Sable Offshore Corp. shares fell 4.8% on Friday after a federal judge ordered the U.S. Interior Department to produce internal records connected to permitting decisions for the company’s pipeline system off Santa Barbara, California.
Judge Michelle Williams of the U.S. District Court for the Central District of California issued the order on Thursday, requiring federal officials to turn over correspondence with Sable Offshore that addresses the oil-spill risks tied to restarting the offshore drilling operation. The scope of the order encompasses internal deliberative materials as well as emails, text messages and other communications exchanged with the company and with other agencies.
The judge’s directive followed a lawsuit brought by environmental groups challenging the planned restart. In her ruling, Williams concluded that plaintiffs had shown agencies acted in "bad faith" to accelerate environmental assessments and other permits under the National Environmental Policy Act.
Williams wrote in the decision: "Plaintiffs have presented evidence of a compressed directive to complete the EA, restart-focused coordination and approvals surrounding the Santa Ynez Unit, and post-decision statements celebrating a rapid restart," highlighting the judicial finding that the record showed an objective of rapid resumption of operations.
The court action comes amid reports that President Donald Trump will sign a Defense Production Act emergency order intended to permit Sable to pump oil through the pipelines. The Justice Department issued an opinion last week asserting that the Cold War-era statute authorizes the president to preempt state law and ease permitting for the system.
California state agencies have previously scrutinized the pipeline network for possible structural faults linked to a 2015 oil spill. Those concerns were part of the factual backdrop in which the plaintiffs challenged the speed and conduct of the permitting process.
This ruling compels the disclosure of internal agency materials and communications relating to restart decisions while the matters raised by environmental groups proceed through the courts. Market reaction was immediate, with Sable Offshore shares moving lower after the order became public.