Too Smart by Half?: Naperville Smart Meter Awareness v. City of Naperville
Benjamin Franklin may have discovered electricity, but it was the men who invented the meter who made the money. Earl Wilson (American journalist 1907-1987)
Like the milkmen of an earlier day, meter readers and their monthly meter readings, may become a thing of the past, as utility companies replace analogue energy meters with digital “smart” readers. Smart meters enable utilities to manage the electrical grid more efficiently, by using smart grid systems and “dynamic,” i.e., time of use, pricing (not to mention saving the labor costs associated with all those meter readings). Naperville Smart Meter Awareness v. City of Naperville, 900 F.3d 521 (7th Cir. 2018); Opinion of the European Data Protection Supervisor on the Commission Recommendation on Preparations For The Roll-Out Of Smart Metering Systems (June 8, 2012) ¶¶12, 13 (“Smart Metering Roll-Out”); Alexandra Klass, Remaking Energy: The Critical Role of Energy Consumption Data, 104 CALIF. L. REV. 1095, 1095-1102 (2016)(“Remaking Energy”). Unfortunately, as is so often the case, with such benefits come a burden, smart meters may have significant privacy implications, Smart Metering Roll-Out, at ¶¶14-22; see generally, Electronic Privacy Information Center, The Smart Grid and Privacy (webpage). Indeed, a municipal utility’s installation of smart meters without an “opt out” provision for individual homeowners may violate the Fourth Amendment or the “search and seizure” provisions of some state constitutions. Or at least some concerned citizen of Naperville, Illinois thought. The Seventh Circuit grappled with that challenge in Naperville Smart Meter Awareness v. City of Naperville, 900 F.3d 521 (August 16, 2018)(“NSMA”). The resulting opinion is remarkably short given the gravity of the issue.
For customers who have traditional energy meters, utility companies generally obtain one lump-sum figure reflecting energy consumption for a month. Smart meters transmit data on household energy consumption far more frequently, indeed with sufficient frequency that the data can reveal much about the homeowners’ activities. Individual appliances have distinct energy-consumption signatures. NSMA, 900 F.3d at 524 (citing Ramyar Rashed Mohassel, et al., A Survey on Advanced Metering Infrastructure, 63 INT’L J. ELECTRICAL POWER & ENERGY SYSTEMS 473, 478 (2014)). Refrigerators, for instance, draw power differently than a televisions, respirators, or indoor grow lights. Id. Thus, a utility company could identify the types of appliances present in the home and the timing of their use. See Smart Metering Roll-Out, supra, ¶¶16, 18; Muhammad Rizwan Asghar, et al., Smart Meter Data Privacy: A Survey, 19 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, 2820 (2017), available with subscription here (“[s]everal recent works have pointed out that electricity consumption data may allow one to reveal private information, such as household occupancy or economic status”).
The City of Naperville owns and operates a public utility that provides electricity to its residents. Using funds provided under the American Recovery and Reinvestment Act of 2009, Pub. L. 111-5, 123 Stat. 115, to modernize the Nation’s electrical grid, Naperville began replacing its residential customers’ analog energy meters with digital smart meters. NSMA, 900 F.3d at 524. Naperville’s Electric Utility collects residents’ energy-consumption data at fifteen-minute intervals, storing it for up to three years. Id. Naperville Smart Meter Awareness brought suit alleging that Naperville’s smart meters reveal “intimate personal details of the City’s electric customers” in violation of the search and seizure clauses of the U.S. and Illinois Constitutions. Id. More particularly, they claimed that smart readers reveal “when people are home and when the home is vacant, sleeping routines, eating routines, specific appliance types in the home and when used, and charging data for plug-in vehicles that can be used to identify travel routines and history.” Id.
The District Court twice dismissed the case without prejudice, and refused plaintiff leave to file a second amended complaint on grounds of futility. Id. at 525-26.
The Seventh Circuit’s Opinion
The Seventh Circuit concluded that the use of smart meters intruded upon “reasonable expectations of privacy, thus constituting a search subject to Fourth Amendment constraints, but that such searches were “reasonable,” and thus constitutionally permissible.
In finding that the Naperville Electric Utility’s use of the smart meters constituted a search, the appellate panel relied heavily on Kyllo v. United States, 533 U.S. 27, 31–32 (2001). In Kyllo, police used a thermal imaging device to reveal the heat signature of defendant’s house so as to detect the presence of high‑intensity lamps, a reliable indicium of illicit marijuana cultivation. Based on the thermal imaging results, the officers obtained a search warrant for the home. The Supreme Court ruled that the initial use of the thermal imaging device constituted a search. “Where … the Government uses a device that is not in general public use, to explore details of the home that would previously have been unknowable without physical intrusion, the surveillance is a ‘search.’ ” Id. at 40. The Seventh Circuit panel concluded that the data collected from smart meters is at least as “rich” as that collected by the officers’ use of the thermal imaging device in Kyllo. NSMA, 900 F.3d at 526.
Nor was it significant that drawing conclusions about the homeowner’s activities from smart-meter data required making inferences from the data. The Supreme Court had rejected a similar argument in Kyllo. Id. (quoting Kyllo, 533 U.S. at 36). And even though government officials’ employment of a technology “in general public use” will generally not constitute a search, despite the technology’s invasiveness, Kyllo, 533 U.S. at 40, warrantless monitoring of smart meters data could not be defended on that basis. NSMA, 900 F.3d at 526. The court acknowledged that “more and more energy providers are encouraging (or . . . forcing) their customers to permit the installation of smart meters.” Id. at 527. Indeed, though unnoted in the decision, the U.S, Energy Information Administration has reported that, as of 2016, “installations of smart meters have more than doubled since 2010” and thus “almost half of all U.S. electricity customer accounts now have smart meters.” Nearly Half of All U.S. Electricity Customers Have Smart Meters, (Dec. 6, 2017)(webpage). Nevertheless, the Court explained, smart meters “have been adopted only by a portion of a highly specialized industry.” Id.
Characterizing its city-owned utility as a “third party” for purposes of Fourth Amendment analysis, Naperville argued that its residents had surrendered any reasonable expectation of privacy in the information smart meters transmit by voluntarily sharing it with the Utility. NSMA, 900 F.3d at 527. The Supreme Court has held that by sharing information with third parties, such as communications providers and financial institutions, in exchange for their services, individuals relinquishes any reasonable expectation of privacy in the information provided. Carpenter v. United States, ––– U.S. ––––, 138 S. Ct. 2206, 2216 (2018). The doctrine has been heavily criticized, see, e.g., U.S. v. Jones, 565 U.S. 400, 417 (2012) (Sotomayor, concurring); see generally, Bernard W. Bell, Secrets and Lies: News Media and Law Enforcement Use of Deception as an Investigative Tool, 60 PITT. L. REV. 745, 762-773 (1999). In NSMA, the Seventh Circuit found the doctrine inapposite for two reasons. 900 F.3d at 527.
First, it said, there is no third party present in the case; rather, there is only the municipal utility and the homeowner. Id. But that reasoning seems a bit odd. Information shared with the provider of a service can surely be accessed by the provider itself without transgressing the Fourth Amendment. The “third party” doctrine enables government entities other than the service provider (whether private or public) to access the information without a warrant. See, id. at 527, n.6. Second, the Seventh Circuit panel reasoned, Naperville’s residents’ provision of information is involuntary, relying on Carpenter v. United States. In Carpenter, the Supreme Court declared that a person does not shed an expectation of privacy in cell phone data by sharing such information with a communications provider, explicitly declining the invitation to extend the third-party doctrine to cell phone location records. Id. at 2216-17. In NSMA, the panel opined that “a home occupant does not assume the risk of near constant monitoring by choosing to have electricity in her home.” 900 F.3d at 527.
Having found that the Electrical Utility’s monitoring of the smart meters constituted a search, the Court concluded that such searches were reasonable, and thus consistent with the Fourth Amendment. It acknowledged the general presumption that warrantless search are unreasonable, see id., at 528 (citing Kyllo, 533 U.S. at 40). The Court referenced the administrative search doctrine to find that the presumption had been overcome. NSMA, 900 F.3d at 528-29 (citing Camara v. Municipal Court, 387 U.S. 523 (1967)).
In particular, Naperville had “no prosecutorial intent;” “public utility [e]mployees —not law enforcement officials—collect and review the data.” Id. Thus, the Electric Utility’s intrusion was more innocuous than that found to violate the Fourth Amendment in Camara. Unlike the search in Camara, Naperville’s data collection does not involve physical entry into the home. Id. Moreover, the risk of corollary prosecution attendant discovery of regulatory violations, which the Supreme Court noted in Camara, was absent when Naperville’s utility accessed and monitored smart meter data. And, the Court noted, Naperville’s “Smart Grid Customer Bill of Rights” states that the city’s utility will not provide customer data to third parties, including law enforcement, without a warrant or court order. City of Naperville, Department of Public Utilities – Electric, Service Rules and Policies §8-1B-2 (March 21, 2017). (Other jurisdictions have similarly adopted such smart grid bill of rights, see, Shehryar Nabi, 6 Smart Grid Bill Of Rights Examples From Around the U.S., UTILITY DIVE (Sept. 5, 2012)).
The Court cautioned that its holding turned on the circumstances of the case. In particular, it observed that “[w]ere a city to collect the data at shorter intervals,” or make smart meter data “more easily accessible to law enforcement or other city officials,” its conclusion might change. NSMA, 900 F.3d at 529.
The decision seems to reach the correct result. If a municipality or other governmental entity decides to provide electric power to its citizens, the Fourth Amendment should not prohibit it from monitoring smart meters in 15-minute intervals in order to more efficiently provide electricity and reduce the severity of power outages. The panel properly focused on the particulars of Naperville Utility’s practices, most notably the frequency of the readings, the records retention period, and the accessibility of the data beyond those involved in provision of electrical power. The first two considerations take into account concerns Justices Sotomayor and Alito expressed in Jones with regard to government monitoring of covertly-installed GPS tracking devices, where they noted that the duration of tracking and period of time officials retained the records might have particular relevance for Fourth Amendment purposes. U.S. v. Jones, 565 U.S. 415-16 (Sotomayor, J., concurring; id. at 430-31 (Alito, J, concurring).
However, the third factor, accessibility to law enforcement or regulatory officials for reasons other than management of the power grid, will likely prove to be the most critical determinant of the Fourth Amendment constraints on the municipal-owned utilities’ use of smart meters. Though the further dissemination of information obtained by way of a search is not a focus of Fourth Amendment law, in certain circumstances consideration of limitations on the dissemination of information may be a part of a sensible Fourth Amendment analysis. See, Harold J. Krent, Of Diaries and Data Banks: Use Restrictions Under the Fourth Amendment, 74 TEX. L. REV. 49, 51-53, 63-92 (1995) (suggesting that Fourth Amendment reasonableness extends to law enforcement publication of information). Here it could be employed to separate the government’s provision of a service from its regulatory and law enforcement functions.
In that regard, perhaps the most important place to focus, at least as far as the traditional purposes of the Fourth Amendment, is the requisite showing criminal investigators or regulators must make to obtain a warrant for smart meter records. Perhaps the quantum of evidence required should be a bit higher given the granularity of the information such smart meters can provide regarding a person’s activities inside their home, a location entitled to the highest privacy protections, see, e.g., Payton v. New York, 445 U.S. 573, 589-90 (1980) (“[a]t the very core [of the Fourth Amendment] stands the right of a man to retreat into his own home and there be free from unreasonable governmental intrusion”); Bernard W. Bell, Theatrical Investigation: White-Collar Crime, Undercover Operations, and Privacy, 11 WM. & MARY BILL RTS. J. 151, 168-71 (2002).
Moreover, if certain types or patterns of energy consumption become either regulatory or a criminal violations, use of smart meter data become all the more problematic in terms of the Fourth Amendment analysis. In its administrative search analysis, the Seventh Circuit noted that Naperville has not criminalized excessive energy consumption. NSMA, 900 F.3d at 528. (For another take on the Fourth Amendment issues, see Orin Kerr, Public Utility’s Recording of Home Energy Consumption Every 15 Minutes Is A “Search,” Seventh Circuit Rules, The Volokh Conspiracy (Aug. 17, 2018).)
But the Fourth Amendment will not likely be the focus of privacy protections related to the use of smart meters. As demonstrated by Olmstead v. United States, 277 U.S. 438 (1928), in interpreting the Fourth Amendment the Supreme Court tends to lag behind the advance of privacy-diminishing technological developments, see, id. at 472-79 (1928)(Brandeis, J., dissenting), see, generally, Samuel D. Warren & Louis D. Brandeis, The Right to Privacy, 4 HARV. L. REV. 193, 195-96 (1890). Justice Alito recently offered a similar observation in Jones, 565 U.S. at 427-28, 429-30 (Alito, J, concurring)(suggesting that protecting privacy with respect to GPS trackers should be addressed by Congress).
But there is even a more potent reason why Fourth Amendment jurisprudence is unlikely to have a major impact upon the resolution of the privacy implications of smart meters. While a significant portion of electricity is provided by government-owned entities, most power in this country is provided by private utility companies. American Public Power Association, Public Power (webpage). These entities, though almost invariably heavily regulated, are not “state actors,” see, Jackson v. Metropolitan Edison, 419 U.S. 345, 350-58 (1974), and thus not constrained by the Fourth Amendment.
Moreover, though the federal government has issued reports or recommendations regarding the privacy implications of smart meter technology, see, David T. Doot and Florence K.S. Davis, Keeping Your Kilowatts Private, 150 No. 4 PUB. UTIL. FORT. 48, 48-49 (2012), most notably U.S. Department of Energy, DATA PRIVACY AND THE SMART GRID: A VOLUNTARY CODE OF CONDUCT (January 12, 2015), neither Congress nor any agency has established federal regulatory standards on the issue, Remaking Energy, supra, at 1118. Most public utility regulation is state-based and generally performed by each state’s public utility commission. Some states have enacted statutes regarding the privacy of data collected by public utilities, and state public utility commissions have also taken up the issue. See, id. at 1117-23 (2016); Keeping Your Kilowatts Private, supra, at 49-51. I have not studied these efforts in depth, but they appear to focus on ensuring that utility companies follow fair information practices in their handling of information transmitted from smart meters, rather than placing constraints on how frequently the smart meter transmits information or the records retention periods. See, e.g., In Re Commission’s Own Motion to Review Issues Concerning Customer Information and Data Privacy Related to Advanced Metering Infrastructure Deployment, 306 P.U.R. 4th 146 (Mich. P.U.C. 2013); Decision Adopting Rules to Protect the Privacy and Security of the Electricity Usage Data, Etc., Decision 11-07-056 (Calf. P.U.C. July 28, 2011).