Opinion
NO. CIV. S-02-2437 WBS PAN
June 10, 2003
MEMORANDUM AND ORDER
In this action for declaratory and injunctive relief, plaintiffs, four nationwide trade organizations representing manufacturers of residential and commercial appliances and equipment, allege that defendants have adopted appliance efficiency regulations that are preempted by federal legislation. On December 13, 2002, the court granted plaintiffs' motion for a preliminary injunction regarding certain of the challenged regulations. Plaintiffs now move for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) and for final declaratory and injunctive relief.
I. Factual and Procedural Background
The energy efficiency of appliances is governed by two sets of federal legislation: (1) the Energy Policy and Conservation Act ("EPCA"), as amended by the National Appliance Energy Conservation Act of 1987 ("NAECA"), Pub.L. No. 100-12, 101 Stat. 103 (codified at 42 U.S.C. § 6291 et seq.); and (2) the Energy Policy Act of 1992 ("EPACT"), Pub.L. No. 102-486, 106 Stat. 2776 (codified at 42 U.S.C. § 6311 et seq.). NAECA contains efficiency standards, testing procedures, and labeling requirements, among other regulations, for certain residential appliances, referred to as "covered products." These include appliances such as refrigerators, room air conditioners, and fluorescent lamp ballasts. 42 U.S.C. § 6292 (a) (enumerating "covered products"). EPACT contains similar regulations for certain types of industrial equipment, referred to as "covered equipment." These include certain electric motors, packaged terminal air conditioners and heat pumps, storage water heaters, and instantaneous water heaters. 42 U.S.C. § 6311 (1) (defining "covered equipment"). Together, NAECA and EPACT provide the statutory framework under which the Federal Trade Commission ("FTC") and the Department of Energy ("DOE") exercise authority and promulgate regulations relating to the manufacture and marketing of appliances and equipment.
EPCA "was enacted in 1975 as part of a `comprehensive national energy policy.'" Natural Res. Def. Council v. Herrington, 768 F.2d 1355, 1362 (D.C. Cir. 1985) (quoting S. Rep. No. 516, 95th Cong., 1st Sess. 116 (1975), U.S. Code Cong. Admin. News 1975 p. 1762 (conference report)). NAECA and EPACT both contain preemption provisions. The NAECA preemption provision reads as follows:
(1) Effective on March 17, 1987, this part supersedes any State regulation insofar as such State regulation provides at any time for the disclosure of information with respect to any measure of energy consumption of any covered product if —
(A) such State regulation requires testing or the use of any measure of energy consumption, water use, or energy descriptor in any manner other than that provided under section 6293 of this title; or
(B) such State regulation requires disclosure of information with respect to the energy use, energy efficiency, or water use of any covered product other than information required under section 6294 of this title.
42 U.S.C. § 6297 (a)(1)(A), (B). In addition, NAECA provides general rules of preemption for state energy conservation standards both before and after a federal standard becomes effective for a product. 42 U.S.C. § 6297 (b), (c). EPACT incorporates all the preemption provisions of 42 U.S.C. § 6297 and makes them applicable to "covered equipment." 42 U.S.C. § 6316.
42 U.S.C. § 6293 contains provisions relating to testing procedures used in assessing appliance efficiency.
42 U.S.C. § 6294 contains provisions relating to appliance labeling.
42 U.S.C. § 6293 contains provisions relating to testing procedures used in assessing appliance efficiency.
42 U.S.C. § 6294 contains provisions relating to appliance labeling.
The general rules provide for certain enumerated exceptions that are not relevant to this action.
In August 2001, the California legislature instructed defendant California Energy Commission ("CEC") to "[a]dopt and implement updated and cost-effective standards" for all appliances "whose use . . . requires a significant amount of energy on a statewide basis." Cal. Pub. Res. Code § 25553(b). By notice published on November 23, 2001, the CEC began its rule-making on the regulations at issue in this case. The regulations were adopted by the CEC on February 6, 2002, and, after several revisions, approved by the California Office of Administrative Law on October 28, 2002. The appliance regulations were scheduled to go into effect on November 27, 2002.
On November 7, 2002, plaintiffs filed this suit for declaratory and injunctive relief. Plaintiffs' complaint sets forth eight specific challenges to the CEC regulations.
• Count One alleges that the CEC section 1607 marking requirements for NAECA "covered products" are preempted by 42 U.S.C. § 6297.
• Count Two alleges that the CEC section 1607 marking requirements for EPACT "covered equipment" are preempted by 42 U.S.C. § 6316.
• Count Three alleges that CEC section 1606 information disclosure and pre-market approval requirements are preempted by 42 U.S.C. § 6297.
• Count Four alleges that CEC sections 1604(f) and 1605.3(f) establish test procedures and efficiency standards that are preempted by 42 U.S.C § 6297(a), (b), and (c)
• Count Five alleges that CEC section 1605.1(c)(1) misrepresents federal standards with respect to four air conditioner products.
• Count Six alleges that federal law prohibits the CEC from enforcing federal requirements concerning appliance efficiency.
• Count Seven alleges that the CEC's interpretation of the term "new construction" in section 1606(H)(1)(F) is preempted as impermissibly broad.
• Count Eight alleges that the CEC's requirements unduly burden interstate commerce.
Plaintiffs moved for a preliminary injunction regarding Counts One, Two, Three, Four, and Five of the complaint. On December 13, 2002, the court enjoined enforcement of the following regulations:
• CEC section 1607(d)(2) (marking requirements for NAECA "covered equipment");
• CEC section 1606's information disclosure and pre-market approval requirements, and the related enforcement provisions of CEC sections 1608(a) and (b); and
• CEC sections 1605.3(f) and 1604(f)(5), as they relate to under-20-gallon water heaters.
The court denied the remainder of plaintiffs' motion for preliminary injunction without prejudice on the ground that plaintiffs had not sufficiently demonstrated irreparable harm as to CEC sections 1607(b), (c), and (d)(1)(b), CEC section 1606(a)(3)(E)'s rounding rule, and CEC section 1605.1(c)(1), in light of a planned emergency rule-making session.
Subsequent to the court's issuance of the preliminary injunction, the CEC engaged in an emergency rule-making session to address the issues raised by this litigation. The CEC adopted several amendments to the regulations. Both parties agree that, as a result of the amendments, plaintiffs' challenges to CEC section 1607(d)(1)(B), which was part of Count One, and Counts Four and Five are now moot. Regarding this motion for judgment on the pleadings, therefore, the court need only address the remaining issues in Count One and Counts Two, Three, Six, Seven, and Eight.
II. Discussion
A. Applicable Legal Standard
Pursuant to Federal Rule of Civil Procedure 12(c), "[a]fter the pleadings are closed but within such time as not to delay the trial, any party may move for judgment on the pleadings." "Generally, district courts have been unwilling to grant a Rule 12(c) dismissal `unless the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law.'" Doleman v. Meiji Mut. Life Ins. Co., 727 F.2d 1480, 1482 (9th Cir. 1984) (quoting C. Wright A. Miller, Federal Practice and Procedure: Civil, § 1368 at 690 (1969))
The same standard applies to motions made under Rule 12(c) as applies to motions made under Rule 12(b)(6). See 2 James Wm. Moore et al. Moore's Federal Practice § 12.38 (3d ed. 2002). Therefore, on a motion for judgment on the pleadings, the factual allegations of the non-moving party are taken as true. Doleman, 727 F.2d at 1482 (citing Austad v. United States, 386 F.2d 147, 149 (9th Cir. 1967)). "Courts dismiss complaints under Rule 12(c) for either of two reasons: (1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal theory." Young v. Car Rental Claims, Inc., ___ F. Supp.2d ___ No. CV02-00770, 2003 WL 1786471, at *2 (D. Haw. March 31, 2003) When deciding a Rule 12(c) motion, the court "may consider pleadings, documents attached as exhibits or incorporated by reference in the pleadings, and matter of which the Court may take judicial notice; the Court may also consider documents not explicitly incorporated in or attached to the complaint if the complaint necessarily relies on these documents and their authenticity is not questioned." Milne v. Slesinger, No. CV02-08508, 2003 WL 21076983, at *3 (C.D. Cal. May 8, 2003).
Under the Supremacy Clause of the Constitution, Congress has the power to pass legislation that preempts state law. See U.S. Const. art. VI, cl. 2; Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 372 (2000) ("A fundamental principle of the Constitution is that Congress has the power to preempt state law."). Such preemption may be either express or implied. Here, plaintiffs argue only express, not implied, preemption. Express preemption may be found where Congress has explicitly stated "the extent to which its enactments preempt state law." English v. Gen. Elec. Co., 496 U.S. 72, 79 (1990) ("Pre-emption is fundamentally a question of congressional intent, and when Congress has made its intent known through explicit statutory language, the courts' task is an easy one.") (internal citation omitted))
In determining the scope of an express preemption provision, the court is guided by two presumptions. Medtronic v. Lohr, 518 U.S. 470, 485 (1996). First, the court presumes that "`the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.'" Id. (quoting Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). Second, "`[t]he purpose of Congress is the ultimate touchstone' in every preemption case." Id. (quoting Retail Clerks v. Schermerhorn, 375 U.S. 96, 103 (1963)). Congressional intent is "primarily discerned from the language of the pre-emption statute and the `statutory framework' surrounding it." Id. (citation omitted).
B. Plaintiffs' Claims
1. Count One: CEC § 1607 Marking Requirements for NAECA "Covered Products"
a. CEC §§ 1607(b) and (c)
Under CEC section 1608(a)(2)(B), all the marking requirements set forth in CEC section 1607 must be met for "any unit of any appliance . . . sold or offered for sale in California." CEC section 1607(b) requires that the manufacturer's name, brand name or trademark, the model number, and the date of manufacture (year and month, or smaller increment) be "permanently, legibly, and conspicuously displayed on each unit." If the date is in a code that is "not readily understandable to the layperson," section 1607(b) requires manufacturers to provide the code immediately, on request, to the CEC. Section 1607(c) further provides that: (1) for plumbing fixtures and plumbing fittings, the required information be displayed on an accessible place on each unit or on the unit's packaging; (2) for lamps, the required information be displayed on an accessible place on each unit, or the unit's packaging, or "where the unit is contained in a group of several units in a single package, on the packaging of the group"; and (3) for fluorescent lamp ballasts, that the date of manufacture indicate year and three-month or smaller increment.
The amended section 1607(b) no longer requires that this information appear on the product's nameplate.
In analyzing whether these requirements are preempted, the court must begin, as it does in any statutory analysis, with the plain language of the statute. See United States v. Hanousek, 176 F.3d 1116, 1120 (9th Cir. 1999) ("If the language of the statute is clear, we need look no further than that language in determining the statute's meaning."). Relevant to the court's analysis of the plain language of a statute is "`the structure and purpose of the statute as a whole,' as revealed not only in the text, but through the reviewing court's reasoned understanding of the way in which Congress intended its regulatory scheme to affect business, consumers, and the law." Medtronic, 518 U.S. at 488.
NAECA provides, in pertinent part, for preemption of state regulations that require "the disclosure of information with respect to any measure of energy consumption or water use of any covered product if — such State regulation requires disclosure of information with respect to the energy use, energy efficiency, or water use of any covered product other than information required under section 6294 of this title." 42 U.S.C. § 6297 (a)(1)(B). CEC sections 1607(b) and (c) clearly require the disclosure of information. See Section II (B)(3), infra (discussing the meaning of "disclosure of information"). Therefore, the court must determine: (1) if this disclosure of information is "with respect to any measure of energy consumption or water use" and (2) if it is, whether the disclosure of information required by the CEC regulations is "other than information required by section 6294."
On their face, CEC sections 1607(b) and (c), which require disclosure of the manufacturer's name, the model number, and the date of manufacture, do not appear to call for the disclosure of information with respect to any measure of energy consumption or water use. However, at oral argument on plaintiffs' motion for preliminary injunction, defendants stated that it was necessary to have the date of manufacture on the products to determine compliance with energy consumption standards. (Dec. 5, 2002 Hr'g Tr. at 41:22-42:14). In addition, in defendants' opposition, they state that "[a]ll of the marking requirements [in section 1607] help foster EPCA's primary goal of energy efficiency," and that "[t]he purpose of [these] regulations is to allow compliance and enforcement personnel . . . to determine quickly which efficiency standard is applicable. . . ." Therefore, because the purpose of the regulations appears to be facilitating determinations of whether products comply with energy efficiency standards, CEC sections 1607(b) and (c) do require disclosure of information with respect to any measure of energy consumption.
Thus, the court must determine whether this disclosure of information is "other than information required under section 6294." Section 6294 of NAECA provides for labeling requirements for "covered products." The requirements of NAECA, including those of section 6294, are implemented through FTC regulations. 16 C.F.R. § 305.1 (setting forth the scope of the regulations implementing NAECA).
The FTC regulations require, among other things, that the name of the manufacturer and the model number appear on the labels of most "covered products." 16 C.F.R. § 305.11 (a)(5)(B), (a)(5)(C). Regarding lighting products, the FTC regulations do not require the manufacturer's name or the model number to appear on the label. 16 C.F.R. § 305.11 (d), (e). The FTC regulations do not require that the labels of "covered products" include the date of manufacture. Rather, the federal regulations require that the date of manufacture be reported to the FTC whenever a new basic model is introduced on the market, or, for fluorescent lamp ballasts, with the first submission for each basic model. 16 C.F.R. § 305.8 (a)(1), (a)(2). The federal regulations also provide manufacturers with options regarding the placement of labels on "covered products" and allow the information to be displayed on a hang tag instead of an affixed label. 16 C.F.R. § 305.11 (6), (7).
The requirements of CEC sections 1607(b) and (c) go beyond the federal requirements in two ways: (1) by providing that the date of manufacture be marked on "covered products" when the FTC regulations require only that this information be submitted to the FTC in certain circumstances; and (2) by providing that the manufacturer's name and model number be marked on the products themselves rather than on a label or hang tag (or in the case of lighting products not provided on a label at all), as required by the FTC regulations. Therefore, CEC sections 1607(b) and (c) require the disclosure of information "other than" what is required by section 6294 and its implementing regulations.
Accordingly, because CEC sections 1607(b) and (c) require disclosure of information with respect to any measure of energy consumption and because that disclosure is "other than" what is required by section 6294, CEC sections 1607(b) and (c) — creating marking requirements for "covered products" — are preempted under the plain language of NAECA.
b. CEC § 1607(d)(1)
CEC section 1607(d)(1) states that "[t]he marking required by 16 C.F.R. Part 305 (2001) shall be displayed on all unites [sic] of all federally-regulated consumer products of" certain classes. Plaintiffs contend that this regulation is an impermissible attempt to enforce a federal standard. Defendants acknowledge that the CEC does not have the authority to enforce federal efficiency standards at the point of sale.See Section II (B)(4), infra (further discussing state enforcement of federal standards). As discussed above, marking requirements relate to energy efficiency standards in that they facilitate compliance determinations. See Section II (B)(1)(a), supra. Under CEC section 1608(a)(2)(B), all the marking requirements set forth in CEC section 1607 must be met for appliances sold or offered for sale in California. Therefore, if a product did not comply with the federal marking requirements incorporated into CEC section 1607(d)(1), the CEC could potentially block the product's sale in California. Because such blockage would constitute impermissible enforcement of a federal standard, CEC section 1607(d)(1) is preempted.
2. Count Two: CEC 1607 Markin Requirements for EPACT "Covered Equipment"
CEC section 1607(d)(2) requires that "covered equipment" be marked with "applicable energy performance information shown in Table V" of the regulation. With regard to this regulation, defendants reiterate the argument they made at the preliminary injunction stage — that, because the DOE has not prescribed labeling rules for most "covered equipment," the CEC is merely filling a regulatory gap left by DOE inaction. Under 42 U.S.C. § 6315, the DOE is authorized to prescribe labeling rules for classes of "covered equipment" for which a test procedure has been prescribed. The DOE's power to prescribe test procedures under EPACT is discretionary. 42 U.S.C. § 6314 (a). Therefore, the lack of DOE regulations regarding the labeling of "covered equipment" is due to the fact that, currently, the DOE has not prescribed test procedures for most classes of "covered equipment."
The DOE has prescribed marking requirements for electric motors.See 10 C.F.R. § 431.81, 431.83.
The EPACT preemption provision states that a state regulation that provides "at any time for the disclosure of information with respect to any measure of energy consumption" is preempted where the required disclosure is of information "other than" what is required by EPACT's labeling provision. 42 U.S.C. § 6316 (incorporating the NAECA preemption provision found in 42 U.S.C. § 6297) (emphasis added). Therefore, the statutory language does not contemplate that preemption of state regulations regarding the marking of "covered equipment" is dependent on the passage of federal regulations regarding labeling.
In addition, the touchstone of any preemption analysis is Congressional intent. See Medtronic, 518 U.S. at 485. As discussed above, EPCA, the statute preceding NAECA and EPACT, was enacted as part of a comprehensive national energy policy. See S. Rep. No. 516 (1975). Furthermore, NAECA resulted from a situation where "appliance manufacturers were confronted with the problem of a growing patchwork of differing State regulations which could increasingly complicate their design, production and marketing plans. Regulations in a few populous States could as a practical matter determine the product lines sold nationwide, even in States where no regulations existed." S. Rep. No. 100-6 at 4 (1987). EPACT incorporates NAECA's preemption provisions. Thus, Congress clearly intended to create some uniformity in regulations under the EPACT regime.
Defendants state that the language regarding the "patchwork of differing state regulations" refers only to Congressional concern about potentially differing state regulations establishing efficiency standards. Even if this statement was made in the context of a discussion of efficiency standards, there is no evidence that congressional concern about the problematic situation that would be created if different states enacted different regulations was limited solely to efficiency standards.
Therefore, as discussed at length in the court's December 13, 2002 Order, where: (1) preemption is effective "at any time"; (2) Congress clearly intended to create a comprehensive energy policy scheme and a statute with some preemptive effect; and (3) an agency is vested with discretion in promulgating regulations, as the DOE is here, DOE inaction does not create a regulatory gap that the states are free to fill as they like. Rather, in light of the circumstances listed above and the EPACT statutory framework, the decision by the DOE to forego, for the time being, promulgating test procedures and accompanying regulations for most classes of "covered equipment," implies a determination that the area is best left unregulated. See Arkansas Elec. Coop. Corp. v. Arkansas Public Serv. Comm'n, 461 U.S. 375, 384 (1983) ("[A] federal decision to forego regulation in a given area may imply an authoritative federal determination that the area is best left unregulated, and in that event would have as much pre-emptive force as a decision to regulate." (emphasis in original)); see also Dec. 13, 2002 Order Section II (B)(1). Accordingly, CEC section 1607(d)(2) is preempted by EPACT.
According to a declaration submitted by defendants, the DOE drafted a final rule for test procedures for "covered equipment" in 2000 "during the course of an extensive rulemaking," but the rule has not yet been published. (Martin Supp. Decl. ¶ 20). The mere fact that a forthcoming federal rule may preempt a state rule in the future does not mean that the current state rule must "give way under the Supremacy Clause." See Ray v. Atlantic Richfield Co., 435 U.S. 151, 172 (1978). However, the fact that the DOE has engaged in rulemaking on test procedures for "covered equipment" bolsters the conclusion that the current lack of DOE regulations in this area is the result of an exercise of DOE discretion. Moreover, the preemption provisions at issue in the cases defendants cite in support of their argument that DOE inaction should have no preemptive effect are different from the preemption clause at issue here, which, the court has determined, is not dependent upon the promulgation of federal regulations. See Toy Mfrs. of Am., Inc. v. Blumenthal, 986 F.2d 615, 620 (2d Cir. 1993) (stating that preemption provision in the Federal Hazardous Substances Act was contingent on existence of federal regulation addressing same issues as state regulation); New Jersey State Chamber of Commerce v. Hughey, 774 F.2d 587, 592 (3d Cir. 1985) (stating that OSHA's preemption provision expressly gives states the authority to regulate matters not governed by a federal standard).
3. Count Three: CEC 1606 Information Disclosure and Pre-Market Approval Requirements
a. Information Disclosure and Pre-Market Approval Requirements
CEC section 1606 requires manufacturers to submit specified information to the CEC for each appliance offered for sale or sold in California. In particular, CEC section 1606(a), Table U, sets forth the specific information that must be submitted for various appliances, including both "covered products" and "covered equipment". The recent amendments to this regulation make the submission of some items of information contained in Table U voluntary, rather than mandatory. CEC sections 1606(a)(1)(A) and (B) provide that the CEC's executive director will specify formats and schedules for information submittal. CEC section 1606(b) then provides for a procedure by which the executive director will review the submitted statements and determine whether or not an appliance complies with CEC regulations.
CEC section 1606(b)(2)(A) delineates time periods within which the executive director must inform manufacturers as to whether their products are compliant. For example, through February 28, 2004, if the manufacturer's submission of information is filed electronically, the executive director must inform the manufacturer of the determination within thirty calendar days after the receipt of the submission.
The parties dispute whether the phrase "disclosure of information," which is used in both the introductory and modifying clauses of section 6297, should be interpreted broadly or narrowly. Defendants contend that: (1) "disclosure of information" should be interpreted narrowly as referring only to labeling requirements and "other point of sale information disclosure to consumers"; and (2) even if the CEC regulations require "disclosure of information" within the meaning of NAECA's preemption provision, they do not require data regarding measures of energy consumption or water use. The meaning of the phrase "disclosure of information" is somewhat unclear from the plain language of section 6297. Therefore, the court must look to the statutory framework to determine the meaning of this phrase. Furthermore, where the statutory language is ambiguous, the court "may look to legislative history as a guide to its meaning." United States v. McElyea, 158 F.3d 1016, 1018-19 (9th Cir. 1998).
The statutory and regulatory framework of NAECA contemplates disclosures of information regarding energy consumption that go beyond disclosures of information on labels. See Dec. 13, 2002 Order at Section II (C)(1)(a). For example, section 6296(d) of NAECA states that the DOE may require manufacturers of "covered products" to submit information or reports to the DOE regarding, among other things, energy efficiency, energy use, or water use of "covered products."
Defendants contend that section 6296 is of "dubious relevance" to the preemption inquiry because section 6297 refers only to sections 6293 and 6294, the testing and labeling provisions of NAECA, in its modifying clauses. However, when a statutory phrase is ambiguous, the court must look to the overall statutory framework to discern the meaning of the phrase. See Medtronic, 518 U.S. at 488. Moreover, the provisions of section 6296 are inextricably related to those of section 6294. For example, manufacturers of "covered products" to which a rule under section 6294 applies must, upon request, "provide the data from which the information included on the label and required by the rule was derived." 42 U.S.C. § 6296 (b)(2).
In addition, the FTC regulations implementing NAECA provide both labeling requirements and requirements for the submission of data to the FTC including data regarding "the estimated annual energy consumption . . . or energy efficiency rating . . . for each basic model in current production." 16 C.F.R. § 305.8 (a)(1). The FTC regulations also require the submittal of the "model numbers for each basic model; the total energy consumption, determined in accordance with § 305.5, used to calculate the estimated annual energy consumption or energy efficiency rating; the number of tests performed; and, its capacity. . . ." Id.
While defendants are correct that section 6294(c) refers to labels and other information provided to consumers at the point of sale, as the above discussion makes clear, NAECA and its implementing regulations encompass disclosures of information that go beyond disclosures made to consumers at the point of sale and include disclosures to federal agencies. Accordingly, the phrase "disclosure of information" cannot be read narrowly as defendants suggest. Rather, "disclosure of information" encompasses disclosures of information such as the ones required by CEC section 1606.
The court must therefore determine whether CEC section 1606 requires the disclosure of information with respect to measures of energy consumption or water use such that CEC section 1606 is preempted by NAECA. NAECA defines "measure of energy consumption as energy use, energy efficiency, estimated annual operating cost, or other measure of energy consumption." 42 U.S.C. § 6291 (8) (emphasis added). The statute defines "energy use" as "the quantity of energy directly consumed by a consumer product at point of use", and "energy efficiency" is defined as "the ratio of the useful output of services from a consumer product to the energy use of such product." 42 U.S.C. § 6291 (4), (5).
According to defendants, taking these statutory definitions together, "section 6297(a)(1) could preempt a State regulation on "the disclosure of information with respect to any measure of energy consumption . . . of any covered product' only if the information specifically describes how much energy the product "directly consume[s]' . . . or, for measures of energy efficiency, how much useful output the appliance produces in relationship to its energy use." Defendants' definition, however, ignores the "or other measure of energy consumption" language contained in the statutory definition. Moreover, as discussed in the context of the marking of "covered products," information that is not apparently related to measures of energy consumption, such as the date of manufacture, may still relate to compliance with measures of energy consumption. See Section II (B)(1)(a), supra.
Finally, as the court noted in its previous order, allowing each state to require manufacturers to submit different pieces of information about their products opens the door to the creation of the precise situation that Congress sought to avoid in passing NAECA — subjecting manufacturers to a patchwork of potentially inconsistent state regulations. See Dec. 13, 2002 Order at Section II (C)(1)(a)(i); see also Section II (B)(2), supra. Therefore, because CEC section 1606 provides for "the disclosure of information with respect to any measure of energy consumption or water use," its information-reporting requirements, and the related pre-market approval requirements in CEC section 1608(a), are preempted by NAECA.
While the DOE has not promulgated a regulatory scheme for "covered equipment" under EPACT similar to the one the FTC has promulgated under NAECA, EPACT expressly applies the NAECA preemption provision and the relevant provisions of section 6296 to "covered equipment." 42 U.S.C. § 6316 (b)(1). As discussed in Section II (B)(2), supra, preemption under EPACT is not contingent on the promulgation of regulations by the DOE. Therefore, the CEC's information submittal requirements are also preempted as applied to "covered equipment."
b. The Rounding Rule
CEC section 1606(a)(3)(E) (the "rounding rule") provides rules regarding how test data required to be submitted under Table U must be reported. Because the court has determined that the information submittal requirements for "covered products" and "covered equipment" are preempted, the issue of how test data must be reported to the CEC is moot. Accordingly, the court need not address whether the rounding rule is preempted.
4. Count Six: CEC Enforcement of Federal Requirements
Plaintiffs claim that the CEC cannot enforce federal requirements regarding "covered products" and "covered equipment." In particular, plaintiffs allege that the CEC regulations impermissibly allow state enforcement of federal energy efficiency standards. Defendants acknowledge that, pursuant to section 6297(c), the CEC does not have the authority to enforce federal efficiency standards at the point of sale, and CEC section 1608(a)(4) has been amended to clarify that the CEC cannot block the sale of a product in California based solely on the product's failure to comply with a federal standard. Therefore, the court must consider whether any of the remaining enforcement provisions in the CEC regulations are preempted.
Plaintiffs' objections to the CEC's enforcement of federal marking requirements are discussed at Section II (B)(1)(b), supra.
Section 6297(c), in pertinent part, provides that, with certain exceptions not relevant here, when a federal energy conservation standard becomes effective for a covered product pursuant to section 6295, "no State regulation concerning the energy efficiency, energy use, or water use of such covered product shall be effective with respect to such product. Although defendants seek to confine the limitation on their enforcement powers to enforcement at the point of sale, no such limitation is evident from the language of the statute.
CEC section 1608(e) sets forth provisions for the "enforcement testing of appliances." Under section 1608(e), the CEC executive director "shall periodically cause" the testing of appliances — pursuant to federal testing procedures — to determine whether these products comply with federal and state standards that are set forth in section 1605 of the regulations. If it is determined, after calculating the mean results of two tests, that a product is not compliant, that product will be removed from California's database. CEC §§ 1608(e)(1), (2). In the case of a federally regulated appliance, if the test results for a product do not meet a federal standard or are at variance with what the manufacturer has reported to the DOE or the FTC, the regulations provide that the CEC shall inform the proper federal agency. CEC § 1608(g). The cost of testing, after the initial test, is borne by manufacturers.
Although the CEC regulations do not provide that products that do not comply with federal standards will be banned from sale in California, CEC section 1608 still sets up a mandatory testing regime for federally regulated appliances that results in certain negative consequences for failure to comply. Such mandatory testing requirements that are designed to ensure compliance with federal standards are not meaningfully distinguishable from the enforcement of federal energy efficiency standards. Accordingly, the enforcement provisions of CEC section 1608, as they apply to "covered products" and "covered equipment," are preempted.
5. Count Seven: The CEC's Interpretation of the Term "New Construction"
Section 6297(c)(3) contains an exception to the preemption of state regulations "concerning the energy efficiency, energy use, or water use" of a covered product if the state regulation is "in a building code for new construction." CEC section 1606(h)(1)(F) uses the term "new construction" in a section containing a statement that is required to be placed in a trade directory that can be used for any purpose the CEC database created pursuant to section 1606(c) is used for. The California building code applies both to new buildings and to any new construction in existing buildings for which a building permit is required. Cal. Code Regs. tit. 24, §§ 100(d)(2), 100(d)(3), 100(a) (2001).
The relevant part of section 1606(h)(1)(F) states that a trade directory must contain a statement saying that "UNLESS INDICATED OTHERWISE, any appliance listed in this directory may be sold, offered for sale, or installed in new construction in California."
In a series of related arguments, defendants contend that because plaintiffs have not shown that they have been injured or "adversely affected" by the CEC's definition of new construction: (1) plaintiffs do not have standing to assert this claim; (2) that the claim is not ripe; and (3) that the court does not have subject matter jurisdiction under 42 U.S.C. § 6306 (c). Although the declarations submitted by plaintiffs do not specifically address the injury that may be caused by the definition of "new construction," plaintiffs have detailed the various burdens on manufacturers that are created by a state regulatory scheme that is different from a federal regulatory scheme. Accordingly, the court is satisfied that plaintiffs have demonstrated injury such that the court may reach the merits of plaintiffs' claim that the CEC's definition of "new construction" is preempted.
"New construction" is not defined by NAECA or EPACT and has not been interpreted in the implementing regulations for either statute. Moreover, the meaning of the phrase is not apparent from the text of the statutory provision in which it appears, and the parties have not cited to any relevant legislative history regarding the construction of this phrase. Plaintiffs urge the court to adopt the definition of "new construction" that has been used in other federal regulations — that "new construction" refers to the building of a new structure and/or an addition to an existing structure that increases the floor area by more than 100 percent — not to any new construction in existing buildings for which a building permit is required. See Pls.' P. A.'s at 26 n. 39 (citing U.S. Dep't of Housing and Urban Development regulations 24 C.F.R. § 583.5 and 24 C.F.R. § 884.01; Dep't of Veterans Affairs regulation 38 C.F.R. § 17.701; and Federal Emergency Management Agency regulation 44 C.F.R. § 9.4).
However, when passing legislation, Congress is generally presumed "knowledgeable about existing law pertinent to the legislation it enacts." Goodyear Atomic Corp. v. Miller, 486 U.S. 174, 184-85 (1988) (stating that, "in the absence of affirmative evidence in the language or the history of the statute," the Court was unwilling to assume that Congress was ignorant of relevant state laws). When NAECA was passed, the California building code used the phrase "new construction" in the same context as the phrase is used in the current code. The parties dispute whether the scope of the phrase is exactly the same in the current California code as it was in the California building code that was in existence when NAECA was passed.
Regardless, plaintiffs have not demonstrated that Congress intended a more restrictive meaning of "new construction" than that contained in the California Code or that Congress was ignorant of California's use of the phrase "new construction" in its building code. In light of the presumption that Congress is aware of relevant state laws when it enacts federal legislation, the court cannot determine, on the record currently before it, that California's definition of "new construction" is preempted.
Indeed, Congress was clearly aware of the existing California energy efficiency standards when it passed NAECA because it referred to them in section 6295(b)(3)(A) (ii) (I) of NAECA.
In addition, as plaintiffs' citations to other federal statutes where the term "new construction" has been defined in implementing regulations evidences, the federal government is capable of specifically defining "new construction" where it wishes to do so. In the absence of any indication that Congress intended to impart a specific definition to "new construction" in the statute at issue here, the court is unwilling to write plaintiffs' definition of that phrase into the statute.
6. Count Eight: Burden on Interstate Commerce
Finally, plaintiffs contend that the CEC regulations at issue in this litigation constitute an impermissible burden on interstate commerce. This claim is moot as to those regulations that the court has determined are preempted. Therefore, the court must consider this claim only as to the California definition of "new construction."
In order to establish a claim under the dormant Commerce Clause, a party must show that: (1) "the state law or regulation in question penalizes interstate commerce" and (2) that it "does so without sufficient economic justification." Nat'l Audubon Soc'y, Inc. v. Davis, 307 F.3d 835, 857 (9th Cir. 2002) (citing Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970)). Plaintiffs have advanced no arguments in support of their claim that the CEC regulations burden interstate commerce. Moreover, it is far from clear that using a broad definition of "new construction" in California penalizes interstate commerce. Accordingly, the court cannot conclude that CEC section 1607(d)(1) or the California definition of "new construction" violates the dormant Commerce Clause.
IT IS THEREFORE ORDERED that:
(1) plaintiffs' motion for judgment on the pleadings be, and the same hereby is, DENIED as to the term "new construction" as used in CEC section 1606(h)(1)(F) and Title 24 of the California Code of Regulations; and
(2) plaintiffs' motion for judgment on the pleadings the same hereby is, GRANTED as to CEC sections 1606, 1607(b) and (c), 1607(d)(1) and (d)(2), and the related enforcement and pre-market approval provisions of CEC section 1608. Defendants are permanently enjoined from enforcing those regulations as against plaintiffs.