On Wednesday, the Supreme Court of the United States, in a 6-3 decision, reversed the United States Court of Appeals for the Second Circuit (“Court of Appeals”) and upheld the EPA rule that it could consider costs and benefits for existing cooling water intake structures. The EPA estimates that the Supreme Court’s ruling affects over 500 facilities that account for over half of the United States’ electricity production.

Traditionally power plants will use water from a nearby stream or lake for cooling purposes. Aquatic life, such as fish and shellfish, can beat risk to get squashed against the intake screens or sucked into the cooling structure during the process. In order to mitigate these environmental effects, EPA issued two regulations under the Clean Water Act (“CWA”) that required the “best technology available for minimizing adverse environmental impact.” EPA first announced in 2001 that new power plants would have to be placed on a closed-loop system or reduce their intake so that the environmental impact is similar to a closed-loop system.

EPA later released regulations that existing structures would have to assure EPA that their intake systems had reduced the mortality rate of fish or shellfish by 80-95%. This alternative regulation for existing structures was selected because it was nine times less expense than forcing existing power plants to convert to a closed-loop system. Additionally, EPA stated that it would allow site-specific variances when the existing power plant demonstrated that the compliance costs were significantly higher than the costs EPA had estimated for the benefit of complying. Riverkeeper, Inc. and other environmental groups appealed EPA’s cost-benefit rule to the Court of Appeals which overruled EPA.

Writing for the majority, Justice Antonin Scalia ruled that the cost-benefit analysis was a reasonable interpretation of CWA’s technology requirements. While admitting that the Court of Appeals’ interpretation to require the greatest mortality reduction is acceptable, it was not the only reasonable interpretation. Instead, “best technology for minimizing adverse environmental impact” under the CWA could mean “the technology that most efficiently produces some good.” Additionally, Justice Scalia noted that Congress was specific in other provisions of the CWA, using words such as “elimination” and “no discharge” when it required the greatest feasible reduction within the CWA. Since Congress used the term “minimizing adverse environmental impact,” it allowed EPA to consider a cost-benefit analysis.

In his dissent, Justice John Paul Stevens, joined by Justices Souter and Ginsburg, argued that EPA could not consider costs and benefits. Justice Stevens wrote that under the CWA, the only time that EPA was allowed to consider costs was when the costs essentially made the best available technology unavailable. Justice Stevens also noted that the Supreme Court had previously decided that when the CWA was silent as to whether an agency can consider costs, it assumed that a cost-benefit analysis was prohibited. Because the provision at issue in the CWA was silent, EPA did not have the authority to consider a cost-benefit analysis.

Meanwhile, Justice Stephen Breyer concurred in part and dissented in part. In his opinion, Justice Breyer stated that EPA could compare costs and benefits, but added that EPA had not adequately explained its reasons for applying different standards to new and existing plants.

A copy of the Supreme Court’s decision can be found at: http://www.supremecourtus.gov/opinions/08pdf/07-588.pdf.