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

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Nos. 07-588, 07-589, & 07-597 (Cons

In the

Supreme Court of the Anited States

ENTERGY CORP.,

PSEG LLC AND PSEG NUCLEAR LLC, AND

UTILITY WATER ACT GROUP,

Petitioners,

Vv.

RIVERKEEPER, INC., et al.,

Respondents.

ON WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF OF PETITIONER

UTILITY WATER ACT GROUP

KRISTY A. N. BULLEIT

Counsel of Record

HUNTON & WILLIAMS LLP

1900 K STREET, N.W.

WASHINGTON, DC 20006-1109

(202) 955-1547

Counsel for Petitioner JULY 14, 2008

WiLSON-EPES PRINTING CO., INC. — (202) 789-0096 — WaSsHINGTON,D C. 20002

lie. ® tal a

QUESTION PRESENTED FOR REVIEW

Whether Section 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

The Utility Water Act Group (“UWAG”) is a

petitioner in this Court and was a petitioner in the

court of appeals.

PSEG Fossil LLC, PSEG Nuclear LLC, and

Entergy Corporation are petitioners in this Court

and were petitioners in the court of appeals.

Appalachian Power Company and the [llinois Energy

Association, which participated below, are not

parties to this appeal.

The United States Environmental Protection

Agency is a respondent in this Court and was a

respondent in the court of appeals.

The following parties are respondents in this

Court and were petitioners in the court of appeals:

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 Connecticut, State of

Delaware, Commonwealth of Massachusetts, State of

New Jersey, State of New York, and Commonwealth

of Rhode Island.

The industry parties, environmental groups,

and States jointly petitioned to intervene in the other

petitioners’ cases in the court of appeals on August

27, 2004.

Pursuant to Rules 24.1 and 29.6, there is no

change to the disclosure statement previously filed

by the Utility Water Act Group.

ill

TABLE OF CONTENTS

Page

QUESTION PRESENTED FOR REVIEW............... i

PARTIES TO THE PROCEEDING........................4.. i

TABLE OF CITED AUTHORITIES. ....................... vi

INE? cpicncurehicntienmdatiiminnsioneskesnieoamagionts 0

TT isolated atataiinitetmbeiddedineeadainiiens 1

STATUTORY AND REGULATORY

Fe Oe BEF Y UD cv cscccccncesccsccccccsscssesanecsscees 1

STATEMENT OF THE CASE....................00000seseeeees 2

I. Background .0.......ssssesssssecssssssssessssesesssees ssh 5

A. Cooling Water Intake

RII scsi isiineistentictaeeneianeninsiiitaeseniionsee 5

B. | et a Re 11

C. EPA's Long-Standing Approach

To § 316(b) Implementation ............. 15

Il. ee ee ee einiinincdterctaniantseniinitencseceinin 16

A. EERIE IE Seen OP REE S rae TE 16

B. National Standarda......................:0008 22

C. Site-Specific Standards..................... 23

a>. Ue IID IIE... cecusecnsdicenecopocesses

SUMMARY OF THE ARGUMENT ....................0..

EET REHEAT See eRe TN

1. EPA’s Interpretation of § 316(b) as

Authorizing Cost-Benefit Analysis Is

I Oy a cceeeesmencovene

A. The Second Circuit’s

Interpretation Is Not Dictated

by Statutory Language or

EEE Rae a

1. The Wording of Section

316(b) Does Not

Foreclose Cost-Benefit

| IE TR a ee

5. The Second Circuit’s

Reliance on Crushed

Stone Was Misplaced .............

B. The Phase II Rule Embodies the

Same Reasonable Policy Choice

EPA-Has Made for the Past 30

EE eee ee a eae

II. EPA Reasonably Concluded that

§ 316(b) Permits Site-Specific Cost-

Benefit Consideration. ................sccesseseeeeeeees

A. Other Clean Water Act Sections

Do Not Foreclose Site-Specific

Cost-Benefit Analysis Under

BD I ccccsesonescunccuntecnenthiainaiiiiaiinnieal 45

B. The Relationship Between

§ 316(a) and § 316(b) Supports

EPA’s Use of Site-Specific Cost-

Benefit Analysis Under § 316(b) ...... 48

C. The Record Supports EPA’s

IONS GE Te IED vicsnsccenesicediaiuiaiamits 51

1. Impingement and

Entrainment Vary

Widely Based on Site-

Specific Conditions................. 51

2. The Availability,

Effectiveness, and Cost of

Intake Technologies Vary

Widely By Site........................ 54

CAITR AIN een ccssrssserssivinissiiinipiienmpniaale 57

TABLE OF AUTHORITIES

FEDERAL CASES

Alaska Dep't of Envtl. Conservation v. EPA,

ke A | |

Appalachian Power Co. v. Train,

566 F.2d 451 (4% Cir. 1977)...........

Arkansas v. Oklahoma,

Be BPD vccoccccscesseseccccospeoes

Barnhart v. Walton,

535 U.S. 212 (2002)................sccc0e0.

Bethlehem Steel Corp. v. EPA,

538 F.2d 513 (2d Cir. 1976)...........

Bragdon v. Abbott,

524 U.S. 624 (1998)...............:ceceeee

Chemical Mfrs. Ass’n v. NRDC,

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

467 U.S. 887 (1984)...................0000.

City of Columbus v. Ours Garage &

Wrecker Seruv.,

B96 U.S. 424 (2002Z)............0..0006. 002.

Page

ConocoPhillips v. EPA,

(5 Cir., No. 06-60662, filed 7/14/06)............ 17

EPA v. Nat'l Crushed Stone,

CS | | ee 35, 36, 37

FDA v. Brown & Williamson Tobacco Corp.,

ETE ES SIR RDS aren 29

Hudson Riverkeeper Fund v. Orange &

Rockland Utils.,

835 F. Supp. 160 (S.D.N.Y. 1993) ........... 41, 44

Kapral v. United States,

166 F.3d 565 (3d Cir. 1999) ..................ceeeeee 50

Nat’ Cable & Telecomms. Ass'n v. Brand X

Internet Serus.,

I I ia ieiaincieantcitiesiislapinnaiondaed 30

Nat'l Wildlife Fed’n v. EPA,

286 F.3d 554 (D.C. Cir. 2002)................cccevese 46

NationsBank of N.C. v. Variable Annuity

Life Ins. Co..,

II I etn it iteptinindibenbaiicepiinaelibiaan 29

North Haven Bad. of Ed. v. Bell,

I i I a ertenenieeeiieanniiesnicaniil 37

PSEG Fossil LLC v. Riverkeeper, Inc.,

Ry: Gy I ID vi ciceicinencntmnisneseseiaacteniaiiil 1

Pauley v. BethEnergy Mines,

Be Sees Se i cicnnacinestcnrncssninenentenanitiann 30

vill

Riverkeeper, Inc. v. EPA,

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

i sdaradigamanninasingn passim

Riverkeeper, Inc. v. EPA,

475 F.3d 83 (2d Cir. 2007)

Eee perenne 1, 46, 47

_ Russello v. United States,

I aia 50

Seacoast Anti-Pollution League v. Costle,

597 F.2d 306 (1% Cir. 1979)................. 9, 16, 41

Skidmore v. Swift & Co.,

lila 38

Smiley v. Citibank (S.D.), N.A.,

ae cae 29, 30

United States Steel Corp. v. Train,

556 F.2d S22 (7® Cir. 1977)...........cccsscsceseesees 41

United States v. Pozsgai,

999 F.2d 719 (3d Cir. 1993)................sceceseeees 31

United States v. Ressam,

II i 50

EPA ADMINISTRATIVE DECISIONS

In re Dominion Energy Brayton Point, LLC

(formerly USGen New England, Inc.)

Brayton Point Station, NPDES 03-12,

2006 EPA App. LEXIS 9 (EAB

I in coe iiisiciiinntrionecinns 41

In re Pub. Serv. Co. of N.H. (Seabrook

Station, Units 1 & 2), 1 E.A.D. 332,

10 Env’t Rep. Cas. (BNA) 1257, 1977

EPA App. LEXIS 16, *47 (June 10,

1977), reud on other grounds and

remanded, Seacoast Anti-Pollution

League v. Costle, 572 F.2d 872 (1+

In re Pub. Serv. Co. of N.H. (Seabrook

Station, Units 1 and 2), 1 E.A.D. 455,

1978 EPA App. LEXIS 17 (1978),

aff'd, Seacoast I, 597 F.2d at 311................. 40

STATE CASE

In the Matter of Riverkeeper, Inc. v.

Johnson,

2008 NY Slip Op. 5608, 2008 N.Y.

App. Div. LEXIS 5503 (N.Y. App.

Div. 3d Dep’t June 19, 2008) ....................c...e ee

STATE ADMINISTRATIVE DECISIONS

Athens Generating Co., 2000 WL 33341184

(N.Y. Dep’t Envtl. Conservation

a eeaeeniesaniidadeiansendl 41

In the Matter of Dynegy Northeast

Generation, Inc. (Danskammer

Generating Station), 2006 N.Y. ENV

LEXIS 23 (Deputy Commissioner, NY

Dep’t Envtl. Conservation May 24,

Si leiissctecisncsiebindathiunidapbaiaaimipnniaenienatiiaiiiiigiiimmnntel 41

STATUTES

BD Ee Be Bre, STE CIID wseecccscovccccccevcncscesessis 10

16 U.S.C. §§ 4701-51 (1997) ...eccccccccccccscesecesseeseseeveees 10

a Oe GRU cnncssicbannictdintncinenniitbaninciiitintansnsieiienii 1

I i a passim

Sy rin IIIT ivicdicsiicsuieiteiscisicnadiigeigibiiiasinaioepesthbiattiii 35

Sie Ui I cp uinstistsisicnmsntnscibeieinicetsesisnmanoadeiial 35, 36

ee ee: Ue CIE I isrssscassitivsicisnibasicaidissiionnsnliiaesipnnuneaeibcaneens 47

I passim

LEE De EAC cama a on passim

Be es Se eID itciicsinscissnicbacbinceneiiniedanumieaian 35

I passim

Be SI iciacensicnsonssisonennmesenipnunniaiaicndes passim

I Oe I veces vnicinttnsaiecvennctontiarnintlonrade tbl 14

RULES

Dr ol eeiaaeaiaiocananile il

LS ESE Ns eres oe An nee ere li

REGULATIONS

40 C.F.R. §§ 125.80-125.89..........cccccscscsesssssessssssesees 16

I FN acini cc evitivensevvtsenctecnteielsaigccien 33

40 C.F.R. § 125.94(a)(5)(ii). ....ccccccecceeeeceeeeeeeeees 23, 25

aA Ts 22

40 C.F.R. § 125.94(b)(2).......ccecescseccsceseseeeeessesesseseeeees 22

TF TN cscs cciteneceicstiincneincnnemenitsiinais 25

I TG cesses ccinervsiicinententitieniicclisieinpas 24

40 C.F.R. § 125.95(b)(6)(i) .......ecceccceceeseeeeseseeeeeeseseee 24

40 C.F.R. § 125.95(b)(6)(ii) ......ccceccceceesesceeeseseseeeeeeees 24

40 C.F.R. § 125.95(b)(6)(ii)((B) .....0..20cccccccesseeseeeseeeees 24

40 C.F.R. § 125.95(b)(6)(G@i)(C) ......cccececeseeeeseeeeeeseseees 24

40 C.F.R. § 125.95(b)(6)(ii)(D) .......e.eeccceeeeseeeeeeeeeeees 24

40 C.F.R. § 125.95(b)(7)(ii) .......ccececsceecesseeseseeseeeseee. 53

Ge ee RD cs esccecicesesinenssevesonesnessnvscconines 55

40 C.F.R. Part 125 Subpart J ou... cece ececeeseeeeeees 2

OTHER AUTHORITIES

41 Fed. Reg. 17,387 (Apr. 26, 1976)......................... 15

41 Fed. Reg. 17,387-90 (Apr. 26, 1976)............ccc008 38

41 Fed. Reg 17,388 (Apr. 26, 1976)............. 15, 38, 39

41 Fed. Reg. 1. 589 (Apr. 26, 1976).............. fever 38

66 Fed. Reg. 65,338 (Dec. 18, 2001).....................008 16

68 Fed. Reg. 13,527 (Mar. 19, 2003) ...............::eee 56

68 Fed. Reg. 13,541 (Mar. 19, 2003) ...........c eee 42

68 Fed. Reg. 36,754 (June 19, 2003)...............0........ 16

69 Fed. Reg. 41,575-693 (July 9, 2004)............ passim

71 Fed. Reg. 35,006 (June 16, 2006)........................ 17

71 Fed. Reg. 35,017 (June 16, 2006)........................ 17

72 Fed. Reg. 37,459 (July 10, 2007)...................00085. 10

1 A Legislative History of the Water Pollution

Control Act Amendments of 1972 (hereinafter

Leg. Hist.) 263 (93d Cong. 1%t Sess.) (1973)....... 13, 14

American Heritage Dictionary of the English

a I . csincicceisssiecenniciesdinetmiesniimioesnns 34

xii

Merriam-Webster’s Collegiate Dictionary (10%

TREN Ean Seem Re area SNe ae OOP I 34

In re Central Hudson Gas & Elec. Corp.,

et al. Opinion No. 63, July 29, 1977, 1977 WL

I ia ciel 40, 49

EPA, Draft Guidance for Evaluating the

Adverse Impact of Cooling Water Intake

Structures on the Aquatic Environment:

Section 316(b) P.L. 92-500 (May 1, 1977).... 15, 39, 40

EES SET ee ee a 21

NERC 2007 Long-Term Reliability

Assessment 2007-2016 at 10, 97 (available at

ftp://ftp.nerc.com/pub/sys/all_updl/docs/pubs/L

TRA2007.pdf or at

http://www.nerc.com/~filez/rasreports.htm)) .......... 11

OPINION BELOW

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

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

Riverkeeper, Inc. v. EPA, 475 F.3d 83 (2d Cir. 2007)

(“Riverkeeper II’).

JURISDICTION

The Second Circuit entered judgment on

January 25, 2007, and denied petitions for rehearing

and rehearing en banc on July 5, 2007. Timely

petitions for certiorari were filed on November 2,

2007 following an extension of time. Certiorari was

granted April 14, 2008, PSEG Fossil LLC ov.

Riverkeeper, Inc., 128 S. Ct. 1867, 1868 (2008). The

jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

STATUTORY AND REGULATORY

PROVISIONS INVOLVED

This case concerns § 316(b) of the Federal

Water Pollution Control Act, commonly known as the

Clean Water Act (““CWA” or the “Act”), 33 U.S.C.

§ 1326(b). Section 316(b) states:

! 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. There is also a “UWAG

Appendix” attached to this brief.

Any 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.

This provision, as well as parts of CWA §§ 301, 304,

and 306, 33 U.S.C. §§1311, 1314, 1316, are

reproduced in the addendum to this brief and at Pet.

App. 97a-113a. The rule at issue here (National

Pollutant Discharge Elimination System —- Final

Regulation to Establish Requirements for Intake

Structures at Phase II Facilities, 69 Fed. Reg. 41,575-

693 (July 9, 2004) (“Phase II” rule)) was codified at

40 C.F.R. Part 125, Subpart J, and is reproduced at

Pet. App. 122a-593a.

STATEMENT OF THE CASE

This case concerns the regulations for existing

power plant cooling water intake structures (“intake

structures” or simply “intakes”) that EPA adopted

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

§ 1326(b). More specifically, this case focuses on

whether EPA may use cost-benefit analysis to

develop national intake structure standards for

existing power plants and allow permit writers to use

cost-benefit analysis on a site-specific basis in

selecting the “best technology available” (“BTA”) for

“minimizing” “adverse environmental impact” as

required by § 316(b).

For the past 30 years, EPA has implemented

§ 316(b) case-by-case, taking into account costs and

benefits in deciding which intake technology is the

best for minimizing adverse environmental impact at

a particular site. In developing the rule at issue

here, EPA’s deliberations were informed by this

history, and by its understanding of the biological

and technological complexities involved in § 316(b)

implementation, especially at existing facilities.

After nine years of deliberation, it developed the

“Phase II” rule, which attempts to streamline the

BTA selection process by setting national standards

based on the estimated performance of a suite of

commercially available intake structure technologies.

The rule requires hundreds of existing steam electric

power plants to use one or more of those technologies

to achieve national standards for reducing the degree

to which aquatic organisms are trapped against

(“impinged” by) or drawn through (“entrained” by)

cooling water intake structures.

EPA selected this approach after carefully

considering many alternatives, including requiring

some or all existing Phase II facilities that have

once-through or “open-cycle” cooling systems to

replace them with recirculating systems.

Recirculating or “closed-cycle” facilities reduce the

amount of water withdrawn, but only at a

substantial cost both in environmental and economic

terms. EPA looked at those environmental and

economic costs, compared them to the additional

reduction in impingement and entrainment that

closed-cycle cooling might achieve, and concluded

that requiring closed-cycle cooling was not BTA.

EPA recognized, however, that determining

what is necessary to minimize adverse

environmental impacts can necessitate a site-specific

inquiry of the type it had previously required for all

facilities. Therefore, the rule also includes a

provision authorizing alternative standards for a

particular site where the facility can demonstrate

that the overall costs of achieving the national

standards are substantially greater than the overall

benefits.

The Second Circuit rejected this reasonable

approach, concluding that EPA is not permitted to

weigh costs and benefits in implementing § 316(b).

For the reasons given in the separate brief filed by

Entergy Corp., PSEG Nuclear, and PSEG Fossil in

the consolidated cases 07-588 and 07-589

(“Entergy/PSEG Brief’), EPA’s conclusion that

§ 316(b) permits some comparison of marginal

environmental benefits with the costs of achieving

them, both at the national level and at particular

sites, is the only reasonable reading of the Act and

thus should have been upheld under “step one” of the

analysis required by Chevron U.S.A. Inc. v. NRDC,

467 U.S. 837 (1984). In addition, as explained in the

Entergy/PSEG Brief and more fully herein, the Act is

at least ambiguous as to whether EPA may compare

costs and benefits under § 316(b). EPA’s reading of

the Act to permit such comparisons, both nationally

and at particular sites, is wholly reasonable and thus

should have been upheld under “step two” of the

Chevron analysis. In either case the decision below

is wrong and must be reversed.

1. Background

A. Cooling Water Intake Structures

EPA has always understood that regulating

intake structures involves myriad complex, site-

specific environmental, energy, and economic trade-

offs that can appropriately be evaluated by using

cost-benefit analysis. For example, the Agency has

long understood that the “environmental impact” of

an intake structure depends partly, but only partly,

on the type of cooling system it serves.

Steam electric power plants come in different

sizes and configurations, but they all operate on the

same principle: water is boiled to make steam,

which drives a turbine, which powers an electric

generator. All steam electric plants need a way to

condense the steam back to water. Most use cooling

water for that purpose.”

2 A few employ “dry cooling,” which uses natural or

mechanical air drafts to remove heat and requires little or no

water. Pet. App. 270a (69 Fed. Reg. 41,608). Even for new

facilities, where it would be easiest and cheapest to install dry

cooling systems, EPA did not require them, because they are

costly, reduce water intake only minimally compared to closed-

cycle wet cooling, increase air pollution and energy penalties,

and have other disadvantages. In ruling on challenges to EPA’s

earlier “Phase I” rule for new facilities (66 Fed. Reg. 65,256

(continued...)

6°

The amount of cooling water withdrawn from

a waterbody by a steam electric plant depends on a

variety of factors, one of which is the type of

condenser cooling system. There are two basic types

of “wet” condenser cooling systems: open-cycle and

closed-cycle. Open-cycle systems pass water through

the condenser only once before returning virtually all

the water to its source, albeit at a _ higher

temperature. Closed-cycle systems recirculate the

heated water from the condenser through an

evaporative cooling structure (typically a _ cooling

tower, pond, or lake) two or more times before the

build-up of salts in the water requires the system to

“blow down” (i.e., discharge). Closed-cycle systems

withdraw from 70% to 98% less water than open-

cycle systems, depending on the water’s salinity

level, Pet. App. 240a (69 Fed. Reg. 41,601 n.44), but

they evaporate (i.e., consume) most of the water

withdrawn, returning very little to its source.

EPA also understood that the amount of water

withdrawn does not alone determine the

“environmental impact” that a cooling water intake

structure will have, even if impact is gauged solely

by intake-induced impingement and entrainment

mortality. Local characteristics of the waterbody

(Dec. 18, 2001)), the Second Circuit upheld EPA’s decision.

Riverkeeper, Inc. v. EPA, 358 F.3d 174, 182 n.5 (2d Cir. 2004)

(“Riverkeeper I’). For existing facilities, no party to this case

has disputed EPA's determination that dry cooling is not BTA.

and its fish are just as important, as are the

characteristics of the intake structure.

In formulating the Phase II rule, EPA

identified 20 distinct ecosystem and _ species

characteristics and 18 intake features that influence

impingement and entrainment losses.4 These factors

interact to determine the numbers and types of

healthy organisms near the intake at any given time;

the likelihood those organisms will survive an

encounter with the intake; and the consequences of

any losses that occur. Which factors are most

important varies by site.

Indeed, EPA’s record demonstrates that the

types and numbers of organisms impinged and

entrained over time and among different sites could

vary tremendously — for some species, by factors in

excess of 40,000.5

3 See, e.g.,'Pet. App. 216a, 226a-227a, 235a (69 Fed. Reg.

41,596, 41,598, 41,600).

4 EPA, Economic and Engineering Analysis (July 20,

2000) (“EPA EEA”), Ch. 11, p. 11-4, Table 11-1, Docket EPA W-

00-03, DCN:1-5046-PR, incorporated into Docket EPA-HQ-OW-

2002-0049 by reference at DCN:4-0000), J.A. 165-67.

5 See, eg., EPA EEA 11-13, Table 11-11 (showing

115,384-fold variation in annual impingement of Atlantic

croaker by eight estuarine plants); 11-13, Table 11-10 (showing

3,515-fold variation in entrainment of Atlantic tomcod eggs and

larvae by three estuarine facilities); 11-10, Table 11-6 (showing

1,033-foid variation in annual entrainment of alewife by five

Great Lakes facilities); 11-9, Table 11-5 (showing 18,750-fold

(continued...)

This is not to say that impingement and

entrainment rates at the lower end of the range are

necessarily trivial. But the record shows that EPA

had good cause to believe that impingement and

entrainment rates vary substantially from site to site

and may not be as significant at some sites as at the

handful of large facilities located on sensitive

waterbodies that the Agency presented as examples

of power plant intake structure e’fects.®

EPA also understood that not all organisms

that become impinged or entrained are harmed by

the intake structure. For example, whether an

organism’s encounter with an intake causes harm,

even to that individual, depends on whether the

organism is alive on arrival. Many are not, due to

the enormously high natural mortality to which

variation in annual impingement of freshwater drum by four

lake or reservoir facilities); 11-6, Table 11-2 (showing 1,101-fold

variation in entrainment of sunfish eggs, larvae, and juveniles

by five riverine facilities); 11-15, Table 11-13 (showing 19-fold

variation in impingement of queenfish by two ocean facilities).

6 Compare Pet. App. 175a-181a (69 Fed. Reg. 41,587-88)

with UWAG Comments on Proposed § 316(b) Rule for New

Facilities 81-87 (Nov. 9, 2000) (“UWAG Phase I Comments’),

incorporated by reference per DCN:4-0000 (discussing issues

raised by EPA reliance on information for a small group of

power plants to derive its estimate of national impacts); see also

UWAG Comments on Proposed § 316(b) Rule for Existing

Facilities, Public Comment 1.041 (Aug. 7, 2002) 15-17 (“UWAG

Phase II Comments”) (describing site-specific factors that affect

impingement and entrainment levels).

aquatic organisms are subject.? Equally important,

many organisms will survive their encounter with

the intake, resulting in no harm even to the

individual.®

The broader implications of those individual

losses depend on the species affected, the size of the

population from which the losses occur, and the

? See, e.g. EPRI Comments on Proposed § 316(b) Rule

for Existing Facilities, Public Comment 1.074 (Aug. 7, 2002) 9,

16; UWAG Phase II Comments at 15. High mortality in wild

populations is natural, and due to compensation and other

demonstrated natural mechanisms, increased mortality can

result in increased production. UWAG Phase I Comments at 32

& App. B; see also EPA’s Response to Public Comment, Author

Version, DCN:6-5049A (“EPA’s Response to Comment”) 689-90;

Seacoast Anti-Pollution League v. Costle, 597 F.2d 306, 309 (1*

Cir. 1979) (“Seacoast IT’); In re Pub. Serv. Co. of N.H. (Seabrook

Station, Units 1 & 2), 1 E.A.D. 332, 10 Env’t Rep. Cas. (BNA)

1257, 1977 EPA App. LEXIS 16, *47 (June 10, 1977), rev'd on

other grounds and remanded, Seacoast Anti-Pollution League v.

Costle, 572 F.2d 872 (1* Cir. 1978) (loss of Mya clam larvae

would be 100,000,000,000, but this was at most about 5% of the

standing crop of Mya clam in the area, and a single adult clam

releases several million eggs per spawning and may spawn

several times a years).

8 Pet. App. 234a-235a (69 Fed. Reg. 41,600) (citing

differences in impingement survival rates among species as

basis for setting performance standard ranges). See also In the

Matter of Riverkeeper, Inc. v. Johnson, 2008 NY Slip Op.

5608, 2008 N.Y. App. Div. LEXIS 5503 (N.Y. App. Div. 3d Dep’t

June 19, 2008) (upholding agency consideration of entrainment

survival in setting BTA requirements).

presence of other significant stressors. Some species

are so abundant that intake-related losses, even if

large in the abstract, are unlikely to affect the

species’ well-being. Other species are considered a

nuisance by state and federal fisheries managers,

who do their best to extirpate them. ?!°

In short, the extent to which an intake

structure causes impingement or entrainment

mortality at a particular site and the environmental

relevance of any such mortality are highly site-

specific. Equally important, such impacts are not the

only “environmental impacts” associated with the

technology choices under § 316(b). For example,

closed-cycle cooling systems can create other adverse

environmental impacts such as noise, salt drift, ice,

fog, elimination of favorable thermal habitat, and

others of which EPA is well aware. See infra at 20.

Most notably, because retrofitted closed-cycle

systems are less efficient than once-through systems

9 See, eg., UWAG Phase I Comments at 172-73

(evaluation of effects of entrainment of Atlantic mackerel by a

Northeastern plant showed that annual entrainment of Atlantic

mackerel eggs loss equaled less than one millionth the number

spawned yearly by that species).

10 See, e.g., Nonindigenous Aquatic Nuisance Prevention

and Control Act of 1990, 16 U.S.C. §§ 4701, 4712 (1994);

National Invasive Species Act of 1992, 16 U.S.C. §§ 4701-51

(1997); 72 Fed. Reg. 37,459 (July 10, 2007) (U.S. Fish and

Wildlife Service lists silver carp as “injurious fish” because they

carry pathogens, compete with native species, and degrade

habitat).

at removing heat, they extract a_ significant,

permanent “energy penalty,” resulting in less

electricity per unit of fuel. Pet. App. 254a-261a (69

Fed. Reg. 41,605-06). This means each affected

power plant would have a lower output because of

the retrofit. This raises serious concerns about the

nation’s electric supply.!! The costs of various

technological alternatives also are highly site-

specific, as EPA recognized. See, e.g., 69 Fed. Reg.

41,670-75 (Appendix A). The Agency made an

attempt to capture those costs in its analysis, but it

recognized that the assumptions it made might not

be correct for any given case. Pet. App. 435a (69 Fed.

Reg. 41,647).

B. Section 316(b)

The Agency found legal authority for

evaluating costs and benefits at both the national

11 Indeed, closed-cycle cooling retrofits, if required,

could have a very negative impact on the reliability of the

electrical supply system in the United States. The North

American Electric Reliability Corp. (“NERC”) is charged with

overseeing the reliability of the nation’s electric supply.

NERC’s recent assessment of long-term energy found that long-

term capacity margins already are inadequate in many regions,

and retrofitting existing power plants with closed-cycle cooling

pursuant to § 316(b) could result in a 12 percent reduction in

available capacity margin, thus compounding en already

serious reliability picture. See NERC, 2007 Long-Term

Reliability Assessment 2007-2016 at 10, 97 (available at

ftp://ftp.nerc.com/pub/sys/all_updl/docs/pubs/LTRA2007.pdf or

at http://www .nerc.com/~filez/rasreports. html).

and site-specific levels in the language and

legislative history of the statute. Pet. App. 150a-

157a (69 Fed. Reg. 41,582-83); Pet. App. 253a (69

Fed. Reg. 41,604); Pet. App. 348a-354a (69 Fed. Reg.

41,625-26).

. As EPA recognized, among the provisions of

the Clean Water Act that rely on technology to

achieve an outcome, § 316(b) is unique. It is the only

provision that applies to structures that withdraw

water, rather than to discharges that add pollutants

to water. Thus, its subject — the location, design,

construction, and capacity of cooling water intake

structures — is different from the subject of the

statute’s other technology-based provisions. Pet.

App. 156a-157a (69 Fed. Reg. 41,583).

Equally important, unlike the technology-

based program for point sources, the goal of which is

to “eliminate” pollutant discharges, § 316(b) has a

broadly stated objective of “minimizing adverse

environmental impact.” Section 316(b) does not

specify the impacts on which EPA must focus, does

not identify the threshold at which impacts are

considered “adverse,” and does not require that

adverse impacts be eliminated wherever it is

technologically possible to do so.

There are other differences as well. Section

§ 316(b) refers to but is structurally removed from

the technology-based provisions of §§ 301 and 306,

which the Entergy/PSEG Brief describes in some

detail. Unlike those sections, it does not require

development of several tiers of uniform national

standards for categories and classes of industrial

discharges. In fact, § 316(b) does not require

categorical or numeric performance standards of any

kind.

Section 316(b) does not reside with the Act’s

technology-based provisions but in a separate section

of the Act that, as its title states, addresses “Thermal

Discharges.” 33 U.S.C. § 1326. The cornerstone of

the section is § 316(a), which affords relief from

otherwise applicable technology or water quality-

based effluent limits for heat where the discharger

can demonstrate that alternate thermal limits will

ensure the “protection and propagation of balanced,

indigenous population of shellfish, fish and wildlife

in and on the water to which the discharge is

made.”!2 Pet. App. 59a, n.27.

By its terms, § 316(b) does not require controls

based solely on what technology can achieve, without

regard to the environmental outcome. Rather, as the

Agency concluded, § 316(b) authorizes EPA “to

12 Section 316 was originally included in the House-

passed water pollution control bill because “the arguments

which justified a basic technological approach to water quality

control did not apply in the same manner to the discharges of

heat.” 1A Legislative History of the Water Pollution Control Act

Amendments of 1972 (hereinafter Leg. Hist.) 263 (93d Cong. 1*

Sess.) (1973). Among the reasons offered in support were the

relatively local, non-accumulative, and temporary effects of

heat in comparison to other pollutants and the potential for

thermal discharges in some cases to enhance the aquatic

environment. /d. at 263-64, 267-28.

consider not only technologies but also their effects

on and benefits.to” the environment. Pet. App. 157a

(69 Fed. Reg. 41,583).

Although legislative history on § 316(a)

abounds, there is relatively little on § 316(b). Section

§ 316(b) appeared for the first time in the Conference

Committee Report.'° See Riverkeeper J at 186 n.12.

The only substantive comment was offered by one of

the House floor managers, Representative Don

Clausen (R. Calif.), who explained that § 316(b) “is

intended to be interpreted to mean the best

technology available commercially at = an

economically practicable cost.” 1 Leg. Hist. at 264;

Pet. App. 252a (69 Fed. Reg. 41,604). This brief

discussion places § 316(b) within the tradition of

§§ 301, 304, and 306, all of which authorize EPA to

weigh costs and benefits.

Thus, while § 316(b) refers to and therefore

logically should be read in conjunction with §§ 301,

304, and 306, both its subject (intake structures) and

its object (minimizing adverse’ environmental

impacts) are markedly different in wavs ‘hat EPA

13 Indeed, to the best of our knowledge, the only other

references tc cooling water withdrawals occurred during the

debate over §511(c), 33 U.S.C. § 1371(c), which limits the

applicability of the National Environmental Policy Act to

specified federal actions under the Clean Water Act. 1 Leg.

Hist. at 194-98 (Statement of Senator Buckley) and 198-200

(Senator Muskie). (Section 511(c) is in the appendix to this

brief.) ’

was obliged to consider when interpreting and

implementing that provision. The Second Circuit

itself recognized this in its earlier decision, largely

upholding the Phase I § 316(b) rule for new facilities.

See Riverkeeper I at 193 (recognizing that “intake

structures are in a class by themselves”).

C. EPA’s Long-Standing Approach To

§ 316(b) Implementation

For over 3) years, EPA has read § 316(b) to

authorize pe~it writers to select BTA on a site-

specific basis uv.d to weigh costs and benefits in

doing so. The Agency’s early rules relied exclusively

on site-specific decision-making. J.A. 44 (41 Fed.

Reg. 17,387, 17,388 (Apr. 26, 1976). Those rules

were set aside on procedural grounds a year later in

Appalachian Power Co. v. Train, 566 F.2d 451, 457

(4 Cir. 1977).

During the next 30 years, until EPA

promulgated the rules at issue here, EPA and state

permit writers successfully relied on Agency

guidance that required permit writers to select BTA

site-by-site, taking into account the relationship

between costs and benefits.'4 That guidance

14 EPA, Draft Guidance for Evaluating the Adverse

Impact of Cooling Water Intake Structures on the Aquatic

Environment: Section 316(b) P.L. 92-500 (May 1, 1977) (“1977

draft guidance”), DCN:1-5045-PR, incorporated into Docket

EPA-HQ-OW-2002-0049 by reference at DCN:4-0000), also

available at

http://www.epa.gov/waterscience/316b/files/197 7AEI guid. pdf.

provided permit writers with a general framework

for evaluating the potential environmental impacts

of existing intake structures, deciding whether those

impacts are adverse, and, if they are, selecting the

modifications to the structure’s location, design,

construction, or capacity that best minimizes those

impacts at a cost not “wholly disproportionate” to the

benefit gained. Pet. App. 161la (69 Fed. Reg. 41,584).

The approach embodied in EPA’s guidance was

approved by the First Circuit in Seacoast IJ, 597 F.2d

at 311, and followed in numerous administrative

decisions thereafter.

Il. The Phase II Rule

A. Background

In the mid-1990s, to resolve a lawsuit filed by

environmental groups, EPA entered a consent decree

obligating it to initiate §316(b) rulemaking

proceedings, which it did in three phases.!© The

15 EPA’s Phase I rule, adopted in 2001, governs new

facilities of all kinds, including new steam electric power plants.

66 Fed. Reg. 65,338 (Dec. 18, 2001), as amended at 68 Fed. Reg.

36,754 (June 19, 2003), codified at 40 C.F.R. §§ 125.80-125.89.

The Second Circuit reviewed and largely upheld those

regulations, including a variance’ provision § allowing

consideration of local environmental impacts. Riverkeeper I at

174. For a detailed discussion of the Second Circuit’s decision

in Riverkeeper I, see Entergy/PSEG Brief, Statement of the

Case (“SOC”) § A.5.

Phase III encompasses existing power plants and

industrial facilities not subject to Phase II. See Pet. App. 159a

(continued...)

“Phase II” rule at issue here resulted from that

process. Pet. App. 122a-593a (69 Fed. Reg. 41,576).

The rule applies to cooling water intake structures at

approximately 540 large steam electric generating

plants built before January 17, 2002. EPA estimated

that Phase II facilities produce about 50% of the

nation’s electric energy. Pet. App. 203a (69 Fed. Reg.

41,593); EPA, Economic and Benefits Analysis for the

Final Section 316(b) Phase II Existing Facilities Rule

A3-12-13 (2004), DCN:6-0002.

EPA’s Phase II rule embodies both site-

specificity and cost-benefit principles, but with two

significant innovations. First, to promote greater

consistency and ease administrative burdens on the

permit writers responsible for implementing

§ 316(b), the Phase II rule establishes new nationally

applicable performance standard ranges for reducing

impingement mortality and entrainment!® and

(69 Fed. Reg. 41,583). For these facilities, EPA has determined

that uniform national standards are not the most effective way

to ensure compliance with § 316(b), opting instead to continue

regulating exclusively case-by-case. 71 Fed. Reg. 35,006 (June

16, 2006). The Agency based this determination on its

judgment that “the monetized costs associated with the primary

option under consideration are wholly disproportionate to the

monetized environmental benefits.” 71 Fed. Reg. 35,017 (June

16, 2006). Environmental groups have challenged that

determination in a case now pending in the Fifth Circuit.

ConocoPhillips v. EPA, (5 Cir., No. 06-60662, filed 7/14/06)

(stayed pending outcome of Phase II appea)).

16 Although EPA recognized that entrained organisms

sometimes survive passage through the cooling system, it also

(continued...)

imposes new, more uniform _ procedural

requirements. Those performance ranges and

procedural requirements, described in greater detail

below, provide a consistent framework for selecting

the “most effective and efficient approach and

technologies for minimizing adverse environmental

impact” at each site, at a cost that is “economically

practicable.” Pet. App. 226a, 356a (69 Fed. Reg.

41,598, 41,627).

Second, the Phase II rule does not require a

threshold evaluation of whether the type and level of

impact occurring at a site is truly “adverse” in any

meaningful sense. Instead, it addresses that issue

through an_ optional _ site-specific compliance

alternative. That alternative, described in greater

detail below, authorizes establishment of alternative

performance standards where the overall costs of

achieving the national standards exceed the overall

benefits.

recognized that entrainment survival rates are very site-

specific. Pet. App. 325a-327a (69 Fed. Reg. 41,620). Therefore,

for purposes of setting national standards, the Agency assumed

that no survival occurs and established standards for

entrainment per se, rather than for intake-induced entrainment

mortality. However, as discussed below, it allowed

consideration of facility-specific entrainment survival through

the site-specific cost-benefit provision. Throughout this brief,

we will refer to “impingement,” “impingement mortality,”

“ent:ainment,” and “entrainment mortality” as the context

demands.

For purposes of setting national standards in

the Phase II rule, the Agency chose not to draw

distinctions (though it could have) based on the type

of species affected, the life stages affected, the size of

the losses, or the effects on the ecosystem. Instead,

it took a precautionary approack, based on its

national findings about the likely benefits of

reducing impingement mortality and entrainment,

the acceptability of the other environmental and

energy impacts that would impose, and the

associated costs of achieving the required reductions.

Pet. App. 249a-252a (69 Fed. Reg. 41,603-04); see

also 247a-249a (69 Fed. Reg. 41,603). To avoid

irrational or counterproductive results at the site-

specific level, however, EPA included provisions

allowing site-specific standards based on actual costs

and benefits. Jd.

Besides the regulatory option it chose, EPA

considered a number of others. Several were wholly

site-specific. EPA rejected these in favor of an

approach that promoted consistency, reduced

administrative burdens, and decreased the likelihood

of disputes and delay in the permit process. Pet.

App. 268a-269a (69 Fed. Reg. 41,608).

It also considered and rejected several options

requiring all or some existing facilities with once-

through cooling to retrofit closed-cycle systems,

which would reduce flow substantially and, EPA

estimated, achieve a comparable reduction in

entrainment and, in some cases, impingement.!’

Pet. App. 287a-289a (69 Fed. Reg. 41,612). Although

recognizing that the reduction in impingement and

entrainment achievable by closed-cycle cooling could

be greater in some cases than was achievable from

technologies directly applicable to the _ intake

structure, such as barriers, behavioral devices, or

screening, EPA chose not to base the Phase II

standards on closed-cycle cooling. Pet. App. 254a-

273a (69 Fed. Reg. 41,605-09).

EPA based this choice partly on its conclusion

that “other technologies approach the performance of

[closed-cycle cooling],” Pet. App. 255a (69 Fed. Reg.

41,605), at about one-ninth the cost of closed-cycle

cooling. Compare Pet. App. 256a (69 Fed. Reg.

41,605) (total social cost for cooling towers about $3.5

billion per year, not counting land acquisition) with

Pet. App. 450a (69 Fed. Reg. 41,650) (total social cost

for Phase II rule of $389 million per year). Other

factors also influenced EPA’s decision: the huge

plant-specific and national cost of retrofitting

existing facilities with closed-cycle cooling; the

energy penalties associated with retrofitting existing

17 EPA found that entrainment is related to flow, and

impingement is related to a combination of flow, intake velocity,

and fish swim speed, and that installing flow reduction

technologies would result in a similarly high reduction in

impinged and entrained organisms. Pet. App. 288a-289a (69

Fed. Reg. 41,612).

facilities;!® increases in air emissions from additional

generation needed to compensate for such penalties;

the fact that retrofitting might be impossible at some

plants; and other adverse environmental effects,

such as fog, icing, and noise. See Pet. App. 255a-

259a (69 Fed. Reg. 41,605-06).

In other words, the Agency considered overall

costs, weighed them against overall benefits, and

concluded that the approach it chose was the best

way to minimize adverse environmental impacts

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

In fact, EPA adopted a Phase II rule that

would produce benefits at a relatively high cost. The

Agency performed a cost-benefit analysis of the rule,

as required by Executive Order 12866. That analysis

estimated that the costs of the Agency’s chosen

alternative exceeded the quantifiable benefits by

almost 5-to-1. Pet. App. 526a (69 Fed. Reg. 41,666)

(total pre-tax social costs of $389.2 million and total

use benefits of $82.9 million).

18 For existing facilities, the Department of Energy

estimated that retrofitting closed-cycle cooling at existing

facilities would impose an energy penalty ranging from 2.4 to 4

percent (or, at one plant, over 5 percent) of existing generating

capacity, requiring the construction of approximately 20

additional 400-megawatt power plants to replace that lost

capacity. Pet. App. 257a-258a (69 Fed. Reg. 41,605). The “net

effect” of the energy penalty would be more consumption of

fossil fuel, which in turn increases emissions of carbon dioxide,

sulfur dioxide, NOx, mercury, and other pollutants. Pet. App.

258a (69 Fed. Reg. 41,605).

B. National Standards

The rule sets national standards requiring all

Phase II facilities to substantially reduce the

“Impingement mortality” that can occur when

aquatic organisms become trapped against the

intake structure. EPA found that “best technology”

varies among sites but is reflected by national

performance standards that require all Phase II

plants to reduce impingement mortality by 80-95%

from an uncontrolled or “calculation baseline” level.

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

The Phase II rule also requires some facilities

to reduce “entrainment” of very small aquatic

organisms (usually eggs and very small larvae) that

are drawn into the facility’s cooling system through

the intake. The Agency concluded that entrainment

levels could be significant enough to warrant

regulation at facilities that (1) have a “capacity

utilization rate” of 15% or greater, and (2) are located

on oceans, estuaries, tidal rivers or the Great Lakes,

or are located on a freshwater stream or river (but

only if the plant has a design flow of 5% or greater of

the mean annual flow of river or stream). Pet. App.

229a-234a (69 Fed. Reg. 41,599-600). These facilities

must reduce entrainment 60-90% from the

c. culation baseline. Pet. App. 560a (40 C.F.R.

§ 125.94(b)(2)). For other facilities, the Agency

decided that the risks from entrainment were not

sufficient to justify additional controls — a decision

that no party challenged.

The Agency focused on impingement mortality

and entrainment as a “quick, certain, and consistent

metric for determining performance at Phase II

existing facilities.” Pet. App. 168a-188a (69 Fed.

Reg. 41,586-90). But because EPA recognized that

the availability, performance, cost, and

environmental effects of intake technology

alternatives varied significantly by site, the Agency

did not base its performance standards on a single

technology. Pet. App. 216a, 226a, 234a-235a (69 Fed.

Reg. 41,596, 41,598, 41,600). Instead, the standards

are based on a suite of commercially available

technologies, including fine- and wide-mesh screens,

aquatic filter barriers, barrier nets, and fish return

systems. Pet. App. 226a-228a (69 Fed. Reg. 41,598-

99).

C. Site-Specific Standards

To provide a “level of flexibility comparable” to

its long-standing site-specific approach, EPA also

included a provision allowing permit writers to set

site-specific alternative performance standards

where a facility can demonstrate that the overall

costs of achieving the national standards exceed the

overall benefits. Pet. App. 269a (69 Fed. Reg.

41,608); Pet. App. 556a-560a (40 C.F.R.

§ 125.94(a)(5)(ii)). + Alternate standards set under

this provision must be as close as practicable to the

national standard without resulting in significantly

greater costs than benefits.

To qualify, a facility must submit a “Benefits

Valuation Study” fully valuing the impacts of

impingement mortality (and, where applicable,

entrainment) at its site, and providing a quantitative

and qualitative assessment of all of the benefits

(recreational, commercial, and_ ecological) of

achieving applicable natiomal standards. Pet. App.

579a-581a (40 C.F.R. § 125.95(b)(6)(ii)). ~—‘ Facilities

subject to entrainment standards may document

entrainment survival and factor that survival into

the Benefits Valuation Study. Pet. App. 579a (40

C.F.R. § 125.95(b)(6)(ii)((B)). In fact, this is the only

point in the rule at which entrainment survival can

be considered. To avoid any bias in the benefits

estimate, the rule authorizes a permit writer to

require an applicant to provide at its own expense an

independent peer review of the Benefits Valuation

Study. Pet. App. 580a (40 C.F.R.

§ 125.95(b)(6)(ii)(D)). The rule also requires the

applicant to explain how the uncertainties involved

in benefits estimation will be identified and factored

into the assessment. Pet. App. 579a (40 C.F.R.

§ 125.95(b)(6)Gi)(C)).

An applicant for alternate limits also must

submit a “Comprehensive Cost Evaluation Study.”

The rule does not limit the types of costs that can be

considered to only those economic costs borne by the

permittee. It simply requires submission of

“engineering cost estimates” (Pet. App. 578a-579a

(40 C.F.R. § 125.95(b)(6)(G)), an undefined term that

is broad enough to encompass estimates for a variety

of different costs, whether borne by the facility,

society, or the environment. Ultimately, according to

the rule, the determination regarding any site-

specific alternative limitation must be made based

on “reliable, scientificelly valid cost and performance

data” submitted by the facility “and any other

information the Director deems appropriate.” Pet.

App. 559a (40 C.F.R. § 125.94(a)(5)(ii)).

All of this information must be submitted as

part of the facility's “Comprehensive Demonstration

Study,” which becomes part of its NPDES permit

renewal application. Pet. App. 564a-582a (40 C.F.R.

§ 125.95(a), (b)). As such, it becomes part of the

public record, available for review and comment.

Ill. The Decision Below

The Second Circuit invalidated the Phase II

rule based on its own highly selective interpretation

of § 316(b) and §§ 301 and 306, to which § 316(b)

refers.'9 Although the circuit court stated that EPA

may consider technology cost and must consider

technology performance in selecting BTA at the

national level, it held that § 316(b) forbids any

comparison of the two. Pet. App.20a-33a. Instead,

EPA must select the technology that achieves the

greatest reduction in impingement mortality and

entrainment, unless the Agency finds that the

industry cannot “reasonably bear” its cost. Pet. App.

26a-27a. The court also prohibited EPA from

allowing site-specific variation from the national

standards based on_ cost-benefit evaluation,

reasoning that weighing costs and benefits is

19 For a detailed discussion of the basis for the Second

Circuit’s decision, see Entergy/PSEG Brief, SOC § B.

generally prohibited and, applied on a site-specific

basis, would involve consideration of forbidden

“water quality” factors. Pet. App. 56a-60a.

The court agreed that EPA may consider

energy and non-water quality impacts in selecting

BTA (Pet. App. 26a n.12). But its decision strongly

suggests that EPA may not use any form of economic

cost-benefit analysis as a means of balancing those

competing factors and selecting the alternative that

best “minimizes adverse environmental impact”

overall, even though the definition of “cost-benefit

analysis” cited by the court suggests that is a task for

which such an analysis is ideally suited. Cf. Pet.

App. 23a n.10 (citing OMB circular describing cost-

benefit analysis as a “systematic quantitative

method of assessing the desirability of government

... policies when it is important to take the long view

of future effects and a broad view of possible side-

effects”) (internal citations omitted).

SUMMARY OF THE ARGUMENT

The Second Circuit’s decision misreads

§ 316(b) and the other technology-based provisions of

the Clean Water Act, ignores the legislative history,

and misapplies this Court’s precedents to reach a

conclusion that is inconsistent with § 316(b)’s

mandate.

Section 316(b) does not. forbid EPA to compare

costs and benefits on either a national or site-specific

basis. As the Entergy/PSEG Brief demonstrates,

§ 316(b), read both alone and within the broader

structure of the Act, clearly permits EPA to weigh

costs and benefits in regulating cooling water intake

structures. UWAG agrees with and adopts the

arguments presented by Entergy and PSEG.

At the very least, however, § 316(b) is

ambiguous as to EPA’s authority to weigh costs and

benefits in setting national standards or in making

site-specific BTA determinations. Other than

requiring EPA to focus on the “location, design,

construction, and capacity” of cooling water intake

structures, and to “minimize” those “environmental

impacts” that are “adverse,” § 316(b) is silent on the

factors to be considered and how they should be

considered. EPA’s interpretation of § 316(b) was

entirely reasonable and thus was entitled to

deference under Chevron. The Second Circuit's

decision gave it none; indeed, the court makes almost

no mention of EPA’s interpretation. Instead, the

courts decision upsets 30 years of Agency

interpretation and precedent and denies EPA the

deference to which it is due when interpreting a

statute the Agency is charged with administering.

The Second Circuit’s cost-benefit decision

places a harmful and artificial limit on EPA's

thinking. As the discussion above of EPA’s findings

shows, the Agency knew that saving some fish is

more important than saving others; that installing

some equipment to save fish, in some places, will

harm the environment or at least have no

worthwhile overall effect; and that some equipment

that saves fish will also reduce electric supply and

increase air pollution. All these are relevant to “best

technology available” for “minimizing adverse

environmental impact.”

Yet the reasoning underlying the Second

Circuit’s decision suggests that EPA is

inappropriately restricted from thinking about these

things in certain ways. It may not consider, for

example, how intake technologies increase air

pollution, increase undesirable fish, or harm electric

supply if considering them would involve translating

those costs and benefits into economic terms for

comparison. This restriction on an _ agency’s

deliberative process is irrational. ‘The various

“factors” (all of which can be thought of as either

“costs” or “benefits”) must assuredly be compared to

one another at some point, and cost-benefit analysis

is one tool for making such comparisons. Is it not a

requirement of rational decision-making that EPA

consider, for example, that a large increase in air

pollution would produce only a_— minimal

improvement in a fish population? And is not that

comparing “costs” to “benefits”?

It is inconceivable that Congress intended to

impose irrational limits on EPA’s thinking, especially

where such limits would undercut the statutory

objective (minimizing adverse’ environmental

impact). If that is what Congress intended, there

would be clear evidence of it in the statute or

legislative history. But there is none.

ARGUMENT

Judicial review of an agency’s interpretation of

a statute that the agency is charged with

administering proceeds under the familiar two-step

procedure articulated in Chevron. At step one of a

Chevron analysis, reviewing courts must examine

the text of the statute and ask “whether Congress

has directly spoken to the precise question at issue.”

Chevron, 467 U.S. at 842. If it has, then the “inquiry

is at an end” and the agency must follow Congress’s

command. See FDA v. Brown & Williamson Tobacco

Corp., 529 U.S. 120, 132 (2000).

If a court determines that the statute is

ambiguous, however, the inquiry moves to step two

of Chevron’s test. At step two, a court must defer to

the agency’s interpretation of an ambiguous

provision so long as it represents “a reasonable policy

choice for the agency to make,” Chevron, 467 U.S. at

845, and is thus a “permissible” construction of the

statute. Jd. at 843. This can be framed as an aspect

of statutory interpretation and of the requirement

that agencies engage in reasoned decision-making.

Compare NationsBank of N.C. v. Variable Annuity

Life Ins. Co., 513 U.S. 251, 257 (1995) (citing

Chevron, 467 U.S. at 844) (“If the administrator’s

reading fills a gap or defines a term in a way that is

reasonable in light of the legislature’s revealed

design, we give the administrator's judgment

‘controlling weight.”) with Smiley v. Citibank (S.D.),

N.A., 517 U.S. 735, 741 (1996) (citing Chevron, 467

U.S. at 844) (“In its logic, at least, the line [drawn by

the agency] is not ‘arbitrary [or] capricious,’ and

thereby disentitled to deference under Cheuron.”).

Review at step two is deferential. The court

may not “simply impose its own construction on the

statute, as would be necessary in the absence of an

administrative interpretation.” Chevron, 467 U.S. at

843. It must affirm an agency’s interpretation even

if it is not the best interpretation of a statute or the

interpretation that the court would have devised.

See id. at 843 n.11. The rationale for agency

deference is clear. As this Court has explained,

Chevron is based upon “a _ presumption that

Congress, when it left ambiguity in a statute meant

for implementation by an agency, understood that

the ambiguity would be resolved, first and foremost,

by the agency, and desired the agency (rather than

the courts) to possess whatever degree of discretion

the ambiguity allows.” Smiley v. Citibank, 517 U.S.

at 740-41 (citing Chevron, 467 U.S. at 843-44).

Under Chevron, deference to reasoned agency

decision-making is particularly appropriate where

the statute at issue is highly technical or complex.

Chevron, 467 U.S. at 865 (1984); see also Nat Cable

& Telecomms. Ass’n v. Brand X Internet Serus., 545

U.S. 967, 1002-03 (2005); Barnhart v. Walton, 535

U.S. 212, 222 (2002); Pauley v. BethEnergy Mines,

501 U.S. 680, 697 (1991). As this Court has

explained, the Clean Water Act is exactly the type of

“very complex statute” for which Chevron deference

is particularly appropriate. See Chemical Mfrs. Ass'n

v. NRDC, 470 U.S. 116, 125 (1985). Accordingly,

courts regularly defer to the EPA’s expertise in

construing silent or ambiguous provisions of the

CWA. See, e.g., Arkansas v. Oklahoma, 503 U.S. 91,

112-14 (1992) (reversing Court of Appeals decision to

invalidate Clean Water Act permit issued by EPA

because that court failed to defer to EPA's

interpretation of its water quality regulation and

therefore “made a policy choice that it was not

authorized to make”); United States v. Pozsgai, 999

F.2d 719, 729 (8d Cir. 1993) (giving deference to

Army Corps of Engineers interpretation of Clean

Water Act because, “[lJike the Clean Air Act in

Chevron, the Clean Water Act addresses a

scientifically complicated subject, and has an

intricate regulatory structure”).

1. EPA’s Interpretation of §316(b) as

Authorizing Cost-Benefit Analysis Is

Entitled to Deference

Reviewing the language of § 316(b) itself, and

the full statutory context, the only conclusion that

can be drawn is that, for the reasons given by

Entergy and PSEG, the provision unambiguously

permits EPA to weigh costs and benefits. If this

Court concludes otherwise, however, then, at the

very least §316(b) is silent, and _ therefore

ambiguous, on the issue; it certainly does not

unambiguously forbid the Agency to weigh costs and

benefits. EPA’s interpretation of § 316(b)_ to

authorize cost-benefit analysis both at the national

and site-specific level is entirely consistent with a

reasonable, common sense interpretation of § 316(b),

and the Second Circuit erred in not deferring to the

Agency’s interpretation.

A. The Second Circuit’s Interpretation

Is Not Dictated by Statutory

Language or Precedent

3. The Wording of Section 316(b)

Does Not Foreclose Cost-

Benefit Analysis

As the Second Circuit itself recognized in

Riverkeeper I, the paucity of legislative history,

combined with the brevity of the section itself,

“counsels against imputing much specific intent to

Congress beyond the section’s words themselves.”

Riverkeeper J at 187 n.12. Thus, “[t]o the extent the

provision is silent on issues to which other sections

speak” (such as EPA’s authority to consider costs and

benefits under § 316(b), “we hesitate to draw the

negative inference that the brevity of section 316(b)

reflects an intention to limit the EPA’s authority

rather than a desire to delegate significant

rulemaking authority to the Agency.” Id.

If such a prohibition exists, then, it must be

apparent from the terms Congress used in § 316(b).

That those terms do not unambiguously prohibit

balancing costs and benefits finds support in the

same arguments presented by Entergy and PSEG

demonstrating why §316(b) is best read as

unambiguously authorizing cost-benefit balancing.

In Section II.A of their Argument, Petitioners

Entergy and PSEG discuss in detail the ordinary

meaning of “best,” “available,” “minimize,” and

“adverse environmental impact.” As that analysis

demonstrates, the ordinary meaning of all these

terms, individually and collectively, is entirely

consistent with EPA’s use of cost-benefit analysis in

selecting BTA at the national level and at specific

sites.

Focusing further on the phrase “minimize

adverse environmental impact,” nothing in the

statute suggests, as the Second Circuit assumed,

that Congress intended a single-minded focus on

reducing impingement and entrainment as much as

physically possible. See Pet. App. 26a (assuming

“best” means “most effective” or “optimally best

performing” at reducing impingement mortality and

entrainment).

That EPA chose impingement mortality and

entrainment as a measure of “adverse environmental

impact” does not mean that it forfeited the right to

weigh other factors in deciding when “adverse

environmental impact” in the broader sense occurs

and when it is minimized. As EPA was careful to

explain, its decision to set national standards did not

limit its discretion to decide that environmental

impacts are “minimized” at something less than

those standards.2° Pet. App. 356a (69 Fed. Reg.

41,627).

20 Indeed, in the Phase I rule, EPA adopted a regulatory

definition of “minimize” that accommodates cost-benefit

balancing to decide what level of additional control is

“reasonably possible.” See 40 C.F.R.§ 125.83 (defining

“minimize” for purposes of the Phase I rule as meaning “reduce

(continued...)

Had the Second Circuit examined the phrase

“adverse environmental impact,” it would have found

no bar to EPA’s interpretation. “Adverse” commonly

means “contrary to one’s interests or welfare;

harmful or unfavorable.” American Heritage

Dictionary of the English Language (4 ed. 2000).

“Environmental” means “relating to or being

concerned with the ecological impact of altering the

environment.” Jd. And definitions of “impact”

include “the force or impression of one thing on

another: a significant or major effect.” Merriam-

Webster’s Collegiate Dictionary (10% ed. 1996).

Collectively, they suggest Congress’s intent to reduce

significant effects that have ecological impact and

that are contrary to the interests of the

“environment” writ large.

It is eminently reasonable to use cost-benefit

comparisons to decide when such effects have

occurred and at what point they are “minimized.” In

short, the objective of § 316(b) is not so narrow that

it suggests a Congressional intent to forbid cost-

benefit comparisons, as the Second Circuit assumed.

Indeed, §§ 301, 304, and 306 are designed to make

progress toward the far more precise and demanding

goal of “eliminating pollutant discharges,” but, as

explained below, even those provisions permit cost-

benefit comparisons.

to the smallest amount or degree reasonably possible”). This

provision was not challenged and remains in effect today.

2. The Second Circuit’s Reliance

on Crushed Stone Was

Misplaced

In finding an unambiguous intent to prohibit

cost-benefit analysis, the Second Circuit largely

ignored the specific requirements of § 316(b).

Instead, it drew a strict analogy between § 316(b)

and the BAT (“best available’ technology”

economically achievable) and BADT (“best available

demonstrated control technology”) requirements of

§§ 301(b)(2) and 306(b)(1)(B). Having drawn this

analogy, it misinterpreted this Court’s decision in

EPA v. Natl Crushed Stone, 449 U.S. 64 (1980),

which construed those provisions, as “strongly

suggest(ing] that cost-benefit analysis is no longer

permitted under those sections....” Pet. App. 23a.

Nothing in Crushed Stone supports the Second

Circuit’s rejection of EPA’s interpretation of § 316(b).

There, this Court examined whether the Clean

Water Act requires EPA to provide a variance from

BPT (“best practicable contre’ technology” currently

available) limits that prove too expensive for a

facility to afford. The Fourth Circuit had ruled that

EPA was required to provide such a variance to

account for individual affordability, because § 301(c),

the BAT variance provision, required it.

This Court disagreed, holding that EPA was

not required to provide a BPT variance based on

affordability. The Court reasoned that because the

statute requires EPA to weigh costs and benefits

when setting BPT requirements, those requirements

embodied EPA’s judgment that the costs, including

some individual closures of clearly deficient plants,

were necessary to make reasonable further progress

and thus were worth the benefits.

In reaching this conclusion, this Court noted

in passing that “[s]imilar directions are given the

Administrator for determining effluent reductions

attainable from the BAT except that in assessing

BAT total cost is no longer to be considered in

comparison to effluent reduction benefits.” Crushed

Stone, 449 U.S. at 71 (emphasis added). The Court

then cited remarks made by Senator Muskie

describing the BPT standard and noting 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

benefits.” Jd. at 71 n.10 (internal citations omitted).

The Second Circuit misread this Court’s remark as

tantamount to a statement that, in assessing BAT,

total cost may no longer be considered in relation to

effluent reduction benefits. But that is not what the

Court said, nor is that how its decision has been read

by other courts. See Entergy/PSEG Brief, Argument

§ 11.B.1.

‘The Court simply never considered whether

EPA had discretion to weigh costs and benefits in

setting BAT where it deemed such consideration

appropriate, because that was not the issue before it.

Indeed, later in its decision, the Court recognized

that the § 301(c) variance provides for exactly that

sort of balancing in adjusting BAT requirements on a

site-specific basis. See Crushed Stone, 449 U.S. at 77

n.16.

B. The Phase II] Rule Embodies the

Same Reasonable Policy Choice

EPA Has Made for the Past 30 Years

Given that § 316(b) is at least ambiguous on

the subject of EPA’s authority to weigh costs and

benefits, the question presented under step two of

Chevron is whether EPA’s conclusion that such

analysis is permitted by the Act is reasonable. It is.

As Entergy and PSEG have shown in their

brief, § 316(b), read both alone and within the

broader structure of the Act, clearly permits EPA to

weigh costs and benefits in regulating cooling water

intake structures. The same analysis supports the

conclusion that EPA’s interpretation is reasonable.

EPA’s interpretation here is consistent with

the same principles of site-specificity and cost-benefit

balancing that the Agency has applied for the past 30

years without challenge by any court or change by

Congress. The longevity of EPA’s interpretation and

its widespread application for so many years warrant

special deference, as this Court has recognized. See,

e.g., Alaska Dep't of Envtl. Conservation v. EPA, 540

U.S. 461, 487 (2004) (the Court “normally accord[s]

particular deference to an agency interpretation of

‘longstanding’ duration”); Barnhart v. Walton, 535

U.S. 212, 220 (2002) (quoting North Haven Bd. of Ed.

v. Bell, 456 U.S. 512, 522 n.12 (1982), recognizing

that “well-reasoned views” oof an_ expert

administrator rest on “a body of experience and

informed judgment to which courts and litigants may

properly resort fur guidance”); Bragdon v. Abbott,

524 U.S. 624, 642 (1998) (quoting Skidmore v. Swift

& Co., 323 U.S. 134, 139-40 (1944)).

In developing the Phase II rule, EPA did not

write on a blank slate. As discussed above, the

Agency adopted a § 316(b) rule in 1976, only to have

it remanded on procedural grounds a year later. See

supra at 15. The 1976 rule, unlike the rule at issue

here, made no attempt to set national standards.

J.A. 38-49 (41 Fed. Reg. 17,387-90 (Apr. 26, 1976)

(cited in Pet. App. 159a-162a (69 Fed. Reg. 41,583-

84)). Instead, the 1976 rule required that the best

technology available be determined by evaluating the

specifics of each plant and its site, including the size

and type of waterbody and relative magnitude of flow

withdrawn.

The Agency took a broad view of what permit

writers ought to consider in determining whether an

adverse environmental impact exists and when it is

minimized. The number of organisms affected and

the potential for population impacts were both

factors it said were relevant. J.A. 45 (41 Fed. Reg.

17,389). It explained that, once a permit writer has

identified adverse environmental impacts for a given

site, its task is to identify economically practicable

technologies for the individual facility and to select

from among them the most effective at minimizing

the adverse environmental impacts identified. J.A.

41-42 (41 Fed. Reg. 17,388). Although EPA said that

§ 316(b) does not require permit writers to conduct a

cost-benefit analysis before selecting BTA, it did not

suggest that permit writers were forbidden to

compare costs and benefits if they chose to when

deciding which technologies are the most effective at

minimizing adverse environmental impact. Jd.

The Agency also concluded that closed-cycle

cooling systems were not “universally and

necessarily the best technology available,” finding

that the available data did not support requiring

their use even for plants on biologically sensitive

waters. J.A. 43-44 (41 Fed. Reg. 17,388).

EPA later supplemented its initial § 316(b)

rule with draft § 316(b) guidance.2! Although never

finalized, the 1977 draft guidance is important

because it has been widely followed by state and

federal permit writers, and its principles are

reflected in hundreds of individual § 316(b) decisions.

21 The 1977 draft guidance (p. 11) states as follows:

Adverse aquatic environmental impacts occur

whenever there will be entrainment or

impingement damage as a result of the

operation of a specific cooling water intake

structure. The critical question is_ the

magnitude of any adverse impact. The exact

point at which adverse aquatic impact occurs

at any given plant site or water body segment

is highly speculative and can only be

estimated on aé_e case-by-case basis. by

considering the species involved, magnitude of

the losses, years of intake operation

remaining, ability to reduce losses, etc.

The 1977 draft guidance acknowledges that

the “adverse impact” of cooling water intakes is site-

specific and directs permit writers to make design,

location, construction, and capacity decisions case-

by-case. 1977 draft guidance at 4n.12. It suggests a

general process for decision-making, starting with a

site-specific study, which is used to determine

whether, based on the magnitude of the impact, the

facility needs to make changes for minimizing

adverse environmental impact. Id. at 11-14,

discussed at Pet. App. 16la (69 Fed. Reg. 41,584).

Besides the 1977 draft guidance, the Agency

issued a variety of decisions and opinions reflecting

its interpretation of § 316(b). Most important for

this case was the Administrator’s decision involving

a § 316(b) determination for the Seabrook generating

station. In re Pub. Serv. Co. of N.H. (Seabrook

Station, Units I and 2), 1 E.A.D. 455, 1978 EPA App.

LEXIS 17 (1978), affd, Seacoast IT, 597 F.2d at 311.

There, the Administrator confirmed that § 316(b),

while not requiring a cost-benefit analysis to justify

BTA requirements, does not require selecting the

technology that most reduces impingement and

entrainment mortality, if its cost would be wholly

disproportionate to the benefits obtained (that is, the

number of organisms spared or the effects of reduced

losses on the waterbody). EPA’s General Counsel

subsequently endorsed the Administrator’s

determination. In re Central Hudson Gas & Elec.

Corp., et al. Opinion No. 63, July 29, 1977, 1977 WL

28250 (E.P.A.G.C.) at *9-10 (explaining that it would

be “unreasonable to interpret Section 316(b) as

requiring use of a technology whose cost is wholly

disproportionate to the environmental benefit to be

gained”).

In permitting decisions over the past 30 years,

EPA and the states have relied on this “wholly

disproportionate” test to make § 316(b) decisions. 22

Until now, no court has ever found fault with that

approach. On thé contrary, the courts have

supported it. Seacoast IJ, 597 F.2d at 311; United

States Steel Corp. v. Train, 556 F.2d 822, 850 (7%

Cir. 1977) (“we trust that EPA will conduct a limited

cost-benefit analysis” for a steel mill under § 316(b)).

22 See, e.g., In re Dominion Energy Brayton Point, LLC

(formerly USGen New England, Inc.) Brayton Point Station,

NPDES 03-12, 2006 EPA App. LEXIS 9, *87-88, 132-33 (EAB

February 1, 2006); In the Matter of Dynegy Northeast

Generation, Inc. (Danskammer Generating Station), 2006 N.Y.

ENV LEXIS 23, *19 (Deputy Commissioner, NY Dep’t Envtl.

Conservation, May 24, 2006) (describing New York’s approach

for selecting BTA, including a determination about whether the

costs of practicable technologies are wholly disproportionate to

the environmental benefits conferred by such measures), appeal

dismissed on procedural grounds, Hudson Riverkeeper Fund v.

Orange & Rockland Utils., 835 F. Supp. 160, 165-66 (S.D.N-Y.

1993); Athens Generating Co., 2000 WL 33341184 (N.Y. Dep’t

Envti. Conservation, June 2, 2000) at *10-11 (applying a

“wholly disproportionate” cost-benefit standard, which is met

where “the relative costs are unreasonable”); see also the cases

cited in UWAG’s Petition for Writ of Certiorari, No. 07-597 at

21-22 (Nov. 2, 2007).

Il. EPA Reasonably Concluded that § 316(b)

Permits Site-Specific Cost-Benefit

Consideration

The compliance option authorizing alternative

standards where justified by site-specific costs and

benefits provides for balanced, environmentally

protective decision-making. To obtain an alternative

standard, the applicant must demonstrate that the

costs (which, as noted above, encompass more than

just the _ facility’s out-of-pocket costs) are

“significantly greater’25 than all the benefits that

would occur if the national standards were met.

The rule requires the permittee to submit

qualitative and quantitative information and allows

balancing of both. It requires consideration of the

benefit of reducing impingement mortality and

entrainment not only to commercial and recreational

fisheries, but to the ecosystem. And it provides for

independent evaluation of uncertainty, which will

need to be taken into account in reaching a decision.

By its terms, it does not require rigid, mechanistic

decision-making based solely on economics. Instead,

23 EPA chose the phrase “significantly greater” (instead

of the “wholly disproportionate” test EPA has used in the past,

both in guidance and in the Phase I rule) to signal its

understanding that existing facilities have less flexibility in

selecting locations and technologies, that the rule will affect a

much larger portion of the generating capacity, and that a

slightly less extreme standard will avoid “economically

impracticable impacts on energy prices.” 68 Fed. Reg. 13,541

(Mar. 19, 2003).

it allows decision-makers to weigh all the costs

against all the benefits and to choose the best option

based on local resource management priorities. As

the Department of Energy commented, supporting

the concept of site-specific requirements using the

cost-benefit test, State or regional permit writers,

who can appreciate the site-specific nature of any

adverse environmental impact, would have the final

say on site-specific requirements rather than having

the decision-making reside with the federal

government. EPA’s Response to Comment 181.

By allowing for comparison of all costs and all

benefits, the cost-benefit provision affords the rule’s

only mechanism for testing EPA’s assumption that

the environmental benefits of reducing impingement

mortality and entrainment will outweigh other

adverse environmental impacts created by an intake

alternative.

The Second Circuit did not say that § 316(b)

prohibits case-by-case decision-making per se. In

fact, in Riverkeeper I, the court agreed with EPA that

§ 316(b) does not require uniform, categorical

rulemaking. See Riverkeeper I at 203 (finding no

textual bar to case-by-case application of § 316(b)

and upholding rule requiring such _ individual

decisions for some new facilities). As the court

acknowledged, “the Clean Water Act does not forbid

the EPA from addressing certain environmental

problems on a case-by-case basis, ... when it does not

violate the statute’s language and is otherwise

consistent with Congress’s overriding goal of

improving the quality of the nation’s waters.” Id.

Other courts have consistently agreed that EPA may

implement § 316(b) case by case. See Hudson

Riverkeeper Fund, 835 F. Supp. at 165; Appalachian

Power Co., 566 F.2d at 457 (stating in dicta that “we

do not fault EPA for its point source by point source

application”).

Nevertheless, the Second Circuit invalidated

EPA’s’ carefully crafted provision authorizing

establishment of site-specific standards based on

cost-benefit comparison. Besides relying on its

conclusion that § 316(b) does not permit cost-benefit

analysis in any case (Pet. App. 57a-58a), the court

gave two other reasons.

First, the court concluded that allowing site-

specific cost-benefit analysis impermissibly

authorizes EPA to consider local water quality

conditions (or, for § 316(b) purposes “wildlife levels”)

— an approach the court said Congress rejected when

it established the technology-based program for

pollutant control. Pet. App. 58a-59a. Second, it

construed the existence of a specific water quality-

based variance for heat in § 316(a), and the absence

from § 316(b) of a comparable provision, as evidence

that Congress intended no consideration of local

water quality factors under § 316(b). Pet. App. 59a

n.27.

A. Other Clean Water Act Sections Do

Not Foreclose Site-Specific Cost-

Benefit Analysis Under § 316(b)

By its terms, § 316(b) authorizes, rather than

prohibits, consideration of site-specific

environmental conditions, including “wildlife levels,”

in selecting BTA. This is apparent both from

Congress’s focus on the “location, design,

construction, and capacity” of the cooling water

intake structure (all of which involve inherently local

considerations and _ trade-offs, particularly for

facilities which already exist), and its mandate that

EPA require the best technology available for

“minimizing adverse environmental impact.”

That phrase is indisputably broad enough to

authorize EPA to consider what an intake structure’s

environmental impacts (to the waterbody or any

other parts of the environment) are, to evaluate

whether they are adverse, and to decide at what

point they have been “minimized.” To suggest that

EPA is barred from allowing federal and state permit

writers to make _ site-specific assessments if

necessary to address these factors is_ wholly

implausible.

The Second Circuit did not base its

interpretation on the language of § 316(b). Instead,

the court relied on case law describing Congress's

general dissatisfaction with the purely water quality-

based regulatory scheme in place before 1972 and its

desire to replace that program with technology-based

regulations focused on controlling discharges of

pollutants. Pet. App. 58a-60a, citing Riverkeeper J at

189-190 (citing, inter alia, the Second Circuit’s

statement in Bethlehem Steel Corp. v. EPA, 538 F.2d

513, 515 (2d Cir. 1976), that Congress intended to

“replace or supplement” the water quality standards

program with “effluent limitations” as basis for

setting aside restoration provisions).

Courts generally have agreed that the

language and history of the technology-based

requirements for the _ reduction of pollutant

discharges indicate that EPA is not required to

consider local water quality conditions when setting

such controls. But until Riverkeeper IJ, no court had

suggested that Congress intended to bar EPA from

considering water quality in setting discharge

controls. To the contrary, in at least one case, Nati

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

the circuit court upheld EPA’s authority to decline to

set categorical limits for color discharged by pulp and

paper mills “because the potential for significant ...

impacts from color discharges is driven by highly

site-specific conditions.” Id. at 556.

Even if §§ 301, 304, and 306 did forbid

consideration of local water quality in setting

technology-based discharge limitations, transferring

that conclusion to § 316(b) would be an error, given

the material differences between § 316(b) and the

other provisions.

One of the most obvious differences is between

the activity regulated by § 316(b) and activity

regulated under the other provisions. Sections 301,

304, and 306 focus on controlling pollutant

discharges in order to reduce or eliminate their

introduction into the environment. In contrast,

§ 316(b) focuses on the effects of structures

specifically designed to interact with the environment.

Presumably, Congress chose different language to

distinguish between the two programs.

Another obvious difference is between the goal

Congress established for the pollutant discharge

control program and the objective it set in § 316(b).

The former expressly strives to eliminate the

discharge of pollutants, without regard to the

environmental outcome (subject, of course, to the

water quality-based variances for heat and non-

conventional/non-toxic pollutants that Congress

established in §§ 316(a) and 301(g), respectively).

(Section 301(g) is in the appendix to this brief.) By

contrast, §316(b) focuses expressly on _ the

environmental impact of the intake technology,

requiring that it be the best for “minimizing adverse

environmental impact.” That objective is broadly

written — quite unlike the narrowly focused goal of

“eliminating point source discharges.”

Also, the structural choice Congress made in

setting §316(b) apart, along with § 316(a), is

significant. Having acknowledged this structural

difference in Riverkeeper I, the Second Circuit barely

mentions it in Riverkeeper II]. Compare Riverkeeper I

at 186 with Riverkeeper II at 90 (Pet. App. 4a-5a).

B. The Relationship Between § 316(a)

and § 316(b) Supports EPA’s Use of

Site-Specific Cost-Benefit Analysis

Under § 316(b)

Contrary to the Second Circuit’s reasoning and

for the reasons Entergy and PSEG point out, it is

implausible to believe that Congress, knowing of the

link between thermal discharges and _ intake

structures, would have provided a water quality-

based variance for the discharge while ordering the

Agency to ignore local water quality conditions in

regulating the intake side. See Entergy/PSEG Brief,

Argument § IJ.B.2.

EPA considered the relationship between the

two provisions and, in the end, concluded that

Congress did not intend to make the Agency’s

authority to minimize adverse environmental

impacts under § 316(b) co-extensive with the

direction to assure a “balanced, indigenous

population of shellfish, fish, and wildlife in and on”

the waterbody under § 316(a). Pet. App. 59a, n.27.

EPA reasoned that, had Congress intended to compel

that result, it would have used parallel language in

the two provisions. But this interpretation of

§ 316(b) does not preclude the Agency from using

cost-benefit analysis to decide what is necessary to

“minimize adverse environmental impact” in a

particular case, taking site-specific factors into

account, and the Agency has never suggested it does.

This position is consistent with EPA’s long-

standing interpretation of §316(b) and its

relationship to § 316(a). As the Agency’s General

Counsel explained in 1977:

Any cooling water intak

technology may be imposed under

Section 316(b), despite a successful

Section 316(a) demonstration, if the

cost of the technology is not ‘wholly

disproportionate’ to the environmental

gains to be _ derived from the

application of the technology. As a

practical matter, though, it would be

more difficult for the Agency to show,

for example, that the imposition of a

$25 million technology under Section

316(b) is not ‘wholly disproportionate’

to the magnitude of the adverse

environmental impact if the

discharger has shown under Section

316(a) that the overall impact of a less

stringent thermal effluent limitation

does not interfere with the protection

and propagation of the balanced,

indigenous population.

In re Central Hudson, supra at 40, 1977 WL 28250 at

"9.

EPA’s long-standing interpretation

harmonizes §§ 316(a) and (b) and is consistent with

the plain language of both. It followed this

interpretation of the linked provisions in developing

the Phase II rule. As this Court has observed

repeatedly, a long-standing agency interpretation is

entitled to substantial deference. See supra

Argument § I.B.

The Second Circuit’s reliance on Russello v.

United States, 464 U.S. 16 (1983), to support its

rejection of EPA’s interpretation of § 316 is wholly

misplaced. Pet. App. 59a n.27. The Russello

presumption — that the presence of a phrase in one

provision and its absence in another reveal

Congress’s design -— is only one indication of

meaning. Kapral v. United States, 166 F.3d 565, 579

(3d Cir. 1999) (Alito, J., concurring); United States v.

Ressam, 128 S. Ct. 1858, 1865 (2008) (Breyer, J.,

dissenting). It grows weaker with each difference in

the statutory provisions being examined. City of

Columbus v. Ours Garage & Wrecker Serv., 536 U.S.

424, 435-36 (2002).

Here, the obvious difference between the two

provisions is that one — § 316(a) — provides for a

wholly water quality-based variance from otherwise

applicable technology and water-based standards,

while § 316(b) requires the use of technology to

accomplish a_ site-specific environmental result.

Because the authorization (indeed, the

responsibility) to consider water quality is embedded

in § 316(b), Congress did not need to provide for a

specific water quality-based variance of the type it

adopted in § 316(a).

In short, there is no support for any of the

rationales offered by the Second Circuit to justify its

conclusion that Congress intended to forbid site-

specific cost-benefit analysis.

C. The Record Supports EPA’s

Reading of § 316(b)

To develop the national rule, EPA made a

number of assumptions about the extent and impact

of the aquatic effects of intake structures at power

plants. The Agency understood that some of these

were generalizations that might tend to inflate its

assessment of the risk posed by impingement and

entrainment. The Agency also understood that the

amount and type of impingement mortality and

entrainment that occurs and the environmental

impacts of any losses are strongly influenced by local

conditions. As a result, “EPA’s comparison of

national costs to national benefits may not be

applicable to a specific site due to variations in (1)

the performance of individual technologies and (2)

characteristics of the waterbody in which the

intake(s) are located, including resident aquatic

biota.” Pet. App. 250a (69 Fed. Reg. 41,604).

1. Impingement and

Entrainment Vary Widely

Based on Site-Specific

Conditions

A power plant withdrawing large quantities of

cooling water may not impinge many fish if its intake

is in an area that is not desirable habitat or where

the resident fish do not dwell in the water column.

See, eg., DCN:1-3003-BE at 308 (1974-75

impingement sampling at Big Rock Nuclear Station

in Michigan produced only 326 fish weighing 49

pounds total); DCN:1-3021-BE at 207 (1974-75

impingement sampling at Ghent Electric Generation

Station recovered only six fish); see also Pet. App.

229a-230a, 249a-25la (69 Fed. Reg. 41,599, 41,603-

04); UWAG Phase I Comments at 109-12. Similarly,

a plant may not entrain many eggs or iarvae if the

intake is not near a breeding area or if most of the

eggs and larvae are not free-floating. Pet. App. 229a-

230a (69 Fed. Reg. 41,599).

Impacts vary seasonally as well. For example,

eggs and larvae may be present to be entrained

during species-specific spawning seasons but not the

rest of the year. Pet. App. 293a-294a, 307a (69 Fed.

Reg. 41,613, 41,616). As EPA recognized, “because of

the location of the intake, the characteristics of a

particular waterbody, or the behavioral patterns of

the fish or shellfish in that particular waterbody,

there may be little or no impingement mortality or

entrainment occurring at the site....” Pet. App. 250a-

251a (69 Fed. Reg. 41,604).

Equally important, the mere fact’ that

impingement or entrainment occurs does not always

signal that the intake has caused “adverse

environmental impact.” 24

24 As discussed in this subsection, not all impingement

or entrainment is harmful, even to the affected individual.

Some organisms are intruders which do more harm than good

to the ecosystem. EPA declined to distinguish among species

for purposes of setting the national standards. However, it

recognized the importance of allowing state resource managers,

who may find certain species harmful and thus welcome a

(continued...)

First, as EPA recognized, due to the very high

natural mortality to which aquatic organisms are

subject, many organisms arrive at the intake

structure already dead or moribund. See, e.g., Pet.

App. 581la-582a (40 C.F.R. § 125.95(b)(7)(2i))

(requiring that verification monitoring plan for

assessing technology performance account for

naturally moribund fish and shellfish that enter the

structure). The record suggests that this

phenomenon is not uncommon.25 Because special

procedures are required to gauge even an adult

organism’s condition prior to impingement (a task

that is difficult or impossible for earlier life stages),

EPA’s national assessment of intake impacts largely

assumed that all losses are caused by the intake.?6

certain amount of “cropping,” to set their own priorities. See,

e.g., EPA’s Response to Comment 4188, J.A. 355; Pet. App. 269a

(69 Fed. Reg. 41,608) (cost-benefit alternative provides

flexibility comparable to purely site-specific approach); See

UWAG Phase I Comments 85. See also UWAG Phase II

Comments 101-03 (providing support for exclusion of invasive

species from protection under § 316(b)).

25 In one analysis of 40 impingement surveys, 70% of

the organisms collected were dead before they were impinged.

Cherry et al., Effects of Impingement/Entrainment at the

Kanawha River Plant, DCN:1-3007-BE at 6. See also Potter,

Assessment of the Effects of Impingement and Entrainment on

the Fish Community of the New River, Virginia, DCN:1-3056-

BE at 20 (March 1978) (93.9% of 842 fish collected were dead

prior to impingement).

26 For the very early life stages subject to entrainment,

EPA made an effort to factor in the extremely high natural

mortality rates those life stages typically experience by

(continued...)

But EPA knew that requiring application of the

technology most capable of reducing impingement

and entrainment would do nothing to re-animate

organisms already dead or dying from natural

causes.

Second, the Agency understood that many

organisms survive impingement and entrainment

unscathed. That is why EPA developed national

standards for “impingement mortality” rather than

impingement per se. Although EPA chose not to do

the same for entrainment, it did allow facilities to

gauge entrainment survival if they apply for site-

specific limits based on cost-benefit balancing. See

supra n.16.

2. The Availability,

Effectiveness, and Cost of

Intake Technologies Vary

Widely By Site

The availability, effectiveness, and cost of

intake technologies that reduce impingement or

entrainment, or improve organism survival, also

vary with existing site and facility constraints and

the biological and hydrological conditions at the site,

calculating the number of “equivalent adults” represented by

entrainment losses. See, e.g., Pet. App. 17la-172a (69 Fed. Reg.

41,586). EPA assumed, however, that the actual organisms

entrained were alive upon arrival and thus would have

contributed in some fashion to equivalent adult production but

for the intake structure.

as EPA recognized. See Pet. App. 247a-252a, 289a-

295a (69 Fed. Reg. 41,603-04, 41,612-13). For

example, cylindrical wedgewire screens can reduce

impingement mortality by 80-95% for fish and

shellfish and, if required, reduce entrainment by 60-

90% under certain conditions. Pet. App. 245a-246a

(69 Fed. Reg. 41,602). However, such screens work

best where in-stream flow conditions are sufficient to

carry away organisms removed from the screen, so

they do not become re-impinged. Pet. App. 529a (40

C.F.R. § 125.99(a)(ii)); see also EPA’s Response to

Comment 979. And barrier nets, which are

successful at reducing impingement mortality by 80-

90%, are susceptible to damage by strong currents,

debris, and icing and thus may be unsuitable for

certain sites but very effective at others. EPA,

Technical Development Document for the Final

Section 316(b) Phase II Existing Facilities Rule (EPA

821-R-04-007) (DCN:6-0004) (Feb. 12, 2004) (“EPA

TDD”) 4-14.

Even where site conditions allow a technology

to reduce impingement and entrainment, it may

create other environmental and social problems. For

example, large in-stream screens or nets may create

hazards to navigation. Pet. .ipp. 447a-449a (69 Fed.

Reg. 41,649-50). Enlargin, intake structures to

reduce velocity may require construction in shoreline

habitat. Jd. As we have already pointed out,

changes to the cooling system often create significant

adverse side-effects, most notably energy penalties

and increased air emissions. Pet App. 256a-261la (69

Fed. Reg. 41,605-06). In some cases, the thermal

discharge from the facility provides unique habitat

for an important species. Curtailing that discharge

with a closed-cycle system can have disastrous

results for the species in question.27

As the environmental impacts of intake

technologies vary from site to site, so do the costs.

See, e.g. EPA TDD, 1-1 to 1-13 (cost estimates for

retrofitting wedgewire screens at fossil-fueled plants

show 36-fold difference in cost depending on site-

specific factors); EPA TDD, Table 2-21 and 2-22

(showing 115-fold difference in cost of retrofitting

fine mesh traveling screens with fish returns,

depending on site-specific factors). The capital,

energy, and operating and maintenance costs of

retrofitting closed-cycle cooling, which is particularly

costly and difficult for existing facilities, is highly

dependent on site-specific factors. Pet. App. 256a (69

Fed. Reg. 41,605) (capital costs for cooling towers

even for new plants would range from about

$170,000 to $12.6 million per plant annualized,

depending on flow); 68 Fed. Reg. 13,527 (Mar. 19,

2003) (citing DOE study showing site-specificity of

retrofit costs). Moreover, EPA was concerned that

the small sample of plants it used to estimate retrofit

27 See, e.g., Fla. Dept. Industrial Wastewater Comments

on Phase II Rule 2 (Aug. 7, 2002), J.A. 262-63 (describing

adverse impacts of thermal discharge curtailment = on

endangered manatees, which seek out thermally enriched

waters as habitat); see also FPL Comments on the Proposed

316(b) Rule for Existing Sources, Public Comment 1.051 (Aug.

7, 2002) 6.

costs was unlikely to capture the full cost. Pet. App.

259a (69 Fed. Reg. 41,605-06).

In sum, faced with the Herculean task of

developing national standards to address the

complex, interlocking, and_ inherently local

environmental and technical issues presented by

§ 316(b), the Agency considered a number of

approaches. It chose the approach that offered some

measure of uniformity, while also providing to

facilities and regulators the safety valve of

considering the site-specific factors that drive both

the “adverse environmental impact” likely to occur

and the availability, performance, and cost of intake

technologies for reducing that impact.

CONCLUSION

In the broadest sense, cost-benefit balancing is

a fundamental tool of logical decision-making. It

allows the decisionmaker to use all the available

information to make the most reasonable choice for

achieving an_ objective. Courts, governments,

markets, industries, and ordinary people rely on it

constantly, whether explicitly or implicitly, to make

rational decisions.

Now, for the first time, the Second Circuit has

held that cost-benefit analysis is forbidden even

where it is consistent with achieving a statutory

objective and the statute does not expressly prohibit

it. This is folly. The court was wrong to substitute

its own highly selective interpretation for EPA’s

eminently reasonable one.

This Court should hold that EPA’s

consideration of costs and benefits in deciding what

is “best technology available” on a national basis and

establishing performance standards based thereon

was within its statutory authority. Likewise, this

Court should hold that EPA was within its authority

in permitting site-specific determinations of “best

technology available” when the cost of meeting

national standards would be significantly greater

than the benefits.

The portions of the Second Circuit’s judgment

remanding the national performance standards and

site-specific cost-benefit provisions of the Phase II

Rule (which are described in greater detail in Section

IV of the Entergy/PSEG Brief) should be reversed.

Respectfully submitted,

Kristy A. N. BULLEIT

Counsel of Record

HUNTON & WILLIAMS LLP

1900 K STREET, N.W.

WASHINGTON, DC 20006-1109

(202) 955-1547

Counsel for Petitioner

JULY 14, 2008

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.