Court sets Fall date for debate on water standards:
In accepting an appeal on the role of cost-benefit analysis in establishing standards under the Clean Water Act, the Supreme Court on Monday set the stage for what could be an important post-Election Day debate over environmental policy.
While the Bush administration opposed Supreme Court review of appeals filed by industry groups, Solicitor General Paul D. Clement notified the court that if the justices did decide to hear the case, the administration would side with the industry challengers.
In its brief, the administration told the justices that the federal appeals court that barred the Environmental Protection Agency from adopting the cost-benefit approach erred “by purporting to micromanage the agency’s decision making.”
The court’s new case, Entergy Corporation v. Environmental Protection Agency, No. 07-588, concerns a provision of the Clean Water Act that applies to the use by power plants and manufacturing facilities of “cooling water,” water drawn from rivers or lakes and used to absorb heat generated by the industrial process. Both the intake of the water and its outflow have environmental consequences for aquatic organisms. Section 316 of the act provides that the design of structures used for cooling water must “reflect the best technology available for minimizing adverse environmental impact.”
Proposing rules for large existing power plants in 2004, the Environmental Protection Agency gave the industry a range of options for meeting “national performance standards.” It also provided that on a plant-by-plant basis, operators could request a variance on the ground that the cost of complying was significantly greater than the environmental benefits of compliance.
Ruling in a lawsuit brought by environmental groups, the United States Court of Appeals for the Second Circuit, in Manhattan, held that the statute barred the agency from engaging in cost-benefit analysis of the type it had proposed. The only way that cost could be taken into account, the court said, was to permit a plant operator to use “a less expensive technology that achieves essentially the same results” as the “best” technology. Finding that it was unclear exactly how the agency had considered cost, the appeals court sent the regulation back to it for reconsideration.
The administration told the Supreme Court that the appeals court had addressed a question of “great significance” and had reached a “wrong” result. The appeals court engaged in “freelancing,” Solicitor General Clement’s brief said, by “usurping the agency’s role of construing and filling in an ambiguous statute.”
The brief went on to explain that the administration had decided not to appeal the ruling because “the full impact of the decision will not be clear until E.P.A. completes proceedings on remand.” However, Mr. Clement added, the administration would support the industry view and defend the regulation if the court decided to hear the case.
That leaves a coalition of environmental groups, led by Riverkeeper Inc., to defend the appeals court’s judgment when the case is argued in the Supreme Court’s next term.
The "316(b)" is case is a modern day illustration of the stories that we tell about the anti-efficiency evils of the Clean Water Act during the 1970s and 1980s. The Clean Water Act mandated the use of best available control technology in order to pursue a goal of zero discharges into navigable waters. This sounds unbelievable good but is impossible to implement in practice when acknowleding the most basic lessons of economics: scarcity and opportunity cost. The additional benefits of water quality improvements, measured in the broadest anthropogenic sense, are less than the additional costs of water quality improvements for some improvements. Benefit-cost analysis helps to identify the situations where additional water quality improvements should not be pursued. In these cases the money would be better spent on other types of environmental improvments, other social programs or somewhere else.
Some environmental groups and the courts continue to fail to recognize this basic principle of economics.
