All Challenges to Cooling Water Rule Denied by 2nd Circuit

The EPA’s promulgation of multiple rules since 2001 to protect aquatic species that get swept into (entrainment) and against (impingement) industrial cooling water intake structures (CWISs) has met with legal challenges from both environmental groups and industry.

In several cases, the U.S. Court of Appeals for the 2nd Circuit has found merit in the complaints; accordingly, the court has remanded portions of the rules to the Agency for reconsideration and revision. But in the latest judicial action, a 2nd Circuit panel has denied requests to vacate many provisions in an Agency CWIS rule that primarily affects existing facilities (August 15, 2014, Federal Register (FR)). Petitioners also asked the court to set aside a biological opinion the U.S. Fish and Wildlife Service and the National Marine Fisheries Service (Services) issued detailing how the rule impacts species protected under the Endangered Species Act (ESA). The panel denied that petition as well.

The panel’s opinion affirms every challenged portion of regulations issued by the Obama EPA and which the Trump EPA has decided to stand behind, an unexpected position given the high profile of industry petitioners, which included the American Petroleum Institute (API). Generally, the panel found that “both the final rule and the biological opinion are based on reasonable interpretations of the applicable statutes and sufficiently supported by the factual record.”

Impingement and Entrainment

The challenged rule, which itself was written to comply with a court remand, applies to existing power plants and manufacturing facilities as well as new units at existing facilities that use CWISs to withdraw more than 2 million gallons of water per day, of which 25 percent or more is used for cooling. The rule established impingement and entrainment standards and implements several processes to ensure compliance with the ESA. Before the rule was promulgated, the EPA and the Services resolved most of their disagreements over the prospective impact of the rule on listed species; this resulted in the Services stating in its biological opinion that compliance with the rule was not likely to jeopardize the continued existence of listed species or adversely modify critical habitat within the meaning of the ESA.

Complaints and Responses

In its decision, the panel organizes complaints against the EPA’s rule under 13 headings. Selected complaints and panel responses are summarized as follows.

• Environmental petitioners argued that the EPA’s decision to regulate some CWISs on a case-by-case basis violated the Clean Water Act (CWA), which requires a single national best technology available (BTA) requirement.
  The panel answered that CWA Section 316(b) merely directs the Agency to require every CWIS subject to regulation to reflect BTA. It does not compel the EPA to regulate either by one overarching regulation or on a case-by-case basis.
• Environmental petitioners argued that the EPA acted arbitrarily and capriciously when it concluded that closed-cycle cooling is not nationally available as the BTA to control entrainment.
  The panel answered that the EPA identified three factors that together render closed-cycle cooling unavailable on a national scale, including that about 25 percent of facilities have constraints on land availability (e.g., limited physical space, restrictive zoning requirements) that would prevent them from retrofitting to accommodate closed-cycle cooling.
• Environmental petitioners argued that closed-cycle cooling, not modified traveling screens, as specified in the rule, is the BTA for minimizing impingement mortality.
  As with the entrainment standards, the panel responded that the EPA rationally concluded that closed-cycle cooling is not nationally available. Therefore, it was neither arbitrary nor capricious for it to reject closed-cycle cooling as the BTA to reduce impingement mortality nationwide.
• Environmental petitioners argued that the rule failed to adequately define BTA, leaving state directors, who issue National Pollutant Discharge Elimination System (NPDES) permits, with unfettered discretion to establish entrainment requirements at individual facilities.
  The panel answered that the director must consider the required and optional factors set forth in the rule—the factors themselves limit a director’s discretion—and then the director must explain to the EPA in writing why he or she rejected any better-performing technologies.
• Environmental petitioners argued that the EPA exceeded its statutory authority by allowing directors to base their BTA determinations in part on a cost-benefit analysis.
  The panel responded that in Entergy Corp. v. Riverkeeper, Inc. (2009), the Supreme Court held that the EPA may weigh costs against benefits when setting BTA standards under Section 316(b).
• Environmental petitioners argued that there is no rational connection between the facts found by the EPA and its decision to exclude rebuilt, repowered, and replacement units from the definition of a new unit.
  The panel agreed with the EPA’s explanation—that including rebuilt units in the definition would discourage manufacturers from improving their facilities; also, many activities that could be considered rebuilding or repowering would raise the same hurdles that led the EPA to conclude that closed-cycle cooling was not nationally available.
• Environmental petitioners had multiple objections to the biological opinion, including that it violates Section 7 of the ESA by deferring analysis of the rule’s impact on jeopardy to later review by individual directors and by failing to use the best scientific and commercial data available to evaluate thermal impacts of the rule.
  The panel stated that the Services conditioned their no-jeopardy finding on compliance with certain procedures and represented to the court at oral argument that they have a commitment to those procedures. The panel also disagreed that the Services failed to seek out and consider existing scientific data on thermal pollution.
• One industry petitioner contended that the EPA violated the Administrative Procedures Act by failing to provide adequate notice of and an opportunity to comment on the rule’s Service-driven provisions, including provisions relating to the technical assistance process.
  The panel said the EPA fairly apprised interested persons that the subjects and issues of the rulemaking included compliance with the ESA and also fairly apprised them of the Services’ role in achieving that compliance.
• The API argued that the proposed rule did not provide adequate notice of the meaning of new unit and that the EPA’s estimate of compliance costs for manufacturing facilities that install new units improperly relied on limited and outdated data.
  The panel said the API raised this concern in its comments on the proposed rule and that the EPA responded adequately in the final rule. Regarding cost, the panel said the EPA sought to improve accuracy by collecting additional information and adjusting costs for inflation.

The panel’s July 23, 2018, decision (amended September 27, 2018) in Cooling Water Intake Structure Coalition v. EPA is available here.