April 03, 2009
Environmental Law Alert
Author(s): Libby Ford, QEP, CHMM, CEP
On April 1, 2009, the Supreme Court, by a narrow majority, held that “[t]he EPA permissibly relied on cost-benefit analysis in setting the national performance standards for cooling water intake structures (“CWISs”) and in providing for cost-benefit variances from those standards as part of the Phase II regulations.” A five judge majority lead by Justice Scalia determined that the EPA’s interpretation that the §316(b) Clean Water Act (CWA) mandate that CWISs use the “best technology available for minimizing adverse environmental impact” allows consideration of technology costs and the relationship between those costs and the environmental benefits they produce is a “reasonable interpretation of the statute.” The majority held that “[m]inimizing admits of degree … is not necessarily used to refer exclusively to the ‘greatest possible reduction’” and, thus, § 316(b) gives the EPA discretion to determine the extent of reduction warranted under the circumstances, “plausibly involving a consideration of the benefits derived from reductions and the costs of achieving them.” The court went on to find that EPA “was well within the bounds of reasonable interpretation … to conclude that cost-benefit analysis is not categorically forbidden.”
In a separate concurring opinion, Justice Breyer agreed that the CWA authorizes the EPA to compare costs and benefits, but, to Justice Breyer, this authorization was “restricting.” Like the majority, he determined that, while the CWA does not require a comparison of costs and benefits, it also does not expressly forbid such a comparison.
Writing for the three-member minority, Justice Stevens found that, because CWA § 316(b) states that the EPA “shall require” CWISs to “reflect the best technology available for minimizing adverse environmental impact,” it plainly means that, unless “costs are so high that the best technology is not ‘available,’” it does not permit cost-benefit analysis because such analysis “often, if not always, yields a result which does not maximize environmental protection.”
The decision remands the Riverkeeper II cases back to the Second Circuit for further proceedings, consistent with the Supreme Court opinion. As discussed in our earlier Alerts on Riverkeeper II dated February 5, 2007 and March 12, 2007, respectively, this cost and cost-benefit issue was the primary one that led the Second Circuit to rule out four of the five BTA Compliance Alternatives that had been included in the Phase II rules, leaving only closed-cycle cooling in place. The Second Circuit must now revisit the other four alternatives.
Best professional judgment decisions will continue
It is likely to be years until there is a final resolution of this matter and definitive Phase II CWIS federal regulations. Thus, for the foreseeable future, EPA and N/SPDES permitting states will continue to make BPJ determinations as once-through cooling power plants’ N/SPDES permits come up for renewal. There are clearly emerging trends on what is being required in the 316(b) CWIS-related provisions in these permits, as well as some significant variations between what some of the states and the EPA are putting in permits.
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.