Entergy v. Riverkeeper
Supreme Court allows EPA to import cost-benefit analysis into statutory standard requiring “best technology available” for water-intake structures at power plants
Status: Final
Discussion & Analysis: To produce electricity, power plants must generate massive amounts of heat. They dissipate excess heat by cycling water drawn from rivers, lakes, and other natural sources through the facility and discharging it back into those water bodies. Power plant intake structures account for two-fifths of all freshwater withdrawals in the United States, killing over 3.4 billion aquatic organisms each year through “impingement” (squashing against intake screens) and “entrainment” (suctioning into the cycling system). This is despite the fact that thirty years ago Congress required EPA in Section 316(b) of the Clean Water Act to mandate that power plants use the “best technology available for minimizing adverse environmental impact” from these water intakes. This is referred to as the “BTA standard.”
In 2001, EPA established a BTA standard that requires new water intake facilities to use “closed-cycle cooling systems,” which extract far less water by recycling it through the system. If existing facilities were retrofitted with this technology, it would reduce aquatic mortality from intake structures by 98 percent. EPA, however, relied on cost-benefit analysis in setting a lower BTA standard for existing facilities, which only achieves reductions in aquatic mortality of around 80 percent. The agency determined that it would cost power plants $3.5 billion to install closed-cycle cooling systems, but that the environmental benefits were worth only $83 million. This figure was based on the estimated economic value of the lost aquatic organisms that might be commercially and recreationally “harvested,” a mere 1.8 percent of the total number. Shockingly, EPA assigned a zero value to the other 98.2 percent of aquatic wildlife killed by water intake structures.
Environmental groups and several states challenged these regulations in court, asserting not only that EPA’s cost-benefit analysis was deeply flawed, but also that EPA had no authority under the Clean Water Act to engage in such analysis in the first place. A three-judge panel of Second Circuit Court of Appeals unanimously agreed. In an opinion authored by Judge Sonia Sotomayor, the court concluded that the statutory BTA standard did not authorize EPA to use cost-benefit analysis. Judge Sotomayor and her colleagues also concluded that in establishing the BTA standard, EPA violated its own regulations under the Clean Water Act by relaxing the strict standards called for by the law.
The Supreme Court reversed, 6-3, solely on the question of whether EPA could engage in cost-benefit analysis, but did not address the other parts of Judge Sotomayor’s opinion. Justice Scalia, writing for the majority, determined that on this question, EPA’s interpretation of the statute was reasonable. He parsed four other “best technology” standards in the Clean Water Act, two of which require EPA to use cost-benefit analysis, while the other two only state that EPA should consider “costs.” By contrast, the BTA standard at issue in this case provides no express guidance on factors EPA may consider. (Courts refer to this as “statutory silence.”) Relying solely on the text of the BTA standard itself, the majority concluded that “[t]he phrase ‘best technology available,’ even with the added specification ‘for minimizing adverse environmental impact,’ does not unambiguously preclude cost-benefit analysis.”
In dissent, Justice Stevens argued that the majority failed to consider several important legal authorities in reaching this conclusion. First, it did not undertake a proper “Chevron analysis,” named after the seminal case that established the test for determining whether agency interpretations of statutes are lawful. The first step of the Chevron analysis is to ask whether the statute is ambiguous on the precise question at issue. If so, the second step is to ask whether the agency’s interpretation of the statute is reasonable. Here, rather than engaging in a full step-one analysis, the majority took silence to represent ambiguity—and, in Justice Stevens’ words, “an invitation for the Agency to decide for itself which factors should govern its regulatory approach.”
Further, the majority failed to consult the legislative history of the Clean Water Act, which shows that Congress heavily debated the use of cost-benefit analysis in the Clean Water Act and explicitly authorized it in only some sections of the law. “‘When Congress has intended that an agency engage in cost-benefit analysis, it has clearly indicated such intent on the face of the statute,’” wrote Justice Stevens, quoting American Textile Manufacturers v. Donovan (1981).
Stevens then pointed to a 2001 environmental case, Whitman v. American Trucking Association, that appears to directly contradict the majority’s reasoning. American Trucking posed the question whether a provision of the Clean Air Act that authorizes EPA to consider implementation costs in setting ambient air quality standards implicitly prohibits use of full cost-benefit analysis. The Supreme Court held, 9-0, that the law did prohibit cost-benefit analysis, explaining that courts should not infer agency authority to do cost-benefit analysis where Congress has not “clearly indicated such intent”: “[T]he cost of implementation [of a regulatory standard] ‘is both so indirectly related to public health and so full of potential for canceling the conclusions drawn from direct health effects that it would surely have been expressly mentioned in [the text] had Congress meant it to be considered.’” The majority opinion, charged Stevens, ignored this important precedent.
The Entergy ruling undermines Congress’s power to protect the environment in two key respects. First, it shows extreme deference to administrative agencies’ decisions to invoke cost-benefit analysis—in this case going so far as to ignore the first step of a well-established test used by courts to assess the legality of agency action. Second, the decision seems to establish a presumption that an agency decision to use cost-benefit analysis is reasonable unless expressly forbidden by Congress, upending clear Supreme Court precedent that stood for the opposite proposition. Because cost-benefit analysis typically favors weaker environmental regulatory options in order to protect private economic interests, Congress has been sparing in authorizing its use. Now the Supreme Court is turning Congressional forbearance on its head, relying on its silence to effectively write cost-benefit analysis into environmental law.
Key Opinion: Entergy v. Riverkeeper, 556 U.S. __, 129 S. Ct. 1498 (2009).
But see: Whitman v. American Trucking Association, 531 U.S. 457 (2001) (holding that statutory authorization to consider costs of regulatory implementation under the Clean Air Act does not authorize use of cost-benefit analysis).
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