Opinion ID: 1192266
Heading Depth: 1
Heading Rank: 6

Heading: Unusual and Compelling Interests

Text: The DOE's second ground for its denial of the CEC's waiver petition was that [the] CEC ha[d] not established by a preponderance of the evidence that the State of California has unusual and compelling water interests as required by the EPCA. To satisfy this standard, the CEC was required to demonstrate that California has interests in saving water that are substantially different in nature or magnitude than those prevailing in the United States generally and 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. . . . 42 U.S.C. § 6297(d)(1)(C)(i)-(ii). The DOE did find that CEC had met the first requirement; i.e., it found that California's water interests are substantially different. . . in magnitude than those prevailing in the U.S. generally, because the State has a volumetric total demand far greater than the national average, . . . a projected population increase that is above the median growth rate, . . . [and] higher than average water rates. 71 Fed.Reg. 78,162. The DOE found, however, that the CEC had not satisfied the second requirement namely, that its standards were preferable or necessary when measured against alternative approaches. Id. 78,163. The DOE's explanation for this finding was that the CEC had failed to provide underlying analysis of its assumptions and data inputs and that, as a consequence, DOE was unable to determine that the California Petition meets EPCA requirements. Id. According to the DOE, the CEC merely asserted that the economic assumptions and data inputs used in this analysis were vigorously tested in [the CEC's] public rule-making process that led to the adoption of this standard and did not indicate where in that record the requisite analysis could be found. Id. We find the DOE's conclusions unsupported by the record. The CEC provided a full explanation of its assumptions, data, and analyses in the form of its own rulemaking record. The DOE itself, in its notice soliciting comment, referred readers to the web site at which CEC's rulemaking record could be found. 71 Fed.Reg. 6023 (Feb. 6, 2006). This record contained a study commissioned by California Pacific Gas & Electric (PG & E) which provided much of the analysis used in the CEC rulemaking, including a first cost analysis which the DOE claimed did not exist in the CEC's petition. Moreover, CEC correctly points out that it cited the PG & E study as support for its conclusions in its petition for reconsideration to the DOE. It is also worth noting that the DOE's own regulations require that it accept as complete [o]nly such petitions which conform to the requirements of [DOE's regulations] and which contain sufficient information for the purposes of a substantive decision. . . . 10 C.F.R. § 430.42(f)(1). The DOE's acceptance of the petition as complete casts some doubt on its later faulting of CEC's reliance on the CEC rule-making proceeding. We conclude, therefore, that the CEC provided sufficient data and analysis for the DOE to make a decision concerning whether California's standards were preferable or necessary compared to alternatives. Whether those data and analysis were sufficient to meet CEC's burden is not for this court to decide in the first instance. It is clear, however, that whether or not the data and analysis were sufficient, the DOE simply did not evaluate them. Thus, at the very minimum, the DOE failed to consider an important factor or aspect of the problem. The DOE's reliance on its second ground for denying CEC's petition for waiver was, therefore, arbitrary and capricious.