The EPA's current proposal states that "a substantial number of retailers are already reducing or ending their purchases of Step 1-certified wood heating devices from the manufacturers because they are concerned that they will not be able to sell these devices before the May 2020 Step 2 compliance date and will be left with unsalable inventory".(83 Fed. Reg. at 61.578). Our company has direct experience with this for both our Subpart QQQQ products as well as our Subpart AAA. Reorders are not occurring at the end of the 2018-2019 heating season, and many of our major retail partners are saying that they will not take product for the 2019-2020 unless it is 2020 certified, for fear of being stranded with uncompliant product as of May 15, 2020. It is important to note that our major retailers do not differentiate between Subpart QQQQ and Subpart AAA products. To them these types of product are all wood heating and are treated as one category. Of course, end consumers (homeowners) do differentiate between the various types of stoves and furnaces and our experience has been that homeowners want a specific type of product (for instance, a non-catalytic wood stove instead of a pellet stove or a wood or pellet stove that goes into a living room instead of a furnace that goes in a basement) that falls within a specific price range.
      USSC sells a majority of its products through mass merchant retailers. This includes Tractor Supply Company, Home Depot, Lowes, Menards and even Amazon. These companies display our wood heating products only during the first half of the heating season (with the exception of Amazon being an ecommerce retailer). It might be beneficial to note, these mass merchants begin to review their whole heating programs (product offerings) for the next season in October and November. The programs are being set (meaning finalized) in January with product orders beginning to be placed to us in March for the following heating season. This timeline clearly demonstrates why your final decision on this proposal is so critically needed now.
      Stores are typically set with wood heating product displays shortly prior to Labor Day, and after the New Year they begin to transition and replace heating product with spring lawn and garden items. Effectively 4 months on the showroom floor as a selling season. Like many other seasonal products, these retailers take advantage of the time of year consumers will be buying these kinds of products. Weather is a pivotal factor on the success or failure of the selling season. It is common for mass merchant retailers to carry-over somewhere between 25-35% of their annual purchases to the next year. This number translates to between [REDACTED] of USSC inventory that is typically carried over by the retailers. These merchants, often publicly traded, won't afford to be saddled with inventory they cannot sell the following year because of the May 2020 deadline. In order to maintain business relationships, USSC will either have to buy product back or pay for markdowns (payments or credits to retailers to be able to discount products as sale items at retail) of retail prices.
      We are seeing three major things happen with these retailers today.
      1. Retailers are telling us they will not buy any product, both Subpart QQQQ and Subpart AAA items, that is not 2020 certified for the 2019-2020 heating season. These retailers have told us they would continue to buy Step 1 product if retail sell-through was granted. Several retailers in this case have ceased any reorders for the 2018-2019 selling season and have already been requesting markdown money from our company now to offer sale prices on the existing Step 1 inventory, so that they can be sure that they will run out of it before the 2019-2020 selling season.
      2. Retailers will be drastically scaling back their orders so not to be saddled with 25-35% leftover inventory rolling into May 2020. These retailers have also told us they would continue to buy Step 1 product in normally projected volumes if retail sell-through was granted.
      3. Retailers are planning on purchasing normal amounts of Step 1 inventory in the hopes of a strong 2019-2020 selling season, but they will ultimately rely on USSC [US Stove Company] with markdown money and buybacks if their sales are not as expected. This is because these retailers simply do not have any choice for the markets that they specialize in (i.e. an example being extremely low-cost heating products), given the available step 2 products of today.
At the public hearing, a representative from the above manufacturer (0142 p.76) similarly asserted that  -
      As you have or will hear from retailers, they can't afford to be stuck with stranded product beyond the 2020 deadline. Therefore, they are reducing or eliminating their purchases of Step 1 products. Let me be clear. We aren't talking about non-affected, non-technology driven products which we are requesting a sell-through provision. These are clean-burning products meeting the current Step 1 requirements. Although we, like most wood stove manufacturers, are working very hard to have Step 2 wood stoves ready for the 2020 deadline, we are still manufacturing and selling Step 1 products. As with the Step 1 warm air furnaces, retailers are hesitant as of today to purchase Step 1 products because of the likelihood of being caught with stranded inventory.
Another representative from this same manufacturer also commented at the public hearing (0142 pp.80-81) that  -
      Without retail sell-through, our retail partners will naturally be stranded with inventory, despite best efforts to exhaust it. ... In the event of Step 1 carryover inventory into 2020, we most certainly will be required to buy back unusable/unusable Step 1 product in order to maintain business relationships with our customers. At this point, we have had large customers say if this sell-through is not granted, they will scale back 2019 orders and invest money into other categories. US Stove has been affected in every product type in this rule besides hydronic heaters. ...
A third representative from this same manufacturer also testified at the public hearing (0142 pp.71-73) that  -

      Obviously, in a perfect world, all retailers would want to sell 100 percent sell-through at the end of the season, but this is not reality. Regardless of how strong the selling season is or how deep their end-of-season clearance sales are, there is always carryover. When I say carryover, I'm talking about the products for that season. Mass merchant retailers tend to carry over somewhere between 25 percent to 30 percent of their purchases for the season. This percentage is split up between QQQQ and AAA, as stated previously. Retailers look at these as the same products, just wood-burning appliances.

      It is hard to put an exact dollar value because it all depends on the company and their volume. But I would estimate easily among some of our top key customers, the carryover dollars we are talking about are in excess of $14 million. This inventory is what they typically use to start the seasonal setups going into the next season. If the retailers do not get an opportunity to sell through on these appliances, they become unsalable and ties up inventory dollars they are unable to spend on new product. We have had some retailers say if they cannot get sell-through relief, they would spend their dollars in other categories; in other words, potentially exit this category. ... In addition, if they cannot get an extended sell-through period and they do continue to buy Step 1 products, they will extremely limit their buys of current products for the 2019 selling season; therefore, will miss potential sales. Again, this may steer them away from the category and even hurt the manufacturers.

A representative from the industry trade group testified at the public hearing (0142 p.46) that "across the industry, retailers are slowing or ceasing purchases of Step 1 products due to the looming retail prohibition on May 15, 2020." On the contrary, however, this same industry trade group submitted a comment (0063 pp.18-19) stating that some retailers will continue to order Step 1 compliances  -
      In addition, there are still some retailers that cannot afford to stop ordering Step 1
appliances altogether. This could be due to a number of reasons: First, to the extent Step 1 models are popular and in high demand by consumers between now and May 2020, many retailers will not want to miss out on such sales. Indeed, several retailers surveyed in the Page Report indicated they would still be willing to buy appliances even if those appliances could no longer be manufactured by a date certain.
      Second, there simply are not enough Step 2 products available for sale at this time.
Retailers want to show a variety of appliances in their stores in hopes of having at least one product to cover every segment of the market. This means they will want to carry a variety of models (both pellet and stick wood models) across a range of prices and offer both catalytic and non-catalytic models. As noted above, there are few or no Step 2 models available for certain segments of the market. To further complicate matters, retailers typically have relationships with only a limited number of manufacturers. This means that some retailers may not be able to order exclusively Step 2 appliances even if they wanted to, because some manufacturers do not have any Step 2-compliant products at this time.
      Third, most consumers of residential wood burning appliances are price sensitive and
may not be willing to pay for Step 2 appliances. ... Step 2 appliances tend to cost significantly more than Step 1 appliances. Price sensitive customers might look for another retailer that has Step 1 products available for sale; switch to alternative sources of heat (e.g., gas); or forego changing out their older wood-burning appliance and instead continue to use their existing, higher emitting stoves, boilers, or furnaces. These are just a few of the reasons why some retailers nationwide may not be able to reduce or eliminate their purchases of Step 1 appliances and thus, they are at risk of having a lot of unsellable Step 1 appliances come May 2020 unless EPA revises the rule to add sell-through provisions.
Response:
The Agency appreciates the information provided regarding inventory carryover, selling season length, and the potential decline in purchases by retailers of Step 1 forced-air furnaces. It is expected that retailers will reduce their purchases of Step 1-compliant devices as the Step 2 compliance date approaches, and focus purchased on Step 2-compliant devices. Please see our responses in 2.3.2, 3.1.2 and 5.2.1 above. After reviewing all comments and data submitted, we have determined that there is not an adequate rationale for a sell-through after the Step 2 compliance date.

5.2.4 Comment: Time required for EPA certification of forced-air furnace models
A manufacturer of forced-air furnaces and wood heaters (0070 pp.3-4) stated that the sell-through is necessary to allow for the 12-18 months required to develop new models from start to finish  -

      We have worked very hard to maintain our key revenue streams in order to financially support product development leading up to 2020, but the huge feat of transitioning our product lines to meet 2020 PM emissions standards was next, and after all the prior testing we were already in Q1 of 2018. ... Our woodstoves, single burn rate woodstoves, and furnaces are all in the process of redesign and R&D testing now for 2020 certification. Without revenue from the final year and a half before the Step 2 emissions limits come into effect, it makes it very difficult to test and certify our entire product line. Just as important as revenue is time. With backlogs at EPA certified test laboratories continuing to get worse, time is also just as critical for certifying all residential wood heaters to the Step 2 standards. It typically takes 12-18 months to develop a new wood burning products from start to finish.

Response:
We appreciate the information on the length of time necessary to develop new wood burning devices from start to finish. This supports the Agency's position that five years is a sufficient time period to develop, certify and bring new wood heating devices to market, as we discuss in our response in 2.3.2.

5.2.5 Comment: Cost to certify forced-air furnace model line
A manufacturer of forced-air furnaces and wood heaters (0070 p.4, 0142 pp.75-76) provided the following cost figures  -

      Specifically looking at Forced-Air Furnaces, the current NSPS required us to take a non-affected facility and engineer multiple models first to the Step 1 requirements. For US Stove, that translates to 8 certificates. EPA has estimated the development costs, which in our experience is low at $162,000. By using that number, our 8 certificates would translate to $1,296,000. From our experience, a new EPA certified product ultimately costs our company [REDACTED], to test and get ready for the marketplace. Using an average of $350,000 per item that cost is more like [REDACTED] worth of development cost. We have not achieved a Step 2 compliant furnace despite our best efforts. We have put significant investment into research and development, so we are not sure what the final development cost will be, but we know it will be significantly more than the [REDACTED] that we have become accustomed to, if we are able to meet the Step 2 limit.

Response:
We appreciate the information on the costs associated with certifying Step 2-compliant forced-air furnace models. That said, this cost information does not support the need for a sell-through period, because the need for a sell-through period is an issue of the time needed to develop Step 2-certified models and bring them to market, not the cost of doing so.

5.3	Wood Heater Step 1 and Step 2 Statistics (AAA)
Section 5.3 includes comments regarding the availability of Step 2-compliant wood and pellet heater models regulated under subpart AAA, the availability of Step 1 and Step 2 models at retailers, the time needed to sell-off Step 1 models, inventory carryover, the decline in purchases of Step 1-compliant models by retailers, any shift to pellet heaters from cord wood heaters reported by the commenters, and the time required for EPA certification of model lines.

5.3.1 Comment: Step 2 AAA models designed and certified
Comments regarding the number of AAA wood heater models certified to the Step 2 standards included manufacturer statistics revealing numerous Step 2-compliant models (0032, 0142) and comments from regulatory agencies likewise pointing out that many Step 2-compliant wood heaters are already certified and available (0133, 0142, 0045, 0054/0200, 0068, 0073, 0074). On the other hand, comments also included assertions from industry claiming that percentage-wise there are relatively few Step 2-compliant models (0047, 0050, 0063). Comments also seemed to indicate that Step 2-compliant models were not readily available to distributors and retailers (0037, 0150), as discussed more in Section 5.3.2.

One manufacturer (0142 p.40) stated  -
      Today we have 60 wood and pellet products that are Step 1 compliant and that are Step 2 certified. We began working on certifying these products nearly 24 months ago and have already invested over $6 million in 2020 product development and testing. We have an additional 33 Step 2 products in development now and 10 we will not be certifying due to the inventory risks that continue to push manufacturers' Step 1 products into 2020.
Another manufacturer (0142 pp.76-77) commented that they currently hold  -
      43 certificates for wood stoves and pellet stoves meeting the Step 1 requirements. While we have many pellet stoves tested and ready for 2020, we are working very hard to certify our wood stove line for meeting Step 2 requirements.
Commenter (0142 p. 56) testified at the public hearing that their organization believes there are more residential wood heaters available to consumers that can meet the Step 2 standard than indicated in the NPRM, saying  -
      EPA identifies a total of 74 models that qualify as Step 2 certified (based on the March 2018 EPA certified stove list). However, the total number of models meeting the Step 2 emission limit of 2 g/hour (or 2.5 g/hour when tested with cord wood) appearing on the EPA certified stove list from May 2018 totals more than 200.
This commenter (0142 pp.57-58) disagreed with the need for more time, saying that the difference between Step 2-certified models and Step 1 models that meet the Step 2 emission limits are largely administrative and these Step 1 models are expected to meet the more stringent standard if retested. The commenter notes that there are appliances that have completed NSPS certification testing, meet the Step 2 standard, and may have applied for certification, but are not yet certified, leading them to conclude that there will be a sufficient number of models available well before the May 2020 deadline.
An additional commenter (0073 p.2) agreed, stating that the market has already adjusted to meet the Step 2 standards with over 80 pellet, catalytic, and non-catalytic wood heater models available.
One state regulatory agency (0068 p.15) similarly asserted that -

      As of October 2018, there are 578 distinct certified Step 1 and Step 2 compliant wood stoves listed on EPA's website. Of those, 100 (17.3%) are Step 2 compliant. Therefore, a sell-through is clearly not needed.

Another state regulatory agency (0074 pp.6-7) noted, echoed by commenter (0142 pp.56-57), that as of March 2018  -

EPA, in the NPRM identifies 78 models (44 pellet and 34 cord wood) that meet the Step 2 standard (i.e. certified to the requirements in the 2015 rule). An analysis from an October 2018 certified stove list found that over 200 wood stove models from dozens of manufacturers met the Step 2 standard of 2 g/hr.

A third state regulatory agency (0052 p.2) commented that  -
      As of October 2018, a total of 99 models of wood heaters including 44 pellet and 34 crib/cord stoves already meet the Step 2 requirements of 2.0 g/hr, as required under 40 CFR 60.532(b) or 60.532(c).
Another commenter (0045 pp.6-7), echoed by commenter (0054/0200 p.4), also highlighted the contention that many models have been 2020-certified  -
      As of October 2018 there are 105 model lines from 37 manufacturers that meet the Step 2 standard for residential wood heaters (AAA)., ,  There is evidence that manufacturers have completed development of Step 2 appliances, and may have submitted their test results to EPA, but the products do not yet appear on the list of certified appliances. We have no way of knowing if manufacturers have units for which they have completed development and in-house testing but have not yet tested for certification. Finally, EPA has estimated that there would be no increase in cost to the consumer.
Likewise, another commenter (0133 p.2) asserted that EPA must review all 30-day testing notices and confirm that they have been received and made available to the public in order to ensure a complete and accurate dataset of Step 2-certified appliances going forward.
On the contrary, a manufacturer (0050 p.3) contended that there were relatively few Step 2-compliant wood heaters available  -

      With only 19% (100 out of 526) of all Step 1 stoves meeting Step 2 (based on EPA website data), the consumer will have far less choices going into the next burn season who are looking to upgrade from their pre-1988 NSPS high emitting wood stove. Granting sell-through relief is a decision that will positively impact thousands of consumers and more than 2,500 retailers and 98 manufacturers in the United States.

Another manufacturer (0047 p.4) estimated that they will only be able to offer half the number of models that they do currently, which reduces their customer's choices.

Likewise, the industry trade group (0063 p.8) claimed that "less than one-fifth of currently certified wood and pellet stoves are Step 2-certified -- and that some manufacturers have few or even zero Step 2-compliant products at this time -- sell-through is important to ensuring that enough manufacturers survive the increasingly stringent standards and can offer consumers a broad range of affordable appliances to choose from." This commenter (0063 p.13-14) stated  -

      As described in the current proposal, EPA identified the percentage of wood
heaters that were estimated to be meeting the Step 2 standards back in 2015 to 70% of pellet stoves, 26% of wood stoves, 18% of hydronic heaters, and zero forced-air furnaces. Based on those percentages, EPA determined that it could not impose the Step 2 emission limits in 2015. Instead, after weighing all of the requisite factors under CAA Section 111, EPA determined that it would not require compliance with the Step 2 limits until May 2020, i.e., after giving manufacturers five years of lead time to bring models into compliance with those limits. Now, three-and-a-half years later, the percentages are not materially different:

 Of the 526 currently certified wood and pellet stoves, only 100 (19%) are Step 2-
certified. Specifically, 53 pellet stoves, 27 non-catalytic wood stoves, and 20
catalytic/hybrid wood stoves are currently Step 2-certified.
 Of the 129 currently certified hydronic heaters, only 10 (8%) are Step 2-certified.
 Of the 18 currently certified forced-air furnaces, only 1 (6%) is Step 2-certified.

      To this day, a very small percentage of either Subpart AAA or Subpart QQQQ appliances are currently Step 2-certified. Notably, 53 out of the 88 wood and pellet stove manufacturers who currently have one or more Step 1-certified appliances still do not have a single Step 2-certified appliance at this time. Of those 53, six manufacturers currently offer eight or more Step 1-certified appliances, yet they face a real risk that they will have nothing to offer for sale by May 2020. Finally, many of the manufacturers who currently have Step 2-certified stoves have not come close to certifying a full range of products to comply with the Step 2 standards, and some of the Step 2-certified stoves are not even ready for production yet.

One manufacturer (0032 p.1), however, disagreed with the above assertions, stating that the challenge of developing new 2020 EPA-compliant heaters has been greatly exaggerated and there are already dozens that are certified and available.

Whether this availability of Step 2-compliant models extends to the distributors and retailers is another question discussed more in Section 5.3.2. One distributor (0037 pp.3-4) commented that there are few 2020-compliant products available. They currently have 3 pellet units and 8 wood units that are 2020-certified available from the manufacturer. This distributor further claimed that "less than 15% to 20% of what is available is 2020-compliant (and several of those units just became available)." A retailer (0150 p.1) similarly claimed that "out of ... more than 100 products [in their showroom], less than 10% of them are 2020 certified units."

Response:
The Agency acknowledges that, as of March 5, 2020, there were 405 Step-1 certified wood heater and pellet fuel heater model lines and 196 Step 2-certified model lines (or 33 percent), according to the EPA Certified Wood Heater Database (available at https://www.epa.gov/compliance/epa-certified-wood-heater-database).

5.3.2 Comment: Step 1 and Step 2 AAA models available at retailers
Commenters generally indicated that only a small portion of the wood heater models available at retailers are Step 2-compliant (0033, 0037, 0110, 0122, 0125, 0150). For example, a distributor (0037) noted that he still must purchase Step 1 (2015) models because less than 15% to 20% of the models available are Step 2-compliant. Likewise, retailers noted that they have few or no 2020-compliant models in their showrooms and still needed to sell-off their Step 1-compliant models (0033, 0110, 0125, 0126, 0150). This was echoed by a manufacturer (0122, 0142) who noted that his visits to showrooms around the country revealed the lion's share of models available for sale to be Step 1 (2015) models still, not Step 2-compliant models.
One distributor (0037 pp.3-4) highlighted their concerns about the lack of 2020-compliant models, providing several statistics about the percentage of Step 1 versus Step 2 models available for sale currently  -
      There is a huge impact because of uncertainty in the future and because of lack of available 2020 compliant models. If the rule doesn't change very quickly to allow distributors and retailers an extended sell-through period for 2015 compliant models, the impact on our company and retailers will be enormous. We currently have well over [REDACTED] in non-2020 compliant appliances in our building. Over the past year or more, we have not had a choice, we needed inventory to supply the market. We had to continue purchasing 2015 models since less than 15% to 20% of what is available is 2020 compliant (and several of those units just became available)... The dealers we work with can display from as few as 15 total units to as many as 125+ in their showrooms. Most fall in the average of 40 to 80 units displayed.

      o Right now, most dealers are working to sell-off as many of their wood or pellet
appliances that don't meet 2020 to reduce their exposure as they move into 2019. The challenge is the limited number of 2020 compliant product available to replace what is being sold off, thus leaving big gaps on showroom floors. This impacts sales at all levels, if they don't show it, they won't sell it.

      o The other concern is the cost of selling off displays and then having to replace them once 2020 compliant products are finally available. The cost of this process is
considerable. Display units typically have to be discounted between 15% to as much as 50% and this kills dealers' margin in both the short term and long term as they get less dollars for displays sold and pay more for new units once available for display. It's a costly double-edged process.

      o Between potentially stranded inventory losses and the costs associated with liquidating and replacing display models, retailers could be financially impacted on a long-term basis before they can recoup.

      If the rule remains as it is currently, and we all have to meet the May 15th, 2020 sales prohibition deadline, the financial impact on our business could easily be $[REDACTED] to as much as $[REDACTED]. I can't begin to estimate what the financial impact would be to manufacturers and retailers, but I can assure you it would be significant.

One retailer (0033 p.1) commented that they currently have 36 wood and pellet heaters on display and in stock, none of which meet the 2020 NSPS deadline. Another retailer (0110 p.2) stated that they currently have 65 wood/pellet heaters on display and in backstock that are not compliant with 2020 standards. A third retailer (0125 p.1) noted that of the 56 models they offer, only 14 different models are Step 2, 2020-compliant. Another retailer (0126 p.1) commented that they still have 55 Step 1 units in inventory that will need to be sold before the 2020 deadline.

Likewise, another retailer (0150 p.1) commented that  -

      As of this point, out of the 58 woodburning products I have on my showroom floor, only 5 of them meet the 2020 standard. I typically sell over 80 woodburning products a year, and most of these are in the fall and early winter. With the lack of sell through cutoff happening in May of 2020, we will have to make sure we are selling off our woodburning products in the winter months of late 2019 and early 2020. Because we have so many stoves in our showroom and we try to keep "one to show, one to go" we have over 100 products in stock at one time. This is spread out over seven different manufacturers, not one of which has certified more than a fraction of their woodburning lineup to the 2020 standard. Out of this more than 100 products, less than 10% of them are 2020 certified units.

Another manufacturer (0122 pp.1, 0142 pp.9-10) commented that --

      From my visits to showrooms and retail stores across the country, there are at least 20 wood and pellet heaters on display in each location. With 4,000 or more retailers, that pencils out to 80,000 plus wood and pellet heaters on display, the lions share not being 2020 compliant. Retailers also carry additional stock in the back room or in their warehouses. That means there are 80,000 or more, mostly step one wood and pellet heaters that must be sold in the next 17+ months.

The same manufacturer (0122 pp.5-6) commented that they asked dealers to confirm how many heaters they have in inventory that do not meet 2020 compliance requirements. A total of 1,395 from this manufacturer are at dealerships around the country and are not 2020-compliant.

Response:
As of March 5, 2020, there were 405 Step 1-certified wood heater and pellet fuel heater model lines and 196 Step 2-certified (33 percent) model lines, according to the EPA Certified Wood Heater Database (available at https://www.epa.gov/compliance/epa-certified-wood-heater-database). Further, as discussed above in response to comment 2.3.2, Step 2-certified models have been available for some time. Commenters have not provided EPA with information showing that Step 2 models are available to some retailers and not to others. See above response to comment 5.1.2. Thus, retailers will have had 5 years to manage their inventories by the May 2020 deadline when Step 1 models may no longer be sold.

5.3.3 Comment: Time needed to sell-off Step 1 models
One retailer (0110 pp.1-2) noted that it would require 1-year to sell-off their Step 1-compliant wood heaters.

Note that other retailers submitted responses to this question to EPA as CBI, and also responded to a question regarding the timeframe between the date of purchase from manufacturers to when it is sold at retail to a customer.

Response:
The Agency appreciates this information on the length of time needed to sell-off Step 1 models. See our responses in 2.3.2 and 3.1.2 above.

5.3.4 Comment: Inventory carryover, selling season, and decline in purchases by retailers of Step 1 AAA devices
Many commenters  -  including retailers, distributors, manufacturers and the industry trade group  -  contended that retailers were already declining to purchase Step 1-compliant AAA wood heaters (i.e., devices that are not Step 2-compliant) and that a sell-through was necessary to allow retailers to continue purchasing Step 1-compliant devices (0110, 0037, 0047, 0050, 0051, 0063, 0070, 0094, 0114, 0117, 0123, 0125, 0126, 0127, 0142, 0169). Some commenters (0094, 0110, 0117, 0125) indicated that pre-buying of Step 1-compliant devices from manufacturers has stopped, unless they are presold to a customer.

In addition, the issue of inventory carryover, or the amount of time between when a retailer purchases a model from the manufacturer (or distributor) and sells the model to a consumer, is related to the contention that retailers are declining to purchase Step 1-compliant devices and comments often addressed both issues interchangeably. Retailers claimed that the time period from purchase to sale varied anywhere from 1 month to 4 years, and multiple commenters asserted generally long lead times prior to selling a device in inventory, as long as 3 to 4 selling seasons/years (0044, 0110, 0114, 0117, 0123, 0125, 0127, 0169).

One retailer (0125 p.1) commented that they have already begun scaling way back on orders placed for the 2019-2020 selling season. They historically stock an average of 1700 units and pre-book orders to get the best price from the supplier, but cannot do that this year because they cannot buy any product that is not 2020-compliant.

Another retailer (0169 p.1) indicated they have already started scaling back orders for Step 1 products, saying  -

      Historically, I have stocked, on average, 16 units (comprising of a variety of models produced by Quadrifire) in any given heating season. This year, I am only stocking 10 units of the aforementioned because I know that I will not be able to sell 2015- compliant model lines after May 15, 2020. It normally takes me 3 selling seasons, and sometimes much longer to sell leftover products, on average, so we I have already been scaling back orders for Step 1 products.

A third retailer (0123 p.1) commented that they are declining to purchase any more Step 1-compliant heaters for their inventory and they believe most other retailers are doing the same, because they worry about not being able to sell them before the May 15, 2020 deadline.

A fourth retailer (0127 pp.1-2) explained that  -

      At this date we still have in inventory 55 units that will have to be sold before the 2020 deadline. If other dealer are like us and have a large inventory of currently approved, but not non 2020 certified units, at this point we will not be purchasing inventory from manufacturers that do not meet the deadline. This is going to adversely affect the manufacturer and will cause dealers to possibly dump inventory. Usually we place early buy orders that allow us extra discounts and the manufacturers plenty of time to build inventory and ship products. The factories depend on these orders to keep the factories running. 2020 will adversely affect small business that operate on a seasonal basis. It is also very stressful to accomplish this. Our selling season is roughly September thru February. This could be a tall order to completely sell thru the inventory by deadline. Dumping will of course affect profit levels in turn tax revenue that goes to the government.

The industry trade group (0063 pp.16-17) asserted that -
      EPA's current proposal details how "a substantial number of retailers are already
reducing or even ending their purchases of Step 1-certified wood heating devices from the manufacturers because they are concerned that they will not be able to sell these devices before the May 2020 Step 2 compliance date and will be left with unsaleable inventory." The fact that this is already happening so far before May 2020 should not have come as a surprise. When HPBA commented on EPA's 2014 proposal, one of HPBA's consultants with decades of experience in product development, sales, and marketing for many hearth industry manufacturers (Charlie Page) warned that the fear of being stuck with unsellable inventory could have profound implications throughout the supply chain:
            Many retailers will stop buying appliances they are not absolutely
sure that they can sell, and the manufacturers will lose the revenue
from the sales of these stoves; revenue that is needed to fund the
design, testing and the launch costs for new NSPS compliant
models. It has been reported that this is already happening in the
warm air furnace market and will be exacerbated unless EPA
grants adequate sell-through relief.
      It is well known in this industry that "many retailers have unsold inventory at the end of the season" even though there is variation among how retailers do business, e.g., some keep substantial inventories at any given time while others only buy product when they need it. As noted in EPA's current proposal, many retailers have begun to take measures to try to ensure that they will have little or no Step 1 inventory stranded after May 2020 so that they can minimize or eliminate their financial losses.

Another commenter (0051 p.2) stated that "Absent the transition window provided by a sell-through time frame, retailers have already begun to pull back on orders for Step 1 products out of concern they will end up with stranded inventory that they can neither sell nor give away after the May 2020 effective day for Step 2."

One manufacturer (0094 p.1-3) commented and others (0037) agreed that  -
      With no sell-through extension (beyond May 15, 2020) for wood stoves and inserts, this creates a significant decline in our Early Buy Program's wood order flow making our production much more speculative (building to a forecast instead of to actual Early Buy orders). Our dealers and distributors will be reluctant to speculate and to bring in wood inventory other than what is sold. We are forecasting up to a REDACTED% decline in our wood stove and insert Early Buy order flow for 2019 wood sales... From a manufacturer's perspective, a May 2020 compliance deadline does not mean we will have until May 2020 to develop compliant products. We effectively needed to have May 2020-compliant products ready to sell in 2018 because some retailers and distributors have been telling us that is all they will buy from 2018 onwards.
Likewise, another manufacturer (0047 pp.3-4) stated that retailers have begun selling off their showroom models and giving space to 2020-compliant products, meaning they will sell next to none of this manufacturer's 2015-compliant products in 2019. They also noted that the lack of pre-season purchases due to the impending 2020 deadline impacted their profit margins and will likely ultimately increase the cost of the products.
Another manufacturer of forced-air furnaces and wood heaters (0070 pp.4-6) commented that retailers have already begun ordering only Step 2-compliant devices and that a sell-through would allow retailers to continue purchasing Step 1-compliant devices for the 2019-2020 heating season  -
      How the Retail Landscape for USSC [U.S. Stove Company] is Affected
      The EPA's current proposal states that "a substantial number of retailers are already reducing or ending their purchases of Step 1-certified wood heating devices from the manufacturers because they are concerned that they will not be able to sell these devices before the May 2020 Step 2 compliance date and will be left with unsalable inventory".(83 Fed. Reg. at 61.578). Our company has direct experience with this for both our Subpart QQQQ products as well as our Subpart AAA. Reorders are not occurring at the end of the 2018-2019 heating season, and many of our major retail partners are saying that they will not take product for the 2019-2020 unless it is 2020 certified, for fear of being stranded with uncompliant product as of May 15, 2020. It is important to note that our major retailers do not differentiate between Subpart QQQQ and Subpart AAA products. To them these types of product are all wood heating and are treated as one category. Of course, end consumers (homeowners) do differentiate between the various types of stoves and furnaces and our experience has been that homeowners want a specific type of product (for instance, a non-catalytic wood stove instead of a pellet stove or a wood or pellet stove that goes into a living room instead of a furnace that goes in a basement) that falls within a specific price range.
      USSC sells a majority of its products through mass merchant retailers. This includes Tractor Supply Company, Home Depot, Lowes, Menards and even Amazon. These companies display our wood heating products only during the first half of the heating season (with the exception of Amazon being an ecommerce retailer). It might be beneficial to note, these mass merchants begin to review their whole heating programs (product offerings) for the next season in October and November. The programs are being set (meaning finalized) in January with product orders beginning to be placed to us in March for the following heating season. This timeline clearly demonstrates why your final decision on this proposal is so critically needed now.
      Stores are typically set with wood heating product displays shortly prior to Labor Day, and after the New Year they begin to transition and replace heating product with spring lawn and garden items. Effectively 4 months on the showroom floor as a selling season. Like many other seasonal products, these retailers take advantage of the time of year consumers will be buying these kinds of products. Weather is a pivotal factor on the success or failure of the selling season. It is common for mass merchant retailers to carry-over somewhere between 25-35% of their annual purchases to the next year. This number translates to between [REDACTED] of USSC inventory that is typically carried over by the retailers. These merchants, often publicly traded, won't afford to be saddled with inventory they cannot sell the following year because of the May 2020 deadline. In order to maintain business relationships, USSC will either have to buy product back or pay for markdowns (payments or credits to retailers to be able to discount products as sale items at retail) of retail prices.
      We are seeing three major things happen with these retailers today.
      1. Retailers are telling us they will not buy any product, both Subpart QQQQ and Subpart AAA items, that is not 2020 certified for the 2019-2020 heating season. These retailers have told us they would continue to buy Step 1 product if retail sell-through was granted. Several retailers in this case have ceased any reorders for the 2018-2019 selling season and have already been requesting markdown money from our company now to offer sale prices on the existing Step 1 inventory, so that they can be sure that they will run out of it before the 2019-2020 selling season.
      2. Retailers will be drastically scaling back their orders so not to be saddled with 25-35% leftover inventory rolling into May 2020. These retailers have also told us they would continue to buy Step 1 product in normally projected volumes if retail sell-through was granted.
      3. Retailers are planning on purchasing normal amounts of Step 1 inventory in the hopes of a strong 2019-2020 selling season, but they will ultimately rely on USSC with markdown money and buybacks if their sales are not as expected. This is because these retailers simply do not have any choice for the markets that they specialize in (i.e. an example being extremely low-cost heating products), given the available step 2 products of today.
At the public hearing, a representative from the above manufacturer (0142 p.76) similarly asserted that  -
      As you have or will hear from retailers, they can't afford to be stuck with stranded product beyond the 2020 deadline. Therefore, they are reducing or eliminating their purchases of Step 1 products. Let me be clear. We aren't talking about non-affected, non-technology driven products which we are requesting a sell-through provision. These are clean-burning products meeting the current Step 1 requirements. Although we, like most wood stove manufacturers, are working very hard to have Step 2 wood stoves ready for the 2020 deadline, we are still manufacturing and selling Step 1 products. As with the Step 1 warm air furnaces, retailers are hesitant as of today to purchase Step 1 products because of the likelihood of being caught with stranded inventory.
Another representative from this same manufacturer also commented at the public hearing (0142 p.80-81) that  -
      Without retail sell-through, our retail partners will naturally be stranded with inventory, despite best efforts to exhaust it. Knowing that most of our customers carry up to 30 percent of their inventory, US Stove could be looking at an excess of $14 million in buybacks without retailers scaling back 2019 purchases. We are only in 2018 and as a manufacturer, we are already being asked by our customers to support sell-down of Step 1 inventory. But due to the nature of mass merchant retail, we will be required to buy back stranded inventory. Wood heating appliances can be in a store's inventory for more than two years, based on factors such as weather, energy prices, and overall strength of the economy, just to name a few. In the event of Step 1 carryover inventory into 2020, we most certainly will be required to buy back unusable/unusable Step 1 product in order to maintain business relationships with our customers. At this point, we have had large customers say if this sell-through is not granted, they will scale back 2019 orders and invest money into other categories. US Stove has been affected in every product type in this rule besides hydronic heaters. Yes, we have and are developing 2020 product for AAA.
A third representative from this same manufacturer also testified at the public hearing (0142 pp.71-73) that  -

      Obviously, in a perfect world, all retailers would want to sell 100 percent sell-through at the end of the season, but this is not reality. Regardless of how strong the selling season is or how deep their end-of-season clearance sales are, there is always carryover. When I say carryover, I'm talking about the products for that season. Mass merchant retailers tend to carry over somewhere between 25 percent to 30 percent of their purchases for the season. This percentage is split up between QQQQ and AAA, as stated previously. Retailers look at these as the same products, just wood-burning appliances.

      It is hard to put an exact dollar value because it all depends on the company and their volume. But I would estimate easily among some of our top key customers, the carryover dollars we are talking about are in excess of $14 million. This inventory is what they typically use to start the seasonal setups going into the next season. If the retailers do not get an opportunity to sell through on these appliances, they become unsalable and ties up inventory dollars they are unable to spend on new product. We have had some retailers say if they cannot get sell-through relief, they would spend their dollars in other categories; in other words, potentially exit this category. ... In addition, if they cannot get an extended sell-through period and they do continue to buy Step 1 products, they will extremely limit their buys of current products for the 2019 selling season; therefore, will miss potential sales. Again, this may steer them away from the category and even hurt the manufacturers.

One manufacturer of wood heaters (0050 p.1) went as far as contending that "[w]ithout this extension for sell through, the wood and pellet hearth business will come to a halt in the next few months. Cancellation of orders of these products started occurring in late 2018 and is substantial already."

Regarding inventory carryover or lead times prior to retail sale, retailers estimated that inventory carryover ranges anywhere from 1 month to 4 years, but generally at least 2 years. For example, one retailer (0044 p.1) commented  --

      ...long lead times are a part of planning our inventory so we have adequate supply to keep generating revenue. It is not uncommon for me to have inventory carryover in the range of 3-4 years or more on some appliances before I am able to find a perfect match between customer and a particular item carried in inventory. Consequently, I carry in excess of $600,000 in inventory at any given point in time.

Another retailer (0123 p.1) said that they sell most heaters within 2 years of purchasing them, but some unique or low volume wood heaters can take up to 4 years to sell. Likewise, a third retailer (0125 p.1) commented that it normally takes them 2 to 3 selling seasons to sell leftover products. A fourth retailer (0110 pp.1-2) commented that it takes them 1 month to 4 years. A fifth retailer (0114 p.1) stated that some inventory items have taken as long as 2 or more years to be sold.

A retailer (0110 p.2) noted that they have "... declined all pre-buys from our manufacturers of wood stoves and inserts. Only making purchases of stove(s) presold to a customer. We are not purchasing stoves for displays or back stock." This same retailer stated that it requires 1 month to 4 years to sell a wood heater at 0, but concluded a 1-year time period would be necessary/ sufficient to sell off their Step 1 compliant heaters. However, regarding the Step 1 compliant models, this retailer (0110 p.2) explained that they felt "...it necessary to put all display models and back stock on sale to make sure that we would not have any stoves/inserts on hand that would not meet 2020 deadline. We sold stoves at a 10%-30% discount. Well below our normal margin. 50+ stoves and inserts were sold during this sale." Likewise, another retailer (0117 p.1) concluded that if they buy units on a pre-buy basis, it can take a few years to sell them. However, they are not pre-buying due to the uncertainty of this regulation.

A representative from the industry trade group testified at the public hearing (0142 p.46) that "across the industry, retailers are slowing or ceasing purchases of Step 1 products due to the looming retail prohibition on May 15, 2020." On the contrary, however, this same industry trade group submitted a comment (0063 pp.18-19) stating that some retailers will continue to order Step 1 compliances  -
      In addition, there are still some retailers that cannot afford to stop ordering Step 1
appliances altogether. This could be due to a number of reasons: First, to the extent Step 1 models are popular and in high demand by consumers between now and May 2020, many retailers will not want to miss out on such sales. Indeed, several retailers surveyed in the Page Report indicated they would still be willing to buy appliances even if those appliances could no longer be manufactured by a date certain.
      Second, there simply are not enough Step 2 products available for sale at this time.
Retailers want to show a variety of appliances in their stores in hopes of having at least one product to cover every segment of the market. This means they will want to carry a variety of models (both pellet and stick wood models) across a range of prices and offer both catalytic and non-catalytic models. As noted above, there are few or no Step 2 models available for certain segments of the market. To further complicate matters, retailers typically have relationships with only a limited number of manufacturers. This means that some retailers may not be able to order exclusively Step 2 appliances even if they wanted to, because some manufacturers do not have any Step 2-compliant products at this time.
      Third, most consumers of residential wood burning appliances are price sensitive and
may not be willing to pay for Step 2 appliances. ... Step 2 appliances tend to cost significantly more than Step 1 appliances. Price sensitive customers might look for another retailer that has Step 1 products available for sale; switch to alternative sources of heat (e.g., gas); or forego changing out their older wood-burning appliance and instead continue to use their existing, higher emitting stoves, boilers, or furnaces. These are just a few of the reasons why some retailers nationwide may not be able to reduce or eliminate their purchases of Step 1 appliances and thus, they are at risk of having a lot of unsellable Step 1 appliances come May 2020 unless EPA revises the rule to add sell-through provisions.

Notably, another commenter (0128 p.2) did not take issue with the assertion that retailers may be declining to purchase devices that are not Step 2-compliant, but contended that this decline in purchases is in fact the desired outcome of the NSPS and that the sell-through "in effect subsidizes the worst performing technologies"  -

      EPA's preamble says that the agency is proposing a sell-through because "it is reasonable to assume that retailers may become increasingly reluctant to purchase non-Step 2-compliant wood heating devices." But isn't that the desired outcome? Improving air quality and human health by increasing the efficiency of the residential wood heater sector is a principal goal of the original regulation. It is the intended result of the regulation to move retailers to focus inventory on Step 2-compliant devices. There is evidence that some retailers would likely switch to manufacturers that are producing 2020 compliant models.

      Lamppa Manufacturing is one such manufacturer. Lamppa is a smaller manufacturer, and they are looking to connect with retailers. Their unit is very affordable at a retail price of $5,295 and is compliant with the 2020 Phase 2 standard. Tarm Biomass, who makes 2020 compliant wood and pellet boilers is getting calls from dealers looking for 2020 product. So are others who have 2020 compliant units. ... Competition in the marketplace is fundamental to consumers having access to more efficient and cleaner burning appliances. This proposal works against these market forces, and in effect subsidizes the worst performing technologies.

Note that retailers also submitted responses to EPA as CBI regarding when they will likely no longer purchase Step 1 heaters from manufacturers.

Response:
We appreciate these comments and information on inventory carryover, the length of the selling season, and the decline in purchases by retailers of Step 1-compliant wood heaters. It is expected that retailers will reduce their purchases of Step 1-compliant devices as the Step 2 compliance date approaches, and focus purchases on Step 2-compliant devices. See our responses in 2.3.2 and 3.1.2 above. After reviewing all comments and data submitted, we have determined that there is not an adequate rationale for a sell-through after the Step 2 compliance date.

5.3.5 Comment: Shift to pellet heaters from cord wood heaters
Commenters (0110, 0114, 0117, 0123, 0126, 0127) did not predict a shift from cord wood heaters to pellet heaters, primarily because these commenters asserted that customers valued the low cost of cord wood relative to pellets.
For example, one retailer (0123 p.1) went as far as contending that  -
      No, there has not been a shift to pellet heaters. Pellet heater sales have been declining for years. We barely sell any at all. I don't foresee pellet heater sales increasing in the future. Pellet heaters are complex, unreliable and usually cost customers more to heat with compared to wood or natural gas/propane heaters.
Likewise, other retailers (0110, 0114, 0117, 0126, 0127) commented that they do not think there will be a shift to pellet heaters, because wood heater customers appreciate the low cost of wood and therefore will not move to pellet models. One commenter (0127 p.2) asserted that, due to the low cost of wood (as compared to pellets presumably), customers will likely hold onto their old heaters rather than switch to pellet heaters  -
      I do not think there will be a shift to pellet heaters, the low cost of wood in our area will keep that from happening. Existing consumers will tend to hold onto their old stoves. The time to sell thru the existing inventory of wood stoves can vary from season to season and styles of stoves that are popular vary from year to year.
      Response:
The Agency appreciates this information that multiple commenters have not seen and do not predict a shift from cord wood heaters to pellet heaters. In any event, EPA notes that there are both cord wood heaters and pellet fuel heaters that have been certified to meet the Step 2 standards, and so consumers will have the option of buying either type of heater, based on their preference.

5.3.6 Comment: Time required for EPA certification of AAA models
Several commenters (0050, 0070, 0142) expressed concern regarding longer wait times for testing laboratories and for EPA certification.

One manufacturer (0050 p.2) stated concern over the certification timeline due to longer lead times to secure testing as well as longer wait times for EPA's certificates of compliance  -

      We are seeing the lead time for securing testing at an approved test lab increasing. We used to be able to secure testing time within 30 days, however, of late that has moved out to 45 days and will likely continue to grow. With the number of models HHT still must test, and industry as a whole, the lead time to securing testing will likely get longer making it even harder for manufacturers to get Step 2 product certified prior to May 2020.

      To compound the issue, the certificates of compliance issuance lead times are also increasing. The EPA goal is to issue a certificate of compliance in 90 business days (16 weeks) once they acknowledge receipt of the submittal package. On average, we have been getting our certificates in 60 days (12 weeks), however, prior to the government shut-down, we were not even getting acknowledgement of the package being received which further delays the 90-day certificate timeline.

Another manufacturer (0070 pp.3-4) echoed those concerns, stating  -

      Now testing products for 2020, we have to start out by retesting all of our existing wood pellet stoves to the new 2015 method, even though their pre-2015 test method emissions limits fall below the new 2.0 g/hr limit. We have tested or are in the process of testing, all but 3 pellet models for the new Step 2 standards. Our woodstoves, single burn rate woodstoves, and furnaces are all in the process of redesign and R&D testing now for 2020 certification. Without revenue from the final year and a half before the Step 2 emissions limits come into effect, it makes it very difficult to test and certify our entire product line. Just as important as revenue is time. With backlogs at EPA certified test laboratories continuing to get worse, time is also just as critical for certifying all residential wood heaters to the Step 2 standards. It typically takes 12- 18 months to develop a new wood burning products from start to finish. [REDACTED] To put these numbers into perspective, we currently have 16 active woodstove certificates on the EPA list meeting Step 1 that we sell today in the marketplace. These are 16 certificates, we have multiple sub-models on these certificates. These are models we have the potential of losing needed revenue in the upcoming heating season due to lack of sell-through.

Another manufacturer (0142 p.40) stated that "certifying and qualifying 2020 units takes approximately ten months, and certifying a wood product takes about 15 months."
Regarding the scheduling and related cost of testing, a state regulatory agency (0034 pp.1-2) stated that  -
      An EPA-certified testing facility in Wisconsin confirmed that, to date, it has primarily certified wood and pellet stove units (wood heaters) as Step 2 compliant. This testing facility also noted that the number of tests conducted before a wood heating device is certified as Step 2 compliant has been highly variable. Certification costs can become expensive if several iterative tests ($10,000/unit) are required. Generally, the testing facility has found that manufacturers with their own research and development (R&D) departments have achieved certification with a fewer number of tests relative to manufacturers lacking an R&D department, which tend to be small businesses.
      Response:
We appreciate the responses and information provided regarding the time needed to develop new wood heater models. This supports the Agency's position that five years is a sufficient time period to develop, certify, and bring new wood heating devices to market, as we discuss in our response in 2.3.2.

The EPA's Office of Enforcement and Compliance Assurance (OECA) understands the need of manufacturers to obtain their certifications promptly to manufacture their appliances and bring them to market without delay. There is currently no backlog of test reports waiting to be reviewed.

In managing the National Wood Heater Program, EPA has a practice of processing all wood heater applications within 90 days, if not sooner. In some cases, it may not be feasible to meet the 90-day processing time frame because a manufacturer has not submitted a complete application package. Once the application is complete, the 90-day review period commences. A complete package includes certification test reports, certification of conformity, a quality assurance plan, and all supporting documentation required by the Wood Heater Rule. When processing an application, there may be occasions where the Agency will need to reach out to a manufacturer because the EPA may have questions regarding the certification test report and/or supporting documentation.

For the applications that the Agency processed in 2019, including those applications which may have been incomplete when initially submitted, the average amount of days that were needed to issue the certification from the date the applications were submitted was 41 days. Through compliance assistance, the EPA works with manufacturers when they have submitted an incomplete application. This ensures they understand the requirements for certification and what needs to be submitted to the Agency so they can obtain a certification in a timely manner.

To address any potential issues regarding the capacity to timely review certification applications, the process for issuing the certifications had been revised to include third-party certifiers. Before OECA reviews the certification test reports, these independent third-parties have reviewed the reports and provided the certification of conformity that the tests were conducted pursuant to the regulatory requirements, i.e., the test reports are accurate and complete, and the reports show the applicable limits were met.

6.0	Support for Retaining or Revising Pellet Fuel Requirements
Section 6 presents comment excerpts and summaries regarding retaining and revising the existing pellet fuel requirements.

6.1	Pellet Requirements Should Be Retained
Section 6.1 includes comments contending that the pellet requirements should be retained and why these requirements are important.

6.1.1 Comment: Pellet requirements are needed to ensure consistent operation and emissions performance to safeguard public health
Multiple commenters expressed the need for pellet requirements to ensure consistent operation and emissions performance to minimize pollution and safeguard public health (0034, 0052, 0056, 0074, 0142).

One commenter (0052 p.3) supported retaining pellet fuel requirements  -
      Pursuant to the provisions in 40 CFR 60.532(e) and 60.5474(e), ADEC [Alaska Department of Environmental Conservation] recommends that the minimum quality pellet fuel requirements should be retained for consistency in the level of quality. However, ADEC supports the recommendation in the 2013 report of the New York State Energy and Research Development Authority (NYSERDA) that enforceable standards should be established for elemental compositions of commercial wood pellets to reduce toxic air emissions.
Another commenter (0034 p.2) similarly asserted that  -
      As WDNR [Wisconsin Department of Natural Resources] noted in its May 2, 2014 comments to EPA on the proposed 2015 NSPS, EPA should ensure that compliance assurance performance testing for pellet fuel is as representative of in-field operation and performance as possible, considering operation parameters such as fuel species, fuel shape and bum categories.

Likewise, a commenter (0056 pp.2-3) stated that  -

      MassDEP supports retaining fuel quality standards for pellets sold for residential use, which ensures consistent operations and emissions performance from pellet appliances and helps keep contaminated pellets out of the market. A NESCAUM study of wood pellets found that without fuel quality standards, pellets can contain significant levels of metals and other contaminants that can increase toxic emissions and potentially damage equipment.

Another commenter (0074 p.7) similarly stated that  -
      Oregon DEQ supports establishing enforceable U.S. standards for elemental compositions of commercial wood pellets and chips that are necessary to ensure public health. All bagged pellets sold should be qualified by the Pellet Fuel Institute (PFI) Standards Program.
      A study of 23 wood chip samples and 132 wood pellet samples manufactured in the United States and Canada conducted by the New York State Energy Research and Development Authority in 2013  found unusually high concentrations of heavy metals including chromium, arsenic, and copper in some samples. The study found those elements attributable to waste wood and other treated wood products that had been converted to pellet fuel. Based on these test results, establishing enforceable U.S. standards for elemental compositions of commercial wood pellets and chips would help exclude inappropriate materials and promote cleaner combustion.
Consistent with the above comments, during the public hearing, another commenter (0142 p.24) testified that their organization "supports implementation of fuel quality standards for all pellets sold for residential use to specifically: Ensure consistent operations and comparable emissions performance from pellet appliances; Protect against contaminated pellets in the market; and Provide some assurance that the pellet heater's performance in the home is consistent with the certification test."
One commenter (public testimony 0142 pp.24-25) asserted and concluded that "if EPA removes the fuel quality standards, pellet appliances must be tested and certified using the worst-case fuel. So, if EPA removes the pellet fuel standards, we believe that EPA needs to ensure that the appropriate performance is being tested and, therefore, we request that EPA require testing with high ash and fine content fuel."

Response:
The Agency agrees that some pellet requirements are needed to ensure consistent operation and emissions performance to safeguard public health. The EPA has decided to remove the minimum requirements in subsections 1 through 7 listed under 40 CFR 60.532(e) under subpart AAA, and in 40 CFR 60.5474(e) under subpart QQQQ. We are retaining the prohibition that was stated in the eighth pellet fuel minimum requirement that pellet fuel must not contain any of the prohibited fuels in 40 CFR 60.532(f) and 40 CFR 60.5474(f). Specifically, the EPA is including the requirement that the pellet grading done under a licensing agreement with a third-party organization include a certification by the third-party organization that the pellets do not contain and are not manufactured from any of the prohibited fuels listed in 40 CFR 60.532(f) and 40 CFR 60.5474(f). Further, minimum requirements/specifications are already part of the PFI's and other third-party's requirements, and so will be imposed by the retained rule requirement that the pellets be graded under a licensing agreement by PFI or another EPA-approved third-party. For example, PFI's current (2018) Standard Specifications for Residential/Commercial Densified Fuel  includes nearly identical requirements on density, dimensions, fines, chlorides, ash and trace metals, as required by the 2015 final rule. The remaining requirement  -  that the pellets contain no demolition or construction waste  -  is already contained in the list of prohibited fuels in 40 CFR 60.532(f) and 60.5474(f), which the Agency is retaining with this final rule by requiring operators of pellet fuel heaters to burn only pellets certified by third-party organizations as containing none of these prohibited fuels.

As pointed-out by multiple commenters in response to the NPRM, enforcing a list of pellet requirements in this final rule serves to codify a static list of requirements, until an updated rule is promulgated. Innovations may occur in the interim regarding pellet fuel heater technology, which may require an update to the list of pellet specifications, prior to when a revised rule is promulgated. Third-party organizations can update the list of pellet requirements in step with developments in pellet fuel heater technology, so as to not delay or preclude innovation that may improve pellet fuel heater operation and decrease emissions. The EPA is therefore removing the part of this codified list that is already specified by third-party organizations and/or specified by the list of prohibited fuels and maintaining approval authority over third-party organizations. This final action will allow for pellet specifications that, while protective, do not unnecessarily preclude, inhibit or delay technological innovation.

Regarding the suggestion that EPA require testing for pellet fuel with high ash and fine content, the Agency is not amending the rule at this time or otherwise taking any final action with respect to this comment. However, the agency will monitor these fuel specifications going forward.

6.1.2 Comment: Retention of trace metals, sulfur, chlorine, ash and fines requirements
Several commenters (0054/0200 p.6 and public testimony 0142 pp.24-25, 0065 p.6) supported retaining all existing pellet fuel requirements/restrictions for trace metals, sulfur, chlorine, ash and fines content.

Response:
Pellet fuel will continue to be subject to requirements/restrictions for trace metals, chlorides, ash and fines content because the rule retains the requirement that the pellets be graded under a licensing agreement by PFI or another EPA-approved third-party. PFI and other EPA-approved third-parties include such requirements. For example, PFI's current (2018) Standard Specifications for Residential / Commercial Densified Fuel  includes nearly identical requirements on density, dimensions, fines, chlorides, ash and trace metals, as required by the 2015 final rule. It should be noted that the 2015 NSPS does not specify a requirement for sulfur content, although the pellet requirements include a prohibition against using any of the material listed in the prohibited fuel list found in 40 CFR 60.532(f) and 60.5474(f) to make pellets. The EPA has decided to remove the minimum requirements in subsections 1 through 7 listed under 40 CFR 60.532(e) under subpart AAA, and in 40 CFR 60.5474(e) under subpart QQQQ. We are retaining the prohibition that was stated in the eighth pellet fuel minimum requirement that pellet fuel must not contain any of the prohibited fuels in 40 CFR 60.532(f) and 40 CFR 60.5474(f).

6.2	Pellet Requirements Should Be Revised
Section 6.2 includes comments asserting that the pellet requirements should be strengthened in some ways but revised and made less stringent for certain specific parameters.

6.2.1 Comment: Reasons for strengthening pellet fuel requirements
Several commenters (0054/0200 pp.5-6 and public testimony 0142 pp.24-25, 0068 p.5) supported strengthening and improving the pellet fuel requirements for the reasons stated below  -
      The EPA List of Certified Wood Stoves includes many models designed to burn pellets. With increasing use of this fuel for residential home heating purposes, pellet quality and the potential impacts from its use are important. NESCAUM conducted a study for the New York State Energy Research and Development Authority (NYSERDA) and found that absent enforceable fuel quality standards, wood pellets can contain significant levels of metals and other harmful contaminants that can increase toxic emissions. For example, we analyzed commercially available pellet fuels that had high chromium, copper, arsenic, lead and mercury content.
      In addition to increased emissions of toxic pollutants, inferior quality pellets can affect a device's operation, reduce combustion efficiency, and potentially damage high efficiency equipment over time. Our sampling program found commercially available pellets with ash content as high as 8 percent, which is well above the Pellet Fuels Institute (PFI) ash limit of 1 percent for "premium grade" pellets. High quality pellets save consumers money in terms of reduced fuel consumption and maintenance costs. In NESCAUM's 2011 analysis of 132 samples representing over 100 brands of pellet fuels, 36 percent of the pellet brands exhibited levels of elevated materials (see Attachment 3). Our ongoing analysis of pellet fuels has found that, to date, no pellets bearing the Pellet Fuel Institute certified fuel quality mark appear contaminated. The PFI certification program requires the use of clean wood, routine (quarterly or monthly) unannounced inspections, and annual unannounced analysis for metals.
      The 2015 NSPS requires that pellets burned in residential wood pellet heaters meet minimum fuel quality criteria. NESCAUM strongly supports maintaining such requirements to protect against contaminated pellets in the retail market, ensure efficient operations and comparable emissions from pellet-fueled devices, and provide some assurance that the pellet heater's performance in the home is consistent with the certification test. EPA currently accepts existing pellet quality standards from various third-party organizations including PFI, ENplus and CANplus, and additional organizations may apply to the Administrator for approval. The stringency and effectiveness of these programs, however, can differ markedly. The current standards could be improved by consolidating these requirements into a single standard that would apply to all suppliers and all third-party certifiers.
      NESCAUM supports implementation of fuel quality standards for all pellets sold for residential use, but we support eliminating size requirements. Standards for metals, sulfur, chlorine, ash and fines content should all be retained because these are key elements to assure real world performance. Furthermore, EPA must include provisions that approved voluntary programs have mechanisms to provide appropriate oversight such that compliance assurance can be monitored, and appropriate enforcement actions are taken when deviations occur.
Likewise, other commenters (0065 pp.5-6, 0068 p.5) recommended that minimum quality pellet fuel requirements be retained but with revisions and their suggested revisions are discussed in the following subsections. One commenter (0068 p.6) furthermore asserted that "if EPA adopts a sell-through provision ... or weakens the requirements for wood pellets, states may adopt regulations to counter EPA's actions."

Response:
We appreciate the information that NESCAUM's "ongoing analysis of pellet fuels has found that, to date, no pellets bearing the Pellet Fuel Institute certified fuel quality mark appear contaminated." The EPA has decided to rely on third-party organizations approved by the Agency  -  including PFI  -  to ensure that minimum specifications and restrictions are met for pellet quality. The EPA has also decided to remove the minimum requirements in subsections 1 through 7 listed under 40 CFR 60.532(e) under subpart AAA, and in 40 CFR 60.5474(e) under subpart QQQQ. We are retaining the prohibition that was stated in the eighth pellet fuel minimum requirement that pellet fuel must not contain any of the prohibited fuels in 40 CFR 60.532(f) and 40 CFR 60.5474(f). The Agency has made this determination primarily because: (1) minimum requirements/specifications are already part of the PFI's and other third-parties' requirements, and so will be imposed by the retained rule requirement that operators of pellet fuel heaters must only burn pellets graded under a licensing agreement by PFI or another EPA-approved third-party; (2) having the list of pellet specifications imposed by federal regulations may inhibit innovations that may improve pellet fuel heater operation and decrease emissions; and (3) PFI has added metal requirements as of November 9, 2018. Finally, nothing in this final rule precludes the EPA from proposing and promulgating appropriate additional pellet fuel requirements in the future, if the Agency determines that federally imposed requirements are needed.

6.2.2 Comment: Maximum length restriction should be eliminated
Multiple commenters (0042, 0054/0200, 0065, 0142) supported eliminating the maximum length restriction in the list of pellet fuel requirements. One commenter (0054/0200 p.6 and public testimony 0142 pp.24-25) "support[ed] implementation of fuel quality standards for all pellets sold for residential use, but [nonetheless] support[ed] eliminating size requirements." Another commenter (0065 p.6) also supported eliminating size requirements for pellets. Likewise, commenter (0042 p.1) asserted that "the EPA should not list specific requirements of fuel such as length or diameter but it should match the PFI Standard specifications."

Response:
We appreciate the suggestions that the dimension restrictions should be removed from the rule and instead match PFI specifications. The EPA has decided to remove the minimum requirements that were in subsections 1 through 7 of 40 CFR 60.532(e) under subpart AAA, and in 40 CFR 60.5474(e) under subpart QQQQ. We are retaining the prohibition that was stated in the eighth pellet fuel minimum requirement that pellet fuel must not contain any of the prohibited fuels in 40 CFR 60.532(f) and 40 CFR 60.5474(f). The Agency has made this determination primarily because: (1) minimum requirements/specifications are already part of the PFI's and other third-parties' requirements, and so will be imposed by the retained rule requirement that operators of pellet fuel heaters must only burn pellets graded under a licensing agreement by PFI or another EPA-approved third-party; (2) having the list of pellet specifications imposed by federal regulations may inhibit innovations that may improve pellet fuel heater operation and decrease emissions, and (3) PFI has added metal requirements as of November 9, 2018.

6.2.3 Comment: Fines restriction should be revised
One commenter (0042 p.1) suggested that "fines should be referred to as fines and not as inorganic fines as inorganic fines infer that the fines are somehow directly related to non-carbon-based material such as ash."

Response:
We agree that the correct specification is "fines" instead of "inorganic fines". Going forward, the Agency has decided to rely on EPA-approved third-party pellet specifications, such as those required by PFI's current Standard Specifications for Residential/Commercial Densified Fuel, which specifies "fines" not "inorganic fines".

6.2.4 Comment: Trace metal restrictions should be retained and strengthened
One commenter (0045 p.8) stated that  -
      The presence of heavy metals in pellet fuel, including arsenic, copper and chromium and the likely emission from the fuel into the ambient air in neighborhoods, exposing the public, is troubling. It appears that the presence of these metals indicates that treated lumber waste stream is finding its way into commercial pellet production [cites Elemental Analysis of Wood Fuels. Final Report, June 2013. New York State Energy Research and Development Authority]. EPA should have a pellet fuel standard that limits the amount of toxic metals, so that treated lumber waste and other similar contaminants do not become a component of the pellet fuel. ... WESTAR ... urges EPA to take steps to better protect the public from exposure to toxic metals from pellet fuels.
Response:
We agree that the presence of toxic metals and other contaminants in pellets is a health and environmental hazard. The Agency also appreciates the information provided above in Section 6.2.1 that NESCAUM's "ongoing analysis of pellet fuels has found that, to date, no pellets bearing the Pellet Fuel Institute certified fuel quality mark appear contaminated." The EPA has decided to rely on third-party organizations approved by the Agency  -  including PFI  -  to ensure that minimum specifications and restrictions are met for pellet quality. We note that trace metals were recently added to the PFI Fuel Grade Requirements in November 9, 2018. The EPA has decided to remove the minimum requirements in subsections 1 through 7 listed under 40 CFR 60.532(e) under subpart AAA, and in 40 CFR 60.5474(e) under subpart QQQQ. However, we are retaining the prohibition that was stated in the eighth pellet fuel minimum requirement that pellet fuel must not contain any of the prohibited fuels in 40 CFR 60.532(f) and 40 CFR 60.5474(f).The Agency has made this determination primarily because: (1) minimum requirements/specifications are already part of the PFI's and other third-party's requirements, and so will be imposed by the retained rule requirement that operators of pellet fuel heaters must only burn pellets graded under a licensing agreement by PFI or another EPA-approved third-party; (2) having the list of pellet specifications imposed by federal regulations may inhibit innovations that may improve pellet fuel heater operation and decrease emissions, and (3) PFI has added metal requirements as of November 9, 2018. Finally, nothing in this final rule precludes the EPA from proposing and promulgating appropriate additional pellet fuel requirements in the future, if the Agency determines that federally imposed requirements are needed.

6.2.5 Comment: Ash content restriction should be revised
One commenter (0042 p.1) asserted that  -

      One problem with the proposed NSPS, is the 2% limitation of ash content. Granted that higher ash content can result in higher particulate emissions in traditional pellet stove burn systems; but the NSPS should not rule out the use of higher ash fuels burnt in less traditional pellet burn systems, such as gasifiers, that might be able to reach the particulate emissions the NSPS is looking for. Let the stove designers meet NSPS and not artificially rule out higher ash fuels.

Response:
We appreciate the suggestion that the specifications need to be agile enough to respond to different pellet fuel heater technologies. To that end, the Agency has decided to rely on third-party organizations approved by the Agency  -  including PFI  -  to ensure that minimum specifications and restrictions are met for pellet quality. One of the reasons the EPA has made this determination is that having the list of pellet specifications imposed by federal regulations may inhibit innovations that may improve pellet fuel heater operation and decrease emissions, as discussed further in response to other comments. See, e.g., response to comment 6.1.1.

6.2.6 Comment: Demolition /construction waste restrictions should be retained and strengthened
One commenter (0054/0200 p.6) supported retaining and strengthening the restrictions against using demolition and construction waste, asserting that only clean wood fuels should be used for producing pellets, while the following should be prohibited: any waste wood or construction or demolition waste products; any de minimis waste materials; and any binders that could lead to a decrease in emissions performance. Another commenter (0065 p.6) also asserted that only "clean wood fuels" should be used in pellets, with "any waste wood" prohibited.

Response:
We appreciate the concern regarding demolition and construction waste in pellets and agree that only clean wood fuels should be used in pellets. The Agency is implementing this prohibition against demolition and construction waste in 40 CFR 60.532(e) and 40 CFR 60.5474(e) by including the requirement that the grading done by third-party organizations include a certification by the third-party organization that the pellets do not contain and are not manufactured from any of the prohibited fuels listed in 40 CFR 60.532(f) and 40 CFR 60.5474(f)., which includes construction or demolition debris as well as a list of other materials that can create hazardous emissions and damage the pellet wood heating device.

In addition, the Agency is retaining the requirement that the pellets be graded under a licensing agreement by PFI or another EPA-approved third-party, whose certification will ensure that the pellets also meet minimum requirements and specifications. For example, PFI's current Standard Specifications for Residential/Commercial Densified Fuel includes nearly identical requirements on density, dimensions, fines, chlorides, ash and trace metals, as required by the 2015 final rule.

6.2.7 Comment: Prohibited fuel list should be revised regarding pallets and seasoned wood prohibitions
Several commenters argued that pallets should be allowed for use in the manufacture of wood pellets for residential wood burning (0055, 0058, 0072). A couple commenters also asserted that unseasoned wood should not be prohibited for the manufacture of pellet fuel (0040, 0042).

Comments regarding Pallets:

One commenter (0058 pp.1-2) requested that EPA "eliminate the restriction on the use of pallet wood waste as a feedstock for manufacture of wood pellets." This commenter (0058) asserted that "to maintain the pallet wood exclusion within this rule will eliminate jobs, increase costs, burden our landfills and not improve air quality."

Likewise, another commenter (0055 pp.1-2) asserted that
      NWPCA [National Wood Pallet and Container Association], on behalf of its members, requests that EPA revise the current minimum pellet fuel requirements to ensure that pellets made from wood pallets are not a prohibited fuel source, or alternatively remove the requirements from the 2015 New Source Performance Standards (NSPS)...
      On March 16, 2015, EPA issued a final rule revising the Standards of Performance for New Residential Wood Heaters. 80 Fed. Reg. 13,671 (Mar. 16, 2015). In that rule, EPA promulgated a rule governing requirement for pellet fuel. See 40 C.F.R. § 60.532(e). EPA also listed a variety of prohibited fuel sources. Id. § 60.532(f). One of the prohibited items in that list is "pallets." Id. § 60.532(f)(9). The rule, however, did not clarify whether wood pellets made from wood pallets were a prohibited fuel source.
      In a November 16, 2016 Memorandum titled EPA's Response to Remand of the Record for Residential Wood Heaters New Source Performance Standards, EPA explained that wood pellets could not contain any of the prohibited fuels. See EPA-HQ-OAR-2018-0195-0010 at 19. EPA explained that the concept of prohibited fuels originated from the 1988 NSPS "Do Not Burn" list, which EPA alleged included wood pallets. Id. However, the 1988 NSPS did not list wood pallets as a prohibited fuel. See 53 Fed. Reg. 5,860, 5,914 (Feb. 26, 1988). EPA's inclusion of wood pallets as a prohibited fuel source was unwarranted.
      There is no basis to exclude wood pellets made from recycled wood pallets as a fuel source. Pellets derived from recycled wood pallets provide an ideal combination for a fuel source  -  low moisture, high heat, and low metal emissions. The combustion of these pellets are not a source of hazardous pollutants or toxic emissions, as EPA's memorandum suggests. See EPA-HQOAR-2018-0195-0010 at 19. Such pellets meet the current Pellet Fuels Institute (PFI) tests for premium fuel. The pellets cannot currently be certified under the PFI Standards Program, however, because they are derived from a source EPA has purportedly prohibited.
      Wood pallets are currently the most recycled packaging product, with 95% of all wood pallets recovered, refurbished and recycled according to a recent study by Virginia Tech and the U.S. Forest Service. Since wood pellets with wood pallet residuals cannot currently be certified under the PFI Standards Program, there is grave concern across the industry that these pallets will now be diverted to landfills, rather than recycled as a renewable fuel source. The exclusion also causes a financial hardship on the small, family businesses that count on the pellet market for their pallet residuals. Instead of receiving a revenue stream for these residuals, many companies must now pay a disposal fee, while also contemplating reduced work hours, jobs, and production.
      The environmental and economic consequences of excluding wood pallets as a fuel source is significant. EPA should clarify that wood pellets sourced from wood pallet residuals are not a prohibited fuel source. We are happy to assist EPA in its efforts to reform NSPS Subpart AAA and look forward to commonsense reform efforts that do not prohibit a useful fuel source from being used in residential wood heaters.
Another commenter (0072 p.1) similarly stated  -
      We request that the EPA revise the current minimum pellet fuel requirements to eliminate wood pallets as a prohibited fuel source and feedstock. Pellets made from such feedstock can meet the current standards set forth by the PFI Standards Program but are unable to get certified under the Program because the raw material is prohibited according to the NSPS. We believe that recycled pallets are the most recycled packaging product in the United States according to a study by Virginia Tech and the US Forest Service and by turning this material into a usable fuel source we will be aiding in landfill avoidance while creating a viable fuel source for years to come.
      By prohibiting pallets as a raw material, it has and will put a financial strain on our company and others who use this feedstock. We along with other producers have invested a tremendous amount of money in equipment and employees and we ask that you remove pallets as a prohibited fuel source in order to compete in the market and provide a viable outlet for residual waste that would otherwise be sent to a landfill.
Another commenter (0058 p.2) explained that  -

      Industrial Pallet through an affiliated company is a member of the Pellet Fuels Institute. Though our company cannot participate in the PFI's certification program because of the exclusion, we test our fuels regularly. Testing indicates that we pass all the criteria for certification except for the exclusion of pallet wood in the EPA rule which is subject of these comments. Additionally, you may be aware that Europe also has a standard for pellet fuel which is more stringent than our country's standard. Our company, for our internal edification, has tested our pellets under the European standard several times and we pass that standard also. There seems to be no need nor prior indication that the exclusion of pallet wood is necessary. The notion that pallet wood is somehow contaminate is false. Hundreds of millions of recycled wood pallets are used worldwide every day to transport all types of consumer goods including food products.

Comments regarding seasoned wood:

One commenter (0042 p.1) asserted that "The EPA seasoned wood requirement would shut down most of the wood pellet industry as most producers dry their raw materials." Likewise, another commenter (0040 p.1) opined that  -

      One of the NSPS requirements is that manufacturers only use seasoned wood when making wood pellet fuel. I estimate this would shut down the majority of residential pellet fuel manufacturers since many take clean, green dust and chips from sawmills that keeps it from going to a land fill. Then dry it at their plant before turning it into pellets.

Response:
We are maintaining the prohibition that states that no person is permitted to burn any of the prohibited fuels in 40 CFR 60.532(f) and 60.5474(f). These provisions apply to all material burned in wood heating devices, including pellets. Regarding the prohibition as it applies to pallets, the Agency is concerned about potentially hazardous material in pallets, from either intentional treatment of the pallet wood or contamination of the pallet while the pallet is in use. Therefore, in response to questions concerning the scope of the prohibition on "pallets" in 40 CFR 60.532(f)(9), we are clarifying in the preamble to this final rule that this provision covers pressure-treated pallets. Furthermore, as noted above, pallets contaminated with any of the materials listed as a prohibited fuel type in 40 CFR 60.532(f) may not be burned or used to manufacture pellets because such burning or use is barred by the provision prohibiting the specific prohibited fuel. For instance, manufacturing pellets from pallets contaminated with "waste petroleum products, paint or paint thinners, or asphalt products" (i.e., the language in 40 CFR 60.532(f)(5)), is prohibited by 40 CFR 60.532(f)(5). As a second example, pallets that are contaminated with asbestos may not be used to make pellets due to the prohibition against "materials containing asbestos" in 40 CFR 60.532(f)(6). Sections 40 CFR 60.532(f) and 40 CFR 60.5474(f) state that no person is permitted to burn any of the following materials in an affected wood heating device:

      1. Residential or commercial garbage;
      2. Lawn clippings or yard waste;
      3. Materials containing rubber, including tires;
      4. Materials containing plastic;
      5. Waste petroleum products, paints or paint thinners, or asphalt products;
      6. Materials containing asbestos;
      7. Construction or demolition debris;
      8. Paper products, cardboard, plywood, or particleboard. The prohibition against burning these materials does not prohibit the use of fire starters made from paper, cardboard, sawdust, wax and similar substances for the purpose of starting a fire in an affected wood heater;
      9. Railroad ties, pressure-treated wood or pallets (40 CFR 60.532(f)(9)) and
      Railroad ties or pressure-treated lumber (40 CFR 60.5474(f)(9));
      10. Manure or animal remains;
      11. Salt water driftwood or other previously salt water saturated materials;
      12. Unseasoned wood
      13. Any materials that are not included in the warranty and owner's manual for the subject wood heater; or
      14. Any materials that were not included in the certification tests for the subject wood heater.

Regarding unseasoned wood, we are clarifying that the prohibition against unseasoned wood applies to the fuel being burned and therefore, in the case of pellets, applies to the manufactured or finished pellet, not the raw wood used to produce/ manufacture the pellet. Unseasoned wood may be used in the production of pellets, as long as the finished pellet has a moisture content less than 20 percent.

6.2.8 Comment: Quality assurance program requirements should be revised
Some commenters (0054/0200, 0065) stated support for retaining and strengthening requirements for quality assurance programs overseeing pellet fuel quality, while one commenter (0040) expressed opposition to instituting a quality assurance program.

In support of a quality assurance program, one commenter (0054/0200 p.6) asserted that -
      Pellet fuel should be certified through a quality assurance program licensed by a third-party organization approved by EPA and should meet the following minimum requirements:
       minimum annual random compliance audits, including unannounced inspection and testing activities for metals content with limits consistent with those adopted by PFI;
 monthly or quarterly testing to assure compliance with pellet standards;
 mechanisms to provide pellet sampling and inspection reports for review by the appropriate authorities;
 retention of existing metals, sulfur, chlorine, ash and fines content requirements;
 requirement for the use of clean wood fuels while prohibiting the use of any waste wood or construction or demolition waste products;
 prohibition on the use of any de minimis waste materials; and
 prohibition on the use of any binders that could lead to a decrease in emissions performance.

This above list was also echoed by another commenter (0065, p.6) who also requested that EPA "require that approved voluntary programs include oversight mechanisms to allow compliance to
be monitored and, as necessary, appropriate enforcement action to be taken."

Another commenter (0040 p.1) was not supportive of requiring quality assurance program oversight for pellet fuel quality, arguing that  -

      Our current testing program we use is more thorough and cheaper than the expensive certified programs NSPS ruling is requiring. For years, we have tested our pellet fuel every 5th ton produced for ash content & fines at our onsite lab. Two or three times a year, we send a 40 lb. bag out to an independent lab to ensure our testing system is accurate. The NSPS ruling requires one of 2 certification programs:
       	-One certified program tests once every 1,000 tons produced and the participant must pay 4 different groups to be in the auditing program as well as the cost of paying for shipping, lab tests, and auditors site visits.
 	-The other program tests only once/year, but requires the participant to pay money -based on their annual production - which goes to the program and is used to promote the use of pellet fuel in Europe.

This NSPS requiring costly certification programs favors the large corporations in the pellet fuel business that can absorb the high costs of the programs and penalizes small family businesses. At the same time, this would not be as thorough as our current testing program.

Response:
The EPA has decided to remove the minimum requirements in subsections 1 through 7 listed under 40 CFR 60.532(e) under subpart AAA, and in 40 CFR 60.5474(e) under subpart QQQQ. We are retaining the prohibition that was stated in the eighth pellet fuel minimum requirement that pellet fuel must not contain any of the prohibited fuels in 40 CFR 60.532(f) and 40 CFR 60.5474(f), as assured through a quality assurance program licensed by a third-party organization approved by the EPA. The Agency appreciates that some pellet producers may have a stringent testing program of their own in place, but not all pellet producers do. Licensing a quality assurance program by an EPA-approved organization is necessary to ensure all pellet producers are producing pellets free of prohibited materials, and that also meet the specifications required by the EPA-approved third-party organization.
7.0	Support for Eliminating Pellet Fuel Requirements
Section 7 presents comment excerpts and summaries regarding eliminating the pellet fuel requirements as they currently exist in the NSPS.

7.1	The Pellet Fuel Requirements are not Permissible under the CAA
Section 7.1 includes comments contending that the pellet fuel requirements are not permissible under the CAA and providing a legal basis for why they need to be eliminated. These legal arguments were primarily provided by the Pellet Fuels Institute (PFI).

7.1.1 Comment: EPA lacks legal authority under the CAA to regulate pellet fuel, did not analyze BSER, unjustifiably regulates a commercial product in homes and must repeal the requirements entirely.
One commenter (0069 pp.1-2, 3-8, 9-12, 21) argued extensively that the pellet fuel requirements cannot be justified legally under the CAA for several inter-related reasons -
      PFI argued in 2015 and contends now that the EPA lacks legal authority to promulgate such standards. First placed into the Clean Air Act ("CAA") in 1970, CAA §111 is designed to regulate emissions from stationary sources, including large industrial facilities. In its 2015 rule, however, EPA extended the regulatory reach of this provision well beyond the fence line of an industrial plant to regulate a commercial product and the homeowners that buy this product to heat their homes. In doing so, EPA ignored 40 years of case law and regulatory precedent by failing to properly analyze the best system of emission reduction ("BSER") with respect to pellet fuels. ...
      The administrative record for the 2015 rule and for options that would either retain pellet fuel standards in the same or revised form is seriously deficient and relies on insufficient and anecdotal information which, in some cases, does even not support EPA's conclusions.
      While PFI appreciates EPA's decision to review pellet fuel standards, we believe that only one outcome of the rulemaking is permissible: elimination of the 2015 standards. EPA does not have the authority, a reasoned basis or a sufficient administrative record to retain the 2015 standards or amend parts of the 2015 regulations.
      As they have in the past, pellet fuels will continue to offer a viable, clean-burning alternative to using cord wood for home heating, benefitting both homeowners and others who depend on wood heat as well as the surrounding, local community. Rescinding EPA's intrusive standards will help to restore incentives for innovation that were
substantially diminished, if not thoroughly eliminated, by EPA's 2015 rule. ...
      Almost five years ago, PFI expressed serious concerns with EPA's proposed rule that would regulate pellet fuel for the first time. As proposed in 2014 and as finalized in 2015, PFI argued that EPA's pellet fuel requirements were in excess of its authority under CAA §111. EPA neither responded to these comments nor altered the trajectory of its proposed regulation in 2015. In fact, EPA added several additional pellet fuel requirements beyond those it had originally proposed. EPA did not explain how it determined that BSER for wood heaters included specific standards for fuel providers nor how a CAA §111 rule may regulate the behavior of an individual who is an owner of the wood stove, or even a non-owner, casual user of a wood stove, much less any alternatives to this regulatory regime. EPA also did not explain how it could use its authority in CAA §111(a)(2) to regulate products (i.e., pellet fuel) where such products have not been previously listed for regulation, or subject to an endangerment determination.
      Thus, EPA's standards for pellet fuel were previously in excess of EPA's statutory authority in CAA §111  -  and remain so today. Then, as now, the standards are unsupported in the administrative record for either the 2015 rulemaking or this proposed rule. EPA did not conduct an analysis of the best system for emission reduction ("BSER") related to pellet fuel either as part of its 2015 rule or as part of its current proposal to retain or modify current pellet fuel standards. Thus, aside from a lack of legal authority, EPA's rulemaking procedure is (and remains) contrary to law, at variance with EPA's past interpretations and implementation of CAA §111 and arbitrary and capricious. Our more detailed comments below expand on these serious concerns and dictate that EPA take action to reverse its legal and procedural mistakes.
      EPA Failed to Address Comments Filed by the Pellet Fuel Institute in 2014 and the Proposed Rule Does Not Cure Previous Legal and Procedural Defects
      In PFI's comments on EPA's 2014 proposed rule, PFI explained that CAA §111 does not provide EPA with authority to establish pellet fuel standards. PFI also explained that whether EPA was exerting authority under CAA §111(a), (b) or (h), the Agency must take into account several statutory considerations, including cost and energy requirements, which it ignored when promulgating final standards. Despite the central nature of these comments to EPA's rule, EPA never provided a substantive response to PFI's comments. Specifically, while mentioning PFI's objections to the Agency's exertion of statutory authority in its Response to Comments ("RTC") document, EPA provided a two paragraph response which neither mentioned the legal basis for its standards, nor responded to explicit comments that EPA had failed to determine that pellet fuel requirements were BSER or consider the explicit statutory criteria to promulgate a "standard of performance" pursuant to CAA §111(a).
      The current proposed rule does nothing to cure this defect. In its proposed rule, EPA has not explained how retaining current pellet fuel regulations is consistent with its authority to establish CAA §111 standards, nor has EPA put forward any additional information concerning how it determined the BSER to support the original 2015 standards. While EPA takes comments on an alternative, less prescriptive set of pellet fuel standards, the Agency does not provide an analysis of how such standards either comply with CAA § 111 or constitute BSER. Until such fundamental defects are cured  -  and PFI would submit that they cannot  -  EPA lacks authority to finalize either Option 1 (retain standards) or Option 3 (revise standards) as presented in the proposed rule.
      EPA's lack of original supporting analysis for the 2014 proposed rule or the 2015 final rule affecting pellet fuel is vividly demonstrated by its decision, in 2016, to supplement the original administrative record for that rulemaking. Specifically, in pending litigation on the 2015 standards, EPA moved to remand the record with respect to litigation on the 2015 final rule (which included standards for all types of wood heaters as well as pellet fuel requirements) solely on one issue. That issue was to "further explain its rationale behind the pellet fuel requirements in the Final Rule." In other words, well over a year after EPA finalized pellet fuel standards, it determined that it should attempt to "further explain" why it promulgated such standards in the first instance despite the CAA's clear requirement any proposed rule contain a statement of basis including "the factual data on which the proposed rule is based" as well as "major legal interpretations" that support the rulemaking.
      EPA's 2016 further "explanation" of its 2015 pellet fuel standards was insufficient then to justify the final requirements and is insufficient now to support either retaining the current standards or revising such standards. Within the current proposed rule, EPA simply asserts that the requirements are "intended to maintain a level of quality consistent with the requirements of a pellet heater certification test" may be promulgated under the authority of CAA §111. But any regulatory "intent" is wholly subjective and does not fulfill EPA's legal duty to determine BSER only after a full examination of mandatory statutory criteria. Moreover, EPA has not, to date, either adequately responded to comments PFI filed in 2014 nor developed a new record sufficient to retain existing standards.
      This leaves the Agency one choice: Option 1, the elimination of pellet fuel requirements in 40 C.F.R. §60.532(e)(1)-(8) and §60.5474(e)(1)-(8). EPA must repeal these provisions which establish explicit size and content requirements for pellet fuel and the mandate, in the two subparagraphs (e)(8), that pellets "contain none of the prohibited fuels in paragraph (f) of this section."
      EPA's Supplemental Response to the Pellet Fuel Institute's Comments Does Not "Cure" EPA's Lack of Legal Authority
      EPA Admits that Pellet Fuel Standards are not Authorized by Clean Air Act § 111
      EPA refers to the preamble of the proposed and final rules and EPA's Response to Comments document as "containing the reasoning" supporting the NSPS and the Supplemental Response as providing "additional clarification." But none of these documents explain how EPA has authority to regulate pellet fuel characteristics pursuant to CAA §111(b), nor how EPA determined BSER for the regulated source category as including the specification of multiple parameters and characteristics pellet fuel and the regulation of the behavior of private citizens who may not even own a pellet stove. EPA must do so in order to promulgate a lawful standard.
      As referenced above, EPA also did not respond to comments filed in 2014 that the Agency lacked authority under CAA section 111(a) or (b) for its final 2015 standards. But EPA effectively admitted after the fact that it does not have such authority. EPA's Remand of the Record explicitly states that pellet fuel standards are not authorized under a CAA §111 standard of performance. Specifically, EPA stated that:
            PFI's comment that EPA has not demonstrated that the pellet fuel requirements are part of BSER fails to understand the role of pellet fuel requirements in the rule. They are not part of the systems of emission reduction that pellet heater manufacturers apply to control emissions . . . The pellet fuel requirements are a means to ensure that conditions during the certification testing and homeowner operation are comparable.
      EPA lacks statutory authority to regulate pellet fuel and the pellet fuel industry on the basis of an amorphous claim that this is just a "means to ensure" that testing, and operation of a source is comparable. Pursuant to CAA §111, EPA must determine that the BSER for the source category being regulated  -  wood heaters and other wood-fueled appliances. EPA does not obtain authority under CAA §111 to additionally regulate entities that are not part of the source category being regulated. And EPA's statement that pellet fuel regulations are not part of BSER explicitly verifies that EPA acted without authority in 2015 to regulate pellet fuels and that Options 1 and 3 in this proposed rule are also beyond EPA's authority to promulgate as a final rule.
      But rather than discuss the legal basis for regulating pellet fuels when given the opportunity to do so in this proposed rule, EPA repeatedly attempts to justify its new and novel regulation of a previously unregulated commercial product  on the basis that its regulations "were intended to maintain a level of quality consistent with the requirements of a pellet heater certification test to ensure these pellets are similar to pellets used in certification testing. But the "intent" of a rule is not to be confused with legal authority to promulgate a rule. EPA may intend to do many things, but it may only promulgate rules to regulate the private sector if Congress had granted the Agency legal authority to do so.
      As EPA recently explained, CAA §111 "authorizes and directs the EPA to prescribe NSPS applicable to certain new stationary sources (including newly constructed, modified, and reconstructed sources). As a preliminary step to regulation, the EPA lists categories of stationary sources that the Administrator, in his or her judgment, finds "cause, or contribute significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare." But with regard to the wood heater NSPS, EPA has neither defined pellet stoves utilizing pellet fuel as a wood heater, explicitly listed pellet stoves using pellet fuel as a source category or completed an endangerment finding that considers pellet fuel, which it newly regulated in 2015. Rather, EPA indicates that pellet stoves were subject to an "unintentional loophole" in the 1988 NSPS for wood heaters that this was corrected in the 2015 rule when they were "explicitly regulated."
      The CAA defines a "`new source" as "any stationary source, the construction or modification of which is commenced after the publication or regulations (or, if earlier, [proposed regulations) prescribing a standard of performance . . . which will be applicable to such source." But EPA's 2015 regulations and Options 1 and 3 as proposed in this rule, do not solely regulate a stationary source. They effectively regulate pellet fuel manufacturers who may only produce a pellet fuel for use in new pellet fuel heaters if the fuel meets EPA's specific requirements for such fuel. And EPA's 2015 regulations and Options 1 and 3 also regulate homeowners or other operators (including non-owners and casual operators) of pellet fuel stoves who may be completely unaware of fueling requirements. The NSPS does not solely apply to pellet stoves or pellet stove manufacturers. Instead, "new pellet heater/stove owners and operators will be required to use only the grades of pellet fuel . . . that are included in the owner's manual based on the heater/stove certification tests."
      Under CAA §111(a)(1), EPA has explained that it "must set [NSPS] at the level that reflects the `best system of emission reduction . . . adequately demonstrated' taking into account technical feasibility, costs and non-air quality health and environmental impacts and energy requirements...The text and legislative history of CAA §111, EPA's previous regulatory interpretations of that provision and relevant court decisions, identify factors for the EPA to consider in making a BSER determination." And EPA has further explained the process that it must follow: first, EPA identifies the "system of emission reduction" that has been adequately demonstrated for a particular source category and second, "EPA determines the `best' of these systems after evaluating the extent of the emissions reductions, costs, any non-air health and environmental impacts, and energy requirements."
      Yet EPA has done of this required CAA §111 analysis for pellet fuels -  as it readily admits  -  since it does not consider pellet fuel requirements to be part of a system of emission reduction. And there is nothing in the record for the 2015 rulemaking or this proposed rule that shows EPA has evaluated the "best" system after considering the mandatory statutory factors that it must consider prior to determining BSER. EPA evaluated no other option than placing extremely prescriptive requirements into the Code of Federal Regulations ("C.F.R.") where they become enforceable as CAA standards, subjecting violators to the possibility of CAA per day/per violation fines.
      EPA additionally represents that its determination of BSER "is based on an evaluation of what has been achieved by the various models of wood heaters, and concluding that the lowest emitting heaters are using the best system of emission reduction (that is, whatever combination of the wide variety of combustion techniques that they are using)." If so, this is another blatant admission by the Agency that no BSER analysis was conducted with respect to its separate, non-source regulation of pellet fuel and operators of pellet stoves. EPA presented no information with respect to why these lowest levels of emission were achieved and the extent to which the lower emission of the regulated pollutant  -  i.e., particulate matter  -  was attributable to the fuel utilized, versus some other factor(s). ...
      EPA Failed to Apply its "Four Part Analysis" in 2015 or in this Proposed Rule
      During its 2014-2015 rulemaking process, EPA did not analyze BSER for pellet fuel under the "four part" analysis used in other NSPS rulemakings, most recently in the NSPS for fossil-fuel power plants. EPA has also not applied such an analysis with respect to its proposal to retain current standards (Option 1) or amended standards (Option 3). Nor does EPA cite any case law supporting its methodology for promulgating pellet fuel standards in 2015 or with regard to the current rulemaking, except for one decision which is inapplicable, as discussed below in Section IV.E. [of comment 0069].
      The four-part analysis that EPA has used in prior CAA §111 rulemakings and most recently referenced in its newly proposed CAA §111(b) standards for new, modified, and reconstructed electric utility generating units consists of: (1) identifying system[s] of emission reduction that have been adequately demonstrated; (2) determining which of these systems is best; (3) taking into account the cost of achieving the required emission reductions; and (4) considering "`any non-air quality health and environmental impact' in determining BSER," including cross-media environmental impacts.
      Neither the 2015 rule, nor this proposed rule or supporting analysis (e.g., EPA's Response to Remand) contains a structured analysis of pellet fuel regulations that uses EPA's prior methodology in promulgating CAA §111 rules, based on mandatory statutory requirements. EPA offers no explanation for this departure, but instead repeatedly ignores the impact of pellet fuel requirements on multiple entities: pellet fuel manufacturers, owners of pellet fuel stoves and operators of pellet fuel stoves. A regulatory agency may depart from its prior interpretations, but it must have a reasoned basis for doing so. In 2015 and in this proposed rule, EPA offers none.
      EPA's Supporting Analysis Suffers from Factual Errors
      EPA attempts to distinguish pellet fuel requirements from other CAA §111 standards by describing the wood heater NSPS as not being a "typical" NSPS. EPA then erroneously claims that the "rule does not require each operator (aka, each homeowner) to meet emission limits." This is both: (a) inaccurate; and (b) thoroughly inconsistent with EPA's insistence that pellet fuel requirements are essential for compliance.
      With regard to the accuracy of the statement, EPA has elsewhere admitted that owners and operators of pellet fuel stoves are required to comply with the standard. While it is true that a homeowner does not need to perform emission tests to certify that the stove purchased meets emission limits for pellet heaters, EPA requires the homeowner or a non-homeowner operator to meet emission limits by operating the heater in a manner consistent with the owner's manual. 40 C.F.R. §§60.532(g); 60.5474(g). Operators of pellet fuel heaters "may only burn pellets that have been graded under a licensing system" and the pellet fuel "must meet minimum requirements" as promulgated by EPA and specified in the owner's manual. Id. §§60.531(e)-(f); 60,5474(e)-(f). Thus, homeowners and other operators must meet emission standards which EPA has promulgated and explicitly defined as including the use of specific types of pellet fuel.
      In further trying to distinguish the wood heater NSPS from other NSPS, EPA represents that the "requirements on what pellets can be burned are designed to ensure that homeowners burn pellets comparable to what was used in certification tests" EPA then cites a 30-year-old Response to Comments ("RTC") document (for a rule that did not regulate pellet fuel) as the reason why such requirements and "fuel standardization" is necessary. But apart from a 1988 RTC being irrelevant to why EPA promulgated pellet fuel requirements in 2015 or with respect to how EPA may do so in in 2019, the cited RTC only addresses whether it is necessary to have a standardized test method for certification of stoves. All the quoted passages from the 1988 RTC involve only why it is important to have a comparable basis for testing stoves as against one another for certification testing. They only address the comparability of emission tests, not the rationale for the promulgation of an NSPS.
      In sum, EPA cannot distinguish pellet fuel requirements as being part of an "atypical" NSPS. As a matter of law, there is no such thing as a typical or atypical NSPS. Instead, rules promulgated pursuant to CAA §111 must apply to a source and be based on a determination of BSER. EPA's attempt to distinguish the 2015 rules applying to pellet fuels as solely related to certification testing and performance is frankly disingenuous. Neither the 2015 final rule, this proposed rule nor the 1988 RTC says anything about whether and how EPA has determined pellet fuel requirements as part of its BSER analysis, much less how it considered the mandatory elements of a BSER determination as applied to operators of pellet fuel stoves. Nor does EPA at any point include a justification for subjecting homeowners to possible CAA liability (a potential $37,500 fine for each occurrence) based simply on the operation of a pellet stove in a private residence (or examine viable alternatives thereto).
      EPA Reliance on Sierra Club v. EPA is Misplaced
      In an attempt to find legal support for its 2015 final standards and its proposal of Option 1 and 3, EPA includes a reference to Sierra Club v. EPA, 353 F. 3d 976 (D.C. Cir. 2004). But this case involved regulations promulgated under CAA §112, not CAA §111, the authority for this rulemaking. Thus, the court in Sierra Club was considering standards based on a determination of the "maximum achievable control technology," not the "best system of emission reduction" as required under CAA §111. While EPA concedes that the wood heater rule differs "in some respects" from other rules, the Agency simply cannot mix and match its statutory authorities and relevant precedent.
      In any event, Sierra Club involved use of operating parameters in lieu of requiring active monitoring in order to ensure compliance. Here, as the administrative record demonstrates, EPA did not evaluate any other system of emission reduction other than placing requirements on pellet fuel manufacturers and homeowners. While EPA decided that certification testing of all new stoves was impracticable, the requirement for the use of certain pellet fuel is not only a requirement for testing and certification of new stoves, but it is a central part of a CAA §111 emission standard. Fueling pellet fuel stoves only with certain certified pellets applies at all times of operation, including presumably start-up and shutdown of a stove. It is a permanent and ongoing requirement of complying with an NSPS. Sierra Club is thus further distinguishable on this basis.
      That requirements for pellet fuel are part of an emission standard versus a method of compliance is further demonstrated by EPA's insistence that pellet fuel requirements "are not based on CAA 111(h)." CAA 111(h) allows EPA to promulgate "design, equipment, work practice, or [an] operational standard, or a combination thereof" when it is not feasible to prescribe or enforce an NSPS. By denying that pellet fuel requirements are a CAA §111(h) standard, EPA must have determined that pellet fuel requirements are a CAA §111(b) standard. This further reinforces the interpretation that EPA's 2015 standards are not mere "compliance mechanisms" as EPA repeatedly tries to suggest, but rather an element of a CAA §111(b) standard.
      EPA Cannot Disclaim Responsibility to Conduct BSER Analysis
      EPA erroneously disclaims any need that the Agency consider cost and energy requirements when promulgating an NSPS standard. This is in direct contravention to EPA's analysis in other CAA rulemakings. "Under CAA section 111(a)(1), the EPA is required to take into account `the cost of achieving' the required emission reductions." "Under CAA section 111(a)(1), the EPA is required to take into account `energy requirements.'"
      EPA claims that "because PFI's comments [to the proposed 2014 rule] did not present any information that the pellet fuel requirements would have cost or energy impacts, and EPA is not aware of any such information, there was no need to take cost and energy impacts from pellet fuel requirements into account in determining what was achievable through BSER." But EPA cannot disclaim mandatory duties on the basis that the Agency was not "aware" of any such information. CAA §111 imposes an affirmative duty on EPA to investigate the extent of any such effects. EPA provides no evidence that it did so.
      In the 2014 proposed rule, EPA examined costs only associated with "the effectiveness of the proposed standards when considering the design life span of the appliances in residences." Thus, EPA effectively put on "regulatory blinders" and did not consider the cost impacts of the full range of its determination of BSER. EPA has not corrected this regulatory oversight in the current, proposed rule, which also lacks any inquiry into costs, energy impacts and other mandatory CAA §111(b) elements.
      Simply put, EPA cannot transfer an affirmative legal duty placed on the Agency to private sector entities regulated by its standards. EPA can also not claim that the Agency has no legal obligation to examine cost, energy and other mandatory impacts if it simply is unaware of information or chooses not to further investigate the impact of its regulatory determinations. This legal error, in of itself, makes the 2015 standards arbitrary and capricious.
      EPA Lacks Authority to Retain 2015 Pellet Fuel Standards or to Promulgate Amended Standards
      As outlined above, EPA never conducted a BSER analysis for its 2015 standards that followed the "four part test" for BSER, included a review of pellet fuel requirements, or conducted any analysis of the propriety of the obligations imposed on pellet fuel stove owners or operators. Nor did EPA examine any alternatives to the promulgation of requirements as now incorporated within 40 C.F.R. §§60.532(e)-(f), 60.5474(e)-(f). Instead, EPA promulgated final pellet fuel requirements in 2015 that were largely unchanged from those contained in the 2014 proposed rule -- except for the addition of additional requirements that had never been proposed or even discussed in the 2014 proposed rule.
      In the current proposed rule, EPA relies solely on comments filed in connection with the 2014 proposed rule, another document produced after the final rule in 2016 in response to litigation (i.e., the 2016 Remand of the Record) and select documents from 1988 that, on their face, do not analyze the BSER for pellet fuel stoves with reference to pellet fuel composition. Thus, EPA lacks authority to retain the 2015 standards or promulgate the revised standards it has proposed. And even if EPA had such authority, as demonstrated below [in comment 00069], EPA's "new" rationale is insufficient to support either current or revised standards. ...
      ...[B]ased on the comments above, the Agency cannot and should not promulgate either Option 1 or 3 that would retain all or part of the existing standards. The only supportable course of action is for EPA to eliminate pellet fuel regulations in their entirety.
Another commenter (0040, p.1) simply stated that  -

      Under the Clean Air Act section 111, the EPA is not supposed to establish pellet fuel requirements. Is the ruling even legal? ... Countries in Europe are giving consumers large incentives to use wood pellet fuel in order to reduce the country's emissions by using a renewable fuel. EPA is making it more expensive for consumers to use wood pellet fuel by adding unnecessary requirements and expensive certification programs for wood pellet fuel manufacturers. We would like to see the EPA change the NSPS ruling and drop the requirements and certifications listed for wood pellet fuel.

Response:
As explained in EPA's November 2016 Supplemental Response to Pellet Fuels Institute's Comments For Remand of the Record Based on Existing Docket for Residential Wood Heaters New Source Performance Standards, the EPA has the authority to impose minimum pellet requirements. As such, the Agency has decided to retain the list of prohibited fuels in 40 CFR 60.532(f) and 60.5474(f), which applies not only to pellets, but to all wood fuels burned in residential wood heating devices subject to this rule. However, the EPA has decided to remove the minimum requirements in subsections 1 through 7 listed under 40 CFR 60.532(e) under subpart AAA, and in 40 CFR 60.5474(e) under subpart QQQQ. We are retaining the prohibition that was stated in the eighth pellet fuel minimum requirement that pellet fuel must not contain any of the prohibited fuels in 40 CFR 60.532(f) and 40 CFR 60.5474(f). See response to comment 6.1.1.

Data show that pellet fuel quality assurance is necessary to ensure that the pellet fuel heaters operate properly and meet the certified emission limits.

7.1.2 Comment: EPA cannot prescribe a specific technology for compliance with a standard under CAA section 111 and doing so precludes innovation
One commenter (0069 pp.1, 8-9, 12-15) contended that  -
      PFI argued in 2015 and contends now that the EPA lacks legal authority to promulgate such standards. ... It also set a standard that is specifically prohibited under CAA §111(h) as a "particular system of technological control." ...
      EPA Standards Violate CAA §111(b)(5) and Preclude Innovation