The majority today holds that the words “negligible or no expansion of existing or former use” mean “negligible or no expansion of existing or former use.” I agree, of course. Who wouldn’t?”
— Concurring Opinion of Associate Justice Leondra R. Kruger
In an opinion filed on June 25, 2026, the California Supreme Court reversed the judgment of the First District Court of Appeal (Div. 5) in Sunflower Alliance v. Department of Conservation (2024) 105 Cal.App.5th 771, a case involving lead agency California Department of Conservation’s Geologic and Energy Management Division’s (“CalGEM”) determination that a project to convert a former oil and gas extraction well to a treated wastewater injection well was exempt under the CEQA Guidelines’ Class I categorical exemption for existing facilities. The Supreme Court remanded the matter for further proceedings consistent with its opinion. Sunflower Alliance v. Department of Conservation (Reabold California, LLC, Real Party in Interest) (2026) ___Cal.5th___. (My prior 9/9/24 blog post on the Court of Appeal’s original decision can be found here, and my 10/8/24 post on that Court’s modifications to its opinion on denial of rehearing can be found here.)
CEQA’s Class I Categorical Exemption And The Court of Appeal’s Analysis
As relevant to this case, the Class I exemption applies to “minor alteration[s] of existing … facilities … involving negligible or no expansion of existing or former use.” (CEQA Guidelines, § 15301.) Prior to setting forth a list of non-exclusive examples of types of projects falling within the exempt class, the exemption further states that: “The key consideration is whether the project involves negligible or no expansion of use.” (Ibid.)
According to my own review of dictionary definitions, “negligible” is an adjective describing something “too slight or small in amount to be of importance” (Cambridge Online Dictionary) or “so tiny or unimportant or otherwise of so little consequence as to require or deserve little or no attention.” (Webster’s Third New International Dictionary (Unabridged), p. 1514.) The Court of Appeal in this case searched for a frame of reference to apply the term as used in the Class I exemption, and finding that necessary context in CEQA’s overarching goal of environmental protection, reasoned that the exemption properly applied whenever an expansion or change in use of an existing facility presented a “negligible risk of environmental harm.” It thus reasoned that converting a former oil and gas extraction well into a treated wastewater injection well that merely returned the wastewater by-product from such extractions to the same isolated, non-potable aquifer it came from, cleaner than when it was extracted, and did so with little or no change to the physical well machinery, and subject to strict regulatory conditions ensuring that the wastewater would not escape the aquifer, presented a “negligible risk of environmental harm” and was thus a “negligible” change or expansion of use qualifying for the Class I exemption. Logical, right?
The Supreme Court’s Analysis
Wrong! The Supreme Court disagreed with the foregoing thoughtful and earnest analysis of the Court of Appeal, pointing out that the exemption’s plain language does not expressly reference or contemplate the “risk of environmental harm,” and holding that its phrase “negligible or no expansion of existing or former use” refers instead to “an expansion or change in the nature or degree of a structure or facility’s use[.]” (Emph. added.)
In addition to its “plain language” rationale, the Supreme Court found support for its holding in (1) CEQA’s statutory and regulatory scheme empowering the Secretary of California’s Natural Resources Agency (“CNRA”) – and not lead agencies or courts – to identify with expertise categories of exempt projects based their unlikeliness to cause significant environmental effects, and (2) CEQA’s three-tier decision tree process, which obviously does not contemplate an in-depth “mini-CEQA environmental review” at the second-tier stage of review of projects for exemptions.
The high court elected to punt on another significant issue briefed by the parties on which it had originally granted review, declining to address whether certain project conditions imposed by CalGEM on the well conversion permit were actually “veiled [CEQA] mitigation measures … improperly considered at the exemption determination stage[.]” It dodged this interesting and important issue – which highlights an analytical tension between (1) the general rule that agencies can’t “mitigate into” a categorical exemption and (2) a contrasting body of case law holding “that lead agencies may impose project conditions related to the environment on exempt projects without running afoul of CEQA” – on the ground that it might “require a fact-specific, record-based analysis” that would be obviated should the Court of Appeal decide on remand that the evidence didn’t support CalGEM’s exemption determination.
Justice Kruger’s Concurring Take
All in all, as underscored by Justice Kruger’s concurring opinion, the majority’s “it is what it is” analysis provides little or no helpful guidance in defining the relative term “negligible” for purposes of the exemption, which as the Court of Appeal recognized “demands some frame of reference.” Ultimately, the question that remains for lead agencies grappling with whether the exemption applies is: “negligible” change in use from what perspective?
Justice Kruger concluded that the Court of Appeal’s “error was not in looking for a yardstick for measuring a “negligible” expansion of use” or “in turning to CEQA’s environmental-protection purposes for guidance, or in concluding that considerations of environmental harm are relevant.” She pointed out that the parties and amici curiae CNRA and CalGEM “all acknowledged at oral argument [that] these considerations do have a role to play in applying the Class I exemption – if not quite as open-ended and expansive a role as the court of appeal envisioned.” Justice Kruger found the non-exclusive examples listed in the Guideline itself – e.g., “adding a bicycle lane to an existing street, or converting a single-family residence to office use (Guidelines, § 15301, subds. (c), (n)” – “provide a useful benchmark for the nature and scope of expansions that fall into this category” as each involves what could be described as a “new” use of an existing facility that is nonetheless not “likely to give rise to a new kind or degree of environmental concern that warrants further, formal study.” She suggests the exemption applies when a project “resembles or can reasonably be analogized” to one or more of the listed examples, and that “[w]here there is no obvious resemblance, as in this case, the examples can still serve as a guide to the nature and scope of change in environmental risk that renders further formal study unnecessary[.]” Ultimately, she concluded the Court of Appeal’s task on remand would be to “measure the expansion – i.e., converting a long-dormant oil extraction well into a well dedicated to daily injecting some 12,600 gallons of treated wastewater into an underground aquifer – not only by referring to CEQA’s ultimate purpose of protecting the environment, but also by giving careful consideration to the manner in which CEQA demands that environmental concerns be aired and assessed.”
Conclusions, Implications and Loose Ends
Justice Kruger’s valiant efforts notwithstanding, it is obvious that no “bright line” test and minimal helpful guidance emerged from the Supreme Court’s opinion beyond the tautological conclusion that “use” means “use” and not “risk of environmental harm.” The majority did helpfully confirm that Guidelines § 15301’s listed “examples seem to contemplate a change, not just in degree, but in the nature of the use, including additional uses” – thus rejecting plaintiff’s rather extreme argument that the exemption allowed no new uses. But on remand, the Court of Appeal – and all other California courts – will still need to wrestle with the issue of what constitutes a “negligible” expansion or change of use in this context, and the Court of Appeal will also need to evaluate in the first instance the validity of CalGEM’s industry-specific CEQA exemption for well conversions of this type – another issue the Supreme Court declined to address. (See, 14 Cal. Code Regs., § 1684.1; CEQA Guidelines, § 15300.4 [authorizing agencies to develop industry-specific exemptions].)
Another lurking but unarticulated issue that I see, highlighted by the high court’s references throughout its opinion to a “dormant” well, is whether the expansion should be measured against an environmental “baseline” of a dormant or active well, given that the Guideline’s plain language refers to “expansion of existing or former use.” (Emph. added.) Related to this point, I found part of the Supreme Court’s reasoning based on an argument apparently made by Real Party – i.e., that the Class I exemption’s “apparent rationale” is a presumption that the environmental effects of existing structures and facilities have already been analyzed (Slip Opn. at 26) – to be unhelpful and problematic. This is so because, under a long line of well established CEQA authorities, the environmental baseline consists of actually existing conditions which include the ongoing physical impacts of long-operating facilities regardless of whether they were established or operated in compliance with CEQA or other land use laws.
All in all, the Supreme Court’s opinion is a disappointment in terms of providing useful guidance to practitioners and stakeholders, but in my view it does highlight the continuing need for comprehensive CEQA reform in a regulatory world that has, in so many ways and areas, outgrown the need for traditional one-size-fits-all CEQA review Here, the weight CEQA places on values such as process and public participation can essentially override the extensive and highly-technical expert analysis of a specialized state agency operating under strict regulations that are already highly protective of the environment. Adding redundant CEQA analysis to this mix, it seems to me, will result primarily in further expense and delay, i.e., unnecessary “green tape” of the kind California needs to eliminate.
The undisputed facts of this case show that the injection well project at issue here, which may or may not proceed if an EIR is required, would have saved hundreds of miles of heavy truck trips per week transporting treated wastewater for disposal with – per the expert agency CalGEM and the Court of Appeal – negligible risk of environmental harm. One must question the continuing utility and relevance of our state’s “signature environmental law” adopted well over half a century ago if it may serve thwart such an environmentally beneficial outcome in the name of beneficial process.
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