UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

CALIFORNIA ENERGY COMMISSION,

Petitioner,

V.

UNITED STATES DEPARTMENT OF

ENERGY, and SAMUEL W. BODMAN,

Secretary of Energy,

Respondents

No.

PETITION FOR REVIEW

The California Energy Commission ("Commission") hereby petitions the

court for review of the Denial by the United States Department of Energy

("Department") of the Commission's Petition for Exemption from Federal

Preemption of California's Water Conservation Standards for Residential Clothes

Washers. The Denial was issued on December 28, 2006 (71 Fed. Reg. 78,157

(Dec. 28, 2006). The Commission's Request for Reconsideration of the Denial

was denied by operation of law on February 28, 2007. The Denial, a Civil Appeals

Docketing Statement, and a Proof of Service (listing all parties in the Department's

proceeding) are attached.

April 20, 2007 Respectfully submitted,

Wili4am M. Chamberlain, Chief Counsel, SBN 050264

Jonathan Blees, Assistant Chief Counsel, SBN 070191

William Staack, Senior Staff Counsel, SBN 099564

Michael Doughton, Senior Staff Counsel, SBN 111084

Attorneys for Petitioner

CALIFORNIA ENERGY COMMISSION

15 16 Ninth Street, Mail Station 14

Sacramento, California 95814-5512

(916) 654-3953

 EE-RM-PET-100 COMMENT 94
A-il (iev. 7/00) Page 1 of2

USCA DOCKET # (IF KNOWN)

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

CIVIL APPEALS DOCKETING STATEMENT

PTPASF. ATTACH ADDITIONAL PAGES IF NECESSARY

TITLE IN FULL: DISTRICT: JUDGE:

CALIFORNIA ENERGY COMMISSION,

Petitioner, V. UNITED STATES

DISTRICTCOURTNUMBER:

DEPARTMENT OF ENERGY, and DATENOTICE OF APPEAL

SM{UEL W. BODMAN, FILED: iS THIS ACROSS-APPEAL? YES

Secretary of Energy, Respondents

IF TI-IIS MATTER I-lAS BEEN BEFORE THIS COURT PREVIOUSLY,

PLEASE PROV IDE THE DOCKET NUMBER AND CITATION (IF ANY):

BRIEF DESCRIPTION OF NATURE OF ACTION AND RESULT BELOW:

Review of agency action. Federal law preempts most state appliance efficiency standards,

but states may petition Respondent U.S. Department of Energy ("DOE") for a waiver from

preemption. Petitioner California Energy Commission ("Commission") adopted waterefficiency standards for residential clothes washers and sought a waiver from DOE. DOE

denied the waiver. The Commission seeks review of the denial.

PRINCIPAL ISSUES PROPOSED TO BE RAISED ON APPEAL:

DOE's denial of the Commission's waiver (a) violated the agency's own regulations,

(b) violated the applicable statute, (c) was arbitrary and capricious, and (d) was not

based on substantial evidence in the agency's record.

PLEASE IDENTIFY ANY OTHER LEGAL PROCEEDING THAT MAY HAVE A BEARING ON THIS CASE (INCLUDE

PENDING DISTRICT COURT POSTJUDGMENT MOT1QNS):

None at this time.

DOES THIS APPEAL INVOLVE ANY OF THE FOLLOWING:

.iJ Possibility of settlement

Likelihood that intervening precedent will control outcome of appeal

Likelihood of a motion to expedite or to stay the appeal, or other procedural matters (Specify)

Any other information relevant to the inclusion of this case in the Mediation Program

Possibility parties would stipulate to binding award by Appellate Commissioner in lieu of submission to judges

LOWER COURT INFORMATION

 EE-RM-PET-100 COMMENT 94
Page2of 2

JURISDICTION DISTRICT COURT DISPOSITiON

FEDERAL APPELLATE TYPE OF JUDGMENT/ORDER APPEALED RELIEF

FEDERAL FINAL DECiSION OF U DEFAULT JUDGMENT DAMAGES:

QUESTION DISTRICT COURT

LI

SOUGHT S_____________

DISMISSAL/JURISDICTION AWARDED S _____________

U DIVERSITY El INTERLOCUTORY U DISMISSAL/MERITS El INJUNCTIONS:

DECISION APPEALABLE

AS OF RIGI-IT SUMMARY JUDGMENT PRELIMINARY

OTI-IER

(SPECIFY): U

U JUDGMENT/COURT DECISION U PERMANENT

42 U S C INTERLOCUTORY

Section BY U JUDGMENT/JURY VERDICT GRANTED

6306 (b)(1)

DISTRICT JUDGE

(SPECIFY) L_J DECLARATORY JUDGMENT LI DENIED

El JUDGMENTASAMATTEROFLAW

Section 502

OTI-IER U ATTORNEY FEES:

(SPECIFY):

U OTHER(SPECIFY): SOUGHTS ______________

Review of agency

AWARDED $ ___________

action. U PENDING

U COSTS:$ _____________

CERTIFICATION OF COUNSEL

I CERTIFY THAT:

I. COPIES OF AGENCY ACTIONAPPEALED FROM ARE ATTACHED.

2. A CURRENT SERVICE LIST OR REPRESENTATION STATEMENT WITI-I TELEPI-IONE AND FAX NUMBERS IS ATTACHED (SEE 9T1-I

CIR. RULE 3-2).

3. A COPY OF THIS CiVIL APPEALS DOCKETING STATEMENT WAS SERVED IN COMPLIANCE WITH FRAP 25.

4. I UNDERSTAND TI-IAT FAILURE TO COMPLY WITH Tl-IESE FILING REQUIREMENTS MAY RESULT IN SANCTIONS,

INCLUDING DISMISSAL OF THIPEA

'

J

jfEiL_/ April 18, 2007

Signature Date

COUNSEL WHO COMPLETED THIS FORM

NAME: Jonathan Blees

FIRM: California Energy Commission

ADDRESS:

1516 Ninth Street, Mail Station 14, Sacramento, CaLifornia 95814-5512

E-MAIL: jblees@energy.state.ca.us

TELEPHONE: (916) 654-3953

FAX: (916) 654-3843

*THIS DOCUMENT SHOULD BE FILED IN THE DISTRICT COURT WITH THE NOTICE OF APPEAL*

*IF FILED LATE, IT SHOULD BE FILED DIRECTLY WITH THE U.S. COURT OF APFEALS*

 EE-RM-PET-100 COMMENT 94
Case Name: CALIFORNIA ENERGY COMMISSION, Petitioner, v. UNITED

STATES DEPARTMENT OF ENERGY, and SAMUEL W. BODMAN,

Secretary of Energy, Respondents

Case No.:

Court: United States Court of Appeals for the Ninth Circuit

PROOF OF SERVICE

I am a citizen of the United States, over the age of 18 years, and not a party to or

interested in the within entitled cause. My business address is 1516 Ninth Street,

Sacramento, California 95814. On April 20, 2007, I served the following:

PETITON FOR REVIEW

by placing a true copy thereof enclosed in a sealed envelope with postage thereon fully

prepaid, in the United States Post Office mail at Sacramento, California, addressed as

follows:

Samuel W. Bodman

Secretary of Energy

United States Department of Energy

1000 Independence Avenue, SW

Washington, DC 20585

Julie Leimbach

Sierra Nevada Alliance

Community Groups Coordinator

P.O. Box 7989

South Lake Tahoe, CA 96158

Chris DeGabriele, General Manager

North Mann Water District

999 Rush Creek Place

P.O. Box 146

Novato, Ca 94948

Craig Perkins, Director

1685 Main Street, Suite 116

P.O. Box 2200

Santa Monica, CA 90407-2200

Jeffrey Kightlinger, General Manager

Metropolitan Water District of Southern

California

P.O. Box 54153

Los Angeles, CA 90054-0153

Tim Anderson

Sonoma County Water Agency

P.O. Box 11628

Santa Rosa, CA 95406

Stephen T. Guthrie, President

EnerPath

1758 Orange Tree Lane

Redlands, CA 92374

Richard W. Hansen, General Manager

1021 B. Miramer Avenue

Claremont, CA 91711-2052

William Pecsi, General Manger

Foothill Municipal Water District

4536 Hampton Road

P.O. Box 686

La Canada Flintridge, CA 9 1012-0686

Bruce Michael Banks

Santa Fe Irrigation District

P.O. Box 409

Rancho Santa Fe, CA 92067-0409

 EE-RM-PET-100 COMMENT 94
Stephen T. Conley, President of the Board

of Water Commissioners

1800 East Wardlow Road

Long Beach, Ca. 90807-4994

James D. Kuykendall, General Manager

Channel Islands Beach Community

Services District

353 Santa Monica Drive

Channel Islands Beach, CA 93035-4473

Richard Bollard

Fisher & Paykel Appliances

78 Springs Road, East Tamaki

P.O. Box 58 732, Greenmount

Auckland, New Zealand

Rancho Water Dr. Brian Brady, General

Manager

42135 Winchester Road

P.O. Box 9017

Temecula, CA 92589-9017

San Diego Water Authority

James H. Bond, Chairman

4677 Overland Avenue

San Diego, CA 92123-1233

Central Basin Municipal Water District

Robert Apodaca, President

17140 S. Avalon Blvd. Suite 210

Carson, CA 90746-1296

San Diego Water Authority

Ken Weinberg, Director of Water Resources

4677 Overland Avenue

San Diego, CA 92123-1233

William A. Baker, President

West Basin Municipal Water District

17140 5. Avalon Blvd, Suite 210

Carson, CA 90746-1296

Daniel Terheggen, President

Multi-housing Laundry Association

1500 Sunday Drive, suite 102

Raleigh, NC 27607

Gina Garbolino, Mayor

City of Roseville

311 Vernon Street

Roseville, Ca 9567 8-2649

Ms. Brenda Edwards-Jones

U.S. Department of Energy, Building

Technologies Program

Mailstop EE-2J, Room 1J-018

1000 Independence Avenue, SW

Washington, DC 20585-0121

Elsinore Valley Municipal Water District

Rob Whipple, Conservation Specialist

P.O. Box 3000

Lake Elsinore, CA 92531

The Home Depot

Kent Knutson, Vice President

101 Constitution Avenue, NW

Suite 800 West

Washington, DC 20001

Edison Electric Institute

Steven Rosenstock, P.E.

701 Pennsylvania Avenue, N.W.

Washington, DC 20004-2696

2

 EE-RM-PET-100 COMMENT 94
Pacific Institute Air-Conditioning & Refrigeration Institute

Dr. Peter H. Gleick, President Steven R. Yurek, General Counsel

654 13th Street, Preservation Park Vice President, Policy and Public Affairs

Oakland, CA 94612 4100 North Fairfax Drive, Suite 200

Arlington, VA 22203

Upper San Gabriel Valley City of Burbank

Municipal Water District Burbank Water and Power

Timothy C. Jochem, General Manager Steve Soghomonian

11310 Valley Boulevard P.O. Box 631

El Monte, CA 91731 Burbank, CA 91503

Natural Resources Defense Counsil

Noah Horowitz, Senior Scientist

111 Sutter Street, 20th Floor

San Francisco, CA 94104

Natural Resources Defense Counsil

Ronnie Cohen, Senior Policy Analyst

111 S utter Street, 20th Floor

San Francisco, CA 94104

Calleguas Municipal Water District

Donald R. Kendal, Ph.D., P.E.,

General Manager

2100 Olsen Road

Thousand Oaks, CA 91360

City of Glendale, California

David Weaver, Mayor

613 East Broadway, Suite 200

Glendale, CA 91206-4391

Carpinteria Valley Water District Western Municipal Water District

Charles B. Hamilton, General Manager John Rossi, General Manager

1301 Santa Ynez Avenue 450 E. Alessandro Blvd.

P.O. Box 578 Riverside, CA 92508

Carpinteria, CA 93014

California Water Association Maytag

John K. Hawks David P. Steiner, Vice President

601 Van Ness Avenue 701 Pennsylvania Avenue, NW Suite 750

San Francisco, CA 94102-3200 Washington, DC 20005

GE Consumer & Industrial Alameda County Water District

Earl F. Jones, Jr., Sr. Counsel, Government Paule Piraino, General Manager

and Industry Relations 43885 South Grimmer Boulevard

Appliance Park 2-225 P.O. Box 5110

Louisville, KY 40225 Fremont, CA 94537-5110

Contra Costa Water District California Urban Water

Walter J. Bishop Conservation Council

1331 Concord Avenue Mary Ann Dickinson, Executive Director

P.O. Box H2o 455 Capitol Mall, Suite 703

Concord, CA 94524 Sacramento, CA 95814

3

 EE-RM-PET-100 COMMENT 94
Mono Lake Committee

Frances Spivy-Weber, Executive Director

P.O. Box 29

Hwy 395 and Third Street

Lee Vining, CA 93541

San Juan Water District

Shauna Lorance, General Manager

9935 Auburn Folsom Road

Granite Bay, CA 95746

City of Big Bear Lake

Department of Water and Power

Scott Heule, Assistant General Manager

41972 Garstin Drive

P.O. Box 1929

Big Bear Lake, CA 92315

Dublin San Ramon Services District

Flordeliza Misra

Acting Operations Manager

7051 Dublin Boulevard

Dublin, CA 94568

AHAM

David Calabrese, Vice President

Government Relations

1111 19t1 Street, NW, Suite 402

Washington, DC 20036

Whirlpool Corporation

Sarah Bovim

Whirlpool Government Affairs

2000 M-63N

Benton Harbor, M* 49022-2692

City of Santa Rosa

Utilities Department

Water Conservation Division

Miles A. Ferris, Director of Utilities

69 Stony Circle

Santa Rosa, CA 95401

Castaic Lake Water Agency

Dan Masnada, General Manager

27234 Bouquet Canyon Road

Santa Clarita, CA 9 1350-2173

Otay Water District

Mark Watton, General Manager

2554 Sweetwater Springs Boulevard

Spring Valley, CA 9 1978-2096

Consolidated Smart Systems

Daniel Terheggen, President

620 West 135th Street

Garden a, CA 90248

Whirlpool Corporation

Tom Catania, Vice President

Government Affairs

2000 M-63N

Benton Harbor, M* 49022-2692

City of Santa Barbara

Steve Mack

Water Resources Manager

P.O. Box 1990

Santa Barbara, CA 93102

NEMA Association of California Water Agencies

Kyle Pitsor Krista Clark, Director of Regulatory

Vice President, Government Relations. Affairs

1300 North 17th Street, Suite 1847 910 K Street, Suite 100

Rosslyn, VA 22209 Sacramento, CA 95814-3577

4

 EE-RM-PET-100 COMMENT 94
City of Los Angeles

Department of Water and Power

Ronald F. Deaton, General Manager

Box 51111

Los Angeles, CA 90051-5700

Alliance Laundry Systems

Phil Manthei, Sr. Staff Engineer

Agency! Codes Approval

P.O. Box 990

Ripon, WI 54971-0990

Irvine Ranch Water District

Paul D. Jones II, General Manager

P.O. Box 57000

Irvine, CA 92619-7000

Association of Home Appliance

Manufacturers

David Calabrese, Vice President

Government Relations

1111 19t) Street, NW Suite 402

Washington, DC 20036

Sacramento Municipal Utility District Olivenhain Municipal Water District

John DiStasio, Assistant General Manager David C. McCollom, General Manager

Energy Delivery and Customer Services 1966 Olivemhain Road

P.O. Box 15830 Encinitas, CA 92024

Sacramento, CA 95852-1830

WEB Web Service Company

William E. Bloomfield, Jr., President

3690 Redondo Beach Ave.

Redondo Beach, CA 90278

City of Anaheim

Public Utilities Department

Business and Community Programs

Mariann Long

Business and Community Programs

Manager

201 S. Anaheim Boulevard, Suite 801

Anaheim, CA 92805

Eastern Municipal Water District

Anthony J. Pack, General Manager

P.O. Box 8300

Penis, CA 92572-8300

Community Enhancement Services

Zigmund Vays, President

16743 Schoenbom St.

North Hills, CA 91343

Municipal Water District of Orange County City of Del Mar

Kevin P. Hunt, General Manager Kim Krause, Finance Director/Treasurer

P.O. Box 20895 1050 Camino Del Mar

Fountain Valley, CA 92728 Del Mar, CA 92014-2698

Helix Water District United States Senate

John B. Linden, President George V. Voinovich

Board of Directors United States Senator

7811 University Avenue 524 Hart Senate Office Building

La Mesa, CA 91941-4927 Washington, DC 20510

5

 EE-RM-PET-100 COMMENT 94
Rent A Center

Christopher A. Korst

Senior Vice President

General Counsel & Secretary

5700 Tennyson Parkway

Third Floor

Piano, TX 75024

City of Yreka

Kathi Sheehan, Special Projects Manager

701 Fourth St.

Yreka, CA 96097

Cucamonga Valley Water District

Jo Lynne Russo-Pereyra

Assistant General Manager for External

Affairs

10440 Ashford Street

Rancho Cucamonga, CA91729

Padre Dam Municipal Water District

Doug Wilson

P.O. Box 719003

Santee, CA 92072-9003

City of Napa

Water Division

Phil Brun, General Manager

P.O. Box 660

Napa, CA 94559

Crescenta Valley Water District

Dennis Erdman, General Manager

2700 Foothill Blvd.

La Crescenta, CA 91214

California Municipal Utilities Association

Jerry Jordan, Executive Director

915 L Street, Suite 1460

Sacramento, CA 95814

Victor Valley Water District

Reginald A. Lamson, District Engineer

17185 Yuma Street

Victorville, CA 92392-5 887

Whirlpool Corporation

J.B. Hoyt

Director, Government Relations

2000 M-63N

Benton Harbor, MI 49022-2692

City of Downey

Desi Alvarez, P.E., Director of Public

Works

11111 Brookshire Ave.

Downey, CA 9024 1-06007

Marin Municipal Water District

Daniel Carney, Water Conservation

Manager

220 Nellen Ave.

Courte Madera, CA 94925

Douglas L. Faulkner

Actin Assistant Secretary

Energy Efficiency and Renewable Energy

United States Department of Energy

Section 327 Petitions, Appliance Efficiency

standards

Forrestal Building

1000 Independence Avenue, SW

Washington, D.C. 20585-0 121

6

 EE-RM-PET-100 COMMENT 94
Mr. Bryan Berringer

United States Department of Energy

Office of Energy Efficiency and

Renewable Energy

Building Technologies Program, EE-2J

1000 Independence Avenue, SW

Washington, D.C. 20585-0121

Charles A. Samuels

General Counsel, Association of Home

Appliance Manufacturers

Mintz, Levin, Cohn, Ferris, Lovsky, and

Popeo, PC

701 Pennsylvania Avenue, Suite 900

Washington, D.C. 20004

Mr. Thomas DePriest

United States Department of Energy

Office of General Counsel, GC-72

1000 Independence Avenue, SW

Washington, D.C. 20585-0121

Sacramento Region Water Forum

660 J Street, Suite 260

Sacramento, CA 95814

I declare under penalty of perjury under the laws of the State of California that the

foregoing is true and correct. Executed on April 20, 2007 at Sacramento, California.

7

 EE-RM-PET-100 COMMENT 94
Federal Register/Vol. 71, No, 249/Thursday, December 28, 2006/Notices 78157

DEPARTMENT OF ENERGY

Office of Energy Efficiency and

Renewable Energy

[Docket No. EE-RM--PET-1 00]

Energy Efficiency Program for

Consumer Products: California Energy

Commission Petition for Exemption

From Federal Preemption of

California's Water Conservation

Standards for Residential Clothes

Washers

AGENCY: Office of Energy Efficiency and

Renewable En ergy, Department of

Energy.

ACTION: Notice of Denial of a Petitiuii for

Waiver from Federal Preemption.

SUMMARY: The Department of Energy

(hereafter "DOE") announces its denial,

and the reasons therefore, of the

California Energy Commission's Petition

for Exemption from Federal Preemption

of California's Water Conservation

Standards for Residential Clothes

Washers (hereafter ''California

Petition").

DATES: A request for reconsideration of

the denial must be received by DOE not

later than January 29, 2007.

ADDRESSES: A request for

reconsideration must submitted,

identified by docket number EE-RMPET--lOU, by one the following methods:

• Mail: Ms. Brenda Edwards-Jones,

U.S.'Department of Energy, Building

Technologies Program, Mailstop EE-2J,

Room 1J-018, 1000 Independence

Avenue, SW., Washington, DC 20585-

0121. Please submit one signed original

paper copy.

• Hand Delivery/Courier: Ms. Brenda

Edwards-Jones, U.S. Department of

Energy, Building Technologies Program,

Room 1J-018, 1000 Independence

Avenue, SW,, Washington, DC 2O585-

012 1.

Instructions: All submissions received

must include the agency name and

docket number for this proceeding.

FOR FURTHER INFORMATION CONTACT:

Bryan Berringer, U.S. Department of

Energy, Office of Energy Efficiency and

Renewable Energy, Building

Technologies Program, EE-2J, 1000

Independence Avenue, SW.,

Washington. DC 20585-0121, (202) 586-

0371, or e-mail:

Biyan.Berringer@ee.doe.gov; or Francine

Pinto. Esq., or Chris Calamita, Esq., U.S.

Department of Energy, Office of the

General Counsel, GC-72, 1000

lndependence Avenue, SW.,

Washington, DC 20585, (202) 586-7432

or (202) 586-1777, e-mail:

Francine.Pinto@hq.doe.gov or

ChristopJier.CaJornita@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

I. Summary of Today's Action

II. Background

A. Energy Conservation Standards under

EPCA

B. Preemption of State Standards

1. DOE Energy Conservation Standards for

Residential Clothes Washers

2. Waiver of Preemption

3. Legislative History

C. California Petition

III. Effective Dale Requirements of EPCA

IV. Analysis of the California Petition

A. Necessity of State Regulation to Address

Unusual and Compelling State Water

Interests

1. Interests Substantially Different in

Nature and Magnitude from those

Prevailing in the United States Generally

a. Consideration of "U.S. generally"

b. Substantially different in nature or

magnitude-analysis of California's

water interests

2. Costs, Benefits, and Burdens of the State

Regulation as Compared to Alternative

Measures

a. Cost benefit analysis

b. Analysis of alternatives

3. Unusual and Compelling State Water

Interests

B. Impacts of California's Standards on

Manufacturing, Marketing, Distribution,

Sale or Servicing

1. Manufacturing and Distribution Costs

2. Effect on Competition and Smaller

Entities

3. Redesign and Production

4. Proliferation of State Standards

5. Significant Impact on Manufacturing,

Marketing, Distribution, Sale, or

Servicing

C. Availability of Product Performance

Characteristics and Features

1. Top-Loading Residential CloLbes

\AJashers

2. Other Product Classes

V. Denial

VI. Approval of the Office of the Secretary

I. Summary of Today's Action

DOE is denying a petition submitted

by the California Energy Commission

(CEC) for a waiver from Federal

preesnption of its residential clothes

washer regulation contained in section

1605.2(p)(1) of the California Code of

Regulations,l DOE is denying the

petition for three separate and

independent reasons. First, DOE is

denying the petition because DOE does

not have the statutory authority to

prescribe a rule for California that

would become effective by January 1,

2007, the first of two compliance dates

contained in Title 20, section

'The Appliance Efficiency Regulations,

lcaliforoia Coda of Regulations, Title 20, sections

1601 through 1506) dated January 2006, ware

adopted by the California Energy Cominissiosi on

October 19, 2005, and approved by the California

Office of Acloiinistrstive Law on December 30,

2005. The Appliance Efficiency Regulations include

standards for both federally-regulated appltances

and non-federally-regulated sl)plrsnces.

1605.2(p)(1) of the California Code of

Regulations. Section 32 7(d)(5XA) of the

Energy Policy and Conservation Act

(Pub. L. 94-163, as amended) (EPCA)

requis'es that a final rule prescribed by

DOE to grant a petition such as tile

California Petition must have an

effective date at least three years

following publication of the final rule.

(42 U.S.C. 6297(d)(5)(A)) The California

Petition does not comply with the

effective date criteria in EPCA, and CEC

has not petitioned for an effective date

other than that provided in the

California regulation. CEC has provided

information only in the context of the

compliance dates of the California

regulation, and has not provided tile

information necessary for DOE to

promulgate a rule with an effective that

would be compliant under EPCA, i.e., a

rule with an effective date three years

following the date of issuance.

Therefore, DOE denies the California

Petition's waiver request.

Second, CEC has not established by a

preponderance of the evidence that the

State of California has unusual and

compelling water interests, a condition

required by EPCA for DOE to grant

California a waiver from Federal

preemption. (42 U.S.C. 6297(d)(1)(B))

CEC did not provide sufficient support

for what CEC alleges to be the costs and

benefits of the California regulation

presented in tile petition. Further, CEC

did slot provide an appropriate analysis

of non-regulatory alternatives for

comparison to the California regulation.

Without support for the likely costs and

benefits associated with the California

regulation and an appropriate

alternatives analysis, DOE was unable to

evaluate if the California regulation is

"preferable or necessary" as compared

to 51011-regulatory alternatives, which is

a required showing in order for DOE to

determine that an unusual and

compelling water interest exists. (42

U.S.C. 6297(d)(1)(C)(ii)) Therefore, DOE

catlnot find that the California

regulation is preferable or necessary as

compared to non-regulatory altertlatives,

and denies tile California Petition's

waiver request.

Tllird and finally, interested parties

demonstrated by a preponderance of

evidence that the State of California

regulation would likely result in the

unavailability of a class of residential

clothes washers in California.

Commenters submitted to DOE

information demonstrating that the 2010

water factor (WF) standard would likely

result in tile unavailability of top-loader

residential clothes washers in

California. Thus, even if DOE had the

authority to ignore or override the first

effective date of the California

 EE-RM-PET-100 COMMENT 94
78158 Federal Register/Vol. 71, No. 249/Thursday, December 28, 2006/Notices

.............................. ..............................................

.............................. ..............................................

............................................ ..............................................

................... .......

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regulation (i.e., 2007) and promulgate a

rule that complied with the EPCA

requirement that the rule not take effect

for another three years, the rule would

violate EPCA in another way, i.e., it

would mandate the 6.0 WF standard in

2010, which would likely result in the

unavailability of top-loader residential

clothes washers. Therefore, under

section 327(d)(4) of EPCA, DOE denies

the California Petition's waiver request.

(42 U.S.C. 6297(cl)(4))

II. Background

A. Energy Conservation Standards

Under EPCA

Part B of Title III of EPCA established

the Energy Conservation Program for

Consumer Products Other Than

Automobiles. (42 U.S.C. 6291-6309)

Products covered under the program,

inclu ding resi clential clothes washers,

are listed in section 322(a) of EPCA. (42

U.S.C. 6292(a)) Section 325(g) ofEPCA

establishes energy conservation

standards for residential clothes

washers and authorizes DOE to amend

these standards. (42 U.S.C. 6295(g))

B. Preemption of State Standards

Generally under the provisions of

EPCA, where an energy efficiency

standard is effective for a 'covered

product" under EPCA, including a

standard for residential clothes washers,

a State regulation concerning the energy

efficiency, energy use, or water use of

that product is preempted and is not

effective. (42 U.S.C. 6297(c)) Section

322(a) (7) lists residential clothes

washers as a product covered under Part

B of Title III of EPCA. (42 U.S.C.

6292(a)(7)) DOE has established energy

efficiency standards for residential

clothes washers as a covered product

under section 325(g)(4)(A), and those

standards are currently in effect (10 CFR

430.32(g)). (42 U.S.C. 6295(g)(4)(A))

Therefore, State regulations concerning

the water use of residential clothes

washers are preempted by the Federal

standards. EPCA provides several

pro\hisions in which the Federal

standards rIo not preempt State

regulation, but for residential clothes

washers the only applicable exception

from the preemption provision is if a

waiver is granted under section 327(d).

(42 U.S.C. 6297(c)(2))

1. DOE Energy Conservation Standards

for Residential Clothes Washers

The initial Federal efficiency

standards prescribed in EPCA, as

TABLE 11.1.-FEDERAL RESIDENTIAL CLOTHES WASHER STANDARD LEVELS

Capacity Product class (ft.3)

Top-Loading, compact

Top-Loading, standard

Front-Loading

Top-Loading, Semi-automatic

Suds-saving

2. Waiver of Preemption

As stated above, Federal energy

efficiency sta nclards for residential

products generally preempt State laws,

regulations and other requirements

concerning energy conservation testing,

labeling, and efficiency standards. (42

U.S.C. 6297(a)-(c)) Section 327(d) of

EPCA sets forth the procedures and

provisions for granting waivers from

Federal preemption (hereafter 'waiver")

for particular State laws or regulations.

(42 U.S.C. 6297(d)) Section 327(d)(1)(A)

of EPCA provides that any State or river

basin commission with a State

regulation regarding energy use, energy

efficiency, or water use requirements for

products regulated by DOE may petition

<1.6 0.65

^1.6 1.04

- 1.04

- Unheated rinse water option

- Unheated rinse water option

Effective date 1/1/2004

Modified energy factor

(ft.3/ kWh / cycle)

Effective date 1/1/2007

amended by the National Appliance

Energy Conservation Act of 1987 (Pub.

L. No, 100-42) (NAECA), required an

unheated rinse water option for

residential clothes washers

manufactured on or after January 1,

1988. (42 U.S.C. 6295(g)) On January 12,

2001, DOE issued a final rule

establishing energy efficiency standards

for five product classes of residential

clothes washers (hereafter referred to as

"the January 2001 final rule"): toploading compact; top-loading, standard;

front-loading; top-loading, semiautomatic; and top-loading, suds-saving.

66 FR 3314.

The January 2001 final rule

established nñnimum energy efficiency

standards, set forth in Table 11.1, below,

to become effective on January 1, 2004,

and January 1, 2007. The January 2001

final rule constituted the second

residential clothes washer rulemaking

required by EPCA. DOE's standards for

residential clothes washers are energy

efficiency standards only; DOE has not

set a water use requirement for

residential clothes washers,2 (10 CFR

430.32(g))

0.65

1.26

1.26

Unheated rinse water option

Unheated rinse water option

for a waiver of Federal preemption and

seek to apply its own State regulation.

(42 U.S.C. 6297(d)(1)(A)) Regulations

implementing the statutory provisions

regarding petitions for waiver from

Federal preemption are codified at 10

CFR part 430 subpart D.

Section 327(d)(1)(B) ofEPCA requires

a petitioner to establish ''by a

preponderance of the evidence" that its

proffered regulation "is needed to meet

unusual and compelling State or local

energy or water interests." (42 U.S.C.

6297(d)(1)(B)) "[U]nusual and

compelling" interests are defined as

interests which:

(i) Are substanlially different in nalure or

magnitude than those prevailing in the

United Stales generally; and

(ii) Are such that the cosis, benefits,

burdens. and reliability of energy or water

savings resulting from the Slate regulation

make such regulation preferable oi' necessary

when measured against the costs, benefits,

burdens, and reliability of alternative

approaches to energy or water savings or

production, including reliance on reasonably

predictable market-induced improvements in

efficiency of all products subject to the Slate

regulation."

(42 U.S.C. 6297(d)(1)(C)(i) and (ii))

The Secretary may not grant a waiver

if he finds "that interested persons have

established, by a preponderance of the

evidence, that" the State regulation

would "significantly burden

manufacturing, marketing, distribution,

sale, or servicing of the covered product

on a national basis." (42 U.S.C.

2111e Energy Policy Act of 2005 lPub, L. 100-581 clothes washers. These new standards require s water consumption factor2 of not more than 9.5.

amended EPcA with new energy efficiency and products nsanufacturecl on or after January 1, 2007, (42 U.S.C. 6313(d)

water cnnaers'ation standards for consinercial to have a modified energy factor of at least 1.26 end

 EE-RM-PET-100 COMMENT 94
Federal Register/Vol. 71, No. 249/Thursday, December 28, 2006/Notices 78159

6297(d)(3)) This is the case even if a

State has sufficiently demonstrated the

existence of 'unusual and compelling

interests.''

To evaluate whether the State

regulation will create a significant

burden, the Secretary must consider "all

relevant factors, ''including the

following:

(A) The extent to which the State

regula non will increase manufacturing or

distribution cos Ls of manufacturers,

distributors, and others;

(B) The extent lo which the State

regulation will disadvantage smaller

manufacturers, distributors, or dealers or

lessen competition in the sale of the covered

product in the State;

(C) The extent to which the Stale

regulation would cause a burden to

manufacturers to redesign and prod uce the

covered product type (or class), taking into

consideration the extent to which the

regulation would result in a reduction-

)i) In the current models, or in the

projected availability of models, that could

be shipped on the effective date of the

regulation to the State and within the United

Slates; or

(ii) In the current or projected sales volume

of the covered product type (or class) in the

State and the United Stales; and

(U) The extent to which the State

regulation is likely to contribute significantly

to a proliferation of State appliance efficiency

requirements and the cumulative impact

such requirements would have.

(42 U.S.C. 6297(d)(3)(A) through (D))

The Secretary also may not grant a

waiver if interested persons have

established, by a preponderance of die

evidence, that

(T)he State regulation is likely to result in

the unavailability in the State of any covered

product type (or class) of performance

characteristics (including reliability),

features, sizes, capacitiet, and volumes that

are substantially the same as those generally

available in the State at lie time of the

Secretary's finding).]"

(42 U.S.C. 6297(d)(4)) The failure of

some classes (or types) to meet these

statutory criteria shall not affect the

Secretary's determination of whether to

prescribe a rule for oilier classes (or

types). (Id.)

The phrase "any covered product type

(or class) of performance

cliaracteristics"is tiot clear on its face.

(42 U.S.C. 6297(o)(4)) Grammatically,

the phrase "of performance

characteristics" appears to modify the

tenn "product type" and the term

"class." While that phrase fits with the

term ''class," it is ambiguous at best

when read with the term ''product

type.''

DOE interprets section 327(dX4)

consistent with a parallel provision n

section 325(o)(4) which reads,

(T]he standard is likely to result in the

unavailability in the United States in any

covered product type (or class) of

performance characteristics (including

reliability), features, sizes, capacities, and

volumes that are substantially the same as

those generally available in the Usnted States

at the time of the Secretary's finding.

(42 U.S.C. 6295(o)(4)) The similarity of

the language regarding "covered

product type (or class) of performance

characteristics" in section 32 7(d)(4) and

section 325(o)(4) indicates that this

language should be read consistently

between the two sections. Further, the

similarity in function between these two

sections supports a consistent reading.

Section 325(o) establishes the criteria

for prescribing new or asneaicled Federal

standards. (42 U.S.C. 6295(o)) In past

discussions of section 325(o)(4), DOE

has stated that it is prohibited from

establishing a standard that the

Secretary finds will result in the

unavailability of any covered product

type with performance characteristics

(includitig reliability), features, sizes,

capacities, and volumes that are

substantially the same as products

generally available in the United States

at the time of the Secretary's finding. 61

FR 36974, 36984 (July 15, 1996).

Section 327(d) establishes the criteria

for prescribing a rtile that grants a

waiver from preemption for a State

regulation. Section 327(d) (4) prohibits

DOE from prescribing such a rule if the

rule would impact the availability of

covered products. Concern with the

impact of an efficiency standard on

product availability is equally

applicable for a State standard for which

a waiver from preemption is requested,

as it is with a Federal standard.

Therefore, DOE sees no need or reason

to interpret the "covered product type

(or class) ol performance

characteristics" language differently in

section 327(d)(4) than in section

325(o)(4).

Furthermore, this interpretation of

327(d) (4) is consistent with the balance

Congress apparently meant to strike

between more stringent efficiency

standards and consumer product choice.

The Senate report accompanying

NAECA states that DOE shall not "grant

a waiver if interested persons show that

the State regulation is likely to result in

the unavailability in the State of a

product type or of products of a

pas-ticular performance class, such as

frost-free refrigerators." (S. Rep. No.

100-6, 100th Cong., 1st Sess. (1987). at

2)

A fisial reason for choosing this

interpretation of section 327(d)(4) is that

in response to the notice of receipt of

the California Petition and request for

comment (71 FR 6022; February 6, 2006)

neither California nor any commenter in

response to the California petition has

suggested that DOE has misconstrued

section 327(d)(4).

If a petition for a waiver from Federal

preemption is denied, the petitioner

may "request reconsideration within 30

days of denial," 10 CFR 430.48. The

request must contain a statesnent of facts

and reasons supporting reconsideratidn.

DOE will only reconsider a denial of a

petition where it is alleged and

demonstrated that the denial was based

on an error of law or fact and that

evidence of the error is found in the

record of proceedings. 10 CFR 430.48(b).

3. Legislative History

The current waiver provisions are, in

part, the result of amendments to EPCA

under NAECA. In 1987, Congress passed

NAECA which amended EPCA's

provisions on petitions for waiver from

Federal preemption under section

32 7(d). Under the original provisions,

DOE could grant a petition only if it

found that there was a "significant State

or local interest to justify such State

regulation" and that "such State

regulation contains a more stringent

energy efficiency standard than such

Federal standard." (S. Rep. No. 100-6,

100th Cong., 1st Sess. (1987). at p. 40)

Furthermore, DOE could not prescribe a

rule if DOE found that "the State

regulation would unduly burden

interstate commerce." (Id.)

Under the NAECA revisions, the

preemption provisions allow States to

"petition DOE to be waived from

Federal preemption, but achieving the

waiver is difficult." (S. Rep. No. 100-6,

100th Cong., 1st Sess. (1987) at p. 2.) In

addition, according to the Senate

Report, the amended provision

"provides new and more stringent

criteria that a State must establish by a

preponderance of the evidence in order

to receive an exemption." (S. Rep. No.

100-6, 100th Cong., 1st Sess. (1987). at

p. 9)

For all of the above-mentioned criteria

that DOE must consider in evaluating a

petition, Congress placed the burden on

the petitioner, interested parties

supporting the petition, and interested

parties opposing the petition, depending

on the criteria, to establish facts and to

meet the statutory criteria "by a

preponderance of the evidence." The

California Petition is the first petition

for a waiver of Federal preemption

submitted under section 327(d) since

Congress amended the preemption

provisions in 1987.

 EE-RM-PET-100 COMMENT 94
78160 Federal Register / Vol. 71, No. 249 I Thursday, December 28, 2006 I Notices

C. California Petition

California Assembly Bill 15e1, pa'sed

by the California legislature and signed

into law in 2002, required CEC to adopt

water efficiency standards for

residential clothes washers by January

2004, and to file a petition with DOE for

a waiver by April 2004. The California

legislation also requires that residential

clothes washers "be at least as waterefficient as commercial clothes

washers.'' (California Public Resources

Code section 25402(e)) California

currently requires that commercial

clothes washers meet a maximum water

factor (WF) of 9.5 by January 1, 2007,

the same standard as prescribed by

Section 342 of EPCA. (20 C.C.R.

1605.3(p) and 42 U.S.C. 6313(e)) In

2004, CEC adopted water efficiency

standards for top- and front-loading

residential clothes washers, setting a

two-tier standard of 8.5 WF effective

January 1, 2007, and 6.0 WF effective

January '1, 2010. (20 C.C.R 1605.2(p)(1))

(CEC, No, 1 at p. 3)

On September 16, 2005, DOE received

from CEC a petition dated September

13, 2005, for a waiver from Federal

preemption pursuant to the

requirements of section 327(d) of EPCA

(42 U.S.C. 6297(d)) and 10 CFR part 430,

subpart D. However, by letter dated

November 18, 2005, DOE notified CEC

that its petition had failed to comply

with certain requirements set out in 10

CFR 430,42(c). In particular, the

original petition had not included the

statement t'equired by 10 C.F.R.

430,42(c), on whether "[to the best

knowledge of the petitioner] the same or

related issue, act or transaction has been

or presently is being considered or

investigated by any State agency,

department, or instrumentality." CEC

responded on December 5, 2005, and

provided the required information,

stating that it was aware of only its

petition and the California standard the

CEC adopted in 2004. (CEC, No. 2 at p.

2) By letter dated December 23, 2005,

DOE notified CEC that it had accepted

as complete the California Petition as

supp I emen ted.5

On Februas'y 6, 2006, DOE published

a notice of receipt of the California

Petition in the Federal Register

According to the california code of Regulations

lccR); "Water factor'' means the quotient of the

total weighted per-cycle water consumption

divided by the capacity of the clothes washer,

determined using the applicable test method *

which is the same test method as prescribed by

DOE lie.. m CFR Part, 430 Subpart B, Appendix

11 for residential clothes washers). 120 c.c.R.

tCO2lp) and 15041p))

Faulkner, DL. Letter to lonatlssu Bleus.

November Itt, 2005.

Faulkner, 0. L. Letter to Jonathan Blees.

December 23, 2005.

(hereafter referred to as the "February

2006 notice") and requested comments

on the California Petition. (71 FR 6022)

DOE received 78 comments on the

California Petition, including more than

50 from California utilities, agencies,

districts, water service districts, and

cities.

111. Effective Date Requirements of

EPCA

Section 327(d)(5)(A) of' EPCA requires

minimum lead times for any rule

presct'ibed by DOE under the waiver

provisions. In general, EPCA requires

that,

[N]o final rule prescribed by the Secretary

under Ithe waiver provisionel may permit

any Slate regulation to become effective with

respect to any covered product manufactured

within three years after such rule is

published in the Federal Register ot' within

five years if the Secretary finds that such

additional time is necessary due to the

substantial burdens of retooling, redesign, or

distribution needed to coniply with the State

regulation.

(42 U.S.C. 6297(d)(5)(A)) EPCA also

establishes separate lead time

requirements if a ,State regulation were

to become effective prior to the earliest

possible effective date for the initial

amendment of the energy conservation

standard established by the statute. (42

U.S.C. 6297(d)(5)(B)) This separate

provision is not applicable to the case

at hand, as the earliest possible effective

date for the initially amended standard

for residential clothes washers was

January 1, 1993. (42 U.S.C.

6295(g)(4)(A)) As noted above, the

California Petition requests a two-tier

regulation with two effective dates: 8.5

WF effective January 1, 2007, and 6,0

\IVF effective January 1, 2010. (20 C.C.R

16O5.2(p)(1)) The requested effective

date of 2007 would not allow for the

minimum three-year lead time required

by EPCA. Further, it is not clear what

impact a revised effective date would

have on the analyses provided by CEC

and interested parties. If the effective

dates of the two-tiered standard were

each set three years beyond that of the

California regulation, or if the first tier

were eliminated, the water savings and

costs could be different from that

presented in the California petition as

well as in comments provided by

interested parties.

IV. Analysis of the California Petition

A. Necessity of State Regulation To

Address Unusual and Compelling State

Water Interests

As indicated above, in order for DOE

to grant CEC's petition for a waiver from

preemption, the State must establish by

a preponderance of the evidence that its

regulation is needed to meet unusual

and compelling water interests. For

such interests to exist, California's water

interests must, first, be substantially

different in nature or magnitude from

those prevailing in the U.S. generally,

and, second, be such that the State

regulation is necessary or preferable to

alternative approaches, evaluated in

light of several specified factors. (42

U.S.C. 6297(d)(1)(C))

1. Interests Substantially Different in

Nature or Magnitude From Those

Prevailing in the United States

Generally

a. Consideration of "U.S. generally".

In the February 2006 notice

requesting comments on the California

Petition, DOE asked whether it should

interpret the phrase 'in the United

States generally" to include a

comparison to both regional and

national averages. 71 FR 6025. DOE

received several comments on this

issue, with differing opinions on

whether simply a national comparison

or also regional and local comparisons

were appropriate.

In its comments, the San Diego

County Water Authority (SDCWA) atid

CEC (in its rebuttal comment) asserted

that DOE should not use regional

comparisons to assess whether

California's water interests are

substantially different. The SDCWA

commented that "if Congress had

intended for regional comparisons to

apply, it would have stated this in

(EPCA]." (SDCWA, No. 29 at p. 3) CEC

emphasized that section 327(d) (i)(C) (i)

of EPCA refers to "the United States

generally." (42 U.S.C. 6297(d)(1)(C)(i))

CEC also challenged the relevancy of a

comparison to individual States or cities

and asserted that examining California's

interests in the context of regions does

not negate the unique water and energy

costs experienced by the State of

California. (CEC, No. 79 at pp. 3-4)

The National Electrical Manufacturers

Association (NEMA) commented that it

believes DOE should consider water use

issues faced by other States on an

individual basis or regions of' the United

States. Further, NEMA asserted that a

comparison to other States on an

individual basis and regions would help

DOE to assess how unusual and

compelling California's water interests

are and the potential for the

proliferation of State standards. (NEMA,

No. 36, at p. 4)

The Gas Appliance Manufacturers

Association (GAMA) and the

Association of Home Appliance

Manufacturers (AHAM) commented that

a decision by DOE to gt'ant the

California standards could result in a

 EE-RM-PET-100 COMMENT 94
Federal Register/Vol. 71, No. 249/Thursday, December 28, 2006/Notices 78101

proliferation of State waiver requests, if

other States have similar situations to

California's. In its comment, GAMA

questioned whether California's water

concerns are so substantially different in

nature or magnitude from those of many

other States. (CAMA, No. 38 at p. 2) In

addition, AHAM argued that

California's situation is similar to that in

other regions, including other western

States, and could thus result in a

proliferation of State standards. (AHAM,

No. 52 at p. so)

DOE interprets the term "U.S.

generally" in section 327(cl)(1)(C)(i) of

EPCA as necessitating a comparison of

a State's interests to national averages.

The Webster's II, New Riverside

University Dictionary (1994) defines

"generally" as 'widely," "usually," and

"in disregard of particular instances,

and details.'' The Random i-louse

College Dictionary (1980) defines

"generally" as "with respect to the

larger part," "usually, commonly," and

"without reference to or disregarding

particular * * * situations * * * which

may be an exception." Based on the

dictionary definition and plain meaning

of ''generally,'' an evaluation of whether

a State's interest is substantially

different in nature or in magnitude calls

for a comparison of the State's interests

to the U.S. as a whole, instead of a

comparison with discrete regions or

specific States.

Further, comparison of a State's

interests to national averages is

reasonable given the purpose of a

waiver from preemption provisions in

EPCA. The waiver of Federal

preemption provisions provide for the

establishment, in limited instances, of a

State standard that is more stringent

than a Federal, i.e., national standard.

Essentially, the State must demonstrate

that its energy or water interests are not

adequately addressed by the Federal

standard.

Federal efficiency standards ad rf'pss

in part, the need for national energy

conservation. (42. U.S.C.

6295(o)(2)(B)(i)(VI)) Consideration of the

need for national energy conservation

requires DOE to analyze the interests of

the Nation as a whole. DOE believes that

in order for a State to demonstrate the

State's need for a waiver, the State must

demonstrate that State or local energy or

water interests are substantially

different in nature or magnitude than

the national energy or water interests

considered by DOE in establishing the

Federal standard. Therefore, a State's

interests must be compared to national

averages, as opposed to regional

averages or averages specific to sister

States.

While under the terms of EPCA the

potential proliferation of State standards

is an issue that DOE must consider, this

issue is better addressed when

conducting the necessary analysis of

costs and burdens, not when

considering the nature and magnitude of

a State's water interests. When

analyzing the costs and burdens, DOE

must consider:

The extent to which the State regulation is

likely to contribute significantly to a

proliferation of State appliance efficiency

requirements and the cumulative impact

such requirements would have.

(42 U.S.C. 6297(d)(3)(D)) Additionally,

if DOE were to grant a request for a

waiver from Federal preemption, DOE

believes that the potential burden from

multiple State standards could be

addressed, in part, through responses to

individual waiver petitions.

ii Substantially different in nature or

magnitude-analysis of California's

water interests.

In its petition and its rebuttal to

comments, CEC stated that California's

water interests are substantially

different in both nature and magnitude

from those prevailing in the United

States generally. (CEC, No. I at p. 5;

CEC, No. 79 at p. 4) Several interested

parties provided statements in support

of CEC on this point. (CUWCC, No. 61

at p. 3; SDCWA, No. 29 at p. 4)

CEC asserted that California's water

interests are substantially different in

nature than those prevailing in the U.S.

generally. CEC stated that its water

supplies are limited, noting that existing

reservoirs are being drawn down in the

face of drought, streams and

groundwater supplies face overdraft,

and under the terms of the Colorado

River Agreement California will be able

to draw less water from the Colorado

River. (CEC, No. I at p. ii) CEC also

stated that California lies higher water

rates than the U.S. in general, stating

that a thousand gallons of water saved

in California is valued on average at

$3.15, compared to a national average of

$2.88. (CEC, No. I at pp. 13)

CEC stated that California's water

distribution has one of the highest

associated energy costs in the nation,

and cited a report stating that

California's water systems are uniquely

energy intensive due to the pumping

requirements for the major conveyance

systems. (CEC, No. 1 at p. 14) CEC stated

that associated energy values (e.g., the

energy required to transport water)

average 8.4 KWh per 1,000 gallons in

Southern California and can be as high

as 11 kWh per 1,000 gallons in

California for marginal water supplies.

CEC did not provide national averages

for the associated energy, generally.

However, CEC stated that the average

rural household well in the U.S.

requires 2.61 kWh per 1,000 gallons of

delivered- water, whereas California

estimates range from 4.1 kWh to 6 kWh

per 1,000 gallons. (CEC, No. I at pp. 14-

15)

Additionally, CEC asserted in its

petition that the magnitude of

California's water use is substantially,

different than that prevailing in the U.S.

generally. CEC stated that California's

total (fresh and saline) withdrawals

exceed that of all other States at 51

billion gallons per year. CEC cited U.S.

Geological Survey Circular 1268,

"Estimated Use of Water in the United

States in 2000-Table 2," (revised

February 2005), which estimates the

average State withdrawal at 8.1 billion

gallons per year. (CEC, No. I at pp. 5-

6) CEC also stated that its projected

population growth through 2025 is

expected to be above the national

median. (CEC, No. 1, at p. 6) CEC stated

that U.S. Bureau of Census figures

estimate the median growth rate for all

States to be 20 percent through 2025.

(Id.) Relying again on U.S. Bureau of

Census figures, CEC stated that

California's population is expected to

increase by approximately 36 percent

through 2025; increase from the current

population of 36 million to 49 million

in 2025. (Id.)

CEC indicated that in addition to the

water demands generated by its

increasing population, the State's

agricultural economy requires more

water than compared to the U.S.

generally. CEC stated that California has

the highest amount of irrigated farm

land of any State in the country-8.7

million acres, and that California has

the largest proportion of irrigated farm

land to total farm land (32 percent) in

the country. (CEC, No. I at p. 7)

While CEC presented information

indicating that its water supplies are

becoming limited and that the State

faces high energy costs associated with

water distribution, most of this

information was not placed in the

context of supply and costs on a

national level. It may well be as CEC

asserts that California is facing a

drought and that reservoirs are being

overdrawn, and that under the Colorado

River Agreement California is required

to decrease the amount of water it draws

from the river, However, CEC failed to

provide DOE with a comparison of

California's supply problems to the

Nation in general. Without such

information, DOE is unable to determine

if the nature of California's interests is

different than the Nation in general. If

the Nation on average, or substantial

 EE-RM-PET-100 COMMENT 94
78162 Federal Register/Vol. 71, No. 249/Thursday, December 28, 2006/Notices

portions thereof, was facing a drought

and waler supplies were being

overdrawn, California's interests would

not be substantial]y different than the

U.S. generally. Similarly, neither CEC

nor comments supporting its petition,

provided information regarding energy

costs associated with water distribution

on the national level. CEC did provide

a comparison of energy costs for water

drawn from rural wells, but this limited

comparison was not sufficient to meet

the "preponderance of evidence"

burden established by EPCA. 'i'he v.'rter

interests CEC is seeking to address

through the proposed California

regulation are much broader than those

related to water demand from rural

wells; i.e., the proposed California

regulation would impact all consumers

of residential clothes washers, not just

those that relyon rural wells.

With regard to the magnitude, DOE

has determined that the California

Petition demonstrated by a

preponderance of the evidence that

California's water interests are

substantially different in magnitude

from those faced by the U.S. generally.

In analyzing the magnitude, as well as

the nature, of a State's energy or water

interests, DOE does not rely on any

single factor in making a determination,

but instead balances all of the relevant

information presented.

CEC presented evidence that the

volumetric total demand for water in

California is substantially greater than

that of other States in the U.S. in

general. As evidenced by data submitted

by CEC, California's water withdrawal is

over six times that of the national perState average, 51 billions gallons p'

year as compared to 8.1 billion gallons

per year. (CEC, No. 1 at pp. 5-6) The

California Petition also indicated that

water demand would likely increase as

a result of population growth which is

above the national median. (CEC, No. 1

at p 6)

Volumetric total demand in and of

itself does not demonstrate a substantial

difference in magnitude for the purpose

of EPCA, but the total demand

considered in conjunction with the

likely increase in demand that will

accompany California's projected

population growth and the value of

water saved demonstrates by a

preponderance of the evidence that

California's water interests are

substantially different in magnitude

than in the U.S. generally. If DOE were

to consider only a State's total water

demand in determining whether a

State's water interests were substantially

different in magnitude, more populous

States would likely be able to

demonstrate that their interests are

substantially different in magnitude

from the U.S. generally simply due to

the fact that the State's population is

greater than the average State

population. This would be contrary to

the general intent of the waiver

provision, which is that it establishes a

high bar for granting a waiver request.

(See S. Rep. No. 100-6, 100th Cong., 1st

Sass. (1987). at p. 2)

CEC has demonstrated by a

preponderance of the evidence that

California's water interests are

substantially different in magnitude

from the U.S. generally by

demonstrating that it has a volumetric

total demand far greater than the

national average-by far the largest

demand in the Nation-and this

demand is accompanied by a projected

population increase that is above the

median growth rate for all States, and an

average value of water saved in

California that is greater than the

national average value of water saved.

As stated above, CEC reported that

California has higher water rates than

the U.S. in general, an average of$ 3.15

per thousand gallons of water saved in

California versus a national average of

$2.88 per thousand gallons of water

saved. (CEC, No. 1 at pp. 13)

Conversely, the California Petition

asserted that California's per capita

water use (for all uses) is relatively low

(CEC, No. 1 at p. 5) and according to the

CUWCC, California consumers use less

indoor water per capita than many other

States. (CUWCC, No. 61 at p. 3) The per

capita demand for water by the

California residential sector would

indicate that California's demand is not

substantially different in magnitude

from the U.S. in general, on a per capita

basis.

While p capita demand may be low

in comparison to the national average,

this fact alone is too narrow a basis to

reject CEC's assertion that California's

water interest is greater in magnitude

than that of the U.S. generally. As stated

above, DOE balances all of the factors

presented by the petitioner and

comments provided by interested

parties in support of the petition. A per

capita demand in California that was

substantially higher than the average per

capita demand for the U.S. generally

would support a substantial difference

in magnitude. However, a per capita

demand in California that is lower than

the national average per capita demand

does not negate the fact that California

faces a higher than average total

volumetric demand, a projected

population increase that is higher than

generally projected for all of the States,

and higher than average water rates.

DOE based its determination on the

full spectrum of information provided

by CEC and various interested parties.

As stated above, on balance with all of

the water demand information

provided, DOE has determined that the

California Petition has shown by a

preponderance of the evidence that the

magnitude of California's water interest

is substantially different from the U.S.

generally. The data regarding

California's greater than average

volumetric total demand, the likely

increase in demand that will accompany

a projected population growth that is

higher than the median for all States,

and the greater than average value of

water saved (per thousand gallons of

water) demonstrate by a preponderance

of the evidence that California's water

interests are substantially different in

magnitude from the U.S. generally.

The Air-Conditioning and

Refrigeration Institute (ARI) asserted

that the Senate provided direction on

the meaning of "substantial" in the

phrase "substantially different in nature

or magnitude than those prevailing in

the United States generally" in the 1987

Senate Report on NAECA. In particular,

ARI cites the Senate's reference to a "3

to 10 year 'lock-in' period for the

Federal standards except if the State can

show that an 'energy emergency

condition' exists within the State[.]" (S.

Rep. No. 100-6, 100th Cong., 1st Sess.

(1987) at P. 2) (ART, No. 35 at pp. 2-3)

DOE does not agree with the assertion

that a State must demonstrate that an

emergency exists in order for DOE to

find that a State's interests are

substantially different in nature or

magnitude from the U.S. generally.

Section 327(d)(5)(B)(i) explicitly

requires a showing of an emergency

condition if DOE were to prescribe by

final rule that a State regulation is to

become effective prior to the earliest

possible effective date of a Federal

standard. (42 U.S.C. 6297(d)(5)(B)(i))

The statute establishes no such

requirement for determining whether a

State's water interests are "unusual and

compelling." DOE declines to read into

section 327 an additional requirement,

i.e., the existence of an emergency as an

element of the "unusual and

compelling" provision-that does not

appear in the text.

2. Costs, Benefits, and Burdens of the

State Regulation as Compared to

Alternative Measures

In addition to demonstrating that the

nature or magnitude of a State's

interests are different from those in the

U.S. generally, CEC must also

demonstrate by a preponderance of the

evidence that the costs, benefits,

 EE-RM-PET-100 COMMENT 94
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burdens, and reliability of the water

savings resulting from its regulation

make such regulation preferable or

necessary when measured against

alternative approaches. (42 U.s.c.

6297(d)(1)(Chhi)J If the petitioner fai1s to

make such a showing, DOE cannot

determine that california's water

interests are 'unusual and compelling.''

In the present instance, CEC and

commenters supporting the california

Petition fai]ed to satisfy their burden of

providing sufficient information to

allow DOE to make such a

determination.

a. Cost benefit analysis.

cc estimated the energy, water, and

dollar savings of the california

regulation for individual consumers and

for the State, and summarized these

savings and a simple payback period

calculation in the california Petition.

(CEC, No. 1 at pp. 19-26 and 36)

savings estimates presented by CEC

were both annual and cumulative and

calculated per standard level. EC

presented its individual consumer

savings estimate as annual and as

cumulative over what CEC estimated

was the average lifetime of a residential

clothes washer. CE presented annual

statewide estimates in the regulation's

first-year and once the entire stock of

products had become compliant.

No. 1 at pp. 2 1-24) EC also presented

a cumulative statewide savings estimate

for products operated between 2010 and

2054. (cEc, No. I at p. 36) The simple

payback period presented by CEC

considered the payback to an individual

consumer from the california regulation

as a whoje.

While EC provided its estimates of

the costs and benefits associated with

the california regulation, it did not

provide a sufficient explanation of the

analysis supporting its estimates. EC

stated that the "the economic

assumptions and data inputs used in

this analysis were vigorously tested in

the commission's public rulemaking

process that led to the adoption of this

standard." (CEC, No. I at p. 19)

However, cEc did not indicate where

its rulemaking record could be located

and where within the record the

relevant assumptions, data, and analysis

could be located; nor did CEc submit

any of that information to DOE. Further,

csc did not provide sufficient

explanation of the underlying

assumptions and data in its petition. For

example, cc states that ''perhaps the

Psyback period is the length in time it woud

take the purchaser of the appliance to recoup the

increase in sales price through annual savings in

operating costs. In the case of clothes wsshers, the

operating cost savings include the savings in both

energy consumption aiid wster consumption.

most important driver of the economic

analysis is the estimate of the increased

first cost of washing machines that

would result from the standards," (cEc,

No. I at pp. 19-20) However, EC did

not provide a sufficient explanation of

how it derived its estimates of

incremental first costs; in fact, CE did

not even attempt to do so. EC simply

presented its estimates of incremental

first costs, by standard level, and

asserted that they were consistent with

(though different than) DOE's

incremental first cost estimate for its

2000 rulemaking. (CEC, No. I at p. 20)

Without the undei'lying analysis of

cEc's assumptions and data inputs,

DOE is unable to determine whether the

cost and benefit estimates provided are

i'easonable, and is unable to determine

that the california Petition meets EPCA

requirements.

b. Analysis of alternatives.

CE discussed several alternatives to

the State regu]ation in the California

petition-specifically, rebates, other

non-regulatory programs, and

"reasonably predictable market-induced

improvements in efficiency." EC

estimated the cost to utilities and

consumers of achieving water savings

through rebates for highly efficient

residential clothes washers and asserted

that rebates would be much more

expensive for utilities and consumers

than regulations. (CEC, No. 1 at pp. 27-

32) In particular, CEC estimated

participation rates and the cost of

providing rebates and purchasing

compliant products to develop weighted

average costs per eligible washer for the

utilities and the consumer. CEC then

compared this estimate to its estimate of

the increased cost of residential clothes

washers under the California standard.

(CEC, No. I at pp. 30-31) Finally, CEC

concluded that rebate and educational

programs would be much more

expensive for utilities and consumers

than standat'ds and that such savings

would not persist after the rebates

terminated. (CEC, No. I at p. 32)

With regard to other non-regulatory

programs, CEC cited DOE's 2000

analysis of alternatives to DOE's own

energy efficiency standards for

residential clothes washers as an

approximate assessment of the cost of

the proposed State standards versus

alternatives. (CEC, No. I at pp. 32-34)

DOE's 2000 analysis reviewed enhanced

public education and information, sixyear financial incentives (including tax

credits to consumers and manufacturers,

consumer rebates and subsidies),

voluntary efficiency targets, mass

government purchases, early

replacement programs, and performance

standards. (DOE, "Regulatory Impact

Analysis for Proposed Energy

Conservation Standards for Residential

Clothes Washers," September 2000)

From this, CEC concluded that there is

no "close alternative" to the California

standards for "cost-effectively acquiring

water savings and ensuring that the

savings are persistent over time." (CEC,

No. I at p. 34)

CEC discussed the potential impact of

other non-regulatory programs on the

market penetration of residential clothes

washers with higher water efficiency, as

compared to the current market.

However, CEC's reliance on DOE's 2000

analysis to address the costs and

benefits of non-regulatory programs is

inappropriate, and does not satisfy

CEC's burden of demonstrating by a

preponderance of the evidence that the

costs, benefits, burdens and reliability of

water savings resulting from the State

regulation would make such regulation

preferable or necessary when measured

against alternative approaches. (42

U.S.C. 6297(d)(1)(C)(ii)) The cost and

benefit estimates provided in the DOE

analysis are national estimates (CEC,

No. 1 at p. 33) and do not consider the

costs and benefits of alternative

California-based programs; the estimates

certainly do not evaluate the standards

being advocated in the California

Petition. For example, CEC provided

estimated water savings, energy savings

and the net present value for a national

voluntary efficiency target. (CEC, No. 1

at p. 33) CEC made no assertion, or

demonstration, concerning whether the

estimate of water savings, energy

savings and the net present value would

be comparable if voluntary efficiency

targets were set by California. In

addition, we note that the voluntary

consensus alternative presented by CEC

was for a voluntary energy efficiency

target, rather than a voluntary water use

reduction target.

Comparison of the costs and benefits

of the California regulation to nonregulatory alternatives available to

California requires estimates of the costs

and benefits of those alternatives as

implemented by California. While the

analysis of the nature and magnitude of

California's water interests are in the

context of the nation in general, the

analysis of the costs and benefits of

alternatives must be in the context of

the "products subject to the State

regulation." (42 U.S.C. 6297(d)(1)(CXii))

As such, the costs and benefits

presented in the DOE analysis cited by

CEC do not allow for a comparison of

the costs and benefits of alternatives in

California.

Interested parties provided additional

information on water saving strategies

also being pursued within California.

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For example, CUWCC listed some of the

water saving strategies its members have

implemented, and cited their total

savings and expenditures. (CUWCC, No.

61 at pp. 1-3) Also, SDCWA cited a

variety of strategies to increase supj;y

and limit demand. SDCWA also noted a

range of costs in $/acre-foot for various

supply sources it uses and estimates the

cost it pays in 1/acre-foot for

conservation measures it uses (SDCWA,

No. 29 at pp. 4-5) However, the

information provided was not specific

to the product 'subject to the State

regulation" (42 U.S.C. 6297(d)(1)(C)(iifl;

i.e., residential clothes washers. As

stated above, EPCA requires that the

consideration of alternatives be specific

to the product (or products) subject to

the State regulation. Comments from

other interested parties in support of the

petition did not provide enough detail

for DOE to assess the relative benefits

and costs of alternative approaches to

the proposed California regulation for

residential clothes washers.

3. Unusual and Compelling State Water

Interests

CEC, and the comments supporting its

petition, have failed to establish by a

preponderance of the evidence that

California has an "unusual and

compelling'' water interest, within the

meaning of that term as defined by

EPCA. As stated above, CEC has

established that the magnitude of

California's water interest is

substantially different than that

prevailing in the U.S. generally.

However, CEC and other commenters

supporting the California Petition have

failed to establish that the State

regulation proposed in the California

Petition is necessary or preferable as

compared to other alternatives.

EPCA places the burden on CEC of

demonstrating by a prep onderance of

the evidence that the costs and benefits

of its proposed standard make the

standard preferable or necessary when

compared to alternatives. (42 U.S.C.

6297(dXlXC)(ii)) CEC did not provide

data and several of the assumptions

underlying its cost and benefit estimates

associated with the California

regulation. CEC did not provide an

evaluation of the costs and benefits of

other non-regulatory programs, beyond

rebates (e.g., voluntary efficiency

targets, mass government purchases,

early replacement programs), in

California. Without the ability to review

and analyze the assumptions, anal'us,

and data underlying CEC's cost and.

benefit estimates and without

information on the potential costs and

benefits of non-regulatory programs in

California, beyond rebates, DOE is

unable to conclude that the California

regulation is necessary or is preferable

to these alternatives,

By not demonstrating the necessity or

preference of the proposed State

regulatory action as opposed to other

possible alternatives, CEC has failed to

demonstrate by a preponderance of the

evidence that the State regulation is

necessary or preferable to alternatives,

and therefore has failed to meet the

EPCA requirement that it demonstrate

that California's water interests are

"unusual antI compelling." DOE has not

evaluated whether CEC has met the

EPCA requirement of establishing that

the proposed State regulation is

"needed" to address an unusual and

compelling State interest. DOE has no

occasion to consider the "need" issue

because the existence of "unusual and

compelling interests" has not been

established.

B. hnpocts of California's Stondards on

Mon ufacturing, Marketing, Distribution,

Sole or Servicing

As indicated above, under section

327(d)(3) of EPCA DOE is prohibited by

law from granting the California Petition

if interested parties establish by a

preponderance of the evidence that the

California regulation will significantly

burden the manufacturing, marketing,

distribution, sale or servicing of

residential clothes washers on a

national basis. (42 U.S.C. 6297(d)(3)) In

considering this prohibition, EPCA

requires DOE to consider "all relevant

factors'' including the extent to which

the State regulation will:

(1) Increase manufacturing or

distribution costs;

(2) Disadvantage smaller

manufacturers, distributors or dealers,

or lessen competition;

(3) Cause a burden on manufacturers

to redesign and produce the product

covered by the State regulation; and

(4) likely contribute significantly to a

proliferation of State appliance

efficiency requirements and the

cumulative impact such requirements

would have.

(42 U.S.C. 6297(d)(3)(A)-(D)) As

discussed below, DOE has not made a

determination as to whether the

California regulation would

significantly burden the manufacturing,

marketing, distribution, sale or servicing

of residential clothes washers on a

national basis.

1. Manufacturing and Distribution Costs

DOE received comments from

manufacturers stating that the burden of

the proposed California regulation on

manufacturing would be such that the

manufacturers would be required to

remove several of their current product

offerings from the California market

(ALS, No. 50 at p. 1; F&PA, No. 30 at

p. 2; GE, No. 55 at pp. 3 and 7; Maytag,

No. 53 at p. 3; and Whirlpool, No. 17 at

pp.2) Some manufacturers claimed that

this would reduce their presence in the

California market (ALS, No. 50 at p. 1;

and CE, No. 55 at pp. 3-4) or result in

their exit from it. (ALS, No. 50 at p. 1).

(Section IV.B.2. further evaluates such

comments) Most manufacturers

commented that this would limit their

ability to recoup prior investments.

(F&PA, No. 30 at P. 2; GE, No. 55 at p.

7; Maytag, No, 53 at P. 3; and Whirlpool,

No. 17 at p.3) Maytag stated that the

California regulation would increase

distribution complexity and costs

because products that would not

comply with the California regulation

would still be shipped to distribution

centers in California that service other

West Coast States. (Whirlpool, No. 17 at

p. 3) Comments from individual

manufacturers on the impact to

manufacturing and distribution were

presented in general terms and did not

provide specific estimates of the cost

burden resulting from the potential

elimination of products from the

California market.

To demonstrate the industry-wide

financial impacts of attempting to meet

the California regulation, AHAM

modeled industry cash flows with the

Government Regulatory Impact Model

(GRIM), a tool used in several of DOE's

energy conservation rulemaking

analyses. AHAM commented that

manufacturers could divert shipments

or invest in new capacity to meet the 8.5

WF. To meet the 6.0 WF standard

AHAM stated that it believes its member

companies would have to invest in Dew

manufacturing capacity. (AHAM, No. 52

at pp. 34 and 40) According to AHAM,

if manufacturers invested in new

manufacturing capacity to meet the

standard, the proposed California

regulation would necessitate $150

million of additional manufacturer

investment. (AHAM, No. 52 at p. 38)

AHAM's GRIM analysis modeled the

effect of capital investments to meet the

8.5 WF level in 2007 and the 6.0 WF

level in 2010. According to AHAM's

GRIM analysis, the proposed California

regulations would result in a decline in

industry value of $100 to $641 million

7 industry value refers to the net present value of

cash flows for the industry due to manufacturers'

sale of products in the U.S. market, DOE uses

change in industry value as a metric for measuring

the potential impacts of an energy efficiency

standard on manufacturers. See, for example, "Final

Rule Technical Support Document ITSD): Energy

Efficiency Standards for coisumer Products

clothes Washers", Mamsfacturer Impact Analysis,

chapter 11, December 20001.

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dollars, depending on assumptions

regarding gross margins. According to

AHAM estimates, these numbers reflect

16 to 103 percent share of total indiitry

value, respectively. (AHAM, No. 52 at p.

39) In addition, AHAM commented that

additional costs would be required for

spending on "engineering, product

development, product introduction and

marketing to support the introduction of

new models for California consumers."

(AHAM, No. 52 at p. 38)

AHAM's methodology of using GRIM

to assess the magnitude of manufacturer

impacts resulting from the California

regulation is a useful tool for DOE to

evaluate the California petition.

However, DOE notes that the results

from GRIM are very sensitive to three

cost elements factored into the model:

conversion capital expenditures,

product conversion expenses, and

variable production costs, Given the

importance of these data inputs to the

model DOE must evaluate the

reasonableness of these estimates before

it can draw conclusions about the

significance of the results projected by

GRIM. AHAM did not provide sufficient

substantiation of the values it assigned

these cost inpits for DOE to evaluate

appropriately the model's results.

AHAM provided aggregated figur.th of

$150 million for conversion capital

expenditures (AHAM, No. 52 at p. 38)

and $105 million for product conversion

expenses (AHAM, No. 52 at pp. 46 and

48). According to AHAM's presentation

of its analysis, it appears that

conversion capital expenditures

represent the capital needed for three

manufacturers to prepare a total

production capacity of 1.5 million

residential clothes washers par year.

(AHAM, No. 52 at pp. 46 and 48)

AHAM did not pro\Tide a basis for the

total production capacity value. In fact,

the value relied on by AHAM,

according to AHAM's own projected

shipment numbers, appears to exceed

the expected annual demand of the

California market. (AHAM, No. 52 at pp.

44-45) Moreover, AHAM's comment

would have benefited from including

separate estimates for manufacturing

equipment, tooling, and buildings and a

quantification and description of the

stran cled assets; information that could

support the conversion capital costs

projected by AHAM. justification of the

estiniates along with refei'ences to

source data, where appropuato, would

also have been useful.

Similarly, for product conversion

costs DOE would have benefited from

disaggregated estimates and

descriptions of engineering, product

development, product introduction, and

marketing costs. Additionally, AHAM

was not clear as to whether current

products which meet the California

regulation would need to undergo

substantial redesign, and if so why that

would be required.

Estimates of the incremental variable

product costs are also a major element

contributing to the magnitude and

uncertainty of GRIM results. AHAM and

CEC have vastly different estimates for

the incremental consumer prices of

lower water factor residential clothes

washers. In its GRIM analysis AHAM

calculated Costs of Goods Sold (COGS)

as a percentage of estimated future

residential clothes washer prices.

(AHAM, No. 52 at p. 46) AHAM stated

in its comments that "the basic bill of

materials needed to achieve low water

usage at acceptable wash and rinse

performance adds significant costs that

can not be avoided through experience

or productivity improvement." (AHAM,

No. 52 at p. 32) However, AHAM did

not present a breakdown of the basic bill

of' materials that underlies its estimated

incremental production costs.

AHAM provided DOE with a detailed

model to esthnate the cost implications

to manufacturers resulting from the

California regulation. However, AHAM

failed to provide sufficient discussion of

the assumptions and inputs employed

in the model. Without an understanding

of the model's assumptions and inputs

DOE is unable to appropriately evaluate

the results, and therefore AHAM has

failed to demonstrate by a

preponderance of the evidence the

extent to which the proposed California

standard would increase the

manufacturing and distribution costs of

manufacturers and distributors. (42

U.S.C. 6297(d)(3)(A))

2. Effect on Competition and Smaller

Entities

AHAM and several manufacturers

commented that the California

standards would affect different types of

manufacturers differently. In particular,

AHAM commented that the engineering,

product development, and product

introduction costs plus capital

conversion investments of introducing a

new model will exceed $40-SO million

for most manufacturers, regardless of

actual production volume." (AHAM,

No. 52 at p. 41) AHAM also stated that

manufacturers with smaller market

shares might not be able to support

investment in the design and

production of residential clothes

washers with WF levels capable of

meeting the standard. (AHAM, No. 52 at

p. 41) AHAM did not provide a basis for

its $40-SO million dollar estimate and

did not provide a discussion of the level

of investment manufacturers with

smaller market shares would be unable

to support.

ALS commented that production

volume lost from the removal of its noncompliant top-loading washers in

California would not be fully replaced

by the sale of its compliant front-loading

washer, It stated that foreign

manufacturers with lower

manufacturing costs, due to "lower

labor costs and unequal or non-existept

employee benefit costs," would have a

competitive advantage by being able to

offer compliant products at a lower cost.

(ALS, No. SO at pp. 2 and 6)

GE claimed that its sales volume

would fall because its limited product

offerings would not be able to compete

with "larger and specialty marketers."

(GE, No. 55 at p. 4) Maytag commented

that competitors larger than itself would

have a better ability to absorb additional

costs. (Maytag, No. 53 at p. 3)

AHAM commented that several

manufacturers would likely continue to

sell in California only if their current

products (i.e., those products already in

the market place) met the proposed

California standard, Furthermore, it

stated that it believes that some lowvolume manufacturers would likely

leave the California market instead of

making additional investments in new

products. (AHAM, No. 52 at p. 41)

Though they did not specify their

market volumes, both GE and ALS

commented that they currently have

limited product offerings that comply

with the proposed California standards

and that they believe their market

presence in California would be reduced

as a result of the California regulation.

(GE, No. 55 at pp. 3-4; ALS, No. 50 at

pp. 1-2) In particular, GE commented

that it "does not have a large enough

marketshare over which to spread the

huge costs of investment to develop a

more complete line of laundry product

offerings[.]" (GE, No. 55 at p. 4)

Fisher & Paykel Appliance

commented that it has experience with

developing residential clothes washers

to meet water factor criteria in Australia.

(F&PA, No. 30 at p. 1) Furthermore, it

commented that it currently produces

high efficiency washers for a niche

market and that the 8.5 WF standard

would likely have a small impact on it

(though its current product does not

meet the 6.0 WF level). (F&PA, No. 30

at p. 2)

Maytag commented fhat it believes

small retailers could be adversely

impacted by the California proposed

regulations, bearing an uneven burden

compared to larger retailers. It

commented that the short time-period to

the proposed effective dates would

"shock" smaller retailers" business

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models and "force them out of

business." (Maytag, No. 53 at p. 5)

CEC commented that the California

regulation would not likely have an

adverse affect on small businesses or on

sales competition. (CEC, No, 1 at p. 40)

In particular, CEC correlated DOE 2001

energy standards with a growth in the

types of residential clothes washer

technologies and features, and in the

ni.inber of qualifying models on the

market. Furthermore, CEC commented

that the number of' manufacturers

selling in the U.S. has grown in the past

five years despite concentration in many

business sectors.8 According to CEC,

both the growth in residential clothes

washer technologies and the growth in

the number of manufacturers selling

residential clothes washers in the U.S.

indicate that there would be no reason

to expect that the California standard

would have a negative impact. (CEC,

No. I at p. 40).

DOE is concerned about the ability of

smaller manufacturers to spread their

investment costs over lower production

volumes. Analysis from DOE's January

2001 final rule indicated that cost

structures did vary between small and

large manufacturers. 66 FR 3314. In the

TSD that accompanied the January 2001

final rule, DOE noted that

"manufacturing large volumes and

optimizing production for these levels

can create a significant cost advantage.

Smaller manufacturers of clothes

washers could thus be affected more

negatively than other manufacturers by

any proposed standard because of their

need to spread fixed costs over smaller

production volumes." (DOE, "Final

Rule Technical Support Document

(TSD): Energy Efficiency Standards for

Consumer Products: Clothes Washers",

Manufacturer Impact Analysis, pp -

53 and 11-54, December 2000)

Manufacturers did not provide cost

estimates for redesigning their products

to meet the WF levels of the California

regulation. Further, manufacturers did

not provide analysis of spreading such

costs across production volumes. DOE

recognizes that smaller manufacturers

may have a significantly more difficult

time in responding to the WF levels in

the California regulation. However,

manufacturers did not provide cost data

that would allow DOE to determine the

extent of this difficulty and its

° OOE notes, however, that since this proceeding

started, Maytag company has been j,urchasad by

the Whirlpool corporation, further concentrating

the clothes washer industry. Based on DOE

estimates of data reported in Pcpi hance Magazine.

DOE estimates that whirlpool corporation accounts

for approximately 71 percent of clothes washer

sales, GE 17 percent and the remaining 12 percent

is spread over the rencai ning manufacturers.

nationally.

significance to smaller manufacturers,

and therefore comments opposed to the

California Petition did not adequately

demonstrate the extent to which the

proposed California regulation would

disadvantage smaller manufacturers,

distributors, or dealers, or lessen tile

competition in the sale of residential

clothes washers in California. (42 U.S.C.

6297(d)(3)(B))

Redesign and Production

In assessisig tile impacts of a State

regulation if a waiver were to be

granted, EPCA requires DOE to consider

the extent to which tile State regulation

would cause a burden on manufacturers

to redesign and produce the covered

product. (42 U.S.C. 6297(d)(3)(C)) While

this analysis is sintilar to tile evaluation

of the resulting manufacturing and

production costs, EPCA directs DOE to

specifically consider the extent to which

tile regulation would result in a

reductiosiIi) In the cut'restt models, or in the

projected availability of models, tllet could

be shipped on the effective date of the

regulation to the State and within the United

States; or

(ii) in the cut'ment or projected sales volume

of the covered product type (or class) in the

Stale acid die United Statesl.]

(42 U.S.C. 6297(d)(3)(C)(i) and (ii))

Evaluation under section 3 27(d)(3) (C)

considers the availability of compliatlt

units by tile effective date and any

impact on tile total number of sales for

the covered product. Essentially, DOE

must cons idet' whether compliant

resicletttial clothes washers would be

available by the effective date an.d

whether the California standard would

impact the overall sale of residential

clothes washers.

AHAM cotnmented that

manufacturers could respond to the 8.5

WF by producing redesigned compliant

units, shifting production in favor of

compliant front-loaders and nonconventional top-loaders, shifting

distribution of compliant front-loaders

and non-conventional top-loaders to

California acid away from tile general

U.S. market, or, presutnably, through a

combittatioti of these responses.

(AHAM, No. 52 at pp. 34 atld 40)

Al-IAIv1 stated that for the 8.5 WF level,

it is possible dInt there is sufficient U.S.

capacity to meet California demand

under the California regulation by

largely elimitiating sllipments of

compliant units to other States. (AHAM,

No. 52 at p. 34) AHAM also stated,

however, that the design of such

products is targeted towards specialty

customers and is not geared towards tile

demands of the average consumer; i.e.,

current utiit designs tllat would comply

with the proposed California regulation

are typically higher cost models not

"optimized for tile vast majority of the

market that wishes simpie, rehabie, iotv

cost washers." (AHAM, No. 52 at p. 40)

With regard to demand for residential

clothes washers, AHAM stated that due

to price elasticity and what it asserted

wilere necessary design cilanges,

shipments to Cahfornia will decline as

consumers choose to repair current

washers as opposed to purchasing new,

more expensive washers. (AHAM, No. 1

at p. 38) Based on its aslalysis, AHAM

projected that shipments of washers

would decline by 10 percent from 2007

through 2009, by 20 percent in 2010

through 2012, and recover between 2013

and 2015. (AHAM, No. 52 at p. 39)

AHAM did not provide a breakdown

of the costs associated with shiftitig

production in favor of compliant frontloading and non-conventional toploading residential clothes washers or

redistributing compliant residential

clothes washers to California. Further,

Al-lAM did not indicate whether or why

such changes to manufacturing and

distribution could be accomplished in

the lead times provided for under the

California regulation. The comments

received did not provide specific

information indicating whether

manufacturers would have difficulty in

shifting production and distribution

within the lead time provided by the

California regulation in order to provide

sufficient products for the U.S. market

in 2007. Therefore, commenters

opposed to the California Petition have

not provided sufficient evidence or

analysis for DOE to determine tile extent

to winch tile proposed California

regulation would cause a burden to

manufacturers to redesign and produce

residential clothes waslters that would

comply with tile proposed Califoritia

regulation. (42 U.S.C. 6297(d)(3)(C))

4. Proliferation of State Standards

Currently, no other State has

petitioned DOE for a waiver of

preemption regarding the water

efficiency of residential clothes washers.

If other States petitioned for a waiver,

DOE would consider the extent to

which oilIer States chose standards

levels identicai to those proposed by

California, as well as levels proposed by

any other States. Furthermore, DOE

would consider whetiler the cumulative

impact of similar or differing State

standards would burden the

manufacturing, marketing and

distribution of residesltial clothes

washers nationally. However, DOE did

not consider the impact of otlter State

petitions because currentiy California is

 EE-RM-PET-100 COMMENT 94
Federal Register/Vol. 71, No, 249/Thursday,_December 28, 2006/Notices 78167

tile oniy State to have submitted a

petition under section 327 of EPCA,

5. Significant Impact on Manufacturing,

Marketing, Distribution, Sale, or

Servicing

Interested parties have not

demonstrated by a preponderance of tile

evidence that the California regulation

would significantly burden

manufacturing, marketing, distribution,

sale or servicing of tile covered product

on a national basis. Interested parties

asserted that the California regulation

would increase manufacturing and

distribution costs, would negatively

impact smaller manufacturers, and that

the California regulation could result in

redistribution of product. As discussed

above, however, tile interested parties

did not provide adequate justification to

support these assertions. Manufacturei's

did not provide detailed cost estimates

and AHAM's analysis did not provide

justification for its underlying

assumptions. Therefore, tile interested

parties opposed to the California

Petition did not satisfy their burden of

providing sufficient information to

allow DOE to determine that, if the

California Petition were granted, tile

proposed California regulation would

sigmficantly burden manufacturing,

marketing, distribution, sale or servicing

of the residential clothes washers on a

national basis. (42 U.S.C. 6297(cl)(3))

C. Availability of Product Perform once

Cu oracteristics and Features

1. Top-Loading Residential Clothes

Washers

Under EPCA section 327(d)(4), DOE is

prohibited by law from granting

California a waiver of preemption if

interested persons have demonstrated

by a preponderance of the evidence that

California's proposed regulation is

likely to result in tile unavailability ill

California in any covered product type

(or class) with performance

characteristics (including reliability),

features, sizes, capacities, and volumes

that are substantially tile same as those

genera/ly available in tile State at tile

time of tile Secretary's finding. (4z

U.S.C. 6297(d)(4))

Manufacturers' comments indicated

tllat the design changes necessary to

comply with the 6.0 WF level would

eliminate traditional top-loading

residential clothes washers from tile

California market. (AHAM, No, 52 at pp.

I and 32; ALS, No. 50 at pp. 2 and 6;

Whirlpool, No. 17 at p. 1; Maytag, No.

53 at p. 3; GE, No. 55 at p. 3) Maytag

stated that traditional top-loading

residential clothes washers curreiltiy

represent at least 60 percent of

California's residential clothes wasiler

sales. (Maytag, No. 53 at p. 3) Data

submitted by Al-JAM, including

ENERGY STAR data, indicate that only

front-loading residential clothes

washers currently meet tile 6.0 WF

level; current models of top-loading

residential clothes washers, regardless

of design, have a WF level of greater

than 6.0. (Al-JAM, No. 52 at p. 22) In its

comments, CEC identified a top-loading,

horizontal-axis residential clothes

washer as a potential design to meet tile

6.0 WF level. (CEC, No. 1 at p. 46; CEC,

No. 79 at p. 13) However, the model to

which CEC referred (CEC, No. 1 at P. 46)

does not currently meet tile 6.0 WF

level, and would require redesign.

Moreover, the residential clothes washer

identified by CEC appears to represent

a small portion of the market.

A number of stakeholders, including

the CUWCC, PG&E, NRDC, Consolidated

Smart Systems (CSS) and several

California entities commented that tile

California market currently offers a

variety of models that can meet the 8.5

and 6.0 WF levels. (CUWCC, No. 61 at

p. 5; NRDC, No. 41 at p. 2; PG&E, No.

44 at pp. 6-7 and 9; CSS, No. 77 at p.

2) DOE is aware that several models of

residential clothes washers in the

market today can meet the 8.5 WF and

6.0 WF levels. However, DOE also notes

that this discussion of tile availability of

products, generally did not distinguish

between front- and top-loading

residential clothes washers.

DOE knows of no top-loading

residential clothes washers on the

market that meet a 6.0 WF. Neither CEC

nor any other comnlenier has asserted or

demonstrated that such a product exists.

As noted above, several stakehoiders

commented that, while existing

residential clothes washers can

currently nleet the 6.0 WF level, there

is no indication that any of these

residential clothes washers are toploading. For example, according to data

on ENERGY STAR products submitted

by AHAM, the lowest WF of a toploading washer currently on the market

is approximately 6.3. (AHAM, No. 52 at

p.22; and CEC,No. 1 atp. 46) DOE

finds that it has been established by a

preponderance of the evidence that

there are no top-loading residential

clothes washer in the current market

that would comply with the 6.0 WF

level of the proposed California

regulation, and that therefore the

proposed California standard would

result in the unavailability of toploading residential clothes washers in

the California market. Therefore, even

had CEC nlet its requirements under

EPCA, the California Petition should be

rejected on this additional ground.

2. Other Product Classes

EPCA states that the failure of some

classes (or types) to meet the criterion

of the State regulation shall not affect

DOE's determination on whether to

prescribes rule for other classes (or

types). (42 U.S.C. 6297(d)(4)) As noted

above, DOE has established energy

efficiency standards for five classes of

residential clothes washers, including

top-loading residential clothes wasilers.

(10 CFR 430.32(g)) However, the

California Petition in its discussion of

the impact of the California regulation

does not distinguish between classes of

residential clothes washers and

therefore, the question of whether such

levels would be appropriate for

individual classes of residential clothes

washers is not at issue.

Even if it were, however, DOE would

be concerned that differing maximum

WF levels established for specific

classes of residential clothes washers

could have negative consequences for

water savings in California. Regulating

more efficient residential clothes

washers like front-loading residential

clothes washers to a 6.0 WF, while

allowing a significantly less stringent

WF level for top-loader washers, would

likely further increase the existing price

differential between top- and frontloading washing machines. (AHAM, No.

52 at pp. 32 and 35) Tile result of this

change in price difference could well

increase purchases of less water

efficient residential clothes washers,

and potentially offset the intended

benefit from setting a water efficiency

standard for certain but not all classes

of residential clothes washers. (See,

AHAM, No. 52 at pp. 32 and 35)

V. Denial

As discussed above, tile California

Petition requests a waiver of Federal

preemption for a State regulation that

establishes effective dates not permitted

under EPCA. Therefore, DOE denies the

requested waiver,

Second, in order to grant a petition for

a waiver from Federal preemption, a

State must show by a preponderance of

the evidence that its regulation is

needed to address unusual and

compelling State or local water or

energy interests. Such a showing

requires that a State demonstrate that its

interests are substantially different in

nature or magnitude compared to those

in the United States generally and that

the State standards are "preferable or

necessary" when compared to

alternatives, including market-induced

ones. As discussed above, DOE has

determined that the California Petition

has demonstrated by a preponderance of

 EE-RM-PET-100 COMMENT 94
78168 Federal Register/Vol. 71,No. 249/Thursday, December 28, 2006/Notices

the evidence that the State's water

interests are substantially different in

magnitude fronl those present in the

United States generally. CEC and

comments supporting the California

Petition, however, failed to provide

sufficient information to demonstrate by

a preponderance of the evidence that

the proposed State standard is

preferable or necessary when compared

to alternative approaches. Since CEC

has established only one of the two

elements necessary to show an unusual

and compelling State interest, DOE

denies the waiver request.

Third and finally, even if CEC had

established by a preponderance of the

evidence that California's water

interests are unusual and compelling,

DOE is denying the waiver request

because interested parties have

established by apreponderance of the

evidence that the California regulation

would likely result in the unavailability

of top-loading residential clothes

washers in California. Therefore, DOE is

prohibited from prescribing a rule that

would grant the California Petition.

VI. Approval of the Office of the

Secretary

The Secretary of Energy has approved

publicatioi of this notice.

Issued in Washington, DC, on December

20, 2006.

Alexander A. Karsner,

Assistant Secretaiy, Energy Efficiency a.,'

Renewable Energy.

IFR Doc. E6-22270 Filed 12-27-06; 8:45 aml

BILLING CODE 6450-01-P

DEPARTMENT OF ENERGY

Energy Information Administration

Agency Information Collection

Activities: Submission for 0MB

Review; Comment Request

AGENCY: Energy Information

Administration (EIA), Department of

Energy (DOE).

ACTION: Agency information collection

activities: submission for 0MB Review;

comment request.

SUMMARY: The EIA has submitted the Oil

and Gas Reserves System Surveys to the

Office of Management and Budget

(0MB) for review and a three-year

extension under section 3507(h) (1) of

the Paperwork Reduction Act of 1995

(Pub. L. 104-13) (44 U.S.C. 3501 at seq).

The ETA requests that the EIA-23P, "Oil

and Gas Well Operator List Update

Report" be discontinued, as it is no

longer necessary.

DATES: Comments must be filed by

January 29, 2007. If you anticipate that

you will be submitting comments but

find it difficult to do so within that

period, you should contact the 0MB

Desk Officer for DOE listed below as

soon as possible.

ADDRESSES: Send comments to Sarah P.

Garman, 0MB Desk Officer for DOE,

Office of Information and Regulatory

Affairs, Office of Management and

Budget. To ensure receipt of the

comments by the due date, submission

by FAX (202-395-7285) or e-mail

(Sarah_P ._Garman@omb. eop gay) is

recommended. The mailing address is

726 Jackson Place NW,, Washington, DC

20503. The 0MB DOE Desk Officer may

be telephoned at (202) 395-4650. (A

copy of your comments should also be

provided to ETA's Statistics and

Methods Group at the address below.)

FOR FURTHER INFORMATION CONTACT:

Requests for additional information

should be directed to Kara Norman. To

ensure receipt of the comments by the

due date, submission by FAX (202-287--

1705) or e-mail

(kora.norrnon@eia.doe.gov) is also

recommended. The mailing address is

Statistics and Methods Group (EI-70),

Forrestal Building, U.S. Department of

Energy, Washington, DC 20585-0670.

Kara Norman may be contacted by

telephone at (202) 287-1902.

SUPPLEMENTARY INFORMATION: This

section contains the following

information about the energy

information collection submitted to

0MB for review: (1) The collection

numbers and title; (2) the sponsor (i.e.,

the Department of Energy component);

(3) the current 0MB docket number (if

applicable); (4) the type of request (i.e.,

new, revision, extension, or

reinstatement); (5) response obligation

(i.e., mandatory, voluntary, or required

to obtain or retain benefits); (6) a

description of the need for and

proposed use of the information; (7) a

categorical description of the likely

respondents; and (8) an estimate of the

total annual reporting burden (i.e., the

estimated number of likely respondents

times the proposed frequency of

response per year times the average

hours per response).

1. Forms EIA-23L, 23S, and 64A, "Oil

and Gas Reserves System Surveys"

2. Energy Information Administration

3. 0MB Number 1905-005 7

4. Three-year extension

5. Mandatory

6. EIA's Oil and Gas Reserves Systems

Surveys collect data used to estimate

reserves of crude oil, natural gas, and

natural gas liquids, and to determine the

status and approximate levels of

production. Data are published by EIA

and used by public and private analysts.

Respondents are operators of oil wells,

natural gas wells, and natural gas

processing plants.

7. Business or other for-profit

8. 49,120 hours.

Please refer to the supporting

statement as well as the proposed forms

and instructions for mare information

about the purpose, who must report,

when to report, where to submit, the

elements to be reported, detailed

instructions, provisions for

confidentiality, and uses (including

possible nonstatistical uses) of the

information. For instructions on

obtaining materials, see the FOR FURTHER

INFORMATION CONTACT section.

Statutory Authority: Section 3507(h)(1) of

the Paperwork Reduction Act of 1995 (Pub.

L. 104-13) (44 U.S.C. 3501 at seq., at

35 07 [h)( 1))

Issued hi Washington, DC December 21,

2006.

Jay H. Casselberry,

Agency Clearance Officer, Statistics and

Methods Group, Energy Infarmation

Administration.

[FR Doc. E6-22266 Filed 12-27-06; 8:45 am]

BILLING CODE 6450-01-P

DEPARTMENT OF ENERGY

Federal Energy Regulatory

Commission

[Docket No. ER07-239-000]

BG Energy Merchants, LLC; Notice of

Issuance of Order

December 19, 2006.

BC Energy Merchants, LLC (BC

Energy) filed an application for marketbased rate authority, with an

accompanying tariff. The proposed

market-based rate tariff provides for the

sale of energy, capacity and ancillary

services at market-based rates. BC

Energy also requested waivers of various

Commission regulations. In particular,

BC Energy requested that the

Commission grant blanket approval

under 18 CFR Part 34 of all future

issuances of securities and assumptions

of liability by BC Energy.

On December 19, 2006, pursuant to

delegated authority, the Director,

Division of Tariffs and Market

Development-West, granted the

requests for blanket approval under Part

34, The Director's order also stated that

the Commission would publish a

separate notice in tire Federal Register

establishing a period of time for the

filing of protests. Accordingly, any

person desiring to be heard or to protest

the blanket approvals of issuances of

 EE-RM-PET-100 COMMENT 94