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Energy Companies Win Supreme Court's Clean Water Act Ruling

WASHINGTON The Supreme Court has given power plant operators in California and around the nation an important victory by upholding the Environmental Protection Agency's power to use cost-benefit analyses in deciding whether to require expensive retrofitting to minimize fish-kills.

Environmental groups, however, say they hope the Obama administration EPA will shift policy and take a stricter view of what existing power plants must do to reduce the impact on aquatic life from using ocean or river waters to cool the facilities.

In California, an environmental lawyer voiced concerns the ruling could ease pressure on utility companies to overhaul the 17 aging power plants that line the Pacific Coast from San Diego to Humboldt County and reduce the amount of water used to cool the facilities. The California Supreme Court has deferred action on a challenge to the operations of the Moss Landing power plant on Monterey Bay while awaiting the U.S. Supreme Court's decision.

The justices' 5-4 ruling on April 1 in Entergy Corp. v. Riverkeeper, Inc., 07-588, deferred to the decision by the Bush administration's EPA that the Clean Water Act allows cost-benefit analyses in regulating cooling water intake structures at power plants. As Justice Antonin Scalia explained from the bench, the water-cooling systems result in large numbers of fish and other aquatic organisms either being "squashed" against drains or "sucked" into power plant facilities.

An EPA rule adopted in 2001 under pressure from environmental groups requires new power plants to use "closed cycle" cooling systems that minimize the impact on aquatic life by reducing the amount of water used. Three years later, however, the EPA declined to impose the same requirements on some 500 existing power plants, which account for slightly more than half of the nation's electric-generating capacity.

Environmental organizations, including the Hudson River conservation group Riverkeeper, challenged the EPA decision. They argued that the decision violated the Clean Water Act's provision requiring the cooling systems to use the "best technology available for minimizing adverse environmental impact." The New York-based Second U.S. Circuit Court of Appeals in 2007 agreed and ordered the EPA to redo the regulation.

In his opinion reversing the appeals court decision, Scalia reasoned that the statute's "best technology" requirement could refer to "the technology that most efficiently produces some good." And the term "minimize," he continued, does not necessarily mean the "greatest possible reduction." Since the statute did not explicitly prohibit cost-benefit analyses, Scalia concluded that the EPA "permissibly relied on cost-benefit analysis" in setting national standards and in providing for exemptions for individual facilities.

Scalia's opinion was joined by Chief Justice John G. Roberts Jr., fellow conservatives Antonin Scalia and Clarence Thomas, and Californian Anthony M. Kennedy, a swing-vote on environmental and some other issues. Kennedy, who had appeared sympathetic to a stricter reading of the statute during oral arguments in December, did not write separately to explain his view of the case.

In a partial dissent, Justice Stephen G. Breyer agreed that cost-benefit analyses were permitted, but faulted the EPA for failing to adequately explain its decision to broaden the basis for granting exemptions to individual plants. In the main dissent, Justice John Paul Stevens said that Scalia misread the statute. He said the ruling "fundamentally weakens" the provision. Liberals David H. Souter and Ruth Bader Ginsburg joined Stevens's opinion.

In a written statement, the Riverkeeper group said it was "disappointed" with the decision, but "pleased" that the ruling left it up to EPA to decide "to what extent, if any" cost-benefit analyses were to be used. Without referring to her by name, the group said that it was "looking forward to working with EPA's new administrator," Lisa Jackson, and said it was "confident" that she would agree that the Bush EPA regulations did not satisfy the statutory mandate.

The EPA had no comment on the ruling. Industry representatives had no immediate on-the-record comment, but an industry source noted that the regulations have been suspended since the appeals court decision. The agency would have to follow the notice-and-public comment procedures in promulgating any new rules, the source said.

In California, Stanford law professor Deborah Sivas noted that the state Supreme Court is considering rules to require closed-cycle or other alternate cooling technologies and some plants have been moving in that direction. "The worry is that the [Supreme Court] decision undermines the pressure to do that," Sivas said. As director of Stanford's environmental law clinic, Sivas is representing environmental groups in the Moss Landing case, Voices of the Wetlands v. State Water Resources Control Board, No. H028021 (see CP&DR Legal Digest, April, 2008, March 2008).

Scalia noted in his opinion that the EPA had estimated that installation of closed-cycle systems at all existing power plants would cost about $3.5 billion per year and reduce electricity generation by 2.4% to 4.0%. The agency projected that closed-cycle systems would reduce fish mortality by 98% compared with the goal of 80% to 95% set in the rules as adopted.

In his dissenting opinion, Stevens said that cost-benefit analyses are controversial because it is easier to calculate costs than to "monetize" the benefits of environmental protection. He said that the EPA had initially valued the aquatic life to be protected by closed-cycle systems at $735 million, but reduced the figure to $83 million by considering only the value of fish commercially or recreationally harvested.

Steven Geoffrey Gieseler, a Pacific Legal Foundation lawyer who filed an amicus brief in the case, said cost-benefit analyses are needed "to know what kind of bang you're getting for the buck." Gieseler, who heads PLF's Florida office, said that utilities could be expected to pass on the costs of "forced retrofitting" to customers in the form of higher rates.

Sivas countered that industry and regulatory agencies often undervalue the benefits of environmental protection. "Once economics go into that equation on a site specific basis, the whole thing becomes a kind of a sham," she said. "It just becomes a gaping hole for industry."

 

Contributing editor Kenneth Jost, a former editor of The Los Angeles Daily Journal, is Supreme Court editor, CQ Press, in Washington, D.C.

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