Opinion
FEINBERG, J.
The Procedural History
In 1973, the Bay Area Air Pollution Control District (District)1 granted a permit to construct a low sulfur fuel oil facility (LSFO) to [594] Standard Oil Company of California (Standard) at its Richmond, California refinery2 subject to certain conditions suggested by Standard and agreed to by the District.3 Construction of the LSFO was completed in 1976 and Standard received from the District in August 1976 a permit to operate with a “shutdown” provision, i.e., the LSFO unit could operate only while two of the three preexisting units were out of operation.
Standard proceeded to operate with all four units. The District took the view that Standard by so doing was in violation of the permit. It initiated proceedings before the hearing board of the District (Hearing Board). The Hearing Board, in effect, ruled that Standard was in violation of the conditions of the permit to operate but authorized reinstatement of the permit at such time as Standard complied with the conditions upon which it had been first issued. The District did so reinstate the permit upon Standard’s agreement to comply.
Standard then brought this action under Code of Civil Procedure section 1094.5 to declare the condition—unit No. 4 to operate only if two of the three preexisting units were down—null and void.
The trial court decided the case on the administrative record solely, and exercising its independent judgment thereon, granted the writ. This appeal followed.
This is the bare skeleton of the case; in the discussion that follows, we shall flesh out the bones.
[595]
The Background
We start with the federal Air Quality Act of 1967, 81 Statutes at Large 485, as amended by the Clear Air Amendments of 1970, Public Law No. 91-604, 84 Statutes at Large 1676. The thrust of the law was to establish national quality minimum standards for the ambient air, i.e., the outdoor air we breathe. Achievement of the standards was left to the states which were required to prepare and enforce a state implementation plan, subject to the approval of the Environmental Protection Agency (EPA). If a state did not submit such a plan to the EPA within the time specified, the administrator of the EPA was required to promulgate and enforce such a plan on the delinquent state’s behalf.
The purpose of the federal Clean Air Amendments of 1970 was to achieve national, effective air pollution control and “[e]ffective pollution control requires both reduction of present pollution and prevention of new significant pollution problems.” (H.R. Rep. No. 91-1146, 1970 U.S. Code Cong. & Admin. News, pp. 5360-5361; italics added.)
In California the Legislature has created the State Air Resources Board with overall control of the effort to achieve ambient air quality standards (Health & Saf. Code, §§ 39002, 39003) but has given to local and regional bodies, such as the District here, “the primary responsibility for control of air pollution from all sources, other than emissions from motor vehicles” (Id., § 40000) and these local districts are directed to “endeavor to achieve and maintain the federal ambient air quality standards” (Id., § 40001). Districts have the power to adopt and enforce rules and regulations to achieve and maintain ambient air quality. (Id., § 40001.)
Each District is directed to employ an air pollution control officer (Control Officer) whose duty it is to enforce the statewide provisions relative to the ambient air as well as the District’s orders, rules and regulations. (Id., §§ 40750, 40752.)
Pursuant to its authority, the District here promulgated regulation 2. Regulation 2 provided for a permit system to “construct any facility. . . or erect, alter, or replace” any “article, machine, [or] equipment” or to operate any of the foregoing if such operation would increase, eliminate, [596] reduce or control the emission of air contaminants. (§§ 1301, 1302.)4 Thus, if one sought to build such a facility, a written permit to construct had to be obtained from the Control Officer before construction could begin. Upon completion of construction, a written permit to operate had to be secured from the Control Officer before the facility could be put into use.5
An applicant for a permit dissatisfied with the action of the Control Officer has a right to appeal (§§ 1306.2, 1306.3) to the Hearing Board6 for an order reversing or modifying the decision of the Control Officer.
The Issue
Simply put, the issue in the case is whether Standard in operating all four units is discharging significantly less particulates7 into the air than it did when it operated with only three units.
There is little dispute about the amount of particulates all four units are emitting; there is a great deal of dispute as to what base line the [597] current emissions are to be compared with in order to determine whether there has been a significant reduction.
There are other ancillary issues and we shall note and deal with them as they become pertinent in our discussion of the central issue.
The Facts
In 1973, Standard operated a facility producing fuel oil as well as other distillates of crude oil. The refining capacity of the facility was approximately 270,000 barrels per day (bpd) of crude oil. Standard was interested in expanding the facility in order to produce more fuel oil, fuel oil with a low sulfur content.8 It contemplated certain alterations to its existing three units and the construction of a fourth unit to produce low sulfur fuel oil. The refining capacity as a result of the proposed project would be approximately 365,000 bpd; the new LSFO unit alone would have a capacity of 175,000 bpd.
Because there was a need for increased production of fuel oil and because low sulfur fuel oil is a “cleaner” fuel than high sulfur fuel oil, the project appeared to be a desirable one to the District from the standpoint of the public good.
The problem, however, was this: in producing fuel oil, a fuel is used to heat the furnaces. The combustion of that fuel produces air pollutants including particulates. The ambient air quality standards for particulates in the vicinity of the refinery was already exceeded in 1973. Section 1309 prohibited the issuance of a permit to construct a new source, i.e., the proposed new unit No. 4, when such a condition obtained.9 Standard was so advised. Standard then sought consideration [598] under section 1311.10 Section 1311 permits the replacement of one facility by another if the use of the replacement results in a reduction of each pollutant being emitted by the facility replaced.
The District took the position that since the productive capacity of the four units would be substantially greater than the productive capacity of the existing three units, the proposed construction could not be considered a “replacement” within the meaning of section 1311.
Eventually, Standard submitted an application whereby it agreed to shut down two of the three existing units at such time as the proposed unit No. 4 came on line and was in operation. The application further provides as follows: “After startup of the new crude unit [No. 4], we will limit operation of the above crude units as outlined in the foregoing [two units down if Unit No. 4 is operating] until applicable California and Federal air standards are met in the vicinity of the Refinery, or applicable District regulations are revised to make operation of such units permissible, or written approval for such operation is obtained from the BAAPCD [Bay Area Air Pollution Control District] or the BAAPCD Hearing Board.” (Italics added.) The District approved the application as submitted under section 1311 and issued the authority to construct accordingly. Standard completed the project in 1976 at a cost of approximately $200 million.
In 1975, the District amended regulation 2 by adding thereto section 1311.2.11 In effect, it required the Control Officer to issue a permit authorizing construction at existing facilities without regard to any “replacement” qualification provided that the operation of the facility after construction would result in the emission of significantly less of each air contaminant than the use or operation of the original facility.
[599] In July 1976, Standard, upon completion of construction, began operating with all four units, pending issuance of a permit to operate. In August 1976, the District issued to Standard a permit to operate unit No. 4 on condition that two of the preexisting units be shut down.
It is Standard’s position that the facility, after construction, is discharging significantly less particulates and, therefore, it complied with section 1311.2. Under the terms of its permit to construct, Standard concludes, because the District amended regulation 2 to allow, by section 1311.2, an expansion of an existing facility if the result is a significant decrease in each pollutant being discharged, Standard has a fundamental, vested right to operate with all four units going.
The District’s position is that the new facility has not significantly reduced the quantity of particulates being emitted.
The evidence before the Hearing Board showed that with all four units operating, the facility actually discharged over a full year (July 1976 to June 1977) 2.4 tons per day (tpd) of particulates, whereas in the two years preceding 1973, the year of the issuance of the permit to construct, the discharge rate was 1.4 tpd, resulting in an increase of almost 70 percent in the amount of particulates discharged into the ambient air. This, the District contends, is the appropriate measure of compliance with section 1311.2.
Standard asserts that the comparison is improper. It points out that in the two years before construction, the facility was operating at less than capacity, refining 200,000 bpd, whereas its capacity was 270,000 bpd. Thus, Standard argues, the District should have calculated the amount of particulates that would have been emitted if the plant had been operating at full capacity in 1976, the year unit No. 4 came on line. Standard made such a projection and eventually came up with an answer of 3.9 tpd, thus the 1976-1977 actual discharge of 2.4 tpd would represent a significant decrease.
The District responded by pointing out that Standard had used a “worst case” in making its 1976 projection. “Worst case” in this instance means the following: the quantity of particulates discharged is [600] not only a function of the quantity of fuel oil produced, it is also a function of the kind of fuel that is used in the process of making fuel oil. Thus, if the furnaces are heated by gas, gas is a relatively “clean” fuel and emits proportionately much less pollutants as against fuel oil. Further, other fuels are used as well with differing rates of particulate emission. The District charges that for 1976 Standard “projected” for the preexisting units on the basis of a “dirty fuel slate”12 and compared it with estimates for the modernized and expanded facility which assumed a much cleaner fuel slate. The District did its own projections of full capacity 1976 operation of preexisting units and of the refinery with the LSFO project, assuming, in each case, similar “dirty” or “clean” fuel slates, and found that the facilities would produce, respectively, 1.4 and 1.6 tpd of particulates (with a clean fuel slate) and 3.9 and 4.5 (with a dirty fuel slate). In either case the result of operating the new facility at full capacity would be to increase particulates by about 15 percent above the operation of the old facility at its full capacity.13
The Hearing Board took the position that section 1311.2 contemplated a “significant decrease” in the amount of pollutant being discharged by the facility after construction, as against the actual discharge before construction, using a reasonable time frame immediately preceding construction for the base line.
We believe the Hearing Board to be correct. The fact is that in the geographic area involved neither federal nor state standards as to the level of particulates in the ambient air have yet been met. The entire thrust of federal and state legislation has been to reduce the actual air pollution to acceptable levels, not to permit the pollution to become worse. Reduced to its essentials, Standard’s argument is that while particulate pollution is worse with four units operating than it had been [601] with three units, it isn’t as bad as it could have been with the three units going full bore using the “dirtiest fuel slate.” The argument has a certain logical charm but people don’t breathe logic. To the millions of people who inhale the air, it would appear to be a small consolation to be told that the quality of the air has been permitted to become worse but it isn’t as bad as it “could have been.”
We make it clear that we are well aware of the important role that the production of fuel oil plays in the national energy crisis. We are aware, too, of the substantial investment made by Standard. An investment in excess of $200 million is an imposing sum even in these days of double-digit inflation and federal budgets in excess of $500 billion. But, as against these considerations, the Legislature has found and declared that the people of this state “have a primary interest in the quality of the physical environment in which they live, and that this physical environment is being degraded by the waste and refuse of civilization polluting the atmosphere” (Health & Saf. Code, § 39000; italics added) and this “public interest shall be safeguarded by an intensive, coordinated state, regional, and local effort to protect and enhance the ambient air quality of the state” (id., § 39001; italics added). It is apparent that it is the Hearing Board’s interpretation of section 1311.2 that implements the legislative policy, not Standard’s view.
We are further buttressed in our view by the very nature of the uncertain accuracy of projections. A projection is an attempt to predict a future event or result. It depends on certain assumptions. If the assumptions vary, the projection changes. If some assumptions turn out to be unjustified, the projection loses validity. In the case at bar, in 1973, Standard projected that the preexisting units operating at full capacity and using a dirty fuel slate would emit 4.3 tpd of particulates. It later revised that figure to 3.9 tpd. Thus, the first projection was approximately 10 percent higher than the second but the District, assuming a clean fuel slate, calculated the figure at 1.4 tpd, about 65 percent less than Standard’s revised figure. Consider, too, that in 1973, Standard projected that the new facility in 1976, with all four units at full capacity, would emit 4.1 tpd. It then revised the figure to 2.5 tpd, a decrease of about 40 percent; in 1976, Standard did a third projection and this time the figure was 1.6 tpd. The first projection of 4.1 tpd was about 250 percent higher than the final projection. To cap it off, while the 1976 projection was 1.6 tpd, the actual emission for 1976-1977 was 2.4 tpd so that actual contamination was 50 percent higher than the 1976 [602] projection. We cite these figures solely to show that the Hearing Board was justified in relying on the actual rather than the hypothetical.14
Finally, in this aspect, we believe that the principle that an administrative agency’s interpretation of its own regulation is entitled to great weight and should be followed by the courts, unless clearly wrong, is applicable here.15 The Control Officer took the view that section 1311.2 meant a significant decrease in contaminants as against actual operation in the past. On that basis, he issued in 1976 the authority to operate with two units shut down. When Standard nevertheless continued to operate all four units, the Control Officer brought action before the Hearing Board to revoke the authority to operate. Standard nevertheless argues that the Control Officer had interpreted the regulation in accordance with their views in 1973, at the time of the negotiation on the application for authority to construct. Whatever the Control Officer may have said in 1973, surely it cannot constitute an administrative interpretation of a section that did not come into existence until 1975. Certainly, in 1976 and thereafter, the Control Officer’s view was unequivocal and opposed to Standard’s position.
Does Standard Have a “Fundamental Vested Interest” in Operating All Four Units?
Standard asserts that because it had a fundamental vested right to operate four units, the trial court was required to exercise its independent judgment on the facts. The trial judge ruled in favor of Standard; therefore, the issue on appeal is whether there is substantial evidence to support the trial court’s ruling. (Bixby v. Pierno (1971) 4 Cal.3d 130, 143, fn. 10 [93 Cal.Rptr. 234, 481 P.2d 242]; Harlow v. Carleson (1976) 16 Cal.3d 731, 739 [129 Cal.Rptr. 298, 548 P.2d 698]; Pasade[603] na Unified Sch. Dist. v. Commission on Professional Competence (1977) 20 Cal.3d 309, 314 [142 Cal.Rptr. 439, 572 P.2d 53].)
We disagree for several reasons.
1. The dispute between the parties does not turn upon a factual issue. While superficially it would appear that the question of whether there has been a significant decrease in pollutant after construction, as against before construction, would appear to be a factual one, the real question, as we have shown, was whether the current emissions were to be measured against the actual experience before construction as the District contended, and the Hearing Board held, or against projections as to what could have been emitted in 1976 by the preexisting units. That question is a legal question involving an interpretation of section 1311.2 in the light of the environmental control regulations and statutes. (Carmona v. Division of Industrial Safety (1975) 13 Cal.3d 303, 310 [118 Cal.Rptr. 473, 530 P.2d 161].) Of course, the trial court was not bound by the District and Hearing Board interpretations but neither are we bound by the “substantial evidence” rule advocated by Standard.
2. Ordinarily, we would not address the question of whether Standard had a “fundamental, vested right” to operate all four units because the issue is irrelevant in light of our holding that the issue is a legal one rather than a factual one. However, because of the importance of the question in this context and the likelihood that this issue may arise again, we hold that if the problem of whether there was a significant decrease in particulates had been a factual one, the trial court erred in exercising its independent judgment on the evidence for Standard had neither a “fundamental” nor a “vested” right to operate all four units.
a. There is no magic formula for determining whether a right is “fundamental.” Rather, “[t]he courts must decide on a case-by-case basis whether an administrative decision or class of decisions substantially affects fundamental vested rights and thus requires independent judgment review. [Citations.] As we shall explain, the courts in this case-by-case analysis consider the nature of the right of the individual: whether it is a fundamental and basic one, which will suffer substantial interference by the action of the administrative agency,...
[604] “In determining whether the right is fundamental the courts do not alone weigh the economic aspect of it, but the effect of it in human terms and the importance of it to the individual in the life situation....
“In analyzing the fundamental nature of the right asserted, this court, manifesting slighter sensitivity to the preservation of purely economic privileges, has found that the owners of Bay Bridge bonds had no fundamental vested right in preventing the construction of a second toll crossing on the San Rafael-Richmond Bridge [citation], and that a water company had no fundamental vested right to a permit to divert water from the Kern River. [Citation.] Thus, likewise, in Beverly Hills Fed. S. & L. Assn. v. Superior Court (1968) 259 Cal.App.2d 306, 316-317 [66 Cal.Rptr. 183], several savings and loan associations with offices in Beverly Hills attempted to protect their interest in being free from additional competition by opposing the license application of another Beverly Hills savings and loan organization. Justice Hufstedler observed for the court that ‘By no stretch of imagination can petitioners’ interest in being free from competition be deemed a “vested” right. Petitioners do have a vested right in being permitted to continue operating their existing savings and loan businesses. That right, however, is not here threatened.’ (259 Cal.App.2d at pp. 316-317.)” (Bixby v. Pierno, supra, 4 Cal.3d at pp. 144-146; fns. omitted.)
Our Supreme Court has not deviated from Bixby in the intervening years, rather it has emphasized its continuing vitality. (Strumsky v. San Diego County Employees Retirement Assn. (1974) 11 Cal.3d 28, 34 [112 Cal.Rptr. 805, 520 P.2d 29]; Harlow v. Carleson, supra, 16 Cal.3d 731, 736-737; Dickey v. Retirement Board (1976) 16 Cal.3d 745, 750-751 [129 Cal.Rptr. 289, 548 P.2d 689]; Anton v. San Antonio Community Hosp. (1977) 19 Cal.3d 802, 823 [140 Cal.Rptr. 442, 567 P.2d 1162].)
In the case at bench, we are concerned with a “purely economic” privilege toward the preservation of which our Supreme Court has been “manifesting slighter sensitivity.” There is no contention that Standard will be driven to financial ruin by the action of the District; there is not even a contention that this particular facility will be forced to operate at a loss and close. It is true that Standard will not be able to produce as much fuel oil as it would want to and could produce.16 It may be that [605] its operation of this facility will not be as profitable with three units as it could be with four. It may be that the return on its considerable investment will fall short of what it might have been. None of these circumstances, nor all of them, makes Standard’s right to operate four units instead of three “fundamental.”
b. Standard argues that it had a “vested” right to operate four units. Its theory is that when it received its authority to construct, it was authorized to operate all four units at such time as “applicable District regulations are revised to make operation of such units permissible.” When section 1311.2 was adopted in 1975, Standard’s projections of what all four units would emit showed that the emission of particulates would be significantly less than its projections of what the three preexisting units would emit based upon operation at full capacity. Therefore, operation of all four units was “permissible” under section 1311.2 and vested. Thus Standard could lawfully operate all four units when construction was complete. We disagree.
A right is “vested” when it is ‘“already possessed’” or “‘legitimately acquired.’” (Harlow v. Carleson, supra, 16 Cal.3d at p. 735.) Here, after completion of the construction in 1976, Standard had no right to operate any units because they had no written authority to operate as required by section 1302. Implicit in Standard’s position is that the granting by the District of an authority to operate once the construction had been completed was purely a formality. We do not perceive that to be the regulatory scheme. Obviously the purpose of requiring written authority to operate is to enable the Control Officer to decide whether the facility after construction is completed, would do that which it was supposed to do, in this instance, comply with the applicable regulations. Can it be seriously contended that if the Control Officer concluded that the facility as completed would actually increase pollution, he had to issue an authority to operate nonetheless? Such a construction of section 1302 would make it meaningless.
The recent Supreme Court opinion in Interstate Brands v. Unemployment Ins. Appeals Bd. (1980) 26 Cal.3d 770 [163 Cal.Rptr. 619, 608 P.2d 707], makes it clear that a trial court shall exercise its independent judgment on an administrative decision when either a fundamental interest in the Bixby sense or a vested interest in the traditional sense is involved. But, as we have analyzed Standard’s interest, it is neither “fundamental” nor “vested.”
[606] Thus, if the issue here were a factual one, the trial court would have erred in exercising its independent judgment on the administrative record. It remains only to say that there was substantial evidence to support the factual determination of the Hearing Board that the level of particulates had not been significantly reduced.
As was eloquently put in Mobil Oil Corp. v. Superior Court (1976) 59 Cal.App.3d 293, 305 [130 Cal.Rptr. 814]: “Here it appears the Oil Companies are asking us to determine they have a fundamental vested right to release gasoline vapors while dispensing fuel to their customers. How are we to answer the public, on the other hand, who assert a fundamental vested right to breathe clean air? If either exists, it must be the latter. We are not presented with the enforcement of a rule which effectively drives the Oil Companies out of business. At most it puts an economic burden on them increasing the cost of doing business. In weighing the relative importance to individuals in the life situation, it is manifest the Oil Companies’ right to continue releasing gasoline vapors into the atmosphere is neither fundamental nor vested. The trial court will use an evidentiary rule of ‘substantial evidence in light of the whole record’....”
Did the District in Issuing the Authority to Construct Give to Standard the Authority to Determine Compliance With Section 1311.2?
Standard contends that paragraph (d) of the authority to construct (see fn. 3, ante) constituted a delegation, in effect, from the District to Standard of the power to determine whether operation of the four units complied with section 1311.2. We do not so read it.
We read paragraph (d) to say that if the regulations are changed and if the District decides that operation of the four units complies with the new or changed regulation, then the shut-down limitation will not be applicable. In other words, if the law or the regulations are changed, Standard will be permitted to do what the law and the regulations allow; it would not be “locked-into” the two-unit down limitation. It would seem to have been a reasonable act by the District and, in fact, it is still the District’s position that Standard will be permitted to operate all four units at such time as the District finds that such operation complies with its regulations.
[607] Further, if Standard’s strained interpretation of paragraph (d) were correct, and the District did intend to delegate to Standard its power to decide whether the facility met a change in the requirements of the regulations, such a delegation would be void and unenforceable as against public policy. (See Avco Community Developers, Inc. v. South Coast Regional Com. (1976) 17 Cal.3d 785, 800 [132 Cal.Rptr. 386, 553 P.2d 546].)
Is the District Estopped From Using the Actual Preconstruction Emissions as a Base Line?
Standard argues that at the time of the 1973 negotiations, the District agreed that a projection of the amount of particulates that would be produced by the three preexisting units operating at full capacity would be the appropriate base line to be used in the event of a change in the regulation that might permit the operation of all four units. Further, Standard alleges that it was “apparent” in 1973 that a new regulation would be issued permitting an expansion in production by additional construction such as Standard was proposing. In reliance of the foregoing Standard made its handsome investment.
There is a welter of conflicting evidence as to whether it was represented to Standard that projections could be used as a base line. Suffice it to say that the Hearing Board found that the District had not represented to Standard that projections could be so used. There is substantial evidence to support that finding.
But even if the District had represented that a base line premised upon a projection would be acceptable, was Standard induced to spend $200 million thereby? An essential element in estoppel is that the injured party relied upon the party to be estopped. (City of Long Beach v. Mansell (1970) 3 Cal.3d 462 [91 Cal.Rptr. 23, 476 P.2d 423]; 7 Witkin, Summary of Cal. Law (8th ed. 1974) Equity, § 132, p. 5352.)
Any representation made in 1973 as to base lines could only have been in the context of a future change in regulation 2; it was irrelevant in terms of the regulation as it existed in 1973. Thus, Standard could only have “relied” if it knew not only that there was going to be a change in regulation 2 but what the change would be and when. Standard says that it was “apparent” that there would be a change but Standard could not be so prescient as to know that the change would [608] make “base lines” a relevant consideration. It overstrains credulity to believe that Standard invested $200 million on the proposition that the District, at some future date, would effect such a change in its regulations as would make possible the operation of all four units.17
And, even if, as Standard claims, the District made similar representations in 1975 and 1976, this was long after Standard had received its authority to construct and had begun construction so that, in the nature of things, Standard could not have relied on those representations in undertaking the project.
Finally, our Supreme Court has very recently held that “Estoppel will not ordinarily lie against a governmental agency if the result will be the frustration of a strong public policy.” Bib’le v. Committee of Bar Examiners (1980) 26 Cal.3d 548, 553 [162 Cal.Rptr. 426, 606 P.2d 733].) Here, to raise an estoppel against the District would be to permit an increase in the level of pollution in the ambient air breathed by our people, “a frustration of a strong public policy” enunciated by the Legislature and embodied in law.
The judgment of the trial court is reversed; it is directed to vacate its writ of mandamus and enter its judgment denying the petition for said writ.
White, P. J., concurred.