Sunflower Alliance v. California Dept. of Conservation (Sept. 6, 2024) 104 Cal.App.5th…

The Sunflower Alliance (Alliance) challenged the Department of Conservation’s use of a Class 1 categorical exemption for approval of the conversion of an out-of-service oil well to an injection well for “produced water,” the product of oil drilling operations. Only minor changes to the well would be necessary to convert it to an injection well and state regulation (14 California Code of Regulations 1724.7) prohibits approval of an injection well unless the permittee can demonstrate that the injected water will be confined by the aquifer’s geology and will not escape the aquifer into which it is injected. The aquifer underlying the proposed injection well is exempt from the Safe Drinking Water Act and is eligible to receive injected produced water.

The Alliance argued that injection is a “significantly different use” than the capped oil well, making the Class 1 exemption inapplicable. The trial court held in favor of the Alliance; the Court of Appeal reversed that judgment.

The key argument between the parties was over whether conversion was greater than the “negligible or no expansion” limitation inherent in the Class 1 exemption. The Court examined the evidence

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surrounding the Department of Conservation’s decision, guided by the consideration that “the term negligible is intended to allow changes or expansions in use that are inconsequential and to exclude changes that threaten environmental harm.” The Court further noted that “the change in use is unimportant, as far as CEQA goes, if the risk from environmental harm from the new use is negligible.”

On that basis, the Court concluded that “the exemption is appropriate for the relatively modest type of conversation project at issue here,” which would require only minor physical changes to the well and no changes to roads, the well pad, or vegetation.

The Court also rejected the Alliance’s claim that the Department of Conservation had improperly imposed mitigation measures on the project to eliminate its environmental impacts. The Court found that the conditions imposed on the project implemented regulatory standards and were not for purposes of lessening environmental impacts. “Compliance with the standards is a legally mandated element of the project, not a CEQA measure to lessen the project’s environmental impacts and shoehorn it into a categorical exemption.”