Smart Meter Data Collection is a Search, but Court Allows It Anyway

By K.T. Weaver, Augsut 24, 2018; Original article here.

A few days ago I reported on a ruling in the smart meter-related case of Naperville Smart Meter Awareness (NSMA) v. City of Naperville (Case 1:11-cv-09299)¹.

Since then, there have been several articles in other blogs on the same topic, many of which I considered to be inaccurate or extremely biased. One this morning by Naked Security, however, I considered to be objective and accurate (and shorter than mine), so I thought I would provide a synopsis and link to it to provide a different perspective.

As stated in the latest article ²

"US cities using smart meters narrowly escaped a legal problem this month when a court decided that the benefits of these IoT devices outweighed the privacy issues created by collecting detailed home energy data.

The US Court of Appeals for the Seventh Circuit, a federal court that oversees appeals for Illinois, Indiana and Wisconsin, ruled against a privacy advocacy group called Naperville Smart Meter Awareness (NSMA). …

It ruled that using technology to peek in detail at goings-on inside peoples’ homes every 15 minutes does constitute a search, but decided that the search was reasonable. …

It decided that smart meter data collection is not very intrusive because the data isn’t used to prosecute people. …

The court had a caveat, though, and warned the City that the balance could change. It concluded:

‘We caution, however, that our holding depends on the particular circumstances of this case. Were a city to collect the data at shorter intervals, our conclusion could change. Likewise, our conclusion might change if the data was more easily accessible to law enforcement or other city officials outside the utility.’"

Positive Aspects of the Latest Court Ruling

Although I am sure NSMA is disappointed it did not prevail on its primary allegation that smart meter data collection was by itself an unreasonable search, the litigation did make some progress in privacy protections for its members and possibly even across the country as explained below.

The Appeals Court rejected the District Court’s conclusion that granular smart meter data is no different than analog meter readings collected once per month for billing purposes. The Court cited NSMA’s “well-pled allegations” that “energy-consumption data collected at fifteen-minute intervals reveals when people are home, when people are away, when people sleep and eat, what types of appliances are in the home, and when those appliances are used.”

The Appeals Court also rejected the District Court’s conclusion that customers voluntarily provided consent for the City to collect high frequency data merely because they purchased the essential service of electricity.

For the first time, recognizing evolving technology, smart meter energy usage data was given Fourth Amendment protection at least, for example, in instances where law enforcement may be gathering evidence for a criminal prosecution.

The Court also provided a warning that collecting energy usage data at intervals less than 15-minutes might tip the balance towards a conclusion that the collection would be too intrusive and therefore unreasonable.

The City of Naperville during the course of its litigation with NSMA made a number of commitments (and codified into its Municipal Code) to reduce its litigation risk and to increase its chances of prevailing in the case:

1. Customers’ electric usage readings will not be taken more frequently than in 15-minute intervals.

2. Disclosure of energy usage data will not be made to any third party absent a warrant, court order or written consent from the customer. The City also clarified that a “third party” in this context includes anyone other than the electric utility itself, the City’s finance department employees, the City’s legal department, and third parties engaged by the City for collection purposes.

3. Customers’ electric usage interval data shall be kept for three (3) years, and thereafter annually purged and destroyed.

My primary objection to the Court’s analysis in its ruling is that it concluded that the 15-minute data collection frequency represented a reasonable balance compared with the government’s interest in implementing smart meters. It did this without any basis other than that is what the City wanted for operational reasons and is currently using as the data collection frequency. It is not needed for billing purposes. In addition, the Court did not get into the detail of a complex issue whereby a smart meter could be programmed to collect data at a 15-minute frequency for operational grid reasons but then not be attributed to the customer’s account record, thereby lessening the privacy invasion aspects of the data collection.

At this juncture I believe it is unlikely either party will appeal the latest Court ruling, effectively ending this case. Thus we will need to rely on future litigation or legislative efforts to provide additional privacy protections for smart meters as well as Internet of Things (IoT) devices.

Epilogue

As I reflect back on the multi-year litigation, most of NSMA’s efforts were spent attempting to convince the District Court Judge that customers had a reasonable expectation of privacy for smart meter data readings because of their sensitive nature.

I instinctively knew the real arguments to be made should deal with whether there was a reasonable balance between collecting intrusive data compared with the possible benefits of smart meters. That is why I wrote the article back in 2013 discussing such a balance, even having made up a little graphic to illustrate: “Naperville Fails to Consider Privacy Interests of Residents during Smart Grid Implementation,” at
https://smartgridawareness.org/2013/10/12/naperville-fails-to-consider-privacy-interests/.

Unfortunately, NSMA was never able to convince the District Court Judge of the sensitive nature of smart meter data, and thus the case never got far enough to litigate the proper balance.

The District Court Judge remained stuck on his premise that “NSMA members have no reasonable expectation of privacy under the Fourth Amendment … regardless of whether that aggregate usage is measured monthly, weekly, daily, hourly, or in fifteen-minute increments.”

On appeal, the Court finally recognized what to me was obvious from the beginning, based upon “well-pled allegations” by NSMA, that high frequency smart meter data collection was different than infrequent analog meter readings. However, the Appeals Court then simply accepted the current 15-minute data collection frequency as part of its own superficial reasonable balance analysis and left little to no opportunity to further litigate that analysis in court.

In the end, NSMA ran out of time, money, and potential routes of legal remedy to arrive at a truly just or reasoned result in this particular case.

One analysis of the Naperville decision by a major law firm was that “neither utilities implementing smart meter technology nor privacy advocates should be overly enthused or disheartened” by the 7th Circuit decision, but possibly the ruling can provide “a solid constitutional framework for state policy-makers and regulators as they continue to tackle the issue of smart meters and consumer privacy.”³

Statement by Naperville Smart Meter Awareness (NSMA):⁴

"We are disappointed that the court affirmed the decision to deny the amended complaint, which allows the City of Naperville to continue denying citizens a true opt-out from the Smart Meter program.

However, the decision has a number of victories for privacy rights with respect to Smart Meter data: the court recognized the privacy implications of modern massive data collection and held that Naperville’s program constitutes a search under the 4th Amendment.

And while they ultimately held that the search here was reasonable, in doing so they affirmed that residents have a privacy interest in their energy-consumption data, and cautioned that, “Were a city to collect the data at shorter intervals, our conclusion could change. Likewise, our conclusion might change if the data was more easily accessible to law enforcement or other city officials outside the utility.”

Most telling of all was that the Court also made it clear that Naperville could have avoided the entire controversy by simply giving residents real choice with a genuine opt-out program, which we hope the City will now do — as it would truly show a commitment by the City to protect the privacy interests of its citizens."

References