Federal Register /Vol. 71, No. 249/Thursday, December 28, 2006 /Notices

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

regulation will increase manufacturing or

distribution costs of manufacturers,

distributors, and others;

(B) The extent to 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 State

regulation would cause a burden to

manufacturers to redesign and produce 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

States; or

(ii) In the current or projected sales volume

of the covered product type (or class) in the

State and the United States; and

(D) 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 the

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, capacities, and volumes that

are substantially the same as those generally

available in the State at the 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 other classes (or

types). (Id.)

The phrase "any covered product type

(or class) of performance

characteristics" is not clear on its face.

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

the phrase "of performance

characteristics" appears to modify the

term "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(d)(4)

consistent with a parallel provision in

section 325(o)(4) which reads,

[T1he 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 United 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 327(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 amended Federal

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

discussions of section 325(0)(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

(including 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 rule 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) of 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

particular performance class, such as

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

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

2)

A final 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

78159

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 statement of facts

and reasons supporting reconsideration.

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

327(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." (1d.)

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.

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78160 Federal Register /Vol. 71, No. 249 /Thursday, December 28, 2006 /Notices

C. California Petition

California Assembly Bill 1561, passed

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) 3 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).4 In particular, the

original petition had not included the

statement required 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

supplemented.s

On February 6, 2006, DOE published

a notice of receipt of the California

Petition in the Federal Register

(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.

III. Effective Date Requirements of

EPCA

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

minimum lead times for any rule

prescribed by DOE under the waiver

provisions. In general, EPCA requires

that,

[N]o final rule prescribed by the Secretary

under [the waiver provisions] may permit

any State regulation to become effective with

respect to any covered product manufactured

within three years after such rule is

published in the Federal Register or 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 comply 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

WF effective January 1, 2010. (20 C.C.R

1605.2(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

3 According to the California Code of Regulations interested parties. (CCR); "Water factor" means the quotient of the

total weighted per-cycle water consumption IV. Analysis of the California Petition

divided by the capacity of the clothes washer,

determined using the applicable test method * * A. Necessity of State Regulation To

which is sam prescri

DOE (i.e.t10 C RePart 430 S bpart B Appendix Address Unusual and Compelling State

J1 for residential clothes washers). (20 C.C.R. Water Interests

1602(p) and 1604(p)) As indicated above, in order for DOE "Faulkner, D.L. Letter to Jonathan Blees.

November 18, 2005. to grant CEC's petition for a waiver from

5 Faulkner, D.L. Letter to Jonathan Blees. preemption, the State must establish by

December 23, 2005 . 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) and

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)(1)(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 grant the

California standards could result in a

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Federal Register /Vol. 71, No. 249 /Thursday, December 28, 2006 /Notices

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. (LAMA, 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. 50)

DOE interprets the term "U.S.

generally" in section 327(d)(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 House

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 address,

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.

b. 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. 1 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. 1 at p. 11) CEC also

stated that California has 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. 1 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

78161

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. 1 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. 1 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. 1 at p. 7)

While CEC presented information

indicating that its water supplies an,

becoming limited and that the State

faces high energy costs associated N% I t

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 (:1(

asserts that California is facing a

drought and that reservoirs are being

overdrawn, and that under the Colonel,

River Agreement California is require-d

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

AV U NJ

 EE-RM-PET-100 COMMENT 97
78162 Federal Register / Vol. 71, No. 249 / Thursday, December 28, 2006 / Notices

portions thereof, was facing a drought

and water supplies were being

overdrawn, California's interests would

not be substantially 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. The water

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 rely on 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 per

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

Sess. (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 per 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) (ARI, 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,

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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)(C)(ii)) If the petitioner fails 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 failed to satisfy their burden of

providing sufficient information to

allow DOE to make such a

determination.

a. Cost benefit analysis.

CEC 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 6

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. CEC

presented its individual consumer

savings estimate as annual and as

cumulative over what CEC estimated

was the average lifetime of a residential

clothes washer. CEC presented annual

statewide estimates in the regulation's

first-year and once the entire stock of

products had become compliant. (CEC,

No. 1 at pp. 21-24) CEC also presented

a cumulative statewide savings estimate

for products operated between 2010 and

2054. (CEC, No. 1 at p. 36) The simple

payback period presented by CEC

considered the payback to an individual

consumer from the California regulation

as a whole.

While CEC 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. CEC

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. 1 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,

CEC did not provide sufficient

explanation of the underlying

assumptions and data in its petition. For

example, CEC states that "perhaps the

a Payback period is the length in time it would

take the purchaser of the appliance to recoup the

increase in sales price through annual savings in

operating costs. In the case of clothes washers, the

operating cost savings include the savings in both

energy consumption and water 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. 1 at pp. 19-20) However, CEC did

not provide a sufficient explanation of

how it derived its estimates of

incremental first costs; in fact, CEC did

not even attempt to do so. CEC 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. 1 at p. 20)

Without the underlying analysis of

CEO's assumptions and data inputs,

DOE is unable to determine whether the

cost and benefit estimates provided are

reasonable, and is unable to determine

that the California Petition meets EPCA

requirements.

b. Analysis of alternatives.

CEC discussed several alternatives to

the State regulation in the California

petition-specifically, rebates, other

non-regulatory programs, and

"reasonably predictable market-induced

improvements in efficiency." CEC

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. 1 at pp. 30-31) Finally, CEC

concluded that rebate and educational

programs would be much more

expensive for utilities and consumers

than standards and that such savings

would not persist after the rebates

terminated. (CEC, No. 1 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. 1 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

78163

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. 1 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)(C)(ii))

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 supply

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 $/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)(ii));

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 preponderance 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(d)(1)(C)(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, analysis,

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 and 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. Impacts of California's Standards on

Manufacturing, Marketing, Distribution,

Sale 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 GE, 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 new

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 ti .

effect of capital investments to mei't 111

8.5 WF level in 2007 and the 6.0 1VI

level in 2010. According to AHAM"

GRIM analysis, the proposed Californi,,

regulations would result in a decline in

industry value 7 of $100 to $641 million

'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 (TSD): Energy

Efficiency Standards for Consumer Products:

Clothes Washers", Manufacturer Impact Analysis,

Chapter 11, December 2000).

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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 industry

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 inputs for DOE to evaluate

appropriately the model's results.

AHAM provided aggregated figures 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 per year.

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

AHAM did not provide 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

stranded assets; information that could

support the conversion capital costs

projected by AHAM. Justification of the

estimates along with references to

source data, where appropriate, 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 estimate 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 $40-50 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 $40-50 million dollar estimate and

did not provide a discussion of the level

of investment manufacturers with

78165

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-existent

employee benefit costs," would have a

competitive advantage by being able to

offer compliant products at a lower cost.

(ALS, No. 50 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 that 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

number 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." 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. 1 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. 11-

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

6 DOE notes, however, that since this proceeding

started, Maytag Company has been purchased by

the Whirlpool Corporation, further concentrating

the clothes washer industry. Based on DOE

estimates of data reported in Appliance 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 remaining 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 the

competition in the sale of residential

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

6297(d)(3)(B))

3. Redesign and Production

In assessing the impacts of a State

regulation if a waiver were to be

granted, EPCA requires DOE to consider

the extent to which the 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 similar to the evaluation

of the resulting manufacturing and

production costs, EPCA directs DOE to

specifically consider 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

States; or

(ii) in the current or projected sales volume

of the covered product type (or class) in the

State and the United States[.]

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

Evaluation under section 327(d )(3)(C)

considers the availability of compliant

units by the effective date and any

impact on the total number of sales for

the covered product. Essentially, DOE

must consider whether compliant

residential clothes washers would be

available by the effective date and

whether the California standard would

impact the overall sale of residential

clothes washers.

AHAM commented 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 and away from the general

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

combination of these responses.

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

AHAM stated that for the 8.5 WF level,

it is possible that there is sufficient U.S.

capacity to meet California demand

under the California regulation by

largely eliminating shipments of

compliant units to other States. (ARAM,

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 the

demands of the average consumer; i.e.,

current unit designs that would comply

with the proposed California regulation

are typically higher cost models not

"optimized for the vast majority of the

market that wishes simple, reliable, low

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

where necessary design changes,

shipments to California 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 analysis, 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 shifting

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

redistributing compliant residential

clothes washers to California. Further,

AHAM 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 the extent

to which the proposed California

regulation would cause a burden to

manufacturers to redesign and produce

residential clothes washers that would

comply with the proposed California

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 other States chose standards

levels identical to those proposed by

California, as well as levels proposed by

any other States. Furthermore, DOE

would consider whether the cumulative

impact of similar or differing State

standards would burden the

manufacturing, marketing and

distribution of residential clothes

washers nationally. However, DOE did

not consider the impact of other State

petitions because currently California is

N

 EE-RM-PET-100 COMMENT 97
Federal Register /Vol. 71, No. 249/Thursday, December 28, 2006/Notices

the only 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 the

evidence that the California regulation

would significantly burden

manufacturing, marketing, distribution,

sale or servicing of the 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, the interested parties

did not provide adequate justification to

support these assertions. Manufacturers

did not provide detailed cost estimates

and AHAM's analysis did not provide

justification for its underlying

assumptions. Therefore, the 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, the

proposed California regulation would

significantly burden manufacturing,

marketing, distribution, sale or servicing

of the residential clothes washers on a

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

C. Availability of Product Performance

Characteristics 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 the unavailability in

California in any covered product type

(or class) with performance

characteristics (including reliability),

features, sizes, capacities, and volumes

that are substantially the same as those

generally available in the State at the

time of the Secretary's finding. (42

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

Manufacturers' comments indicated

that the design changes necessary to

comply with the 6.0 WF level would

eliminate traditional top-loading

residential clothes washers from the

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

1 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 currently

represent at least 60 percent of

California's residential clothes washer

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

submitted by AHAM, including

ENERGY STAR data, indicate that only

front-loading residential clothes

washers currently meet the 6.0 WF

level; current models of top-loading

residential clothes washers, regardless

of design, have a WF level of greater

than 6.0. (AHAM, No. 52 at p. 22) In its

comments, CEC identified a top-loading,

horizontal-axis residential clothes

washer as a potential design to meet the

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 the 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 the

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 the 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 commenter has asserted or

demonstrated that such a product exists.

As noted above, several stakeholders

commented that, while existing

residential clothes washers can

currently meet 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 at p. 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 met its requirements under

EPCA, the California Petition should be

rejected on this additional ground.

78167

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

prescribe a 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 washers.

(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) The 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, the 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

40 -0 00

 EE-RM-PET-100 COMMENT 97
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 from 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 a preponderance 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

publication of this notice.

Issued in Washington, DC, on December

20, 2006.

Alexander A. Karsner,

Assistant Secretary, Energy Efficiency and

Renewable Energy.

[FR Doc. E6-22270 Filed 12-27-06; 8:45 am]

BILLING CODE 6450-01-P

DEPARTMENT OF ENERGY

Energy Information Administration

Agency Information Collection

Activities: Submission for OMB

Review; Comment Request

AGENCY: Energy Information

Administration (EIA), Department of

Energy (DOE).

ACTION: Agency information collection

activities: submission for OMB Review;

comment request.

SUMMARY : The EIA has submitted the Oil

and Gas Reserves System Surveys to the

Office of Management and Budget

(OMB) 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 et seq).

The EIA 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 OMB

Desk Officer for DOE listed below as

soon as possible.

ADDRESSES: Send comments to Sarah P.

Garman, OMB 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.gov) is

recommended. The mailing address is

726 Jackson Place NW., Washington, DC

20503. The OMB DOE Desk Officer may

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

copy of your comments should also be

provided to EIA'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

(kara.norman@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

OMB for review: (1) The collection

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

the Department of Energy component);

(3) the current OMB 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. OMB Number 1905-0057

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 more 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.G. 3501 et seq., at

3507(h)(1)).

Issued in Washington, DC December 21,

2006.

Jay H. Casselberry,

Agency Clearance Officer, Statistics and

Methods Group, Energy Information

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.

BG Energy Merchants, LLC (BG

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. BG

Energy also requested waivers of various

Commission regulations. In particular,

BG Energy requested that the

Commission grant blanket approval

under 18 CFR Part 34 of all future

issuances of securities and assumptions

of liability by BG 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 the 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 97
Federal Register /Vol. 71, No. 118 /Tuesday, June 20, 2006 /Notices 35419

permit to construct, operate, maintain,

and connect an electric transmission

line across the U.S. border with Mexico.

In the same application, Comision

Federal de Electricidad (CFE), the

national electric utility of Mexico, has

requested a rescission of Presidential

Permit No. PP-57.

DATES: Comments, protests, or requests

to intervene must be submitted on or

before July 20, 2006.

ADDRESSES: Comments, protests, or

requests to intervene should be

addressed as follows: Office of

Electricity Delivery and Energy

Reliability (OE-20), U.S. Department of

Energy, 1000 Independence Avenue,

SW., Washington, DC 20585-0350.

FOR FURTHER INFORMATION CONTACT:

Ellen Russell (Program Office), 202-

586-9624 or Michael T. Skinker

(Program Attorney), 202-586-2793.

SUPPLEMENTARY INFORMATION: The

construction, operation, maintenance,

and connection of facilities at the

international border of the United States

for the transmission of electric energy

between the United States and a foreign

country is prohibited in the absence of

a Presidential permit issued pursuant to

Executive Order (EO) 10485, as

amended by EO 12038.

On January 24, 1975, the Federal

Power Commission, predecessor agency

of the Department of Energy, in Docket

No. E-8057, now Presidential Permit

No. PP-57, authorized CFE to construct,

operate, maintain, and connect a

138,000-volt (138-kV) electric

transmission line across the U.S.-

Mexico international border in the

vicinity of Loredo, Texas.

On June 12, 2006, American Electric

Power Service Corporation (AEPSC),

acting as the agent for TCC, formerly

doing business as Central Power and

Light Company (CPL), filed an

application with the Office of Electricity

Delivery and Energy Reliability (OE) of

the Department of Energy (DOE) for a

Presidential permit. TCC proposes to

construct a double circuit 230,000-volt

(230-kV) electric transmission line

across the U.S.-Mexico international

border. In the same application CFE

requests DOE rescind Presidential

Permit No. PP-57 if the TCC-requested

permit is issued.

The existing international

transmission facilities authorized in

Presidential Permit No. PP-57 consist of

a single-circuit 138-kV transmission line

that originates at TCC's existing Laredo

Power Plant Station, in Laredo, Texas.

The facilities continue west

approximately 0.3 miles to the Rio

Grande River, the U.S.-Mexico

international border, and continue to

CFE's Ciudad Industrial Station in

Laredo Nuevo, Mexico. In its

application TCC proposes construct a

new 230-kV circuit between the Laredo

Power Plant and the CFE system and to

rebuild and convert the existing 138-kV

facilities to a 230-kV transmission

circuit to be operated initially at 138-kV.

The proposed double circuit facilities

are to be operated as an asynchronous

tie using a Variable Frequency

Transformer (VFT). The VFT equipment

would convert the interconnection with

CFE from a block-over synchronous

radial feed configuration to a

continuous asynchronous connection.

The proposed facilities would be

constructed on steel monopole

structures and would be sited along the

center-line of the existing right-of-way.

The existing wood transmission

structures would be replaced with

approximately four steel monopole

structures. All facilities and equipment

to be constructed, including the VFT,

would be placed within the existing

fence of the Laredo Power Plant.

TCC has indicated its intention to

operate the proposed facilities as an

open access transmission facility. If

DOE were to grant the Presidential

permit requested in OE Docket No. PP317, it would simultaneously rescind

Presidential Permit No. PP-57 issued to

CFE.

Procedural Matters

Any person desiring to become a

party to this proceeding or to be heard

by filing comments or protests to this

application should file a petition to

intervene, comment or protest at the

address provided above in accordance

with §§ 385.211 or 385.214 of the

FERC's Rules of Practice and Procedures

(18 CFR 385.211, 385.214). Fifteen

copies of each petition and protest

should be filed with the DOE on or

before the date listed above.

Additional copies of such petitions to

intervene or protests also should be

filed directly with: Terri Gallup,

Regulatory Case Manager, American

Electric Power Service Corporation, 212

East Sixth Street, Tulsa, OK 74119-1295

and Carolyn Y. Thompson, Esq., Jones

Day, 51 Louisiana Avenue, NW.,

Washington, DC 20001-2113A.

A final decision will be made on this

application after the environmental

impacts have been evaluated pursuant

to the National Environmental Policy

Act of 1969, and a determination is

made by DOE that the proposed action

will not adversely impact on the

reliability of the U.S. electric power

supply system. In addition, DOE must

obtain the concurrence of the Secretary

of State and the Secretary of Defense

before taking final action on a

Presidential permit application.

Copies of this application will be

made available, upon request, for public

inspection and copying at the address

provided above. In addition, copies of

the application can be obtained from

Ms. Odessa Hopkins at 202-586-7751,

or by e-mail at

Odessa.Hopkins@hq.doe.gov.

Issued in Washington, DC, on June 14,

2006.

Ellen Russell,

Acting Director, Siting and Permitting, Office

of Electricity Delivery and Energy Reliability.

[FR Doc. E6-9634 Filed 6-19-06; 8:45 am]

BILLING CODE 6450-01-P

DEPARTMENT OF ENERGY

Office of Energy Efficiency and

Renewable Energy

[Docket No. EE-RAC--PET-100]

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 Energy, Department of

Energy.

ACTION: Notice.

SUMMARY : The Department of Energy

(hereafter "the Department") announces

the extension of the time period for

evaluation and decision on the

disposition 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"). In accordance

with section 327(d)(2) of the Energy

Policy and Conservation Act (hereafter

"EPCA"), the Department is extending

the time period for issuing a decision on

the California Petition from June 23,

2006, to December 23, 2006. The

Department is extending this time

period in order to allow it adequate time

to evaluate the California Petition in

light of public comments received on

the California Petition and the

California Energy Commission's

(hereafter "CEC") rebuttal comments

received by the Department on May 15,

2006.

DATES: The Department is extending the

time period of evaluation of the

California Petition from June 23, 2006 to

December 23, 2006.

ADDRESSES : For access to the docket to

read background documents relevant to

^

.0161.

 EE-RM-PET-100 COMMENT 97
35420 Federal Register/ Vol. 71, No. 118 /Tuesday, June 20 , 2006/Notices

this matter; go to the U.S. Department of

Energy, Forrestal Building, Room 1J-018

(Resource Room of the Building

Technologies Program), 1000

Independence Avenue, SW.,

Washington, DC 20585-0121, telephone

number (202) 586-9127, between 9 a.m.

and 4 p.m., Monday through Friday,

except Federal holidays. Please call Ms.

Brenda Edwards-Jones at the above

telephone number for additional

information regarding visiting the

Resource Room. Please note that the

Department's Freedom of Information

Reading Room (formerly Room 1E-190

at the Forrestal Building) is no longer

housing rulemaking materials.

Electronic copies of the California

Petition are available online at either the

Department of Energy's Web site at the

following URL address: http://

www.eere.energy.gov/buildings/

a ppliance_standards/state_

petitions.html or the CEC's Web site at

the following URL address: http://

www.energy.co.govlappliancesl2005-

09-13 _PETITIOIV

CLOTHES WASHERS.PDF. An

electronic copy of California's water

plan update and related material is

available online at the California

Department of Water Resources Web site

at the following URL address: http://

www.waterplan. water.ca.gov/.

Electronic copies of comments received

by the Department on California's

Petition and the California Energy

Commission's rebuttal statement are

available online at the following URL

address: http://www.eere.energy.govl

buildings/appliance_standards/

state_patitions.htm 1.

FOR FURTHER INFORMATION CONTACT:

Bryan Berringer, U.S. Department of

Energy, Office of Energy Efficiency and

Renewable Energy, Building

Technologies, EE-2), 1000

Independence Avenue, SW.,

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

0371. E-mail:

bryan.berringer@ee.doe.gov. Thomas

DePriest, Esq., U.S. Department of

Energy, Office of General Counsel, GC72, 1000 Independence Avenue, SW.,

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

9507, e-mail:

Thornas.DePriest@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

1. Authority

H. Background

1. Authority

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,

including residential clothes washers,

and the authority to regulate them, are

listed in section 322. (42 U.S.C. 6292)

Section 325(g) (42 U.S.C. 6295(g))

establishes standards for certain types of

residential clothes washers and requires

the Department to issue two

rulemakings to consider further

amendments.

Federal energy efficiency

requirements for residential products

generally preempt State laws or

regulations concerning energy

conservation testing, labeling, and

standards. (42 U.S.C. 6297(a)-(c))

However, the Department can grant

waivers of Federal .preemption

(hereafter "waiver" or "exemption") for

particular State laws or regulations, in

accordance with the procedures and

other provisions of section 327(d) of

EPCA. (42 U.S.C. 6297(d)) In particular,

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

the Energy Conservation Program, may

petition for an exemption from Federal

preemption and seek to apply its own

State regulation. (42 U.S.C.

6297(d)(1)(A))

Section 327(d)(2) of EPCA requires

that the Department afford interested

persons a reasonable opportunity to

make written comments, including

rebuttal comments, related to the

petition. (42 U.S.C. 6297(d)(2)) In

addition, section 327(d)(2) of EPCA

provides the Department with the

authority to extend its decision date to

within one year after the" date on which

the Department accepted the petition.

However, the Department must publish

notice of this extension in the Federal

Register and note its reasons for delay.

(42 U.S.C. 6297(d)(2)) In addition,

should the Department decide to grant

a petition, section 336(a)(1) of EPCA

requires that DOE afford interested

persons the opportunity to present

written and oral data, views, and

arguments with respect to any proposed

rules prescribed under section 327. (42

U.S.C. 6306(a)(1))

II. Background

On September 16, 2005, the

Department received a petition from the

CEC, dated September 13, 2005,

pursuant to the requirements of section

327(d) of EPCA (42 U.S.C. 6297(d)) and

Title 10 Code of Federal Regulations

(CFR) part 430, subpart D, and sections

430.41(a)(1) and 430.42 of the CFR.

However, by letter dated November 18,

2005, the Department notified the CEC

that its petition had failed to comply

with certain requirements set out in 10

CFR 430.42(c). The CEC responded on

December 5, 2005, and provided the

required information. By letter dated

December 23, 2005, the Department

notified the CEC that it had accepted the

California Petition as supplemented.

In accordance with section 327(d)(2)

of EPCA (42 U.S.C. 6297(d)(2)) and 10

CFR 430.43, the Department published

notice of the California Petition in the

Federal Register on February 6, 2006

(hereafter "February 2006 notice"). (71

FR 6022) The February 2006 notice

provides a summary of the Department's

authority regarding petitions for

exemption, the California Petition, and

criteria for evaluating petitions for

exemption. In the February 2006 notice,

to help the Department evaluate the

California Petition's request, the

Department also invited the public to

submit comments, data, and information

regarding the California Petition by

April 7, 2006.

In order to afford the CEC a

reasonable opportunity to review public

comments and provide rebuttal, the

Department notified the CEC by letter

dated April 14, 2006, of its opportunity

to provide rebuttal comments. CEC

rebuttal comments were received by the

Department on May 15, 2006.

In this notice, the Department extends

the period for evaluation of the

California Petition to December 23,

2006, in order to provide the

Department adequate time to evaluate

the petition in light of public comments

and CEC rebuttal comments received.

The Department will consider the

information and views submitted and

make a determination on the California

Petition. At such point, the Department

will either provide notice of a proposed

rule on which it will seek written and

oral comment, or provide a notice of,

and the reasons for, denial of the

California Petition.

Issued in Washington, DC, on June 14,

2006.

Alexander A. Karsner,

Assistant Secretary, Energy Efficiency and

Renewable Energy,

[FR Doc. E6-9637 Filed 6-19-06; 8:45 aml

BILLING CODE 6460-01-P

ENVIRONMENTAL PROTECTION

AGENCY

[FRL-8185- 5]

National Advisory Council for

Environmental Policy and Technology

AGENCY : Environmental Protection

Agency (EPA).

ACTION: Notice of meeting.

OW0152

 EE-RM-PET-100 COMMENT 97
Department of Energy

Washington , DC 20585

April 14, 2006

Mr. Jonathan Blees

Assistant Chief Counsel

California Energy Commission

1516 Ninth Street, Mail Station 14

Sacramento, California 95814-5512

Dear Mr. Blees:

This letter is to inform you that the comment period on the U.S. Department of Energy's (DOE)

notice of receipt of the California Energy Commission's (CEC) Petition for Exemption from

Federal Preemption of California's Water Conservation Standards for Residential Clothes

Washers (California Petition) has closed, and to invite the CEC to provide rebuttal statement to

the comments DOE received.

In accordance with 10 CFR 430.43(a) and (b), DOE published notice of the California Petition in

the Federal Register on February 6, 2006. (71 FR 6022) In the February 6, 2006, notice, DOE

invited public comments on the California Petition and information related to the evaluation

factors outlined in the Energy Policy and Conservation Act (EPCA). The comments are on the

DOE website at the following address:

http://www.eere.energy.gov/buildings/appliance standards/state petitions.html.

In accordance with section 327(d)(2) of EPCA, DOE invites the CEC to submit a rebuttal

comment to the public comments received. The CEC may submit rebuttal comments via the

public comment procedures as provided in the February 6, 2006, notice. Should the CEC wish to

submit rebuttal comments, they should be submitted to DOE within thirty days of the date of this

letter. We request CEC include the docket number (EE-RM-PET-100) on all submissions.

If you have any questions regarding this letter, please contact Mr. Bryan Berringer at

Bryan.Berringer@ee.doe.gov or at the following address: Mr. 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.

Richard F. Moorer

Deputy Assistant Secretary

Technology Development

Energy Efficiency and Renewable Energy

0000153

Printed with soy ink on recycled paper

 EE-RM-PET-100 COMMENT 97
6022 Federal Register / Vol. 71, No. 24 / Monday, February 6, 2006 / Proposed Rules

members and their specific alternates

are appointed by the Secretary of

Agriculture from nominations submitted

by certified producer organizations. The

Secretary annually appoints half of the

Board, nine members and nine

alternates, for 2-year terms.

AMS published in the Federal

Register (64 FR 8014; February 18,

1999) its plan to review certain

regulations, including the Egg Research

and Promotion Program (conducted

under the Egg Research and Promotion

Order), under criteria contained in

section 610 of the Regulatory Flexibility

Act (RFA; 5 U.S.C. 601-612). The plan

was updated in the Federal Register on

August 14, 2003 (68 FR 48574). Because

many AMS regulations impact small

entities, AMS decided, as a matter of

policy, to review certain regulations

which, although they may not meet the

threshold requirement under section

610 of the RFA, warrant review.

Accordingly, this notice and request for

comments is made for the Egg Research

and Promotion Order.

The purpose of the review is to

determine whether the Order should be

continued without change, amended, or

rescinded (consistent with the

objectives of the Egg Research and

Consumer Information Act of 1974) to

minimize the impacts on small entities.

AMS will consider the continued need

for the Order; the nature of complaints

or comments received from the public

concerning the Order; the complexity of

the Order; the extent to which the Order

overlaps, duplicates, or conflicts with

other Federal rules, and, to the extent

feasible, with State and local

regulations; and the length of time since

the Order has been evaluated or the

degree to which technology, economic

conditions, or other factors have

changed in the area affected by the

Order.

Written comments, views, opinions,

and other information regarding the

Order's impact on small businesses are

invited.

Dated: January 31, 2006.

Lloyd C. Day,

Administrator, Agricultural Marketing

Service.

[FR Doc. E6-1563 Filed 2-3-06; 8:45 am]

BILLING CODE 3410-02-P

DEPARTMENT OF ENERGY

Office of Energy Efficiency and Avenue, SW., Washington, DC 20585-

Renewable Energy

10 CFR Part 430

[Docket No. EE-RM-PET-100]

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 Energy, Department of

Energy.

ACTION: Petition for Exemption.

SUMMARY: The Department of Energy

(hereafter "the Department") announces

the filing 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"). To help the

Department evaluate the California

Petition's request, the Department

invites interested members of the public

to submit comments they may have on

the California Petition and information

related to the evaluation factors outlined

in the Energy Policy and Conservation

Act.

DATES: The Department will accept

written comments, data, and

information regarding the California

Petition until, but no later than April 7,

2006,

ADDRESSES : A document entitled

"California Preemption Exemption

Petition" is available for review on the

Internet at http://www.eere.energy.govI

buildings/ appliance_standardsl

state petitions.html or from Ms. Brenda

Edwards-Jones, U.S. Department of

Energy, Building Technologies Program,

EE-2J, Room 1J-018, 1000

Independence Ave., SW., Washington,

DC 20585-0121, or by telephone (202)

586-2945.

Please submit comments, identified

by docket number EE-RM-PET-100 by

any of the following methods:

a Federal eRulemaking Portal: http://

www.regulations.gov. Follow the

instructions for submitting comments.

e E-mail:

Cali fornia.Petition@ee. doe.gov. Include

either the docket number BE-RM-PET100, and/or "California Preemption

Exemption Petition" in the subject line

of the message.

e Mail: Ms. Brenda Edwards-Jones,

U.S. Department of Energy, Building

Technologies Program, Mailstop EE-2J,

Room 1J-018, 1000 Independence

0121. Please submit one signed original

paper copy.

• Hand DeliverylCourier: Ms. Brenda

Edwards-Jones, U.S. Department of

Energy, Building Technologies Program,

Room 1J-018, 1000 Independence

Avenue, SW., Washington, DC 20585-

0121.

Instructions: All submissions received

must include the agency name and

docket number for this proceeding. For

detailed instructions on submitting

comments and additional information

on the proceeding, see section II. C of

this document (Submission of

Comments).

Docket: For access to the docket to

read the background documents

relevant to this matter, go to the U.S.

Department of Energy, Forrestal

Building, Room 1J-018 (Resource Room

of the Building Technologies Program),

1000 Independence Avenue, SW.,

Washington, DC, (202) 586-2945,

between 9 a.m. and 4 p.m., Monday

through Friday, except Federal holidays.

Available documents include the

following items: The California Petition;

California's 2005 water plan, California

Water Plan Update 2005: Public Review

Draft; prior Department rulemakings

regarding clothes washers or comments

received, Please call Ms. Brenda

Edwards-Jones at the above telephone

number for additional information

regarding visiting the Resource Room.

Please note: The Department's Freedom of

Information Reading Room (formerly Room

1E-190 at the Forrestal Building) is no longer

housing rulemaking materials.

Electronic copies of the California

Petition are available online at either the

Department of Energy's Web site at the

following URL address: http:/!

www.eere.energy.gov/buildingsl

appliance_standardsl

statepetitions.html or the California

Energy Commission's Web site at the

following URL address: http://

www.energy.ca.gov/appliances/2005-

09-13- PETITION CLOTHES_

WASHERS.PDF. An electronic copy of

California's water plan update and

related material is available online at

the California Department of Water

Resources Web site at the following URL

address: http://

www. waterplan. water. ca.govl.

Electronic copies of prior Department

rulemakings regarding clothes washers

and of the Final Rule Technical Support

Document for clothes washers are

available from the Department's

Building Technologies Program's Web

site at the following URL address:

A®®

 EE-RM-PET-100 COMMENT 97
Federal Register /Vol. 71, No. 24 /Monday, February 6, 2006 /Proposed Rules 6023

http://www.eere.energy.gov/buildings/

appliance-standards/ residential/

clothes washers.html.

This notice also refers to California

standards for residential clothes

washers adopted by the California

Energy Commission (CEC) in 2004.

Material related to this State regulation

is available at the following URL

address under Docket # 03-AAER1(RCW): http://www.energy.ca.govl

appliances12003ru)emaking/

cl o th es_ wash ers/in d ex. h tm 1.

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:

Bryan.Berringei-@ee.doe.gov.

Thomas DePriest, Esq., U.S.

Department of Energy, Office of General

Counsel, GC-72, 1000 Independence

Avenue, SW., Washington, DC 20585,

(202) 586-9507, e-mail:

Thomas.DePriest@hq. doe.gov.

SUPPLEMENTARY INFORMATION:

1. Introduction

A. Authority

B. Background

1. Department Rulemakings Regarding

Clothes Washers

2. California Petition for Waiver of Federal

Preemption and Summary of State

Regulation

3. Factors to Consider in Granting or

Declining an Exemption

II. Discussion

A. Summary of Reasons for Petition

B. Issues on which the Department Seeks

Comment

C. Submission of Comments

I. Introduction

A. Authority

Part B of Title III of the Energy Policy

and Conservation Act, as amended

(hereafter "Act"or EPCA) established

the Energy Conservation Program for

Consumer Products Other Than

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

Products covered under the program,

including residential clothes washers,

and the authority to regulate them, are

listed in section 322. (42 U.S.C. 6292)

Section 325(g) (42 U.S.C. 6295(g))

establishes standards for certain types of

residential clothes washers and requires

the Department to issue two

rulemakings to consider further

amendments.

Federal energy efficiency

requirements for residential products

generally preempt State laws or

regulations concerning energy

conservation testing, labeling, and

standards. (42 U.S.C. 6297(a)-(c))

However, the Department can grant

waivers of Federal preemption

(hereafter "waiver" or "exemption") for

particular State laws or regulations, in

TABLE 1.1.-FEDERAL RESIDENTIAL CLOTHES WASHER STANDARD LEVELS

Product class

Top-Loading, compact ..................................................................

Top-Loading, standard ..................................................................

Front-Loading ................................................................................

Top-Loading, Semi-automatic .......................................................

Suds-saving ...................................................................................

The January 2001 final rule

constituted the second residential

clothes washer rulemaking required by

EPCA. The initial standards prescribed

in EPCA, as amended by the National

Appliance Energy Conservation Act of

1987, required an unheated water

option, and permitted a water rinse

option for clothes washers

manufactured on or after January 1,

1988. (42 U.S.C. 6295(g)) Subsequent

standard amendments made by the

Department established the five product

classes in Table 1.1 and set minimum

energy efficiency standards.

The Energy Policy Act of 2005

amended the Act to adopt new energy

Capacity

(f t.3)

accordance with the procedures and

other provisions of section 327(d) of the

Act. (42 U.S.C. 6297(d)) In particular,

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

the Energy Conservation Program, may

petition for an exemption from Federal.

preemption and seek to apply its own

State regulation. (42 U.S.C.

6297(d)(1)(A))

B. Background

1. Department Rulemakings Regarding

Clothes Washers

On January 12, 2001, the Department

issued a final rule for energy efficiency

and design standards for five product

classes of clothes washers (hereafter

referred to as the January 2001 final

rule): Top-loading compact; Toploading, standard; Front-loading; Toploading, semi-automatic; and Toploading, suds-saving. (66 FR 3314-3333)

The January 2001 final rule set

minimum energy efficiency standards

that would become effective on January

1, 2004, and January 1, 2007. DOE

standards for residential products are

energy efficiency standards only; DOE

has not set a water use requirement for

residential clothes washers. (10 CFR

430.32(g))

(ft.3/kWh/cycle)

Modified energy factor

Effective date

1/1/2007

Effective date

1/1/2004

0.65 ...........................................

1.04 ...........................................

1.04 ...........................................

Unheated rinse water option ....

Unheated rinse water option ....

efficiency and water conservation

standards for commercial clothes

washers. The commercial clothes

washer standards require products

manufactured on or after January 1,

2007, to have a modified energy factor

of at least 1.26 and a water factor of not

more than 9.5. (42 U.S.C. 6313(e))

2. California Petition for Waiver of

Federal Preemption and Summary of

State Regulation

On September 16, 2005, the

Department received a petition for an

exemption from the California Energy

Commission (CEC) (hereafter referred to

as the California Petition), dated

0.65

1.26

1.26

Unheated rinse water option.

Unheated rinse water option.

September 13, 2005, pursuant to the

requirements of section 327(d) of the

Act (42 U.S.C. 6297(d)) and Title 10

Code of Federal Regulations (CFR) Part

430, Subpart D, and Sections

430.41(a)(1) and 430.42 of the CFR.

However, by letter dated November 18,

2005, the Department notified the CEC

that its petition had failed to comply

with certain requirements set out in 10

CFR 430.42(c). The CEC responded on

December 5, 2005, and provided the

required information. By letter dated

December 23, 2005, the Department

notified the CEC that it had accepted the

California petition as supplemented.

00 1s5

 EE-RM-PET-100 COMMENT 97
6024 Federal Register /Vol. 71, No. 24 /Monday, February 6, 2006 /Proposed Rules

California Assembly Bill 1561, passed

by the California legislature and signed

into law in 2002, required the CEC to

adopt water efficiency standards for

residential clothes washers by January

2004, and to file a petition with the

Department for a waiver by April 2004.

The law also required that the new

standards be at least as efficient as

commercial clothes washers. (California

Public Resources Code section 25402

(e)) California currently requires that

commercial clothes washers meet a

maximum water factor of 9.5 by January

1, 2007, the same standard as prescribed

by Section 342 of EPCA, as amended by

the Energy Policy Act of 2005 in August

of 2005. (20 C.C.R. 1605.3(p) and 42

U.S.C. 6313(e)) (CEC, No. 1 at 2)1

In 2004, the CEC adopted water

efficiency standards for Top- and FrontLoading residential clothes washers,

setting a two-tier standard of 8.5

maximum water factor effective January

1, 2007, and of 6.0 maximum water

factor, effective January 1, 2010. (20

C.C.R 1605.2(p)) (CEC, No. 1 at 3)

3. Factors to Consider in Granting or

Declining an Exemption

Section 327(d) of the Act sets forth

factors that the Secretary of Energy

(hereafter "Secretary") is to consider in

evaluating whether to grant an

exemption. (42 U.S.C. 6297(d)) Section

327 (d)(1)(B) requires the Secretary to

grant an exemption if the Secretary

determines that the proffered State

regulation "is needed to meet unusual

and compelling State or local water

interests." (42 U.S.C. 6297(d)(1)(B))

According to section 327(d)(1)(C) of the

Act, "unusual and compelling" interests

are defined as interests which "(i) are

substantially different in nature or

magnitude than those prevailing in the

United States generally; and (ii) are such

that the costs, benefits, burdens, and

reliability of energy or water savings

resulting from the State regulation make

such regulation preferable or 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

State regulation." (42 U.S.C.

6297(d)(1)(C))

I A notation in the form "CEC, No. I at p. 2"

identifies a written comment the Department has

received and has included in the docket of this

rulemaking. This particular notation refers to a

comment (1) By the California Energy Commission

(CEC), (2) in document number 1 in the docket of

this proceeding (maintained in the Resource Room

of the Building Technologies Program), and (3)

appearing on page 2 of document number 1.

According to sections 327(d)(3)-(4),

the Secretary may not grant an

exemption if the Secretary finds the

State regulation would "significantly

burden manufacturing, marketing,

distribution, sale, or servicing of the

covered product on a national basis," or

"result in the unavailability" in the

State of any covered product's

"performance characteristics (including

reliability), features, sizes, capacities,

and volumes that are substantially the

same as those generally available in the

State at the time of the Secretary's

finding, except that the failure of some

classes (or types) to meet this criterion

shall not affect the Secretary's

determination of whether to prescribe a

rule for other classes (or types)." (41

U.S.C. 6297(d)(3) and (4)) To evaluate

whether the State regulation will create

a significant burden, the Secretary is to

consider "all relevant factors,"

including the following:

"(A) The extent to which the State

regulation will increase manufacturing

or distribution costs of manufacturers,

distributors, and others;

(B) The extent to 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 State

regulation would cause a burden to

manufacturers to redesign and produce

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 States; or

(ii) In the current or projected sales.

volume of the covered product type (or

class) in the State and the United States;

and

(D) 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." (U.S.C.

6297(d)(3)(A) through (D))

H. Discussion

A. Summary of Reasons for Petition

The California Petition seeks waivers

of Federal preemption for all classes of

residential clothes washers that are

covered products under the Act,

"including but not necessarily limited

to-Compact and Standard; TopLoading and Front-Loading; Automatic

and Semi-Automatic; and Suds-Saving

and Non-Suds-Saving." (CEC, No. 1 at p.

4)

According to the California Petition,

the CEC states that California currently

uses, and will continue to need, costeffective water conservation strategies.

The CEC states that every water supply

source for the State is "overappropriated" and water demand is

projected to grow rapidly. (CEC, No. 1

at p. 1) Furthermore, the CEC claims

that clothes washer standards are

distinctly preferable to alternative

approaches to water savings and

production. (CEC, No. 1 at p. 26) The

CEC additionally argues that California's

local and state water interests are

unusual and compelling, and that

"California's water interests (and

associated energy interest) are different

in both nature and magnitude than

those prevailing in the United States

generally. * * *" (CEC, No. 1 at p. 5)

The California Petition also provides

information relating to the California

standard's burden on manufacturing,

marketing, distribution, sale, or

servicing of the residential clothes

washers on a national basis, and states

that California's water efficiency

standards will achieve benefits without

significantly impacting the residential

clothes washer industry or the

consumer-usefulness of appliances.

(CEC, No. 1 at pp. 37 through 41)

B. Issues on Which the Department

Seeks Comment

The Department is interested in

receiving comments on all aspects of the

California Petition and this notice. The

Department is especially interested in

public comment on information related

to the evaluation of factors outlined in

section 327 of the Act, including the

following: whether the California

Petition has established that California

has unusual and compelling State or

local water interests to warrant a waiver

from Federal preemption; whether the

State regulation will be burdensome;

and whether the State regulation will

affect the availability of covered

products with features generally

available in California. In that regard,

the Department is particularly interested

in receiving comment on the following

questions:

* Are California's water interests

"unusual and compelling," and how do

they compare to those of the Nation and

of other States? (42 U.S.C. 6297(d)(1)(B))

® Are there other factors and

information in addition to the California

Petition the Department should consider

in determining whether California's

water interests are "unusual and

compelling"? (42 U.S.G. 6297(d.)(1)(C))

€b11 a^ 6

 EE-RM-PET-100 COMMENT 97
Federal Register /Vol, 71, No. 24/Monday, February 6, 2006/Proposed Rules

• Are the water use issues

"substantially different in nature or

magnitude than those prevailing in the

United States generally?" Should the

phrase, "in the United States generally"

be interpreted to include comparison to

regions as well as national averages? Are

the water use issues in California

substantially different in nature or

magnitude than those prevailing in

other western states? (42 U.S.C.

6297(d)(1)(C)(i))

• Are there "alternative approaches to

* * * [clothes washer] water savings"

that could achieve the same water

savings in California as would be

achieved by the California clothes

washer standards? (42 U.S.C.

6297(d)(1)(C)(ii))

• Are there "alternative approaches to

* * * water savings or production" not

considered in the California water plan

that could achieve the same water

savings in California as would be

achieved by the California clothes

washer standards? (42 U.S.C.

6297(d)(1)(C)(ii))

• Are there alternative policies or

programs in California that can achieve

the same water savings at the same or

lower cost or burden, or with greater

reliability and benefit? (42 U.S.C.

6297(d)(1)(C)(ii))

• Are there estimates of marketinduced improvements in efficiency of

all products subject to the California

regulation? (42 U.S.C. 6297(d)(1)(C)(ii))

• Is the analysis used in the

California Petition accurate? For

example, are the State's savings

estimates correct? How valid are the

State's assumptions?

• Is California Petition's statement

that water supplies are not "fungible"

and that it is very difficult to transfer

any water savings from one sector of the

State to another accurate? Are there

ways California can transfer water

savings more easily?

• What impacts would the State

standards have on manufacturing,

marketing, distribution, sale, or

servicing of covered products on a

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

• What impact will the California

clothes washer standard have on

manufacturing or distribution costs of

manufacturers, distributors and others?

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

• Will the California clothes washer

standard disadvantage smaller

manufacturers, distributors, or dealers

or lessen competition in California? (42

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

• To what extent would the California

standard cause a burden to

manufacturers to redesign their

residential clothes washers? (42 U.S.C.

6297(d)(3)(C))

• Would the California standard

result in a reduction in product

availability? (42 U.S.C. 6297(d)(3)(C)(i))

• Would the California standard

result in a reduction in sales volume of

clothes washers either in California or

in the United States as a whole? (42

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

• To what extent is the California

regulation likely to contribute

significantly to a proliferation of State

appliance efficiency requirements?

What cumulative impact would such

requirements have? (42 U.S.C.

6297(d)(3)(D))

• Would the California regulation

impact. the availability in the State of

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

State? (42 U.S.C. 6297(d)(4))

• Would the California standard

affect the availability of classes of

clothes washers or clothes washer

performance characteristics, reliability,

features, sizes, capacities and volumes

that are generally available in

California? (42 U.S.C. 6297(d)(4))

After the period for written

comments, the Department will

consider the information and views

submitted, and make a decision on

whether to prescribe a waiver from

Federal preemption for California with

regard to water use standards for

residential clothes washers.

C. Submission of Comments

The Department will accept

comments, data, and information

regarding this notice no later than the

date provided at the beginning of the

notice. Please submit comments, data,

and information electronically. Send

them to the following e-mail address:

California.Petition@ee.doe.gov. Submit

electronic comments in WordPerfect,

Microsoft Word, PDF, or text (ASCII) file

format and avoid the use of special

characters or any form of encryption.

Identify comments in electronic format

by the docket number EE-RM-PET-100

and wherever possible include the

electronic signature of the author.

Absent an electronic signature,

comments submitted electronically

must be followed and authenticated by

submitting the signed original paper

document. DOE does not accept

telefacsimiles (faxes).

In accordance with 10 CFR 1004.11,

any person submitting information that

he or she believes to be confidential and

exempt by law from public disclosure

should submit two copies: one copy of

the document including all the

information believed to be confidential,

6025

and one copy of the document with the

information believed to be confidential

deleted. The Department will make its

own determination about the

confidential status of the information

and treat it according to its

determination.

Factors of interest to the Department

when evaluating requests to treat

submitted information as confidential

include: (1) A description of the items;

(2) whether and why such items are

customarily treated as confidential

within the industry; (3) whether the

information is generally known by or

available from other sources; (4)

whether the information has previously

been made available to others without

obligation concerning its

confidentiality; (5) an explanation of the

competitive injury to the submitting

person which would result from public

disclosure; (6) when such information

might lose its confidential character due

to the passage of time; and (7) why

disclosure of the information would be

contrary to the public interest.

Issued in Washington, DC, on January 27,

2006.

Douglas L. Faulkner,

Acting Assistant Secretary, Energy Efficiency

and Renewable Energy.

[FR Doc. 06-1041 Filed 2-3-06; 8:45 am]

OILUNG CODE 6450-01-P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 39

[Docket No. FAA-2005-23319; Directorate

Identifier 2005-CE-52-AD]

RIN 2120-AA64

Airworthiness Directives; Raytheon

Aircraft Company 65, 90, 99, and 100

Series Airplanes

AGENCY : Federal Aviation

Administration (FAA). Department n1

Transportation (DOT).

ACTION: Notice of proposed rulem+ihou

(NPRM).

SUMMARY : The FAA proposes to

supersede Airworthiness Directive (Al)

92-07-05, which applies to certain

Raytheon Aircraft Company (Raytheon)

65, 90, 99, and 100 series airplanes. AI)

92-07-05 currently requires you to

inspect the rudder trim tab for proper

moisture drainage provisions, and if the

correct drainage provisions do not exist,

prior to further flight, modify the rudder

trim tab. Since we issued AD 92-07-05,

FAA has received and evaluated new

service information that requires the

0 OOi.5"^

 EE-RM-PET-100 COMMENT 97
Department of Energy

Washington, DC 20585

December 23, 2005

Mr. Jonathan Blees

Assistant Chief Counsel

California Energy Commission

1516 Ninth Street - Mail Station 14

Sacramento , CA 95814-5512

Dear Mr. Blees:

The U.S. Department of Energy (DOE or Department) has received the California

Energy Commission's petition for exemption from federal preemption of

California's water conservation standards for residential clothes washers, dated

September 13, 2005, and the supplemental letter dated December 5, 2005,

regarding the requirements under 10 CFR 430.42(c). By this letter, DOE is now

providing you notification that the Department has reviewed your

September 13, 2005, petition and the December 5, 2005, letter and determined

that the regulatory requirements have been met and that DOE has accepted your

petition for exemption from federal preemption pursuant to 10 CFR 430.42(f).

Sincerely,

Douglas L. Faulkner

Acting Assistant Secretary

Energy Efficiency and Renewable Energy

cc: Charles A. Samuel, General Counsel

Association of Home Appliance Manufacturers

Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo, PC

Printed with soy ink on recycled paper

 EE-RM-PET-100 COMMENT 97
apart ent of Energy

Washington, DC 20585

November 18, 2005

Mr. Jonathan Blees

Assistant Chief Counsel

California Energy Commission

1516 Ninth Street - Mail Station 14

Sacramento, CA 95814-5512

Dear Mr. Blees:

F,;-,: F,;-,: ;? P ,Mtn'' {:a=. !W - ,-; a.. N; .

t.. 4 .^ V;

The U.S. Department of Energy (DOE) has received the California Energy Commission's

petition for exemption from federal preemption of California's water conservation standards for

residential clothes washers, dated September 13, 2005. DOE has reviewed the petition, and

determined that the regulatory requirements have not been met. The statement required by 10

C.F.R. 430.42(c), on whether "the same or related issue, act or transaction has been or presently

is being considered or investigated by any State agency, department, or instrumentally," was not

included in the petition. Please supply DOE with information in writing sufficient to satisfy this

filing requirement and DOE will complete its review of your petition and provide you with the

notification required under 10 C.F.R. 430.42(f).

Sincerely,

Douglas L. Faulkner

Acting Assistant Secretary

Energy Efficiency and Renewable Energy

cc: Charles A. Samuels, General Counsel

Association of Home Appliance Manufacturers

Mintz, Levin, Cohn, Ferris, Glovsky, and Popeo, PC

Printed with soy ink on recycled paper G uC GJ-59

 EE-RM-PET-100 COMMENT 97
® A 77®'^ ter'--

,L,'.1.'.., ^rManufacturers

 EE-RM-PET-100 COMMENT 97
a. oriaI ion of boar

apl,liancr Ina fill I'a (.[(I

February 16, 2007

1 t 11 19th street , n' 6. suite 402 ^ vrashington , dc 20036

202.872. 5955 .. fax 202,872.9354 . ww .aham.org

Association of Home Appliance Manufacturers

Response to

The California Energy Commission's Request for Reconsideration of

the Denial of the Petition for Exemption from Preemption for

Water Conservation Standards for Residential Clotheswashers

Docket Number: EE- -PET-100

The CEC petition sheds no new light on its petition which would justify, under the

criteria in 10 CFR 430.48(b), reversing in whole or in part DOE's denial. DOE's denial was

appropriately reasoned and took into account all relevant facts presented to it and the applicable

law.

The essence of CEC's argument is that it need not comply with the legal requirements to

present its entire case to the Department; rather, that it is the Department's obligation to ferret

out in the State record CEC's analysis and reshape the petition to create some version of it that

can be granted. Indeed, at the conclusion of the Motion for Reconsideration, CEC lists a number

of possible partial grants options. CEC's attitude apparently is that it is DOE's obligation to find

some way to make the facts in the petition and the federal laws match up so that CEC can have

some version, any version, of the state residential clotheswasher standard.

This is not the law, however. It is California's burden to justify the extraordinary

circumstances that make a specific and fully- justified standard "necessary" under the law. CEC

had well over a year to shape its state rule and petition to comport with the criteria in EPCA.

That it failed, despite the able work of its counsel and other staff, indicates that such an

exemption cannot be justified.

1. CEC requests that DOE ignore the three-year effective date lead-in requirement.

CEC argues that because it is difficult to predict EXACTLY when a DOE exemption procedure

will conclude it had no obligation to develop a standard with an effective date and commensurate

analysis which would be AT ALL RELEVANT to the likely effective date. It is a long leap from

recognizing that no petition can predict precisely a possible effective date to the CEC

intentionally promulgating a standard and preparing a petition based on a January 1, 2007 initial

effective date, upon which all its analysis for that tier was based, including benefits, even though

it knew a legally proper date would be at least 3 years later. This is highly relevant because CEC

justification for this first tier is heavily weighted toward early benefits being achieved. If the

benefits are not to be achieved for another three years it significantly changes the benefit-cost

calculations.

OOOO1.6-O

 EE-RM-PET-100 COMMENT 97
February 16, 2007

Page 2

AHAM Response to

The California Energy Commission's

Request for Reconsideration

2. DOE was correct in concluding that California did not show that the standards are

preferable to alternatives. The law requires CEC, as part of a state energy and water plan, to

demonstrate to DOE that the standard has been considered as part of, and in comparison to,

alternatives and is preferable or NECESSARY when compared to those alternatives. There is no

such plan in California that makes, or even attempts to make , this showing. That explains why

CEC was unable to proffer it. As AHAM comments indicated, the state water plan does not even

mention, much less rely, on these standards. In the development of the state plan and in the

submission to DOE, California essentially did not address the requirement that it undertake a

comparative analysis. This indicates not only the deficiency in their regulatory approach and the

value of preemption, but that this critical showing cannot be made by California.

The law does not allow CEC to makes its case merely by asserting that it would like to

have these state standards. It must show that they are clearly preferable or necessary. Necessity

is not demonstrated, contrary to the CEC's extraordinary view, by the fact that the state has

requested the exemption and that major stakeholders in the state support it. Under that view, any

half decent petition would meet the "necessity" test. Rather, the federal law requires California

to undertake exactly the rigorous analysis which CEC refused to do at the state level.

As we showed, if that analysis was done, one would readily conclude that residential

clothes washer water and energy use are a relatively small portion of statewide water or energy

use. The regulations are unlikely to have much impact on overall state water and energy use,

particularly considering other regulatory and market activities . There are myriad other activities

that the state could do at modest levels, including repairs of leaks and limited conservation

efforts utilizing proven, cost-effective, conventional technologies aimed at California's huge

agricultural water use, that would far surpass the water savings from these clothes washer

standards. California water and energy problems will not be substantially alleviated even if

every new clotheswasher in California was required to be only an expensive , high-end front

loader, as the CEC contemplates.

CEC cannot seriously maintain that since DOE finally accepted, on purely ministerial

grounds, the sufficiency of its filing that DOE must accept it on substantive grounds. Just as

CEC would do, the initial DOE review of the petition simply ensures that it has the right parts,

signatures, etc., not that it is justified on the merits.

More significantly, CEC creates a false standard when it claims that DOE is requiring it

to show beyond a reasonable doubt that the standards are preferable to other alternatives. DOE

never stated that that is the standard but rather that there must be a sufficiently detailed analysis

that DOE can examine whether such standards are preferable to other alternatives. We will not

repeat our arguments and the data we submitted (with clear and complete explanation and backup on the record) which shows that CEC has grossly underestimated the costs of the limited

selection of horizontal-axis products that it would require every California consumer to purchase.

oo.

 EE-RM-PET-100 COMMENT 97
February 16, 2007

Page 3

AHAM Response to

The California Energy Commission's

Request for Reconsideration

3. DOE was correct in applying the "safe harbor" test to CEC's 6.0 WF proposal to

eliminate top loaders. When NAECA stakeholders, including the CEC, developed the

preemption language, they included language which is the same as is in the DOE standardssetting language - the so-called "safe harbor". This language indicates a 1986 consensus -

renewed by Congress in every subsequent energy law - that a federal standard or exempted state

standard must not deprive consumers of the same range of choices, designs, and prices and other

relevant features and considerations which enrich their lives today. The quality of life of

California consumers and the clear preferences of most purchasers for washers of conventional

configuration, design and price must not be adversely affected by DOE action or CEC social

engineering.

AHAM demonstrated, and CEC essentially did not rebut, that the 6.0 water factor leads

to a handful of extremely expensive, very new design top loaders and expensive front loaders

which contain certain features and aspects that a significant number of California , and U.S.

consumers as whole do not like. AHAM members sell top-loaders and front-loaders and have no

built-in bias against one or the other. But, we have a strong bias towards protecting consumer

sovereignty and meeting the needs of all our customers with a variety of designs. And, although

the market is shifting, there is no question that a huge proportion of consumers prefer the cost

and feature price/package of top-loaders.

There is no basis in the law to assume that DOE should form fit the CEC petition and

ascertain some other water factor level that it would exempt such as the proffered 6.3 water

factor. The 6.3 number is based on an extremely low production volume product by Staber, a

small manufacturer. This blatant cherry picking does not deal with the essential question of the

impacts on millions of California consumers of having such radically limited choices.

(Ironically, the model CEC identified as the lowest WF top-loader machine may no longer exist

and is not on the current Energy Star list.) Nor does the law allow DOE to decide to abandon

and tear away 90% of the CEC petition and grant only a 6.0 water factor for front loaders. Yes,

that is more feasible than the rest of the petition but what is the point? What significant savings

are attributable to such action that would make even a dent in California's water and energy

problems?

4. DOE correctly concluded that California's water and energy interest are not

different than other states. AHAM showed that the water prices and energy issues in California

are similar to those faced in many other parts of the United States. California is not left

defenseless with respect to clothes washer water use. The expansion of the existing California

programs in the context of climate change and resource conservation to deal with energy and

water efficiency already have delivered powerful results in shifting of the marketplace in

California and can be expected to be equally successful in the future.

6. There is no basis for DOE to determine that state standards would not

significantly burden national manufacturing marketing, etc. AHAM strongly disagrees that DOE

properly dismissed AHAM's arguments on these critical points. Indeed, the CEC petition sets up

6666162

 EE-RM-PET-100 COMMENT 97
February 16, 2007

Page 4

ALAN[ Response to

The California Energy Commission's

Request for Reconsideration

exactly the scenario about which Congress was concerned - undermining a national system of

manufacturing, distribution and marketing.

7. Any DOE decision to reverse in any manner its previous decision must be

followed by the full procedure contemplated under the law. We urge DOE not to change its

decision to deny in whole the petition. But, any action inconsistent with denial requires a full,

public rulemaking applying all relevant criteria in the statute to consider the justification and

consequences of any such action.

Respectfully submitted,

David B. Calabrese

Vice President

Government Relations

Charles Samuels

Counsel to AHAM

Mintz, Levin, Cohn, Ferris, Glovsky and

Popeo, P.C.

701 Pennsylvania Avenue, N.W.

Washington, D.C., 20004-2608

(202) 434-7300

 EE-RM-PET-100 COMMENT 97
L ! I

1111 19th stree !, nv. a suite 402 i washington, ric 20036

202.872.5955 . ?ax 202.872.9354 L v'w .anam.org a.^u( ill tion lio uni

a; plianrr mantd'aetureN

Docket EE-RM-PET- 100

April 7, 2006

0®001 4

Response of the Association of Home Appliance Manufacturers

To the California Energy Commission's

Petition for Exemption from Federal Preemption of California 's Water and Energy

Conservation Standards for Residential Clothes Washers

 EE-RM-PET-100 COMMENT 97
TABLE OF CONTENTS

1. EXECUTIVE SUMMARY ...................................................................................1

H. INTRODUCTION AND SUMMARY ..................................................................1

III. THE EXEMPTION-FROM-PREEMPTION PROVISIONS ...........................4

IV. METHODOLOGY ................................................................................................ 8

V. CALIFORNIA WATER ISSUES .........................................................................8

A. Significance of Clothes Washers .............................................................. 8

B. Fungibillty of Water Conservation ........................................................ 11

C. The Savings Potential From the Standard Is Minimal ........................ 12

D. There are Many Alternative Strategies to Save Water; The Clothes

Washer Standard is not Integral to the California Water or Energy

Plans .........................................................................................................13

1. Non-Clothes Washer Alternatives ............................................. 13

2. Clothes Washer Alternatives ..................................................... 15

E. California Water Costs and Interests are Similar to Those in Other

Regions .....................................................................................................17

VI. IMPACT ON CALIFORNIA CONSUMERS IF THE CALIFORNIA

STANDARD WAS IMPLEMENTED ...............................................................20

A. Energy and Water Clothes Washer Technology Issues ....................... 20

B. Washer Technology Platform Description ........................................... 23

1. Top Load - Agitator (Conventional Deep Fill) Technology ... 23

2. Top Load - Reduced Fill ............................................................ 24

3. Front Load ................................................................................... 24

C. California Consumer Satisfaction Effects if Moderately Priced,

Conventional Top-Load Machines Are No Longer Available............ 25

D. Consumer Preference/Utility and Rinsing Issues ............................ .....26

E. Cost and Price Implications ...................................................................28

F. The California Standard Would Result in Much Higher Prices and a

Reduction in Product Availability to California Consumers.............. 34

G. The Analysis Used In The California Petition Is Inaccurate for

Product Costs And Consumer Savings ................................................. 34

VII. EFFECT ON THE NATIONAL MARKET ......................................................37

A. Financial Effects on Manufacturers ...................................................... 38

B. The California Standard Would Cause A Burden On Manufacturers

To Redesign Their Residential Clothes Washers .................................40

C. Effects on Competition ........................................................................... 41

D. Sourcing Patterns and Effects on Jobs ..................................................41

VIII. CONCLUSION ....................................................................................................50

i

0000165

 EE-RM-PET-100 COMMENT 97
I. EXECUTIVE SUMMARY

The CEC petition must overcome the high hurdle of the stringent criteria in

NAECA which strongly disfavor the granting of an exemption from preemption unless

there are:

1. Unusual and compelling state interests for which the regulation is needed,

which will substantially relieve the state problem, and which cannot be reasonably

alleviated otherwise;

2. No significant negative impacts on the national market; and

3. No deprivation to California consumers and businesses of the product

features, designs, utilities and prices they favor.

This petition is based on a water standard which was justified by the California

Legislature and the CEC in large part based on energy considerations. Yet, the water

factor standard is not shown to be necessary; it is not even contained in the state energy

or water plans. Any reasonable estimate of water savings attributable to the proposed

standard is an insignificant part of the overall water use picture in California. There are

numerous other programs, which with only modest achievement, could save far more

water. Based on comparative water use, shortages, and prices the California situation is

not significantly different than that of many other regions, cities and states.

Furthermore, the national market would suffer disruption and harm as a result of a

California standard which would effectively ban top-load, conventional clothes washers

in California. Manufacturers, who already have invested heavily in good faith reliance

on the DOE clothes washer standards, would lose large parts of that investment --

adversely affecting cash flow, profitability and the maintenance of domestic employment.

Finally, California consumers would be deprived of exactly the combination of features,

designs, utilities and price points that the "safe-harbor" provision of the preemption

provision is designed to protect. To put it simply, if we show that conventional toploaders are prevalent and desired in the California market and would be eliminated by

this standard, the petition must be denied.

The CEC petition fails all of the tests under 42 U.S.C. 6297 and the Petition

should be denied.

II. INTRODUCTION AND SUMMARY

These comments are in response to the February 6, 2006 Federal Register notice

regarding the September 15, 2005 petition by the California Energy Commission in

which it seeks, pursuant to the 42 U.S.C. 6297(d), a waiver of federal preemption for a

clothes washer water and energy standard.

BOO-' .

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 20061

April 7, 2006

The CEC action was taken pursuant to Assembly Bill 1561, enacted in 2002,

which required CEC to adopt separate water and energy standards for clothes washers

and file a petition for waiver. The law sharply limits CEC 's discretion, requiring that the

new standards be at least as stringent as those CEC set for commercial clothes washers.

In 2004, CEC promulgated much more stringent residential clothes washer standards than

it set for commercial clothes washers: a two-tier water factor of 8.5 by January 1, 2007

and a 6.0 water factor effective January 1, 2010. (The status of these purported 2007

standards are unclear since there is a 3 year "lead-in" period between any final rule

granting a petition and its possible effective date . 41 U.S.C. 6297(d)(5)(A)).

The lengthy and specific criteria a petition must overcome to be granted are

clearly stated in the Federal Register Notice. See 71 Fed. Reg. 6022, 6024.

The Association of Home Appliance Manufacturers ("AHAM") is the United

States trade association for the manufacturers of major , portable and floor care appliances

and related suppliers. AHAM membership includes virtually all the manufacturers of

residential clothes washers who sell machines in the U .S. We have represented the

appliance industry on energy matters for over 30 years.

AHAM and its members were principal industry architects of the federal energy

laws on appliance standards and federal preemption and have been active on state

appliance standards activities, particularly in California. AHAM led the regulatory and

negotiations effortwhich culminated in the January 2001 final rule for the residential

2004/2007 clothes washers federal efficiency standards. This rule was expressly and

carefully designed to save significant amounts of energy and water, maintain full lines of

clothes washer models for consumers and mitigate manufacturer impact . Final Rule 66

Fed. Rea. 3314 et. sea. (January 12, 2001) and Proposed Rule at 65 Fed. Reg. 59550 et.

sec. (October 5, 2000). This careful balance, and the entire viability of a national system

of standards, is at stake in this proceeding. AHAM also was engaged in the CEC

rulemaking which promulgated the standard which is the subject of this petition.

The essence, the "bargain," of the Energy Policy and Conservation Act, as

amended, (42 USC 6291-6307) is a comprehensive system of federal regulations and

periodic updates for a range of appliances and consumer and commercial/industrial

products in exchange for which there is virtually complete federal preemption of state

energy conservation testing, labeling, standards and related requirements (42 USC 6297).

There is a limited opportunity for states in urgent and exigent circumstances to obtain a

waiver from the Department. This can only be done where a detailed and credible case

can be made for "unusual and compelling state or local water and energy interests" (42

USC 6297(d)(B)), and the statute provides a complete set of criteria that must be proven

to make this case . Even if such a case can be made, the Secretary may not grant the

exception if it finds that either the regulation would (a) "significantly burden

2

0000167

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

manufacturing, marketing, distribution, sale or servicing of the covered product on a

national basis," or (b) "result in the unavailability in the state of any covered products

performance characteristics (including reliability), features, sizes, capacities and volumes

that are substantially the same as those generally available in the state at the time of the

Secretary's finding ...." This latter provision is known as the "safe harbor" because it

protects consumers and the national market regardless of the state's interest and the

benefits of the standard. There are a number of supplementary criteria in the statute

relevant to these determinations.

The great detail required and difficulty of proof in making the case for waiver is

not arbitrary or an historical artifact. It was the intention of Congress, particularly in its

most significant revision, the National Appliance Energy Conservation Act ("NAECA"),

to limit successful waiver petitions to those circumstances in which a state has no other

significant options to protect its energy or water interests and yet its actions will not

significantly impact or burden the state or national consumers or manufacturers.

One might expect that the first waiver petition filed by a state would occur under

extreme circumstances where the state-proposed solution seems clear, effective, and

central to a plan and where consumers and manufacturers are left unharmed.

Unfortunately, just the opposite has occurred. The attachment of water requirements to a

separate CEC energy standard was not based on expert, rigorous consideration by state

agencies of expertise. In fact, the CEC was considering other products as the subject of a

first waiver petition but was itself preempted by the action of the Legislature imposing

the requirement that the CEC adopt this standard and file a waiver.

This legislation was not developed after a process in which there first was careful

consideration in the state water and energy plan of whether separate water and energy

standards for residential clothes washers were critical to dealing with California's water

supply problems. In fact, as far as AHAM can ascertain, this standard is not even a part

of the thousands of pages of the state's water and energy plans or if it is, it is buried as an

inconsequential piece of the overall picture. (The CEC submission of reams of pages, in

paper and electronically, is not proof; it is simply a data dump.) Instead, the proposed

water and energy standard provides little benefit and imposes a direct burden on out-ofstate manufacturers who are not influential in California.

As will be described below, the Commission has failed to meet its initial burden

under the statute to show as a threshold matter its need and interest in this regulation, its

necessity as compared to alternatives, and its efficacy. As we will show, the standard

also has enormous implications on the types and costs of products which will be available

in the California market and will impact the utility and product selection that consumers

expect in California. Its primary effect is to deprive California consumers of moderately

priced, conventional, top-loading clothes washers. CEC does not deny this effect; it

3

0000168

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

simply belittles it. But, the statute is clear that if this result is likely, it is a "show

stopper" to the granting of a waiver regardless of California's interest.

A California standard will undermine the federal uniform system of the

regulations because California's interest is similar to that of other states and regions

which could make the same argument for exemption-from-preemption on this and other

products if California is successful. Adequate water supplies in the face of population

growth is a problem facing other and states such as Nevada, Arizona and Texas. And,

the regulation, if allowed to be imposed in California, will significantly burden

manufacturers in their production, distribution, marketing and sale of these products. In

fact, the proposed CEC water/energy clothes washer standard is exactly the type of state

standard that NAECA intended to preempt, not permit.

The citizens of California will still have tools to deal with their water and energy

problems without this standard. First, the federal energy standards for clothes washers

will save not only many quads of energy but billions of gallons of water. Second, Energy

Star and California-specific energy and water incentive programs will add to these water

and energy savings and continue to pull the market along in the "green" direction in

which it already is going. Recent federal tax credits accelerate this pace. There are many

alternatives Californians can implement to save water and the energy that is used in the

water system. Only minor improvements in some of these massive systems will far

outweigh any possible savings in a separate California energy and water standard for

clothes washers.

III. THE EXEMPTION-FROM-PREEMPTION PROVISIONS

Reviewing the statutory scheme and Congressional intent is critical because they

reveal (a) the considerable burden on both the petitioner and DOE before a waiver can be

granted; and (b) that a successful petition must overcome three independent reviews.

The state's interest in and consideration of the proposed standard must be

demonstrated under several criteria. But, even if this demonstration is made, DOE must

still consider whether the state regulation will significantly burden the production,

distribution, and marketing of the product on a national basis (which we will describe as

"the national market.") Finally, no matter what DOE's evaluation of the national market,

it may not prescribe the rule if it finds that the standard will violate the so-called "safeharbor" prohibition -- which also applies in the consideration of federal energy standards

-- that the waiver may not be allowed if it is likely to result in the unavailability in the

state of certain product types, classes, performance characteristics and other key aspects

of the product that are currently available.

4

00001G9

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET- 100 [April 7, 2006]

April 7, 2006

Thus, if California fails to meet any aspect of its initial burden on state interest,

the petition fails. Even if California meets this burden, the petition fails if the national

market will be adversely affected. And, no matter what DOE's evaluation is of the state

interest and the national impact, consumers in California must not be deprived of any

product features or utilities that they consider to be significant and that exist in today's

marketplace.

This tripartite structure was intentionally designed to eliminate all but the most

extraordinary requests. In this, as in many regards, NAECA was an update and a

significant restructuring of prior law. Preemption is clearly an equal hallmark of NAECA

alongside a federal system of standards. The legislative history is replete with references

that the strong preemption in NAECA was in recognition that appliance manufacturers

face "a growing plethora of different state regulations," and are "confronted with the

problem of a growing patchwork of differing state regulations." HR Rep. No. 100-11;

100th Congress, 1st Session at 23 (1987); S. Rep. No. 100-6; 100th Congress, 1st Session

at 4-5 (1987). The preemption provision "is designed to protect the appliance

manufacturer from having to comply with the patchwork of numerous conflicting state

requirements." HR Rep. No. 100-11 at 24. The Senate report stated that NAECA, by

adding a number of specific federal standards and rulemaking schedules, has the effect of

"increasing federal preemption of state regulation." S. Report 100 -61 at 12.

Indeed, NAECA enhanced and made more difficult the process to obtain waivers

by, among other revisions, changing the states' burden from showing "a significant State

or local interest" (Pub. L.94-163 89 State 871 (1975)) to establishing "by a

preponderance of the evidence that such State regulation is needed to meet unusual and

compelling state or local energy interests." The Senate Report stated that this change

provided "new and more stringent criteria " that a State must establish . S. Rep. 100-6 at 9

(1987).

There was no controversy in Congress about the preemption provisions and

energy conservation groups testified about their importance. Howard Geller , then head of

ACEE, stressed that the legislation "will prevent a patchwork of state regulations, a factor

of extreme importance for appliance manufacturers ." Hearing before the Subcommittee

on Energy Conservation and Power, 99th Congress, Serial No. 99-165 (September 10,

1986) at 113. David Goldstein and a colleague at NRDC stressed that appliance

manufacturer 's benefit under NAECA "by being protected from a potential patchwork of

state regulations." Id. at 127.

Indeed, the then Chairman of the California Energy Commission stated in a letter

to the Subcommittee that "we understand that this bill is the result of intense negotiations,

and that the explicit trade-off was national standards for stronger preemption of state

standards than exists under current law. We have thought seriously about the new

5

00001,70

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

exemption criteria, which significantly reduces the state's ability to set standards and

weigh them against the benefit of nationwide conservation. We conclude that the tradeoff is worthwhile." Id. at 162.

California and New York State were so concerned, however, about the difficulty

in obtaining exemption from preemption that they each requested Congress to revise the

legislative language or create a legislative history which would state that the DOE would

analyze a petition based on the overall benefits of the exempted standard versus the

burdens on manufacturers and consumers. It is significant that neither the California

proposed language nor the New York State Energy Office proposed language, which

would have fundamentally changed the nature of this provision to an overall balancing

provision, are part of the intent of Congress, as evidenced in the descriptions in the House

and Senate reports. The requests are only included in the record as submitted testimony.

Id. at pages .174-185 and 162-163.

Thus, Congress rejected an attempt by California and New York State to change

this provision into one involving the weighing of respective interests. Instead, each

component of the case -- the state interest; the impact on the national market; and the

impact on California consumers -- are separate and necessary determinations. It is

irrelevant whether California can demonstrate -- which here it decidedly does not -- that

its interest in the benefits of the state water and energy conservation are greater than the

burdens to manufacturers and to California consumers. Each aspect of the exemption

consideration stands on its own.

There are several other specific aspects of the statutory provision which must be

recognized. First, the state must show, by a preponderance of evidence , that the state

regulation is "needed" to resolve the unusual and compelling state or local energy and

water interest. 42 U.S.C. 6297 (d)(1)(B). .A measure being "needed" means proof of a

condition beyond desirability , convenience or cost-effectiveness. It means that the state

or local energy or water interests cannot be achieved under any reasonable circumstances

without this specific standard and, that , in fact, they will be achieved with the application

of the standard. This requirement of necessity is separate from the language later in (C)

in which as part of the definition of "unusual and compelling state or local energy or

water interest," it is stated that the cost, benefits, burdens, and reliability of energy or

water savings resulting from the state regulation make such regulation preferable or

necessary when measured against alternative approaches.

Second, the factors in determining whether unusual and compelling state or local

energy or water interests exist must be evaluated in the context of the state's energy or

water plan and forecast, if they exist. This was not a mandate by the federal government

that there must be state energy or water plans but if a requirement for such planning

exists -- as it does in California -- then the proffered standard must be an integral part of

6

0000171

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California 's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET- 100 [April 7, 2006]

April 7, 2006

the plan. As the Congress stated: "It does require the State to show that it has engaged in

a rational planning process in which the state has reviewed the cost effectiveness of

various alternatives to state appliance standards." H.R. Report 100-11 at 25. This means

that there is great significance to the fact that neither the California water nor energy

plans contain any significant reference or reliance on this standard . The CEC cannot

bootstrap this absence by claiming it did the analysis later, outside of the plan. If this

were a courtroom, the petition, if viewed as a complaint, would be subject to a motion to

dismiss because it does not contain one of the critical, specific elements required.

Third, AHAM has the obligation to establish, by preponderance of evidence, that

the regulation will "significantly burden" manufacturing , marketing, distribution, sale or

servicing of the products on a national basis using , among other things, the relevant

factors stated in the statute. The requirement is not that we prove that our national

market will be destroyed, or that it will be impossible to sell, or that our sales will be

significantly diminished. Rather, the requirement is to establish a "significant burden" on

the national market.

The relevant factors are considered cumulatively , including increased

manufacturer and distribution costs, disadvantage to small manufacturers, distributors

and dealers or lessening of competition, the burden on manufacturers to redesign and

produce compliant products, and any resulting reductions in availability of models or the

current or projected sales volume . The extent to which the state regulation is likely to

affect proliferation of state appliance efficiency requirements, and the cumulative impact

of such requirements, also is an important consideration.

Finally, as noted, there is an independent and critical consideration of whether the

California regulation will result in the unavailability in California of any clothes washer

type or class of performance characteristics (including reliability), features, sizes,

capacities and volumes substantially the same as those generally available in the state at

the time of DOE's finding. To put it simply, if we show that moderately priced, tonloading clothes washers are the type of product substantially prevalent and desired in the

California marketplace today and that they are likely to no longer exist after the

application of the standard, then DOE is compelled to deny this petition. Interestingly,

CEC does not deny that this product will no longer be available; it just does not consider

that fact to be significant. It would be an extraordinary and radical revisionist

interpretation and understanding of consumer interest to ignore the California market

share and consumer interest in moderately-priced, standard, top-loading clothes washers.

7 0000172

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RIMPET-100 [April 7, 2006]

April 7, 2006

IV. METHODOLOGY

In developing these comments, AHAM has relied on two well-regarded and

highly experienced analysts. Richard Topping, formerly at ADL and TIAX, has

consulted for DOE and industry on technological issues affecting the appliance industry

and standards for almost 30 years. Business and economic analyst Everett Shorey is the

"inventor" of the Government Regulatory Impact Analyses ("GRIM") widely used in

appliance standards rulemakings under the Process Improvement Rule.

We have designated where we use their analyses. The Topping and Shorey

studies have been commissioned solely to respond to the CEC petition. Although AHAM

would not normally gather sensitive price, cost, and other competitive data, this is

required to prepare adequate responses under NAECA. AHAM has engaged these

independent consultants not only due to their expertise but so that association staff is not

privy to confidential information. Wherever possible, public information has been used.

The cost, market and technology data have been collected under strict procedures

using confidentiality agreements with the consultants and ensuring that the data are not

shared with competitors except at an aggregated , de-identified level approved by counsel

and consistent with long-standing AHAM. market data programs . The underlying data

will be destroyed when they are no longer required as backup.

Any collective discussions of this report have occurred only when counsel is

present and relate solely to the regulatory implications of the data and conclusions

therein.

V. CALIFORNIA WATER ISSUES

Curiously, CEC says relatively little about energy use in its Petition although the

underlying legislation was premised in large part on energy use related to water supply

and wastewater, as was the CEC regulatory proceeding. This is an implicit

acknowledgement that a case cannot be made under the waiver provisions on the basis of

energy.

A. Significance of Clothes Washers

The crux of the California Petition to DOE is that the state has such an "unusual

and compelling" water shortage and impending crisis as to make state standards

preferable to alternatives, including action in other water-consuming applications,

existing federal NAECA standards, and market induced reductions in clothes washer

water consumption. Further, CEC claims that the state has almost uniquely serious water

8

0 0002 1 3

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

issues that require a different solution from the other forty-nine states and justify a move

away from a consistent nationwide approach. A review, however, of California water

use, impending shortages and price/availability differences relative to the rest of the U.S.

lead to the conclusion that there is no compelling justification for this petition.

The Petition relies on future water use projections from the California Department

of Water Resources ("DWR") (California Water Plan Update 2005). First, it does not

appear that separate California water and energy standards are contained in or integral to

the water plan. Nor are such standards contained in or integral to the CEC energy plan.

This is a fatal blow to the petition because of the NAECA requirement that any such

plans contain the proposed standard. It shows how little consideration planners have

given to this option.

It also should be noted that there is no clear consensus by experts on DWR's

findings. The U.S. Census Bureau predicts lower population growth in California than

stated. The well-qualified Pacific Institute ("PI") in Oakland, CA, in its recent response

to the 2005 Water Plan (California Water 2030 : An Efficient Future, September 2005)

concluded that "official scenarios routinely project substantial increases in water use over

time, far in excess of the use that actually materializes." After analyzing this and past

DWR water plans, PI concluded: "And the projections of the total future water demands

routinely exceed estimates of available supplies by several million acre-feet annually, a

shortfall projected in every California water plan since the first ." Thus, CEC embraces

water projections based on a "business as usual " approach, similar to its reliance on

standards that historically have overly burdened consumers , local businesses and

manufacturers.

In contrast, PI concludes: "Under a High Efficiency scenario , total human use of

water in California could decline by as much as 20 percent while still satisfying a

growing population, maintaining a healthy agricultural sector and supporting a vibrant

economy." PI supports a comprehensive approach, including clothes washer water

standards, but its analysis recognizes that clothes washer standards would make only a

minimal contribution to the overall savings proposed.

Another PI report (Waste Not, Want Not, November 2003) is referenced by DWR

in the California water plan as estimating a potential savings of 2 to 2.3 MAF/yr in urban

water use. That is based on an analysis assuming full implementation of available

conservation technologies in 2000. PI estimated that washers used 330,000 AF/yr and

could save 33%, or 110,000 AF/yr, if all the existing washer stock was instantly replaced

with units having an average of the water factor of the high efficiency machines on the

market in 2000. Despite such a draconian measure, the savings for washers amounted to

only about 5.5% of the total 2 MAF/yr in urban savings potential, and that assumption is

an upper limit. Not even CEC is suggesting mandatory retirement of the current washer

9

0000174

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

population. PI goes on to estimate water consumption and conservation savings through

2020 and the percentage savings for washers changes little.

DWR data used in the Petition estimates that total annual water usage in

California in 2000 was 43.1 million acre-feet, or 14.0 trillion gallons. Of, this,

agricultural use accounts for the vast majority, approximately 80% (see Figure 1). The

2003 Pacific Institute report estimates that indoor residential use is about 7% of the total

and of that, clothes washers consume 14% which is less than 1% of the total urban and

agricultural water use. This is in contrast to the 22% value used in the Petition based on

an older (1998) nationwide analysis by the American Water Works Association

(Residential End Uses of Water, 1999). We believe the PI data is more recent and more

representative of the mix of washers in California.

The water savings predicted from this proposed regulation, therefore, are a

fraction of 1% of the water used in California and are even less than the indoor residential

water lost to leaks. Thus, how can this measure possibly be "needed"? The largest users

of water indoors are toilets, showers and faucets that together consume about 5% of the

state's water. Just below this value is the large quantity of water used outdoors for

residential landscaping (4%). In fact, California's largest "crop" is lawns and landscaped

areas; DWR estimates that between 1.2 and 1.4 million acres are landscape areas,

including mainly urban irrigated landscape. This is more than the acreage devoted to any

major agricultural product. The Public Policy Institute of California (PPIC Research

Brief #102, July 2005) further concludes that "landscaping frequently accounts for more

than half of all municipal water use."

1 Acre Foot - 43 .560 cu ft or 325,651 Gal

Ref: The Pacific Institute, Nov. 2003

Figure 1: Water Usage in California (2000)

10 0000175

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

Agricultural water use is nearly twelve times larger than all indoor residential water use

combined. To put this in perspective, the CEC petition reports that the average California

water consumption per capita (based on 2000 data) is 1500 gallons per day, of which

1200 gallons per day are consumed for agricultural purposes. Indoor residential. per

capita daily use is approximately 100 gallons, so just 14 gallons per day are used by

washing machines.

About a 1% reduction in agricultural water use would equal all the water used by

washers today . Such a modest conservation program would deliver two to three times the

water savings predicted from the proposed CEC washer standards . Yet, instead, the

washer industry is being asked to significantly decrease the water use of its products (by

33 to 50%) while CEC avoids suggesting far more modest improvements for the

agricultural industry . The U.S. Environmental Protection Agency (EPA) believes that

agricultural irrigation is the largest water usage problem in California . The 2003 Pacific

Institute report concluded : "Water use in many parts of California 's agricultural sector is

inefficient and wasteful , ... No comprehensive conservation and efficiency policy -

indeed, no rational water policy - can afford to ignore inefficient agricultural water uses."

B. Fungibility of Water Conservation

The petition dismisses agricultural conservation by claiming that water supplies

are often not fungible, and that it is difficult to transfer water among sectors. That is a

questionable position given that the California State Water Project (SWP) provides water

for 23 million Californians and 755,000 acres of irrigated farmland by conveying water

across the state through the use of the 444 mile long California Aqueduct that transports

water from Northern to Southern California.

California has a growing water merchandising business. A Public Policy Institute

of California report (Research Brief #74, July 2003) states: "Among the measures that

can alleviate supply and demand imbalances is the development of a water market. A

market enables the historical holders of water rights - mainly farmers in the agricultural

heartland - to transfer water to other users willing to pay for it. Potential buyers include

urban and industrial users, farmers with higher-value crops, and environmental programs

to support fish and wildlife habitats."

The Pacific Research Institute in San Francisco (not the Pacific Institute quoted

earlier) reports (Pacific Research Institute Fact Sheet, July 1999): "Water markets can

alleviate other perceived water crises in California as well, such as disputes over the

allotment of the Colorado River. Contrary to alarmist rhetoric, the Colorado River

contains more than enough water to meet the demands of all of the states to which it

11 000017G

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California 's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

supplies water. Interstate water markets offer the best way to allocate Colorado River

water in the same way that water markets can manage water within California."

DWR, itself, promotes transfers through its Water Transfers Office. On its

website (www.watertransfers.water.ca.gov) it states: "Water transfers are a permanent

and necessary part of California 's water picture . State law supports voluntary water

transfers, and directs State agencies to encourage and facilitate voluntary transfers in a

manner that protects existing water uses.

The seven southern-most of the California counties (Imperial, Los Angeles,

Orange, Riverside, San Diego, San Bernadino and Ventura) account for 11% of all

irrigated land in California (US Department of Agriculture , 2002 Census of Agriculture).

A 10% reduction in the use of water for agriculture through basic conservation measures,

in those counties alone would produce greater water savings than the total consumption

of water by washing machines across the entire state. A 3% reduction in agricultural

water use in those counties would save as much water as CEC predicts for the proposed

regulation. Since this is the most water short area of the state, a suggestion that there is

not significant fungibility of water is unsupported by the facts.

Based on Mr. Topping's research, we can find no reason why balanced

conservation strategies across the various sectors and geographic areas of California with

reasonable transfers from areas with surplus to those with need would not provide a

lasting, comprehensive and equitable solution to California 's water issues.

C. The Savings Potential From the Standard Is Minimal

As analyzed by the CEC, the savings attributable to the proposed standard is at

most a minor component of a California water program . The CEC's approach that "every

little bit helps" is charming but hardly meets the criterion of "necessity" in the statute.

There have been considerable water savings due to the 2004 and upcoming 2007 DOE

standards and even more significant savings due to voluntary consumer purchases of low

water factor washers. The market has shifted dramatically . This trend will continue

since the 2007 Energy Star ratings incorporate a water factor.

In reality, the likely savings from the proposed CEC standard are greatly

exaggerated as demonstrated in VI(G) below.

12

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 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [Apri l 7, 2006]

April 7, 2006

D. There are Many Alternative Strategies to Save Water; The Clothes

Washer Standard is not Integral to the California Water or Energy

Plans

1. Non-Clothes Washer Alternatives

The California Water Plan Update 2005 does recommend a comprehensive

strategy to address urban water use in California, including the adoption of rate structures

to encourage conservation and a wide range of voluntary programs such as a "Water Star

Homes" program (note this balanced approach does not even specifically mention

standards for clothes washers).

Volume 2, Chapter 22 of the Plan covers Urban Water Use Efficiency. There is

significant discussion of the success of the CUWCC Best Management Practices (of

which BMP #6 covers rebates for high efficiency clothes washers) and the cost

effectiveness of water conservation programs vis-a-vis production methods to make more

water available. The Light Wash program is described where energy and water

conservation rebates of up to $450 are available for high efficiency commercial clothes

washers. The plan states that water conservation "has become a way of life for

Californians, most of whom have easy and affordable access to a wide variety of off-the

shelf water efficient ... washing machines ..." It references energy in that it mentions

that water conservation saves energy (references CEC's estimate that nearly one -fifth of

the state's energy use is associated with water development and use).

Specific future recommendations call for continued implementation of BMP's and

a wide range of balanced strategies including "financial incentives, new revisions in State

and local codes and standards, and legislative initiatives." Most of the emphasis is on

incentive programs, rate structures, new BMP's, metering, consumer education,

landscape water use reduction, etc. There is no specific mention of residential clothes

washers or water factor restrictions; the only products specifically mentioned are toilets

and hot water systems.

The recent State Water-Energy Workshop, co-hosted by CEC, is replete with

references to the State Water Plans and Water Action Plan. Perusal of the presentations

does not indicate a significant role for a clothes washer standard. See

http://www.energy.ca.gov/process/water/2006-03-28 symposiumlindex.html.

The Pacific Institute 2005 report, while critical of DWR's lack of creativity:

("These projections have never included a vision of a truly water-efficient future, where

California's environmental, economic and social needs are met with smart technology,

strong management, and appropriate rates and incentives."), also strongly asserts that a

water efficient future is possible: "We envision a future in which California water use is

13

0060178

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET- 100 [April 7, 2006]

April 7, 2006

highly efficient, permitting us to maintain a healthy economy and healthy ecosystems

while reducing overall water use." Further, the report concludes that "A water-efficient

future is achievable, with no new inventions or serious hardships."

Also, PI finds that agricultural water consumption can decline "more than 20

percent from actual year 2000 water use... as farmers move to more efficient irrigation

methods, without reducing crop area or changing crop type..." Based on this, the narrow

and inadequate CEC proposal to unduly burden one product with little resulting impact

on state water consumption, which drastically and forcibly alters consumer's preferences

and usage patterns for clothes washers, should be rejected.

There are many potential programs to curtail inefficient water use. For example,

EPA has announced a program with the landscaping irrigation industry which may reduce

overall water use by 25 percent. 215 BNA Daily Environment Reporter A-6 (11/8/2005).

Interestingly, DWR estimates that 700,000 California water users in metropolitan

areas are still not metered. The Pacific Research Institute reports (Impact, June 2004):

"Water sub-meters are devices that can be installed in apartments with vertical riser pipes

to bill individual users for water consumption. With sub-metering, a third party provides

residents with a bill that accurately measures their water consumption, so individual costs

can be compared to individual benefits, and consumption altered accordingly. Large

families, people who delight in long showers, or those who wash their clothes or dishes

frequently pay more. Single people or those who conserve water religiously pay less.

It's simple, fair and promotes water conservation. The National Apartment .Association

and the National Multi Housing Council report that submetered properties use 18-39

percent less water than properties where water costs are built into the rent. Another

study, conducted in San Antonio, found that sub-metering decreases consumption by 31

percent. Currently, California regulations discourage the installation of submeters."

In Canada, flat-rate users consumed 70% more water than metered users even

though Canadian water prices are among the worlds lowest "Effect of Metering on Per

Capita Domestic Water use for 1999", Government of British Columbia 1999.

We understand that new legislation will require all households to be metered in

California, but not until 2025. This is a choice by California not to implement powerful

conservation alternatives earlier. Therefore, this situation will continue for some time,

even though studies have consistently shown that water usage is one third less when users

are billed on volume of water consumed. The California Water Plan recognizes the

conservation value of users paying directly for the water they use and calls for universal

metering of all urban customers, billing by volume of use, and submetering of new

multifamily construction.

14 0000179

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-1 00 [April 7, 2006]

April 7, 2006

The same metering issue affects agricultural water use where conservation can

result from awareness of the quantities of water used . Yet in 1997 it was estimated that

approximately one-third of all irrigation water in California was still distributed on a peracre fee basis rather than being priced on a per-unit usage basis. Water Use conflicts in

the West: Implications of Reforming the Bureau of Reclamation 's Water Supply

Policies, Congressional Budget Office Study (8/97).

Therefore, there are more effective and straightforward actions other than

regulating washers which can be undertaken to save water in California. These

alternatives afford more customer choice and will have far less impact on the California

consumer, the nation's appliance efficiency program and the appliance industry.

2. Clothes Washer Alternatives

Even in the clothes washer context, the CEC petition equates reliance on

reasonably predictable market-induced improvements in efficiency as "doing nothing"

(Petition, page 26). In fact, the situation in California is just the opposite and bodes well

for the use of incentives and free market forces to significantly improve efficiency

without the need for prescriptive standards. Many different entities have done much to

support the Federal Energy Star program in California with excellent results . Current

market share of Energy Star washers through all retail outlets in California is at least

56%, far higher than nationwide . (California Residential Efficiency Market Share

Tracking, Appliances 2004, Itron, Inc.) This share is also a very substantial 17% twoyear increase from the 2003 value of 39% presented in the Petition and demonstrates that

rebates and market awareness-building activities do work.

Even with this penetration, there are still greater opportunities for California to

increase its sales of Energy Star clothes washers: For example, the California share of

Energy Star washers sold through national chains lags behind those in the Northwest and

New England, the vast majority with water factors below 8 .5 or even 6.0.

Furthermore , now that the Energy Star program for clothes washers includes a

water factor component, the impact of this very successful market transformation

program will be even more beneficial to water conservation . Much of CEC's projected

water savings will be achieved voluntarily, without the need for any exemption and with

minimal impact on manufacturers and consumers. Currently approximately 40% of

Energy Star washers in the Northwest -- without regulation -- have MEFs greater than 1.8

(virtually all of which will have WFs of 6.0 or lower), with a goal in that region of

increasing this portion to 50% by 2007(nwalliance.org). In contrast, California only has

28% of its Energy Star washers with MEFs greater than 1.8. California can increase its

effort to promote Energy Star washers to the level of penetration reached in the

15

0000180

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

Northwest and New England. By meeting the results proven in other regions, California

can reach half its initial goal for the 8.5 standard and much of its goal for the 6.0 level.

Water efficiency practices have been institutionalized through the California

Urban Water Conservation Council 's (CUWCC) Memorandum of Understanding

(MOU). As of 2003, there were 309 signatories to the MOU, representing 80 percent of

all the urban water supplied to California . These agencies plan, implement and track a

set of Best Management Practices. One of these, BMP-6: High Efficiency Clothes

Washers, is aimed at achieving water savings in clothes washers through rebates. In

addition, the state of California has itself funded 200 ,000 clothes washer rebates

(Petition, page 19). In spite of all this success in making water conservation a way of life

for Californians, CEC pursues standards at all costs, apparently persuaded that

unnecessary regulations are "cheaper " and therefore preferable to education, awareness

building and consumer choice.

The CEC debunks the use of alternative approaches to increase the usage of low

water washers as it attempts to justify a mandatory standard. This approach is misleading

for at least two reasons:

1. The probability is very high that, through ordinary market forces and continued

market development, the actual usage of front load washers will approach and

exceed 33% of the market.

2. CEC has grossly overestimated the cost of alternative programs.

The Northwest Energy Efficiency Alliance has demonstrated that it is possible to

achieve significant penetration of low water usage washers through targeted market

development programs that are cost effective. The Northwest region has consistently led

in market penetration of Energy Star washers. Of these, nearly 80% (32% of total sales)

have MEFs that are only reached, in the current marketplace, with low water factor

washers. These penetration rates have been achieved through a balanced program of

retailer training and involvement, utility promotion and periodic rebates such as the 2004

"Double Your Savings With Energy Star" and similar programs. The CEC has not met

its burden of proof that cost effective market development programs will not yield much

of the potential savings it seeks in water and energy . Instead, it seeks to impose a "tax"

on all consumers of over $280 per washer in additional washer cost rather than allowing

consumers who view this as a sound investment to choose lower water consuming

washers.

Nor is it the case, as CEC alleges (Petition at 29), that utilities and governments

have few funds to operate voluntary programs. The California Public Utilities

Commission, for example, has just launched what it describes as a "Groundbreaking"

16 0000181

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-l00 [April 7, 2006]

April 7, 2006

energy efficiency effort -- the most ambitious in the history of the utility industry in the

U.S. -- by funding $2 billion in 2006-2008 for energy efficiency, including clothes

washers. News Release from PUC, Docket #A.05-06-004: news@cpuc.ca.gov.

E. California Water Costs and Interests are Similar to Those in Other

Regions.

The Petition also claims that California's water and sewer rates are so high as to

justify a water standard apart from the rest of the nation. In fact, California is not at all

unique. There are many areas in the country where water and sewer rates are higher than

in California (see examples in Figure 2). Customers in several cities across the nation

pay more for water and sewer than the citizens of California.

Seattle, WA $28.95 $44.90 $73.85

Boston, MA $29.39 $39.69 $69.08

San Diego, CA $23.41 $39.26 $62.67

Portland, OR $16.43 $43.24 $59.67

San Francisco, CA $17.40 $39.42 $56.82

Richmond, VA $20.84 $33.45 $54.29

Austin, TX $15.69 $31.69 $47.38

Ft. Worth, TX $19.50 $23.10 $42.60

Los Angeles, CA $20.83 $20.11 $40.94

Notes: Source: Raftelis 2002 Water and Waste Water Rate Survey (except for Boston - MWRA)

Rates based on 1000 Cu. Ft./Mo. consumption in the summer

Figure 2: Representative Residential Water Rates

If California has a case based on these data for an exemption-from- preemption then so

do other local and state governments, leading precisely to the proliferation of state

standards and cumulative burden disfavored in the law. After all, in terms of population

growth rate, Nevada is first, Arizona is second, and Texas is sixth. These are all and

states; California is not unique: "Conflicts over current and future allocations of surface

water resources exist throughout the western United States. These conflicts typically

involve historical patterns of use by irrigated agriculture on one hand and increasing (or

increasingly recognized) needs for urban and environmental uses on the other hand.

Many western cities- including Los Angeles, Denver and Las Vegas- are experiencing

17

0000182

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET- 100 [April 7, 2006]

April 7, 2006

rapid population growth that will increase pressure on water supplies that are both

uncertain and limited." Water Use Conflicts in the West: Implications of Reforming the

Bureau of Reclamation's Water Supply Policies, Congressional Budget Office, August

1997.

The following is a brief review of reports on water issues in states similar to

California.

NEVADA: The L.A. Times reports that: "After nearly two decades of busily converting

desert into sprawling metropolis in the fastest-growing region in the nation, southern

Nevada finds itself beset by a four-year drought and straining against limits in the water

that it can pump from nearby Lake Mead. Las Vegas is turning to rural counties to the

north to quench a thirst that the nation's largest man-made reservoir can't sustain. Plans

include drilling wells and building a $ 1-billion pipeline to tap rivers and groundwater

from neighboring rural counties. ... [S]ome at the head of the proposed pipeline worry

that their high desert valleys and ranches will dry up if precious underground water is

pumped to Las Vegas.

In 2003, Nevada led the nation in population growth for the 17th year, according to the

state demographer. About 80% of new residents moved to Las Vegas or nearby. The

Lake Mead reservoir behind Hoover Dam is at its lowest level in 35 years, at 1,140 feet

above sea level and 65 feet below its high-water mark. It is still more than half full, with

about 5 trillion gallons of water. ... Economies of southern Nevada and the rest of the

state depend on continued growth, as well as on.gambling, tourism and mining ... "If

you're going to have a sustainable city there into the future, Las Vegas has got to get very

serious about reducing waste." http://www.latimes.com/news/nationworld/nation/laadna-vegaswater7mar07,1,394780,print.story 7mar04

TEXAS: A Texas A&M Professor reported: "Water fights are not new to Texas; since

before the Lone Star State joined the Union, water rights have been bartered, litigated,

fought over, bought and sold for years, and are as contentious today as they have ever

been." "Hold The Salt: The Promise Of Desalination For Texas," was written by James

Smith, Ph.D., a professor in the Department of Construction Science at Texas A&M

University and published by the Texas Public Policy.

"Declining water resources, coupled with inexorable population growth, demand that the

state find alternative solutions for its future water supply needs," writes Dr. Smith."

Texas Public Policy Foundation (texaspolicy.com)

18 000.0183

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California 's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

ARIZONA: The then Former Secretary of Interior reported: "Like much of the West ...

Arizona faces major natural resource challenges, including securing an adequate supply

of water to meet its needs.

Between 1990 and 2000, Arizona experienced a 40 percent population growth rate, three

times the national average . By 2025 , the state is expected to have 6 .4 million people, up

from 4.2 million people in 1995.

This rapid growth has created uncertainty about future water supplies. ... Two of the

realities driving water supply problems in the West are explosive population growth and

competing demands for finite supplies . Almost all of the Indian tribes in Arizona are

facing water supply challenges, as are many of its rural communities. In almost every

instance, there are significant endangered -species issues that must be addressed in concert

with the water supply shortage. Major droughts, such as the one Arizona has been

experiencing in recent years, intensify these problems, increasing the potential for

conflict. Federal efforts to help Arizona meet its 20th-century water needs led to largescale initiatives, such as the Salt River Project and the Central Arizona Project, which

have played a vital role in the state's growth. ... To its credit, Arizona is carrying out

major water conservation programs throughout the state . Tucson has long had an active

water conservation program, and in recent years the Phoenix area and other communities

have greatly increased their awareness campaigns . Arizona water management entities

have gone to great lengths to ensure their water storage and delivery systems are

modernized, lining canals and automating pumping and canal controls to help conserve

substantial amounts of water."

Guest Editorial -- Gale Norton, then Former Secretary of the Interior Department.

Arizona Republic, July 7, 2003.

OREGON: An Oregon Department reported: "Water is an unusual resource. It has

some characteristics of renewable resources like forests and some of non-renewable

resources like minerals. But finding, using and managing water resources, especially

groundwater resources in and parts of Oregon, can be a frustrating task - witness the

evolving difficulties in the Klamath Basin this past year. In fact, seventeen counties had

drought declarations in 2001, causing serious economic, social, and environmental

problems across the state. The problems with our water supply are not going to go away

and how we find and use water has become one of the most critical questions to the

future of our state." Oregon Department of Geology and Minerals Industries,

Winter/Spring 2002 issue of Cascadia (OregonGeology.com)

COLORADO: The University of Colorado Reported: " In many locales in Colorado,

growth causes increased competition for limited water supplies between the municipal,

agricultural, and environmental sectors. Among Front Range municipal water providers,

1 9

00®x.84

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California 's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET- 100 [April 7, 2006]

April 7, 2006

the'nature and intensity of this competition varies greatly from city to city due to different

water rights portfolios and infrastructures. Many of the associated legal and policy issues

involve trans-basin diversions, environmental protection, water quality management, and

interstate obligations. Coping strategies generally focus on new development of surface

and groundwater, reallocating supplies from agriculture to municipal use, and

conservation and efficiency. Each type of solution, however, poses problems and

concerns, as new management strategies must be reconciled with existing water use

regimes." colorado.edu/law/centers/NRLC

In contrast, it recently has been reported that in California the "state has an

abundance of water in the bank. Reservoirs at 100% capacity -- and snow melt will boost

supply." San Francisco Chronicle March 18, 2006. The article states that: "If California

suddenly went dry, and no rain or snow fell for two straight years, the state still would

have enough water to go around thanks to this winter's wet winter, meteorologist and

water experts said ... ."

VI. IMPACT ON CALIFORNIA CONSUMERS IF THE CALIFO RNIA

STANDARD WAS IMPLEMENTED

A. Energy and Water Clothes Washer Technology Issues

In order to understand the implications of potential water factor standards on

product availability, features, performance characteristics and costs, it is important to

consider washer performance and design. In washers, cleaning takes place through the

application, interaction and duration of three processes:

Chemical - detergent/water concentration

Mechanical - agitation/mixing

Thermal - wash and rinse water temperatures

All washers utilize these processes to clean clothes but to varying degrees based

on their design. In addition, rinse performance (and the related ability to use liquid fabric

softener) and dryer energy requirements are also functions of washer design.

Higher Modified Energy Factors (MEF) (higher means more efficient) are

typically achieved by using less heated water and higher spin speeds (to reduce residual

moisture content (RMC) and therefore minimize drying energy). Water Factor (WF) is

the measure of water used per normal washing cycle. Low WFs (lower means more

water conserving) are the result of changing designs to wash and rinse with less water.

MEF and WF are related indirectly. Water temperature and spin speed significantly

impact MEF but not WF. WF is dependent on the washer platform design and the

20

0000185

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California 's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET- 100 [April 7, 2006]

April 7, 2006

quantity of water required for washing and rinsing . MEF can be improved without

affecting WF and vice versa. In prior testimony, efficiency and water advocates have

faulted the industry because decreases in WF have not kept up with recent increases in

MEF. However, these comments do not take into consideration the fundamental design

differences and market shares of basic types of washers on the market. To project what is

achievable both in energy and water savings, design configuration must be considered.

There are three basic design families of washers being sold in the U.S. today:

1. Top Load - Agitator (Conventional Deep Fill)

Lowest inherent cost

Rugged, reliable and most popular with consumers (80-85% national

market share)

Good cleaning performance

Good rinse performance

Best able to use liquid fabric softener

Inherently lowest MEF

Inherently highest WF

2. Top Load - Reduced Fill (Low Water Level, High Efficiency Top Loader)

Inherently higher cost than Top Load - Agitator due to additional parts

and controls

Operations and styling similar to traditional US washers

Good cleaning performance in most situations

Possible unsatisfactory rinse performance with very dirty loads

Low sales volumes to date as technology matures (<5% market share)

Achieves higher MEF 's than can be obtained with Top Load - Agitator

machines

Achieves lower WF's than can be obtained with Top Load - Agitator

machines

3. Front Load

Inherently higher cost than Top Load - Agitator due to additional parts

and controls; cost for base design could be similar to Top Load - Reduced

Fill

Operations and styling different from traditional US washers, surveys and

market data indicate design not preferred by the majority of consumers.

Cleaning and rinsing performance subject to soil load

More difficult for some models to use liquid fabric softener

Growing sales volumes ( 15-20% market share nationwide to date as a

niche product)

Potential to achieve highest MEF's

21 oooi ^®

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

Potential to achieve lowest WF's

Longer Cycle times

Figure 3 is a comprehensive plot of MEF and WF for models currently on the market

together with the approximate market share by family . All products meet the current

Federal Standard ( 1.04 MEF) and many already meet the upcoming 2007 level (1.26

IMF). The Energy Star program sets higher standards for efficiency , currently 1.42 MEF

and increasing to a 1 .72 MEF coupled with an 8 .0 WF in 2007. The 2007 Energy Star

level is not met by any current Top Load - Agitator machines.

MEF vs. WF for Clothes Washers

18,

16,

14-

12-

8

6

4-

2-

2007 Standard

A

TL Ag#ator

A

A ®® A

A&

1 1.2

2004 Energy Star

2007 Energy Star

If

80-85%

A 4 n

A

TL - Reduced Fill

+0

Front Load

10-20%

® Top Load - Agitator

+ Top Load - Reduced Fill

x Top Load Horizontal

® Front Load

a Front Load - Water Heater

0

1.4 1.6 1.8 2 2.2 2.4 2.6 2.8

Source: energystar.gov, manufacturer data MEF (2004 Test Method)

Figure 3 : MEF vs. WF by Washer Family and Shipments

22 0000187

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

Washer Technology Platform Description

1. Top Load - Agitator (Conventional Deep Fill) Technology

The conventional deep fill top load-agitator, vertical axis configuration commands

a dominant 80+% share of the national market. Mr. Topping's review, based on market

studies performed by both manufacturers and DOE as well as on actual sales results in

the marketplace, indicates that this technology platform is viewed by most consumers as

providing the best balance of performance, price, efficiency and water use. Most U.S.

consumers have shown clearly that they prefer the ability to load clothes from the top of

the machine and during the wash cycle itself (in front loaders the door locks when the

cycle starts.) Product developments have led to improved energy performance for this

technology platform and have resulted in reduction in water consumption. Further

product developments may lead to further improvements in MEF but are unlikely to yield

water factor levels below approximately 10.

Conventional Top Load - Agitator washers achieve their performance through use

of relatively large quantities of water in both the wash and the rinse processes.

Manufacturers have improved the energy performance of Top Load - Agitator washers

through a variety of relatively low cost approaches including:

® Reduced wash temperature, maintaining cleaning through mechanical and

chemical action, with the mechanical action provided by the agitator and requiring

water to float the clothes.

® Enhanced and adaptive controls to link water and energy requirements to load

conditions

® Increased spin speeds to reduce residual water content and increase MEF through

larger motors, more robust transmissions, door locks and similar hardware

additions

It is very difficult to reduce the water consumption of traditional Top Load -

Agitator machines below WFs of 10 while maintaining adequate wash and rinse

performance in all applications. Several deep fills are necessary both for cleaning and for

rinsing, especially of heavy soils. Mr. Topping's review of current and potential washer

technology developments indicates that WF levels below 10 could lead to inadequate

rinsing (see VI (D) below). The result would be unacceptable to those consumers who

clean large, dirty loads, i.e., dingy clothes, poor fabric softening, soil remaining in tub,

etc. Design options such as spray rinse systems use less water in the rinse cycle but they

do not meet standards expected by most consumers for rinse performance. This latter

technology may be acceptable in some niche applications but it is very unlikely to be

acceptable to the vast majority of US consumers.

23 000®x.

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

2. Top Load - Reduced Fill

This is an intermediate approach designed to provide many of the consumer

features present in Top Load - Agitator machines while approaching the energy and

water performance of Front Load washers. To date, this technology has had limited

market acceptance for reasons both inherent in the technology itself and also due to

specific product problems in early models. (In fact, Maytag discontinued its product

offering of this type because of lack of consumer acceptance.) The Top Load - Reduced

Fill technology platform achieves improved energy and water performance through

several mechanisms:

o Use of some method other than deep fill and an agitator to achieve cleaning,

substituting chemical and thermal cleaning for the mechanical action of an

agitator. This results in lower water levels (and less energy to heat the water) in

the cleaning cycle.

® Higher spin speeds to reduce residual moisture content in order to reduce dryer

energy consumption and improve MEF with no effect on water usage

® Enhanced controls in order to match energy and water consumption more closely

to load requirements

All of these techniques inherently add cost to the washer platform, so that the

basic minimum cost of a Top Load - Reduced Fill washer will be closely equivalent to

the minimum cost of a Front Load washer.

3. Front Load

Front Load, horizontal axis washers rely on chemical and thermal action to clean

clothes in much lower quantities of wash water than are used in Top Load - Agitator

machines. As a trade-off for the reduced wash water consumption, Front Load washers

inherently are significantly more costly to build than conventional Top Load - Agitator

washers. In addition, the front loading characteristic and other features (or absence of

features) desired by US consumers has limited the acceptance of this platform in the US

market.

Many consumers are dissatisfied with the front loader's lack of access to clothes

during operation, the longer cycle times, difficulty in loading, space restrictions, and door

location. Under the "safe harbor" these consumers cannot be deprived of these utilities

and designs.

24 0000189

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

C. California Consumer Satisfaction Effects if Moderately Priced,

Conventional Top-Load Machines Are No Longer Available

The Topping-Shorey analysis indicates that any mandate forcing consumers away

from conventional top-load machines will be perceived with disfavor by consumers. The

majority of consumers in the US continue to prefer key features provided by

conventional, agitator top-load washers, particularly the low cost and large capacity

associated with traditional top-load machines. Furthermore, any forced adoption of low

water rinse approaches will lead to increased consumer dissatisfaction in some

applications, consumer complaints and use of extra rinse cycles.

Recent consumer research and actual marketplace experience indicate that there

are three segments of clothes washer buyers:

1. Traditional consumers who prefer the features associated with top-load agitator

platforms, i.e. low price, large capacity , simplicity of operation and loading. This

segment represents the majority of households (60%+ in most studies, which

probably understates actual purchase behavior , since customers routinely express

preferences for features they reject when faced with actual costs).

2. An emerging price/value segment that will pay a premium for additional features.

Recent consumer research indicates that this segment is starting to value energy

and/or water savings. The emergence of this segment accounts for the increasing

share gained by front-load washers. Experience in Canada and with other major

appliance categories is that this segment unlikely to exceed 40% of clothes washer

purchasers.

3. High end, early adopter consumers who will buy the latest, most feature laden

and, generally, most attractive appliances. This segment has not grown above

10% in any appliance category - including the more visible kitchen appliances.

Sales of front-load washers with prices above $ 1,000 are concentrated in this

segment.

The consumer research results from both publicly available and from

manufacturer proprietary studies relating to this segmentation are consistent , particularly

for all studies where consumers are exposed to actual , physical washers. There are four

publicly available consumer research studies relating to consumer interest and acceptance

of various clothes washers:

The High Efficiency Laundry Metering and Marketing Analysis Project

(THELMA)

25 0000190

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

WashWise - Coming Clean About Resource-Efficient Clothes Washers: An Initial

Wash Wise Program and Market Progress Report - Final Report

Arthur D. Little Consumer Study for AHAM

DOE Consumer Study for NAECA Clothes Washer Rule Making

In general, these studies use a combination of consumer focus groups and structured

conjoint surveys to evaluate consumer preferences. In all of these studies, the single most

important factor for consumers is the price of the clothes washer. Other factors of

importance in consumer choice include capacity, load size options, energy and water

savings, ease of loading and other performance-related issues. Where consumers are

exposed to an actual, physical washer (the THELMA and ADL/AHAM studies),

consumers evidenced increased concern about loading characteristics of front-load

clothes washers. All of these studies reinforce the actual marketplace experience that

most consumers strongly prefer the low price and associated features of Top Load -

Agitator washers.

There is a segment of consumers who are willing to accept higher prices for the

constellation of features associated with Front Load washers. But, to cavalierly dismiss

the former (and larger) segment of consumers, as the CEC does, is to miss a critical

portion of the marketplace and denies the majority of California consumers the

combination of features and price that they desire.

D. Consumer Preference/Utility and Rinsing Issues

Mr. Topping was asked by AHAM to interview manufacturers, confidentially,

and evaluate the consumer utility impacts of eliminating in California conventional toploading machines.

As noted, any regulation that forces users away from conventional top-load

washing machines will be disfavored by many consumers. A majority of households in

the US (including California) continue to prefer the features provided by deep fill topload washers, particularly the affordable price, good cleaning, cycle time flexibility and

large capacity associated with these traditional machines. This is particularly true for

low-income households and for senior citizens.

Furthermore, forced adoption of low water rinse approaches as currently used in

the more expensive, non-agitator, high efficiency top-load washers will lead to consumer

dissatisfaction in heavy duty cleaning applications because of perceived inadequate

rinsing performance, potential health issues and consumer complaints in certain wash

situations. Consumers may compensate by adding rinse cycles, eviscerating the water

savings. Reducing the quantity of rinse water will also make it difficult for consumers to

use liquid fabric softener (currently used by about half of all households).

26

0000191

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

The familiar deep fill, top-load agitator washer configuration commands a

dominant 80+% share of the U.S. market and is still viewed by most consumers as

providing the best balance of performance, price, efficiency and water use. Its overall

cleaning function depends on filling the tub with water both when washing and rinsing.

The water factor levels proposed in the California standard particularly the 6.0 WF, even

if technically achievable, would lead to consumer unhappiness about rinsing in certain

applications and be unacceptable to consumers who clean large, dirty loads. The result

would too often be dingy clothes, poor fabric softening, soil remaining in the tub after use

and potential health issues from inadequate removal of contaminants.

As noted, conventional top-load agitator washers are joined in the US market by

two additional configurations that inherently have lower water consumption. The frontload washer performs quite well but is more complex and much more expensive. Market

data shows that it appeals to a smaller customer base. The high efficiency top-load

washer is a non-agitator hybrid, offering some of the more attractive features of both the

other designs. But it is expensive to build and is a niche product, appealing to a very

small .segment of consumers. Rinsing large , dirty loads in these low water usage, topload machines can be problematic.

Mr. Topping learned in his discussion with manufacturers that both consumer

research and actual warranty/complaint experience show that consumers are extremely

concerned with the perceived quality of clothes washing. Manufacturers regularly report

that changes in wash or rinse characteristics, changes in sorting requirements, changes in

detergent usage , and changes in water levels and wash temperatures all generate

complaints. Furthermore, any decline in the perceived cleanliness of clothes has been

shown to increase returns of newly purchased clothes washers. Consumers are very

quick to react whenever the quality of the clothes washing experience or the actual

cleanliness (broadly defined - rinsing, graying, stain removal, etc.) is seen to diminish. If

new washers do not meet their expectations, it is clear they will use hotter water, reduce

load size or even rewash their clothes, using more energy and water than before.

Conventional, top load deep-fill rinse practices make the clothes washing process

more "forgiving" by using adequate water to remove detergent, bleeding dyes, soil , etc.

from the clothes. Sufficient rinsing also aids in flushing bacteria, odors, etc. out of the

wash tub at the end of the cycle. Moving away'from deep-fill rinsing to other low water

approaches in top load machines will make the laundry process more sensitive. Removal

of "chunky", heavy soils in these designs (such as construction waste, diaper residue,

heavy hair, sand, gravel, etc.) can be problematic. Also, consumers with sensitive skin

will need to be very careful about soil and detergent carry-over. At a minimum, with low

water factor, top load machines, consumers will need to sort laundry more carefully in

order to prevent fading, dinginess, bleeding, or other color transfer. This will likely result

27

0000192

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

in an increase in the number of loads washed per year (with resulting decreases in water

savings).

Manufacturers are also extremely concerned about the impact of low water use on

residual bacteria, leading to potential health issues, especially for those customers with

allergies, skin conditions or reduced resistance to disease. The lower limits for rinsing to

prevent these complications have not been scientifically determined. Manufacturers are

justifiably hesitant to further lower water usage to meet standards without adequate field

testing and evaluation.

Therefore, any standard, regulation or other factor that effectively forces the

majority of consumers, who are more than satisfied with their current washers, into other

platforms or into washers with less effective rinse characteristics, will result in a

significant loss of consumer welfare. As shown in both the consumer surveys and in the

actual practice in the marketplace, this loss of performance and other desirable features is

more important to consumers than any associated savings in operating costs or in direct

environmental benefits. The result will be complaints by consumers to manufacturers,

dealers and regulators, reductions in washer shipments as consumers hold on to and

repair existing washers and decreased overall consumer satisfaction. The "safe harbor"

provision of NAECA does not permit DOE to grant a waiver in the face of these effects.

This issue is of such great concern that AHAM is developing a rinsing

effectiveness test procedure to measure and compare units and designs. In Australia,

where large rebates are being offered for low water machines, there has been.an influx of

imported units that use low water during the normal test cycles in order to qualify for the

rebate. In actual use, however, it appears that consumers are using extra rinse cycles to

obtain adequate rinsing, thus defeating the purpose of the rebates. The extra rinse option

is provided for consumers who suffer an allergic reaction to residual detergent, but it

appears that the extra rinse option is being used by the general consumer.

E. Cost and Price Implications

The Topping-Shorey analysis indicates that clothes washers with water factors

under 8.5 and/or 6.0 will cost significantly more than washers currently purchased by the

vast majority of consumers. Reducing water consumption from current WFs for the

predominant top-load agitator machines (current WFs range from 10 to 13 with the

majority of shipments at the higher end) will require changing the rinsing approaches or

migrating consumers from top-load machines to another platform, any one of which will

have higher costs. Manufacturers are not in a position to absorb additional costs in the

magnitude of the differences in the platform and maintain any significant return on

investment, so increased platform costs are very likely to be passed on to consumers.

28

0000193

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

A WF of 8.5 will create a situation where the lowest priced washer will be

approximately $500, versus $220 for the lowest cost machines today and $325 for a

shipment weighted average machine , an increase of $280, or 127 % over the lowest cost

machine . A WF of 6 will result in even greater incremental prices, with a minimum price

of approximately $600 after cost savings through high production, or an increase of $380.

Most manufacturers have a limited number of basic platforms and then achieve

product differentiation by adding controls, cycles and other features that can command

higher retail prices. From the standpoint of predicting marketplace responses to

regulations, it is important to focus on the cost/price of these basic platforms:

1. Standard top-load agitator washers

2. Modified top-load agitator washers using lower water temperatures but retaining

the current tub sizing and using deep-fill rinses (Energy Star top-load washers)

3. Modified top-load agitator washers with non-deep fill rinse systems (spray rinse,

etc.)

4. Top-load, non-agitator washers

5. Standard front-load washers with conventional rinse performance

6. Front-load washers with modified rinse characteristics

To date, increases in the energy efficiency of washers (higher MEFs) have been

accomplished within the core top-load platform through incremental improvement (see

Figure 4). These modifications have been sufficient to meet the current Energy Star

levels and have had some effect on water consumption. Energy Star washers, on average,

have higher retail prices than non-Energy Star models. This is due to regulation-induced

costs as well as differences in features. Further improvements in energy efficiency start

to add significant costs, such as changing spin speeds to extract more water from the

clothes, thus lowering the required dryer energy. None of these approaches changes the

basic tub design (or size) nor do they change the rinse approach.

29 0000194

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

Increasing MEF

Traditional TL

Deep fill wash & rinse -

Simple controls

Low spin speed

Rinse Approaches

Pumps/valves, etc.

Controls

Reduce Wash

Temperature

Valves

Controls

Adaptive Control, Higher

Spin Speeds

Motors/transmissions

Stabilization

Door locks, etc.

Traditional FL

Motors/transmission

Stabilization

Doors/locks, etc.

Controls

8

Rinse Approaches

Pumpsivalves. etc.

Controls

Figure 4: Design Approaches to improve MEF and WF

Higher Spin Speeds

Motorsltransmission

Controls

Significantly decreasing the amount of water used by clothes washers requires

either more expensive modifications to the top-load design or a shift in type to front-load

or non-agitator top-load platforms. The most direct path to reduced water consumption in

top-load washers entails modified rinse systems with additional pumps, spray

mechanisms, controls and other items that add cost but also have rinsing performance

implications. Further, as noted, such spray rinse machines cannot use fabric softener -- a

requirement of 60% of all households.

The next step is to shift platforms, either to standard front-load washers or nonagitator top-load washers that have energy and water performance characteristics similar

to front-loaders. Both of these platforms inherently have lower water consumption (and

higher cost) than conventional top-load washers (for equivalent drum capacities). Again,

further reducing water consumption within the front-load platform requires changes in

the rinse approach with the corresponding addition of pumps and controls and their

respective costs. In the context of comparing front-load versus top-load washers, it has

traditionally been the case that front-load washers have smaller capacities than top-load

washers. Care must be taken in any analysis of energy and water consumption to assure

that comparisons are for similar amounts of laundry, not just cycles.

Mr. Shorey's analysis indicates that cost changes for platforms translate into

changes in retail prices. While this relationship is not totally rigid, the low margin

structure at both the manufacturer and the retail levels provide very little room for

manufacturers to absorb cost increases without offsetting cost reductions or price

increases. Some cost increases have, in fact, been masked by continuous efforts to value

engineer products and to gain production efficiencies. However, these efforts by

30 0000195

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

manufacturers have often obscured the actual cost increases due to regulations. It is

extremely unlikely that manufacturers will be able to offset the change in platform costs

for new rinse systems for top-load agitator washers, let alone the costs for front-load

washers. Manufacturers, in good faith, have made millions of dollars in investment in

reliance on the DOE standard, much of which would be "stranded" if new water factors

applied.

Reducing water factors will result in increased washer prices and reduced utility

for consumers, either from increases in the price for top-load agitator washers or by

forcing consumers to switch from top-load agitator washers to other platforms.

Base prices are the lowest retail price for washers with reasonable feature sets.

Estimated Base prices for 2007-2010, as shown in Figure 5, reflect the effects of probable

future design changes, value engineering and additional production scale. These future

Base prices are speculative and there is no guarantee that they can be achieved; there are

no models in pre-production that can be sold at those prices. However, the future Base

prices represent reasonable estimates of the minimum price that could be achieved in the

marketplace at current margin levels. (There often is commentary that high-end,

innovative products carry higher manufacturer margins. While this may be true for

limited periods of time, competition quickly reduces those margins. All analyses here are

based on the expected retail prices after these competitive effects.)

Current top-load washers with WFs of 10+ have a Base price of $220 and

volume-weighted average price of $325 (See Figure 5). All other washer platforms have

considerably higher costs and retail prices. Reducing the WF of top-load agitator

machines will increase prices to $500 in the short term, with some future reduction

following additional product engineering. Converting to front-load platforms increases

retail prices to $550, with only modest future reductions likely; first because the

fundamental front-load platform is well understood from European designs and second,

because competition in the US market will force increases in front-load washer capacities

to levels closer to current top-load washers. Furthermore, the complexity and materials

inherent in front loaders result in higher costs. Higher efficiency units have

correspondingly higher prices. Also, the top-load non-agitator platform will remain high

priced because it is an inherently high cost platform. The complexity of this design limits

the likelihood of major cost reductions.

31 0000196

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-l00 [April 7, 2006]

April 7, 2006

$1 00

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F . abee aaaaeae eaaam of tray r M,ptteavaa fa.Ripeta+aa®a.*q tveeettmah,

Figure 5: Estimated Washer Retail Prices

As discussed in the technology review, a standard with a WF of 8.5 or lower

would eliminate all conventional Top Load - Agitator washers. This would have the

effect of eliminating a variety of performance characteristics and features that consumers

have consistently shown they desire. Most importantly, Topping and Shorey estimate

that it would force the retail price of the least expensive full-size washer with adequate

wash and rinse performance to $500, an increase of $280 from the current lowest cost

machines with those performance features and approximately $200 over the average price

of those washers. This cost impact does not include the cost of a companion dryer that

most consumers consider important for matching purposes. Arguments that

manufacturers will respond and reduce the cost (and price) back down to levels closer to

current costs are based on theory, wishful thinking or incorrect and totally speculative

analogies. 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 improvements.

CEC, in its petition makes references to various features in an attempt to say that

no consumer benefit would be lost. They ignore the feature that consistently ranks as

most important to consumers both in surveys and in the marketplace - price. A WF

standard of either 6 or 8.5 would deprive the vast majority of consumers the single

feature they value most. The CEC also blithely ignores the effects of such a standard on

smaller households, low income families and other groups who have lesser operating

savings or much lower ability to pay higher prices.

Beyond the effect on washer costs and prices, eliminating traditional Top Load -

Agitator washers would deprive a majority of California consumers of their preference

32 0000197

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7,2006]

April 7, 2006

for the combination of simplicity, ease of loading, low cost and reliability inherent in that

design. Forcing consumers to purchase Front Load washers does more than just change

door location; it changes how the machine is loaded, how it is used, the time for a wash

cycle and other factors. For example, as demonstrated in the marketplace, many

consumers purchasing Front Load washers have had to add the additional cost of a

pedestal to raise the washer for convenient loading since the loading characteristics of

Front Load washers are difficult for may consumers.

CEC cannot have it both ways. On the one hand, it says that market development

measures are too slow and costly. It notes that the marketplace will not convert to low

water factor (i.e. front load washers) on its own. By clear inference, this means that

consumers prefer the package of price and features contained in current washers. On the

other hand and despite all marketplace evidence to the contrary, CEC contends that

consumers will have all the features they want from front load washers that meet its

proposed standards. CEC tries to gloss over the data by contending that some form of top

load washer will be available, but the burden of proof is on the CEC to demonstrate that

this statement is true and it has advanced no evidence that top load technology of any sort

can meet a WF of 6. On the contrary, all available engineering evidence shows that this

will not be true.

At various times, analysts have attempted to model the cost/efficiency

relationships in clothes washers using linear regression analysis techniques. This is a

futile effort. The underlying assumptions in a linear regression analysis are (among

others):

1. The variables (in this case price and efficiency) are essentially continuous, i.e.

that it is meaningful to interpolate between data points along the regression line

2. There are a sufficient number of independent points to demonstrate reasonable

statistical relationships

3. The reliability of the data is high relative to the differences between each data

point

4. There is, in fact, some causal relationship between the variables (in this case price

and efficiency)

Although there is some relationship between price and efficiency, none of the other three

assumptions is correct. Most importantly , the data is not in any sense continuous. Costs

for efficiency levels are very "lumpy", not incremental. Efficiency changes, especially

for lower WFs tend to come in relatively large jumps. It is not meaningful to interpolate

between the basic platforms. Secondly, there are a relatively small number of actual,

33

0000198

 EE-RM-PET-100 COMMENT 97
Response of the Association of Home Appliance Manufacturers to the California Energy

Commission Petition for Exemption from Federal Preemption of California's Water and Energy

Conservation Standards for Residential Clothes Washers

Docket EE-RM-PET-100 [April 7, 2006]

April 7, 2006

useful data points - only prices of basic models. It is neither relevant nor useful to

measure or analyze price/efficiency relationships between feature sets for similar

performance levels. This effect is most obvious in high-end front-load machines, where

prices can vary by $1,000 for products with similar energy performance. Finally, while

retail data is useful as an indicator of underlying costs, there is substantial variation in

retail prices for the same basic platform depending on retailers, retail sales situations,

inclusion of delivery/removal, etc. Creating a valid data base for statistical analysis is

virtually futile. Attempts to circumvent these problems through non-linear models (logit,

probit, etc.) essentially bring the analysis back to platforms and platform considerations.

These statistical detours simply bring the analysis back around to an examination of the

simple platforms above.

F. The California Standard Would Result in Much Higher Prices and a

. Reduction in Product Availability to California Consumers.

As discussed in the technology review above, a standard with a WF of 8.5 or

lower would have the effect of eliminating all conventional Top Load - Agitator washers

and would require that all washers be either Top Load - Reduced Fill or Front Load. If

the standard remained confined to California, then it is possible that there is sufficient US

capacity for these alternative platforms to meet California demand in the short term by

largely eliminating shipments of those units to other states, for no net nationwide savings

in either water or energy. There is not sufficient capacity to meet a WF standard of 6.

Similarly, if other states also applied for waivers and also instituted WF standards of 8.5

or 6, then there would not be sufficient current capacity to meet demand, resulting in

reduced availability of washers.

In practice, actual reduction in product availability in California may be mitigated

because it is likely that some consumers will travel to other states to purchase (and have

delivered) lower cost, traditional washers. So, some California consumers will be merely

inconvenienced without any effect on energy or water consumption. Millions of others

will be deprived of the product they have relied on for over 50 years.

G. The Analysis Used In The California Petition Is Inaccurate for

Product Costs And Consumer Savings.

Mr. Shorey's analysis indicates that the EEC estimates of retail washer prices are

totally inaccurate for base case washers and for the minimum prices that might be

charged for washers that meet the CEC standards. In addition, the implications and total

savings drawn from these per unit amounts are incorrect:

1. CEC has significantly overestimated the cost to a consumer of a base case washer.

It uses a cost of $550. The actual retail price of the basic platform Top Load -

34

0000199

 EE-RM-PET-100 COMMENT 97