Justice Department Says Defense Production Act Orders Could Override State Barriers to Oil Drilling
The U.S. Department of Justice issued a legal opinion concluding that a presidential order on energy production issued under the Defense Production Act (DPA) could preempt conflicting state laws under the Constitution’s Supremacy Clause. The U.S. Department of Energy requested the opinion in connection with Sable Offshore Corp.’s ongoing efforts to restart offshore oil production from the Santa Ynez Unit. (see Sable Timeline for background).
The opinion, issued by the Justice Department’s Office of Legal Counsel (OLC) on March 3, 2026, examines whether federal authorities could compel the resumption of operations at the Santa Ynez Unit and at the associated Las Flores Pipeline system and processing facilities despite state regulatory restrictions. The OLC memorandum states that the Santa Ynez Unit contains an estimated 904 million barrels of oil, with more than 670 million barrels produced between 1981 and 2014 before operations were suspended.
The Defense Production Act is a Cold War–era statute that allows the federal government to direct private industry in support of national defense and energy supply needs. It authorizes the president to require companies to prioritize government contracts, allocate materials and services, and take other actions considered necessary to support national defense and energy security.
According to the opinion, federal orders issued under the Defense Production Act can carry the “force and effect of federal law.” Under the OLC’s analysis, federal directives issued pursuant to the DPA could preempt state laws under the Constitution’s Supremacy Clause.
The memorandum outlines two possible mechanisms for preemption. First, a federal order could explicitly displace conflicting state requirements. Second, preemption could arise through conflict preemption if compliance with both federal and state rules is impossible or if state restrictions obstruct federal policy objectives.
The opinion also addresses whether a DPA order could override provisions in a federal consent decree governing the pipeline system. OLC concluded that if a presidential order issued under the statute conflicts with the terms of a consent decree, federal courts could modify the decree to accommodate the federal directive or shield companies from liability arising from compliance with the order.