The U.S. Supreme Court sided with power companies in a landmark decision last week, ruling that the Environmental Protection Agency (EPA) is not prohibited from considering a cost-benefit analysis when regulating the design of cooling water intake structures. This ruling affects power plants use cooling water from the nation’s rivers, lakes, and oceans.

At the heart of the arguments in Entergy v. EPA were whether Section 316(b) of the Clean Water Act, 33 U.S.C. 1326(b), authorizes the EPA to compare costs with benefits in determining the “best technology available for minimizing adverse environmental impact” at cooling water intake structures.

In January 2007, the U.S. Court of Appeals for the Second Circuit in New York had ruled in favor of environmental groups led by Riverkeeper Inc. and six northeastern states that the agency’s approach was unlawful. Had it stood, that decision would have forced existing power plants to make costly upgrades to reduce the number of fish and aquatic organisms trapped in their cooling systems, perhaps requiring conversion to a closed-loop cooling water system from a once-through system.

But the Supreme Court overturned that ruling (PDF) by a 6–3 vote on April 1, upholding the 2004 EPA rule that affects more than 550 facilities—which collectively account for more than 40% of the nation’s power generation.

Writing for the majority, Justice Antonin Scalia said that the EPA “permissibly relied on cost-benefit analysis in setting the national performance standards and in providing for cost-benefit variances from those standards.”

The appellate court, he noted, interpreted “best technology available” as mandating only those technologies that can “be reasonably borne by the industry.” But, he wrote, “whether it is ‘reasonable’ to bear a particular cost may well depend on the resulting benefits; if the only relevant factor was the feasibility of the costs, their reasonableness would be irrelevant.”

Even the states and environmental groups had recognized in a brief that “some form of cost-benefit analysis is permissible,” he wrote. “They acknowledge that the statute’s language is ‘plainly not so constricted as to require EPA to require industry petitioners to spend billions to save one more fish or plankton.’”

Justices John Paul Stevens, David Souter, and Ruth Bader Ginsburg dissented. “Like the Court of Appeals, I am convinced that the EPA has misinterpreted the plain text of §316(b),” wrote Justice Stevens in a shared opinion. “Unless costs are so high that the best technology is not ‘available,’ Congress has decided that they are outweighed by the benefits of minimizing adverse environmental impact. Section 316(b) neither expressly nor implicitly authorizes the EPA to use cost-benefit analysis when setting regulatory standards; fairly read, it prohibits such use.”

To this, Justice Stephen Breyer—writing only for himself—argued it would be unreasonable for the act’s sponsors to have drafted the Clean Water Act to forbid—not to restrict, as he thought it had done—cost-benefit analysis. “Any such total prohibition would be difficult to enforce, for every real choice requires a decision maker to weigh advantages against disadvantages, and disadvantages can be seen in terms of (often quantifiable) costs,” he wrote. “Moreover, an absolute prohibition would bring about irrational results.”

The cases are Entergy v. EPA, 07-588; PSEG Fossil LLC v. Riverkeeper Inc., 07- 589; and Utility Water Act Group v. Riverkeeper Inc., 07-597.

Source: U.S. Supreme Court, POWER