California's Water Efficiency Standards: Ninth Circuit Orders Further Review

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SandBar 9:1, April, 2010 Recommended citation: Proctor, Jonathan, California's Water Efficiency Standards: Ninth Circuit Orders Further Review , 8:4 SandBar 10 (2010). California's Water Efficiency Standards Ninth Circuit Orders Further Review Jonathan Proctor, 3L, University of Mississippi School of Law The U.S. Court of Appeals for the Ninth Circuit recently ruled on California’s efforts to institute water efficiency standards for residential clothes washers.1 The court reversed the U.S. Department of Energy’s (DOE) denial of the California Energy Commission’s (CEC) waiver request to allow the state to institute the standards. Finding the DOE’s denial arbitrary and capricious, the court ordered a more thorough examination of CEC’s waiver application. Background In an effort to alleviate the state’s severe water crisis, in 2002 the California Legislature ordered the CEC to establish water efficiency standards for residential clothes washers. Accounting for a reported 22% of an average household’s water usage, washing machines are prime candidates for increased water efficiency regulation.2 The proposed standards required machines to meet a certain “water factor” (WF) ratio calculated by dividing a washer’s gallons of water used per load by its water capacity.3 For example, a machine with five cubic feet of capacity that uses 50 gallons of water per load would have a WF of 5.0. The CEC proposed a two-tiered system of implementation: (1) requiring all washing machines sold in California to have a 8.5 WF ratio by January 1, 2007, and (2) requiring a 6.0 WF ratio by January 1, 2010.4 According to the CEC, its proposed washing machine regulations would “result in annual water savings equal to the City of San Diego’s current water usage.”5 However, the federal Energy Policy and Conservation Act (ECPA) expressly preempts states from regulating “energy efficiency, energy use, or water use of any product covered by federal energy efficiency standards.”6 As such, the CEC requested a waiver from the DOE that would allow California to regulate water efficiency standards for residential washing machines. DOE denied the waiver request, citing three reasons: (1) the proposed effective date fell short of the three-year minimum waiting period required after a waiver is granted, (2) CEC did not provide enough data to support its claim of unusual and compelling water interests, and (3) the “proposed regulation would make a class of washers unavailable in California.”7 The CEC subsequently requested that the Ninth Circuit review the DOE’s denial. After determining that it had the proper jurisdictional authority to hear the CEC’s petition for review, the court considered whether the DOE’s reasons for denying the waiver were arbitrary and capricious. If so, the denial would be struck down. Three-Year Waiting Period The ECPA requires that state regulations take effect no less than three years after the DOE grants a waiver for such standards.8 The CEC’s waiver request proposed an implementation date of January 1, 2007 for Tier One and January 1, 2010 for Tier Two.9 The DOE ruled on the waiver request on December 28, 2006; clearly the first phase of implementation would not meet the three-year minimum waiting period. However, the court determined that rather than denying the proposal as a whole, the DOE could have either rejected only the first phase of implementation or accepted the proposal with instructions to extend the effective date of one or both phases. Essentially ignoring the DOE’s claim that the petition offered no data regarding the necessity of an effective date that did not meet the statutory three-year requirement, the court focused instead on “the DOE’s wholesale rejection of the CEC’s analysis on the basis that the proposed waiver could not be implemented according to its proposed timeline.”10 Ultimately, the court found such an out-of-hand dismissal to be arbitrary and capricious given the aforementioned alternatives. Unusual and Compelling Interests The court next turned to the DOE’s second stated reason for denying the waiver petition: that the CEC did not establish California’s unusual and compelling interests requiring such water efficiency standards. The ECPA demands that a requesting state prove that its interests “are substantially different in nature or magnitude than those prevailing in the United States generally” and that the costs and benefits of such regulation are “preferable or necessary” when measured against the costs and benefits of alternative approaches.11 Though the DOE did agree that California’s chronic water crisis render its water interests “substantially different in nature or magnitude” from the rest of the country, it disagreed that the proposed standards were “preferable or necessary when measured against alternative approaches.”12 Primarily, DOE contended that CEC had failed to meet this requirement by failing to provide underlying data and analysis to support its petition. DOE’s claims that the CEC failed to provide adequate data supporting its proposals were unfounded, reasoned the court, based on a study provided by the CEC. The study, conducted by California Pacific Gas & Electric, not only supported the CEC’s proposals, but also included the type of cost analysis that the DOE deemed absent in the CEC’s petition.13 Without determining whether data provided by the CEC was sufficient to meet its burden of proving that its proposed standards were “preferable or necessary when measured against alternative approaches,” the court found DOE’s failure to consider the available evidence to be to be arbitrary and capricious. Unavailability of Top-Loading Washers Essentially, the DOE’s third reason for denying the CEC’s waiver petition (that such standards would make a class of washing machines unavailable in California) was based on the fact that “no top-loading residential washer[s] in the current market . . . would comply with the [proposed] 6.0 WF level.”14 The DOE’s reliance on products currently available, however, did not take into account the possibility that more efficient washing machines may enter the market in time for the proposed standards. The court found the DOE’s failure to consider such probable improvements to be “a clear error of judgment,” once again striking down the arbitrary and capricious denial.15 Conclusion Though not an ultimate victory for the CEC, the court’s ruling does require a more thorough examination of its proposed water efficiency standards for residential washing machines. Whether the CEC’s proposal will withstand DOE scrutiny under the ECPA is unknown, but this ruling does indicate support of measures to alleviate California’s water crisis. Endnotes 1. Cal. Energy Comm’n v. Dep’t of Energy, 2009 U.S. App. LEXIS 23715 (9th Cir. Oct. 28, 2009). 2. Id. at 4. 3. Id. 4. Id. at 17. 5. Id. at 5. 6. Id. 7. Id. at 6-7. 8. 42 U.S.C. § 6297(d)(5)(A). 9. California Energy Commission, 2009 U.S. App. LEXIS 23715, at 17. 10. Id. at 22-23. 11. Id. at 23, citing* 42 U.S.C. § 6297(d)(1)(C)(i)-(ii). 12. Id. at 24, citing* 71 Fed. Reg. 78, 163 (Dec. 28, 2006). 13. Id. at 25. 14. Id. at 27, citing 71 Fed. Reg. 78, 167 (Dec. 28, 2006). 15. Id. at 29, citing* Envtl. Def. Ctr. v. EPA, 344 F.3d 832, 858 n.36 (9th Cir. 2003).
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SandBar 9:1, April, 2010
Recommended citation: Proctor, Jonathan, California's Water Efficiency Standards: Ninth Circuit Orders Further Review , 8:4 SandBar 10 (2010).

California's Water Efficiency Standards

Ninth Circuit Orders Further Review

Jonathan Proctor, 3L, University of Mississippi School of Law

The U.S. Court of Appeals for the Ninth Circuit recently ruled on California’s efforts to institute water efficiency standards for residential clothes washers.1 The court reversed the U.S. Department of Energy’s (DOE) denial of the California Energy Commission’s (CEC) waiver request to allow the state to institute the standards. Finding the DOE’s denial arbitrary and capricious, the court ordered a more thorough examination of CEC’s waiver application.

Background
In an effort to alleviate the state’s severe water crisis, in 2002 the California Legislature ordered the CEC to establish water efficiency standards for residential clothes washers. Accounting for a reported 22% of an average household’s water usage, washing machines are prime candidates for increased water efficiency regulation.2 The proposed standards required machines to meet a certain “water factor” (WF) ratio calculated by dividing a washer’s gallons of water used per load by its water capacity.3 For example, a machine with five cubic feet of capacity that uses 50 gallons of water per load would have a WF of 5.0. The CEC proposed a two-tiered system of implementation: (1) requiring all washing machines sold in California to have a 8.5 WF ratio by January 1, 2007, and (2) requiring a 6.0 WF ratio by January 1, 2010.4 According to the CEC, its proposed washing machine regulations would “result in annual water savings equal to the City of San Diego’s current water usage.”5
However, the federal Energy Policy and Conservation Act (ECPA) expressly preempts states from regulating “energy efficiency, energy use, or water use of any product covered by federal energy efficiency standards.”6 As such, the CEC requested a waiver from the DOE that would allow California to regulate water efficiency standards for residential washing machines.
DOE denied the waiver request, citing three reasons: (1) the proposed effective date fell short of the three-year minimum waiting period required after a waiver is granted, (2) CEC did not provide enough data to support its claim of unusual and compelling water interests, and (3) the “proposed regulation would make a class of washers unavailable in California.”7 The CEC subsequently requested that the Ninth Circuit review the DOE’s denial. After determining that it had the proper jurisdictional authority to hear the CEC’s petition for review, the court considered whether the DOE’s reasons for denying the waiver were arbitrary and capricious. If so, the denial would be struck down.

Three-Year Waiting Period
The ECPA requires that state regulations take effect no less than three years after the DOE grants a waiver for such standards.8 The CEC’s waiver request proposed an implementation date of January 1, 2007 for Tier One and January 1, 2010 for Tier Two.9 The DOE ruled on the waiver request on December 28, 2006; clearly the first phase of implementation would not meet the three-year minimum waiting period.
However, the court determined that rather than denying the proposal as a whole, the DOE could have either rejected only the first phase of implementation or accepted the proposal with instructions to extend the effective date of one or both phases. Essentially ignoring the DOE’s claim that the petition offered no data regarding the necessity of an effective date that did not meet the statutory three-year requirement, the court focused instead on “the DOE’s wholesale rejection of the CEC’s analysis on the basis that the proposed waiver could not be implemented according to its proposed timeline.”10 Ultimately, the court found such an out-of-hand dismissal to be arbitrary and capricious given the aforementioned alternatives.

Unusual and Compelling Interests
The court next turned to the DOE’s second stated reason for denying the waiver petition: that the CEC did not establish California’s unusual and compelling interests requiring such water efficiency standards. The ECPA demands that a requesting state prove that its interests “are substantially different in nature or magnitude than those prevailing in the United States generally” and that the costs and benefits of such regulation are “preferable or necessary” when measured against the costs and benefits of alternative approaches.11
Though the DOE did agree that California’s chronic water crisis render its water interests “substantially different in nature or magnitude” from the rest of the country, it disagreed that the proposed standards were “preferable or necessary when measured against alternative approaches.”12 Primarily, DOE contended that CEC had failed to meet this requirement by failing to provide underlying data and analysis to support its petition.
DOE’s claims that the CEC failed to provide adequate data supporting its proposals were unfounded, reasoned the court, based on a study provided by the CEC. The study, conducted by California Pacific Gas & Electric, not only supported the CEC’s proposals, but also included the type of cost analysis that the DOE deemed absent in the CEC’s petition.13 Without determining whether data provided by the CEC was sufficient to meet its burden of proving that its proposed standards were “preferable or necessary when measured against alternative approaches,” the court found DOE’s failure to consider the available evidence to be to be arbitrary and capricious.

Unavailability of Top-Loading Washers
Essentially, the DOE’s third reason for denying the CEC’s waiver petition (that such standards would make a class of washing machines unavailable in California) was based on the fact that “no top-loading residential washer[s] in the current market . . . would comply with the [proposed] 6.0 WF level.”14 The DOE’s reliance on products currently available, however, did not take into account the possibility that more efficient washing machines may enter the market in time for the proposed standards. The court found the DOE’s failure to consider such probable improvements to be “a clear error of judgment,” once again striking down the arbitrary and capricious denial.15

Conclusion
Though not an ultimate victory for the CEC, the court’s ruling does require a more thorough examination of its proposed water efficiency standards for residential washing machines. Whether the CEC’s proposal will withstand DOE scrutiny under the ECPA is unknown, but this ruling does indicate support of measures to alleviate California’s water crisis.

Endnotes
1.   Cal. Energy Comm’n v. Dep’t of Energy, 2009 U.S. App. LEXIS 23715 (9th Cir. Oct. 28, 2009).
2.   Id. at *4.
3.   Id.
4.   Id. at *17.
5.   Id. at *5.
6.   Id.
7.   Id. at *6-*7.
8.   42 U.S.C. § 6297(d)(5)(A).
9. California Energy Commission, 2009 U.S. App. LEXIS 23715, at *17.
10. Id. at *22-*23.
11. Id. at *23, citing 42 U.S.C. § 6297(d)(1)(C)(i)-(ii).
12. Id. at *24, citing 71 Fed. Reg. 78, 163 (Dec. 28, 2006).
13. Id. at *25.
14. Id. at *27, citing 71 Fed. Reg. 78, 167 (Dec. 28, 2006).
15. Id. at *29, citing Envtl. Def. Ctr. v. EPA, 344 F.3d 832, 858 n.36 (9th Cir. 2003).