The Supreme Court and Best Environmental Practices

By Michael C. Dorf

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The Future of Best-Practice Standards

In no small part, the Court’s division in Entergy Corp. manifests differences in ideological preferences among the Justices. The conservatives in the majority are skeptical of the value of environmental regulation and thus eager to uphold a Bush-era EPA regulation that the power industry favors, while the liberals in dissent want stricter enforcement of the environmental laws.

Reading Entergy Corp. and studying the history of lax regulatory enforcement under the last administration, environmental groups and others who seek tighter regulation of industry may thus be tempted to eschew best-practice standards, and lobby Congress to pass hard-edged rules. Yet that would be a mistake.

To understand why, we need to distinguish among design standards, performance standards, and best-practice standards. A design standard is simply a requirement that a regulated actor use a specific technology. A requirement that coal-burning power plants have smokestacks at least 100 feet high is an example.

Design standards have the virtue of clarity but the vice of rigidity. They tend to lock in the limitations of the technology available when they are adopted. Accordingly, legislators and regulators sometimes adopt performance standards, which require that a regulated actor achieve some specific objective, but leave the choice of means to the regulated actors. A requirement that drinking water (supplied by water companies or municipalities) contain no more than fifteen parts per billion of lead is an example of a performance standard. It does not require that the water supplier use any particular water purification technique, and it thereby encourages water suppliers to develop cheaper methods of complying.

Still, conventional performance standards share an important defect with design standards: Both are static. In setting the level of acceptable pollution or other harm, the regulator uses an existing baseline. Given existing technology, it may not be feasible to reduce the lead content of drinking water to below fifteen parts per billion. Future technology could perhaps reduce lead levels substantially without substantially greater cost, but once the EPA sets the performance standard at fifteen, regulated actors do not have an incentive to reduce lead content further. This is especially true where the regulated actors are not utilities or municipalities subject to local political pressure but multi-national corporations.

Accordingly, in recent years government has often turned to best-practice standards. Section 316(b) of the Clean Water Act is an example. It does not set any particular target but instead tells regulated actors that they must adopt the best methods available. Such best-practice standards create incentives for regulated actors to compete on regulatory compliance. A power company that develops and implements some new technology that achieves better performance along the relevant dimension (here, fewer fish and other aquatic animals killed) can thus force its competitors to play catch-up. And independent inventors who develop better technology have an automatic market for their products—because failure to adopt this new, best available technology constitutes violation of the best-practice standard.

Best-practice standards thus avoid the lock-in drawbacks of design standards and fixed performance standards. Pro-regulation liberals should therefore favor them, right?

In fact, some do, but many do not, precisely because they worry that an administration with ties to industry will take a relaxed view of what constitutes the best available technology. As the EPA action at issue in Entergy Corp. reveals, that is no mere hypothetical problem.

Yet neither is it a reason to throw out the baby with the cooling water. For one thing, an administration that takes its regulatory obligations seriously (as the Obama administration appears to) can achieve much more with best-practice standards than with fixed design standards or fixed performance standards that Congress revisits only infrequently. A vigilant administration can pay close attention to developments in the field and continually update the specific obligations entailed by a best-practice standard (giving regulated actors a reasonable period to comply, of course).

But if the worry is that pro-regulation administrations will not always be in power, then the best solution would appear to be to layer best-practice standards on top of performance standards. Congress can both clearly instruct the agency to mandate at least a particular level of performance, and make clear that this performance standard is a floor by also mandating that the agency apply a best-practice standard if the best available technology can do better than the Congressionally-set floor. That way, even if the courts allow a regulation-hostile administration to water down a best-practice standard, there will still be a hard-edged performance standard providing a backstop. Nothing in Entergy Corp. forbids this approach.

—Michael C. Dorf is the Robert S. Stevens Professor of Law at Cornell University. He is the author of No Litmus Test: Law Versus Politics in the Twenty-First Century and he blogs at michaeldorf.org. This article originally appeared at FindLaw.com as “Why the Supreme Court Decision Upholding Cost-Benefit Analysis Under the Clean Water Act Should Not be Used to Discredit Best-Practice Standards” and is reprinted with permission.