by K.T. Weaver, SkyVision Solutions , Updated August 22, 2018

Key Article Points

• Based upon a Federal Appeals Court analysis, all City of Naperville electric customers are being subjected to a governmental search every 15 minutes without a voluntary consent.
• On August 16, 2018, a Federal Appeals Court ruled against the privacy rights of consumers concluding that governmental searches being conducted as related to data collection by smart meters are reasonable and thus permissible.
• There are limitations to the Court ruling where it indicates that “our holding depends on the particular circumstances of this case.” [1]

For the people living in Naperville, Illinois, how does it “feel” to be subjected to a governmental search in your home every 15 minutes without your consent?

Added Commentary:  This Court ruling appears merely to have had the effect of advancing from the District Court opinion of “deemed” consent for data collection to an Appeals Court opinion of “deemed” legitimate government interest for data collection.  Either way, smart meter privacy invasions continue to occur, just now as an official governmental “search.”

Case Background

Since 2011, and in the case of Naperville Smart Meter Awareness (NSMA) v. City of Naperville (Case 1:11-cv-09299), NSMA has been attempting to receive injunctive relief from the mandatory (forced) installation of digital electric smart meters that collect granular energy usage data well in excess of that required for customer billing purposes.  On September 26, 2016, the District Court entered a final judgment in favor of the City of Naperville.  NSMA later appealed the District Court ruling to the U.S. Court of Appeals for the Seventh Circuit [2].

In short, NSMA requested the higher court to:

“review of the trial court’s dismissal of its claim that the City of Naperville’s use of smart meters constitutes a violation of NSMA members’ Fourth Amendment rights because the City’s smart meters collect electrical usage data from members’ homes at intervals of every fifteen minutes, which data can then be de-aggregated to offer an invasive view into their personal lives and activities inside their homes.” [3] 

Smart Meter Data Collection Constitutes a Fourth Amendment Search

Although the Seventh Circuit ultimately ruled against NSMA in the appeal, the Court essentially agreed with most of NSMA’s arguments and conceded that Naperville’s use of smart meters constitutes a “search” under the terms of both the Fourth Amendment and the Illinois Constitution [1]:

“While some cities have allowed residents to decide whether to adopt smart meters, Naperville’s residents have little choice.  If they want electricity in their homes, they must buy it from the city’s public utility.  And they cannot opt out of the smart-meter program.  The meters the city installed collect residents’ energy-usage data at fifteen-minute intervals.  Naperville then stores the data for up to three years.”

“The ever-accelerating pace of technological development carries serious privacy implications.  Smart meters are no exception.  Their data, even when collected at fifteen-minute intervals, reveals details about the home that would be otherwise unavailable to government officials…. .  Naperville therefore ‘searches’ its residents’ homes when it collects this data.”

“Naperville argues that its citizens sacrifice their expectation of privacy in smart-meter data by entering into a ‘voluntary relationship’ to purchase electricity from the city.  This argument is unpersuasive.  … a choice to share data imposed by fiat is no choice at all. …  a home occupant does not assume the risk of near constant monitoring by choosing to have electricity in her home.”

Although it is disappointing that NSMA lost its appeal, it was gratifying to hear the Court acknowledge the forced nature of the City’s smart meter data collection efforts and to state that “a choice to share data imposed by fiat is no choice at all.”  This is at least a more honest assessment of the facts than to say customers voluntarily share the data by continuing to use electricity or that consent was “deemed” as has been stated in the past.

Therefore, based upon the Court’s analysis as described above, City of Naperville electric customers are being subjected to a governmental search every 15 minutes without their voluntary consent.

Court Rules that Governmental “Searches” are “Reasonable”

Once the Court concluded that a governmental search is being conducted on its residents every 15 minutes, it further analyzed whether such a search is “reasonable” and thus permissible.

The Court cites that “since these searches are not performed as part of a criminal investigation, … we can turn immediately to an assessment of whether they are reasonable, ‘by balancing its intrusion on the individual’s Fourth Amendment interests against its promotion of legitimate government interests’.” [emphasis added]

The Court then states that a “privacy interest must be weighed against the government’s interest in the data collection.”

This is where I would say that the Court begins a flawed analysis that is dependent on accepting a governmental and industry narrative that:  “Indeed, the modernization of the electrical grid is a priority for both Naperville, … and the Federal Government,” and that:

“the government’s interest in smart meters is significant.  Smart meters allow utilities to reduce costs, provide cheaper power to consumers, encourage energy efficiency, and increase grid stability.  We hold that these interests render the city’s search reasonable, where the search is unrelated to law enforcement, is minimally invasive, and presents little risk of corollary criminal consequences.”

All of the above industry contentions on costs, energy efficiency, etc., are debatable as to whether they are factual.  Furthermore, in this ruling the Judges conflate the potential value of smart meters in modernizing the electric grid with personal data collection, …  as if you can’t modernize the electric grid without also collecting 15-minute energy usage data from each customer.  If smart meters are to be used to help modernize the grid, then the only personal energy usage data that needs to be collected is that necessary to bill for basic services, currently once per month in Naperville, Illinois.

Therefore, there is a fundamental misunderstanding on the part of the Judges as to how they have accepted a narrative that modernizing the electric grid requires endless troves of personal energy usage data being collected for each consumer.  That just is not true, and thus it is not reasonable to require such large amounts of data to be collected without consent.

In addition, the City of Naperville has not implemented time-of-use rates and doesn’t even offer customers the ability to view the smart meter readings through a web portal, etc., that could theoretically encourage energy efficiency measures.  Regarding “cheaper power to consumers,” the City has raised electric rates 6%, 7%, 8.3%, 3.6%, and 3.6% for the years 2014, 2015, 2016, 2017, and 2018, respectively [4, 5].  Smart meter installations for the City were effectively completed by the end of 2013.

The Court also considered a clarification offered by the City of Naperville as a mitigating factor that “the city’s public utility will not provide customer data to third parties, including law enforcement, without a warrant or court order.”  This is despite the fact that the police department and electric department are all subject to the direction of the City Council and where there are no meaningful divisions or firewalls between the departments in terms of prohibited communications or information transfer.  (Also see [6] below.)

Additionally, it appears the Judges in this case may have sided with and essentially quoted industry proponents who had filed an amicus brief for this appeal [7] stating:

“The reasonableness of a search under the Fourth Amendment is determined by balancing its intrusion on the individual’s Fourth Amendment interests against its promotion of legitimate governmental interests.”
[emphasis added]

Does the above quote look familiar?

Unfortunately, the Seventh Circuit was apparently unaware of or completely ignored the full history of the District Court case transcripts where the City of Naperville in open court demonstrated that rather than balancing the privacy interests of consumers with the City’s goal to enhance its electrical grid operations, the City instead stated that the current 15-minute smart meter data collection interval was determined by balancing such factors as memory capacity and cost [8].

The City of Naperville made no effort to ensure that smart meter data collection capabilities did not unreasonably infringe on the privacy expectations of the consumer and also performed no privacy impact assessment (PIA) prior to smart meter deployment [8].  Also see [9] for additional information related to balancing privacy interests of consumers.

Let me be clear.  In October 2013, I wrote a blog article at this website documenting how the City of Naperville failed to consider the privacy interests of its residents during smart grid implementation [8].  That article mentioned how “a utility’s goal to enhance its electrical grid operations must be balanced with the privacy interests of the consumer.”  I documented how that balancing was not done.  Ever since and throughout the multi-year legal proceedings with NSMA, the City has continued to deny any privacy concerns with smart meters at all [10].  So how can a Court at this juncture declare that consumer privacy interests have indeed been balanced against its promotion of legitimate government interests?

Thus, despite facts that would support privacy protection, a Federal Appeals Court has ruled against the privacy rights and interests of consumers as related to data collection by smart meters, concluding that electric customers are being subjected to governmental searches every 15 minutes and that such searches are reasonable and may be performed without a warrant.

Limitations of the Court Ruling

Although the NSMA group lost on its appeal, “the judges’ stressed this decision does not give an automatic green light to other cities and utilities to harvest data as they see fit, as the judges said collecting data ‘shorter intervals’ or making the data readily accessible to police or ‘other city officials outside the utility’ could trigger further litigation and court review under the Fourth Amendment” [11].

The Court also seemed to have some sympathy for the predicament of NSMA members where it stated [1]:

“Naperville could have avoided this controversy – and may still avoid future uncertainty – by giving its residents a genuine opportunity to consent to the installation of smart meters, as many other utilities have.”

So for the people in Naperville, Illinois, how does it “feel” to be subjected to a governmental search in your home every 15 minutes without your consent?  Remember that only one personal energy usage data point per month is required for billing you for your electric service.

It is my understanding that any further appeal (or judicial review) for this case would likely involve the U. S. Supreme Court.  I have no information at this time as to whether any such appeal is planned.

Updated Content, August 22, 2018

Electronic Frontier Foundation (EFF) on August 21, 2018, wrote an article at its website praising the Appeals Court ruling as a “landmark decision” and that the Seventh Circuit ruled 3-0 that “the Fourth Amendment protects energy-consumption data collected by smart meters.”  I consider the EFF article as over-the-top positive spin on what actually happened, as the only “decision” made in the ruling was to “AFFIRM the district court’s denial of leave to amend” on the part of NSMA.  However, it is true that future litigants may use the rationale discussed in the latest ruling as a case-law reference to help limit the use (or misuse) of smart meter data for prosecutorial intent.  For what it is worth, here is the link to the EFF article:
https://www.eff.org/deeplinks/2018/08/win-landmark-seventh-circuit-decision-says-fourth-amendment-applies-smart-meter

New Article with Updated Content

Refer to Smart Meter Data Collection is a “Search,” but Court Allows Anyway, SkyVision Solutions Blog Article, August 2018, at https://smartgridawareness.org/2018/08/23/smart-meter-data-collection-a-search/

References and Notes

[1] U.S. Court of Appeals for the Seventh Circuit, Ruling on Appeal for NSMA v. City of Naperville, August 16, 2018, available at NSMA v City of Naperville Ruling on Appeal

[2] Brief of the Plaintiff-Appellant, Naperville Smart Meter Awareness, Docket 16-3766, U.S. Court of Appeals for the Seventh Circuit, February 21, 2017; available at https://skyvisionsolutions.files.wordpress.com/2017/02/020-nsma-brief-with-rule-30a-appendix.pdf

[3] “Naperville Group Appeals Smart Meter Ruling to Higher Court,” SkyVision Solutions Blog Article, December 2016, at https://smartgridawareness.org/2016/12/24/naperville-group-appeals-smart-meter-ruling-to-higher-court/

[4] Naperville residents to see 3 years of electric rate increases, Daily Herald, January 6, 2016, at https://web.archive.org/web/20160428112518/https://www.dailyherald.com/article/20160106/news/160109511/

[5] “Naperville’s Electric Rates; When Pennies Are Better than Dollars,” City Council Watch Dog, March 30, 2017, at https://web.archive.org/web/20170330180919/http://citycouncilwatchdog.com/2017/03/napervilles-electric-rates-pennies-better-dollars

[6] Judges tend to concentrate on the infringements of law enforcement in Fourth Amendment cases and these are certainly important.  But unnecessary collection and review of personal energy usage data by governmental utility department personnel would also be a potential infringement depending on the circumstances.  A “search” by a government agent is a governmental search.  Case law has extended Fourth Amendment protection to include those being subjected to actions by other government actors like fire fighters, building/code inspectors, or even public school officials.  Thus, it is not a stretch to include governmental utility personnel reviewing unnecessarily collected smart meter data as a Fourth Amendment infringement.  If there is also the potential for contact with law enforcement of this data, then the case obviously becomes even stronger.  But to put this analysis in simple terms, a “search” is either conducted by a government agent or a private party.  It is fairly obvious that a person employed and acting as a government employee is not a private party and thus is a government agent.

[7] Government “Searches” Conducted Using Smart Meters Considered “Reasonable” by Industry Proponents, SkyVision Solutions Blog Article, June 2017, at https://smartgridawareness.org/2017/06/04/government-searches-using-smart-meters-considered-reasonable/

[8] “Naperville Fails to Consider Privacy Interests of Residents during Smart Grid Implementation,” SkyVision Solutions Blog Article, October 2013, at https://smartgridawareness.org/2013/10/12/naperville-fails-to-consider-privacy-interests/

[9] A simple example on how consumer privacy interests could have been properly balanced with legitimate government interests would have been for the City of Naperville to have completed a privacy impact assessment (PIA) that resulted in an analysis such as the following:

• In order to better monitor voltage across the system, smart meters could be programmed to record voltage (in volts) every 15 minutes, and this data collection would have no impact on customer privacy.
• Collection of customer usage data in kWh (energy delivered) is necessary to the extent required to bill the customer for service.  For customers with a fixed rate pricing plan, only one data point is required to be collected per month.  For those customers taking advantage of variable pricing plans (if ever offered by the City in the future), more granular data would need to be collected in kWh to the extent necessary to bill the customer.  Smart meters would be programmed on a customer by customer basis to collect the data necessary to bill for electric service depending on the pricing plan chosen by the customer.

Since the City of Naperville has not completed any sort of PIA (abbreviated example above), then there is no basis to conclude that the City has properly balanced consumer privacy interests with legitimate government interests.

[10] The City of Naperville in legal briefs, for example, has referred to NSMA Fourth Amendment violation allegations as “speculative,” “purely hypothetical,” and that “there is no Fourth Amendment privacy interest in the number of kilowatt hours one uses.”  (Reference: City Response to NSMA Appeal)

These City claims have effectively been determined to be false based upon the Appeals Court determination that smart meter data collection is indeed a Fourth Amendment search and the issue to be further resolved is the degree to which  Fourth Amendment privacy interests are properly weighed against legitimate government interests in promotion of smart meter data collection.

How could the City without further evaluation be deemed by the Court to be properly balancing consumer Fourth Amendment privacy interests when the City for years acted under the belief that the consumer had no Fourth Amendment privacy interests in smart meter energy usage data collection?  The effect of this ruling appears to merely have advanced from the District Court opinion of “deemed” consent for data collection to an Appeals Court opinion of “deemed” legitimate government interest for data collection.

[11] “Home energy use info gleaned from ‘smart meters’ is 4th Amend ‘search,’ but not ‘unreasonable’: Appeals panel,” Cook Count Record, August 16, 2018, at https://cookcountyrecord.com/stories/511534395-home-energy-use-info-gleaned-from-smart-meters-is-4th-amend-search-but-not-unreasonable-appeals-panel

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