US Supreme Court Approves Use of Cost-Benefit Analysis

In a welcome decision from the US Supreme Court, Entergy Corp v. Riverkeeper Inc. (07-588), EPA's use of a cost-benefit analysis in deciding what controls are required on river water intakes has been approved by the high court. The intakes at question bring in large amounts of water at power plants and other facilities that use it for cooling. The older intakes can trap and kill billions of fish, mussels and other aquatic life. EPA drafted rules to reduce this "impingement," with new intakes (called Phase I) subject to very expensive controls for protection of aquatic life, such as closed circuit cooling. Older intakes (Phase II), which would be much more expensive to retrofit with the Phase I technology, were required to put less expensive controls in place. However, even these less expensive controls would still reduce mortality by 80 to 95%.

Riverkeeper sued EPA, alleging it had not complied with its duty under section 316(b) of the Clean Water Act, which requires that "the location, design, construction and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact." Riverkeeper argued that "best technology" meant what it said - the best technology for intakes at all types of plants, and nothing less. The Second Circuit largely agreed, deciding that costs of the various intake modification options could be considered only 1)to the extent of determining whether those costs could be reasonably borne by the intake owner, and 2) when choosing between options, but only if all those technology options achieved the best result. The Second Circuit felt EPA couldn't decide what level of protection to achieve by weighing the cost of each intake technology option against the value of the protection it offered - it had to choose from only the best technologies, with the highest degree of protection.

The Supreme Court disagreed, and as the Syllabus reports: "The Second Circuit took 'best technology' to mean technology that achieves the greatest reduction in adverse environmental impacts at a reasonable cost to the industry, but it may also describe the technology that most efficiently produces a good, even if it produces a lesser quantity of that good than other available technologies." The Court found that there was no implicit requirement that the greatest possible reduction in impingement was required, and EPA had discretion on how to implement Congress' directive to employ the best technology. The Court noted that EPA sought only to avoid extreme disparities in costs and benefits, and did not look for the cheapest alternative.

Much of the Clean Water Act is intended to be technology-forcing, forcing industry toward adoption of the best practices available to reduce the pollution and protect the environment. What is often missed, however, is that the newest and best technology can be incorporated in the design of new plants for far less than the cost of retrofitting old plants to meet the same standards. Cost-benefit analysis of the type offered by EPA in this rule is eminently reasonable where it is designed to bring about a substantial reduction in aquatic life mortality without imposing huge costs on industry. Stated differently, there is a price that can be placed on the value of fish, in the sense that we will let some die that could have been saved by significant expenditures. Even Riverkeeper acknowledged that there is no statutory basis for spending billions to save one fish. The same is true of human life - we know that we could save thousands of lives every year by adopting a national speed limit of 30 miles per hour, but as a society we tacitly agree that the lives lost are an acceptable trade-off for the greater efficiency and time gained by driving faster. Life is full of trade-offs

Addendum - Here's an article by Michael C. Dorf with his take on the decision.