Valero Refining Co. v. Bay Area Air QualityAnnotate this Case
An oil refinery, Valero, undertook a three-year construction project to comply with a consent decree with the federal government and to upgrade its facility. The project resulted in a significant reduction in air pollution. After the construction, Valero sought approval from the regional air quality management district to bank the resulting emissions reductions as environmental credits. It was denied a significant portion of the requested credits. The superior court set aside the hearing board’s decision, holding that the board did not apply the correct standard of review in declining to consider evidence that denial of the banking application was “unfair” under the circumstances.
The court of appeal reversed. The agency official charged with considering the application in the first instance denied the credits; applying a local air district regulation that prescribes the methodology for measuring emissions reductions, the official calculated a significantly lower reduction in air pollution than the refinery calculated. The hearing board upheld that interpretation of the regulation; its standard of review neither requires nor empowers it to consider whether applying the regulation to the particular case is "fair." The board is limited to a quasi-judicial inquiry entailing the exercise of its independent judgment to decide if the agency official’s interpretation of the regulation was correct. The board could, and did, appropriately consider Valero’s evidence regarding the fairness of applying the regulation to Valero in addressing Valero’s claim that the district was equitably estopped from applying it.