Petitioners Brief — Entergy Corp. v. Riverkeeper, Inc.

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FILED _

JUL 14 2008

DORO Ms oer

am -089, 07-597 (Consoli aibUPREME COURT Gi

In the

Supreme Court of the Anited States

ENTERGY CORP., Petitioner,

ENVIRONMENTAL PROTECTION AGENCY, ET AL.,

Respondents.

PSEG FossIL LLC AND PSEG NUCLEAR LLC,

Petitioners,

RIVERKEEPER, INC., ET AL., Respondents.

UTILITY WATER ACT GROUP, Petitioner,

RIVERKEEPE ”, INC., ET AL., Respondents.

On Writs Of Certiorari To The United States

Court Of Appeals For The Second Circuit

BRIEF FOR PETITIONERS ENTERGY CORP.,

PSEG FOSSIL LLC, AND PSEG NUCLEAR LLC

ELISE E. ZOLI

Counsel of Record

KEVIN P. MARTIN

ROBERT H. FITZGERALD

ALADDINE D. JOROFF

KEVIN P. PECHULIS

GOODWIN PROCTER LLP

53 STATE STREET

BOSTON, MA 02109

(617) 570-1000

Counsel for Entergy Corp.

MAUREEN E. MAHONEY

Counsel of Record

PHILIP J. PERRY

J. SCOTT BALLENGER

CASSANDRA S. BERNSTEIN

DREW C. ENSIGN

LATHAM & WATKINS LLP

555 1ITH STREET, NW

SUITE 1000

WASHINGTON, DC 20004

(202) 637-2200

Counsel for PSEG Fossil

LLC, PSEG Nuclear LLC

Additional Counsel Listed on Inside Cover

JULY 14, 2008

ABIGAIL HEMANI

GOODWIN PROCTER LLP

NEW YORK TIMES BUILDING

620 8TH AVENUE

NEW YORK, NY 10018

(212) 813-8800

CHUCK D. BARLOW

ENTERGY SERVICES, INC.

308 E. PEARL STREET

JACKSON, MS 39201

(601) 969-2542

Counsel for Entergy Corp.

KARLS. LYTZ

LATHAM & WATKINS LLP

505 MONTGOMERY STREET

SUITE 2000

SAN FRANCISCO, CA 94111

(415) 391-0600

JOHN G. VALERI, JR.

PSEG SERVICES CORP.

OFFICE OF ENVIRONMENTAL

COUNSEL

80 PARK PLAZA, T5C

NEWARK, NJ 07102-4194

(973) 430-5506

Counsel for PSEG Fossil

LLC, PSEG Nuclear LLC

QUESTION PRESENTED

Whether §316(b) of the Clean Water Act, 33 U.S.C.

§1326(b), authorizes the Environmental Protection

Agency (EPA) to compare costs with benefits in

determining the “best technology available for

minimizing adverse environmental impact” at cooling

water intake structures.

PARTIES TO THE PROCEEDING

In the United States Court of Appeals for the

Second Circuit, the petitioners were Riverkeeper, Inc.,

Natural Resources Defense Council, Waterkeeper

Alliance, Soundkeeper, Inc., Scenic Hudson, Inc., Save

the Bay-People for Narragansett Bay, Friends of

Casco Bay, American Littoral Society, Delaware

Riverkeeper Network, Hackensack Riverkeeper, Inc.,

New York/New Jersey Baykeeper, Santa Monica

Baykeeper, San Diego Baykeeper, California

Coastkeeper, Columbia Riverkeeper, Conservation

Law Foundation, Surfrider Foundation, State of

Rhode Island, State of Connecticut, State of Delaware,

Commonwealth of Massachusetts, State of New

Jersey, State of New York, Appalachian Power

Company, lllinois Energy Association, Utility Water

Act Group, Entergy Corporation, and PSEG Fossil

LLC and PSEG Nuclear LLC (collectively “PSEG”).

The respondents were United States Environmental

Protection Agency and Stephen L. Johnson, in his

official capacity as Administrator of the United States

Environmental Protection Agency. Appalachian

Power Company and the Illinois Energy Association

are not parties to this appeal.

Pursuant to Supreme Court Rules 24.1 and 29.6,

there is no change to the corporate disclosure

statement previously filed by Entergy or PSEG.

ill

TABLE OF CONTENTS

Page

ee OF SIT TEP serccescrecnpniccernsssensnccinsoneoncdooeepiint i

PARTIES TO THE PROCEEDING. ............. eee esseseees ii

Te Ge FRE OIE BB icc cccececensecsencencensnsccemsneseeneses vi

SE IIIFENT cinciciesencianpniibceciennnieiinnsinsisiemisiedesniiendbemnmnsint 1

TTI hin dic teiacscetiiinteliasiiinsiniietnustisionnindseiesinbitibeibiiniens 1

STATUTORY AND REGULATORY

PROVISIONS INVOLVED ................scccsseeseseeeeeees 1

Oe Ee GE TIEN III cocenecesisanesiscnconscssnnssioncessees 2

i I iahaiidusepcninadnenccctinisinniciiinetcsinenisanionie 4

i: I cd cinchianbacicieieacainsstabiaaaed 4

2. Section 316(b) of the

Re I ic inicesrsctlernienienisnnisnesnincinocenoi 6

3. Technology Requirements

Under §§301 and 306 .................sccsccccseceeeees 7

4. EPA’s Phase II

NET Aititeiiilennssisincstninnicenieseesinndeendenenin 11

sR Or iciieicieeestrenisscettsitiitinatisedsttidantedaninns 15

Be a Ne ER cicnpticnciciicnsssiiniiissenenntiennseninives 17

SUMMARY OF ARGUMENT. ..................ccsscessssscsssseeees 21

TEU TS eicctreitnsonseesensennssessetsnnneseernsnemenesenmnensnsennnin 23

II.

THE SECOND CIRCUIT'S NEW CLEAR

STATEMENT RULE FOR COST-

BENEFIT ANALYSIS IS CONTRARY TO

PRECEDENT AND MUST BE

SEAS B CGMP v0rvenseonessencesnnessniemnanmntictaenunieiiomedatinite

A. The Second Circuit’s Clear

Statement Rule For Cost-Benefit

Analysis Is Inconsistent With This

og tg NRT erL Ta runner eer

B. The Second Circuit’s Clear

Statement Rule Is Unsound And

Should Be Rejected...............ccsscesssseseseeeseeeees

THE ONLY REASONABLE = INTER-

PRETATION OF §316(b) PERMITS EPA

TO WEIGH COSTS AND BENEFITS AT

THE NATIONAL AND LOCAL LEVEL.......... 31

A. The Ordinary Meaning Of The

Phrase Congress Used In §316(b)

Permits Cost-Benefit Analysis ..................006 32

B. The Structure Of The _ Act

Confirms EPA’s Interpretation.................+ 37

1. Sections 301 And 306

Either Mandate Or

Permit Cost-Benefit

RI encessencentininiciiiinniciniiamemeaaaae 38

2. The Second ' Circuit’s

Rigid Analogy To BAT

Standards Is

DRGIIGIRD ccceinsceniccssnsanasemeinentenmendiaai 42

3. The Water Quality

Policies Of The Act Do

Not Support The Second

Circuit’s “ejection Of

Cost-Benefit Analysis .................::ccceseeeeees 46

C. The Second Circuit’s

Interpretation Has Consequences

Congress Could Not Have

EERE SY ne a 49

D. The Legislative History Confirms

That §316(b) Permits Cost-Benefit

ail iad ti ereretdarenateindndenncnbenceees 53

Ill. AT A MINIMUM, §316(b) IS AMBIGUOUS

AND EPA’S INTERPRETATION IS

REASONABLE AND ENTITLED TO

TTI Lid iaiccinienlininindiibdeessuseninecontimniectoevecoencesse 55

IV. THE SECOND CIRCUIT’S JUDGMENT

SHOULD BE REVERSED IN PART................. 58

TABLE OF AUTHORITIES

Page(s)

CASES

Alaska Department of Environmental

Conservation v. EPA,

Be ae Ie Ce esicctttetestininncctensineiininnnininannecisenbintaian 57

American Iron & Steel Institute v. EPA,

GBS F°Ba 1087 Gad Cie. 19776) ....cceccccccecsecesesescoseces 40, 41

American Petroleum Institute v. EPA,

be F | i Ae: | Saaeeeen 31

American Petroleum Institute v. EPA,

TOE FBG BEB (GER Ci. 19GB) .ncccccccccocccsccccccecccsccssceccees 41

American Textile Manufacturers Institute,

Inc. v. Donovan,

er ee I ircencrvincinssenisencssiesincasteciinasiiabaaiinl 20, 25, 26

Amoco Production Co. v. Village of Gambell,

Ae Tes Te GR cricrennensinnscensaninseinesnininnenianenipsenns 29

Appalachian Power Co. v. EPA,

BS FS GEE CGR CR. BT) ac cccecccesesesescsesinccevecscoensens 11

Arkansas v. Oklahoma,

I i lal 56

Barnhart v. Walton,

IE EI ctepicinissncsusissiiesaiiasnseenaniunnnsiitedateuntaiads 58

vii

BP Exploration & Oil, Inc. v. EPA,

66 F.3d 784 (6th Cir. 1995)................ccsssssseees 27, 38, 41

Building & Construction Trades Department,

AFL-CIO v. Brock,

838 F.2d 1258 (D.C. Cir. 1988) ............ccsccescsccsesseees 27

Chemical Manufacturers Ass’n v. NRDC,

I rinnccticiiiendiiinceniiiiasiiistinntinibioneninnnid 23, 48

Chevron U.S.A. Inc. v. NRDC,

ee ee I Ce taitactnticitenetsinnmnennenansecnsions 24, 31, 55

Chevron U.S.A. Inc. v. Echazabal,

SI I i aati secelenlreniestanneniinneel 30

Citizens Coal Council v. EPA,

GET FBG STO (GER Cit. BODG )nrceccccoccccccscoscccccccsescsccesses 33

Consolidated Rail Corp. v. United States,

Se 0 ee Oe I Ce HD crceencssenerccnenncesnscemensccsenesens 27

Consolo v. Federal Maritime Commission,

I ariel 35

CPC International, Inc. v. Train,

BOD FBG BED GU CIR. 19 T6) nnccccccccccvsccccccccccccccccccsoss 41

E. I. Du Pont de Nemours & Co. v. Train,

II ene enee Ramo nao 33, 49

— eBay Inc. v. MercE xchange, L.L.C.,

a eee ee ctieriindcinstesinsenntnnnctecensceseneinicguiaanis 28, 29

Vili

EPA v. National Crushed Stone Ass’n,

re ee icireiicinniciehpciienialsiiattnataicinninisneniemnaien 9, 42, 43

F'DA v. Brown & Williamson Tobacco Corp.,

SD Fas BE Qo Pevcvnrcinnncesensecinmnnvesnccsensnncesastenes 37, 55

George E. Warren Corp. v. EPA,

BED FBG GEG CG. COP. TDG) cccnccccccesccecoscecesssconesivets 27

Good Samaritan Hospital v. Shalala,

Re re ee Cr iicciinticcsniincincaininintcdirnenenmecenssesennsounie 56

Grand Canyon Air Tour Coalition v. FAA,

154 F.3d 455 (D.C. Cir. 1998), cert. denied,

TI sl carci 37

ICC v. Oregon Pacific Industries, Inc.,

a a re Ce irnenicerttntiitiininnitinnianinninctnnniinnin 31

In re Public Service Company of New Hampshire,

(Seabrook Station, Uni‘s 1 and 2),

1977 WL 22370 (EPA), 1 E.A.D. 332 (June

10, 1977), affd after remand, Seacoast

Anti-Pollution League v. Costle, 597 F.2d

ee Cae NE ciiiiatciiciiaiiciseahiendeataiitehdininndiiinsiiiamin 11, 57

International Paper Co. v. Ouellette,

a a icrenicsccesnntconcnntnccnnnciniancipsesimniaianiai 40

Logan v. United States,

I ll 52

Massachusetts v. Hayes,

ES fds Lt. ee 27

Michigan v. EPA,

213 F.3d 663 (D.C. Cir. 2000), cert. denied,

Be Ss NS Ge Per ccrensesserentincessnnansennsenmnemnpeensemesnene 27

National Ass’n of Home Builders v. Defenders

of Wildlife,

ee ee IED csipicciincncsannitetnicnesentininsinmnaieneiineein 32

National Grain & Feed Ass’n v. OSHA,

ee Fae tee Ge Fi rcecccncscccnenncsessensessensnssenes 27

National Wildlife Federation v. EPA,

286 F.3d 554 (D.C. Cir. 2002) 2000.0... eeeeeeeeeees 16, 41

NRDC v. EPA,

824 F.2d 1146 (D.C. Cir. 1987) 0... ccc ceeeeeeeeeeees 26

Public Citizen v. United States DOJ,

I a a aieaieliasiielalialinaneiad 52

Reynolds Metal Uo. v. EPA,

760 F.2d 549 (4th Cir. 1985).............cscssccccessseesersnees 41

Riverkeeper, Inc. v. EPA,

358 F.3d 174 (2d Cir. 2004) ..........ccccscrcssssseeees passim

Rybachek v. EPA,

904 F.2d 1276 (9th Cir. 1990)... eeeeeeseeeseeeeeseees 41

Seacoast Anti-Pollution League v. Costle,

597 F.2d 306 (1st Cir. 1979) 0.000000. 49, 51,57

Sierra Club v. EPA,

314 F.3d 735 (Gth Cir. BOOZ)..........ccccccscecccccssccccccssceces 27

Sierra Club v. EPA,

375 F.3d 537 (7th Cir. 2004)... cceccsssesseeseeeeees 27

Texas Oil & Gas Ass’n v. EPA,

161 F.3d 923 (Sth Cir. 1998)..............ccstesercssscesesees 42

Walgreen Co. v. Sara Creek Property Co.,

966 F.2d 273 (7th Cir. 1992).................00-..scccescseeeeeees 29

Weinberger v. Romero-Barcelo,

Se Ee Ge Ci cicesccescccncsnenssccocesesennssosnese 29, 38, 43

Weyerhaeuser Co. v. Costle,

590 F.2d 1011 (D.C. Cir. 1978) ................... 8, 9, 40, 41

Whitman v. American Trucking Ass’ns,

Se ees GI CEE Riesivcenisseccnnsennsnsetnnestsnsnsemncess 27, 28, 46

Yellow Transportation, Inc. v. Michigan,

Be i cscciictsienictshetinniidbininttiniiedahiansoinnsuianamiuiois 24

Zuni Public School District No. 89 v.

Department of Education,

eT En 55

STATUTES AND REGULATIONS

eed SPM o cesecesenercsenennsnsonencennntneweunesenanemnsommmenssensins 30

BF Ste: PPR ictisdiccntnsnninsicensinnmnntenstinvenninpensinscinasinnmienitin 1

BF Seats SEED ceccesersessesssaniemnesnentunienmeesssesosinneecenenntiti 25

ee as GIL OP cnncenccevecccoreemesnscmavesiqmnnnmuiameneeitiig 37

BB U.S.C. $1251(a)(2) ..cccssecccsccsesssssssvsseserssssecsesssucsssessnsecees 36

i ccunemmaial 35

I COI. seetnimiatpaaaieiiimsaaaas 7

| |" ——r—rree 8

33 U.S.C. $131 1(b)(2)(A) ooeecccsesesccsssssssessssseeeseseveceseen 36, 43

B33 U.S.C. §1311(D)(2)(C) cecccccsececccsssucscccssesececsssssessessssseeees 10

33 U.S.C. $1811 (b)(2)(D) cescssvessccssssessescssssesesssssseesesssseesee 10

33 U.S.C. §13110D)(2)(E) -.scssseeecccccsssecsccssssssecesesessssessseesse 10

33 U.S.C. §1311()(B) ..csssseccccssueescsssssesesessssssessssssecessen 36, 37

||) iillinaai 8,9

|? .

I i cceesccidtintonsetanerescessnsstoninene x

83 U.S.C. $1311(g)(2)(A) seessccsscescscssssscescssssseccecssssesesesensees 44

33 U.S.C. $1311(g)(2)(C) oescccececscceccssvececscssssneceesecnsesses 10, 36

BB U.S.C. $1311 (M)(2) .cccssvezscccccvcccesccccccsnseccscennscseeccccsnseeeece 36

Ee Lod ee eee 36

B33 U.S.C. §1814(a)(5)(A) cesccccsessccscsvseccccssesesecsssssecsessssecsen 36

B33 U.S.C. §1314(a)(5)(B) .cecccccscecscccssssscscssssesesesssssesesseseneee 36

B33 U.S.C. $1314 (b)(1)(B) o..cccccesscccccsscescessssssecessssesneessens 8, 39

33 U.S.C. $1314 (b)(2)(B) -ecccceseccccssvccccessscsssesssnecesen 9, 22, 39

33 U.S.C. $1814(b)(4)(B) oeccscsecssscssseecescssveesecssseees 10, 39, 44

33 U.S.C. $1314 (ILA) coccscccsecscccssececccnsssesseesssseesseessecesees 36

I a cnsciccsenivsctsicecenmiasiieisstaiaaniaaauuisai .

Ee Pa 8

BB U.S.C. §$1316(O)(1)(B) oesscccsesssscssuecscssssvecsesssssseccssssees 8, 40

a era 52

I BI ic cccesnencevnnsvcncensecnsosererisintetesanvenises 10

|| | __———— 36

BB U.S.C. §$1317(a)(2) ..ccssessccccnessscssseeseccsssuesesessnsesssssssseeees 36

ee es See insietahceriiertsieciicdssiveunaniesinciabiibitinainciistaiiadindiains 38

ee eis. HD ciccsinscrtinencinncnctnanscnsninssumbbiciniaiain 36, 45, 48

ee Ss Pe icitcineccsiceenensitnsaniisininisaiaitaaatatinaatantiitn 1, 2, 48

ee ea ic SUIIETA cnsccncshnserecscnianisescniseentaineseiitenbiiuibidetadsiietidaiian 12

Se es i eitiiatrcincecscncsncinernscettinsincnsinesibnsioneiitiehinnieaiusiuialiiben 10

Be ee HE iicerenncenesstnesnecnsneniansisetinnpsninninnntionieniaviheds 44

ee: EE Piticncecccinncicnasstcssemeninastninisionaneiuniuiaiain 27

BD ay ee trticntnnereccinininncininnonsiniananaiion 35

Br eas OED eenciitntncnctensiinvinnnaneisvinniniiicsiiianiipeaiiae 35

Gr tate i. iets Bs Cocercntnittcntinnenestirimanettomantennion 1

a 15, 59

ee es criestnesccenecneneinennnsncsannsinenitintinsitne 14

le SR enricccenicicscccsnsniinsinseiisenaniniiaianicciein 14

G7 Ped. Rew. 1722S (Apr. 9, BOGR) ....ccccccorccscescossscossosseese 57

69 Fed. Reg. 41,576 (July 9, 2004).......... eee passim

71 Fed. Reg. 35,006 (June 16, 2006)............:ccccecseeseeees 12

72 Fed. Reg. 37,107 (July 9, 2008)..............cssccssssssssesssees 21

LEGISLATIVE HISTORY

Pub. L. No. 92-500, 86 Stat. 844 (1972) .0... eee 8

RD CARER, TOG. TE Fee Ci OEED cccscecsccccntsennecenieuncioveenmsasi 7, 35

xiii

118 Cotag. Rec. SB, PUD (IGT) ...cccccccsssccsesensceccreescscecsscssescs 53

Senate Debate on S. 2770 (Nov. 2, 1971),

reprinted in 2 Legislative History of the

Water Pollution Control Act Amendments

OF TREE CCAGUIE. FUE BOTS) cnccsecccccscesescccncssssessonsesees 54

OTHER AUTHORITY

American Heritage Dictionary

ener <<eeditidiaiaes 32, 33, 34, 35

Black’s Law Dictionary (6th ed. 1990) .........ccceeceee 32, 33

Matthew D. Adler, Risk, Death & Harm: The

Normative Foundations of Risk

Regulation, 87 Minn. L. Rev. 1293 (2003).............. 30

Stephen Clowney, Note, Environmental Ethics

& Cost-Benefit Analysis, 18 Fordham

tis Ss CI IE csisstinenncsintnienstenocnsscasepnecsnenee 29

Office of Water, EPA, Economic & Benefits

Analysis for the Final Section 316(b)

Phase II Existing Facilities Rule (2004),

available at http://www.epa.gov

/waterscience/3 16b/phase2/econbenefits/

citi Aicicdcinbiciccilininsiintininicianenpiniiininntasccenopienetonnts 12

Cass R. Sunstein, Cost-Benefit Default

Principles, 99 Mich. L. Rev. 1651 (2001).......... 26, 30

OPINION BELOW

The opinion of the U.S. Court of Appeals for the

Second Circuit (Pet.App.la-94a!) is reported at 475

F.3d 83 (“Iiverkeeper IT’).

JURISDICTION

The Second Circuit entered judgment on January

25, 2007, and denied petitions for rehearing and

rehearing en banc on July 5, 2007. After this Court

extended the time for filing petitions for certiorari,

petitioners timely filed petitions on November 2, 2007.

This Court granted certiorari on April 14, 2008. This

Court has jurisdiction pursuant to 28 U.S.C. §1254(1).

STATUTORY AND REGULATORY

PROVISIONS INVOLVED

This case involves §316(b) of the Federal Water

Pollution Control Act, commonly known as the Clean

Water Act (““CWA” or “Act”), 33 U.S.C. §1326(b).2

This provision and other relevant portions of the CWA

are reproduced in the addendum to this brief and at

Pet.App.97a-12la. The U.S. Environmental Protection

Agency’s (“EPA”) rule at issue here (the “Phase II

rule”) is codified at 40 C.F.R. pt. 125, subpt. J, and

reproduced at Pet. App.122a—593a.

1 Citations to “Pet.App.” refer to the Appendix to the

Petition for Certiorari filed by Entergy Corp. in No. 07-588.

“J.A.” refers to the Joint Appendix filed herewith.

2 We refer to CWA sections (“§316(b)”) and, where

appropriate, provide citations to the U.S. Code (“33 U.S.C.

$1326(b)”).

3 “National Pollutant Discharge Elimination System—Final

Regulations to Establish Requirements for Cooling Water Intake

STATEMENT OF THE CASE

Section 316(b) of the Clean Water Act states that

“{alny standard established pursuant to section 1311 of

this title or section 1316 of this title and applicable to a

point source shall require that the location, design,

construction, and capacity of cooling water intake

structures reflect the best technology available for

minimizing adverse environmental impact.” 33 U.S.C.

§1326(b). The issue here is whether, as respondents

contend, EPA is forbidden from considering costs in

relation to benefits when selecting the “best technology

available for minimizing adverse’ environmental

impact” (“BTA”) for cooling water intake systems. In

their view, with very few exceptions, EPA must

require each of the Nation’s existing base-load electric-

generating facilities to retrofit with any technology

capable of saving additional fish or other aquatic

organisms from being trapped against components of

the intake structure (“impinged”) or drawn into the

cooling water system itself (“entrained”)—a

requirement that will cost hundreds of millions or

billions of dollars per facility, regardless of the cost or

actual environmental benefit. Pet.App.170a—71la, 255a-

56a (69 Fed. Reg. at 41,586, 41,605).

For 30 years, EPA implemented §316(b) on a

facility-by-facility basis, rejecting the application of

particular intake structure technology at a given

facility if the costs would be “wholly disproportionate”

to the environmental benefits. In this rulemaking,

EPA set national performance standards for cooling

water intake structures at Phase II existing facilities

Structures at Phase II Existing Facilities,” 69 Fed. Reg. 41,576

(July 9, 2004).

by determining ranges of reductions in impingement

mortality and entrainment that could be achieved in a

cost-effective manner, and identifying a number of

technologies capable of achieving such results. EPA

also quite reasonably included a provision in the rule

authorizing site-specific determinations of BTA where,

in relevant part, the costs of retrofitting a particular

facility would be “significantly greater than” the

environmental benefits. See Brief of Petitioner Utility

Water Act Group (“UWAG Br.”), at 6-11, 23-25, 42-57.

The Second Circuit invalidated EPA’s balanced

rule, adopting a radical interpretation of §316(b) under

which EPA must set national standards without regard

to cost, except that EPA may decline to require

technologies that could not be borne by the industry as

a whole. That individual base-load electric plants

would be forced to shut down did not trouble the court.

Likewise, at the site-specific level, EPA must require

technologies that impose costs for no guaranteed

additional benefits over a substantially less costly

alternative technology. The Second Circuit reached

this radical conclusion in part by reading this Court’s

precedents as effectively imposing a “clear statement”

requirement for cost-benefit analysis, one forbidding

agencies from weighing costs and benefits’ in

implementing any statute unless Congress has

expressly granted the agency permission to do so.

The Second Circuit’s decision is wrong. This

Court’s precedents impose no clear statement rule for

cost-benefit analysis. Such a rule is inconsistent with

ordinary rules of deference to agencies and is wholly

unwarranted. Even if such a rule did exist, §316(b),

read both alone and within the broader structure of the

Act, plainly permits EPA to weigh costs and benefits in

regulating cooling water intake structures. Other

sections of the Act cross-referenced by §316(b)

specifically authorize EPA to consider costs, as well as

any other factors it deems appropriate. At a bare

minimum, §316(b) is at least ambiguous on the question

of cost-benefit analysis, and EPA’s interpretation is

reasonable and therefore entitled to deference. And

EPA’s authority to permit a site-specific determination

of BTA is clearly consistent with both §316(b) and its

general authority to provide variances from regulatory

requirements. See UWAG Br. at 42-57.

Unless reversed, the Second Circuit’s decision will

undermine the ability of EPA and other agencies to use

cost-benefit analysis to further rational

decisionmaking. It will undermine agency efforts to set

rigorous national standards secure in the knowledge

that the agency can impose alternative requirements

where the benefits clearly do not justify the costs.

And, as the U.S. Department of Energy forewarned in

this rulemaking, it will jeopardize the United States’

core electric generating capacity through a regime of

potentially perpetual retrofitting driven by changes in

intake structure technology and the applicable five-

year permit renewal cycle, with the massive

expenditures and lengthy shutdowns such retrofits

would entail. See, e.g., J.A.311-13; J.A.320-24; J.A.345-

51.

A. Background

1. Cooling Systems

To ensure safe, efficient operation, steam electric-

generating facilities (such as those owned by

petitioners Entergy and PSEG) require some means to

absorb or dissipate the waste heat created by power

generation. Most such facilities draw in surface water

to circulate through their systems as a coolant.

The amount of cooling water needed and the means

by which that water is drawn into a facility are

fundamental facets of plant design. Broadly speaking,

there are three categories of cooling systems. Some

facilities draw in water, pass it once through the plant,

then release most of it back to surface waters (“once-

through cooling’). Pet.App.554a (69 Fed. Reg. at

41,685). Other facilities draw water into cooling

towers, ponds, or other structures, circulate it several

times through the plant for cooling, and consume the

vast majority by releasing it to the air as water vapor,

with only a small discharge back to surface waters (wet

“closed-cycle” cooling systems). Pet.App.551a (69 Fed.

Reg. at 41,684); J.A.319. And yet others utilize so-

called “dry cooling,” which principally relies on air

instead of water for cooling. Pet.App.8a n.5.

All cooling systems have environmental and energy

advantages and disadvantages, and EPA carefully

considered these differences in developing the rule.

Pet.App.253a-54a (69 Fed. Reg. at 41,604). Once-

through cooling systems optimize energy output and

minimize air emissions, but they sometimes add heat to

the receiving water. They also withdraw larger

volumes of water, and thus increase the potential for

impingement and entrainment. Pet.App.239a—40a (69

Fed. Reg. at 41,601). In comparison, both closed-cycle

and dry cooling systems withdraw less water and add

little or no heat to the receiving water, but they are

less effective at cooling and therefore reduce the

efficiency and electric output of the facilities using

them. /d.; Pet.App.257a—58a (69 Fed. Reg. at 41,605);

J.A.318-22.

For example, when a once-through system is

converted to a closed-cycle system (which may not

always be feasible and requires the facilities to be

taken offline), the retrofitted facility is capable of

generating less energy using the same amount of fuel

due to the differences in water temperature. J.A.320.

Because this permanent “energy penalty” can be up to

5% or more of a facility’s output, requiring facilities to

convert to closed-cycle cooling negatively affects

energy supply and electric system reliability. J.A.320-

25; J.A.333-34; Pet.App.257a-58a (69 Fed. Reg. at

41,605). It also requires greater consumption of fuels

to make up for the energy penalty which, in turn,

generally results in increased air emissions of carbon

dioxide and other pollutants. Pet.App.258a (69 Fed.

Reg. at 41,605); J.A.325-26.

In addition, closed-cycle and dry cooling systems

may create other adverse environmental impacts, such

as requiring more land use, causing fogging and icing,

and increasing noise pollution. Pet.App.259a (69 Fed.

Reg. at 41,606); J.A.316-17; J.A.325.

2. Section 316(b) of the Clean

Water Act

Section 316(b) occupies a unique place within the

CWA, for (unlike most other sections) it does not

address the discharge of pollutants but rather the

environmental impacts associated with the withdrawal

of water by cooling water intake structures.

Pet.App.15la (69 Fed. Reg. at 41,582). Such impacts

include, but are not limited to, impingement and

entrainment. Pet.App.169a (69 Fed. Reg. at 41,586)

(impacts “depend[{] on conditions at the individual

site”).

The Second Circuit has twice acknowledged that

§316(b) was “something of an _ afterthought.”

Riverkeeper, Inc. v. EPA, 358 F.3d 174, 186 n.12 (2d

Cir. 2004) (“Riverkeeper I’); see also Pet.App.4a—5a.

This “afterthought” status is reflected in the legislative

history. In the sole reference to §316(b),

Representative Clausen, a Floor Manager for the

Conference Report for the 1972 Act, explained:

Section 316(b) requires the _ location,

design, construction, and capacity of

cooling water intake structures ... to

reflect best technology available for

minimizing adverse environmental

impact. The reference here to “best

technology available” is intended to be

interpreted to mean the best technology

available commercially at an

economically practicable cost.

118 Cong. Rec. 33,762 (1972) (emphasis added).

3. Technology Requirements

Under §§301 and 306

Section 316(b) explicitly links the determination of

BTA for cooling water intake structures to the process

for setting standards for the discharge of various

pollutants under CWA §§301 and 306, 33 U.S.C. §$1311,

1316. Accordingly, the Second Circuit and the parties

before this Court agree that those provisions inform

the interpretation of §316(b)—though they disagree on

the lessons to be drawn.

For new facilities, §306 requires EPA to establish

“standards of performance” that “reflect{] the greatest

degree of effluent reduction which the Administrator

determines to be achievable through application of the

best available demonstrated control technology”

(““BADT”). 33 U.S.C. §1316(a)(1), (b)(1)(B). This

standard reflects Congress’s understanding that it is

more feasible and economical to install technologies

when a facility is being constructed. See Riverkeeper I,

358 F.3d at 185; Pet.App.360a. Nonetheless, EPA is

authorized to consider “the cost of achieving such

effluent reduction,” as well as any non-water quality

impacts and energy requirements, when setting BADT

standards. 33 U.S.C. §1316(b)(1)(B).

Section 301 requires all point sources, whether

existing or new, to comply with a series of technology-

based pollutant discharge limitations. 33 U.S.C.

§1311(b)-e). First enacted in 1972, but subsequently

amended as_ explained below, §301 _ originally

contemplated two phases of standards for ll

dischargers. The initial phase required facilities to

implement the “best practicable control technology

currently available” (“BPT”’). In establishing a BPT

standard, EPA must compare “the total cost of

application of technology in relation to the effluent

reduction benefits to be achieved from_ such

application.” 33 U.S.C. §1314(b)(1)(B) (emphasis

added); see Weyerhaeuser Co. v. Costle, 590 F.2d 1011,

1045 (D.C. Cir. 1978) (referring to costs and benefits as

““comparison factors’). In other words, EPA is

required to perform cost-benefit analysis in selecting

BPT.

By 1983, those initial BPT standards were to be

followed by “best available technology economically

achievable” (“BAT”) standards. Pub. L. No. 92-500, 86

Stat. 84446 (1972). Congress directed EPA, when

setting BAT standards, to “take into account” factors

enumerated in §304(b)(2)(B), including “the cost of

achieving such effluent reduction ... and such other

factors as the Administrator deems appropriate.” 33

U.S.C. §1314(b)(2)(B) (emphasis added). Congress did

not, however, specify how EPA must consider those

factors. Weyerhaeuser, 590 F.2d at 1045. As the D.C.

Circuit has explained, under BAT “{alJll factors,

including costs and benefits,” are not mandatory

““comparison factors,” as under BPT, but rather are

discretionary “consideration factors” that give EPA

flexibility in deciding how much weight to give each

factor. Id. (emphasis added).

To provide additional flexibility to address

unanticipated adverse economic and _ social

consequences stemming from the BAT requirements,

Congress included a safety valve in the 1972 Act.

Section 301(c) authorizes a variance from BAT

standards where the individual discharger can show

that an alternate limit represents the maximum use of

technology within its economic capability and will

result in “reasomable further progress” toward the

elimination of discharges. 33 U.S.C. §1311(c). This

provision contemplates a kind of “economic

capability/effluent reduction balancing.” EPA v. Nat'l

Crushed Stone Ass’n, 449 U.S. 64, 77 n.16 (1980).

While §301 of the 1972 Act contemplated all

discharges of pollutants being subject first to BPT and

then to BAT standards under §301, Congress amended

the Act in 1977 to create a three-tiered regulatory

system, the goal of which was to regulate specific tiers

of pollutants based on the actual threat they posed. At

the top in terms of potential harm are toxic pollutants,

which include “disease-causing agents ... [that] will ...

cause death, disease, behavioral abnormalities, cancer

... or physical deformations,” among other harms. 33

U.S.C. §1362 (definition). Toxic pollutants remain

subject to the BAT standard, which still allows EPA to

consider what weight to give costs and benefits. See 33

U.S.C. §1311(b)(2)(C)-(D); zd. §1317 (toxic effluent

standards).

Congress also. established a category of

“conventional pollutants,” which need only comply with

the “best conventional pollutant control technology”

(“BCT”) standard. 33 U.S.C. §1311(b)(2)(E). BCT, like

the 1972 Act’s BPT standard, requires EPA to evaluate

“the reasonableness of the relationship between the

costs of attaining a reduction in effluents and the

effluent reduction benefits derived.” 33 U.S.C.

§1314(b)(4)(B). In other words, the 1977 amendments

mandated cost-benefit analysis for conventional

pollutants.

Finally, Congress created a tier of pollutants

referred to as “non-conventional, non-toxic” pollutants,

such as chlorine. In the 1977 amendments Congress

retained the BAT standard for these pollutants, but it

also provided, in §301(g) of the Act, a waiver provision

allowing EPA to set less stringent limits so long as

(among other requirements) the lesser standards

would still ensure “protection and propagation of a

balanced population of shellfish, fish, and wildlife.” 33

U.S.C. §1311(g)(2)(C).

In sum, the CWA provides EPA considerable

authority to weigh costs and benefits to ensure rational

regulatory outcomes, either mandating or permitting

cost-benefit analysis for each of the categories of

pollutants established by the amendments to §301. For

non-conventional pollutants, cost and benefits may be

considered under both EPA’s BAT discretionary

authority and the §301(g) variance. For conventional

pollutants, cost-benefit analysis is now required. And,

even for toxic pollutants, EPA may consider “the cost

of achieving such effluent reduction” and “such other

factors as [EPA] deems appropriate” in setting BAT

standards, and may modify standards based on the

economic capability/effluent reduction balancing

authorized by §301(c).

4, EPA’s Phase II Rulemaking

In 1976 EPA promulgated its first final rule under

§316(b), but the Fourth Circuit remanded it one year

later on procedural grounds. See Appalachian Power

Co. v. EPA, 566 F.2d 451, 457 (4th Cir. 1977);

Pet.App.159a—60a (69 Fed. Reg. at 41,583-84). For the

next 30 years, EPA and state permitting authorities

implemented §316(b) on a case-by-case basis, weighing

costs and benefits in approving intake structures.

Pet.App.355a (69 Fed. Reg. at 41,627). At EPA’s

direction, permitting authorities declined to require

“use of technology whose cost is_ wholly

disproportionate to the environmental benefit to be

gained.” In re Pub. Serv. Co. of N.H., (Seabrook

Station, Units 1 and 2), 1977 WL 22370 (EPA), at *7, 1

E.A.D. 332 (June 10, 1977), J.A.76; see also UWAG Br.

at 15-16, 37-41.

The current §316(b) rulemaking originated in a 1995

consent decree that required EPA to promulgate

national §316(b) regulations. The rulemaking was

conducted in three phases. In Phase I, EPA set forth

standards for cooling water intake structures at new

steam-electric generating facilities. The Phase II rule,

at issue here, governs the Nation’s approximately 550

large existing power-producins plants, each designed

with the capacity to withdraw at least 50 million

gallons of water per day and to use at least 25% of the

water exclusively for cooling purposes. See

Pet.App.124a, 203a (69 Fed. Reg. at 41,576, 41,593).

These facilities comprise approximately 50% of the

Nation’s electric power supply. Office of Water, EPA,

Economic & Benefits Analysis for the Final Section

316(b) Phase II Existing Facilities Rule, at A2-2

(2004) (50% of total projected for 2008), available at

http://www.epa.gov/waterscience/316b/phase2/econben

efits/final.htm; id. at A3-13.4 And in Phase III, EPA

promulgated regulations governing existing facilities

not covered under Phase II (including smaller power

plants) and new offshore oil and gas facilities.®

4 To implement the requirements of the Phase II rule for

existing facilities, EPA chose to rely on the National Pollutant

Discharge Elimination System (“NPDES”) permit-renewal

process set forth in §402, 33 U.S.C. §1342(a)(1). See Pet.App.150a-

52a (69 Fed. Reg. at 41,582). The NPDES re-permitting process

requires existing dischargers to apply for a renewed NPDES

permit every five years. While §402 on its face is limited to

discharge requirements, the Second Circuit deferred to EF PA’s

determination that NPDES permits may be used to impose new

intake structure requirements on existing facilities. Pet. App.15a.

° As explained below, the Second Circuit resolved

challenges to the Phase I rule in 2004, explicitly affirming EPA’s

use of cost-benefit analysis in choosing BTA for new facilities. The

Phase III rule authorizes permit writers to select BTA for

existing facilities on a case-by-case basis using the same type of

cost-benefit analysis rejected by the Second Circuit here. 71 Fed.

Reg. 35,006, 35,014-15, 35,016-17 (June 16, 2006). Challenges to

the Phase [II rule are currently pending in the Fifth Circuit. See

UWAG Br. at 16-17 n.15.

In developing the Phase II rule, EPA targeted

assumed impingement mortality and entrainment,

under the assumption that doing so would assist

aquatic populations taxed by, among other things,

over-fishing. See Pet.App.169a, 188a (69 Fed. Reg. at

41,586, 41,590).6 Rejecting a nationwide mandate of

closed-cycle cooling, the Agency concluded that the

best technology available for minimizing adverse

environmental impact _—irvaries among _ sites.

Pet.App.255a (69 Fed. Reg. at 41,605). It therefore

crafted the rule to require “technology that is

technically available, economically practicable, and

cost-effective while at the same time authorizing a

range of technologies that achieve comparable

reductions in adverse environmental impact.”

Pet.App.157a—58a (69 Fed. Reg. at 41,583).7

6 As EPA explained, the technical information on which it

relied to reach its assumptions about entrainment and

impingement was anecdotal and, in many cases, outdated and/or

highly imprecise. Pet.App.18la—82a (69 Fed. Reg. at 41,588)

(many studies “based on limited data ... collected ... 25 years ago”

and containing “serious study design limitations”). EPA also

acknowledged that it was guided by a precautionary principle, one

that it indicated would be subject to further analysis in the site-

specific application of the rule. Pet.App.183a—84a (69 Fed. Reg. at

41,589).

7 The Second Circuit drew a distinction between “cost

effectiveness” analys':, which it believed permits only a search for

the cheapest way of achieving a given result, and “cost benefit”

analysis, which permits a true weighing of marginal costs and

benefits. See infra, at 18-20. EPA sometimes used the phrase

“cost effectiveness” in the rule, but not in the narrow sense meant

by the Second Circuit. See Pet.App.263a (69 Fed. Reg. at 41,606).

EPA explained that it “consider[ed] the cost of technologies in

relation to the reductions in impingement mortality and

entrainment achieved,” which clearly is a form of cost-benefit

EPA determined that the goal of “minimizing

adverse environmental impact” was best achieved by

national performance standards that require all Phase

II facilities to reduce impingement mortality by 80-95%

from an uncontrolled level (“calculation baseline’’) and,

when appropriate, entrainment by 60-90%. See

Pet.App.560a (40 C.F.R. §125.94(b)(1){(2)) (requiring

compliance with entrainment standards based on

capacity utilization rate and, in relevant part, location

on a particular waterbody type, such as an estuary or

ocean). EPA explained that these performance

standards “reflect best technology available [and] ...

are not based on a single technology but, rather, are

based on consideration of [the] range of technologies

that EPA has determined to be commercially available

for the industries affected as a whole.” Pet.App.228a

(69 Fed. Reg. at 41,599). The standards therefore

reflect the Agency’s judgment that, “given the wide

range of various factors that affect the environmental

impact posed by Phase II existing facilities, different

technologies or different combinations of technologies

can be used and optimized to achieve the performance

standards.” Pet.App.226a (69 Fed. Reg. at 41,598); see

also Pet.» up.228a (69 Fed. Reg. at 41,599) (“range of

available technologies ... used to derive’ the

performance standards’’).

In developing the national BTA requirements, EPA

determined that existing facilities have far less

flexibility than new facilities because their intake

analysis under the Second Circuit’s terminology. EPA Second

Cir. Br. at 55; see also id. at 50 (“EPA’s cost-effectiveness analysis

compares the incremental costs of technology to its incremental

effectiveness in minimizing ... impingement mortality and

entrainment.”).

structures have already been located, designed, and

constructed. Pet.App.l4la (69 Fed. Reg. at 41,580)

(limitations include space, ~as—well—as_location and

development on a waterbody); Pet.App.255a (69 Fed.

Reg. at 41,605) (retrofits “may be impossible or not

economically practicable”). EPA therefore included

two alternative compliance options—both allowing a

facility to request a site-specific determination of best

technology available for minimizing adverse

environmental impact in certain’ circumstances.

Pet.App.193a, 195a—96a (69 Fed. Reg. at 41,591). These

provisions reflect EPA’s longtime reading of §316(b) as

“indicat[ing] that site-specific conditions can be highly

relevant to the determination of BTA to minimize

adverse environmental impact.” Pet.App.35la—52a (69

Fed. Reg. at 41,626); see UWAG Br. at 15-16, 37-41

(history of case-by-case permitting).

At issue here is the site-specific determination

based on a “cost-benefit test,” which allows facilities to

request establishment of site-specific standards where

they can demonstrate that the costs of meeting the

national standards would be substantially greater than

the benefits. Pet.App.249a-5la (69 Fed. Reg. at

41,603-04); Pet.App.559a (40 C.F.R. §125.94(a)(5)(ii)).

The technology selected by the permitting authority

for a facility qualifying under this provision “must

achieve an efficacy level that comes as close as

practicable to the applicable performance standards

without resulting in significantly greater costs.”

Pet.App.196a (69 Fed. Reg. at 41,591).

5. Riverkeeper I

Five months before EPA issued the Phase II rule,

the Second Circuit resolved challenges to EPA’s Phase

I rule in Riverkeeper I. In relevant part,

environmental petitioners (respondents here)

challenged EPA’s selection of closed-cycle cooling over

dry cooling as BTA for new facilities. EPA had

selected closed-cycle cooling on the basis that, inter

alia, “dry cooling costs more than ten times as much

per year as closed-cycle wet cooling,” but provided only

incremental improvements in reducing impingement

mortality and entrainment. Riverkeeper I, 358 F.3d at

194-95. Environmental petitioners challenged this

weighing of costs and benefits, arguing that “because

section 316(b) does not mention cost or other factors,

the EPA cannot give them any weight ... and even if

the EPA was permitted to consider those factors, it

abused its discretion in weighing them.” /d. at 195.

The Second Circuit squarely rejected this argument

and upheld EPA’s choice of BTA. First, the court

determined that the cross-reference to §306 in §316(b)

“is an invitation [for EPA] to look to section 306 for

guidance” in selecting BTA for new facilities. Jd. at

186. The court observed that even when setting new

source performance standards under §306, EPA is

authorized to “take into consideration,” among other

factors, “the cost of achieving such effluent reduction.”

Id. at 195 (quoting §306). The court thus concluded

that “EPA was permitted to consider cost and energy

efficiency in determining the ‘best technology

available.” /d.

The Second Circuit also noted that “‘[a]ppellate

courts give EPA considerable discretion to weigh and

balance the various factors” applicable to §306,

including cost. See id. at 195 (quoting Nat’l Wildlife

Fed’n v. EPA, 286 F.3d 554, 570 (D.C. Cir. 2002)).

Addressing the Phase I rule, the court explained that

“it is undeniably relevant that the difference” in

impingement and entrainment reduction offered by dry

cooling “represents a relatively small improvement

over closed-cycle cooling at a very significant cost.”

Riverkeeper I, 358 F.3d at 194 & n.22 (emphasis added).

Accordingly, the Second Circuit rejected the

environmental petitioners’ challenge and deferred to

EPA’s selection of closed-cycle cooling, concluding that

the court (unlike EPA) was “not well equipped ... to

meaningfully weigh” the incremental benefits of dry

cooling against its incremental environmental and

monetary costs. Jd. at 196 (EPA better placed to

compare entrainment reductions against “300 pounds

of mercury, and $443 million’’).

B. The Decision Below

The Phase II rule was challenged by environmental

and state respondents, as well as industry petitioners,

with the challenges consolidated before the Second

Circuit in Riverkeeper I]. Of relevance here,

environmental and state petitioners challenged EPA’s

designation of a suite of technologies—as opposed to

closed-cycle cooling—as BTA, as well as the provision

allowing site-specific BTA determinations based on a

“cost-benefit test.” Pet.App.20a. As in Riverkeeper I,

they argued that §316(b) does not permit weighing of

costs and benefits, and also argued that EPA exceeded

its authority in rejecting closed-cycle cooling as BTA

for all existing facilities. /d.; Pet.App.29a n.14.

The Second Circuit accepted those arguments in a

confusing opinion that misunderstands the language of

§316(b) and other cross-referenced provisions of the

Act, fails to defer to EPA’s interpretation, and ignores

its own holding—reached just three years earlier in

Riverkeeper I—that EPA has “considerable discretion

to weigh and balance” costs and benefits in regulating

under §316(b). Riverkeeper I, 358 F.3d at 195 (citation

omitted).

The Second Circuit presented three bases for its

conclusion that cost-benefit analysis is prohibited

under §316(b). First, the Second Circuit reasoned that

“(tlhe BTA _ standard of section 316(b) ... is

linguistically similar to the BAT standard of section

301 and the standard that applies to new sources under

section 306.” Pet.App.23a. Accordingly, the court

explained, “to the extent that cost-benefit analysis is

precluded under those sections”—a reading rejected by

other courts, as explained below—“it is similarly not

permitted under section 316(b).” /d.

To reach this idiosyncratic reading of §§301 and 306,

the Second Circuit focused on the differences between

§301’s BPT and BAT standards, which the court read

as having “clearly signaled Congress’s intent to move

cost considerations ... from a cost-benefit analysis to a

cost-effectiveness one.” Pet.App.22a (emphasis added).

“Cost-effectiveness,” according to the Secor Circuit,

means that, within “a narrowly bounded range,” EPA

“may permissibly choose between two (or more)

technologies that produce essentially the same benefits

but have markedly dierent costs.” Pet.App.28a, 22a.

As applied to §316(b), the Second Circuit explained

that “cost-effectiveness” means that, if EPA is “given a

choice between a technology that costs $100 to save 99-

101 fish and one that costs $150 to save 100-103 fish,” it

“could appropriately choose the cheaper technology.”

Pet.App.27a. If, however, industry could bear the cost

of technology saving “at least 102 fish,” then EPA

could not choose the cheaper technology saving at most

only 101 fish, whatever the difference in cost.

Pet.App.27a—28a.

Second, the court of appeals reasoned that the

phrase “best technology available for minimizing

adverse environmental impact” is _ inherently

inconsistent with cost-benefit analysis, and “represents

Congress’s conclusion that the costs imposed on

industry in adopting the best cooling water intake

structure technology available (ie., the best-

performing technology that can be reasonably borne by

the industry) are worth the benefits in reducing

adverse environmental impacts.” Pet.App.57a—58a; see

also Pet.App.23a-28a. The Second Circuit did not

attempt to square that “plain meaning” interpretation

with the fact that other “best technology” standards

under the Act expressly permit or even require cost-

benefit analysis.

Third, the Second Circuit relied on the fact that

§316(b) does not on its face explicitly mention cost-

benefit analysis, and essentially extracted from this

Court’s cases an unprecedented presumption that cost-

benefit analysis is forbidden if not expressly

authorized:

[Our] conclusion is further supported by

the fact that Congress in establishing

BTA did not expressly permit the Agency

to consider the relationship of a

technology’s cost to the level of reduction

of adverse environmental impact it

produces. “When Congress has intended

that an agency engage in cost-benefit

analysis, it has clearly indicated such on

the face of the statute.”

Pet.App.25a (emphasis added) (footnote omitted)

(quoting Am. Textile Mfrs. Inst., Inc. v. Donovan, 452

U.S. 490, 510 (1981) (hereafter “American Tezxtile’”)).

Applying those principles, the Second Circuit

expressed concern that EPA had weighed costs and

benefits in rejecting closed-cycle cooling as BTA for all

Phase II facilities. Pet.App.28a-33a. The court

remanded this aspect of the rule because, in the court’s

estimation, it was unclear on the record whether EPA

had incorrectly “construed the statute to permit cost-

benefit analysis,” had “misunderstood or misapplied

cost-effectiveness analysis,” or had “simply failed

either to perform the required analysis or to explain

adequately a decision that was within its authority to

make.” Pet.App.36a-37a. The court also remanded the

Phase II performance standards derived from EPA’s

selection of BTA, acknowledging that “EPA may ... set

performance standards as ranges,” but expressing

concern that the chosen ranges do not require Phase II

facilities “to achieve as much reduction of adverse

environmental impacts as technologically possible.”

Pet.App.38a, 43a.

In addition, the Second Circuit invalidated the

rule’s provision authorizing site-specific determinations

of BTA based on a cost-benefit test. Pet.App.56a—60a.

The court held that “[jjust as the Agency cannot

determine BTA on the basis of cost-benefit analysis, it

cannot authorize site-specific determinations of BTA

based on cost-benefit analysis.” Pet.App.58a. It

further reasoned that site-specific cost-benefit analysis

would “impermissibly authorize[] the EPA to consider

the degraded quality of waterways in selecting a site-

specific BTA,” which the court believed to be

inconsistent with the general! policy of the Act. /d.

Citing the extent of the rule’s provisions affected by

the Second Circuit’s decision, EPA subsequently

suspended the Phase II rule. 72 Fed. Reg. 37,107 (July

9, 2008) (formal notice following memorandum

suspending rule).

SUMMARY OF ARGUMENT

The Second Circuit held that §316(b) of the Clean

Water Act requires EPA to mandate the height of

current technology for reducing impingement and

entrainment of aquatic organisms by cooling water

intake structures, without regard to costs, so long as

that technology will save at least a few more fish and

the costs will not cripple the entire industry. The

Second Circuit’s radical interpretation must be

rejected, for several reasons.

First, the Second Circuit relied on a presumption,

drawn from a misunderstanding of this Court’s opinion

in American Textile, that cost-benefit analysis may be

considered only if expressly authorized by Congress.

There is no such clear statement rule, and it makes no

sense to start from a presumption that Congress would

prefer agencies not to weigh costs and benefits when

implementing statutes. If anything, the usual

presumption should be the opposite. Congress does not

ordinarily intend that its statutes be implemented in

ways that do more harm than good. And EPA’s

consideration of costs and benefits under §316(b)

reflects 30 years of agency practice.

Second, §316(b)’s language authorizes EPA to

consider costs in relation to benefits, particularly when

§316(b) is placed in its broader statutory context. The

phrase “best technology available for minimizing

adverse environmental impact” delegates enormous

discretion to EPA. The “best” technology “for

minimizing” an effect is not necessarily the one that

reduces that effect as much as possible (7.e., the best at

minimizing). As even the Second Circuit

acknowledged, the word “available” necessarily

requires some judgment about what is economically

reasonable. And “minimize” does not necessarily mean

“eliminate to the maximum extent feasible;” it

frequently just means “reduce.”

Section 316(b) also cross-references the standard-

setting process under §§301 and 306 for the Act’s

various other “best technology” standards. The Second

Circuit thought that the §316(b) standard should be

interpreted consistently with the strictest BAT

standard under §301, which governs the most toxic

pollutants and which the court of appeals wrongly

believed forbids cost-benefit analysis. In fact, the

provisions implementing BAT expressly authorize

EPA to “take into account ... the cost of achieving such

effluent reduction” as well as “such other factors as the

Administrator deems appropriate.” 33 U.S.C.

§1314(b)(2)(B). EPA is at least authorized, and in some

cases required, to weigh costs against benefits when

setting every technology standard under the Act.

Moreover, it is far from clear that BAT is the

appropriate analogy for a standard governing water

intakes. See UWAG Br. at 11-15, 45-47.

The Second Circuit’s interpretation also leads to

results that Congress could not possibly have intended,

and that come perilously close, at least, to absurdity. If

facility-specific cost-benefit considerations must be

ignored in determining the ideal “location, design,

construction, and capacity” for an intake structure,

EPA must shut its eyes to the fact that, for example, a

particular facility impinges mostly dead fish or

nuisance fish that federal and state regulators want to

eliminate. Likewise, EPA would have to ignore that

losses caused by the facility are so small in relation to

the size and health of the relevant fish population that

the most cautious regulator would consider them

trivial. These facts clearly are relevant to any decision

about whether “adverse environmental impacts” ev ist

and have been minimized, yet the Second Circuit’s

decision would require they be ignored.

Finally, the statute is at a minimum ambiguous on

these issues. EPA’s interpretation of the Act “is

entitled to considerable deference; and to sustain it,

{the Court] need not find that it is the only permissible

construction ... but only that EPA’s understanding of

this very ‘complex statute’ is a sufficiently rational one

to preclude a court from substituting its judgment for

that of EPA.” Chem. Mfrs. Ass’n v. NRDC, 470 U.S.

116, 125 (1985). EPA (and the states that implement

the vast majority of permitting programs) have

reasonably interpreted this statute for more than 30

years to permit cost-benefit analysis. That

interpretation has been upheld by the courts and

implemented in countless permitting decisions, and has

never been questioned by Congress despite multiple

amendments to the Act. See UWAG Br. at 15-16, 37-

41.

ARGUMENT

I. THE SECOND CIRCUIT’S NEW CLEAR

STATEMENT RULE FOR COST-BENEFIT

ANALYSIS IS CONTRARY TO

PRECEDENT AND MUST BE REJECTED

In proscribing EPA from weighing costs and

benefits to determine BTA at the national and site-

specific level, the court of appeals relied on a

presumption, drawn from its interpretation of this

Court’s pre-Chevron decision in American Textile, that

cost-benefit analysis must be unambiguously

authorized by Congress. The Second Circuit’s clear

statement rule is based on a misreading of American

Textile, clearly outdated in light of Chevron and its

progeny, and unsound as a matter of policy and

reasonable inferences about congressional intent.

A. The Second Circuit’s Clear Statement

Rule For Cost-Benefit Analysis Is

Inconsistent With This Court’s

Precedent

In Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 843-

44 (1984), this Court made clear that when a statute “is

silent or ambiguous with respect to the specific issue,”

a court “may not substitute its own construction of

[the] statutory provision for a__ reasonable

interpretation made by the administrator of an agency”

responsible for its implementation. Instead,

“[whenever] there is statutory ambiguity and the

agency’s interpretation is reasonable, its interpretation

must receive deference.” Yellow Transp., Inc. v.

Michigan, 537 U.S. 36, 46 (2002). In this case, however,

the Second Circuit concluded that cost-benefit analysis

is prohibited unless explicitly authorized, based solely

on this Court’s statement in American Textile that

““(wJhen Congress has intended that an agency engage

in cost-benefit analysis, it has clearly indicated such

intent on the face of the statute.”” Pet.App.25a

(quoting Am. Textile, 452 U.S. at 510).

Neither the quoted language from American

Textile, nor the decision as a whole, can bear the

weight placed on them by the Second Circuit.

American Textile addressed an industry claim that the

Occupational Safety and Health Act (“OSHA”) was

required to conduct a cost-benefit analysis when

implementing worker safety standards that required

the Secretary of Labor, “in promulgating standards

dealing with toxic materials or harmful physical agents

... [to] set the standard which most adequately assures,

to the extent feasible ... that no employee will suffer

material impairment of health or functional capacity.”

29 U.S.C. §655(b)(5) (emphasis added). Of course that

statute—which protects human health and would not

allow a single worker to be exposed to a preventable

material impairment—specifies a regulatory goal far

more stringent and specific than §316(b)’s direction

that EPA “minimiz[e] adverse environmental impact.”

Regardless, in the passage the Second Circuit focused

on, this Court simply observed that a court should look

to the face of a statute to determine whether Congress

“intended” to require the agency to engage in cost-

benefit analysis—in other words, whether cost-benefit

analysis is required, not whether it is permitted. 452

U.S. at 510 (emphasis added). That is a

straightforward, uncontroversial statement of

interpretive principle fully consistent with Chevron.

The rest of this Court’s opinion in American Textile

confirms that this Court only addressed the question

whether cost-benefit analysis was required by that

statute. For instance, this Court stated that “(t]he

principal question presented in these cases is whether

[OSHA] requires the Secretary ... to determine that

the costs of the standard bear a reasonable relationship

to its benefits,” and echoed that it was “faced with the

issue whether the Act requires OSHA to balance costs

and benefits.” Am. Textile, 452 U.S. at 506, 509 n.29

(emphasis added). Likewise, in explaining its holding,

this Court twice stated that it was “reject{ing] the

argument that Congress required cost-benefit

analysis.” Jd. at 512 (emphasis added); see also id. at

509 (“cost-benefit analysis by OSHA is not required by

the statute”) (emphasis added). Indeed, in an

unrebutted characterization of the majority opinion,

Justice Rehnquist in dissent read the opinion as having

plainly “suggesti{ed|] ... that the Act permits the

Secretary to undertake [cost-benefit] analysis if he so

chooses.” Jd. at 544 (Rehnquist, J., dissenting).8

Unsurprisingly, therefore, this Court has never

ascribed to American Textile the meaning given it by

the Second Circuit. Nor has any other court of appeals.

To the contrary, most circuit courts have concluded

that “American Textile would seem to be limited to the

finding that ... the agency is not required to employ

cost-benefit analysis,”"9 and that, under Chevron,

8 Even assuming this language in American Textile had the

meaning ascribed to it by the Second Circuit, it is inconsistent

with this Court’s subsequent decision in Chevron and cannot

survive it. Under Chevron, statutory silence is read not as a

prohibition, but as delegating the decision to the agency. This

principle holds equally true for cost-benefit analysis as any other

issue. See Cass R. Sunstein, Cost-Benefit Default Principles, 99

Mich. L. Rev. 1651, 1684-85 (2001) (“If Congress has not ...

referred to costs, it will often be because Congress ... has not

resolved the question whether costs should be considered. And if

this is so, the'agency is entitled to consider costs if it chooses.”’).

9 NRDC v. EPA, 824 F.2d 1146, 1159 n.6 (D.C. Cir. 1987)

(en banc) (emphasis added). The First Circuit has similarly

observed that American Textile “held only that the statute ... did

agencies are free to weigh costs and benefits in the face

of statutory silence or ambiguity.!0 The few circuit

courts that have read American Textile to prohibit

cost-benefit analysis in the OSHA context have

emphasized the specific and inflexible worker safety

goal set by the statute.!1

Similar statutory language explains this Court’s

decision in Whitman v. American Trucking Ass’ns, 531

U.S. 457 (2001), which considered EPA’s authority to

consider costs under §109(b)(1) of the Clean Air Act, 42

U.S.C. §7409(b)(1). That provision requires EPA to set

air quality standards that are ““requisite to protect the

public health” with “‘an adequate margin of safety.”

531 U.S. at 465 (citation omitted). This Court held that

the language in §109(b)(1) plainly requires EPA to set

the minimum standards “requisite” to achieve that

goal, and that costs were irrelevant. /d. This Court

observed that some further “textual commitment of

not require ... cost/benefit analysis.” Massachusetts v. Hayes, 691

F.2d 57, 61 n.4 (1st Cir. 1982).

10 See, e.g., Michigan v. EPA, 213 F.3d 668, 678 (D.C. Cir.

2000) (“preclusion of cost consideration requires ... express

congressional direction”), cert. denied, 532 U.S. 904 (2001); Sierra

Club v. EPA, 375 F.3d 537, 541 (7th Cir. 2004) (“when the statute

is ambiguous the EPA is free to take costs into account”); Sierra

Club v. EPA, 314 F.3d 735, 744 (5th Cir. 2002) (“{agency]

determinations based on a cost/benefit analysis are within the

EPA’s discretion unless the statutory scheme precludes such a

determination”); George E. Warren Corp. v. EPA, 159 F.3d 616,

623-24 (D.C. Cir. 1998); BP Exploration & Oil, Inc. v. EPA, 66

F.3d 784, 796 (6th Cir. 1995); Consol. Rail Corp. v. United States,

855 F.2d 78, 85-86 (3d Cir. 1988).

li See, e.g., Nat'l Grain & Feed Ass'n v. OSHA, 866 F.2d 717,

730 (5th Cir. 1989); Bldg. & Constr. Trades Dep't, AFL-CIO v.

Brock, 838 F.2d 1258, 1264 (D.C. Cir. 1988).

authority” would be necessary to authorize cost-benefit

analysis, particularly since the standards set under this

provision “are the engine that drives nearly all of Title

I of the [Clean Air Act]” and Congress “does not alter

the fundamental details of a regulatory scheme in

vague terms or ancillary provisions.” Jd. at 468. This

Court’s discussion of a “textual commitment of

authority” to consider cost was not intended to apply—

and has never been applied by this Court—more

broadly than with respect to that provision. ‘To the

contrary, this Court distinguished several court of

appeals decisions finding “authority for the EPA to

consider costs” under other provisions of the Clean Air

Act, even though those provisions did not expressly

provide for cost-benefit analysis. See id. at 469 n.1.

B. The Second Circuit’s Clear Statement

Rule Is Unsound And Should Be

Rejected

The Second Circuit’s clear statement rule not only

lacks precedential support, it makes no sense. Cost-

benefit analysis by agencies is favored by the law, not

disfavored.12 In the absence of strong contrary

12 It is worth contrasting the Second Circuit’s clear

statement rule with the presumption this Court employs in the

context of the federal courts’ remedial powers. Under traditional

principles of equity, a court considering whether to grant

injunctive relief must consider, inter alia, whether the “balance of

hardships” favors the plaintiff. See eBay Inc. v. Merck xchange,

L.L.C., 547 U.S. 388, 391 (2006). This largely entails an informal

weighing of costs and benefits. See, ¢.g., Walgreen Cu. v. Sara

Creek Prop. Co., 966 F.2d 273, 275 (7th Cir. 1992) (Posner, J.)

(“The choice between remedies requires a balancing of the costs

and benefits of the alternatives.”). This Court has repeatedly held

that statutes should be interpreted to permit (or even require) a

court to weigh the traditional equitable factors when tailoring

evidence, the most reasonable presumption is that

Congress intended to authorize it. Indeed, there are

strong reasons for this Court to adopt a presumption or

clear statement rule that is the opposite of the one

employed by the Second Circuit. The Second Circuit’s

clear statement rule would undermine agency efforts to

engage in the reasoned decisionmaking required by

general principles of administrative law.

At a basic level, what respondents and the Second

Circuit denigrate as “cost-benefit analysis” is nothing

more than common sense—the imperative of basic

rationality to ensure that actions do more good than

harm. And the form employed by EPA here is

exceedingly modest. EPA left a substantial thumb on

the scale for environmental protection in the national

standards, see UWAG Br. at 21 (cost-to-benefit ratio),

and determined that cost considerations would

moderate its BTA determinations on a site-specific

basis only if the incremental costs of a particular

technology or design are “significantly greater than”

the incremental benefits. See supra at 3, 15. In the

absence of clear direction, there is no reason to

presume that Congress would want its statutes

interpreted in a manner that does significantly more

harm than good, and no policy reason for the law to

prefer such an outcome.

In fact, “(flor twenty-five years, American

presidents have compelled administrative agencies to

complete a cost-benefit analysis before enacting major

rules and regulations.” Stephen Clowney, Note,

enforcement measures, unless a contrary purpose plainly appears.

See, e.g., Weinberger v. Romero-Barcelo, 456 U.S. 305, 311-14

(1982) (no contrary purpose in CWA); Amoco Prod. Co. v. Vill. of

Gambell, 480 U.S. 531, 542 (1987); eBay, 547 U.S. at 391-92.

Environmental Ethics & Cost-Benefit Analysis, 18

Fordham Envtl. L. Rev. 105, 106 (2006); see also, e.g.,

Matthew D. Adler, Risk, Death & Harm: The

Normative Foundations of Risk Regulation, 87 Minn.

L. Rev. 1293, 1389-90 (2003). That is unsurprising, for,

other than in those rare cases where Congress has

expressly prohibited a weighing of costs and benefits, it

may be arbitrary and capricious under’ the

Administrative Procedure Act (“APA”), 5 U.S.C.

§706(2), for an agency to promulgate a rule without

doing so. “{|Ajny reasonable judgment will ordinarily

be based on some kind of weighing of costs and

benefits, not on an inquiry into benefits alone.” Cost-

Benefit Default Principles at 1694, supra at 26 n.8; see

also id. at 1668 (“Unless Congress has clearly said

otherwise, agencies will be expected to balance costs

against benefits in issuing regulations.”).

EPA, like other agencies and in coordination with

other agencies, must implement discrete statutory

provisions in light of multiple regulatory goals that

place competing demands on administrative and

industry resources and, in some instances, may conflict.

In Chevron U.S.A. Inc. v. Echazabal, 536 U.S. 73, 85

(2002), this Court recognized “the substantive choices

that agencies are expected to make when Congress

leaves the intersection of competing objectives both

imprecisely marked but subject to administrative

leeway.” And in the landmark Chevron decision, this

Court observed that agencies frequently must make

“policy choices” to reconcile “the competing interests

which Congress itself either inadvertently did not

resolve, or intentionally left to be resolved by the

agency charged with the administration of the statute

in light of everyday realities.” 467 U.S. at 865-66; see

also ICC v. Or. Pac. Indus., Inc., 420 U.S. 184, 193 n.2

(1975) (Powell, J., concurring) (agencies “makje] ...

decision[s] reasonably accommodating diverse and

often competing public interests”). A weighing of costs

and benefits preserves resources for competing

priorities and provides a framework for managing

conflicting policies.

Finally, site-specific determinations grounded in

cost-benefit balancing, such as the one included in the

Phase II rule, help guard against the disruptive effect

of a one-size-fits-all regulation. This approach, as noted

above, is particularly important for existing facilities,

which are more technically, physically, and

geographically constrained than new facilities. See

supra at 14-15; Pet.App.248a (69 Fed. Reg. at

41,603).13

Il. THE ONLY REASONABLE

INTERPRETATION OF §316(b) PERMITS

EPA TO WEIGH COSTS AND BENEFITS

AT THE NATIONAL AND LOCAL LEVEL

Once the Second Circuit’s unsound clear statement

rule is set aside, its radical interpretation of §316(b)

must be rejected even at the first step of the Chevron

analysis. The statutory language is clearly expansive

enough to permit a reasonable weighing of costs and

benefits. And when the broader structure and

13 See Am. Petroleum Inst. v. EPA, 661 F.2d 340, 350 (5th

Cir. 1981). This flexible approach is critical for regulations

involving essential national services, such as power generation.

As here, agencies can develop more stringent national standards,

secure in the ability to moderate their effects in particular local

cases where the costs of compliance would substantially outweigh

the bencfits. See supra at 14-15, 29.

purposes of the statute, traditional canons of

construction, and legislative history are considered, it

becomes clear that an interpretation authorizing EPA

to engage in cost-benefit analysis is the only reasonable

reading. See, e.g., Nat’! Ass’n of Home Builders v.

Defenders of Wildlife, 127 S. Ct. 2518, 2534 (2007) (at

Chevron step one, a court “should not confine itself to

examining a particular statutory provision in isolation.’

Rather, ‘[t]he meaning—or ambiguity—of certain

words or phrases may only become evident when

placed in context ....””) (citations omitted) (alteration in

original).

A. The Ordinary Meaning Of The Phrase

Congress Used In §316(b) Permits

Cost-Benefit Analysis

The Second Circuit’s conclusion that §316(b)

“precludes cost-benefit analysis” (Pet.App.24a), both

nationally and on a site-specific basis, is based on what

the court believed to be the only literal and therefore

reasonable interpretation of §316(b). But even if

§316(b) is considered in isolation (and of course it

cannot be), the dictionary and common usage point to

only one plausible reading of the clause: the “best

technology available for minimizing adverse

environmental impact” does not have to be the one that

impinges or entrains the fewest fish without imposing

financial burdens the industry cannot bear.

First, the word “best” means “[mlJost satisfactory,

suitable or useful; most desirable.” American Heritage

Dictionary 178 (8d ed. 1992). It often means the

superlative of “good,” but it also means the most

productive of good—in the sense of what is optimal for

achieving an end result. Black’s Law Iictionary 160

(6th ed. 1990), for example, defines “best” to mean “[o|]f

the highest quality; of the greatest usefulness for the

purpose intended. Most desirable, suitable, useful, or

satisfactory,” and goes on to explain:

For example, the “best bid” of interest by

_a prospective depository of school funds

would not necessarily be the highest bid,

but, looking to the solvency of the bidder,

the bond tendered, and all _ the

circumstances surrounding the

transaction, the safety and preservation

of the school fund, the “best bid” might be

the lowest bid.

Id. (emphasis added).

The word “best” is therefore perfectly consistent

with the need to balance multiple, complex goals. Even

in the specific CWA context, courts have recognized

that the “best” pollution control technology is not

necessarily the technology that reduces pollution the

maximum amount. “(T]he CWA’s requirement that

EPA choose the “best” technology does not mean that

the chosen technology must be the best pollutant

removal.” Citizens Coal Council v. EPA, 447 F.3d

879, 903 (6th Cir. 2006) (en banc) (quoting BP

Exploration & Oil, Inc. v. EPA, 66 F.3d 784, 796 (6th

Cir. 1995)). Instead, the word “best” is used to

characterize standards that “‘must be acceptable on the

basis of numerous factors, only one of which is pollution

control.’” /d. (quoting 66 F.3d at 796); see also FE. I. Du

Pont de Nemours & Co. v. Train, 430 U.S. 112, 121

(1977) (for “best practicable’ or ‘best available’

technology ... {the CWA| refers to $304 for a definition

of these terms”).

Second, even the Second Circuit recognized that the

word “available” gives EPA authority—indeed a

mandate—to consider economic costs when selecting

BTA. Determining just how absurdly expensive a

technology must be before it is no longer realistically

“available” calls for a substantial exercise of discretion.

The Second Circuit held that EPA could reject

technology requirements as “unavailable” only if the

costs exceeded the maximum financial burden the

industry as a whole could bear. Pet.App.24a. But

nothing about the plain meaning of that word limits

EPA’s consideration of “availability” to the industry’s

ability to absorb exorbitant costs regardless of the

benefit. Congress has repeatedly given “available” a

broader meaning in the CWA to allow the balancing of

diverse economic, environmental, and technological

considerations—including three times using

combinations of the words “best,” “technology,” and

available” to create CWA standards that either permit

or mandate more robust cost-benefit analysis. See

supra at 7-11.

Third, the word “minimize” does not always mean

“eliminate” or even “eliminate to the maximum extent

feasible.” “Minimize” frequently just means “reduce.”

American Heritage Dictionary 1150 (3d ed. 1992). If I

resolve to “minimize” my gasoline consumption this

summer, I am not committing never to drive my car, or

to drive my car only in emergencies. I am committing

to reduce my gasoline usage by some unspecified

amount, implicitly balanced against other goals and

values. Similarly, the American Heritage Dictionary

observes that “[wJhen a manager announces that (‘|The

company wants to minimize the risk of accidents to

line workers,[{’] we naturally interpret the manager as

meaning that the risk is to be reduced to the smallest

level consistent with considerations of efficiency and

cost”—“not ... to the lowest level logically possible.”

Id. (emphasis added and omitted).

Congress has also used “minimize” in contexts

where it cannot have intended the Second Circuit’s

maximalist interpretation. For example, it ordered the

executive branch to “minimize the paperwork burden

for individuals” and “minimize the Federal information

collection burden,” but it obviously did not mean to

require the elimination of tax forms or background

checks for federal employees. 44 U.S.C. §§3501(1),

3504(c)(3). Similarly, in the CWA Congress set a goal

of the “drastic minimization of paperwork,” but it did

not intend to eliminate paperwork to the maximum

extent technologically feasible (or, for that matter, for

the word “drastic” to be grammatically nonsensical).

33 U.S.C. §1251(f). And in the sparse legislative

history of §316(b) itself, Representative Clausen

quoted the “minimize” language and then immediately

stated that it required only technology that could be

implemented at an “economically practicable cost.” 118

Cong. Rec. 33,762 (1972); see supra at 7. Moreover,

interpreting “minimize” as “reduce” is consistent with

this Court’s usage of the word. See, e.g., Consolo v.

Fed. Maritime Comm’n, 383 U.S. 607, 621 (1966)

(reasoning that the APA’s deferential standards of

review “minimize the opportunity for reviewing courts

to substitute their discretion for that of the agency,”

although of course that “opportunity” could be further

reduced by even more deferential standards).

Finally, the phrase “adverse environmental impact”

is not synonymous with impingement and entrainment

but reflects an inherently broad delegation of authority

to EPA to consider what kinds of effects, and at what

level, genuinely have an “adverse impact” on the

“environment” in a particular context. Nothing in the

Clean Water Act establishes a goal of ensuring the

survival of every possible fish. To the contrary, the

Act in numerous sections (including §316(a), 33 U.S.C.

§1326(a)) limits compliance burdens on industry so long

as the “protection and propagation of a balanced

population of shellfish, fish, and wildlife” is assured. 33

U.S.C. §1311(g)(2)(C) (emphasis added); see also id.

§1311(h)(2), (m)(2);_ id. §1314(a)(5)(A), (a)(5)(B),

(1)(1)(A); ef. ad. §1251(a)(2). Even the Act’s provisions

governing toxic pollutants direct EPA to consider “the

importance of the affected organisms” in the local

ecosystem. 33 U.S.C. §1317(a)(1), (2). The Second

Circuit’s reading of §316(b) would mandate enormous

burdens, without any weighing of costs and benefits, to

save as many fish as possible when that objective was

never adopted by Congress or EPA.

Thus, the “best technology available for minimizing

adverse environmental impact” may be the most

suitable or desirable technology available for reducing

such impact, to whatever extent the decisionmaker

believes appropriate in light of competing values. And,

based on a balancing of competing values, BTA for

“minimizing adverse environmental impact” may not

be the one that impinges or entrains the fewest fish.

Similarly, Congress did not take the absolutist

approach of requiring EPA to “eliminate” any

particular impacts associated with intake structures, as

it did for pollutant discharges under §§301 and 306. See

33 U.S.C. §1311(b)(2)(A) (“national goal of eliminating

the discharge of all pollutants”) (emphasis added);

accord id. §1311(b)(3) (requiring EPA to “identify

control measures... available to eliminate the

discharge of pollutants”); id. §1251(a)(1). Congress

chose the far more flexible term “minimizing,” which

allows EPA to determine the degree of reduction

appropriate. Cf Grand Canyon Air Tour Coal. v.

FAA, 154 F.3d 455, 475 (D.C. Cir. 1998) (permitting

agency to consider economic impacts where “Congress

.. required ‘substantial restoration of the natural

quiet,’ not total restoration”), cert. denied, 526 U.S.

1158 (1999).

B. The Structure Of The Act Confirms

EPA’s Interpretation

If the bare language “best technology available for

minimizing adverse environmental impact” leaves any

doubt about the permissibility of cost-benefit analysis,

it is dispelled by the relationship of §316(b) to other

sections of the Act. “A court must ... interpret the

statute ‘as a symmetrical and coherent regulatory

scheme, and ‘fit, if possible, all parts into an

harmonious whole.” FDA v. Brown & Williamson

Tobacco Corp., 529 U.S. 120, 133 (2000) (citations

omitted). Here, reading §316(b) in the context of the

entire CWA—a statute described by this Court as one

“in which Congress envisioned, rather than curtailed,

the exercise of discretion”’—confirms that §316(b)

authorizes EPA to compare the costs of technologies to

their environmental benefits in selecting BTA.

Weinberger v. Romero-Barcelo, 456 U.S. 305, 316

(1982).

1. Sections 301 And 306 Either

Mandate Or Permit Cost-Benefit

Analysis

All parties to this case,!4 the Second Circuit, and

the other courts of appeals to have considered the issue

agree that “best technology available” standard in

§316(b) should be interpreted and applied in a manner

informed by the “best technology” standards in CWA

§§301 and 306. The brevity of §316(b), the linguistic

similarity of BTA to the other “best technology”

standards, the cross-reference to those other

provisions, and the fact that Congress did not

separately provide for civil or criminal enforcement of

viclations of §316(b), see 33 U.S.C. §1319, all reinforce

the conclusion that Congress intended to incorporate

the comprehensive decisional framework established

by §§301, 304, and 306. Respondents contend, however,

that EPA lacks authority to compare costs and benefits

under §301’s BAT standard, and that the BTA

requirement in §316(b) should be _ interpreted

consistently with this constrained view of BAT.15

As an initial matter, respondents’ premise is simply

incorrect. All of the “best technology” standards under

14 See, e.g., Riverkeeper Second Cir. Supp. Br. at 50 (“EPA's

authority for considering compliance costs ... comes from the

cross-reference in section 316(b) to sections 301 and 306.”)

(emphasis added); States Opp. to Cert. at 7-8 (arguing that the

Second Circuit properly “rejected the cost-benefit analysis

because it was precluded ... by the plain language of the cross-

referenced sections”).

15 Environmental respondents have taken conflicting

positions on this issue. They previously conceded that in setting

national standards EPA “can, and did, consider costs in relation to

benefits.” Riverkeeper Second Cir. Opening Br. at 93.

§§301 and 306, including BAT, authorize EPA to

consider costs of compliance as well as environmental

benefits. For some of the “best technology” standards,

Congress specified that costs were a mandatory

“comparison factor.” Congress mandated in §304 that

EPA’s assessment of BPT “include consideration of the

total cost of application of technology in relation to the

e* luent reduction benefits to be achieved from such

opp oeation.” 33 U.S.C. §1314(b)(1)(B). It is undisputed

that #PA was required to conduct a comparison of

costs and benefits when setting BPT. See, e.g.,

Pet.App.2la; States Opp. to Cert. at 7-8; Riverkeeper

Second Cir. Reply Br. at 115. The BCT standard for

conventional pollutants—which respondents and the

Second Circuit have ignored—similarly requires EPA

to evaluate “the reasonableness of the relationship

between the costs of attaining a reduction in effluents

and the effluent reduction benefits derived.” 33 U.S.C.

§1314(b)(4)(B); see supra at 10.

When §§301, 304 and 306 do not require cost-benefit

analysis as a mandatory “comparison factor,” those

provisions still expressly grant EPA authority to

consider costs and _ benefits as_ discretionary

“consideration factors.” Even under the BAT standard

EPA “shall take into account ... the cost of achieving

such effluent reduction” as well as “such other factors

as the Administrator deems appropriate.” 33 U.S.C.

§1314(b)(2)(B). The primary difference between the

statute’s treatment of BPT and BAT is that, under

BAT, “{aJll factors, including costs and benefits, are

{discretionary ] consideration factors, and no factors are

separated out for [mandatory] comparison.”

Weyerhaeuser, 590 F.2d at 1045.16

As the D.C. Cireuit has observed, for BAT

“Congress did not mandate any particular structure or

weight for the many consideration factors,” but instead

“left EPA with discretion to decide how to account for

the consideration factors, and how much weight to give

each factor.” Jd. Thus, §304 “on its face lets EPA

relate the various factors as it deems necessary.” /d. at

1046. One obvious—and clearly permissible—way to

give costs and benefits weight and “relate” them to

each other is to perform a cost-benefit analysis. The

“such other factors as the Administrator deems

appropriate” language in §304 underscores the broad

discretion granted to EPA in determining what

technology is “best” in particular contexts. The D.C.

Circuit has correctly observed that, because of this

language, the CWA provisions “cannot logically be

interpreted to impose on EPA a specific structure of

consideration or set of weights because it gave EPA

authority to ‘upset’ any such structure by exercising its

discretion to add new factors to the mix.”!7 /d.

16 Congress provided a “virtually identical” structure for

BADT standards under §306. Am. Iron & Steel Inst. v. EPA, 526

F.2d 1027, 1059 (3d Cir. 1975). In setting BADT under $306,

Congress required that EPA “shail take into consideration (he cost

of achieving such effluent reduction, and any non-water quality

environmental impact and energy requirements.” 33 U.S.C.

§1316(b)(1)(B) (emphasis added).

17 Cf Int'l Paper Co. v. Ouellette, 479 U.S. 181, 489, 494-95

(1987) (h ling that the CWA preempted state nuisance law

where the NPDES permit program—the same program through

which EPA establishes §316(b) BTA requirements—is designed

Recognizing this significant flexibility, the Sixth

Circuit has expressly held that EPA is permitted to

use cost-benefit analysis in setting BAT. BP

Exploration, 66 F.3d at 796. That court endorsed the

D.C. Circuit’s reasoning that the BAT “consideration

factors” give EPA “discretion to decide how to account

for the consideration factors, and how much weight to

give each factor”’—and thus to compare costs in

relation to benefits. Jd. (quoting Weyerhaeuser, 590

F.2d at 1045). Other circuits have held that cost-

benefit analysis is not required under the BAT

provisions, but until now no court has ever held that

such analysis is forbidden.!8 The Second Circuit itself

previously understood this statutory structure. In

Riverkeeper I, it relied on Weyerhaeuser and BP

Exploration to hold that cost-benefit analysis was

permissible under $316(b) itself. See 358 F.3d at 195

(quoting BP Exploration and Weyerhaeuser).

The court’s contrary reading of §§301 and 316(b) in

this case rests in part on a misreading of a single

sentence in this Court’s pre-Chevron opinion in EPA v.

National Crushed Stone Ass’n, 449 U.S. 64 (1980).

Pet.App.2la—23a. This Court held in Crushed Stone

that EPA was not required to provide a variance for

individual facilities that could not afford to meet BPT

effluent standards. This Court reasoned in part that

for EPA’s “weighing of costs and benefits” in establishing effluent

limitations, and state law would circumvent those considerations).

18 See, e.g., Nat'l Wildlife Fed’n v. EPA, 286 F.3d 554, 559,

563 (D.C. Cir. 2002); Rybachek v. EPA, 904 F.2d 1276, 1290-91

(9th Cir. 1990); Am. Petroleum Inst. v. EPA, 787 F.2d 965, 972

(5th Cir. 1986); Reynolds Metal Co. v. EPA, 760 F.2d 549, 565 (4th

Cir. 1985); CPC Int’l, Inc. v. Train, 540 F.2d 1329, 1341-42 (8th

Cir. 1976); Am. Tron & Steel Inst., 526 F.2d at 1059.

the BPT standards were supposed to reflect the

“prescribed minimum technology,” and that the statute

already required EPA to weigh costs against benefits

when setting those standards. 449 U.S. at 76-77.

When distinguishing the BAT provisions, which include

a variance for individual plant economic affordability,

this Court observed that “in assessing BAT total cost is

no longer to be considered in comparison to effluent

reduction benefits.” /d. at 71. But this Court clarified

that the BAT provision “lists ‘cost’ as a factor to

consider in assessing BAT, although it does not state

that costs shall be considered in relation to effluent

reduction.” /d. at 71 n.10. In other words, Congress

made cost-benefit analysis mandatory for BPT but

only optional for BAT—which helped justify deference

to EPA’s distinction between the two. This Court

certainly did not hold that EPA was forbidden from

considering costs in setting BAT standards, as

subsequent courts have recognized. See Tex. Oil & Gas

Ass’n v. EPA, 161 F.3d 923, 936 (5th Cir. 1998) (“EPA

is not obligated to evaluate ... the relationship between

costs and benefits” under BAT) (emphasis added)

(citing Crushed Stone, 449 U.S. at 71).

2. The Second Circuit’s Rigid

Analogy To BAT Standards Is

Inappropriate

Even if this Court were to conclude that $§301 and

304 of the CWA place significant constraints on EPA’s

discretion to consider costs when setting BAT

standards, there is no sound basis for importing those

constraints into §316(b). This Court has recognized

that even though the CWA imposes “absolute”

requirements in certain contexts, overall it “is a statute

in which Congress envisioned, rather than curtailed,

the exercise of discretion.” Weinberger, 456 U.S. at 316

& n.11 (distinguishing constraints recognized in

Crushed Stone and holding that CWA violations do not

necessarily require injunctive relief).

As EPA recognized in the Phase II rule when

distinguishing §$316(b) from the effluent limitation

provisions, “the object of the ‘best technology available’

lin §316(b)] is explicitly articulated by reference to the

receiving water: To minimize adverse environmental

impact in the waters from which cooling water is

withdrawn.” Pet.App.157a (69 Fed. Reg. at 41,583).

The BAT standard has the very different statutory

goal of “eliminating the discharge of all pollutants.” 33

U.S.C. §1311(b)(2)(A). The content of each CWA

technology standard is necessarily tied to the statutory

goal it is intended to advance. See Crushed Stone, 449

U.S. at 77 (recognizing the close relationship between

the technology standard and the statutory goal, where

the variance sought would have “allow[ed] a level of

pollution inconsistent with the judgment of the

Administrator”); 2d. at 75 n.14.

The Second Circuit focused on BAT because of its

superficial “linguistic similarity” with BTA, but failed

to recognize the important differences in the phrasing,

purpose, and regulatory context of those two

standards. Even if the Second Circuit were correct

that Congress intended for BAT standards to be

“technology-forcing” in some sense, §316(b) embodies

no comparable policy.

Congress’s amendments to §301 also illustrate the

flaw in the Second Circuit’s conflation of BTA with the

BAT standard. The Second Circuit assumed that the

original Act’s scheduled shift from BPT to BAT

signaled an intent by Congress to elevate technological

performance above all else. Pet.App.2la, 24a. But that

ignores the subsequent history of the Act, under which

Congress substantially modified §301 to make the BAT

standard applicable to a much narrower range of

effluents. See supra at 9-11. Under the 1977

amendments, so-called “conventional” pollutants need

only comply with the BCT standard, which

affirmatively requires EPA to weigh “the

reasonableness of the relationship between the costs of

attaining a reduction in effluents and the effluent

reduction benefits derived.” 33 U.S.C. §1314(b)(4)(B).

Congress also added §301(g), which permits EPA to

exempt some non-conventional, non-toxic pollutants

from the BAT standard and regulate them under the

even less stringent BPT standard. See 33 U.S.C.

§1311(g)(2)(A).

After the 1977 and 1987 amendments, the BAT

standard is principally confined to the regulation of

potentially lethal toxic pollutants discharged into the

Nation’s waters. 33 U.S.C. §1362(13) (toxic pollutants

are those “which after discharge and upon exposure ...

will ... cause death,” among other serious harms).

Other pollutants are eligible for consideration under

standards requiring a weighing of costs and benefits.

See supra at 7-11. Under the Second Circuit’s reading,

EPA therefore must analyze impingement and

entrainment under a standard that Congress thought

too stringent for the release of pollutants that pose

risks to human health, \et alone to fish. The Second

Circuit’s assumption that Congress would have wanted

that standard to be applied to cooling water intake

structures in a rigid and “technology-forcing” way,

even though the statute now permits variances from

BAT even for toxic pollutants in certain circumstances,

is simply unreasonable.

That risks to fish from impingement and

entrainment are poorly analogized to toxic and other

dangerous pollutants is further confirmed by

Congress’s decision to place cooling water intake

structure requirements in §316, which generally deals

with the more modest risks posed by thermal pollution.

Thermal discharges are generally regulated as a non-

conventional, non-toxic pollutant subject to the

discretionary variance provision of §301l(g) and a

special variance provision in §316(a), 33 U.S.C.

§1326(a). The §316(a) variance requires EPA to relax

its regulations for a particular facility if the facility

shows that the regulations are “more stringent than

necessary to assure the projection [protection] and

propagation of a balanced, indigenous population of

shellfish, fish, and wildlife in and on the body of water

into which the discharge is to be made.” 33 U.S.C.

§1326(a).

Indeed, to the extent that §316(b) might be viewed

as principally concerned with the protection of fish

(even though, of course, “minimizing adverse

environmental impact” is much broader), Congress has

never extended to risks to individual fish the same

level of concern it has displayed for pollutants

dangerous to humans. Given the care with which

Congress structured the entire Act to ensure that

disproportionate expenditures are not required to

protect aquatic life, see supra at 7-11, 36, it strains

credulity to imagine that it would have opened the

door, through a provision that the Second Circuit twice

characterized as an “afterthought,” to regulations

requiring massive expenditures on behalf of fish for no

appreciable benefit.'!9 Such a reading of §316(b) would

inappropriately “alter the fundamental details of a

regulatory scheme in ... [an] ancillary provision{].”

Am. Trucking, 531 U.S. at 468; supra at 27-28. And, as

this Court has repeatedly cautioned, Congress does not

“hide elephants in mouseholes.” Am. Trucking, 531

U.S. at 468.

3. The Water Quality Policies Of

The Act Do Not Support The

Second Circuit’s Rejection Of

Cost-Benefit Analysis

The Second Circuit also reasoned that any effort to

weigh costs and benefits on a site-specific basis would

inevitably draw _ permitting authorities into

“consideration of the quality of the receiving water,”

which the court believed would be inconsistent with

the broader policies of the Clean Water Act.

Pet.App.56a-60a. The Second Circuit’s reservations

about site-specific cost-benefit analysis are misplaced.

The plain language of §316(b) strongly suggests

that BTA should be determined at the facility level,

particularly for existing facilities. It is hard to imagine

19 For example, the Second Circuit’s reading would require a

radically and arbitrarily different approach to the effects of a

cooling system’s intake and its outflow. Under §316(a), harm to

individual fish from the thermal discharges of a “once-through”

cooling system may be disregarded so long as the discharge does

not threaten the protection and propagation of a balanced

population of fish. Under the Second Circuit’s reading of §316(b),

however, such a facility might nonetheless be required to rip out

that samme cooling system and replace it with, e.g., a wet closed-

cycle system, based solely on a showing that it would save some

extra fish, without any showing that the impingement or

entrainment of those fish threatens a balanced population.

how the optimal “location” or even “design, and

construction” of cooling water intake structures could

be specified at a national level, without regard to the

geographic and waterbody characteristics at particular

facilities. See Pet.App.157a (69 Fed. Reg. at 41,583)

(EPA discussing consideration of “effects on and

benefits to” the local waterbody); Pet.App.229a (69

Fed. Reg. at 41,599 (explaining that “(bJecause

different waterbody types have the potential for

different ... impacts, the requirements ... vary by

waterbody type.”).29 And, as explained in greater

detail in the brief filed by UWAG, both the costs and

the environmental benefits of particular intake

structure technologies can vary dramatically from

facility to facility. See UWAG Br. at 6-11. In at least

some cases, the only sensible way to identify the “best”

available technology will be to weigh costs and benefits

in a site-specific manner.

The Second Circuit appears to be concerned that it

would be inappropriate for a permitting authority to

conclude that the costs of a better intake technology

significantly outweigh the benefits only because the

waterbody is already artificially degraded from its

natural state in a manner that a better intake system

might have helped to remedy. Pet.App.58a—59a. Even

20 Perhaps for this reason, §316(b), unlike the effluent

discharge requirements in §§301 and 306, does not require that

facilities “implement” a particular technology, but only that the

“the location, design, construction, and capacity of cooling water

intake structures reflect” that technology. That structures

“reflect” a technology is a far more ambiguous mandate than one

requiring that facilities “implement” that technology, and one with

ample room for variations and alternative requirements where

justified by local circumstances.

if such concerns were valid they do not remotely justify

precluding site-specific cost-benefit analysis altogether,

including appropriate consideration of site-specific

waterbody characteristics. The Second Circuit’s

reasoning would require EPA to close its eyes to the

fact that some waterbodies naturally support

ecosystems that are robust, or abnormally meager,

enough to affect the “best” choice of intake technology.

The Second Circuit also reasoned that site-specific

cost-benefit analysis is inappropriate because §316(a)

explicitly authorizes variances from thermal discharge

limitations if those limits “will require effluent

limitations more stringent than necessary to assure the

projection [protection] and propagation of a balanced,

indigenous population of shellfish, fish, and wildlife in

and on the body of water into which the discharge is to

be made”—whereas §316(b) contains no_ similar

language. See 33 U.S.C. §1326(a), (b); Pet. App.59a n.27.

That reasoning is flawed. While §316(b) does not

explicitly contain a variance procedure, it directs

regulators to consider the “impact” of the “location,

design, construction, and capacity” of cooling water

intake structures. 33 U.S.C. §1326(b). As explained

above and in UWAQ’s brief, this analysis inherently

calls for some consideration of site-specific issues. See

supra at 14-15; see UWAG Br. at 6-11, 42-57.

In any event, EPA’s authority to weigh costs and

benefits at the site-specific level need not be grounded

in a single provision, but may reflect the Agency’s

inherent authority to select “a mechanism for ensuring

that its necessarily rough-hewn categories do not

unfairly burden atypical plants.” Chem. Mfrs., 470 U.S.

at 120 (affirming EPA’s authority to “temper{] with

flexibility” otherwise categorical pretreatment

standards); Du Pont, 430 U.S. at 128 (1977) (concluding

‘that BPT and BAT limitations may “be set by

[national] regulation” “so long as some allowance is

made for variations in individual plants, as EPA has

done”).

C. The Second Circuit’s Interpretation

Has Consequences Congress Could Not

Have Intended

For all of the reasons given above, it is simply not

plausible that Congress intended to mandate the

maximum possible reduction in impingement and

entrainment without allowing EPA to balance costs

against benefits. Indeed, such an interpretation of the

Act flirts with absurdity.

First, a campaign to eliminate impingement and

entrainment of fish, to the maximum extent possible

without regard to cost, is self-evidently unsound policy.

Although EPA chose reductions in impingement

mortality and entrainment as a “convenient” metric for

determining performance at Phase II facilities

(Pet.App.290a, 169a (69 Fed. Reg. at 41,612, 41,586)),

neither the statutory language nor sound

environmental policy justify the Second Circuit’s

fixation on saving every possible fish. Fish and other

aquatic creatures often produce many thousand times

more offspring than the available ecosystem resources

can support, expecting high natural mortality in the

early life stages.2! Moreover, when a waterbody is

21 See, e.g., Seacoast Anti-Pollution League v. Costle, 597

F.2d 306, 309 (Ist Cir. 1979) (noting that “(tJhough the intake

would act as an additional large predator, there are other more

dangerous threats in the natural environment, which fish are able

to survive because they are highly fecund. For instances,

either highly robust or naturally lacking aquatic life

that is susceptible to impingement or entrainment (like

the Dead Sea or the Great Salt Lake), moderate levels

of impingement and entrainment may have no

consequences for the marine ecosystem that are

remotely worth massive technology costs. The Second

Circuit’s interpretation would compel EPA to order

refits that are enormously expensive symbolic gestures

devoid of any meaningful environmental consequence.

Second, the Second Circuit’s interpretation also

presumably requires EPA to require intake designs

and construction methods that eliminate, to the

maximum extent possible, all “adverse environmental

impact,” so long as the industry can reasonably bear

the costs. Pet.App.26a. As explained above, “adverse

environmental impact” encompasses far more than

impingement mortality and entrainment, and may also

include the fogging, icing, consumptive water usage,

and noise associated with closed-cycle cooling, as well

as increased air emissions from greater fuel

consumption. See supra at 5-6. Indeed, it could extend

to “impacts” such as atmospheric carbon dioxide

produced in the manufacturing and transporting of

building materials used in the “construction” of intake

structures. Congress could not have intended to

require EPA to consider, and reduce to the maximum

extent possible, every far-flung environmental impact

associated with the design and construction of a cooling

water intake structure while intentionally blinding

individual female winter flounder produce about 500,000 eggs

annually and rainbow smelt produce between 25,000 and 50,000.”)

(citation omitted).

itself to whether the costs significantly exceed the

benefits.

Third, the cost burdens imposed by the Second

Circuit’s interpretation are potentially limitless in light

of EPA’s decision to implement §316(b) through the

NPDES permitting process, which operates on a five-

year cycle.2* As new technologies are developed, it is

possible—indeed likely—that the maximally-effective

technology may change over the course of a permitting

cycle. This is problematic because cooling water intake

structures often require tons of concrete and steel in

the ground or underwater.23

Moreover, both the type of cooling system and the

amount of cooling water used affect a facility’s layout

and operation, not to mention energy output. Yet,

under the Second Circuit’s interpretation of §316(b)

and the Phase II rule, EPA and state permitting

authorities presumably would have to reevaluate such

structures every five years, then mandate any new

improvements that will _ significantly reduce

impingement mortality and entrainment—without

regard to the aggregate costs of such a fickle

regulatory policy (as long as the industry can bear

them), or any facility-specific difficulties in

implementation (such as if the ideal location for a state-

22 Congress did not specify any permitting process for

§316(b), and there are good reasons to believe it intended for

§316(b) requirements to be implemented only once, at a facility’s

initial construction. See supra at 12 n.4. This Court elected not to

review that issue.

23 The structure considered by the First Circuit 30 years ago

in Seacoast, for example, involved piping structures drawing

seawater from over a mile out in the ocean. 597 F.2d at 309.

of-the-art intake is occupied by other vital facility

infrastructure). Cf 33 U.S.C. §1316(d) (new facilities,

but not existing facilities, are protected from more

stringent effluent standards for 10 years). Besides the

exorbitant costs, retrofits are extremely time-

consuming, potentially resulting in facilities being

taken offline for significant periods of time, with

obvious consequences for the stability of electric

supplies. J.A.312; J.A.343-44; Pet.App.258a-59a (69

Fed. Reg. at 41,605). There is no evidence in the

language or history of $316(b) indicating that it was

meant to require such a Sisyphean task.

Congress cannot possibly have intended these

results. Since the language is easily broad enough to

encompass consideration of costs as well as benefits,

and the overall language, structure, and legislative

history of the Clean Water Act refiect a strong

commitment to cost-benefit analysis rather than

hostility to it, the Second Circuit’s extreme reading of

this one isolated provision is clearly inappropriate.

Indeed, the reading is so absurd as to require its

rejection even if the plain language did—though it does

not—appear to require it. See, e.g., Logan v. United

States, 128 S. Ct. 475, 484 (2007) (“Statutory terms ...

may be interpreted against their literal meaning where

the words ‘could not conceivably have been intended to

apply’ to the case at hand.” (citation omitted)); Pub.

Citizen v. U.S. DOJ, 491 U.S. 440, 470 (1989) (Kennedy,

J., concurring in the judgment) (such a rule

“demonstrates a respect for the coequal Legislative

Branch, which we assume would not act in an absurd

way).

D. The Legislative History Confirms That

§316(b) Permits Cost-Benefit Analysis

The absence of any congressional intent in §316(b)

to force technology irrespective of costs and benefits is

confirmed by the _ Act’s legislative history.

Representative Clausen, a Floor Manager, explained

that “‘best technology available’ is intended to be

interpreted to mean the best technology available

commercially at an economically practicable cost.” See

supra at 7.

The legislative history of the thermal discharge

provisions of §316 reflects a similar congressional

understanding that EPA (and state regulators) would

weigh the costs of any implementing regulations

against the benefits of such technology forcing to fish

and other wildlife. In discussing Congress’s goal in

enacting §316, Representative Clark—a member of the

House Committee on Public Works and sponsor of the

amendment to H.R. 11896 relating to thermal

discharges—stated:

[T]he [EPA] Administrator has shown an

unfortunate tendency sometimes in the

past to require ridiculous expenditures of

hundreds of millions of dollars with no

benefit to any persons, or even to the fish.

The purpose of the language in sections

304, 306, and 316 is to require the

Administrator to utilize better judgment

in the future.

118 Cong. Rec. 33,765—66 (1972) (emphasis added).

Conference managers from both the House and

Senate also recognized that the bill would not fulfill its

objectives if it imposed unreasonable costs. Senate

Debate on S. 2770 (Nov. 2, 1971), reprinted in 2

Legislative History of the Water Pollution Control Act

Amendments of 1972, at 1272 (Comm. Print 1973)

(“Legis. Hist.”) (statement of Sen. Randolph, Chairman

of the Conference Committee and Chairman of the

Committee on Public Works) (“under the proposed

legislation, controls must relate the economic and social

benefits to be gained with the economic and social costs

to be incurred”). As explained by Senator Bentsen:

If these programs cause too severe

economic dislocations, if the economic and

social benefits of pollution control

programs bear no reasonable relationship

to the costs involved in implementing

them, then all of our best efforts to clean

up the waterways could be defeated in a

backlash against those of us who are

working to clean up the environment....

There must be a reasonable relationship

between costs and benefits if there is to be

an effective and workable program.

Id. at 1281 (emphasis added’ see also id. at 1278

(statement of Sen. Montoya, member of the Committee

on Public Works) (“I would point out ... that the bill

will allow reason to be applied when the benefits of

attaining clean water are clearly and significantly out

of line with the costs involved ....”).

III. AT A MINIMUM, §316(b) IS AMBIGUOUS

AND EPA’S' INTERPRETATION IS

REASONABLE AND ENTITLED TO

DEFERENCE

As explained above, the only reasonable reading of

§316(b) is that the statute expressly delegates to EPA

discretion to consider the relationship between costs

and benefits when selecting the “best technology

available for minimizing adverse’ environmental

impact.” At worst, however, the statute is ambiguous

or sileit on this critical point, particularly considering

the broader statutory context.24 Indeed, the Second

Circuit essentially conceded that the statute was at

least ambiguous; rather than stopping at step one of

Chevron, it held that EPA’s interpretation “was not

‘based on a permissible construction of the statute’”

Pet. App.36a (quoting Chevron, 467 U.S. at 843). EPA’s

construction of the statute is plainiy reasonable, and

entitled to deference.

First, respondents and the Second Circuit have

conceded that §315(b) permits consideration of costs in

some manner. They have simply attempted to impose

exceptionally detailed and cramped restrictions on

exactly how EPA may analyze costs under §316(b).

For example, if EPA had determined that industry

could “reasonably bear the price of technology” that

saves 100-105 fish, the Second Circuit would allow EPA

24 See Zuni Pub. Sch. Dist. No. 89 v. Dep't of Educ., 127 S.

Ct. 1534, 1546 (2007) (“{A)mbiguity is a creature not [just] of

definitional possibilities but [also] of statutory context.”) (citation

omitted) (final two alterations in original); Brown & Williamson,

529 U.S. at 132 (“The meaning-——or ambiguity—of certain words or

phrases may only become evident when placed in context.”).

to choose as BTA a technology that saves 99-101 fish

for $100 instead of one that saves 100-103 fish but costs

50% more ($150) for this incremental benefit.

Pet.App.27a-28a. But EPA could not choose the

cheaper technology saving up to 101 fish if it had first

determined that the industry could bear the price of

technology that could save “at least 102 fish.”

Pet.App.28a. In essence, respondents and the Second

Circuit believe that §316(b) affirmatively authorizes

the consideration of costs, but drastically constrains

how EPA may weigh this criterion—unlike all other

“consideration factors” under the CWA. As the United

States has explained, the Second Circuit’s holding

would “micro-manage the agency’s decisionmaking by

establishing rules that cannot be found anywhere in the

Act.” U.S. Opp. to Cert. at 12.

Second, in the absence of statutory language clearly

signaling congr*s.ional disapproval, cost-benefit

analysis is always reasonable. Cost-benefit analysis

(and particularly the modest form employed by EPA

here) is essentially just another way of describing

common sense or basic rationality. See supra at 26-31

& n.10. Assuming from §316(b)’s ambiguous language

that Congress did not intend for its efforts to do more

harm than good is, al a minimum, a _ permissible

interpretation. See, e.g., Arkansas v. Oklahoma, 503

U.S. 91, 105, 107 (1992) (reversing where CWA did not

limit EPA’s authority on a permitting question and

EPA’s interpretation was a “reasonable exercise of

[its] substantial statutory discretion”).

Third, where an agency’s interpretation “closely fits

‘the design of the statute as a whole,” courts “should

be especially reluctant” to reject it. Good Samaritan

Hosp. v. Shalala, 508 U.S. 402, 417-18 (1993) (citation

omitted). The Act clearly grants EPA significant

authority to consider costs and to provide reasonable

variances even in the context of toxic pollutants. See

supra at 7-11. When it mentions fish at all, it

consistently expresses a policy of protecting balanced

populations of fish—not, as the Second Circuit

assumed, individual fish. EPA’s interpretation of

§316(b) as permitting a weighing of costs and benefits

in setting national BTA standards, as well as with site-

specific determinations based on further cost-benefit

analysis at the local level, is reasonable and consistent

with the Act’s approach towards the protection of fish.

The Second Circuit’s approach, conversely, places fish

and other aquatic organisms on a pedestal never

erected by Congress.

Finally, this Court “‘normally accord(s] particular

deference to an agency interpretation’ of

“longstanding” duration,’ recognizing that ‘well-

reasoned views’ of an expert administrator rest on ‘a

body of experience and informed judgment to which

courts and litigants may properly resort for guidance.”

Alaska Dep’t of Envtl. Conservation v. EPA, 540 U.S.

461, 487 (2004) (citations omitted). The long-standing

nature of EPA’s reliance on cost-benefit analysis in

applying §316(b) is beyond dispute,2° and Congress has

25 Since at least 1977, EPA has compared costs and benefits

in making BTA determinations. See, e.g., x re Pub. Serv. Co. of

N.H., supra at 11, aff'd after remand, Seacoast Anti-Pollution

League v. Costle, 597 F.2d 306 (1st Cir. 1979). EPA discussed this

long history in the Phase II rulemaking, referring to the “‘wholly

disproportionate’ cost-benefit test that has been in use since the

1970s.” 67 Fed. Reg. 17,222, 17,224 (Apr. 9, 2002); see also

Pet.App.157a (69 Fed. Reg. at. 41,583). Furthermore, in Seacoast

the First Circuit affirmed EPA's decision without expressing any

reservations as to EPA’s “wholly disproportionate” standard. 597

never amended §316(b) to prohibit EPA from

comparing costs to benefits, nor has it otherwise

expressed disapproval of EPA’s cost-benefit approach

to permitting. This absence of any change to §316(b) to

overrule the Agency’s long-standing interpretation,

despite Congress’s amendments to other CWA

provisions, “provide[s] further evidence—if more is

needed—that Congress intended [EPA’s]

interpretation, or at least understood [it] as statutorily

permissible.” Barnhart v. Walton, 535 U.S. 212, 220

(2002).

IV. THE SECOND CIRCUIT'S JUDGMENT

SHOULD BE REVERSED IN PART

The Second Circuit remanded a number of

provisions in the Phase II rule. Pet.App.93a—94a.

Some of those provisions, such as the site-specific

“cost-cost” and restoration provisions, were remanded

for reasons unrelated to the question presented here.

The portions of the Second Circuit’s judgment

remanding the national performance standards and the

site-specific cost-benefit provisions, however, should be

reversed. They were based on the Second Circuit’s

erroneous determination that §316(b) bars cost-benefit

analysis at the national and local level.

First, the defect the Second Circuit saw in the

national performance standards was that “it is

impossible to tell whether the EPA based its decision

on permissible cost-effectiveness analysis or exceeded

its authority by relying impermissibly on a cost-benefit

F.2d at 311. The First Circuit’s treatment was sufficiently

definitive that no one challenged F.PA’s interpretation in federal

court again for nearly a quarter century.

analysis.” Pet.App.36a. The court of appeals also

remanded the national performance standards because

they “set performance standards as ranges without

requiring facilities to achieve the greatest reduction of

adverse impacts they can.” Pet.App.94a. In other

words, “the Rule does rot require facilities to choose

technologies that produce the greatest reduction

possible.” Pet.App.28a. All of those rationales rest on

the Second Circuit’s erroneous belief that cost-benefit

analysis is prohibited, and that the “best technology

available” must be the one that reduces impingement

and entrainment the most.

Second, the Second Circuit also remanded the

section of the rule’ authorizing _ site-specific

determinations of BTA based on a cost-benefit test, 40

C.F.R. §125.94(a)(5)(ii). As explained above, that

holding also rested on the Second Circuit’s

determination that EPA had impermissibly authorized

permitting authorities to weigh the costs and benefits

at the local level. Pet.App.57a—60a.

CONCLUSION

The portions of the Second Circuit’s judgment

available and related performance standards, as well as

the site-specific cost-benefit provisions, should be

reversed.

ELISE E. ZOLI

Counsel of Record

KEVIN P. MARTIN

ROBERT H. FITZGERALD

ALADDINE D. JOROFF

KEVIN P. PECHULIS

GOODWIN PROCTER LLP

53 STATE STREET

Boston, MA 02109

(617) 570-1000

ABIGAIL HEMANI

GOODWIN PROCTER LLP

NEW YORK TIMES

BUILDING

620 8TH AVENUE

NEW YorK, NY 10018

(212) 813-8800

CHUCK D. BARLOW

ENTERGY SERVICES, INC.

308 E. PEARL STREET

JACKSON, MS 39201

(601) 969-2542

Counsel for Entergy Corp.

JULY 14, 2008

Respectfully submitted,

MAUREEN E. MAHONEY

Counsel of Record

PHILIP J. PERRY

J. ScoTT BALLENGER

CASSANDRA S. BERNSTEIN

DREW C. ENSIGN

LATHAM & WATKINS LLP

555 ilTH STREET, N.W.

SUITE 1000

WASHINGTON, DC 20004

(202) 637-2200

KARL S. LYTZ

LATHAM & WATKINS LLP

505 MONTGOMERY STREET

SUITE 2000

SAN FRANCISCO, CA 94111

(415) 391-0600

JOHN G. VALERI, JR.

PSEG SERVICES CorP.

OFFICE OF ENVIRONMENTAL

COUNSEL

80 PARK PLAZA, T5C

NEWARK, NJ 07102-4194

(973) 430-5506

Counsel for PSEG Fossil

LLC, PSEG Nuclear LLC

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.