Supreme Court Grants Cert to Consider Whether to Reverse the Second Circuit's Decision that CWA Cooling Water Intake Structure Technology-Based Rules Cannot be Based on Cost-Benefit Analysis

The U.S. Supreme Court has granted certiorari in the Riverkeeper v. US EPA (Riverkeeper II), 475 F.3d 83 (2d Cir. 2007), which remanded EPA rules on power plant cooling water intake structures that included a number of utility-friendly provisions.  Even so, the industry has estimated that implementation of the rules will cost $ 1 billion.  According to Jim May, the Solicitor General argued against cert.  E & E reports that the US opposes the 2d Circuit decision on the merits.  Petitioners naturally expressed enthusiasm about the Court's grant of cert.  EE quoted the Entergy spokesman as saying: 

The high court "recognizes the national importance of EPA's authority and responsibility to balance the extra cost of regulations ... with the benefits that might be provided,"..."The Supreme Court should take the opportunity to establish rationality in this analysis ... and re-establish EPA's authority to draw a line in the sand about costs that are significantly greater than the benefit they create for the environment"

In Riverkeeper II, 2d Cir opinion pdf the Second Circuit held that CWA 316(b) mandated use of "best technology available" for cooling water intake structures at power plants and did not permit use of cost-benefit analysis, although cost could be considered to determine benchmark technology or to engage in cost-effectiveness analysis.  The court concluded that EPA must explain how the technology selected by EPA “approached” the performance of closed cycle cooling.  The court also held that  EPA exceeded its authority by (1) permitting existing plants to meet national performance standards via use of restoration measures and (2) including a site-specific “cost-benefit” variance.  The court sustained EPA regulation of existing as well as new power plants. Finally, the court held that two provisions, the inclusion of a site-specific “cost-cost” variance and the categorical inclusion in “existing facilities” of new units that are part of same industrial operation, violated the APA notice and comment requirements.