High Court Case Tests Power Plants' Water Rules

by Nina Totenberg

December 2, 2008 · The U.S. Supreme Court hears an important environmental case Tuesday, testing whether utilities must use the best technology available to minimize harm to the nation's waterways. At issue is the physical impact on fish and the financial impact on companies.

The nation's 550 power plants use water — lots of water in some instances — that comes from lakes and rivers. Each day, more than 214 billion gallons of water is sucked into power plants across the country. That's tens of trillions of gallons each year.

The water cools the steam used in the electric generating process. And all the fish and aquatic organisms in the water are killed in the process.

In modern plants, little or no water is needed. Instead, the cooling is done with air, or sometimes with a different water system that uses small amounts of water and recycles it. The question in this case involves whether older plants must install new technology to minimize the harm to the nation's lakes and rivers.

The companies say installing the best technology is too expensive — the Bush administration adopted a rule that would allow utilities to get a variance from the Environmental Protection Agency if they can show that the cost of complying is greater than the environmental benefits.

Environmentalists contend that Congress specifically rejected the cost-benefit approach because Congress itself concluded the costs were worth the benefits to the environment. Opponents also say a case-by-case cost-benefit analysis would be too prone to manipulation.

"The Clean Water Act doesn't fare well if it becomes a cost-benefit statute," says Georgetown University law professor Lisa Heinzerling. "Lots of fish aren't really worth that much when it comes down to trying to put a dollar value on them."

Six states and environmental groups challenged the Bush administration's approach, contending that the language of the statute requiring the best technology available is clear and unequivocal. They won in the lower courts, and the utilities appealed to the Supreme Court.

The states point out that the utility plants sit on state lakes and rivers and use their water for free. In Rhode Island, for example, the Brayton utility plant takes in a billion gallons of water a day, killing every living thing in the water, says state Assistant Attorney General Tricia Jedele.

"Our fin fish and winter flounder populations have collapsed, and we've lost a viable commercial and recreational fishing resource that has been used by Rhode Islanders for millennia," Jedele says.

Environmental lawyer Reid Super adds that utility plants are enormously profitable. "The company never said it couldn't afford it," Super says. "They just said they didn't want to do it."

But the utilities counter that Congress never intended to impose new technology costs on the industry without weighing costs against benefits.

Carter Phillips, an attorney who represents a number of utilities, says, "If you don't have at least some cost-benefits analysis that's incorporated into this approach, the possibility of having to spend literally ... hundreds of millions of dollars to save a handful of fish strikes me as palpably absurd."

If you say no cost-benefit analysis is appropriate, he adds, "then you end up with this wildly out-of-sync regulatory scheme."

Phillips contends that weighing costs and benefits is something federal and state agencies do every day, and he thinks a Democratic Obama administration may weigh costs and benefits quite differently than the Bush administration did.

"Who's running the EPA may make a big difference in terms of what the cost-benefit analysis is going to look like," Phillips says.

So, if the standards for measuring costs and benefits are going to change anyway with a new administration, does it matter what the Supreme Court says in this case? You bet it does.

For more than a quarter-century, industry has tried to put a cost-benefit overlay on environmental regulations.

In the past, that effort has often come a cropper in the courts. Now, with the Supreme Court's new conservative composition, industry thinks it has a good shot at winning — and winning in a way that will affect all environmental regulations.