Remember that pipeline off the California coast that spilled a bunch of oil back in 2015 and has been sitting idle ever since? The one short sellers call a "zombie pipeline"? Well, it's back in the news, and this time it's got presidential backing.
Sable Offshore Corp. (SOC) finds itself at the center of a remarkable political drama. President Donald Trump is reportedly weighing whether to use Cold War-era emergency powers to restart the company's long-dormant California oil pipeline. This sets up what could be an epic clash between Washington, Sacramento, and the investors who've been betting against this project for years.
Here's how we got here. After that major 2015 spill off Santa Barbara, California regulators shut down Sable's Santa Ynez Unit and its associated pipeline system. They didn't just turn it off—they imposed stringent new safety and environmental requirements. Since then, state officials and environmental groups have consistently argued the line remains unsafe, effectively blocking Sable's attempts to bring offshore production back online.
The Federal Cavalry Arrives
Recently, the federal government has started tilting the playing field back in Sable's favor. Last week, the U.S. Department of Justice issued a formal opinion with a fascinating legal conclusion: a presidential order under the Defense Production Act could preempt California laws that have kept this pipeline offline.
Think about that for a second. The Defense Production Act—the same law presidents use during wars and pandemics to get companies to make ventilators or whatever—might be used to tell California it can't stop an oil pipeline. According to multiple reports, Trump is now preparing to invoke those very powers to clear permitting hurdles and restart Sable's offshore output. The rationale? Easing an oil supply crunch that's been exacerbated by the conflict with Iran.
California isn't having it. Attorney General Rob Bonta has already filed suit against the Trump administration to block any DPA-driven restart. The state's position remains firm: Sable's infrastructure is too risky, and the company has struggled to meet the tougher standards imposed after the 2015 spill. This lawsuit creates a direct confrontation between Washington and Sacramento over who ultimately controls this project's fate.
Meanwhile, Back at Corporate Headquarters...
While politicians battle over permits, Sable faces its own set of problems that sound like they're straight out of a corporate thriller.
Hunterbrook Media published audio suggesting insider information was shared with selected investors—including golfer Phil Mickelson—on an October 2025 call. The same outlet reported leaked recordings in which CEO Jim Flores allegedly describes the California Coastal Commission as having an "eco-Nazi attitude." That's probably not the best rhetoric when you still need sign-off from local permitting bodies.
Hunterbrook Media updated its investigation into the company in January, arguing Sable is "quickly running out of cash" and may never actually pump that first barrel of oil. Not coincidentally, affiliated fund Hunterbrook Capital has disclosed a short position in SOC.
After Hunterbrook published its first report, Sable received subpoenas from both the U.S. Attorney's Office for the Southern District of New York and the SEC. The allegations center on whether the company selectively shared material nonpublic information with certain investors. Sable has formed a special committee of its board to investigate and has warned in filings that these legal probes could lead to civil or criminal penalties, fines, and sanctions against the company and its current or former officers.
What's an Investor to Do?
For Sable Offshore shareholders, these overlapping legal, political, and corporate dramas have created the kind of volatility that keeps traders up at night.
SOC shares tumbled nearly 16% to $10.43 on Friday after the latest Hunterbrook report and news of California's lawsuit. That partially erased gains notched earlier in the month when the DOJ opinion first surfaced and traders bet that a DPA order could finally unlock those stranded barrels.
The fundamental question here is whether Trump's intervention actually rescues this "zombie" pipeline or merely prolongs its standoff with California. Will the stock's wild swings resolve into a durable recovery? Or will they validate the bears' view that this project is more political flashpoint than viable asset?
According to market data, Sable Offshore shares were up 2.9% at $17.06 on Thursday, after gaining more than 20% over the past five days. That tells you everything you need to know about how quickly sentiment can shift when you're dealing with a story that involves presidential power plays, state resistance, short seller campaigns, and federal investigations—all wrapped around a pipeline that hasn't moved oil in nearly a decade.
