[Federal Register Volume 85, Number 64 (Thursday, April 2, 2020)]
[Rules and Regulations]
[Pages 18448-18455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-05961]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 60

[EPA-HQ-OAR-2018-0195: FRL-10006-75-OAR]
RIN 2060-AU00


Standards of Performance for New Residential Wood Heaters, New 
Residential Hydronic Heaters and Forced-Air Furnaces

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: In this final action, the U.S. Environmental Protection Agency 
(EPA) is amending the 2015 New Source Performance Standards (NSPS) for 
New Residential Wood Heaters, New Residential Hydronic Heaters and 
Forced-Air Furnaces. This final action removes certain requirements 
from the rule for pellet fuel to meet certain specifications regarding 
density, size, and content, while retaining a provision in the rule 
that requires EPA-approved third-party organizations to specify minimum 
requirements as part of the pellet fuel certification process. Also, in 
this final action, the EPA is deciding not to make changes that it had 
proposed that would have allowed a sell-through period for Step 1-
certified residential wood heating devices that are manufactured before 
the May 2020 compliance date to be sold at retail after that date. 
Finally, this preamble provides a clarification of how the ``prohibited 
fuels'' provision applies to pallets.

DATES: The final rule is effective on April 2, 2020.

ADDRESSES: The EPA has established a docket for this action under 
Docket ID No. EPA-HQ-OAR-2018-0195. All documents in the docket are 
listed on the https://www.regulations.gov/ website. Although listed, 
some information is not publicly available, e.g., Confidential Business 
Information or other information whose disclosure is restricted by 
statute. Certain other material, such as copyrighted material, is not 
placed on the internet and will be publicly available only in hard copy 
form. Publicly available docket materials are available either 
electronically through https://www.regulations.gov/, or in hard copy at 
the EPA Docket Center, WJC West Building, Room 3334, 1301 Constitution 
Ave. NW, Washington, DC. The Public Reading Room hours of operation are 
8:30 a.m. to 4:30 p.m., Eastern Standard Time (EST), Monday through 
Friday. The telephone number for the Public Reading Room is (202) 566-
1744, and the telephone number for the EPA Docket Center is (202) 566-
1742.

FOR FURTHER INFORMATION CONTACT: For questions about this final action, 
contact Rochelle Boyd, Sector Policies and Programs Division (Mail Code 
D243-02), Office of Air Quality Planning and Standards, U.S. 
Environmental Protection Agency, Research Triangle Park, North Carolina 
27711; telephone number: (919) 541-1390; fax number: (919) 541-4991; 
and email address: [email protected]. For information about the 
applicability of the NSPS to a particular entity, contact Rafael 
Sanchez, Office of Enforcement and Compliance Assurance, U.S. 
Environmental Protection Agency, WJC South Building (Mail Code 2227A), 
1200 Pennsylvania Avenue NW, Washington, DC 20460; telephone number: 
(202) 564-7028; and email address: [email protected].

SUPPLEMENTARY INFORMATION: 
    Preamble acronyms and abbreviations. We use multiple acronyms and 
terms in this preamble. While this list may not be exhaustive, to ease 
the reading of this preamble and for reference purposes, the EPA 
defines the following terms and acronyms here:

CAA Clean Air Act
CFR Code of Federal Regulations
CRA Congressional Review Act
EPA Environmental Protection Agency
NAICS North American Industry Classification System
NPRM notice of proposed rulemaking
NSPS New Source Performance Standards
NTTAA National Technology Transfer and Advancement Act
OMB Office of Management and Budget
PFI Pellet Fuels Institute
PRA Paperwork Reduction Act
RFA Regulatory Flexibility Act
RTC Response to Comment
RWH Residential Wood Heater
UMRA Unfunded Mandates Reform Act
U.S.C. United States Code

    Organization of this document. The information in this preamble is 
organized as follows:

I. General Information
    A. Does this action apply to me?
    B. Where can I get a copy of this document and other related 
information?
    C. Judicial Review
II. Background
III. Public Comments
IV. What is included in the final rule?
    A. Pellet Fuel Minimum Requirements
    B. Decision Regarding Promulgating New Sell-Through Provisions
V. Summary of Cost, Environmental, and Economic Impacts
    A. What are the affected facilities?
    B. What are the air quality impacts?
    C. What are the cost and economic impacts?
    D. What are the benefits?
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Executive Order 13771: Reducing Regulations and Controlling 
Regulatory Costs
    C. Paperwork Reduction Act (PRA)
    D. Regulatory Flexibility Act (RFA)
    E. Unfunded Mandates Reform Act (UMRA)
    F. Executive Order 13132: Federalism
    G. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    H. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    I. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    J. National Technology Transfer and Advancement Act (NTTAA)
    K. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    L. Congressional Review Act (CRA)

[[Page 18449]]

I. General Information

A. Does this action apply to me?

    Regulated entities. Categories and entities potentially regulated 
by this action are shown in Table 1 of this preamble.

                            Table 1--Source Categories Affected by This Final Action
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                Source category                 NAICS code \1\           Examples of regulated entities
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Residential Wood Heating......................          333414  Manufacturers, owners, and operators of wood
                                                                 heaters, pellet heaters/stoves, and hydronic
                                                                 heaters.
                                                        333415  Manufacturers, owners, and operators of forced-
                                                                 air furnaces.
Testing Laboratories..........................          541380  Testers of wood heaters, pellet heaters/stoves,
                                                                 and hydronic heaters.
Retailers.....................................          423730  Warm air heating and air-conditioning equipment
                                                                 and supplies merchant wholesalers.
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\1\ North American Industry Classification System.

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely to be regulated by this 
final action for the source category listed. This table lists the types 
of entities that the EPA is now aware could potentially be affected by 
this action. Other types of entities not listed in the table could also 
be regulated. To determine whether you are regulated by this action, 
you should carefully examine the applicability criteria found in the 
final rule. If you have questions regarding the applicability of this 
action to a particular entity, consult the person listed in the FOR 
FURTHER INFORMATION CONTACT section of this preamble, your delegated 
authority, or your EPA Regional representative listed in the General 
Provisions at 40 CFR 60.4.

B. Where can I get a copy of this document and other related 
information?

    In addition to being available in the docket, an electronic copy of 
this final action is available on the internet. Following signature by 
the EPA Administrator, the EPA will post a copy of this final action at 
https://www.epa.gov/residential-wood-heaters. Following publication in 
the Federal Register, the EPA will post the Federal Register version of 
the final action and key technical documents at this same website.

C. Judicial Review

    Under section 307(b)(1) of the Clean Air Act (CAA), judicial review 
of this final rule is available only by filing a petition for review in 
the United States Court of Appeals for the District of Columbia Circuit 
by June 1, 2020. Moreover, under section 307(b)(2) of the CAA, the 
requirements established by this final rule may not be challenged 
separately in any civil or criminal proceedings brought by the EPA to 
enforce these requirements. Section 307(d)(7)(B) of the CAA further 
provides that ``[o]nly an objection to a rule or procedure which was 
raised with reasonable specificity during the period for public comment 
(including any public hearing) may be raised during judicial review.'' 
This section also provides a mechanism for the EPA to convene a 
proceeding for reconsideration, ``[i]f the person raising an objection 
can demonstrate to the EPA that it was impracticable to raise such 
objection within [the period for public comment] or if the grounds for 
such objection arose after the period for public comment (but within 
the time specified for judicial review) and if such objection is of 
central relevance to the outcome of the rule.'' Any person seeking to 
make such a demonstration to us should submit a Petition for 
Reconsideration to the Office of the Administrator, U.S. EPA, Room 
3000, WJC South Building, 1200 Pennsylvania Ave. NW, Washington, DC 
20460, with a copy to both the person(s) listed in the preceding FOR 
FURTHER INFORMATION CONTACT section, and the Associate General Counsel 
for the Air and Radiation Law Office, Office of General Counsel (Mail 
Code 2344A), U.S. EPA, 1200 Pennsylvania Ave. NW, Washington, DC 20460.

II. Background

    The statutory background for the Residential Wood Heaters (RWH) 
source category is provided in the proposed rule for this final action 
(83 FR 61577, November 30, 2018) and will not be repeated here. 
Residential wood heaters were originally listed under CAA section 
111(b) on February 18, 1987 (52 FR 5065). Under section 111 of the 
CAA,''Standards of Performance for New Stationary Sources,'' the EPA 
lists categories of sources that, in the EPA's judgment, cause or 
contribute significantly to air pollution, which may reasonably be 
anticipated to endanger public health or welfare pursuant to CAA 
section 111(b)(1)(A), and then promulgates federal standards of 
performance for new sources within such categories under CAA section 
111(b)(1)(B). The original NSPS for RWH (40 CFR part 60, subpart AAA) 
was proposed on February 18, 1987 (52 FR 4994), and promulgated on 
February 26, 1988 (53 FR 5859) (1988 RWH NSPS). The 1988 RWH NSPS 
focused on adjustable burn rate wood heaters, including cord wood 
heaters and some pellet fuel heaters. The NSPS was amended in 1998 to 
address an issue related to certification testing (63 FR 64869).
    On February 3, 2014, the EPA proposed revisions to the NSPS (79 FR 
6330) and promulgated revisions on March 16, 2015 (80 FR 13672) (2015 
RWH NSPS). The final 2015 RWH NSPS updated the 1988 RWH NSPS emission 
limits, eliminated exemptions over a broad suite of wood heating 
devices,\1\ and updated test methods and the certification process. The 
2015 RWH NSPS broadened the applicability of the 1988 RWH NSPS to 
specifically include all single burn rate wood heaters and all pellet 
fuel heaters. The 2015 RWH NSPS also added a new subpart (40 CFR part 
60, subpart QQQQ) that covers new wood burning hydronic heaters and new 
forced-air furnaces. Hydronic heaters and forced-air furnaces represent 
a small portion of total U.S. wood heating device manufactured output 
in recent years. The market share for each of the categories considered 
in this final rule are as follows: Wood and pellet stoves were 96 
percent, hydronic heaters were less than 1 percent and forced air 
furnaces were 3 percent of the total

[[Page 18450]]

market in 2017-2019 in terms of units sold.\2\
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    \1\ As used in this preamble, the term ``wood heaters'' refers 
to all appliances covered in 40 CFR part 60, subpart AAA, and the 
terms ``hydronic heaters'' and ``forced-air furnaces'' refer to 
appliances covered in 40 CFR part 60, subpart QQQQ. Also, in this 
action, the term ``wood heating device(s)'' refers to all units 
regulated by the 2015 RWH NSPS (40 CFR part 60, subparts AAA and 
QQQQ).
    \2\ Wood Appliance Sales Summary, dated March 10, 2020, is 
available in the docket for this final action (https://www.regulations.gov/docket?D=EPA-HQ-OAR-2018-0195).
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    The 2015 RWH NSPS also directs owners of pellet fuel or wood chip 
heaters to burn only fuel that meet certain minimum requirements. In 
the 2015 final rule preamble (80 FR 13682), the EPA stated: ``For 
pellet-fueled appliances, operation according to the owner's manual 
includes operation only with pellet fuels that are specified in the 
owner's manual. Manufacturers must only specify graded and licensed 
pellets that meet certain minimum requirements.''
    The RWH source category is different from most NSPS source 
categories in that it regulates mass-produced residential consumer 
appliance products, rather than industrial facilities. Thus, important 
elements in determining the best system of emission reduction as 
specified in CAA section 111(a)(1) include the costs and environmental 
impacts on consumers of delaying production while wood heating devices 
with those systems are designed, tested, field evaluated, and 
certified. Section 111(b)(1)(B) of the CAA requires that the standards 
be effective upon the effective date of the NSPS. Considering these 
factors, in the 2015 RWH NSPS final rule, the EPA took a two-step 
compliance approach, in which certain Step 1 standards became effective 
in May 2015 and more stringent Step 2 standards would become effective 
5 years later, in May 2020.
    As the May 15, 2020, Step 2 compliance date approached, 
representatives from the manufacturing and retail industry expressed 
concern that a substantial number of retailers have either limited or 
stopped their purchases of Step 1-certified wood heating devices from 
the manufacturers due to concerns they may not be able to sell these 
devices before the May 2020 Step 2 compliance date and would, 
therefore, be left with unsalable inventory. Manufacturers also 
expressed concern that these reductions in sales would result in 
reduced earnings needed to develop Step 2-compliant model lines.
    On November 30, 2018, the EPA proposed (83 FR 61574) to amend 40 
CFR part 60, subpart QQQQ, by allowing a ``sell-through'' provision to 
give retailers additional time after the May 2020 effective date of the 
Step 2 standard to sell Step 1-compliant hydronic heaters and forced-
air furnaces remaining in their inventory. The EPA also took comment on 
whether to amend 40 CFR part 60, subpart AAA for wood heaters and 
pellet fuel heaters to provide a similar sell-through period. In 
addition, the EPA took comment on whether the minimum pellet fuel 
requirements in the 2015 RWH NSPS should be retained or revised.

III. Public Comments

    Public comments on the 2018 proposed rule and the EPA's responses 
to these comments are addressed in a separate Response to Comment (RTC) 
document, available in the docket for this action at Docket ID No. EPA-
HQ-OAR-2018-0195.

IV. What is included in the final rule?

A. Pellet Fuel Minimum Requirements

    This section explains the final actions being taken and the 
rationale for these actions.
1. Final Requirements for Pellet Fuel Burned in Residential Wood 
Heating Devices
    Certification tests for pellet-burning wood heating devices require 
that pellet fuels be made of wood with certain minimum quality 
requirements to ensure consistent operation for every certification 
test. These requirements have the added benefit to manufacturers of 
minimizing emissions during certification testing.
    The 2015 RWH NSPS requires owners of wood heating devices that are 
certified to burn pellet fuels to burn only pellets that have been 
specified in the owner's manual and graded under a licensing agreement 
with a third-party organization approved by the EPA. The Pellet Fuels 
Institute (PFI), ENplus, and CANplus are the current EPA-approved 
third-party organizations for this purpose (additional organizations 
may apply to the Administrator for approval). See the pellet fuel 
requirements stated in 40 CFR 60.532(e) and 40 CFR 60.5474(e). Based on 
these requirements, the EPA concluded that a certified pellet fuel 
heater's performance in a consumer's home would be consistent with the 
heater's performance in the laboratory using the EPA's certification 
test methods. Under the provisions of the 2015 RWH NSPS, a pellet 
manufacturer is not obligated to produce pellets that meet the pellet 
fuel requirements, but operators and manufacturers of pellet fuel 
heaters in the United States are prohibited from using pellets that do 
not meet the pellet fuel requirements. The pellet fuel requirements, in 
addition to ensuring consistency with certification testing, were 
intended to safeguard against emissions hazardous to human health and 
the environment when the pellets are burned in pellet fuel heaters 
operated in the home by consumers.
    Since publication of the 2015 RWH NSPS, interested parties have 
raised issues concerning the pellet fuel requirements. First, these 
parties have questioned the EPA's authority to promulgate the pellet 
fuel requirements. The comments and issues related to the EPA's 
authority to promulgate the pellet fuel requirements are summarized and 
addressed in the RTC document available at Docket ID No. EPA-HQ-OAR-
2018-0195. The EPA has considered these comments and concluded that the 
Agency has the authority to set pellet fuel requirements for the 
reasons discussed in the RTC.
    Second, interested parties have questioned the need for the pellet 
fuel requirements (because they are already part of the requirements 
imposed by the third-party organizations that must grade pellets under 
40 CFR 60.532(e) and 40 CFR 60.5474(e)) and commented that the specific 
minimum fuel requirements will inhibit innovations that may improve 
pellet fuel heater operation and decrease emissions.
    After reviewing public comments on these issues, the EPA has 
determined 40 CFR part 60, subparts AAA and QQQQ, should be revised to 
delete the following seven pellet fuel minimum requirements which are 
currently found at 40 CFR 60.532(e) and 40 CFR 60.5474(e):
    1. Density: Consistent hardness and energy content with a minimum 
density of 38 pounds/cubic foot;
    2. Dimensions: Maximum length of 1.5 inches and diameter between 
0.230 and 0.285 inches;
    3. Inorganic fines: Less than or equal to 1 percent;
    4. Chlorides: Less than or equal to 300 parts per million by 
weight;
    5. Ash content: No more than 2 percent;
    6. Contains no demolition or construction waste; and
    7. Trace metals: Less than 100 milligrams per kilogram.
    The EPA is retaining the prohibition that was stated in the eighth 
pellet fuel minimum requirement that stated pellet fuel must not 
contain any of the prohibited fuels in 40 CFR 60.532(f) and 40 CFR 
60.5474(f). 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;

[[Page 18451]]

    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.
    The EPA has decided to leave the prohibited fuels list in the 
regulation for clarity and continuity as these materials are referred 
to in the provisions regarding ``prohibited fuel types'' in 40 CFR 
60.532(f) and 60.5474(f). Unlike the requirements in 40 CFR 
60.532(e)(1) through (7) and 60.5474(e)(1) through (7) that we are 
removing, which regulated the characteristics of the pellet fuel, this 
prohibited fuels list impacts all fuel types used in all wood heating 
devices. Retaining this provision assures that these specified 
materials will be not be used as a source of fuel and prevents the 
burning of trash, plastics, yard waste, and other unsuitable materials. 
For most of the items on the prohibited fuels list, it is widely-
recognized and widely-accepted that the burning of such material 
increases emissions regardless of the type of wood heating device. 
Moreover, the burning of anything not included in the warranty and 
owner's manual can damage a stove and thereby cause increased 
emissions, as well as potential safety issues, because the stove is 
unable to perform as designed. It should also be noted that the PFI's 
Quality Assurance/Quality Control Handbook recognizes that the 2015 RWH 
NSPS ``. . . contain provisions regarding ``prohibited fuel types'' in 
40 CFR 60.532(f) and 60.5474(f). To the extent that these requirements 
apply to pellet fuel manufacturers, these materials are considered 
prohibited for the purpose of the PFI Residential/Commercial Densified 
Fuel Standards Program.'' \3\ Finally, as discussed above, one purpose 
that is served in removing the seven minimum requirements discussed 
above is to provide flexibility for innovation. Keeping the requirement 
that pellets not contain any of the prohibited fuels does not inhibit 
innovation and ensures that these materials are not included in 
pellets.
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    \3\ Pellet Fuels Institute Residential/Commercial Densified Fuel 
QA/QC Handbook, Section 6.7, Status November 9, 2018.
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    The EPA is implementing this prohibition 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).
    Finally, interested persons have asked questions about how the 
prohibitions in 40 CFR 60.532(f)(12) and 40 CFR 60.5474(f)(12) against 
``unseasoned wood'' (which is defined in 40 CFR 60.531 and 40 CFR 
60.5473 as wood with an average moisture content at or above 20 
percent) applies to pellet fuel. The EPA is clarifying that the 
determination of moisture content is made at the end of the 
manufacturing process, and the prohibition on unseasoned wood in 40 CFR 
60.532(f)(12) and 40 CFR 60.5474(f)(12) does not prohibit the use of 
unseasoned wood earlier in the pellet fuel manufacturing process. The 
EPA notes that the approved third-party organizations determine 
moisture content as part of their examination and grading of the pellet 
fuels. For example, PFI's current Standard Specification for 
Residential/Commercial Densified Fuel requires a limit of <=8.0 percent 
moisture for a premium pellet.\4\
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    \4\ PFI's November 2018 pellet fuel specifications are available 
in the docket for this final action (https://www.regulations.gov/docket?D=EPA-HQ-OAR-2018-0195) and at https://www.pelletheat.org/assets/docs/2018/2018_PFI_Standard%20Specification.pdf.
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2. Rationale for the Final Pellet Fuel Requirements
    As explained in the 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,\5\ the EPA has the authority to impose minimum pellet fuel 
requirements. As such, for the reasons stated above, the Agency has 
decided to retain the list of prohibited fuels in 40 CFR 60.532(f) and 
40 CFR 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 first seven requirements 
currently listed in 40 CFR 60.532(e)(1) through (7) and in 40 CFR 
60.5474(e)(1)-(7). The Agency has made this determination for the 
following reasons.
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    \5\ The EPA's November 2016 Supplemental Response to Pellet Fuel 
Institute's Comments for Remand of the Record Based on Existing 
Docket for Residential Wood Heaters New Source Performance Standards 
is available on Regulations.gov in the docket for the 2015 RWH NSPS 
at https://www.regulations.gov/document?D=EPA-HQ-OAR-2009-0734-1805.
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    First, minimum requirements/specifications are already part of 
PFI's and other third-parties' requirements and will, therefore, be 
imposed by the retained rule requirement that the pellets be certified 
by PFI or another EPA-approved third-party. For example, PFI's current 
Standard Specifications for Residential/Commercial Densified Fuel 
includes requirements on density, dimensions, fines, chlorides, ash, 
and trace metals that are similar to those of the 2015 RWH NSPS.\6\ 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 40 CFR 60.5474(f), which the Agency is 
not altering in this action. The EPA recognizes that PFI and the other 
approved third-party organizations might revise their current 
specifications to alter or remove these requirements. On that point, 
the EPA notes that, first, the third-party organizations had pellet 
fuel specifications prior to the EPA's 2015 promulgation of the minimum 
pellet fuel requirements (and, in fact, the EPA's 2015 minimum 
requirements relied heavily on the third-party specifications). 
Further, the third-party organizations' specifications now are as 
protective as the pellet fuel specifications that the EPA promulgated 
in 2015 and, although the EPA recognizes that the third-party 
organizations may revise their specifications to reflect innovations 
(as discussed below), there is no reason to conclude that revisions by 
the third-party organizations will make their specifications less 
protective because of the EPA's action to remove the minimum 
requirements in 40 CFR 60.532(e) and 40 CFR 60.5474(e).\7\

[[Page 18452]]

Furthermore, if one or more of the third-party organizations were to 
revise their specifications in a way that could lead to increases in 
emissions, the EPA could conduct a rulemaking to re-impose some or all 
of the minimum requirements that we are taking out in this final rule 
(and could add additional minimum requirements that are not currently 
in the rule).
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    \6\ PFI's November 2018 pellet specifications are available in 
the docket for this final action (https://www.regulations.gov/docket?D=EPA-HQ-OAR-2018-0195) and at https://www.pelletheat.org/assets/docs/2018/2018_PFI_Standard%20Specification.pdf.
    \7\ The EPA acknowledges that it previously held the view that 
having the minimum requirements stated in the regulatory text was 
needed to prevent them from changing without EPA action. See EPA's 
November 2016 Supplemental Response to Pellet Fuel Institute's 
Comments for Remand of the Record Based on Existing Docket for 
Residential Wood Heaters New Source Performance Standards (Docket ID 
Item No. EPA-HQ-OAR-2009-0734-1805), at 8. For the reasons discussed 
above in section IV.A, the EPA's policy view on this matter has 
changed.
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    Second, as noted by multiple commenters, the minimum pellet fuel 
requirements serve 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. The removal of the minimum requirements from 40 CFR 
60.532(e)(1) through (7) and 40 CFR 60.5474(e)(1) through (7) will 
allow third-party organizations to update their pellet fuel 
specifications 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. Thus, this final 
action will ensure that the RWH regulations are protective, and at the 
same time do not unnecessarily preclude, inhibit, or delay 
technological innovation.
3. Clarification Concerning the Burning of Pallets and the Use of 
Pallets in Manufacturing Pellet Fuel
    Interested parties have asked the EPA to clarify the scope of the 
prohibition on ``pallets'' in 40 CFR 60.532(f)(9). Although the EPA, in 
this final action, is not making any change to the regulatory text 
concerning pallets, in this preamble, we are clarifying two aspects of 
how the prohibited fuels list applies to: (a) The burning of pallets; 
and (b) the use of pallets in the manufacture of pellet fuel.
    First, the prohibition on ``pallets'' in 40 CFR 60.532(f)(9) bans 
only the use of pressure-treated pallets, because ``pallets'' is part 
of the phrase ``pressure-treated wood or pallets'' and the term 
``pressure-treated'' is intended to apply both to ``wood'' and to 
``pallets.''
    Second, pallets that are 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 specific subsection that bans the contaminating material. For 
example, 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).

B. Decision Regarding Promulgating New Sell-Through Provisions

    Based on the comments and data received on the November 30, 2018, 
proposal (83 FR 61574), the EPA has decided to take final action on the 
proposed sell-through provisions by not promulgating such provisions. 
To justify a sell-through, the Agency first requires sufficient data 
from manufacturers and retailers demonstrating why a sell-through is 
needed. Insufficient data were provided by manufacturers and retailers 
to justify a sell-through, especially in light of the fact that in 
every residential wood heating device category, there are model lines 
certified to meet the Step 2 standards that are already available, and 
have been available for considerable time, which supports the 
conclusion that the Step 2 standards were achievable. For example, the 
record shows that, as of March 2018 (over 2 years before the May 2020 
Step 2 deadline), there were Step 2-certified model lines available for 
each category of wood heating device (83 FR 61578). According to the 
EPA Certified Wood Heater Database,\8\ as of March 5 2020, there were 
196 Step 2-certified wood heater model lines and pellet fuel heater 
model lines compared with 405 Step 1-certified model lines. This means 
that Step 2 model lines represented 33 percent of all certified wood 
heater and pellet fuel heater model lines. Likewise, as of March 5, 
2020, there were 13 Step 2-certified hydronic heater model lines 
compared with 99 Step 1-certified hydronic heater model lines (or 12 
percent). An additional 12 of the 99 Step 1-certified hydronic heater 
model lines would meet the Step 2 limit, but need to re-test to be 
certified. Assuming all these model lines are certified, Step 2 
hydronic heater model lines will represent 22 percent of all certified 
model lines. Finally, as of March 5, 2020, there were two Step 2-
certified forced-air furnace model lines compared with 18 Step 1-
certified model lines (or 10 percent).
---------------------------------------------------------------------------

    \8\ The EPA Certified Wood Heater Database is available at 
https://www.epa.gov/compliance/epa-certified-wood-heater-database.
---------------------------------------------------------------------------

    By contrast, manufacturers did not provide the Agency with 
information showing that any manufacturers have tried but failed to 
develop Step 2 model lines. Thus, there is no support in the record 
showing that manufacturers could not develop Step 2 models in time to: 
(1) Have Step 2 models for sale as retailers reduced or discontinued 
their purchase of Step 1 models; and (2) allow for manufacturers and 
retailers to replace their inventories of Step 1 models with Step 2 
models in advance of the May 2020 deadline. In short, the record shows 
that some manufacturers have tried and succeeded in developing Step 2 
model lines but contains no adequately supported examples of 
manufacturers that have tried and failed to develop Step 2 model lines.
    Finally, it is important to note that manufacturers have had since 
May 2015 to develop Step 2-compliant wood heating devices, and that 
retailers have had since May 2015 to manage their inventory of Step 1-
compliant wood heating devices and replace them with Step 2-compliant 
wood heating devices ahead of the May 2020 deadline. The record shows 
that Step 2-compliant model lines have been available to retailers for 
a considerable amount of time. For example, there were wood heater, 
pellet fuel heater, hydronic heater, and forced-air furnace models that 
were Step 2-certified starting in 2017 \9\ and, as of March 20, 2018, 
more than 2 years before the May 2020 compliance deadline, there were 
78 wood heater model lines (44 pellet fuel heaters and 34 wood 
heaters), nine hydronic heater model lines and one forced-air furnace 
model line certified to Step 2 (83 FR 61578). Further, some model lines 
have emissions significantly below the Step 2 standard, showing not 
only that it is possible to achieve the Step 2 standard but also that 
manufacturers can develop models well below the Step 2 standard.\10\ 
Based on this record, the Agency has insufficient grounds to conclude 
that a sell-through period is needed and to change the established NSPS 
and allow a sell-through.
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    \9\ See the EPA list of certified room heaters and central 
heaters at https://cfpub.epa.gov/oarweb/woodstove/index.cfm?fuseaction=app.about.
    \10\ See id., which shows a significant number of Step 2-
certified models with emission rates well below the Step 2 standard 
for both room heaters and central heaters.
---------------------------------------------------------------------------

    Regarding the data necessary to justify a sell-through, the EPA 
solicited this information in the notice of proposed rulemaking (NPRM) 
by posing multiple

[[Page 18453]]

questions to stakeholders while requesting comment on the proposed 2-
year sell-through, including, but not limited to, the following 
queries:
     Whether retailers are currently declining to purchase Step 
1-compliant wood heating devices and how widespread is this reduction 
in purchases;
     The cost or other impacts that retailers could have on 
manufacturers if they decline to purchase Step 1-compliant wood heating 
devices;
     The typical period of time between when a retailer 
purchases a wood heating device and when the device is sold to the 
consumer;
     What period of time would be sufficient for retailers to 
sell their inventory of Step 1-compliant heaters;
     The number of Step 1-compliant wood heating devices that 
are currently in production and the number that are being designed for 
Step 2 compliance that have not yet been EPA-certified;
     The number of Step 2 wood heating devices that are 
currently Step 2-certified; and
     How far in advance of the current May 2020 Step 2 
compliance date manufacturers will need to submit their EPA 
certification applications to meet the standard as well as manufacture, 
market, and distribute their products without disruption to their 
business.
    While manufacturers and retailers made qualitative statements 
asserting economic harm from stranded inventory if a retail sell-
through was not allowed, these statements were not supported by 
contextual data. In fact, commenters did not submit sufficient data to 
the Agency in response to the NPRM's solicitations, and in particular, 
provided insufficient data showing a percentage decrease in sales 
approaching 2020 relative to previous years and/or the percentage of 
Step 1 inventory that would be stranded without a sell-through since 
the promulgation of the 2015 RWH NSPS.
    As we explained previously, as of March 5, 2020, there were two 
Step 2-certified forced-air furnace model lines. Because both model 
lines tested for certification using an (Agency-approved) alternative 
test method, the Agency undertook a separate action making this 
alternative method broadly applicable to model lines that are 
electronically or thermostatically controlled.\11\ This means that 
forced-air furnace manufacturers may use this test method without 
submitting a model-specific rationale to the EPA requesting permission 
to use the method. We expect that this broadly applicable alternative 
test method for electronically or thermostatically controlled model 
lines will allow more forced-air furnaces--both small and large model 
lines--to certify to the Step 2 standard and become available to 
consumers in the near term.
---------------------------------------------------------------------------

    \11\ See https://www.epa.gov/emc/broadly-applicable-approved-alternative-test-methods#ATLs for ALT-134, available at: https://www.epa.gov/sites/production/files/2019-08/documents/l.s._bilodeau_steel_product_manufacturing_8-19-2019_0.pdf.
---------------------------------------------------------------------------

    In addition, we note that, as mentioned by several commenters, the 
estimated monetized forgone benefits of the proposed sell-through 
exceed the estimated cost savings to manufacturers and retailers by a 
factor of 10 to 20. As shown in the supplemental Regulatory Impact 
Analysis for the proposal, the annual monetized fine particulate 
matter-related forgone health benefits of the proposed amendments, from 
2019-2022, were $100 million to $230 million (2016 dollars) at a 3-
percent discount rate as compared to annual cost savings to 
manufacturers and retailers estimated at $8.3 million (2016 dollars). 
These large net forgone benefits (forgone benefits-cost savings) were 
another consideration in our decision to not change the 2015 RWH NSPS 
to allow a sell-through period with respect to Step 2. Additional 
information and assessment regarding potential impacts are provided in 
a support document titled: A Qualitative Assessment of Impacts of Not 
Including a Sell-Through for Wood Heating Devices, Wood Heaters NSPS--
Draft Support Document--by EPA/OAQPS technical staff dated. March 10, 
2020.

V. Summary of Cost, Environmental, and Economic Impacts

A. What are the affected facilities?

    The baseline for measuring quantifiable impacts to affected 
facilities is the 2015 RWH NSPS (80 FR 13672). No impacts are 
anticipated against this baseline because we are not changing the 
compliance deadline required by the 2015 RWH NSPS. We also do not 
anticipate any quantifiable impacts from eliminating the seven pellet 
fuel requirements in 40 CFR 60.532(e) and 40 CFR 60.5474(e) because 
minimum requirements/specifications are already part of third-parties' 
requirements and will, therefore, be imposed by the retained rule 
requirement that the pellets be certified by an EPA-approved third-
party. However, the change to the pellet fuel minimum requirements will 
revise the regulatory requirements to which manufacturers, testing 
labs, owners, and operators of pellet-burning wood heaters, pellet-
burning hydronic heaters, and pellet-burning forced air furnaces are 
subject.

B. What are the air quality impacts?

    This final action makes a clarification to the prohibited fuel 
types, removes from the rule requirements for pellet fuel to meet 
certain minimum requirements regarding density, size, and content, and 
instead relies on EPA-approved third-party organizations to specify 
minimum requirements as part of the pellet fuel certification process. 
As discussed in section IV.A.2 of this preamble, we anticipate that the 
EPA-approved third-party organizations will continue to specify the 
same or similar minimum requirements as required in the 2015 RWH NSPS. 
The EPA will continue to monitor these requirements to determine if any 
changes to the regulations are needed. In addition to our review of 
these requirements, as part of our ongoing collaborations with many 
stakeholders (including states, citizen groups, wood heater 
manufacturers, and other industry groups), we expect that any concerns 
related to third-party requirements would be brought promptly to the 
EPA's attention. Also, in this final action, the EPA is deciding not to 
finalize changes that would have allowed a sell-through period for Step 
1-certified residential wood heating devices that are manufactured 
before the May 2020 compliance date to be sold at retail after that 
date. In this final action, the Agency is not making any change or 
otherwise taking any final action with respect to the original 
compliance schedule for both manufacturers and retailers set forth in 
the 2015 RWH NSPS (80 FR 13672). Accordingly, there are no air quality 
impacts associated with this final action. The air quality impacts 
associated with the RWH NSPS were discussed in detail in the March 16, 
2015, final RWH NSPS and supporting documentation.

C. What are the cost and economic impacts?

    We did not estimate the cost and economic impacts of the change in 
pellet fuel requirements, because we do not anticipate any quantifiable 
cost or economic impacts to affected facilities. Manufacturers, testing 
labs, owners, and operators of pellet-burning wood heaters, pellet-
burning hydronic heaters, and pellet-burning forced air furnaces will 
still be required to burn only pellets graded under a licensing 
agreement with an EPA-approved third-party.

D. What are the benefits?

    We did not estimate the benefits of the change in pellet fuel 
requirements, because we expect the benefits, forgone or otherwise, to 
be minimal. Such

[[Page 18454]]

benefits are dependent on emissions reduction changes associated with 
this final action and, as discussed in section V.B of this preamble, we 
do not anticipate emissions reduction changes relative to the 2015 RWH 
NSPS (80 FR 13672).

VI. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive Orders 
can be found at: https://www.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is a significant regulatory action that was submitted 
to the Office of Management and Budget (OMB) for review because it 
raises novel legal and policy issues. Any changes made in response to 
OMB recommendations have been documented in the docket.

B. Executive Order 13771: Reducing Regulations and Controlling 
Regulatory Costs

    This action is not expected to be subject to Executive Order 13771 
because this final rule is expected to result in no more than de 
minimis costs or savings.

C. Paperwork Reduction Act (PRA)

    This action does not impose any new information collection burden 
under the PRA. OMB has previously approved the information collection 
activities in the existing regulations and has assigned OMB control 
number 2060-0161 for 40 CFR part 60, subpart AAA, and OMB control 
number 2060-0693 for 40 CFR part 60, subpart QQQQ. This action is 
believed to result in no changes to the information collection 
requirements of the 2015 RWH NSPS, so that the information collection 
estimate of project cost and hour burden from the 2015 final rule have 
not been revised.

D. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. In 
making this determination, the impact of concern is any significant 
adverse economic impact on small entities. An agency may certify that a 
rule will not have a significant economic impact on a substantial 
number of small entities if the rule relieves regulatory burden, has no 
net burden, or otherwise has a positive economic effect on the small 
entities subject to the rule. This final rule will not impose any new 
requirements on any entities because it does not impose any additional 
regulatory requirements relative to those specified in the 2015 RWH 
NSPS. We have, therefore, concluded that this action will have no net 
regulatory burden for all directly regulated small entities.

E. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in 
UMRA, 2 U.S.C. 1531-1538. The action imposes no enforceable duty on any 
state, local, or tribal governments or the private sector.

F. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government.

G. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications as specified in 
Executive Order 13175. This rule will not impose any requirements on 
tribal governments. Thus, Executive Order 13175 does not apply to this 
action. Consistent with the EPA Policy on Consultation and Coordination 
with Indian Tribes, the EPA will provide outreach through the National 
Tribal Air Association and will offer consultation to tribal officials.

H. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    This action is not subject to Executive Order 13045 because it is 
not economically significant as defined in Executive Order 12866, and 
because the EPA does not believe the environmental health or safety 
risks addressed by this action present a disproportionate risk to 
children. Because this final action will not result in air quality 
impacts relative to the 2015 RWH NSPS, as noted in section V.B of this 
preamble, we do not anticipate a change in risk to anyone, including 
children. Further, as noted in the preamble to the 2015 RWH NSPS, the 
EPA does not believe that the environmental health risks or safety 
risks addressed by the 2015 RWH NSPS presents a disproportionate risk 
to children based on distributional assessments of effects from 
residential wood smoke emissions (see 80 FR 13700).

I. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This action is not a ``significant energy action'' because it is 
not likely to have a significant adverse effect on the supply, 
distribution, or use of energy.

J. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

K. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    The EPA believes that this action does not have disproportionately 
high and adverse human health or environmental effects on minority 
populations, low-income populations, or indigenous peoples, as 
specified in Executive Order 12898 (59 FR 7629, February 16, 1994). As 
noted in the preamble to the 2015 RWH NSPS, the EPA believes that the 
human health or environmental risk addressed by the 2015 RWH NSPS will 
not have potential disproportionately high and adverse human health or 
environmental effects on minority, low-income, or indigenous 
populations from residential wood smoke emissions (see 80 FR 13701). 
Because this final action does not have air quality impacts relative to 
the 2015 RWH NSPS, as discussed in section V.B of this preamble, it 
will not alter the EPA's prior findings that, on a nationwide basis, 
cancer risks due to residential wood smoke emissions among 
disadvantaged population groups generally are lower than the risks for 
the general population due to residential wood smoke emissions.

L. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule 
report to each House of the Congress and to the Comptroller General of 
the United States. This action is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

List of Subjects in 40 CFR Part 60

    Environmental protection, Administrative Practice and Procedure.

    Dated: March 11, 2020.
Andrew R. Wheeler,
Administrator.

    For the reasons set forth in the preamble, the EPA amends 40 CFR 
part 60 as follows:

[[Page 18455]]

PART 60--STANDARDS OF PERFORMANCE FOR NEW STATIONARY SOURCES

0
1. The authority citation for part 60 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart AAA--Standards of Performance for New Residential Wood 
Heaters

0
2. Section 60.532 is amended by revising paragraph (e) to read as 
follows:


Sec.  60.532  What standards and associated requirements must I meet 
and by when?

* * * * *
    (e) Pellet fuel requirements. Operators of wood heaters that are 
certified to burn pellet fuels may burn only pellets that have been 
specified in the owner's manual and graded under a licensing agreement 
with a third-party organization approved by the EPA (including a 
certification by the third-party organization that the pellets do not 
contain, and are not manufactured from, any of the prohibited fuels in 
paragraph (f) of this section). The Pellet Fuels Institute, ENplus, and 
CANplus are initially deemed to be approved third-party organizations 
for this purpose, and additional organizations may apply to the 
Administrator for approval.
* * * * *

Subpart QQQQ--Standards of Performance for New Residential Hydronic 
Heaters and Forced-Air Furnaces

0
3. Section 60.5474 is amended by revising paragraph (e) to read as 
follows:


Sec.  60.5474   What standards and requirements must I meet and by 
when?

* * * * *
    (e) Pellet fuel requirements. Operators of wood central heaters, 
including outdoor residential hydronic heaters, indoor residential 
hydronic heaters, and residential forced-air furnaces, that are 
certified to burn pellet fuels may burn only pellets that have been 
specified in the owner's manual and graded under a licensing agreement 
with a third-party organization approved by the EPA (including a 
certification by the third-party organization that the pellets do not 
contain, and are not manufactured from, any of the prohibited fuels in 
paragraph (f) of this section). The Pellet Fuels Institute, ENplus, and 
CANplus are initially deemed to be approved third-party organizations 
for this purpose, and additional organizations may apply to the 
Administrator for approval.
* * * * *

[FR Doc. 2020-05961 Filed 4-1-20; 8:45 am]
BILLING CODE 6560-50-P