Opinion ID: 796659
Heading Depth: 4
Heading Rank: 2

Heading: Cost-Benefit Compliance Alternative26

Text: 90 If a facility requests that it be permitted to demonstrate compliance with the Phase II Rule through the site-specific cost-benefit provision of 40 C.F.R. § 125.94(a)(5)(ii), the facility must submit with its application a Comprehensive Cost Evaluation Study, Benefits Valuation Study, and Site Specific Technology Plan. 40 C.F.R. § 125.95(b)(6). As part of the Benefits Valuation Study, the facility must indicate the monetized value of commercial, recreational, and ecological benefits of compliance with the generally applicable national performance standards as well as a qualitative assessment of any so-called non-use benefits that cannot be monetized. 40 C.F.R. § 125.95(b)(6)(ii)(A), (E). Ultimately, the facility must demonstrate that its compliance costs are significantly greater than the benefits of compliance. The petitioners contend that this alternative impermissibly focuses on cost-benefit considerations, contrary to Congress's directive, and is analogous to the kind of water-quality-based standard we found to be inconsistent with the statute in Riverkeeper I. 358 F.3d at 190. For both reasons, we are persuaded that the EPA exceeded its authority in permitting site-specific cost-benefit variances. In light of this conclusion, we do not reach the industry petitioners' claim that the provision impermissibly requires consideration of qualitative non-use benefits in the cost-benefit analysis. 91 As we discussed previously in analyzing the EPA's determination of BTA, cost-benefit analysis is not consistent with the requirement of § 316(b) that cooling water intake structures reflect the best technology available for minimizing adverse environmental impact. Indeed, the statutory language requires that the EPA's selection of BTA be driven by technology, not cost. The Agency is therefore precluded from undertaking such cost-benefit analysis because the BTA standard represents Congress's conclusion that the costs imposed on industry in adopting the best cooling water intake structure technology available (i.e., the best-performing technology that can be reasonably borne by the industry) are worth the benefits in reducing adverse environmental impacts. Cf. Am. Textile Mfrs. Inst., 452 U.S. at 509, 101 S.Ct. 2478 (noting that where Congress has defined the basic relationship between costs and benefits, a regulatory standard that strikes a different balance is inconsistent with the statute). Just as the Agency cannot determine BTA on the basis of cost-benefit analysis, it cannot authorize site-specific determinations of BTA based on cost-benefit analysis. 92 The cost-benefit variance also impermissibly authorizes the EPA to consider the degraded quality of waterways in selecting a site-specific BTA. We stated in Riverkeeper I that in enacting the CWA, Congress rejected regulation by reference to water quality standards. 358 F.3d at 189-90. Before 1972, Congress regulated point sources based on their effect on the surrounding water and allowed sources to discharge pollutants provided the discharge did not cause water quality to dip below an acceptable level. Id. at 189. Congress changed its approach in 1972, in part because a plaintiff attempting to prove a violation of the law faced a nearly impossible burden of showing that a particular polluter had caused the water quality to dip below the regulatory standards. Id. at 189-90. The Act now regulates discharges from point sources rather than water quality. We thus concluded in Riverkeeper I that water-quality standards cannot be considered under section 316(b). Id. at 190. Of course, water quality in the context of the Act is generally understood to refer to pollutant concentration. As we noted in Riverkeeper I, however, for purposes of section 316(b), which regulates water intake rather than the discharge of pollutants, water quality is measured by wildlife levels. Id. at 189. This analysis in Riverkeeper I is, thus, equally applicable here. 27 93 The challenged provision of the Phase II Rule apparently would permit a facility to argue that, based on water quality (i.e., the level of aquatic wildlife in a particular body of water), the cost of complying with the national performance standards is not justified. The Agency explained in the preamble to the Rule that in a waterbody that is already degraded, very few aquatic organisms may be subject to impingement or entrainment, and the costs of retrofitting an existing cooling water intake structure may be significantly greater than the benefits of doing so. 69 Fed.Reg. at 41,604. This kind of water-quality-based regulation is not authorized by the CWA because it would exempt facilities from meeting the mandated performance standards simply because wildlife levels in the waterbody were already low, and as we held in Riverkeeper I, the CWA does not permit the EPA to consider water quality in making BTA determinations. Finally, we note that to the extent that facilities on highly degraded waterbodies with relatively low wildlife levels face high compliance costs to achieve the national performance standards, those facilities may qualify for the cost-cost variance if such variance is retained on remand. 94 Because the EPA exceeded its authority under section 316(b) by permitting (1) cost-benefit analysis and (2) assessment of the quality of the receiving water (i.e., the receiving water's wildlife levels) in determining whether a variance is warranted, we do not need to defer to the Agency's construction of the statute. We therefore remand this aspect of the Rule.