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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 

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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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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 residentialclothes 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. WaterInterests 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 p etition 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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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 

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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



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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 isover 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 enhancedpublic 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 

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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 benefitsof 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).



# 0^01 i 4Federal Register /Vol. 71, No. 249/Thursday, December 28, 2006/Notices

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 

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smaller market shares would be unable to support. ALS commented that productionvolume 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, itstated 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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### 78166 Federal Register /Vol. 71, No. 249 /Thursday, December 28, 2006 /Notices

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 ofcompliant 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 shiftingproduction 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



# NFederal 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 theseresidential clothes washers are toploading. For example, according to data on ENERGY STAR products submittedby 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 wouldresult 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 pricedifferential 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

### 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 (BGEnergy) 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

### 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 Presidentialpermit 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



### ^ .0 

### 1 61.

### 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 ofEnergy, 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

# 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

### 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. Includeeither 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®®

### 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 URLaddress 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 finalrule): 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.



# 0 0 1s5

### 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 waterefficiency 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 limitedto-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 currentlyuses, and will continue to need, costeffective water conservation strategies. The CEC states that every water supplysource 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))

€b 

# 11 a^ 6

### 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"^

# D epartment 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

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

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### 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 u

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## 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

## 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 notrepeat 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.

## 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 thepreemption 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 marketin g, etc. AHAM strongly disagrees that DOE properly dismissed AHAM 's arguments on these critical points. Indeed , the CEC petition sets up



# 6666162

### 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) 434-7300L ! 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

## 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

## 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 preemptionprovision 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-' .

### 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 

# 000 0167

### 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 proposedwater 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

00 

# 0 0 

# 168

### 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 i ntended 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


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### 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



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



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### 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 atthe 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.



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## IV. METHOD OLOGY

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



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### 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



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### 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)



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### 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



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### 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.



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### 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



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### 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.



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### 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 thatapproximately 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 re gulation -- 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



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### 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"



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### 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



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### 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)



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### 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 

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### 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



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### 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



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### 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

1.6 1.8 2 2.2 2.4 2.6 2.8 1.4 Source : energystar.gov, manufacturer data MEF (2004 Test Method)



### Figure 3 : MEF vs. WF by Washer Family and Shipments



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## 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.



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## 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.



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### 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)



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### 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 inthe 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).



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### 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 bytwo 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



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### 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.



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### 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.



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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



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### 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.



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### 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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### 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



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### 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,



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### 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 -



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