Supreme Court OKs Cost-Benefit Analysis in Clean Water Act
In a victory for proponents of more affordable federal environmental regulations, the U.S. Supreme Court has ruled that the Environmental Protection Agency was right to include a cost-benefit analysis when determining how to regulate water intake from power plants.
NAHB submitted a brief in support of the EPA, along with an analysis by the association of various technologies and their costs, which figured into the court’s decision.
In a six to three ruling issued on April 1, the Supreme Court reversed the Second Circuit decision in Entergy v. Riverkeeper, et al., and held that the EPA reasonably interpreted the Clean Water Act when it considered costs in determining “the best technology available (BTA) for minimizing adverse environmental impact” from power plants with cooling water intake structures.
Writing the majority opinion, Justice Antonin Scalia said that while the Second Circuit’s interpretation of what constitutes best technology and minimal environmental impact under the statute was reasonable, so was the EPA’s. The agency’s interpretation governs if it is reasonable, the decision said.
Second, the court compared BTA to the four other technology standards to control pollution included in the Clean Water Act to determine whether, in relationship to these standards, Congress intended to allow the EPA to consider a cost-benefit analysis under Section 316(b) of the law.
This comparison was of great concern to home builders because another provision of the Clean Water Act requires the EPA to determine the “best available technology” (BAT) in developing effluent limitation guidelines, or ELGs, for the construction and development industry.
Unlike Section 316(b), which covers power plants, Section 304(d) explicitly requires the EPA to take into account the “cost of achieving such effluent reduction” when determining the BAT for the construction and development industry.
The potential for confusion was high: These two standards — “best technology available” and “best available technology” — are almost identical in their wording, and are very similar to the other three standards in the act.
If the Supreme Court had confused these two standards and ruled that cost-benefit analyses could not be used in any Clean Water Act regulations, the result would have been disastrous for home builders.
In its amicus brief, NAHB explained to the court the differences among the five technology standards in the act, clearly illustrating them in a chart.
The majority of the justices were able to make the appropriate distinctions among the different Clean Water Act technology standards, and NAHB’s chart was included as an appendix to the majority’s opinion.
The court ultimately concluded that the absence of language in Section 316 explicitly authorizing the EPA to conduct cost-benefit analyses did not indicate that the intent of Congress was to prohibit the agency from considering costs. Instead, the court said, it showed “a refusal to tie the agency’s hands as to whether cost-benefit analysis should be used, and if so to what degree.”
For additional information, e-mail Amy Chai at NAHB, or call her at 800-368-5242 x8232.