October 23, 2012

Q and A on Entergy Corp. v. Riverkeeper Oral Argument With Jessica Mitchell Wicha

Q and A on Entergy Corp. v. Riverkeeper Oral Argument
With Jessica Mitchell Wicha

Can you briefly review how this case got to the Court and what are the main issues?

The three cases consolidated for review before the Supreme Court all concern Section 316(b) of the Clean Water Act, which authorizes the Environmental Protection Agency (EPA) to regulate cooling water intake structures. These intake structures are used by power plants to withdraw water to cool their machinery. Both the intake and discharge of cooling water have environmental consequences. Section 316(b) requires existing cooling water intake structures to have the "best technology available for minimizing adverse environmental impact" (BTA). The Clean Water Act does not define this technology standard or otherwise address how EPA should determine what constitutes BTA.

In 2004, EPA developed intake structure regulations for existing power plants that intake at least 50 million gallons of water per day. These regulations provide existing facilities with several compliance alternatives for establishing BTA. EPA selected this regulatory approach after conducting what essentially amounted to a cost-benefit analysis of the various compliance options. These regulations also provide for a case-by-case assessment of the costs and benefits of a particular facility's compliance in determining the appropriate action.

In 2006, Entergy Corporation, PSEG Fossil LLC, PSEG Nuclear LLC, and Utility Water Act Group (petitioners in the consolidated cases before the Supreme Court) and Riverkeeper and several northeastern states (respondents in the consolidated cases before the Supreme Court), among other parties, challenged EPA's regulations in the Second Circuit. The Second Circuit held that the Clean Water Act did not permit cost-benefit analysis. Since it was unclear at that point whether the agency relied on such an analysis, the court remanded the issue to EPA for agency clarification or a new determination based on permissible considerations. The court also rejected EPA's use of site-specific determinations based on cost-benefit analysis.

Before the remand process was complete, Petitioners sought review in the Supreme Court claiming, among other things, that the Second Circuit's holding, prohibiting EPA from conducting a cost-benefit analysis, was incorrect. The United States opposed this request arguing that no "square conflict" existed between the circuits and that the full impact of the Second Circuit's decision would not be clear until EPA completed its proceedings on remand. However, the United States indicated that it would largely support the petitioners if certiorar were granted. The Supreme Court granted certiorari on the issue of cost-benefit analysis on April 14, 2008.

How did the oral argument go?

Taking their cue from the parties' briefs, the justices focused their questions almost entirely on statutory language, statutory structure, and legislative history. The justices were interested in EPA and Petitioners' argument that the notion of "best" technology in the BTA standard incorporated costs and in Respondents' argument that the notion that "available" technology in the BTA standard incorporated costs but did not permit a cost-benefit analysis. Rather than stay within the realm of the Clean Water Act and environmental protection more generally, however, the justices' debate over these statutory terms quickly shifted to everyday examples. For example, Chief Justice Roberts questioned EPA's argument that the term "best" included a consideration of cost, noting that the "best" television could be the "fanciest" one, not necessarily the one that the consumer could afford. Similarly, Justice Alito challenged Respondents' claim that the term "available" incorporated a consideration of cost, stating that the notion of cost does not fit within the concept of "availability" any better than it does within the concept of "best." Justice Alito mused that the "best" house that is "available" on the market could cost $50 million; it would be available to him, but he would not be able to afford it.

While these everyday examples helped keep the discussion from getting bogged down in the technical language of the Clean Water Act, they also served to undercut the parties' arguments at times. Indeed, EPA, Petitioners, and Respondents had to emphasize the unique context of the Clean Water Act several times during the oral argument, in an effort to essentially bring the argument back on track. These exchanges highlighted the difficulty of discussing statutory language outside of the statutory context.

Nevertheless, as discussed further below, EPA, Petitioners, and Respondents should be pleased with their hour in court.

Which if any side do you think should have come out feeling good about their hour in Court?

EPA, Petitioners, and Respondents should all be satisfied with their hour in Court. While several justices indicated by their questions that they thought the Second Circuit went too far in prohibiting cost-benefit analysis altogether, there was much disagreement as to what approach EPA should take in determining BTA. The justices also appeared to generally oppose EPA's current regulatory approach, which lessens the likelihood that the Court will simply defer to agency expertise.

EPA and Petitioners should be pleased with the justices' rough consensus that costs should be considered to some degree when EPA establishes BTA. Indeed, even some of the more liberal justices like Justice Ginsberg agreed that the question was not whether costs could be considered, but rather how much costs could be considered. Justice Breyer, often a swing vote in environmental cases before the Court, noted that the legislative history of Section 316(b) did not prohibit EPA from considering compliance costs. His struggle was with determining a "commonsense" way for the agency to do so.

Respondents should also be satisfied with their argument, since several of the Justices, including Justices Souter and Ginsberg, pressed Petitioners on the applicability of cost-benefit analysis in the environmental context, wondering how one would value the aquatic life at issue and weigh that against the cost of new technology. Others, including Chief Justice Roberts, challenged EPA's position that the term "best" in BTA automatically raises the issue of cost. As mentioned above, Chief Justice Roberts noted that the "best" television could be the "fanciest" one, not necessarily the one that the consumer could afford.

What do you think the Court saw as the strongest argument?

Two arguments appeared to resonate with the Court. First, several of the justices of the Court's more liberal contingent agreed with Respondents that a cost-benefit analysis is not appropriate in this context, since it is difficult to measure and value purely environmental benefits. Justices Souter, Ginsberg, and Breyer also appeared to concur with Respondents that a strict cost-benefit analysis would destroy the technology-forcing component of the provision and result in underregulation, which was a significant concern of the provision's drafters.

Second, several of the justices agreed with EPA and Petitioners' argument that a BTA standard developed in the absence of cost considerations could have dire economic consequences. EPA and Petitioners emphasized that the proposed regulations would impact 40 percent of the Nation's power supply. Justices Scalia and Alito agreed that the BTA standard posed a significant risk of power plants passing along increased costs to electricity consumers and the potential for forced power plant closures. Chief Justice Roberts also commented on the dire economic situation faced by these power plants.

Which argument seemed to get the least traction with the Justices?

Many of the justices appeared to struggle with Respondents' admission that EPA can consider costs during the regulatory process. Respondents argued that EPA can consider costs when determining whether a technology was "available," but cannot weigh those costs against the benefits of the technology. In Respondents' view, once EPA determines that a particular technology is economically available, then the agency cannot decide that the technology is not worth it due to the costs outweighing the benefits. Both Justices Souter and Breyer viewed this distinction as a way to allow EPA to continue doing what they have been doing all along, just under a different guise. They deemed this argument to be more of a wordsmithing exercise than a persuasive distinction. Justice Scalia also struggled with this argument, questioning whether determining a technology's "availability" included a consideration of costs incurred by the industry. Justice Alito suggested that Respondents' admission actually undercut their overall argument and instead indicated that the statutory language was at best ambiguous, bringing the case within the ambit of Chevron "step 2" and agency deference.

Were there any questions or discussions that surprised you?


What was the media coverage of the argument like? If there was any, do you think it was a fair representation?

Media coverage of this case has been somewhat limited. This limited coverage is not surprising since Section 316(b) of the Clean Water Act and the ongoing litigation surrounding EPA's regulation of thermal discharges have not garnered as much national attention as other environmental issues such as New Source Review or wetlands protection.

The media coverage of this case, albeit limited, has been relatively even-handed.

Any guesses on how the case will be resolved? Did any of the justices show their hand?

It seems likely that the Court will hold that EPA can consider costs at some point during the regulatory process. While many of the justices were skeptical of EPA's use of strict cost-benefit analysis when determining BTA, there appeared to be a rough consensus that the Second Circuit went too far in prohibiting cost-benefit analysis outright.

Justices Scalia and Alito both appeared to support EPA's consideration of costs in determining BTA. In fact, they questioned the economics of a BTA standard that is not informed by cost. They were particularly concerned about power plants passing along increased costs to electricity consumers and the potential for forced power plant closures – two salient issues given today's economic climate.

Justice Breyer also appeared to support EPA's consideration of costs, saying several times that the Court needs to find a common sense way for EPA to do what it has been doing all along and consider costs.