California Court Strikes Down Approval of State's First CCS Project

A California court has overturned approval of the state's first operational carbon capture and storage project, ordering Kern County to withdraw certification of its environmental impact report and halt further authorisation until a legally adequate assessment is complete.

The Superior Court ruling targets Carbon TerraVault I, developed by California Resources Corporation (CRC). The project began injecting carbon dioxide beneath the Elk Hills Oil Field in May, taking CO2 from CRC's own cryogenic gas plant at a design capacity of up to 1.46 million tonnes per annum. It is now the subject of a legal challenge that could force its shutdown.

The court found that the project's environmental review, certified under the California Environmental Quality Act (CEQA), failed to consider the project's full scope. The Center for Biological Diversity, one of the groups challenging the approval, said the ruling requires CRC to halt all project operations until it complies with environmental law.

CRC has pushed back. In its latest regulatory filing, the company said the ruling was not yet final and that its impact on existing operations remained uncertain. It said it intended to "aggressively pursue legal actions" to protect the project, but did not expect the decision to materially affect its financial position or operating results.

Why did the court reject the review?

The court's reasoning centred on capacity. TerraVault I's two underground reservoirs hold four and seven times the volume required for CO2 captured from the original source, respectively. That surplus, the court found, made the expansion of CO2 sourcing foreseeable — and the environmental review failed to assess it.

Specifically, the review did not adequately evaluate the impacts of securing additional CO2 from eight industrial sectors, including:

• hydrogen production
• cement
• steel
• biomass carbon removal

The court also identified shortcomings in the assessment of potential CO2 leakage, greenhouse gas emissions, air quality mitigation, and the cumulative impact of other CCS developments in the region. Not every claim advanced by the challengers succeeded: the court upheld the county's analysis of induced seismicity and CO2 pipeline safety risks.

What does this change for California's carbon storage build-out?

For CRC, the immediate question is whether injections at Elk Hills continue while the company litigates. The court's order bars the county from further authorising implementation until a new assessment passes legal muster — a process that under CEQA can take months or years. The Center for Biological Diversity's reading of the decision is categorical: all project operations must stop.

The setback arrives as CRC works to expand its carbon management business beyond its own operations. On 2 November, its Carbon TerraVault subsidiary submitted another Class VI permit application to US EPA, covering around 57 million tonnes of CO2 storage capacity. That filing brings the company's total submitted permit volumes to roughly 409 million tonnes.

The gap between permitted ambition and judicial tolerance is now the central tension. California's CCS pipeline depends on Kern County, the state's oil and gas heartland, for both geology and permitting. The TerraVault I ruling signals that courts will treat storage projects as systems that extend beyond the capture source named in the application, pulling downstream CO2 supply contracts and cumulative regional development into the scope of required review.

What happens next?

The next milestone is procedural: CRC's legal challenge to the ruling and Kern County's path to recertifying an environmental impact report that addresses the eight industrial supply streams, leakage risk, and cumulative impacts the court flagged. Until one of those resolves, the operating status of the state's only active CCS project — and the template for the 409 million tonnes of storage capacity CRC has queued behind it — hangs in the balance.