Dec. 2 (Bloomberg) -- U.S. Supreme Court justices voiced support for letting federal regulators balance costs against benefits in deciding whether to impose new requirements on power plants to protect aquatic wildlife.

Hearing arguments today in Washington, several justices questioned a lower court decision that said the Environmental Protection Agency can’t conduct a cost-benefit analysis in regulating how power plants use water from rivers and lakes to cool themselves. Power companies and the Bush administration are seeking to overturn that ruling, which is supported by environmentalists and some states.

The fight turns on a Clean Water Act provision that requires the “best technology available for minimizing adverse environmental impact.” Although that provision doesn’t mention costs, Justice Stephen Breyer today tried to find a way that would let the EPA consider whether expensive new technologies were worth the benefits.

“We’d spend trillions to make America secure” to avoid 50,000 deaths, “but we won’t spend trillions for a road accident,” said Breyer, often a swing vote on regulatory cases. He said the EPA should be allowed to consider costs and benefits in a “commonsense” way.

The Bush administration and power companies including Public Service Enterprise Group Inc. and Entergy Corp. say the EPA has taken costs and benefits into account for more than 30 years. They contend the ruling by the 2nd U.S. Circuit Court of Appeals would impose irrational requirements on businesses.

“The best technology available for winterizing a $400 lawnmower would not be a $500 fluid,” Bush administration lawyer Daryl Joseffer argued.

Environmental Groups

The power companies and administration are battling environmental groups, led by Riverkeeper Inc., as well as six northeastern states.

The environmental groups’ lawyer, Georgetown University law professor Richard Lazarus, argued that other provisions in the Clean Water Act protect against the imposition of unreasonable requirements on plants.

“You are never going to reach the insane result,” Lazarus said. “It’s never going to happen.”

Lazarus said the EPA could consider costs as part of its assessment of whether a technology was “available,” saying the agency need not adopt a standard that an industry couldn’t bear.

Justices Antonin Scalia and Samuel Alito questioned whether that interpretation could be squared with the language of the Clean Water Act.

“I just don’t see how you get cost into the concept of availability,” Alito said, adding, “it’s not the plain meaning of the word.”

‘Smoke and Mirrors’

Justice David Souter later said Lazarus was seeking to let the EPA consider costs in a “smoke and mirrors way.”

At the same time, Souter said he wasn’t sure how the EPA would be able to apply a cost-benefit analysis to individual power plants.

“Are a thousand plankton worth a million dollars? I don’t know,” Souter said.

The case centers on a 2004 EPA rule that applies to large, existing power plants. The agency looked at various approaches, including mesh screens and relocation of water intakes, and then set up standards for facilities to meet.

The EPA rejected the “closed cycle” cooling approach it previously had adopted for new plants. The EPA pointed to the high cost of converting existing plants to closed-cycle cooling, which involves reusing withdrawn water, and said other technologies would achieve close to the same results.

More Rigorous

Justice Anthony Kennedy suggested he wasn’t satisfied with the EPA’s approach. He said the “best technology available” standard for cooling structures appeared to be more rigorous than other standards elsewhere in the Clean Water Act.

“What is it in the regulations that reflects the agency’s concurrence with that?” Kennedy asked Joseffer.

The government lawyer answered that the EPA didn’t agree with the premise of the question. Joseffer said Kennedy’s reasoning would mean greater protections for fish endangered by cooling structures than for people threatened by polluted waters.

“There is no reason Congress would want greater protection for fish through intake structures than for people through the discharge of pollutants,” Joseffer said.

The justices will rule by July. The cases are Entergy v. Riverkeeper, 07-588, PSEG Fossil v. Riverkeeper, 07-589, and Utility Water Act Group v. Riverkeeper, 07-597.

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: December 2, 2008 13:45 EST