Entergy Corp. v. EPA

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Contents

[edit] Briefs and Documents

Docket: 07-588, 07-589, 07-597

Issue: Whether the Clean Water Act permits the EPA to undergo a cost-benefit analysis in determining the most environmentally friendly technology at cooling water intake structures, and to regulate such structures at existing as well as new facilities.

Merit briefs


Amicus briefs


Oral Argument: Transcript

Decision: REVERSED AND REMANDED in an opinion by Justice Scalia

[edit] Pre-Argument Articles

[edit] Grant write-up

[edit] Argument Preview

In Entergy Corp. v. EPA, No. 07-588, which consolidates issues presented in PSEG Fossil v. Riverkeeper (07-589) and Utility Water Act Group v. Riverkeeper (07-597), the Court will consider whether the Clean Water Act (CWA) permits the EPA to employ a cost-benefit analysis in determining the best technology available to reduce the environmental impact of cooling water intake structures.

[edit] Background

Cooling water intake structures draw water into power plants to offset the heat created during power generation. Although necessary for the safe operation of the plants, these structures may harm or kill fish and aquatic organisms in the water. Section 316(b) of the Clean Water Act, 33 U.S.C. § 1326(b), authorizes the EPA to regulate the “location, design, construction and capacity of cooling water intake structures” to ensure that these structures reflect “the best technology available [“BTA”] for minimizing adverse environmental impact.” Although Section 316(b) cross-references Sections 301 and 306 of the CWA – which define technology-based standards for effluent limitations and new source performance requirements – it does not define BTA or otherwise explicitly indicate how the EPA should consider costs in determining what constitutes BTA.

For over thirty years, the EPA relied on the “best professional judgment” of state and federal authorities to determine the BTA for a particular facility based on site-specific costs and benefits. Beginning in 2001, the EPA – pursuant to a consent decree – began to issue regulations implementing Section 316(b). The first phase of the rulemaking, which applied only to new power plants, generally required closed-cycle cooling technology as the BTA; that rule was largely upheld by the Second Circuit in 2004. This case deals with Phase II of the rulemaking, which applies to existing power plant structures. The Phase II rule does not require facilities to update their systems to conform to a single type of cooling water intake structure, such as the closed-cycle cooling tower that was determined to be the BTA for new facilities covered by Phase I. The EPA rejected the single standard due to the high costs of converting existing facilities, the availability of energy-efficient alternatives, and the potential negative impact on energy generation if closed-cycle cooling towers were required. Instead, the new rule authorizes a range of acceptable technologies, as well as the use of restoration measures, to meet national performance standards and provides a variance from these requirements for facilities able to demonstrate that the costs of compliance significantly outweigh the benefits of compliance.

Entergy, along with several other parties, challenged the Phase II rule in the Second Circuit. The court of appeals rejected Entergy’s claim that Congress did not intend the EPA to regulate existing facilities, reasoning that Section 316(b) cross-referenced Section 301, which explicitly applies to existing facilities. The court similarly rejected the EPA’s use of a cost-benefit analysis to determine BTA. Again relying on the cross-references found in Section 316(b), the court observed that other sections of the CWA explicitly provide for cost-benefit analysis: had Congress intended to allow a cost-benefit analysis under Section 316(b), it would have made that intent clear. Instead, the court determined, the EPA could consider cost only to determine (1) what technology is affordable to the industry as a whole; or (2) whether there is a less expensive technology that is capable of achieving a virtually identical result. Finally, the court also prohibited the use of variances or restorative measures to achieve compliance with the regulation. The Second Circuit then remanded to EPA to determine whether the agency properly weighed the costs and benefits when evaluating the acceptable cooling structure technology.

[edit] Petition for Certiorari

Entergy urged the Court to grant certiorari to review the Second Circuit’s decision, as did the Utility Water Act Group and PSEG, which advanced similar arguments for granting certiorari in their petitions for the consolidated cases. In its petition (as well as its reply), Entergy advanced three justifications for granting certiorari. First, Entergy claimed that the Second Circuit’s construction of Section 316(b) as including existing cooling water intake structures is inconsistent with the plain meaning of the CWA and conflicts with the interpretations advanced by other courts of appeals. Specifically, by relying on Section 301 to interpret Section 316(b), Entergy contended the Second Circuit allowed the National Pollutant Discharge Elimination System (NPDES) permitting process to enforce Section 316(b)’s requirements. However, Entergy argued, both the D.C. and Fourth Circuits have declined to extend the use of NPDES permits beyond the discharges.

Second, Entergy sought review on whether courts should defer to an agency’s interpretation of the scope of its authority. According to Entergy, the Supreme Court and courts of appeals have adopted conflicting rules on this question, and the Second Circuit’s decision, by deferring to the EPA’s determination that it had jurisdiction over existing cooling structures, exacerbated that split.

Third, Entergy argued that the Second Circuit’s cost-effectiveness test is overly narrow and conflicts with the holdings of other circuits. Entergy claimed that the court failed to defer to agency expertise and incorrectly applied Section 301 instead of Section 304 in determining whether, and to what extent, the EPA can consider costs and benefits. Even under Section 301, Entergy claimed, amendments to the statute have relaxed the prohibition on conducting a cost analysis. Thus, according to Entergy, the court failed to follow Congressional intent in creating reasonable policies and instead enforced an overly burdensome test for the EPA to follow. Furthermore, Entergy argued, restricting the ability to conduct a cost-benefit analysis is inconsistent with the D.C. and Sixth Circuits’ grant of discretion to the EPA in considering relevant factors in choosing the best technology. Likewise, the restriction is inconsistent when comparing decisions from the D.C. and Fifth Circuits in construing similar language in other environmental statutes. Without further review, Entergy concluded, the Second Circuit’s decision will impose significant and unnecessary burdens on the electric-generating sector and the public.

The Solicitor General filed a brief in which it opposed certiorari but indicated that it would largely support petitioners if certiorari were granted. First, the government agreed with petitioners that the Second Circuit’s holding prohibiting the EPA from conducting a cost-benefit analysis was incorrect. The government contended that the statute lacks any explicit reference requiring the EPA to choose the technology with the greatest benefit for the environment. In the government’s view, the lower court misinterpreted Congress’s silence as a prohibition on cost-benefit analysis, when in fact the Fifth and D.C. Circuits have interpreted silence to permit a cost-benefit analysis. The government also acknowledged that the Second Circuit’s decision is “in tension” with a decision of the First Circuit, but it maintained that no “square conflict” existed because “the permissibility of considering costs was not in dispute in that case.” And, although the government conceded that the cost-benefit analysis raises an important question – especially because electric-generating plants could incur significant new costs and might need to shut down to retrofit their water-intake structures – it nonetheless argued that certiorari is not warranted at this time because “the full impact of the [Second Circuit’s] decision will not be clear until EPA completes proceedings on remand.”

Second, the government also agreed with the Utility Water Act Group and PSEG that the Second Circuit erred in holding that restoration measures may not be used to minimize the adverse effects of cooling water intake structures. Here too, however, the government contended that certiorari is not warranted because “[n]o other court of appeals has held that restoration measures are a permissible means of compliance under Section 316(b)” and the issue is not as important as the cost-benefit question.

Third and finally, the government disputed Entergy’s claim that the court erred in applying Section 316(b) to existing facilities. The government argued, inter alia, that Section 316(b) clearly applies to existing facilities; even if the question was ambiguous, it continued, “EPA’s interpretation is certainly reasonable and entitled to deference.” Moreover, the government emphasized, there is no conflict among the circuits on the question.

On April 14, 2008, the Court granted certiorari but limited its review to the question, as formulated by the government, regarding the EPA’s authority to conduct a cost-benefit analysis.

[edit] Merits Briefing

(NB: Max Schwartz wrote up the respondents' briefs and the petitioners' reply briefs for this section)

In their joint brief on the merits, Entergy and PSEG elaborate on the arguments that they made in their cert. petitions against the Second Circuit’s cost-effectiveness test. First, Entergy and PSEG claim that the Second Circuit disregarded precedent and incorrectly interpreted the statute’s silence as a prohibition on cost-benefit analysis. Instead, Entergy and PSEG maintain that the most reasonable interpretation would be the exact opposite – i.e., that the EPA presumably has the same authority as other agencies to conduct a cost-benefit analysis to effectively implement its statutory mandate.

Second, Entergy and PSEG continue to assert that that the statutory language of § 316(b) not only permits but also requires the EPA to conduct a cost-benefit analysis. Assessing the language of § 316(b), both alone and in conjunction with the statute as a whole, Entergy and PSEG contend that the terms “best” and “available” do not refer solely to the reduction of harm, but also to the consideration of other factors, including costs. Additionally, the cross-references to Sections 301 and 306 of the CWA confirm that the EPA is “at least authorized, and in some cases required” to weigh costs and benefits in setting technology-based standards. In challenging the Second Circuit’s refusal to permit site-specific considerations, Entergy and PSEG argue that the Second Circuit’s interpretation is contradictory because it requires the least adverse environmental technology but precludes local and site-specific considerations that would be relevant in making this decision.

Finally, Entergy and PSEG argue that even if the Court does not agree that the statutory language clearly authorizes a cost-benefit analysis, the statute is, at a minimum, ambiguous, so that the EPA’s interpretation allowing the agency to conduct a cost-benefit analysis should be entitled to deference.

Both the United States and the Utility Water Act Group filed merits briefs echoing the arguments made by Entergy and PSEG. They ultimately conclude that the Second Circuit erred in its interpretation and the EPA should be permitted to conduct a cost-benefit analysis in determining the best technology available to reduce the environmental impact of cooling water intake structures.

In the brief filed by respondents Riverkeeper, Inc., they turn to the “plain language” of the provision at issue and argue that it clearly prohibits cost-benefit analysis of the kind at issue here. According to their brief, the terms “best available” and “minimizing...impact” encompass the calculation of costs and benefits: “best available” means that the technology must be economically feasible for the industry to implement, while “minimizing impact” must be “to reduce to the smallest possible degree” (a definition recognized by the EPA in the Federal Register). The combination of these terms means that the EPA’s calculation must be only limited by the cost of the technology, not whether the EPA concludes that the benefits of that technology are worth the costs.

Riverkeeper also argues that the plain language of the statute gives the EPA the flexibility it needs to address the various hypotheticals raised by petitioners and amici. First, the EPA has the flexibility under 316b to consider other “adverse impacts,” such as energy efficiency; the plain reading of the statute does not prioritize minimizing fish kill to the detriment of other impacts. Also, Riverkeeper’s construction would not require huge expenditures by industry to achieve only marginal benefits; nothing about “minimizing” impact precludes the agency from acknowledging de minimis differences.

Riverkeeper also examines the statutory structure and context of 316b within the Clean Water Act. They argue that Congress’s limited and cautious delegation of responsibility for cost-benefit analysis to the EPA, combined with its silence on the issue in 316b, means that cost-benefit analysis was never supposed to be used.

Finally, Riverkeeper turns to the argument that the EPA has previously used cost-benefit analysis in interpreting the law, and that the agency’s actions should receive deference. Riverkeeper argues that the EPA’s limited use of cost-benefit analysis, through the “wholly disproportionate” test (whereby new improvements are not required because their benefits are wholly disproportionate to their costs), conforms to respondents’ interpretation of the statute—at least when it is applied in situations where there are only de minimis improvements possible through implementation of the new technology. Even if the EPA’s application of this test was inconsistent with the statute, Riverkeeper argues, implementation cannot defeat the plain language of the statute itself.

Respondents Rhode Island and other northeastern states also submitted a brief which largely echoed the issues raised in the Riverkeeper brief.

In their reply briefs, Entergy and the other petitioners return to the structure and history of the CWA, and especially section 316b. They assert that both Riverkeeper and the States misconstrue the language of 316b—that both the de minimis exception and the flexibility that Riverkeeper emphasize in its brief undermine respondents’ own arguments by showing areas in which cost-benefit analysis (or something very close thereto) would exist under their reading. Petitioners also return to their arguments regarding the structure of 316b, asserting that merely because 316b is a biological standard, excluding any discussion of costs and benefits for a regulation based solely on biology is unwarranted.

[edit] Oral Argument Recap

-Max Schwartz

In Tuesday’s oral argument in Entergy v. Riverkeeper (No.07-588, consolidated with Nos. 07-589 and 07-597), the Supreme Court considered Section 316(b) of the Clean Water Act, which provides that “[a]ny standard…applicable to a point source shall require that the location, design, construction, and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact.” The question before the Court was whether Congress in Section 316(b) had explicitly removed the consideration of costs and benefits from the calculation of the “best” technology, or whether the provision is instead sufficiently ambiguous to allow the EPA to use its discretion in considering costs and benefits.

Both Maureen Mahoney, arguing on behalf of petitioner Entergy, and Deputy Solicitor General Daryl Joseffer, arguing for the EPA in in support of Entergy, attempted to portray the language of Section 316(b) as falling squarely within Chevron. Both pointed to two other “best technology” provisions in the Act that explicitly require EPA to consider costs, arguing that because those provisions both reference costs and are much more detailed than 316(b), Congress’s mere silence should not be seen as a prohibition. Both Mahoney and Joseffer also cited EPA practice over the last three decades: the agency has long rejected improvements whose costs would be “wholly disproportionate” to their benefits.

Several Justices pressed Mahoney and Joseffer to explain how a cost-benefit analysis would be conducted; Justice Souter seemed particularly concerned with how to value the natural life being protected in comparison to the expense of plant retrofits, as well as how cost-benefit analysis could be implemented without severely undermining the technology-forcing aspects of Section 316(b).

Arguing for respondents Riverkeeper et al., Richard Lazarus began by trying to counter the various hypotheticals—such as incurring millions in expenses to protect only a few fish—put forth by petitioners and amici (and described more colorfully in respondents’ brief as “proffered horribles”). He was never able to fully finish that line of argument, however, as he was tied down by a series of exchanges with Justices Alito and Scalia regarding his definitions of the words “available” and “best.” While Lazarus contended that the concept of “economic availability” encompassed the idea of cost to the industry, Justice Alito had difficulty seeing how this admission that cost concerns played any role at all managed to avoid the Chevron test.

Justice Breyer seemed to extend an olive branch to both sides of the case, sketching out a vision of 316(b) in which costs were taken into account, and even balanced against benefits, but only in a limited fashion to prevent absurd results; in short, very similar to the “wholly disproportionate” test the EPA had been using previous to this litigation. There must be, “a way of [balancing costs] that they have some discretion over, that doesn’t involve some enormously elaborate thing,” he said, “and that’s what I’m searching for.”

[edit] Opinion Analysis

Lyle Denniston wrote the following on SCOTUSBlog: Parsing what Congress means when it is silent, the Supreme Court on Wednesday decided that federal environmental regulators may let more than 500 electric power plants use less-costly devices to take water for cooling out of the nation’s waterway, even if that does less than could be done to protect fish and tiny forms of acquatic life. The decision was a significant loss for conservationists, and for states that wanted more rigorous protection of the fish, shellfish and tiny plankton at the bottom of the acquatic food chain in their rivers and streams.

Although the ruling in Entergy Corp. v. Riverkeeper (07-588) was limited to government controls on water pollution, it seemed to speak more generally in allowing federal agencies in other fields to opt for lower-cost technology even if not the best for the environment, unless Congress explicitly forbids them to do so.

Justice Antonin Scalia examined a provision of the Clean Water Act that controls industry structures for pulling plant-cooling water out of rivers and streams, and found that Congress had said nothing there about whether EPA could weigh costs against benefits and choose a lower-cost option. “It is eminently reasonable,” Scalia wrote, “to conclude that [that section’s] silence is meant to convey nothing more than a refusal to tie the agency’s hands as to whether cost-benefit analysis should be used, and if so to what degree.”

If Congress’ silence meant prohibition, then federal agencies would not be able to take into account any considerations that Congress did not expressly leave to their discretion, Scalia said.

To Justice John Paul Stevens and two other dissenters, congressional silence — at least in this legislation — spoke more definitively. In the environmental field, the dissenters argued, “Congress granted the EPA authority to use cost-benefit analysis in some contexts but not others” and Congress intended “to control, not delegate, when cost-benefit analysis should be used.” Thus, under the Clean Water Act, silence on Capitol Hill did not mean “an invitation for the Agency to decide for itself which factors should govern its regulatory approach.”

The dissenters argued that, when cost-benefit analysis is used in judging measures to protect the envirionment, it is routinely easier to calculate costs of the technology than it is to calculate harms to the environment, so costs tend to drive the choice. “Cost-benefit analysis often, if not always, yields a result that does not maximize environmental protection,” Stevens wrote.

The impact on future environmental controversies of the majority’s approach in Entergy appears to be depend on what the language of a federal law says, or on what it fails to say explicitly, and that leaves it to Congress to get what it really wants only if it speaks with clarity and specificity. (The decision is only one about how to interpret an existing law, and thus it is open to amendment if Congress does not like the result.) But the impact may also depend, with new leadership now in place at EPA, on whether the Obama Administration wants to use cost-benefit calculations when the result would be lessened environmental protection.

The Entergy case involved a decision by EPA to lay out, for the first time, a set of regulations to apply nationwide to all water-intake structures at new and existing power plants. The resulting rules apply to about 550 power plants that account for about 53 percent of the nation’s electric-power generating capacity.

The power industry challenged the regulation, arguing that EPA does not have the authority to impose new requrements on existing intake structures. The Second Circuit Court upheld the EPA’s authority to do so, but ruled that the agency could not use cost-benefit analysis in applying the regulation. The Supreme Court then agreed to hear the industry appeal, but limited its review to the agency’s authority to compare costs with benefits in judging what structures could be used under the Clean Water Act’s mandate to minimize harm to the environment.

As the case unfolded before the Court, it became a major test of the implications of calibrating environmental impact according to the costs of doing so, rather than finding the technology that would do the most to protect the environment.

Wednesday’s decision came on a 6-3 vote, at least on whether the Act allowed EPA to use cost-benefit analysis in deciding what water-intake structures must be used by utility plants when they are seeking to cool down the heat that results from generating electricity. Justice Stephen G. Breyer went along with that view of the Act, but said that he would have sent the case back to EPA to further explain its switch in the language it used in spelling out its cost-benefit standard.

Justice Scalia’s opinion did not resolve entirely the dispute over EPA’s standards for the structures at issue. The decision sends the case back to the Second Circuit to consider remaining issues beyond EPA’s discretion to use cost-benefit methodology. Joining Scalia’s opinion in full were Chief Justice John G. Roberts, Jr., and Justices Samuel A. Alito, Jr., Anthony M. Kennedy and Clarence Thomas. Justice Breyer wrote separately. Justice Stevens’ dissenting opinion drew the support of Justices Ruth Bader Ginsburg and David H. Souter.

[edit] Links and further information

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