The U.S. Environmental Protection Agency may have to take into account the costs and benefits of new regulations that require power plants to retrofit water intakes to protect aquatic life. The decision, viewed as a defeat for environmental groups, reverses a 2007 ruling by the 2nd U.S. Circuit Court of Appeals, which precluded cost-benefit testing when determining the most environmentally friendly technology for withdrawing water from rivers and streams to cool turbines.

Key to the Supreme Court's ruling was its interpretation of Section 316(b) of the Clean Water Act that requires the location, design, construction and capacity of cooling water intake structures to reflect the best technology available for minimizing adverse environmental impact.

Writing for the 6-3 majority Justice Antonin Scalia stated, The phrase "best technology available," even with the added specification for minimizing adverse environmental impact, does not unambiguously preclude cost-benefit analysis.

Justice Stephen Breyer, often a swing vote when the Court takes on environmental issues, essentially took a middle position. In his concurring opinion he wrote, I agree with the court that the relevant statutory language authorizes the Environmental Protection Agency to compare costs and benefits. Nonetheless the drafting history and legislative history of related provisions makes clear that those who sponsored the legislation intended the law?s text to be read as restricting, though not forbidding, the use of cost-benefit comparisons. And I would apply that text accordingly.

Justice John Paul Stevens, joined by Justices Ruth Bader Ginsburg and David Souter, dissented arguing that Congress never intended to allow cost-benefit analysis. Stevens wrote, Powerful evidence of Congress' decision not to authorize cost-benefit analysis in the BTA standard lies in the series of standards adopted to regulate the outflow, or effluent, from industrial powerplants. Passed at the same time as the BTA standard at issue here, the effluent limitation standards imposed increasingly strict technology requirements on industry.

It remains to be seen what course the EPA in the Obama administration will take, whether it will forego costbenefit analyses when resulting in less environmental protection. Previous to becoming EPA administrator, Lisa Jackson directed the New Jersey environmental protection agency, a state that joined other states in challenging the EPA regulation that the court approved.

The cases are Entergy v. EPA, 07-588; PSEG Fossil LLC v. Riverkeeper Inc., 07- 589; and Utility Water Act Group v. Riverkeeper Inc., 07-597.