|April 2, 2009|
Schiff Hardin Environmental Update
EPA Retains Authority to Set Reasonable National Performance Standards under Section 316(b) of the
The Supreme Court decided a Clean Water Act case yesterday, April 1, 2009, in favor of electric generating plants. The case, Entergy Corp. v. Riverkeeper, Inc., determined that the U.S. Environmental Protection Agency (EPA) did not overstep its authority when it adopted national performance standards after weighing the costs and benefits of water intake cooling systems rather than simply employing the most advanced technology available on the market. The suit, initiated by several environmental groups and various states, alleged that the cost-benefit analysis performed by EPA violated Section 316(b) of the Clean Water Act.
EPA promulgated the regulations at issue in 2004 after nearly three decades of making the "best technology available" determination on a case-by-case basis. Its "Phase I" regulations govern new cooling water intake structures, while its "Phase II" regulations apply to certain large existing facilities. The electric generating plants affected by yesterday's decision are Phase II facilities whose existing water-intake flow exceeds 50 million gallons per day.
In setting national performance standards for Phase II facilities to reduce impingement and entrainment mortality for aquatic organisms, EPA considered two options. The first option involved the implementation of a mix of remedial technologies, which EPA determined were "commercially available and economically practicable," and which would reduce impingement mortality by 80 to 95 percent and entrainment mortality by 60 to 90 percent. The second option involved the conversion of Phase II facilities to "closed-cycle" cooling systems, which would reduce impingement and entrainment mortality by up to 98 percent, but would cost approximately $3.5 billion per year nine times the estimated cost of the first option. EPA decided in 2004 not to mandate the adoption of closed-cycle cooling systems because the benefits of the first option could approach those of the closed-cycle system, but with lower cost and fewer implementation problems.
The environmental groups and several states challenged EPA's interpretation of Section 316(b) and the Phase II regulations. The Second Circuit concluded that cost-benefit analysis is impermissible under Section 316(b), and therefore found the site-specific cost-benefit variance provision unlawful and remanded the regulations to the EPA for it to clarify whether it had relied on cost-benefit analysis in setting the national performance standards.
The Supreme Court reversed the Second Circuit's ruling, finding that the phrase "best available technology" is open to interpretation and does not necessarily mean the technology with the greatest environmental benefit without regard to the cost. Therefore, EPA retains the option to set reasonable national performance standards for existing electric generating facilities, while also allowing variances based on cost-benefit considerations.
RECENT ENVIRONMENTAL PUBLICATIONS
"96th Illinois General Assembly: Environmental Bill Summaries," Environmental Update (April 1, 2009)
ABOUT SCHIFF HARDIN LLP
Schiff Hardin's diverse environmental practice advises clients engaged in a wide variety of industries and commercial endeavors such as electric generation, natural gas distribution and production, chemical manufacturing, auto and auto parts manufacturing, consumer goods manufacturing, real estate development and investments by financial institutions and equity investors.
For more information, contact us.