Justice Triumphs: The Supreme Court Upholds EPA’s Authority to Consider Costs Under Section 316(b) of the Clean Water Act

As many readers of this blog will have already learned, the Supreme Court issued its long-awaited decision in Entergy v. Riverkeeper yesterday. The Court reversed the Second Circuit Court of Appeals and held that EPA was within its authority to consider cost-benefit analysis in setting standards for cooling water intake structures under § 316(b) of the Clean Water Act.

I’m definitely getting on my soapbox here, but this should not be news and it should not be controversial – though I certainly realize that it is. If current conditions tell us anything, it is that resources are not infinite. The irony here is that it is environmentalists who tend to make this point most frequently. Unfortunately, they don’t like to acknowledge that, because resources are not infinite, cost-benefit decisions get made implicitly, even when EPA does not utilize cost-benefit analysis in its regulations.

When I was just a poor Superfund lawyer, I attended a public meeting in Somersworth, New Hampshire, as local residents tried in vain to persuade EPA that they could save more lives by installing traffic signals and hiring public safety personnel than by spending millions of dollars cleaning up an old landfill to the nth degree. The simple truth is that when we force regulated industries to incur costs without regard to the associated benefits, other spending gets displaced. It may be better to have power plant owners spend money on closed cycle cooling than on worker health benefits or, God forbid, payments to shareholders, but let’s make the decision honestly and not ignore the trade-offs.

I still don’t understand why the debate can’t be about how fairly to define costs and benefits. There are serious issues here, but there’s certainly no free lunch. I posted recently about my disappointment regarding early indications that the Obama administration will not be a friend to common sense regulatory reform. The same issues arise here. The Obama administration, because of its undoubted credibility, could advance the cause of cost-benefit analysis and cost-effectiveness analysis. I fear it is not going to happen.

For the same reason, it’s quite possible that the Riverkeeper decision may be much ado about nothing. Riverkeeper holds that EPA may consider costs and benefits, but does not require it. Environmentalists are already clamoring for EPA to rewrite the 316(b) rules and I wouldn’t be surprised if the agency does so.

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