Repost from Courthouse News Service

Refiner Demands $57M in Clean Air Credits

SAN FRANCISCO (CN) – Valero Refining Co. sued the Bay Area Air Quality Management District on Monday, claiming it abused its discretion by denying it $57 million in emissions-reduction credits.

Improvements from a major modernization of Valero’s Benicia refinery brought significant and permanent reductions in air pollution, Valero claims, but the Air Quality Management District last year rejected its application to bank $57 million in emissions reduction credits for the work it did of its own volition.

The refinery, next to the Carquinez Strait about 25 miles north of San Francisco, emits fewer nitrogen oxides and less particulate matter greater than 10 microns in diameter than it did before the project, and also reduced organic compounds and sulfur dioxide, Valero says.

It claims that the Air Quality Management District has not disputed that “the emissions reductions were real, permanent, quantifiable, enforceable and not legally required.”

A Bay Area Air Quality Management District representative on Tuesday said the agency does not comment on pending litigation.

Valero says it relied on a senior district engineer for guidance during the project, only to find out that the district was not bound by her decisions.

After the project was complete, Valero says, the Air Quality Management District changed the baseline emissions figures for the before-and-after comparison it uses to grant or deny credits.

The district’s hearing board upheld the denial on appeal.

Valero on Monday asked the Superior Court to declare the ruling a prejudicial abuse of discretion not supported by substantial evidence in the administrative record.

Valero claims the district’s hearing board mischaracterized its 3½-year project as a “simple shutdown of equipment.”

To the contrary, Valero says, the refinery was outfitted with new furnaces, new flue gas scrubbers and other equipment that “reduced emissions of various pollutants … by thousands of tons per year, thereby significantly improving Bay Area air quality.”

Though the work was prompted by a 2005 consent decree with the U.S. Environmental Protection Agency, Valero says it went far beyond the agreement’s requirements, to retool the refinery’s equipment and operations.

Valero says that $500 million of the $750 million spent on the project went to “achieve emissions reductions beyond those required by the Consent Decree or by other provisions of law.”

Valero seeks writ of mandate to evaluate the fairness and consistency of the district’s rejection, not just whether it was reasonable.

A spokesman from Valero declined to comment, saying the company would let the filing speak for itself.

It is represented by Ronald Van Buskirk with Pillsbury Winthrop Shaw Pittman, in San Francisco.