March 26, 2010

Mr. Gil Wood United States Environmental Protection Agency

109 TW Alexander Drive Durham, NC 27709

RE: Pellet Fuels Institut e Standards Program and NSPS

Dear Mr. Wood:

On behalf of the Pellet Fuels Institute (PFI), we would like to take this opportunity to express our sincere thanks fo r your attendance at our rec ent PFI Board of Directors meeting and our association luncheon in Orlando. Your presentation and comments may ultimately be seen as the watershed poi nt in the evolution of our standards and QA / QC program.

While we understand that our program does not currently c ontain all the elements the EPA believes are necessary, we appreciate your willingness to work with PFI to address

EPA’s recommendations to our current standards program. It is our belief that with a dedicated and focused effort by industry, along with the cooperation of EPA, we can finalize our standards program. It should be recognized that the current program was developed with the goal of im proving product performan ce for the consumer.

Open and ongoing communication with EPA, as we ll as a clear understanding of what EPA currently sees as required changes, is e ssential for PFI to efficiently guide the process over the coming months.

During your presentation you outlined areas of the PFI standards which EPA thinks could be strengthened. While we can see the rationale behind this, we believe that some of the EPA’s observations/recommendations may be based on incorrect assumptions/data. We would li ke to further review these specific items with you. The following is a list of what we perceive as EPA’s observations/recommendations for the program, and a brief comment re garding PFI’s initial thoughts.

1. Include Third Party Testi ng, Sampling and Auditing: The current program does include third party testing; howeve r, all sampling is carried out by the

manufacturer. Past considerations for inclusion of third party check sampling were left out due to cost and logistical c onsiderations. PFI be lieves that it can maintain the current sampling and test ing protocol and add an independent spot2 sampling and an audit function which will meet EPA’s needs. These additions

would be consistent with other similar industry standards.

2. Include Ash Melting Point: The current program includes Ash Fusion testing on a periodic basis. This will not be required for each sample; however, frequency will be sufficient to determine the clinkering characteristics of subject

fuels. We believe this is consistent with EPA’s needs.

3. Recipes with No Bark: PFI believes this is excessive and unnecessary. Many pellet manufacturers are currently produc ing a premium grade product from barkon round wood. These pellets perform we ll in a wide range of appliances. Additionally, even the cleanes t of sawmill residuals will include traces of bark, and as such, a black and white “no bark” rule would be extremely onerous and

restrictive. PFI believes that ash limits and other quality parameters will keep

bark inclusion rates at levels which wil l not pose a problem. Any restriction on the use of bark unnecessarily limits feed stock options for producers. PFI would

caution that without further information on the balance of this product's quality characteristics and the appliance setup, it is extremely misleading to conclude

that the solution is a total ex clusion of bark from feedstocks.

4. Test Every Batch: Our program currently calls for ongoing, in-house testing of feedstocks as well as finished product and independent third par ty testing of product at an interval of once per 1,000 tons. Once the independent check sampling and audit functions are added (as per item 1 above), we believe the level of product testing will be consistent with other comparable industries. We

are uncertain as to what would define “batch”, as pellet production facilities generally run continuously with ongoing blending and extrusion. PFI needs

clarification on the definiti on of a “batch” from EPA.

5. Internal Options Selection in October 2010: We understand that this timeline is real and approaching quickly. We also understand that EPA needs to see far greater participation in the PFI program by that time before it would be considered a viable option by EPA. In your presentation you stat ed that if PFI did not have a 95% (more or less) participati on rate by October, EPA would likely opt

for an alternate standard. We are commi tted to making certain changes to the PFI program to facilitate t he EPA October timeline; however, PFI believes that a target of 95% participation by that time is unattainable. PFI would hope that if we had a revised program that met the following criteria , that it would be EPA’s preferred option.

A. Meets EPA ’s requirements B. Meets the industry’s requirements in terms of appliance manufacturer

and consumer needs C. Has general industry acceptance

D. Has a reasonable participation rate3 6. Pellet Appliance Emissions Targets: As noted in EPA’s discussions regarding the NSPS, pellet appliances have the re cognized ability to combust wood fuels and emit lower particulates than convent ional wood stoves. We acknowledge

EPA’s use of the Best De monstrated Technology (BDT) in terms of emissions standards. While this topic is not a dire ct part of our pellet standards, it could have dramatic impact on our industry. If EPA’s single emissions threshold for pellet appliances eliminates all but premiu m grade fuels, it will si gnificantly impact the country’s ability to grow its densified fuels capacity. In doing so, it may by default, promote a movement back to c onventional wood burning stoves with their higher emissions, thus making this contrary to your desired outcome. PFI would hope that any emissions limits would be implemented with a focus on the long-term implications for both our indus try and EPA’s air quality objectives.

The above points include what we understand to be EPA’s observations and

recommendations to the current PFI st andards program, plus a few associated

issues. Given the time sensitive nature of this process, PFI would like to request that we set up a time to discuss these c oncerns with you via teleconference. We want to be sure that we have correctly interpreted EPA’s intentions with regard to

fuel standards.

Jennifer Hedrick of PFI staff will follow up with you in the coming days to determine if you would be available for a conference call with PFI. It is our intent to maintain open communication with EPA throughout this proc ess to ensure that all parties are fully apprised of progress and status.

Again, thank you for your presentation to our industry. We look forward to working with you over the coming months.

Sincerely,

Jeff Thiessen

President