
MEMORANDUM
		
TO:		Gil Wood, USEPA
		David Cole, USEPA

FROM:	Jill Mozier, EC/R Inc.

DATE:		September 18, 2013

SUBJECT:	Notes from OMB  -  Alliance for Green Heat Conference Call on 9/16/2013 regarding Wood Heater NSPS Proposal


The Office of Management and Budget (OMB), the Small Business Administration (SBA), the Council on Environmental Quality (CEQ), and EPA were on the call. Primary speakers were Tom Morrissey, President of Woodstock Soapstone in New Hampshire, John Ackerly of The Alliance for Green Heat, and Britt Fleming, counsel to The Alliance for Green Heat.
      
Tom Morrissey comments:

 Here in support of the rule representing a very small ("micro") business of 30 employees. Noted that because Soapstone is so small it represents the most vulnerable segment of the manufacturers impacted by the NSPS, and further noted several times how transparent EPA/Gil has been with development of proposed rule.
      
 Speaking as a small business, the emission limits being considered are "eminently possible". Soapstone already has 3 stoves in neighborhood of 1.3 g/hr already and a 4[th] stove that should be ready in November to be certified at 1 or 0.9 g/hr, and be cheaper, too.
      
 Soapstone's R&D plus certification cost for new stove = ~$200,000. Tom has heard some industry estimates at twice this amount and noted he could see spending ~$400,000 for very first model but after that the manufacturers tend to copy an existing model, so the costs shouldn't be that high. In response to question from OMB about whether the $200,000 is representative of the industry as a whole, Tom said yes and furthermore that he has seen some higher industry estimates and some are "almost unbelievable".

 Soapstone supports NSPS also because the public health benefits way exceed the cost to us, as manufacturers. Our industry can ruin air quality for entire community. The regulations Tom's seen are well done, thoughtful, and bring in sources that have not been regulated before.

 This set of regulations in the best possible thing that could happen to our industry because we need to be able to say our products are clean, efficient and non-polluting while passing the "giggle test".

 In response to question from OMB about lessons learned during last go-round, Tom responded the primary lesson is to not wait until the end. His company has been diligently working for 5 or 6 years to develop better stoves [i.e., those noted above]. This can't be done last minute, but a 2 to 5-year window is adequate. All progress is iterative and 2 or even 3 design cycles are possible within 5 year window.
      
 In response to question from OMB about how the company budgets, Tom responded that while there are fixed costs at the end for EPA and UL testing, in the beginning the cost is all man-hours, as even the material is inexpensive (~$1.20/lb of steel). In response to question as to whether costs come out of additional operating expenses rather than capital expenditures, Tom explained that as a C-corp he has retained earnings and a line of credit. So this line of credit can be used for development. The company budgets 4-5% every year for R&D plus can easily get equipment loans through hometown banks, as money is so cheap currently. So it's a mix of retained earnings, line of credit, equipment loans, and eager employees.

John Ackerly (Alliance for Green Heat) comments:

  The Alliance for Green Heat is very supportive of most of the regulations although the Alliance would like the rule to be stricter in a few key places. More people in the US use wood than use oil and propane and, in the 2000 to 2010 time frame, wood heating has grown the fastest. The US needs cleaner models as Europe is trouncing the US in this regard, since the US hasn't kept up.
      
 The Alliance wants to see the regulations in place ASAP, and thinks efficiency is very important. The proposed 4.5 g/hr standard is too easy and doesn't raise the bar at all. In particular, the standard needs to be tighter for pellet stoves as the average pellet stoves is at 2.5 g/hr and a 1g/hr difference is important, especially in urban areas where pellet stoves can be used. There is no reason for the 4.5 g/hr standard  -  this is backsliding and will allow Chinese units to swamp the market.
      
 The 5-year timing is reasonable except for hydronic heaters where the standard needs to get stricter sooner. HH give wood burning a bad name  -  it's a pernicious technology that should have been disallowed. A 2-year time frame, rather than a 5-year period, is needed for HH. Small businesses should not be protected if their product is dirty.
      
 The Alliance agrees with T. Morrissey and is impressed with how transparent EPA has been. But there should be a minimum efficiency standard.  Disclosure is needed at least, but a minimum efficiency standard is good because efficiency is a proxy for CO; a minimum efficiency is not a huge challenge to manufacturers; and yet it will give some assurance to consumers.
 The Alliance would like the green label effort mentioned in the Preamble. Since there is no energy star rating, it's at least worth mentioning the green label effort to show EPA supports it.
      
 There is an increasing number of ways to produce clean stoves affordably (e.g., oxygen sensors/monitors). The Alliance invites OMB rep to visit the wood stove challenge on the lawn in DC in November.

 Britt Fleming noted that although EPA is likely not including efficiency in the regulation, it should at least be mentioned in the Preamble as an option/alternative EPA is taking comment on. (Tom Morrissey agreed that publishing efficiencies are absolutely essential for consumer comparison.) Britt noted that EPA should also take comments on tighter standards than are in the reg text. The Alliance would like to keep as many options open as possible in the rulemaking package  -  that is, keep logic in the Preamble for a different pathway. These products last a very long time, so it's critical we get low emitting units that are also efficient as soon as possible. 


