Amicus Curiae Brief — Utility Water Water Act Group Group v. Riverkeeper, Inc. (Nos. 07-597, 07-588, 07-589)

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ENTERGY CORPORATION, Petitioners,

Vv.

ENVIRONMENTAL PROTECTION AGENCY, ET AL., Respondents.

PSEG FossIiL LLC, £7 AL., Petitioners,

Vv.

RIVERKEEPER, INC., ET AL., Respondents.

LITILITY WATER ACT GROUP, Petitioner,

Vv.

RIVERKEEPER, INC., ET AL., Respondents.

On Writ of Certiorari to the United States

Court of Appeals for the Second Circuit

BRIEF FOR ENVIRONMENT AMERICA AND

THE CENTER FOR BIOLOGICAL DIVERSITY

AS AMICI CURIAE SUPPORTING

RESPONDENTS

CHARLES C. CALDART CHRISTOPHER J. WRIGHT*

JOSEPH J. MANN TIMOTHY J. SIMEONE

NATIONAL ENVIRONMENTAL S. ROBERTS CARTER III

LAW CENTER HARRIS, WILTSHIRE &

1402 Third Avenue GRANNIS LLP

Suite 715 1200 Eighteenth St., N.W.

Seattle, WA 98101 Washington, DC 20036

(206) 568-2853 (202) 730-1300

*Counsel of Record

October 6, 2008

SS

|

|

i

QUESTION PRESENTED

Whether Section 316(b) of the Clean Water Act

authorizes the Environmental Protection Agency to

compare costs with benefits in determining the “best

technology available for minimizing adverse

environmental impact” at cooling water intake

structures.

il

TABLE OF CONTENTS

QUESTION PRESENTED slpeitei cle salsnhanssentdiaienttipaiienaaipaniitl i

A Se CE BN ETE csccerccecescesecescosonenssncenessens iV

ET THEE GET ictinceniiccntinrsevessconemssiioniiinsensiveiis 1

NE sitiitcbiciontineincivanss soctionannneseciniviesinisniil 3

SUMMARY OF ARGUMENT ..................cccsccssssseseeees 7

IE cewtinaiitinnvniibeissinuacininnnsmininiinicviisitet 8

I. EPA Is Not Permitted To Conduct A Cost-

Benefit Analysis To Establish BAT And

TELE PE TRAE eRe ne mE te 10

A. The statutory provisions governing BAT

and BADT do not permit the use of acost- _

i iiinseninnctutiiencieniiniectihealendnnnieningnss 11

1. The statutory language describing the

BAT and BADT standards disallows a

COSE-BOMSTE QNPTORCE ...........ccrccrcsssccvevees 13

2. The structure of the relevant statutory

provisions demonstrates that the BAT

and BADT standards are not to be

based on cost-benefit analysis ............... 19

B. This Court’s decision in National Crushed

Stone Association confirms the conclusion

that the BAT and BADT standards do not

permit the use of a cost-benefit analysis ..... 21

il

Il. The Section 301 And Section 306 Standards

(Including BTA Requirements) Are To Be

Established For Classes And Categories Of

IN 2c cisati seiesdbinsanianeignislonianinnnedeeneties 29

III. There Is Ample Room Under The Statute For

EPA To Avoid Truly Absurd Results ............... 31

TINT seingeinisscdpetenednenvvestitiininennenesvtqneneaniecioons 33

iv

TABLE OF AUTHORITIES

CASES

Alabama Power Co. v. Costle, 636 F.2d 3°3

EERIE Ope Oe a 32

American Iron & Steel Inst. v. EPA, 526 F.2d

I i i cceandasiadiibe 25, 28

American Petroleum Inst. v. EPA, 787 F.2d

SI is coneiinsoednsncconen 27

American Textile Mfrs. Institute, Inc. v.

Donovan, 452 U.S. 490 (1981).............cccccc cece eee 4,7

Association of Pacific Fisheries v. EPA, 615

F.2d 794 (Othe Cir. 19060) ..............0....0.000....0000. 25, 32

BP Exploration & Oil, Inc. v. EPA, 66 F.3d

SO ee cee 24-26

Chemical Mfrs. Ass’n v. EPA, 870 F.2d 177

ERE EI 2 ae ln 5, 27

Chevron U.S.A. Inc. v. NRDC, 470 U.S. 116

SRS arena ON BL Sie aC 23, 24

City of Chicago v. Environmental Defense

Ps Gee Wate ME IID. casicnnicpacedesoetasenmonsecs Y

E.I. du Pont de Nemours & Co. v. Train, 430

I TO i a 4, 15, 29-31

EPA v. National Crushed Stone Ass'n, 449

U.S. 64 (1980).......... 2, 4, 6-8, 12, 19, 21-25, 27, 28

Hughey v. United States, 495 U.S. 411 (1990)....18, 19

International Paper Co. v. Ouellette, 479 U.S.

PTI cadhdctetitc dilelniedhiindetidsnadisinsnieb aplerseiaatalindavewniaiida 28

v

NAHB v. Defenders of Wildlife, 127 S. Ct.

Et CED occcncccnedtenelill udencstiindiinianiiasndiaitinbiieedeiiane 24

NRDC v. EPA, 822 F.2d 104 (D.C. Cir. 1987) ......... 28

NRDC v. EPA, 863 F.2d 1420 (9th Cir. 1988) .... 27-28

NRDC v. EPA, 859 F.2d 156 (D.C. Cir. 1988) ......... 12

NRDC v. Train, 510 F.2d 692 (D.C. Cir.

SU TTUUT<ciisscsiniecicpsnanitnaibesteiaineeiedabiiglhmeaiegcdietentdaiadiiieiiie tcadeca tal cane 31

Our Children’s Earth Found. v. EPA, 527

Pf GS ee sere 27

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

Se STITT sssessisciereiitncieneiatescantienaiintessitedsiningialiadnthdmaatns Alcina 27

Texas Oil & Gas Ass’n v. EPA, 161 F.3d 923

EE TEN. “TRIED cnccnonnnnnespnainsiiantlensieetmbieda tian 16, 25

Waterkeeper Alliance, Inc. v. EPA, 399 F.3d

GS, STD ctnticovnccsnecinnasisnideiissiiiiiiatiaesaiaains 27

Weyerhaeuser Co. v. Costle, 590 F.2d 1011

as GE Cee accrnessecnpicenninssisitinaiiiaalaaues 11, 12, 26, 27, 31

Whitman v. American Trucking Ass’ns, Inc.,

Gt Rk. | een ee 9, 15, 16, 19

v1

CONSTITUTIONAL PROVISIONS

18 U.S.C. § 3580(a) (1982 ed.) .......... cece eee ee eee 18

a csncennnspoosineeess 20

118 Cong. Rec. 33,696 (1976) .................c cece eee 4, 6, 22

Clean Air Act, Section 109(b), 42 U.S.C. §

i cssgucosnaccoes 15, 16

Clean Water Act, 33 U.S.C. § 1251 et seq. .........0....... 1

Section 101(a), 33 U.S.C. § 1251(a) ........0.00..0000.. 12

Section 101(a)(1), 33 U.S.C. § 1251(a)(1)........10,12

Section 101(a)(2), 33 U.S.C. § 1251(a)(2)............ 10

Section 301, 33 U.S.C. § 1311...... 1-3, 9, 10, 29, 30

Section 301(b)(1)(C), 33 U.S.C. §

a secsecsmenonosee 27

Section 301(b)(2)(A), 33 U.S.C. §

RS 1, 7, 13, 14, 20, 21, 29

Section 301(b)(2)(C), 33 U.S.C. §

cecibsnenononos 20

Section 301(b)(2)(D), 33 U.S.C. §

ESS EO vn 21

Section 301(b)(2)(E), 33 U.S.C. §

a ssundsunconce 2, 29

Section 301(b)(2)(F), 33 U.S.C. §

es scicnunenenccns 21

Section 301(c), 33 U.S.C. § 1311(e) ......0.00 en. 32

Section 301(g), 33 U.S.C. § 1311(g)................ 21, 32

Section 301(k), 33 U.S.C. § 1311(k) .....00000. 32

Section 301(n), 33 U.S.C. § 1311(n).........00......... 31

vu

Section 308, 33 U.S.C. § 1912.....................2....... 28

Section 302(b)(2)(A), 33 U.S.C. §

SEAR OI Se ae a RR a 29

Section 304, 33 U.S.C. § 1314.......0000.. 3, 16, 28

Section 304(a)(4), 33 U.S.C. § 1314(a)(4)............ 20

Section 304(b)(1)(B), 33 U.S.C. §

EESTI TLE Ae ae Ae er ae 16, 25

Section 304(b)(2)(B), 33 U.S.C. §

ES RS 13, 14, 16, 17, 19

Section 304(b)(2)(E), 33 U.S.C. §

A Ae ee EE 2

Section 304(b)(4)(B), 33 U.S.C. §

EEE ENED aw ee eae ea 16, 20

Section 306, 33 U.S.C. § 1316............. 1-3, 9, 28-30

Section 306(a)(1), 33 U.S.C. § 1316(a)(1)......... 2,14

Section 306(a)(2), 33 U.S.C. § 1316(a)(2)............ 14

Section 306(b), 33 U.S.C. § 1316(b) .....00..0.. 0... 16

Section 306(b)(1)(A), 33 U.S.C. §

REE a Se 29

Section 306(b)(1)(B), 33 U.S.C. §

REESE ro A Nes eS EE 28, 29

Section 316, 33 U.S.C. S RGB .........0..0..cccccccccceesess 8

Section 316(a), 33 U.S.C. § 1326(a) .................... 26

Section 316(b), 33 U.S.C. §

ESR ee eo EO Ee 1-4, 6-9, 26, 29, 30

Section 502(13), 33 U.S.C. § 1362(13) ..... 10, 20-21

Section 510(1), 33 U.S.C. § 1370(1) ......0. ee. 29

vill

OTHER AUTHORITIES

3 Legislative History of the Clean Water Act

ee IE itis desceihetnteihanisnaminiiniaeiinnisineszences

Nicholas A. Ashford & Charles C. Caldart,

The Use of Cost-Benefit Analysis as a

Means of Evaluating and Designing

Options for Environmental Regulation, in

Environmental Law, Policy, and

Economics (MIT Press 2008).......................2.

Robert W. Hahn & Cass Sunstein, A New

Executive Order for Improving Federal

Regulation? Deeper and Wider Cost-

Benefit Analysis, 150 U. Pa. L. Rev. 1489

IIIT isiinniesdsctcenabiaijaaihinaiualadnibakindeasanidimiibiinie neninmnans

Lisa Heinzerling, The Clean Air Act and the

Constitution, 20 St. Louis U. Pub. L.

ED citiicicadinapatinniiidiitnapstendecinsscssees

Laurence H. Tribe, Ways Not to Think About

Plastic Trees: New Foundations for

Environmental Law, 83 Yale L.J. 1315

GD \acnccitinnbetinsidanisitinnnsnnineunpuniitnaimeonionerscenses

OMB Circular A-94, Guidelines and Discount

Rates for Benefit-Cost Analysis of Federal

Programs, Appendix A (1992).......................

INTEREST OF AMICI

The amici joining this brief (“the Environmental

Amici’) are groups with considerable experience

advocating for positions that will help to achieve

Congress’s goals in enacting the Clean Water Act

(“CWA”).! Section 316(b) of the Act regulates cooling

water intake structures, which are commonly used

by power plants and other large facilities.2 Cooling

water intake structures kill fish and large aquatic

animals by trapping them against grills or screens,

which is known as “impingement,” and kill smaller

creatures by drawing them into the cooling

mechanism, which is known as “entrainment.”

Section 316(b) requires cooling water intake

structures to use the “best technology available for

minimizing adverse environmental impact” (“BTA”),

and directs EPA to include BTA requirements in the

pollution discharge standards it issues under

sections 301 and 306 of the Act. Although the best

guide to the meaning of the BTA standard is the

language used by Congress in section 316(b), the

plain meaning of that language is supported by the

meaning of similar phrases in sections 301 and 306 -

particularly “best available technology” (“BAT”) in

section 301(b)(2)(A) and “best available

demonstrated control technology” (“BADT”’) in

' Petitioners and respondents other than EPA have filed

letters with the Court consenting to the filing of amicus briefs

in this case. and EPA has consented to the filing of this brief.

No one other than counsel for amici wrote this brief, 1n whole or

in part, and no one made a monetary contribution to its

preparation

2 Throughout this brief, we refer te the relevant statutory

provisions by their Clean Water Act section number. The

corresponding U.S. Code section number may be found in the

Table of Authorities

section 306(a)(1).4

The Environmental Amici submit this brief

primarily to rebut inaccurate arguments advanced

by one petitioner and two amici concerning the BAT

and BADT standards. See, e.g., Entergy Br. 38-42

(“Sections 301 And 306 Either Mandate Or Permit

Cost-Benefit Analysis”); NAHB Br. 14-20; American

Chemistry Council et al. (“ACC”) Br. 22-26. In

particular, contrary to their contentions, this Court

concluded in EPA v. National Crushed Stone Ass'n,

449 U.S. 64 (1980), that EPA may not use a cost-

benefit analysis when establishing BAT standards.

While Entergy claims that the Second Circuit's

decision in this case “rests in part on a misreading”

of National Crushed Stone, Entergy Br. 41, it is

Entergy and its amici rather than the Second Circuit

that have misread that decision.

The Environmental Amici fully support the

position of respondents Riverkeeper, Inc. et al., that

a cost-benefit analysis is impermissible under the

BTA standard of section 316(b). The Environmental

Amici also agree that a proper understanding of the

BAT and BADT standards in sections 301 and 306

3 The National Association of Home Builders (“NAHB’), an

amicus supporting petitioners, helpfully included a chart in its

brief (at pages 10-11) that catalogues the relevant standards by

acronym — in addition to BTA, BAT, and BADT, the statute

refers to the “best practicable control technology currently

available” (“BPT”) and the “best conventional pollution control

technology” (‘BCT’). The chart also provides references to the

key statutory provisions relating to each standard. (There is

one error: the entry regarding the CWA provision establishing

the BCT standard erroneously cites section 30@(b)(2)(E) rather

than section 301(b)(2)(E)). The statutory provisions are set forth

in the addendum to the brief filed by petitioners Entergy Corp.,

et al.

3

supports that conclusion. Further, Environmental

Amici believe that an examination of the section 301

and 306 standards demonstrates that Congress did

not, as petitioners argue, intend the BTA standard to

be implemented on a site-by-site basis. See Entergy

Br. 46-47; Utility Water Act Group (““UWAG’”) Br. 50.

But whatever the Court decides concerning the

BTA standard, this Court should not accept

Entergy’s invitation to rewrite the law governing the

BAT and BADT standards, which require an inquiry

into costs but do not permit the use of a cost-benefit

analysis. Entergy’s revisionist interpretation of the

BAT and BADT standards is at odds not only with

the language, structure, and history of sections 301,

304, and 306, but also with the clearly articulated

goals of the Act.

INTRODUCTION

Contrary to the impression given by petitioners

and their amici, the issue in this case is not whether

EPA may consider the costs of implementation in

setting standards under section 316(b) of the Clean

Water Act. It may and it should.

Petitioners and their amici contend, however,

that EPA ought to conduct a cost-benefit analysis —

that the agency ought to consider costs in relation to

water quality benefits — and that it should base its

section 316(b) decision-making on the results. They

advance two versions of such an analysis. Petitioners

appear to favor the stricter version, which would

require that all costs and benefits be monetized and

reduced to present value, and would _ permit

requirements designed to reduce environmental

damage only when the resulting dollar value of the

4

benefits outweighs the dollar value of the costs. In

our view, neither section 316(b) nor any other

provision of the Clean Water Act authorizes this

strict cost-benefit approach as a means of setting

technology-based standards. The other version of

cost-benefit analysis permits the use of technology

that is not the best at reducing pollutant discharge

only where the cost of such technology is “wholly out

of proportion” to the marginal level of reduction that

would be achieved by its use. 118 Cong. Rec. 33,696

(1972), quoted in E.I. du Pont de Nemours & Co. v.

Train, 430 U.S. 112, 129 (1977), and National

Crushed Stone, 449 U.S. at 71 n.10. Senator Muskie

described this approach as a “limited cost-benefit

analysis” in a passage twice quoted by this Court. Jd.

The Clean Water Act’s BPT and BCT standards —

which, as further set forth below, are different from

the other standards in critical ways — require the

application of a limited form of cost-benefit analysis.‘

Petitioners’ focus on cost-benefit analysis is

misplaced in this case, which concerns only the BTA

standard of section 316(b). That provision, like the

BAT and BADT standards, calls for a cost feasibility

analysis rather than cost-benefit analysis. As this

Court noted in American Textile Mfrs. Institute, Inc.

v. Donovan, 452 U.S. 490, 509-10 (1981), a cost-

benefit approach is fundamentally inconsistent with

a feasibility approach. Under a cost feasibility

analysis, EPA must determine whether the costs of

4 In the quoted passage, Senator Muskie was describing the

BPT standard. The BCT standard, the statutory delineation of

which is similar to that of the BPT standard regarding

comparison of costs and benefits, was added in the 1977 Clean

Water Act Amendments. Senator Muskie’s explanation of the

reason for that addition 1s addressed below.

reducing or eliminating pollution to the degree

produced by the best technology available “can be

‘reasonably borne’ by the industry.” Pet. App. 26a;5

see also Chemical Mfrs. Ass'n v. EPA, 870 F.2d 177,

262 (5th Cir. 1989) (same). As the Second Circuit |

explained, a technology that cannot be reasonably

borne by the industry “is not ‘available’ in any

meaningfu) sense.” Pet. App. 24a.

The Second Circuit also concluded that EPA may

engage in a “cost-effectiveness analysis” in applying

the BTA standard. Id. at 26a. Relying on guidance

issued by the Office of Management and Budget, the

court described a cost-effectiveness analysis as “[a]

systematic quantitative method for comparing the

costs of alternative means of achieving the same

stream of benefits or a given objective.” Jd. at 23a

n.10, quoting OMB Circular A-94, Guidelines and

Discount Rates for Benefit-Cost Analysis of Federal

Programs, Appendix A (1992). Although petitioners

and their amici belittle the cost-effectiveness

approach, it is an inherent component of the federal

regulatory program for environmental protection.

Most environmental standards — like the cooling

water intake standards at issue in this case — are

what are commonly known as “performance”

standards. They specify a performance goal (such as

a maximum allowable level of a particular pollutant

discharge), but do not specify a particular means for

attaining that goal. The regulated entity thus is free

to employ the most cost-effective (the cheapest)

means of meeting the standard.

5 “Pet. App.” citations are to the appendix filed by petitioner

Entergy Corporation in No. 07-588.

6

While the Second Circuit concluded that EPA

may properly consider both cost effectiveness and

cost feasibility under section 316(b), the court held

that this provision prohibits EPA from conducting a

cost-benefit analysis. The Second Circuit rested that

conclusion in part on this Court’s construction of the

BAT and BPT standards in National Crushed Stone.

In that case, this Court addressed both the BPT

standard that the Clean Water Act required

polluters to meet by 1977, and the more

environmentally protective BAT standard that

applied beginning in 1987.6 Relying on the statement

of Senator Muskie, “the principal Senate sponsor of

the Act,” the Court concluded that the more lenient

BPT standard called for a “limited cost-benefit

analysis” to determine whether an “additional

degree of effluent reduction is wholly out of

proportion to the costs of achieving such marginal

level of reduction.”’’? 449 U.S. at 71 n.10, quoting 118

Cong. Rec. 33,696. The Court also held that, once the

stricter BAT standard took effect, “total cost is no

longer to be considered in comparison to effluent

cae

6 The 1972 Act set a 1983 deadline for implementation of the

BAT standards. This was extended from 1984 to 1987

(depending on the circumstances) in the 1977 Clean Water Act

Amendments, and the Court cited the 1987 deadline in

National Crushed Stone. The BAT deadline was later extended

to 1989 in the 1987 amendments to the Act.

This cost-benefit comparison is “lhmited” not only because it

employs a “wholly a:sproportionate” test, but also because the

benefit component is not the level of environmental

improvement attained through the pollutant reduction (or the

level of societal benefits that flow from that improvement), but

rather simply the level of pollutant reduction itself. In other

words, Congress made the policy determination that any

appreciable level of pollution reduction would be beneficial. As

discussed below, consideration of water quality benefits 1s not a

factor in setting the Act's technology-based effluent standards

7

reduction benefits.” 449 U.S. at 71. The Court

concluded that the more environmentally protective

BAT standard does not contemplate consideration of

costs “in relation to effluent reduction,” id. at 71

n.10, but rather contemplates “eliminating the

discharge of all pollutants” if it is feasible to do so,

id. at 75 n.14, quoting section 301(b)(2)(A).

The Second Circuit concluded that the BTA

standard at issue in this case is more similar to the

BAT standard than it is to the BPT standard, both

because “best technology available” is linguistically

very similar to “best available technology” and

because section 316(b) does not reference any

comparison of costs and benefits. Pet. App. 29a-31a.

“[Blecause ‘Congress itself defined the basic

relationship between costs and benefits,” the Second

Circuit concluded that EPA is not permitted to

perform a cost-benefit analysis under section 316(b).

Id. at 24a-25a, quoting American Textile, 452 U.S. at

509.

SUMMARY OF ARGUMENT

As respondent Riverkeeper has explained, the

Second Circuit ce: rectly concluded that a cost-benefit

analysis is not permissible under section 316(b). But

whatever this Court concludes concerning section

316(b), it should not rewrite the settled law that the

BAT and BADT standards do not permit the use of

cost-benefit analysis. In addition, there is no merit to

petitioners’ contention that CWA standards should

be established on a case-by-case basis rather than by

means of categorical regulations. While leaving room

for variances in certain circumstances, Congress

mandated principal reliance on rules of general

applicability. Finally, there is ample room to avoid

8

the absurd hypothetical results trotted out by

petitioners and their amici. Congress did not require

costly expenditures to achieve truly de minimis

benefits.

ARGUMENT

The Evironmental Amici disagree with the bulk of

the arguments presented by the Solicitor General,

petitioner UWAG, petitioner Entergy, and their

amici. However, while the arguments presented by

the Solicitor General, UWAG, and most of the amici

are largely limited to advancing an erroneous

interpretation of section 316(b), Entergy and two

amici ask the Court to engage in a far more

dangerous overreaching that would undermine not

only the regulation of cooling water intake at issue in

this case, but also the regulation of a wide variety of

potentially deadly pollutants.

The Solicitor General acknowledges National

Crushed Stone and “[a]ssum[es] for the sake of

argument that cost-benefit analysis is not one of the

other factors that EPA may consider in determining

BAT.” EPA Br. 24. According to the Solicitor

General, however, this Court may nevertheless

conclude that a cost-benefit analysis is permissible

under section 316(b), because section 316 “governs

the intake of water, as opposed to the discharge of

pollutants,” and pollutants are a more serious

problem. Jd. at 23. The Solicitor General also

contrasts the description of the BTA standard in

section 316(b) (which runs 46 words) with the

statutory descriptions of the BPT, BCT, BAT, and

BADT standards (which run longer).® On the basis of

* Of course. the relative brevity of statutory language does not

9

these distinctions, the Solicitor General maintains

that EPA has broad discretion to determine whether

(and, presumably, how) to employ cost-benefit

analysis in setting BTA standards. See EPA Br. 20-

23. Like the Solicitor General, UWAG does not

disown Entergy’s argument concerning the BAT and

BADT standards. See UWAG Br. 14 (asserting that

section 306 authorizes EPA to weigh costs and

benefits). But it emphasizes what it calls “the

material differences between § 316(b) and the other

provisions.” Id. at 46.

While Entergy embraces those arguments, it also

advances the more far-reaching argument that EPA

should be allowed to conduct cost-benefit analyses

even under the BAT and BADT standards. See

Entergy Br. 38-42. Essentially, Entergy argues that

if sections 301 and 306 were rewritten by the Court

to allow cost-benefit analysis, then EPA could

likewise conduct such analyses under section 316(b),

even if the Court finds the BTA standard more

linguistically similar to the BAT and BADT

standards than to the BPT and BCT standards.

Entergys argument is_ incorrect and would

undermine the “national goal” of the Clean Water

Act — eliminating the discharge of pollutants into the

prevent it from expressing Congress's intention. See, e.g.,

Whitman v. American Trucking Ass'ns, 531 U.S. 457, 465-69

(2001) (rejecting, based largely on clear meaning of terms

“public health,” “adequate margin,” and “requisite,” industry's

interpretation of 60-word provision in Clean Air Act setting

forth requirements for national primary ambient air quality

standards): City of Chicago v. Environmental Defense Fund, 511

U.S. 328. 339 (1994) (rejecting. based largely on provision’s use

of term “facility” instead of “wastestream,” EPA's interpretation

of household hazardous waste exemption in RCRA)

10

navigable waters of the United States. See Section

101(a)(1).

I. EPAIS NOT PERMITTED TO CONDUCT

A COST-BENEFIT ANALYSIS TO

ESTABLISH BAT AND BADT

STANDARDS.

Entergy’s contention that EPA may conduct a

cost-benefit analysis in establishing BAT and BADT

standards would lead to serious environmental

harm. Entergy and its amici seek to expand this case

involving harm to aquatic animals resulting from

water intake by existing facilities — a _ serious

environmental problem in its own right — to rewrite

settled law governing pollution involving toxic

chemicals and new facilities. Their arguments in

support of that position are entirely without merit.

® As discussed below, the majority of pollutants subject to

section 301's BAT standard are toxic pollutants, many of which

can cause disease or death in humans at relatively low levels.

In attempting to downplay the harm caused by intake

structures, however, the Solicitor General and petitioners

wrongly suggest that Congress considered impacts on wildlife to

be comparatively unimportant. In drafting the CWA, Congress

made protection of fish and other aquatic hfe a clear national

priority. Not only does the Act establish the goal of achieving

water quality levels that provide “for the protection and

propagation of fish, shellfish, and wildlife,” but it defines “toxic

pollutant” as one that, inter alia, causes “death ... or physical

deformations” to “any organism, Sections 101(a)(2) and

502(13). Cooling water intake structures (though they do not

discharge pollutants) kill and maim fish and other aquatic

animals on a daily basis.

11

A. The Statutory Provisions Governing

BAT And BADT Do Not Permit The Use

Of Cost-Benefit Analysis.

As the D.C. Circuit explained in 1978, Congress

did not apply the “optimal pollution theory” when

enacting the Clean Water Act. Weyerhaeuser Co. uv.

Costle, 590 F.2d 1011, 1041 n.41 (D.C. Cir. 1978).

That theory “contends that there is a level or type of

pollution that, while technologically capable of being

controlled, is uneconomic to treat because the benefit

from treatment is small and the cost of treatment is

large.” Id. If Congress had been using the optimal

pollution theory, it would have required EPA to use a

strict cost-benefit analysis to set all standards under

the Act because cost-benefit analysis targets an

“optimal” level of pollution. !°

10 Petitioners and several of their amici assert that cost-benefit

analysis is the equivalent of “common sense,” and note that

people use it for household decisions such as buying a car. But

establishing regulatory policy is not like buying a car, and cost

benefit analysis often is a difficult tool to apply to

environmental standard-setting. See Nicholas A. Ashford &

Charles C. Caldart, The Use of Cost-Benefit Analysis as a Means

of Evaluating and Designing Options for Environmental

Regulation, in Environmental Law, }»licy, and Economics 147-

69 (MIT Press 2008) (cost-benefit aseiysis tends to undervalue

benefits, understate impacts on future generations, overvalue

costs, and ignore potential for technological change). The D.C.

Circuit noted in Weyerhauser that the optimal pollution theory

is “premised on a view that we have both adequate information

about the effects of pollution to set an optimal test, and

adequate political and administrative flexibihty to keep

polluters at that level once we allow any pollution to go

untreated,” and concluded that Congress doubted the validity of

those premises. 590 F.2d at 1041 n.41. Distinguished scholars

argued in the 1970s (and continue to argue today) that reliance

on quantitative analysis tends to “squcez[e] out ‘soft’ but crucial

information merely because it seems difficult to render

commensurable with the ‘hard’ data in the problem.” Laurence

Tribe, Ways Not to Think About Plastic Trees: Neu Foundations

12

Congress rejected the optimal pollution theory in

favor of establishing the ambitious national goal that

“the discharge of pollutants into the navigable

waters be eliminated” in order “to restore and

maintain the chemical, physical, and _ biological

integrity of the Nation’s waters.” Sections 101(a) and

(a)(1). Congress enacted “stiff penalties to force each

industry ... to develop the technology necessary to

achieve the Act’s aspiring goal.” Weyerhaeuser, 590

F.2d at 1025. In doing so, “Congress foresaw and

accepted the economic hardship, including the

closing of some plants, that effluent limitations

would cause.” National Crushed Stone, 449 U.S. at

79.

Congress also anticipated — correctly, as it turns

out — that the Act’s strict requirements would create

a strong economic incentive for industry to develop

newer, cleaner technology. See NRDC v. EPA, 859

F.2d 156, 208-09 (D.C. Cir. 1988) (in drafting Clean

Water Act, Congress had “firm conviction of need for

technology-forcing measures’). To this end, the Act's

technology-based standards have largely been

written as performance standards; they establish a

goal on the basis of what is deemed attainable

for Environmental Law, 83 Yale U..J. 1315, 1318-19 & n.25

(1974); Lisa Heinzerling, The Clean Air Act and the

Constitution, 20 St. Louis U. Pub. L. Rev. 121, 149 (2001)

(“Cost-benefit analysis tends to underrate those things that

cannot be so quantified and monetized”) Thoughtful

proponents of cost-benefit analysis recognize these problems.

Robert W. Hahn & Cass R. Sunstein, A New Executive Order for

Improving Federal Regulation? Deeper and Wider Cost-Benefit

Analysis, 150 U. Pa. L. Rev. 1489, 1499-1500 (2002) (“Of course,

it 1s possible that in practice, quantitative cost-benefit analysis

will have excessive imfluence on government § decisions,

drowning out ‘soft variables.’’).

13

through the application of a particular technology,

but they do not require the use of that technology.

The regulated entity thus remains free to develop

and employ a more efficient technology that attains

(or exceeds) the goal at a lower cost.

1. The Statutory Language Describing

The BAT And BADT Standards

Disallows A Cost-Benefit Approach.

Consistent with Congress's overriding goal of

eliminating the discharge of pollutants, the language

of the BAT and BADT standards rejects cost-benefit

analysis. The BAT standard for existing sources

requires “the best available technology economically

achievable for [a] category or class [of facilities],

which will result in reasonable further progress

toward the national goal of eliminating the discharge

of all pollutants.” Section 301(b)(2)(A). At the same

time, Congress did not ignore costs — it directed EPA,

in establishing BAT standards, to include “the cost of

achieving such effluent reduction” among the factors

to be considered. Section 304(b)(2)(B). A

straightforward reading of the BAT standard thus

demonstrates that it is to be established with

reference to the use of the available technology that

best reduces or eliminates the discharge of

pollutants, so long as that goal is “economically

achievable.” The language Congress adopted cannot

reasonably bear a reading permitting the use of a

cost-benefit analysis because such an analysis would

result in a retreat from “the national goal of

eliminating the discharge of all pollutants.” Plainly,

Congress did not give EPA authority to use cost-

benefit considerations to override its determination

to eliminate the discharge of pollutants when

14

technology is available to do so at a cost the industry

can bear. Any doubt on this question is dispelled by

section 301(b)(2)(A), which requires EPA to set the

BAT standard at zero — “the elimination of all

discharges of all pollutants” - where “such

elimination is technologically and economically

achievable.” This is the language of feasibility, not

cost-benefit.

The BADT standard for new sources!'! similarly

mandates “the greatest degree of effluent reduction

which the Administrator determines to be achievable

through application of the best available

demonstrated control __ technology, processes,

operating methods, or other alternatives, including,

where practicable, a standard permitting no

discharge of pollutants.” Section 306(a)(1). As with

the BAT standard, Congress directed EPA to

consider a number of factors including “the cost of

achieving such effluent reduction,” but did not call

for any comparison of costs with benefits. Section

304(b)(2;{(B). A straightforward reading of the

language of the BADT standard shows that, as with

the BAT standard, Congress directed EPA to require

that discharges be reduced to the level achieved by

the available technology that is best at reducing or

eliminating the discharge of pollution, provided the

industry can afford it.'? The language of the statute

1! Generally speaking, a “new source” is one that is constructed

after the relevant new source standard has been promulgated.

Section 306(a)(2).

‘2 In practice, the BADT standards will tend to be more

stringent than the BAT standards, for two reasons. First, the

cost of utilizing particular technologies may be higher at

existing plants than at new plants. because of the need to

retrofit. Second, individual firms are authorized to seek certain

variances from the BAT standards, while no such variance 1s

15

does not authorize EPA to invoke cost-benefit

analysis to conclude that it is preferable to permit

the discharge of a pollutant even though technology

is available to prevent such discharge at a price the

industry can bear.

This Court’s decision in Whitman is instructive.

The Clean Air Act (“CAA”) provision at issue there,

section 109(b), 42 U.S.C. § 7409(b), requires EPA to

set ambient air quality standards at a level

“requisite to protect the public health” with “an

adequate margin of safety.” Regulated entities

argued that these terms could be read to allow EPA

to consider implementation costs in setting such

standards. In rejecting this argument, the Court

found it salient that other provisions in the CAA

“explicitly permitted or required economic costs to be

taken into account in implementing the air quality

standards,” and concluded that it could not

reasonably read into the statute “an authorization to

consider costs that has elsewhere, and so often, been

expressly granted.” 531 U.S. at 471. Thus, the Court

concluded, “[t}he text of § 109(b), interpreted in its

statutory and _ historical context and _ with

appreciation for its importance in the CAA as a

whole, unambiguously bars cost considerations.” Jd.

at 471.

Whitman is not an outlier case involving a

“presumption” against considering costs, EPA Br. 33,

or a case pertaining only to whether, but not how,

costs may be considered, see id.'* Nor is its reasoning

available from the BADT standards. See du Pont, 430 U.S. at

137-39.

13 Contrary to the Solicitor General's assertion, cost-benefit

analysis is not a “form” or ‘manner’ of cost consideration. EPA

16

limited to the precise language of CAA section

109(b). See Entergy Br. 28. Rather, Whitman is a

straightforward exercise in reading a_ statutory

provision carefully, mindful of the context in which it

sits, and determining what Congress wanted. The

resulting analysis applies with equal force to the

Clean Water Act’s BAT and BADT provisions.

Congress specified in CWA sections 304(b)(2)(B)

and 306(b) that “the cost of achieving such effluent

reduction” should be considered in setting BAT and

BADT standards. Had Congress wanted EPA to

compare costs with benefits in setting these

standards, it would have said so, as it did twice

elsewhere in section 304. See Sections 304(b)(1)(B)

(directing EPA to consider “the total cost” of

pollution reduction technology “in relation to the

effluent reduction benefits” of such technology when

setting BPT standards) and 304(b)(4)(B) (directing

EPA to consider “the reasonableness of the

relationship” between costs and effluent reduction

benefits in setting BCT standards). Moreover, the

CWA’'s technology-based standards, like the air

quality standards at issue in Whitman, are “the

engine that drives” the Act. 531 U.S. at 468. In such

Br. 33. It is a different inquiry altogether. See Texas Oil & Gas

Ass'n v. EPA, 161 F.3d 923, 936 (5th Cir. 1998) (cited at EPA

Br. 39, Entergy Br. 42) (“The benefit to be achieved from

adopting a particular pollution control technology is not an

element of that technology's cost. ... Reinjection technology, for

example, costs the same regardless of whether it reduces

pollutant discharge by three million pounds per year or three

pounds per vear.’). Entergy similarly conflates these concepts

in trying to explain away this Court's holding in Whitman. See

Entergy Br. 28 (noting that other provisions in the CAA allow

EPA to ‘consider costs ... even though those provisions did not

expressly provide for cost-benefit analysis’).

17

instances, one would think that Congress was

especially deliberate in choosing its words.

Nonetheless, Entergy points to the residual

clause in section 304(b)(2)(B), which permits EPA to

consider “such other factors as the Administrator

deems appropriate” in setting BAT standards.

Entergy Br. 39-40.'4 But this residual discretion does

not permit the agency to interpose cost-benefit

analysis — or any other policy metric of its choosing —

in derogation of the choices already made by

Congress. Section 304(b)(2)(B)’s residual clause is

necessarily cabined by that subsection’s list of “such”

factors that EPA “shall” consider — namely, “the age

of equipment and facilities involved, the process

employed, the engineering aspects of the application

of various types of control techniques, process

changes, the cost of achieving such _ effluent

reduction, [and] non-water quality environmental

impact (including energy requirements).” The

specification of treatment “cost” (but not in relation

to benefits), combined with the specification of “non-

water quality” environmental impact (but not water

quality impact), indicates that Congress did not

intend EPA to weigh treatment costs against water

quality benefits in setting BAT standards. Surely,

Congress did not intend the general language of the

residual clause to override the more specific terms

that precede it, especially in a way that would

undermine the congressional policy apparent in the

use of those terms.

'4 Other industry amici join in this argument, see ACC Br. 22-

23, although the Solicitor General stops short of embracing it,

see EPA Br. 24.

18

This Court construed a_ strikingly similar

statutory provision in Hughey v. United States, 495

U.S. 411 (1990). The question in Hughey was

whether the Victim and Witness Protection Act of

1982 allowed a court to award restitution for acts

other than those underlying a criminal sentence,

where the statute provided that the sentencing court

“shall consider the amount of the loss sustained by

any victim as a result of the offense, the financial

resources of the defendant, the financial needs and

earning ability of the defendant and the defendant’s

dependents, and such other factors as the court deems

appropriate.” Id. at 416-17, quoting 18 U.S.C. §

3580(a) (1982 ed.) (emphases added). Focusing on

“the language of the statute itself,” id. at 415, the

Court determined that the explicit reference to “the

offense” precluded a reading of the residual clause

that would allow a sentencing judge to look beyond

that offense in awarding restitution. See id. at 418

(‘[HJad Congress intended to permit a victim to

recover for losses stemming from all conduct

attributable to the defendant, ... Congress would

likely have chosen language other than ‘the offense’

...).5 Furthermore, the Court held, since the

enumerated items preceding the catchall phrase

were designed to limit the scope of any restitution

order, the canon of ejusdem generis required that the

residual phrase not be read to expand a defendant's

liability. See id. at 418-19. Accordingly, the Court

“reject(ed] as implausible the Government's

contention that the ‘such other’ language in §

3580(a)'s catchall phrase imports into the restitution

'S The Court made clear that its analysis was not based on the

principle of lenity extended in criminal cases. See Jd. at 422.

19

provisions a wholly new substantive dimension not

otherwise evident in the statute.” Jd. at 420.

Entergy’s suggestion that the residual clause of

section 304(b)(2)(B) be read expansively fails along

the same lines. That clause may not be read to

obliterate the explicit limitations articulated in the

terms immediately preceding it. Rather, the residual

clause is an interstitial provision designed to give

EPA leeway to consider “such other” (i.¢., similar)

factors as those enumerated. It certainly may not be

read as an invitation to countermand a substantive

legislative choice as to the proper risk management

tool in favor of the agency’s own policy preferences,

for “Congress ... does not alter the fundamental

details of a regulatory scheme in vague terms or

ancillary provisions.” Whitman, 531 U.S. at 468. In

arguing to the contrary, Entergy seeks to puli the

proverbial “elephant[]” out of a “mouseholef[].” Id.

Moreover, as discussed below, permitting EPA to

conduct a_ cost-benefit analysis in setting BAT

standards would not only override Congress's

determinations but also this Court's authoritative

construction of the statute in National Crushed

Stone.

2. The Structure Of The Relevant

Statutory Provisions Demonstrates

That The BAT And BADT Standards

Are Not To Be Based On Cost-Benefit

Analysis.

Like the statutory language of these provisions,

the structure of the statute confirms that the BAT

and BADT standards do not permit the use of a cost-

benefit analysis. It is undisputed that the BAT and

BADT standards are intended to be more

20

environmentally protective than the BPT or BCT

standards. The BPT standard is more relaxed

because it is largely an interim standard designed to

ensure initial progress toward achievement of the

ultimate elimination of pollutants required by the

BAT standard. The BCT standard, added in 1977, is

more relaxed because it governs only a small subset

of five “conventional” pollutants — so named because

they can be treated by long-available (conventional)

pollution control technology - whose wholesale

elimination generally is not necessary to ensure

water quality.'© The more stringent BAT standard

governs the bulk of the other pollutants discharged

from existing sources, including 129 chemical

compounds designated as “toxic” pollutants and a

host of other pollutants designated as neither “toxic”

nor “conventional.”!? See Sections 301(b)(2)(A), (C),

'6 The designated “conventional pollutants” (see Section

304(a)(4)) are not specific pollutants so much as they are

aquatic conditions that tend to vary with the level and nature of

pollution discharges. Three of the four specifically named in the

statute — biological oxygen demand, total suspended solids, and

pH — can be affected by a wide variety of pollutants (many of

which may be separately regulated as toxic or nonconventional),

and the fourth, fecal coliform, encompasses a variety of

different bacteria. (EPA has since added oil and grease —

another broad category — to the list.) In setting BCT standards,

EPA 1s directed to “compare the cost and level of reduction of

such pollutants” attainable by the subject industrial category

with that attainable by public sewage treatment plants (as

these have traditionally been the primary pollutants that such

plants are designed to treat). Section 304(b)(4)(B).

'7 Although EPA and its amici contend, to varying degrees of

emphasis, that BAT applies only to a small subset of highly

toxic chemicals that may harm humans, this characterization is

strikingly inaccurate. First, 65 chemicals (comprising 129

chemical compounds) have been designated as toxic pollutants.

See 40 C_F_R. § 401.15. Second, as noted above, the list is not

limited to chemicals that are dangerous to humans: “toxic

pollutant” 1s defined as a substance exerting a toxic effect on

21

(D), & (F). The BADT standard is the most

demanding because it applies to new sources of

pollution, which do not face the retrofitting problems

encountered at existing sources.

In short, the structure of the Act plainly requires

that the BAT and BADT standards be given a more

environmentally protective meaning than the BPT

and BCT standards. The BPT and BCT standards

direct EPA to compare costs and benefits. The BAT

and BADT standards do not. The obvious conclusion

is that Congress intended EPA to perform a (limited)

cost-benefit analysis under the BPT and BCT

standards but not under the BAT and BADT

standards.

B. This Court’s Decision In National

Crushed Stone Confirms The Conclusion

That The BAT And BADT Standards Do

Not Permit The Use Of Cost-Benefit

Analysis.

As the Second Circuit concluded, this Court's

decision in National Crushed Stone confirms that the

BAT standard does not permit the use of a cost-

benefit analysis. The issue in that case was whether

EPA must consider “the economic capability of an

individual discharger” when deciding whether to

issue a variance from the BPT requirements. 449

U.S. at 72. The Court examined “the basic structure

“any organism.” Section 502(13) Third, while an individual

discharger is authorized to apply for a relaxation of the BAT

standard for certain “nonconventional” (and _ nontoxic)

pollutants, see Section 301(g), the BAT standard remains the

presumptively applicable standard for the class. of

nonconventional pollutants, see Sections 301(b)(2)(A) & (F).

22

of the Act” in holding that EPA is not required to

consider individual economic capability. Jd. at 69.

The Court relied heavily on a key structural

aspect of the Act — that BPT imposes less stringent

requirements than BAT. Specifically, the Court

wrote that, unlike BAT, “BPT limitations do not

require an industrial category to commit the

maximum economic resources possible to pollution

control, even if affordable.” Jd. at 75. As noted

previously, the Court concluded that the BPT

standard required what Senator Muskie called a

“limited cost-benefit analysis,”” one that examined

only whether costs are “wholly out of proportion” to

the marginal level of pollution reduction attained. Id.

at 71 n.10, quoting 118 Cong. Rec. 33,696. However,

under the stricter BAT standard, the Court stated,

“total cost is no longer to be considered in

comparison to effluent reduction benefits.” 449 U.S.

at 71. A cost-benefit analysis cannot be conducted

without costs being “considered in comparison to”

benefits.

Despite the clarity of this language, and of the

logic on which it is based, Entergy argues that

National Crushed Stone stands for the proposition

that EPA is free to use cost-benefit analysis to set

the BAT standards. Entergy Br. 42. Entergy bases

this contention on the Court’s statement 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.”

Id. at 42, quoting 449 U.S. at 71 n.10. “In other

words,” Entergy opines, “Congress made cost-benefit

analysis mandatory for BPT but only optional for

BAT.” Id. at 42. These are not simply “other words” —

23

they are words with a fundamentally different

meaning, and they cannot be squared with this

Court’s opinion.

The Court in National Crushed Stone recognized

that the BAT standard, which requires industry to

commit the maximum economic resources possible to

pollution control, is more protective than BPT. It

credited Senator Muskie’s statement that Congress

intended a limited cost-benefit analysis under the

BPT standard. And it concluded that Congress

intended there to be no comparison of costs to

benefits under the BAT standard. Entergy’s

suggestion that EPA may nonetheless conduct a cost-

benefit analysis to determine BAT standards

contravenes this Court's understanding of the

structure of the Act. BAT standards would be no

more protective than the corresponding BPT

standards if EPA used a cost-benefit analysis to

determine BAT standards. And they would be even

less protective if EPA conducted a strict cost-benefit

analysis to set BAT standards, as Entergy argues it

may, rather than the limited cost-benefit analysis

applicable under the BPT standard.

This Court authoritatively construed the BAT

standard in National Crushed Stone and concluded

that it does not permit the comparison of costs and

benefits required to conduct a cost-benefit analysis.

The Court's recognition of cost as a factor to be

considered under the BAT standard means what the

Second Circuit concluded it means — that cost must

be considered, but not as part of a cost-benefit

analysis.

Entergy also attempts to dismiss National

Crushed Stone as a “pre-Chevron” case. Entergy Br.

24

41. See generally Chevron U.S.A. Inc. v. NRDC, 467

U.S. 837 (1984). But the Court in National Crushed

Stone determined that Congress had addressed how

EPA is to consider costs in setting the BPT and BAT

standards. Its conclusion that the BAT standard

prohibits a comparison of costs and benefits leaves

no gap in the statutory language for EPA to purport

to fill by requiring a cost-benefit analysis. In Chevron

terms, Congress has spoken to the issue — the

statutory language leaves no room for an agency

“interpretation” allowing cost-benefit analysis. '*

The other cases cited by Entergy do not support a

retreat from National Crushed Stone. Entergy relies

on a Sixth Circuit decision, BP Exploration & Oil,

Inc. v EPA, 66 F.3d 784 (1995), Entergy Br. 41, but

the Sixth Circuit plainly erred. It based its

conclusion that EPA may conduct a cost-benefit

analysis in setting BAT standards on Senator

Muskie’s statement that Congress established a

“limited’ balancing test,” 66 F.3d at 796, a statement

that was made with respect to the BPT standard, not

the BAT standard. As this Court held in National

'8 The Solicitor General appears to suggest that a statute

should be considered “silent” or “ambiguous” on a topic if it does

not address that topic in so many words. EPA Br. 12 The

function of the Chevron inquiry, however, is to determine the

meaning of the words Congress does use. This Court has made

clear that, under the first step of the Chevron analysis, it is

important to review statutory language in context and not in

isolation. See, ¢.g., NAHB v. Defenders of Wildlife, 127 S. Ct.

2518, 2534 (2007) (“{i]t 1s a fundamental canon of statutory

construction that the words of a statute must be read in their

context and with a view to their place in the overall statutory

scheme” (quotation marks omitted)). In National Crushed Stone

the Court did just that, examining “the basic structure of the

Act” to conclude that the BPT standard requires a cost-benefit

analysis and the BAT standard does not permit one. 449 U.S. at

69.

25

Crushed Stone, the BAT standard is’' more

environmentally protective than the BPT standard

and does not call for a comparison of costs and

benefits, but instead for the achievement of the goals

established by Congress. !9

'9 In a footnote, Entergy cites a handful of decisions from lower

courts in support of the statement that “no court has ever held

that [a cost-benefit] analysis is forbidden” in sctting BAT

standards. Entergy Br. 41 & n. 18. To the contrary, in one of

those cases the court rejected an industry petitioner's argument

that certain BAT regulations were faulty because of EPA's

failure to weigh costs against benefits, noting that “{t}he

conspicuous absence of the comparative language contained in

section 304(b)(1)(B) leads us to the conclusion that Congress did

not intend the Agency or this court to engage in marginal cost-

benefit comparisons” in setting BAT standards. Association of

Pacific Fisheries v. EPA, 615 F.2d 794, 818 (9th Cir. 1980).

Although the court also noted later that the benefits of the

regulations “justified the costs,” it is clear that the court was

simply confirming that the effluent reduction benefit was not de

minimis. See id. (The de minimis principle is discussed more

fully below.) In another of the cases Entergy cites, the court

concluded that “Senator Muskie intended that the type of

assessment [used in setting BAT standards} should be basically

the same [as the BPT determination], except that there should

be no cost-benefit analysis.” American Iron & Steel Inst. v. EPA,

526 F.2d 1027, 1051 (3d Cir. 1975) (emphasis added). No court

has squarely held, after this Court's decision in National

Crushed Stone, that EPA is permitted to conduct a cost-benefit

analysis in setting BAT or BADT standards, other than the

Sixth Circuit in the flawed BP Exploration decision. And while,

as Entergy notes, the Fifth Circuit upheld a BAT standard

against an industry challenge to the manner in which EPA had

weighed pollution reduction benefits against costs, the court

concluded that this cost-benefit exercise had been irrelevant to

the BAT determination. See Texas Oil, 161 F.3d at 936

(‘Whatever value such benefit estimates may have, they are not

a required part of the BAT determination.”). If the court had

viewed this as a permissible exercise in setting BAT standards,

surely it would have evaluated the substance of the agency's

cost-benefit comparison in response to industry's “arbitrary or

capricious’ challenge.

26

As did the Sixth Circuit in BP Exploration,

Entergy also relies on the D.C. Circuit’s decision in

Weyerhauser. See Entergy Br. 39-40. That case,

which includes a thoughtful discussion of the

legislative history of the 1972 Act, offers no solace to

Entergy. As discussed above, the Weyerhauser court

observed that Congress had rejected the “optimum

pollution” theory and its reliance on cost-benefit

analysis. Thus, while the interim BPT standard

requires a limited balancing of costs and benefits, in

the more stringent BAT standard “fa]ll factors,

including costs and benefits, are consideration

factors, and no factors are separated out for

comparison.” Weyerhauser, 590 F.2d at 1045.

When the Weyerhauser court speaks here of

“benefits,” it refers not to the in-stream water quality

benefits of applying such technology (as Entergy

would have it), but simply to the degree of pollutant

reduction attained (1.e., how well the technology

works). See id. at 1044 n.49 (“The phrase ‘effluent

reduction benefits’ avoids any suggestion that

receiving water quality is an issue. Effluent

reduction occurs whenever less effluent is discharged

. and the same degree of reduction occurs whether

the discharge is into a small stream or the Pacific

Ocean.”). In fact, the primary holding in Weyerhauser

is that Congress “intended to exclude consideration

of receiving water quality completely” in crafting the

Act's technology-based standards.*° Jd. at 1053 n.68,

20 “In only one limited instance, thermal pollution, is receiving

water capacity to be considered in relaxing [technology-based]

standards, and the section allowing such consideration was

drafted as a clear exception.” Id. at 1043 (referencing CWA

section 316(a) (emphases added)). It is telling that the

Weverhauser court did not include section 316(b) in this

statement.

27

id. at 1041-44 (EPA, in setting BPT standards, is

forbidden from considering water quality benefits).?!

Further, as the D.C. Circuit noted, in 1977 Congress

specifically considered whether to “rewrite” the BAT

requirement “in order to continue the cost-benefit

balancing” done under BPT, but decided instead to

retain the original formulation, under which BAT

does not include cost-benefit balancing. Jd. at 1046.22

Indeed, as Senator Muskie noted at the time,

Congress added the BCT standard to the Act in 1977,

thus permitting a _ cost-benefit balancing for

designated conventional pollutants, precisely

because the BAT standard is “not subject to ... any

form of cost-benefit analysis.” 3 Legislative History

of the Clean Water Act of 1977, at 427 (1975).

21 This answers UWAG'’s assertion that “until Riverkeeper II,

no court had suggested that Congress intended to bar EPA from

considering water quality in setting discharge controls.” UWAG

Br. 46. Of course, a source is ultimately required to meet a

discharge limit more stringent than the applicable technology-

based standard if that is necessary to attain in-stream water

quality standards. See Section 301(b)(1)(C).

22 To the extent that any loose language in Weyerhauser might

be read to suggest in dicta that EPA may perform a cost-benefit

analysis in establishing BAT standards, such statements must

give way to this Court’s later authoritative analysis in National

Crushed Stone.

23 ACC cites several additional cases for the proposition that

BAT allows a full cost-benefit analysis, ACC Br. 22-23, but none

supports this position. Two of those cases, Chemical Mfrs.

Ass'n, 870 F.2d at 204, 207, and Our Children’s Earth Found. v.

EPA, 527 F.3d 842, 849 n.5 (9th Cir. 2008), involved the BPT

(not BAT) standard, under which (as all parties agree) a certain

form of balancing costs and benefits is allowed. Three others,

American Petroleum Inst. v. EPA, 787 F.2d 965, 972 (5th Cir.

1986), Riverkeeper, Inc. v. EPA, 358 F.3d 174, 194 n.22 (2d Cir.

2004), and Waterkeeper Alliance, Inc. v. EPA, 399 F.3d 486, 516

(2d Cir. 2005), involved an application of the de minimis

principle and did not endorse the use of cost-benefit analvsis in

setting the BAT standard. The final case, NRDC v. EPA, 863

28

With regard to the BADT standard, all agree that

it is to be at least as environmentally protective as

the BAT standard. See, e.g., Entergy Br. 40 n.16,

quoting American Iron, 526 F.2d at 1059 (referring to

“a ‘virtually identical’ structure for BADT standards

under §306”). Accordingly, the reference to the “cost

of achieving such effluent reduction” in section

306(b)(1)(B), like the similar reference to cost under

the BAT standard, permits EPA to consider whether

the industry can bear the costs at issue and whether

less costly methods can produce essentially the same

environmental results — but does not permit the use

of a cost-benefit analysis.24

F.2d ‘1420 (9th Cir. 1988), says outright that “BAT should

represent ‘a commitment of the maximum _ resources

economically possible to the ultimate goal of eliminating all

polluting discharges,” td. at 1426, quoting National Crushed

Stone, 449 U.S. at 74) (emphasis added), and “the greatest

attainable level of effluent reduction which could be achieved,”

id. at 1431, quoting NRDC v. EPA, 822 F.2d 104, 115 n.12 (D.C.

Cir. 1987) (emphasis added), which 1s the language of

feasibility, not cost-benefit analysis.

24 Entergy’s reliance on International Paper Co. v. Ouellette.

479 U.S. 481 (1987), which involved the interplay between state

nuisance law and the CWA, is misplaced. See Entergy Br. 40-41

n.17. The Court there determined that a “downstream” state's

nuisance law may not be invoked to upset any “weighing of the

costs and benefits” conducted in setting technology-based or

water quality-based effluent limits in the source state's

discharge permits. See Ouellette, 479 U.S. at 494-96 (citing

Sections 304, 302). The Court did not hold, however, that every

permit limit devolves from a cost-benefit analysis. Obviously,

Congress “weighs costs and benefits” in a holistic sense when it

specifies which technology-based standards should apply to

certain classes of dischargers, even where the standards it

chooses do not themselves involve a cost-benefit analysis. EPA’s

establishment of some technology-based and water-quality

based effluent limits may involve a “weighing of costs and

29

II. THE SECTION 301 AND SECTION 306

STANDARDS (INCLUDING BTA

REQUIREMENTS) ARE TO BE

ESTABLISHED FOR CLASSES AND

CATEGORIES OF DISCHARGERS.

Petitioners and some amici argue that section

316(b) should be implemented on a case-by-case

basis rather than by means of categorical

regulations. See, eg., Entergy Br. 46-47.

Unquestionably, each facility has its own set of site-

specific physical and technological characteristics,

and each facility owner has its own set of financial

capabilities and constraints. Congress thus could

have directed EPA to set the Act’s’ various

technology-based limitations on a site-by-site basis.

Instead, the CWA directs that the BAT, BCT, and

BADT limitations be established for “categories” of

point sources. Sections 301(b)(2)(A) & (b)(2)(E);

306(b)(1)(A) & (b)(1)(B). EPA took a= similar

categorical approach to the establishment of the BPT

limitations, and the Court held in du Pont that this

approach is consistent with the language, structure,

and history of the statute. See, 430 U.S. at 129 (“In

sum, the language of the statute supports the view

benefits,” but only where Congress has explicitly permitted this

analysis (as it did for BPT and BCT, but not BAT or BADT). See

also Section 302(b)(2)(A) (modification of EPA water-quality

based effluent limit allowed where permittee shows “no

reasonable relationship between the economic and social costs

and the benefits to be obtained”). And a source state may

permissibly “weigh costs and benefits” in setting permit terms

based on state law, so long as those terms are more stringent

than what federal law requires. See Section 510(1). (For this

last reason, a state's application of its nuisance law against its

own water pollution sources is not preempted by the CWA )

30

that § 301 limitations are to be adopted by the

Administrator, that they are to be based primarily on

classes and categories, and that they are to take the

form of regulations.”).

Section 316(b) mandates that “[aJny standard

established pursuant to section 1311 of this title or

section 1316 of this title [CWA sections 301 or 306]

. shall require” BTA for cooling water intake. In

other words, the section 316(b) BTA requirements

are to be established as part of the section 301 and

section 306 standards, and thus are to be “based

primarily on classes and categories,” and to “take the

form of regulations,” as well. Indeed, in du Pont the

Court relied, in part, on section 316(b)’s use of the

term “standard” in holding that Congress intended

EPA to promulgate categorical effluent limitations

for existing sources under section 301. 430 U.S. at

133 n.24. The contention that section 316(b) must be

implemented on a case-by-case basis thus cannot be

squared either with the plain language of the statute

or with this Court’s analysis in du Pont.

Moreover, as the Court noted in du Pont, a case-

by-case approach “would place an impossible burden

on EPA,” requiring the agency “to give individual

consideration” to each of the numerous facilities to be

regulated across the country, and would

unseasonably delay the issuance of the required

restrictions. 430 U.S. at 132-33. A case-by-case

approach would also countermand the_ general

congressional mandate to “assure that similar point

sources with similar characteristics ...will meet

similar effluent limitations” insofar as possible, both

to prevent a ‘race to the bottom’ among states eager

to attract business and as a matter of basic fairness.

31

NRDC uv. Train, 510 F.2d 692, 709-10 (D.C. Cir.

1974) (quoting Senator Muskie). Thus, as noted by

Senator Muskie in the debates over the 1972 Act,

Congress chose “to avoid imposing on_ the

Administrator any requirement to consider the

location of sources within a_ category ,

Weyerhaeuser, 590 F.2d at 1045 n.52 (citation

omitted).

Ill. THERE IS AMPLE ROOM UNDER THE

STATUTE FOR EPA TO AVOID TRULY

ABSURD RESULTS.

Interspersed throughout the briefs of petitioners

and their amici are variations of the following

argument: if cost-benefit analysis is not used for

regulatory decision-making, absurd policy results

will ensue. The short answer to this argument, of

course, is that the Constitution assigns Congress the

job of policy-making, and Congress is free to select

policy alternatives with which some or all of the

parties to this case may vehemently disagree.

Moreover, the Clean Water Act’s technology-based

standards do not leave industry (or the environment)

prey to truly absurd results. As the Court noted in

du Pont, the use of national categorical standards

necessitates that variances be _ available for

individual facilities at which the _ relevant

technological features are fundamentally different

from those on which the _ (technology-based)

standards were established.25 See 430 U.S. at 128.

Further, delays in the implementation of the BAT

and BCT standards are available for firms choosing

25 EPA had promulgated such a variance for the BPT standard

by regulation, and Congress has since added such a variance for

the BCT and BAT standards. See Section 301(n).

32

to develop innovative technologies for meeting them,

see Section 301(k), and firms may seek relaxation of

the BAT standard for nonconventional pollutants on

cost or water quality grounds, see Sections 30l(c) &

(g).

Finally, EPA need not require costly effluent

reductions (or cooling water intake adjustments)

where the real-world benefit will be no more than de

minimis. See, e.g., Association of Pacific Fisheries,

615 F.2d at 818. However, this does not permit the

agency to impose a cost-benefit framework in

derogation of congressional policy. As the D.C.

Circuit has noted:

Unless Congress has been extraordinarily

rigid, there is likely a basis for an implication

of de minimis authority to provide exemption

when the burdens of regulation yield a gain of

trivial or no value. That implied authority is

not available for a _ situation where the

regulatory function does provide benefits, in

the sense of furthering the regulatory

objectives, but the agency concludes that the

acknowledged benefits are exceeded by the

costs. For such a situation any implied

authority to make cost-benefit decisions must

be based not on a general doctrine but on a

fair reading of the specific statute, its aims

and legislative history.

Alabama Power Co. v. Costle, 636 F.2d 323, 360-61

(D.C. Cir. 1979) (discussing the CAA).

33

CONCLUSION

The judgment of the court of appeals should be

affirmed.

Respectfully submitted.

CHARLES C. CALDART CHRISTOPHER J. WRIGHT

JOSEPH J. MANN Counsel of Record

NATIONAL TIMOTHY J. SIMEONE

ENVIRONMENTAL S. ROBERTS CARTER III

LAW CENTER HARRIS, WILTSHIRE &

1402 Third Avenue, GRANNIS LLP

Suite 715 1200 18th Street, N.W.

Seattle, WA 98101 Washington, DC 20036

(202) 730-1300

OCTOBER 6, 2008