22 May 2009

A Victory for Economic and Environmental

Rationality: Supreme Court Allows CostBenefit Analysis in Setting Important Clean

Water Act Standards

By David Harrison, Jr., Albert L. Nichols, and Meghan McGuinness

On 2 April 2009, the US Supreme Court ruled in Entergy Corporation et al. v. Riverkeeper, Inc. that

the US Environmental Protection Agency (EPA) may use cost-benefit analysis in setting standards and

issuing permits under Section 316(b) of the Clean Water Act, overturning a 2007 decision by the

Court of Appeals for the Second Circuit. This section of the Clean Water Act directs EPA to require

large power plants and other relevant facilities to install the Best Technology Available (BTA) for

minimizing adverse environmental impacts associated with cooling water intake structures. These

facilities often process millions of gallons of water per day, which leads to fish losses when fish

and other aquatic organisms are trapped against intake screens (“impingement”) or pulled into the

cooling system (“entrainment”).

The major objective of this paper is to explain the methods that environmental economists—working

in conjunction with biologists and engineers—have developed to provide reliable assessments of

costs and benefits in individual 316(b) permit cases.

1 We begin with a discussion of the significance

of the Supreme Court’s ruling. The Supreme Court held that EPA may—not must—use costbenefit analysis in making 316(b) determinations. Thus, it is important to demonstrate to EPA’s

new leadership and to state regulators that site-specific cost-benefit analysis can be implemented

effectively and that it should be an important element of the 316(b) decision-making process, as it

was before the 2007 Second Circuit ruling.

Significance of the Supreme Court’s Ruling

The Supreme Court’s ruling is an important victory for economic and environmental rationality.

2

It overturns a 2007 decision (referred to as Riverkeeper II) by the Court of Appeals for the Second

Circuit that found that the Clean Water Act did not allow EPA to compare costs and benefits in

deciding on BTA. The Court of Appeals found that costs could be considered only in the following

conditions: (1) the costs were so high that they could not be “reasonably borne” by industry; or (2) if

two technologies achieved the same level of fish protection, the less expensive alternative could be
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chosen. Otherwise EPA was required to select the technology that provided the most fish protection,

even if was far more expensive and had few incremental benefits compared to other alternatives.

Prior to the Second Circuit decision, EPA and the state agencies that had been delegated to issue

permits had compared benefits and costs in deciding on BTA technology for particular sites, with

technologies not chosen as BTA if their costs were “wholly disproportionate” to their benefits. Under

rules promulgated by EPA for existing sources (the so-called Phase II rules), EPA had changed the

criteria for site-specific BTA to exclude technologies whose costs were “significantly greater” than

their benefits; it was this element of the EPA regulation that was rejected by the Second Circuit in

Riverkeeper II, the decision the Supreme Court annulled.

The potential societal gains from the Supreme Court’s ruling are substantial, assuming EPA and

the States return to comparing costs and benefits in setting 316(b) permit requirements. The most

effective technology (usually closed-cycle cooling towers) typically costs hundreds of millions of

dollars per plant. Moreover, retrofitting a cooling tower reduces net generation from the plant in

two ways: (1) the temporary plant shutdown required in the retrofit process means the facility is not

producing electricity and its capacity is not available to meet reliability needs; and (2) the cooling

tower reduces the efficiency of the plant and requires electricity on its own, leading to ongoing

reductions in generation and capacity. Replacing the lost electricity generation and capacity can drive

overall costs above $1 billion in some cases. In addition, particularly for nuclear plants, lost output

has negative impacts on climate change and air pollution, because lost output would be made up

in large part by fossil fuel-fired plants (coal or gas) that emit carbon dioxide (CO2) and conventional

pollutants such as sulfur dioxide (SO2) and nitrogen oxides (NOx

).

The Supreme Court decision allows EPA and the states to use cost-benefit analysis to help set sitespecific 316(b) requirements for individual power plants. The extent to which cost-benefit analysis

will actually be used depends in part on confidence that the method is sound when applied in these

cases. Fortunately, economists have developed methodologies that provide comprehensive and

reliable 316(b) cost-benefit assessments, including assessments of the implications of uncertainties in

some of the underlying parameters. In this paper, we summarize the methods that NERA Economic

Consulting has developed and applied in numerous Section 316(b) cases over the past decade.

3

Overview of Cost-Benefit Analysis for Fish Protection

Cost-benefit analysis is a well-established methodology for providing information to decision-makers

faced with the task of determining whether a project should be undertaken and, if so, at what scale

of activity. The approach involves systematic enumeration of costs and benefits that would accrue

to members of society if a particular action were undertaken. The basic rationale for undertaking

a social cost-benefit analysis of a particular decision—such as whether to require additional fishprotection technologies at a power plant—is to help put society’s resources to their most valuable

uses. In choosing among alternatives, the basic cost-benefit principle is to select the alternative that

produces the greatest net benefits (i.e., benefits minus costs).

Every president since Jimmy Carter has required that agencies estimate the costs and benefits of

major rules for review by the Office of Management and Budget (OMB). As part of that review

process, OMB has developed guidelines for conducting cost-benefit analysis (OMB 2003). EPA also

has issued its own guidance for such analyses, most recently in 2000 in its Guidelines for Preparing

Economic Analyses (EPA 2000). In developing the Phase II regulations under Section 316(b), EPA

issued various case studies evaluating the costs and benefits of alternative technologies to protect

fish (EPA 2004).

4
Figure 1 outlines the general

steps in performing a costbenefit analysis of alternatives

to reduce fish losses at a

given facility. The steps involve

integration of technical,

scientific, and economic

information. Indeed, we

emphasize that sound 316(b)

cost-benefit analyses require

a collaboration of biologists,

engineers, and economists.

Identifying Relevant Technology and Operational

Alternatives

Any sound cost-benefit analysis must begin with identification of the alternatives to be evaluated.

Most existing power plants and other affected facilities use once-through cooling systems, whereby

water is withdrawn from a body of water (e.g., river, lake, or ocean), used to cool the facility, and

then discharged back to the water body. Fish losses can result from two general phenomena:

1. impingement occurs when fish (generally small species or juveniles of larger species) are trapped

against intake screens, and some do not survive.

2. entrainment occurs when eggs or larvae are sucked into the plant’s cooling system, where they

may be lost as a result of thermal shock or abrasion.

Entrainment typically makes up a larger fraction of total losses than impingement, although the

specific results depend upon the facility and the species.

A range of technologies and operating procedures can reduce impingement and entrainment. One

general approach that addresses both impingement and entrainment is to reduce the amount of

water taken in by the plant. Converting the plant to closed-cycle cooling—that is, using cooling

towers that allow cooling water to be recycled to cool the plant—is generally regarded as the

technology achieving the highest level of control—with reductions of 90 percent or more from

baseline levels possible—but it also is typically the most costly option. Smaller reductions in flow can

be achieved with variable speed pumps that reduce the flow of cooling water during colder weather,

when less water is needed, and during periods when fish losses are likely to be greatest (e.g.,

spawning periods). Scheduling maintenance and refueling outages for periods of high potential fish

losses also can provide gains. To specifically address impingement, various types of screens and other

devices (e.g., sound and light sources) can reduce mortality.

Many of the alternatives can be operated at various levels; e.g., variable speed pumps can be

operated to reduce flows to varying degrees, or used only at certain times. Various combinations of

technologies and operational measures also are often feasible.

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Figure 1: General steps in cost-benefit analysis

Technology/Operation Alternatives

Benefit Components

Cost-Benefit Components

Overall Conclusions

Cost Components

Uncertainty Analyses
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Economists conducting a cost-benefit analysis work with engineers and fishery biologists to identify

a range of technically feasible and realistic alternatives for evaluation, including variations in intensity

and combinations of measures as appropriate. Some technologies might not be technically feasible

at a given plant and these can be eliminated from the cost-benefit analysis.

Developing Sound Cost Estimates

Figure 2 summarizes four general categories of costs that are typically relevant to each regulatory

alternative. The costs include up-front capital costs for construction and purchase of equipment

plus ongoing operation and maintenance costs. These two types of costs generally are estimated in

the first instance by engineering firms based on their assessment of the physical requirements for a

particular alternative.

In addition to capital and operating and maintenance costs, as noted above, some alternatives

reduce electricity generated by the plant, and that lost output is valued based on the costs of

replacing the generation and capacity. Finally, in some cases, control options also entail some

environmental costs, particularly those associated with changes in air emissions. We focus here on

the estimation of costs of replacement power and consideration of potential environmental costs.

The Costs of Power Replacement

Lost power output and capacity may be a one-time event resulting from the need to shut down the

plant during some portion of the construction period. In addition, net output also may be affected

on an ongoing basis by changes in the electricity required by equipment or reductions in gross

output associated, for example, with lower cooling water flows that raise operating temperatures

and reduce the efficiency of generation. Lost output must be made up by increased generation at

other facilities that have higher marginal operating costs. The types of plants affected by Section

316(b) often provide base load power—i.e., they have low marginal operating costs and hence run

as much as possible. The cost of replacement power varies with time of year and time of day, with

the highest costs during peak demand periods when even high-cost plants must operate to meet

demand. As a result, it is important to specify what time of year a construction outage would be

most likely to occur. Often it is necessary to model the operation of the regional electrical system to

predict which types of plants would provide replacement power in future years.

The net cost of replacement power is the difference between the marginal costs of running those

other plants more intensively and the savings (if any) from reducing output from the plant affected

by 316(b). Depending on the nature of the technological alternative, replacement power costs

can constitute a very large fraction of total costs. In a recent project, for example, we found that

replacement power represented about 97 percent of the cost of one option. In contrast, in another

application we found that replacement power accounted for only about one-quarter of total costs.

Some technologies have little or no replacement power costs.

Figure 2: General categories of potential costs

Capital Costs

Operating &

Maintenance Costs

Power Replacement

During Construction

Power Replacement,

Continuing

Total Costs

for Alternative
Environmental Costs

Air emissions from replacement power are the primary source of environmental costs. If air

emissions, such as SO2 and, eventually, CO2, are subject to a cap-and-trade system, the market value

of the allowances associated with those emissions provides the appropriate cost measure. For other

pollutants, estimates of marginal damages can be used. There also may be other types of potential

external effects, such as aesthetic effects associated with tall cooling towers. For the most part such

effects are very difficult to quantify, but it is important to list them for completeness.

Developing Complete Benefit Estimates

It is important to develop comprehensive estimates of the likely benefits of the various 316(b)

alternatives. The EPA Guidelines provide a summary of the benefit categories relevant to an

assessment of ecological benefits, the broad category relevant to Section 316(b) analyses. Figure 3,

reproduced from the Guidelines, provides a way of organizing the relevant benefit categories based

on how they are experienced. The figure divides ecological benefits into two major categories: use

benefits and non-use benefits:

• Use benefits are those associated with actual use of the resource—such as fishing or various

water-related activities. Use benefits can be further subdivided into direct and indirect benefits.

Indirect benefits and direct benefits may be classified as market or non-market.

• Non-use benefits, in contrast, accrue to individuals who do not use the resource either directly or

indirectly, but nonetheless place a value on preventing its impairment.

Use Benefits from Increased Fish Catches

The primary benefit from Section 316(b) controls is to reduce fish mortality. The primary use

value that members of society receive from reduced fish mortality is increased fish catches. In the

“direct” category, some species of fish are caught commercially (“market” effect) or recreationally

(“non-market” effect). In the “indirect” category, other species are not caught, but rather serve

as forage for species that are valued commercially or recreationally; it is important to include the

benefits from increased numbers of forage fish in the total benefits.

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Figure 3: Potentially relevant benefit categories

Ecological

Benefits

Use

Direct

Private Goods Public Goods

Market

Commercial

Market

Recreational

Indirect

Forage

Non-Use

Non-Use

Source: EPA (2000).
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Figure 4 summarizes the steps involved in valuing increased fish catches. The process starts with

estimates of the reductions in fish mortality for a given technology, broken down by species and

life stage. For species that are caught commercially or recreationally, the next step is for fisheries

biologists to estimate how losses at each life stage translate to adult-equivalent fish, accounting for

the fact that at each life stage, only a fraction survive to the next stage. Thus, for example, out of

hundreds of thousands of eggs, only one may survive to adulthood. These biological calculations are

critical to develop sensible benefit estimates, because it is increases in adult-equivalent fish that lead

to benefits to commercial and recreational anglers. For species that are not caught commercially or

recreationally, the usual approach is for biologists to use trophic conversion factors to account for

the fact that more forage leads to more potential commercial and recreational fish catch. The final

step before valuation is to estimate what fractions of adult-equivalent fish are caught and how that

catch is divided between commercial and recreational fisheries.

For changes in commercial catch, benefits are equal to the increase in producers’ surplus (economic

rents to fishermen) plus any increase in consumers’ surplus if prices fall as a result of increased catch.

In general, the change in catch due to 316(b) controls is too small relative to the relevant market for

prices to fall, so the primary question is the extent to which fishermen are better off. Conceptually,

this potential gain can be thought of as increased revenues minus increased costs. These costs

include the incremental cost of catching more fish. However, because of the well-known “tragedy of

the commons,” in many fisheries the ultimate effect of increased catch rates will be an expansion of

fishing effort—both by existing fishermen and by new entrants—that eliminates any increased rents

to fishermen. In some cases commercial fishing benefits have been adjusted to reflect these factors,

but it is common to use an upper bound estimate based solely on the increased revenues received by

commercial fishermen, without accounting for any increases in costs.

Figure 4: Summary of steps in calculating monetized benefits associated with

reduced fish mortality

Changes in Mortality by Species

and Life Stage

Adult Equivalents of

Directly Valued Species

Change in Commercial Catch

Species Without Direct Value

Trophic Conversion to

Directly Valued Species

Change in Recreational Catch

Non-Market Valuation Methods

Recreational Benefits

Market Valuation

Commercial Benefits
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Valuing increases in recreational catches is more complicated, because there are no directly

observable market prices for recreational catch. It is clear that recreational fishermen value the fishing

experience and, indeed, often spend far more on fishing equipment and supplies than it would cost

to buy the fish in the market. Economists have developed various methods for estimating the value

that fishermen receive from additional catch and how the value changes at different overall catch

rates. Methods based on travel costs are generally considered the most reliable. Such studies gather

data on the characteristics (including catch rate) of different fishing destinations and how often

fishermen from different areas visit each of those destinations. Fishermen implicitly reveal how much

they value different attributes by their willingness to incur higher travel costs to reach destinations

with those attributes. Using statistical techniques, the dollar values of these attributes (including

catch rates) can be estimated.

Many such studies have been conducted by economic researchers in universities and other

institutions. Cost-benefit studies conducted for individual plants subject to possible Section 316(b)

requirements generally use benefit transfer methods to adjust estimates in the literature to the case

at hand. In its simplest form, benefits transfer consists of identifying studies that are relevant in terms

of types of locations (e.g., ocean, lakes, or rivers) and groups of species and then computing some

sort of average value, often supplemented by sensitivity analyses using a range of values from the

selected studies. More sophisticated approaches rely on “meta analysis” statistical techniques that in

effect use the results of different studies to estimate value functions based on different characteristics

of the studies and study areas.

For Section 316(b) studies, the key coefficients are those for measures of catch (such as number

of fish or pounds caught per day for a given group of species). These functions often show that

as catch rates rise, the value of catching an additional “unit” (e.g., pound of fish) declines; i.e.,

the marginal value of increasing catch by one pound per day is higher if the catch rate is lower, as

shown in Figure 5. Typically, the estimated values per pound for recreational catches are many times

higher than for those caught commercially. The benefits analysis must account for fish caught and

released as well for those harvested.

NERA has developed a sophisticated meta analysis methodology based upon hundreds of individual

studies. This meta analysis model allows us to evaluate the value of fisheries benefits at an individual

facility based upon results from a large number of individual studies.

Figure 5: Calculation of marginal value per pound of increased catch

Marginal Value of Pounds

Marginal Value

Initial Catch Rate Catch Rate

(Pounds of Fish per Trip)
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Other Potential Use Benefits

In addition to fishing, EPA has identified a variety of other use benefits that may be relevant in some

Section 316(b) cases. Some of these categories are captured by the fishing-related measures. Many

of these are in effect subcategories of commercial or recreational fishing—e.g., commercial bait,

commercial and recreational shellfishing, and subsistence fishing. Others, such as food chain support,

are addressed by an analysis of forage species. EPA also has identified various potential use values

that are not addressed by analyses of commercial and recreational fishing. Such benefits include

non-fishing activities (such as bird watching, viewing, or boating). Typically these other benefits

cannot be quantified reliably but they can be evaluated on a qualitative basis, which is important for

completeness. In most cases, they can be shown not to be relevant to the kinds of modest changes

in fish populations generally found in Section 316(b) cases.

Non-Use Benefits

Non-use benefits are benefits that are not associated with any direct use by either individuals or

society. These benefits arise if individuals value the change in an ecological resource without the

prospect of using the resource or enjoying the option to use it in the future. The classic example

of a non-use value is that many individuals may be willing to pay to preserve the Grand Canyon

from being dammed even though they have never visited it and do expect to do so in the future.

Unfortunately, the only way to estimate non-use values is to use stated preference methods that

involve surveying individuals and eliciting their preferences directly, rather than inferring those values

from actual behavior. Such methods are expensive and difficult to apply well.

Recognizing these problems, EPA’s Phase II rules for Section 316(b) cost-benefit analyses provide

criteria for determining whether potential non-use benefits are likely to be significant. The Phase

II rules recommend that studies consider the “magnitude and character of ecological impacts

implied by the results of the impingement and entrainment mortality study and any other relevant

information” (69 FR 41648). They suggest considering whether substantial harm is done to one of

the following:

• a threatened or endangered species;

• the sustainability of populations of important species of fish, shellfish, or wildlife; or

• the maintenance of community structure and function in a facility’s water body or watershed

(69 FR 41648).

Working with biologists, we have used these criteria in developing our detailed assessments of the

relevance of non-use benefits in individual cases.

Cost-Benefit Comparisons and Uncertainty Analysis

The standard criterion in cost-benefit analysis is to choose the alternative that maximizes net benefits

(benefits minus costs). Because benefit and cost streams rarely are constant across time, they must

be put in terms of their present value—discounted—before net benefits are computed. Recognizing

that the status quo, by definition, has zero net benefits (because all benefits and costs are measured

relative to the status quo), alternatives with costs that exceed benefits are rejected based upon the

standard cost-benefit criterion. If there are multiple alternatives with positive net benefits, then the

one with the largest net benefits should be chosen. This requires comparing incremental benefits

and costs of moving to more stringent alternatives. Thus, even if the most stringent alternative has

positive net benefits, it should not be chosen if its incremental costs (relative to a less stringent

alternative) exceed its incremental benefits.
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The analysis should not stop at this point, however, because the quantification of benefits and costs

is rarely complete, and often there is substantial uncertainty about the quantitative estimates. As a

result, it is important to conduct both a qualitative assessment of unquantified factors and to provide

a quantitative assessment of uncertainties.

Assessment of Unquantified Factors

In evaluating the quantitative results, it is useful to step back and to consider whether costs or

benefits that were not quantified are likely to be large enough to reverse tentative conclusions based

on the quantified effects. In some cases, it may be clear that quantifying the effect would reinforce

the tentative conclusion. For example, if net benefits are positive, taking into account an omitted

benefit would increase already positive net benefits. Conversely, if net benefits are negative, then

quantifying an omitted cost would make the alternative that much less attractive. In other cases,

however, it will be necessary to reach some judgment about the likely magnitude of the unquantified

cost or benefit relative to the quantified net benefits.

Uncertainty Analysis

In most cost-benefit analyses there are uncertainties about various elements of the quantitative

results. These uncertainties generally come from several sources, including the biological and

engineering estimates that provide many of the inputs to the analysis as well as from the economic

analysis itself. Such uncertainties are inevitable, as the EPA Guidelines recognize: “[t]he issue for the

analyst is not how to avoid uncertainty, but how to account for it and present useful conclusions to

those making policy decisions” (EPA 2000, p. 27).

At a minimum, it is important to perform sensitivity analyses that vary the values of key parameters

over plausible ranges to see their impacts on results. Such analyses are helpful, but have some

important limitations: (1) the number of sensitivity analyses can easily become unwieldy, especially

if they include varying the values of multiple parameters simultaneously, and (2) it can be hard to

interpret the results when some sensitivity analyses point to one conclusion while others point in a

different one.

Monte Carlo analysis goes the next step, generating not just a range of possible outcomes, but also

a formalized mechanism for estimating the likelihoods of different outcomes. It requires assigning

probabilities to alternative assumptions and parameter values. Each trial of a Monte Carlo analysis

involves using the computer to sample from each of the probability distributions of parameter values,

and then computing the resulting net benefits. Typically, thousands of trials are run, from which

a probability distribution of the outcomes is constructed. Figure 6 presents illustrative results for a

hypothetical analysis in the form of a cumulative density function for a particular control option.

(Similar distributions are generated for alternative control options.) The horizontal axis is net benefits

and the vertical axis gives the probability (based on the Monte Carlo runs) that net benefits will be

less than or equal to the value on the horizontal axis. In this example, the 50th percentile is about

-$80 million; i.e., it is equally likely that the value is above or below that amount. In some of the runs

there were positive net benefits, but they were relatively few in number; in this illustrative example,

there is only about a 4 percent probability that the alternative will yield net benefits greater than

zero. Thus, in this example, not only is the most likely estimate of net benefits negative, there is only

a small chance that net benefits will be positive.
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Concluding Remarks

The Supreme Court’s recent decision in Entergy Corp. et al. v. Riverkeeper, Inc. allows EPA and

state agencies to use cost-benefit analysis in deciding what controls to require for fish protection at

power plants covered by Section 316(b) of the Clean Water Act. EPA and the states had been using

this authority for 30 years before the 2007 Riverkeeper II decision, with comparisons of costs and

benefits one of the criteria for selecting BTA technologies. In light of the methodologies and data

that economists, engineers and biologists have developed to produce sound estimates of costs and

benefits, EPA and the states should feel confident that cost-benefit analysis can continue to clarify

what is at stake in 316(b) decisions and assist in the development of sound decisions. Indeed, in

these difficult economic times, it is particularly important that sound decisions be made and that we

get the “biggest bang for the buck” from dollars spent to improve environmental quality.

1 This paper builds upon Harrison and Haxthausen 2003 as well as on the authors’ experience with numerous costbenefit assessments related to 316(b) permit cases.

2 Two of the authors (Dr. Harrison and Dr. Nichols) were among 33 economists who submitted an amici curiae brief to

the Supreme Court supporting the use of cost-benefit analysis in implementing 316(b) requirements. See Brief of

Amici Curiae 2008.

3 NERA has extensive experience in developing 316(b) cost-benefit assessments, having prepared cost-benefit analyses

for numerous major electricity generating facilities on the Atlantic coast, Hudson River and Great Lakes. We believe

that these cost-benefit analyses represent the bulk of the full 316(b) cost-benefit studies that have been performed.

We have presented the results of these studies to various state and federal regulators. In addition, we have assisted

companies and trade associations in the evaluation of 316(b) regulations proposed by EPA and presented our findings

to senior government officials.

4 These regulations (suspended after Riverkeeper II) implemented Section 316(b) for existing power plants and other

major facilities.

End notes

Figure 6: Illustrative cumulative distribution from a Monte Carlo analysis

Net Benefits (2008 $m)

Probability

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

-$200 -$150 -$100 -$50 $0
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References

Brief of Amici Curiae the AEI Center for Regulatory and Market

Studies and 33 Individual Economists in Support of Petitioners,

Entergy Corp. v. Riverkeeper, Inc. et al., 21 July 2008.

Entergy Corp. v. Riverkeeper, Inc. et al. 556 US (2009).

Riverkeeper, Inc., et al v. United States Environmental Protection

Agency. No. 04-6692-ag (L) (2nd Cir., filed 25 January 2007)

(Riverkeeper II).

US Environmental Protection Agency (EPA). 2000. Guidelines for

Preparing Economic Analyses. EPA-240-R-00-003. September.

Available online: http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/

Guidelines.html#download.

EPA. 2002. Case Study Analysis for the Proposed 316(b) Phase

II Existing Facilities Rule. EPA-821-R-02-002. February. Available

online: http://www.epa.gov/waterscience/316b/phase2/casestudy/

index.html.

EPA. 2004. Regional Analysis Document for the Final 316(b)

Phase II Existing Facilities Rule. EPA-821-R-02-003. February.

Available online: http://www.epa.gov/waterscience/316b/phase2/

casestudy/final.htm.

Harrison, David and Eric Haxthausen, White Paper on the Use

of Benefit-Cost Analysis in Site-Specfic 316(b) Decisions Under

the Clean Water Act. Boston: Massachusetts: NERA Economic

Consulting, May 2003.

National Pollutant Discharge Elimination System—Final

Regulations To Establish Requirements for Cooling Water Intake

Structures at Phase II Existing Facilities; Final Rule. 69 FR 41576-

41693 (9 July 2004).

US Office of Management and Budget (OMB). 2003. Circular A-4.

Regulatory Analysis. 17 September 2003. Available online: http://

www.whitehouse.gov/omb/circulars/a004/a-4.pdf.

The Authors

Dr. David Harrison, Jr. is a Senior Vice President and heads NERA’s

global Environment Group. He has extensive experience in economic

analysis of climate change, air quality, water quality, health and

safety regulation, economic impact assessment, and transportation.

Dr. Harrison has directed benefit-cost studies for numerous facilities

under Section 316(b) of the Clean Water Act—including nuclear

and fossil fuel units on the Atlantic, Hudson River, and the Great

Lakes—and was active in the development and evaluation of EPA’s

316(b) regulations. Before joining NERA, he was an Associate

Professor at Harvard’s Kennedy School of Government and served

as a Senior Staff Economist at the President’s Council of Economic

Advisors, where he had responsibility for energy and environmental

policy issues. Dr. Harrison has a PhD in economics from Harvard

University, a MSc in economics from the London School of

Economics, and a BA in economics from Harvard College.

Dr. Albert L. Nichols is a Vice President at NERA. He directs

projects in environmental economics and policy (including emission

trading, benefit-cost analysis, and climate change), energy policy,

and antitrust and competition policy in high-tech industries. His work

on benefit-cost analysis has encompassed a wide range of types of

regulation, including air, water, hazardous waste, and occupational

health and safety. Before joining NERA he was an Associate Professor

of Public Policy at Harvard’s Kennedy School of Government, where

he also directed the university’s Faculty Project on Regulation. He

also served as Director of EPA’s Economic Analysis Division for two

years. Dr. Nichols holds PhD and Masters degrees in Public Policy

from Harvard University and a BA from Stanford University.

Ms. Meghan McGuinness is a Consultant at NERA. She has

substantial experience in cost-benefit analysis of environmental

policies. She has authored various papers and participated in

academic research projects to develop complex models of the

economic effects of environmental regulations. Before joining

NERA, Ms. McGuinness was a policy analyst in the Clean Air

Markets Division at EPA, where she was extensively involved in

the development and economic analysis of proposed air emissions

regulations, and a researcher at Resources for the Future and the

Massachusetts Institute of Technology. Ms. McGuinness holds a BA

in economics and environmental studies from Middlebury College,

and a SM in technology and policy from the Massachusetts Institute

of Technology.
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About NERA

NERA Economic Consulting (www.nera.com) is a global firm of experts dedicated to applying

economic, finance, and quantitative principles to complex business and legal challenges. For nearly

half a century, NERA’s economists have been creating strategies, studies, reports, expert testimony,

and policy recommendations for government authorities and the world’s leading law firms and

corporations. We bring academic rigor, objectivity, and real world industry experience to bear on

issues arising from competition, regulation, public policy, strategy, finance, and litigation.

NERA’s clients value our ability to apply and communicate state-of-the-art approaches clearly and

convincingly, our commitment to deliver unbiased findings, and our reputation for quality and

independence. Our clients rely on the integrity and skills of our unparalleled team of economists

and other experts backed by the resources and reliability of one of the world’s largest economic

consultancies. With its main office in New York City, NERA serves clients from over 20 offices

across North America, Europe, and Asia Pacific.

Contacts

For further information and questions, please contact:

Dr. David Harrison, Jr.

Senior Vice President

Environment Group Head

+1 617 927 4512

david.harrison@nera.com

Dr. Albert L. Nichols

Vice President

+1 617 927 4514

albert.nichols@nera.com

Ms. Meghan McGuinness

Consultant

+1 617 927 4513

meghan.mcguinness@nera.com