Sable Offshore stock jumps 12% on DOJ legal opinion

Investing.com -- Sable Offshore (NYSE: SOC) shares rose 12% Thursday morning following a Department of Justice Office of Legal Counsel opinion stating that presidential orders under the Defense Production Act can preempt state laws that conflict with federal energy production directives.

The March 3, 2026 memorandum addressed a question from the Department of Energy regarding Sable Offshore, which operates the Santa Ynez Unit offshore oil and gas facility in federal waters off California. California state laws have prevented Sable from operating the facility and transporting production through associated pipeline infrastructure.

Assistant Attorney General T. Elliot Gaiser wrote that presidential orders issued under congressionally delegated authority carry the force of federal law under the Supremacy Clause. The opinion concludes that Defense Production Act orders can override conflicting state regulations, even those stemming from federal consent decrees.

The legal opinion states that Defense Production Act orders can preempt state laws either expressly or through conflict, regardless of whether the presidential directive takes the form of an executive order or other presidential directive.

Sable Offshore holds the lease and operates the Santa Ynez Unit, working with the Department of the Interior to update a Development and Production Plan for continuous production. The company and federal agencies cite energy vulnerabilities on the West Coast as justification for the facility’s operation.

Michael Gordon, an analyst at CFRA, wrote, "We are shocked by the DOJ Office of Legal Counsel’s (OLC) memo released Wednesday night indicating the agency’s view that an order under the Defense Production Act (DPA) would override all California laws as well as the consent decree and immunize Sable Offshore (SOC) from any penalties for running its pipeline."

Gordon noted the memo is not binding on courts and expressed skepticism about whether the President’s authority under the DPA extends as far as the opinion suggests.

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