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Congress enacted the Clean Water Act to restore and maintain the chemical, physical and biological integrity of the nation’s waters. The act seeks to reduce the quantity of pollutants discharged to navigable waters by establishing a permitting regime that subjects point source dischargers to technology-based standards and limitations. Designed as a pollution control statute, the act gave scant attention to water withdrawals, largely leaving their regulation to the states. Nevertheless, water withdrawals may impact ecosystem health as seriously as discharges of pollutants. In particular, industrial facilities including electric generating plants withdraw large quantities of water to cool their facilities. These withdrawals may harm fish and other aquatic life. The largest risks to aquatic organisms from water withdrawals are impingement and entrainment. Impingement occurs when the flow of water into a facility’s cooling system traps fish and other large aquatic organisms against cooling water intake screens. Entrainment occurs when smaller aquatic organisms such as plankton, eggs and larvae, are drawn into and pumped back out of the cooling system’s heat exchanger. The 2nd U.S. Circuit Court of Appeals has noted in Riverkeeper Inc. v. EPA ( Riverkeeper I) that “a single power plant might impinge a million adult fish in just a three-week period, or entrain some 3 to 4 billion smaller fish and shellfish in a year, destabilizing wildlife populations in the surrounding ecosystem.” Despite the significant environmental impact that cooling water intake structures may cause, the act regulates these structures as “something of an afterthought.” Congress addressed cooling water intake structures in Section 316(b) of the act, 33 U.S.C. Section 1326(b), titled “Thermal Discharges.” Section 316(b) provides that any standard established pursuant to sections 1311 or 1316 “shall require that the location, design, construction, and capacity of cooling water intake structures reflect the best technology available for minimizing adverse environmental impact.” Pursuant to a consent decree in Riverkeeper v. Whitman, the EPA agreed to issue rules to implement Section 316(b) in three phases: new facilities (Phase I); large, existing power plants (Phase II); and other power plants and industrial facilities (Phase III). To date the EPA has promulgated Phase I regulations, has promulgated but suspended Phase II regulations, and has promulgated Phase III regulations limited to new offshore oil and gas extraction facilities. Phase I and II regulations will be discussed in this article. On Dec. 18, 2001, the EPA issued its Phase I regulations, establishing location, design, construction and capacity standards reflecting the best technology available (BTA) for minimizing adverse environmental impact. The Phase I rule applied to all new facilities that have or are required to have an NPDES permit, withdraw more than 2 million gallons of water per day from waters of the United States and use at least 25 percent of that water for cooling. The Phase I rule for facilities withdrawing 10 million gallons per day or more requires these facilities to use a closed-cycle recirculating cooling water system, limit the velocity of water moving through the intake, take no more than 5 percent of the annual mean flow of any river or stream serving as the source water for the withdrawal and adhere to other restrictions. Alternatively, the Phase I rule allows the facility to employ technologies that will reduce the level of adverse environmental impact to a level comparable to Track I. Under this alternative, the facility must maintain a level of fish and shellfish in the waterbody that is substantially similar to the level that would be achieved under Track I. As the Phase I rule was originally promulgated, a facility could employ restoration measures such as restocking fish to maintain the fish population at the “substantially similar” level. Environmental groups promptly challenged the Track II option of employing restoration measures to meet BTA requirements. On review, the 2nd Circuit held that the restoration option violated Section 316(b) of the act. The court noted that restoration measures do not minimize the environmental impacts of impingement and entrainment. Rather, they correct for adverse impacts after they have occurred. The court explained that Congress intended the design of intake structures to be regulated directly based on the best technology available, not based on an assessment of how a particular discharge may impact water quality or how aquatic life could be restored. Because it viewed the EPA’s restoration regulations to be inconsistent with the clear language of the act, the court remanded the provisions of the rule that allowed compliance with BTA based on restoration measures. The environmental groups also sought to require the EPA to designate dry cooling as the best technology available for minimizing adverse impact. A dry-cooling process would create less injury to aquatic life than the closed-cycle cooling technology that the EPA selected. Nevertheless, cost and energy efficiency, among other considerations, weighed against mandating use of this technology. The court held that cost and energy efficiency were valid factors for the EPA to consider and upheld this provision of the rule. The court likewise upheld the EPA’s authority to grant variances under the criteria specified in the rule. Industry groups unsuccessfully challenged the Phase I rule on multiple grounds. The court rejected the invitation to mandate an approach that would select BTA based on an assessment of the ecosystem effects of a discharge, and upheld the EPA’s focus on the number of organisms killed or injured by the intake structures. The court also upheld the EPA’s authority to require additional technologies during the permitting process to further reduce impingement and entrainment where needed to minimize adverse environmental impact. Likewise, the court upheld the reasonableness of the through-screen velocity limit and the limit on the percent of the flow of the waterbody that the facility may withdraw. Consequently, the Phase I rule survived most challenges. On July 9, 2004, the EPA issued its final Phase II rule, included in 40 C.F.R. Part 125 Subpart J, covering large electric power facilities. To satisfy the Phase II rule, a facility may minimize impingement and entrainment of aquatic organisms by reducing flow commensurate with a closed-cycle recirculating cooling system or reducing maximum through-screen design intake velocity to a specified level. As an alternative, the Phase II rule allows the facility to achieve compliance with the BTA requirement of Section 316(b) through technologies and operational or restoration measures designed to meet the applicable performance standards or restoration requirements. The Phase II rule also provides that a site-specific determination may be used to determine BTA if compliance costs are significantly greater than the costs considered by the EPA in establishing the applicable performance standards, or if the compliance costs would be significantly greater than the benefits of complying with the performance standards. In the case of nuclear power facilities, the EPA must make a site-specific determination that the best technology available would not conflict with the commission’s safety requirement. Various states and environmental groups filed a petition for review challenging the Phase II rule. Petitioners complained that cost considerations had improperly influenced the selection of technologies that would satisfy BTA. On review, the court examined in Riverkeeper Inc. v. EPA ( Riverkeeper II) how costs may be considered in determining BTA. The court concluded that a cost effectiveness analysis examining whether the cost of a given technology could be reasonably borne by the industry is appropriate. In contrast, a cost-benefit analysis that compares the costs and benefits of various ends, and chooses the ends with the best net benefits is impermissible because Section 316(b)’s BTA requirement mandates a technology driven analysis. The court determined that the BTA provision reflects Congress’ decision that the benefits of minimizing adverse impact outweigh costs that can be reasonably borne by the industry. In the Phase II rule, the EPA established performance standards based on a suite of technologies. The court concluded that the record is unclear as to whether the EPA impermissibly employed a cost-benefit or practicability analysis to select these technologies. In addition, the record contained little discussion about the touchstone of a cost-effectiveness analysis: whether costs of closed-cycle cooling could be reasonably borne by the power industry at existing facilities. Consequently, the court remanded the performance standards provisions of the rule. For similar reasons, the court invalidated the provisions of the rule allowing the EPA to issue variances where a facility demonstrates that its compliance costs are significantly greater than the benefits of compliance. The court also criticized the EPA’s use of ranges rather than specific limits in the performance standards for impingement and entrainment. The rule allowed facilities that could achieve the upper end of the performance range to be deemed in compliance if they reached only the lower end. The court noted that “insofar as the EPA establishes performance standards instead of requiring facilities to adopt particular technologies, it must require facilities to choose the technology that permits them to achieve as much reduction of adverse environmental impacts as is technologically possible.” The state and environmental petitioners also challenged the EPA’s decision to allow facilities to utilize restoration methods to avoid adopting cooling water intake structure technologies. As it had decided in Riverkeeper I, the court concluded that the clear language and technology-forcing principle of Section 316(b) required the use of technology to prevent adverse environmental impacts, not to compensate for adverse impacts after they occur. This conclusion was in keeping with the court’s determination that technology rather than water quality or levels of aquatic organisms is the touchstone of the BTA requirement. The court thus invalidated the restoration provisions. Industry petitioners also challenged the Phase II rule. Initially, they contended that Section 316(b) applies only to new facilities as opposed to existing facilities. The court disagreed, noting that the cross-references in Section 316(b) to other provisions of the act that govern both new and existing facilities demonstrate that Congress was not so narrowly focused. One industry member argued that the EPA had arbitrarily defined “adverse environmental impact” to include any loss or harm to aquatic organisms due to impingement mortality and entrainment rather than only more severe population-level effects. Citing to its opinion in Riverkeeper I, the court noted that removing large numbers of aquatic organisms from waterbodies is itself an adverse impact and that the EPA’s focus on the number of organisms killed or injured by cooling water intake structures is eminently reasonable. The industry petitioners also challenged the EPA’s assumption that all entrained organisms are killed. The court found that because the EPA had reviewed a substantial body of complex scientific data and acknowledged that the evidence is inconclusive, it was within its authority to adopt a conservative approach. Finally, petitioners challenged the rule on account of its failure to account for purportedly disproportionate impacts on nuclear power plants. The Riverkeeper II court concluded that the EPA had properly addressed the utilities’ concerns. The Phase II rule requires the EPA, in consultation with the Nuclear Regulatory Commission, to examine whether compliance would result in a conflict with any safety requirement established by the commission. If so, the EPA must make a site-specific determination of BTA that would not result in a conflict. As a result of Riverkeeper II, the EPA has suspended the Phase II rule. Petitions for certiorari are pending to review issues raised in Riverkeeper II. In the interim, the EPA has asserted that permitting authorities should develop BTA controls for existing facility cooling water intake structures by exercising their best professional judgment in accordance with 40 C.F.R. Section 125.90 (b). Whether permit writers are now constrained not to weigh costs and benefits or to consider restoration measures when determining BTA for Phase II existing power generating facilities and for other existing facilities regulated under Phase III remains to be seen. Likewise, whether the 2nd Circuit’s rejection of the cost-benefit approach will extend to portions of the act such as effluent limitations is unclear. Until a revised Phase II rule is promulgated and survives regulatory challenge, or the Supreme Court grants certiorari and its judgment causes the rule to be reinstated, uncertainty will remain regarding how technology-based standards will be applied. Kenneth J. Warren is a partner at Wolf Block Schorr & Solis-Cohen’s Philadelphia office and serves as chairman of its environmental practice group. He is a past-chairman of the American Bar Association Section of Environment, Energy and Resources.

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