March 29, 2011

EPA Punts on Cooling Water Rule; Despite Facts on the Ground, Decides Technology That Would Prevent Massive Fish Kills no Longer Feasible

Around 6pm ET last night, after most reporters had wrapped up, EPA issued its long-awaited proposed cooling water rule. Under the Clean Water Act, this rule is supposed to protect the billions of fish and other aquatic organisms that are killed each day when they are squashed against intake screens or sucked up into cooling water systems at existing power plants and other industrial facilities. Unfortunately, the rule seems aimed more at protecting industry profits than fish. And in justifying the rule, EPA has taken a page right out of industry’s playbook, purporting to rely on cost-benefit analysis, even though no one can agree on how to attach a dollar value to a fish or an ecosystem.

Rather than requiring plants to use the sensible closed cycle cooling option, which reduces intake flows (and dead fish) by 95-98% by simply recycling the cooling water, EPA’s new rule would allow existing plants to continue to use the antiquated “once-through” cooling method as long as they attach buckets and other gizmos to their intake screens designed to try to catch fish that bounce off the screens and return them to open water. 

As for the organisms that get sucked up through the screens and “entrained” in the cooling water system itself, EPA’s new rule simply punts. Reduction in death by “entrainment” is simply left to a case-by-case permitting process to be administered by the states. This puts an untenable burden on the states, which we've seen clearly lack the resources and expertise to make these determinations.

Particularly troubling is the prominent role that EPA appears to have given to cost-benefit analysis in justifying this toothless rule. You may remember that this rulemaking was in the news two years ago, when EPA’s last effort at drafting a cooling water rule for existing facilities went up to the Supreme Court. This case was closely watched in the environmental community because it presented to the Court the decades-old battle between industry and environmentalists over the use of cost-benefit analysis in environmental rulemaking. (Industry likes cost-benefit analysis and environmentalists hate it because it tends to undercount the benefits of environmental protection, which are hard to put a dollar value on.)  

Even though the Clean Water Act says that EPA has to require facilities to use the “best technology available” for protecting fish and aquatic ecosystems, the Supreme Court largely sided with industry, holding that EPA could, if it wanted to, use cost-benefit analysis in setting these rules. But crucially, the Court left the agency with full discretion to decide whether or not to use cost-benefit analysis. And the Court indicated that it was only endorsing a very rough, qualitative apples-to-oranges approach that doesn’t try to pinpoint the exact proportion of costs to benefits, but instead seeks to ensure that costs are not “grossly disproportionate to” benefits. Indeed, the Court expressed considerable skepticism about a more formal type of cost-benefit analysis. Justice Breyer (concurring) wrote that EPA should “describe environmental benefits in non-monetized terms,” and “avoid lengthy cost-benefit proceedings and futile attempts at comprehensive monetization.” And Justice Scalia (for the majority) suggested that more “rigorous form[s] of cost-benefit analysis” might actually be precluded by the statute. 

It is particularly distressing, then, to see EPA state in the preamble to this new rule that it is choosing to rely on cost-benefit analysis to justify the rule, even though the Supreme Court gave it the option not to. And it is further distressing to see that EPA is jumping through all sorts of hoops to perform exactly kind of “futile attempts at comprehensive monetization” that the Supreme Court warned against—trying to attach a dollar value to all the fish and other aquatic organisms that we don’t actually fish for or eat but that nonetheless form invaluable links in the food chain and the overall web of life in our rivers, lakes, and oceans. 

Closed cycle cooling is clearly the “best” technology for reducing environmental impact (reducing harm by 95-98%), and “available” (EPA previously concluded that it is already in use in 21 % of existing facilities and that if it were applied to 59 of the biggest and most damaging of the existing power plants, 91 percent of those plants would incur costs of less than 1 percent of revenues). But this logic is mysteriously missing from the new rule.  This time EPA concludes that closed cycle cooling is not “available,” but doesn’t offer much in the way of an explanation for why it is contradicting its earlier findings. At one point, the agency observes that closed cycle cooling is 10 times more expensive than the modest modifications to intake screens that it is requiring in this new rule. But that doesn’t tell us very much. Ten times a small amount, after all, is still a small amount.

This leads to the conclusion that the justification for this watered-down rule must come from EPA’s cost-benefit analysis.   But the cost-benefit analysis yields no conclusion either. This is not surprising since, as I’ve argued before, any attempt to monetize the complex and dimly understood ecological values at stake in this rule will ultimately be futile.   After pages and pages describing in excruciating detail the pains EPA has gone to in trying to attach dollar figures to all the dead fish and plankton and the “use and non-use values” of the organisms and ecosystems associated with this rule, EPA concludes (pp. 258-259):

 “Quantifying and monetizing reductions in [impingement and entrainment] mortality losses due to the regulatory options is extremely challenging. . . . EPA believes that some potentially significant benefit categories have not been fully monetized, and thus the national monetized benefits presented below likely underestimate total benefits, challenging the Agency’s ability to base [best technology available] decision making on the relationship of quantified costs and benefits alone.”

Ultimately, the results of the cost-benefit analysis present only a “partial” measure of benefits. Acknowledging that it is comparing a complete estimate of costs to an incomplete estimate of benefits, the agency pegs the (complete) costs of its proposed rule at $384 million a year and the (incomplete) benefits at $18 million a year. Buried in a chart is the fact that requiring closed cycle cooling at the biggest plants would cause even the incomplete accounting of benefits to jump 7-fold up to $121 million, but EPA doesn’t draw attention to that fact. The agency also promises that it will try to beef up its benefits estimate by continuing to work on its “stated preference survey”—a controversial method that essentially uses a public opinion poll to try to divine how much value people attach to various fish species and aquatic ecosystems. This survey will simply produce more fruitless agency wheel-spinning without getting us any closer to a “right” answer.  

The bottom line: EPA’s justifications for this weak and toothless rule are murky at best. It is not clear why closed cycle cooling, which EPA concluded ten years ago was “available” and affordable at least for the five dozen biggest and most damaging power plants, is now suddenly “unavailable.” And it is not clear how EPA can base any conclusion on a cost-benefit analysis that is, by the agency’s own admission, unfinished and inconclusive (EPA doesn't know what the final numbers, and won't share them with the public until it issues the final rule). (Of course, that hasn’t stopped them before. This rule creates an eerie sense of deja vu. Last time EPA issued this rule, it used a cost-benefit analysis—at the urging of OIRA—that was also admittedly grossly incomplete to justify weakening the rule by eliminating the closed cycle cooling requirement.)

But from a broader perspective (looking beyond this particular rule) perhaps the most troubling aspect of EPA’s action is its decision to voluntarily go out of its way to waste valuable time and resources on a highly formalized, monetized cost-benefit analysis when it clearly doesn’t have to. Even if the agency can get high enough results from its “stated preference survey” to produce a quantified benefits estimate for its proposed rule as high as its costs, those estimates will be highly controversial and contestable.   Industry has already filed hundreds of pages of comments with EPA complaining about every aspect of the methodology underlying EPA’s “survey.”   While cost-benefit analysis promises the holy grail of scientific certainty in public policy making, when applied to intangibles like fish and endangered species and ecosystems, it delivers only controversy and fodder for contestation and delay.

Amy Sinden, CPR Member Scholar; Professor of Law, Temple University Beasley School of Law. Bio.

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