Environmental Defense Center contended the restart approval is illegal on its face because it flies in the face of the consent decree mandate that the Fire Marshal must make for any restart approval. She added that Sable still has to secure new easement rights on four miles of pipeline that traverse Gaviota State Park. Mostly, she is reaching out to other government agencies to encourage them to defend their rights in court. The most obvious of these would be Attorney General Bonta’s office.

Among the county supervisors, however, it’s not clear what their legal options are. The County Counsel’s office has been instructed to investigate the matter, but aside from the county’s recent vote refusing to approve the transfer to Sable of the property and transfer rights the company purchased from Exxon two years ago, there’s little to work with. All parties acknowledge that Sable can operate without that transfer taking place, but only if Exxon agrees to allow the company to operate under Exxon’s existing permits. Doubtless there would be a daunting court fight. Right now, it appears doubtful that the supervisors have the votes needed to wage such a fight.

Among the bigger investors that have been bird-dogging Sable with a jaundiced eye, there’s skepticism that the PHMSA approval really is the green light it might appear. Such news, they claim, should normally trigger a major jump in Sable’s stock values. Right now, Sable is selling for little more than $10 a share. That’s up from $8 the day before. But with news seemingly this dramatic, they have expressed surprise it’s not much more. The investors, they have suggested, must know something.