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June 24, 2011

Improving Regulations General Docket Environmental Protection Agency

EPA Docket Center

Mailcode: 2822T 1200 Pennsylvania Avenue, N.W. Washington, DC 20460

Attention Docket ID No. EPA-HQ-OA-2011-0156

Re: Comments to “Improving Our Regulations: A Preli minary Plan for Periodic Retrospective Reviews of Existing Regulations”

To Whom It May Concern:

The Hearth, Patio & Barbecue Association (“HPBA”) a ppreciates the opportunity to submit comments on “Improving Our Regulations: A Prelimina ry Plan for Periodic Retrospective Reviews of Existing Regulations” (the “Preliminary Plan”), Docket ID No. EPA-HQ-OA-2011- 0156-0119. HPBA supports both the Preliminary Plan , the retrospective regulatory review process and the larger initiative to improve federa l regulations that was spurred by the issuance of Executive Order 13563. The Preliminary Plan and the regulatory reforms called for in Executive Order 13563 will help ensure that the fed eral regulatory system, including programs administered by EPA, will be efficient, effective a nd dynamic in the coming decades.

HPBA is an international not-for-profit trade assoc iation established in 1980. HPBA’s membership is composed of approximately 2,300 manuf acturers, retailers, distributors, service and installation firms, and many other entities in the hearth, patio, and barbecue industries. Examples of products that HPBA’s members manufactur e, sell, service and install include: factory-built fireplaces, gas logs, fireplace inser ts; wood, pellet, coal, gas and electric stoves; barbecues, grills and smokers; and patio furniture and accessories. Roughly 80 of HPBA’s members are hearth appliance manufacturers – the ma jority of whom qualify as small businesses per the Small Business Administration.

Background

Aside from expressing our general support for the P reliminary Plan that EPA has developed,

HPBA would like to direct EPA’s attention to an out dated aspect of one particular regulation that impacts a large percentage of HPBA’s membership: 40 C.F.R. Subpart AAA – Standards of2

Performance For New Residential Wood Heaters (“Subp art AAA”). Specifically, Subpart AAA requires manufacturers of every model line that is subject to the rule to obtain EPA certification of the model line’s compliance with the emissions s tandard. The rule requires that manufacturers submit paper applications for certifi cation to EPA’s Stationary Source Compliance Division. See 40 C.F.R. § 60.533(b). The current certification application process entails EPA entering the necessary information from the paper applications into an electronic lotus notes spreadsheets for review by EPA personne l. All of the certification laboratories that complete the applications are currently equipped to create reports electronically, rather than manually.

The transfer of data from the paper certification a pplications to the electronic format is quite time consuming. According to an individual with 12 year s of experience in certification laboratories, companies typically experience a delay of four to s ix weeks from the time EPA receives the certification application until the time the certif ication is issued. However, this individual has seen the process take approximately four months in one instance. The timing of certification for new hearth products is fairly cyclical, as the hear th products industry is a highly seasonal business. Manufacturers generally show new product s at the HPBA spring trade show in March to vet the product with retailers and consumers. F ollowing the spring trade show, manufacturers will submit a certification application to EPA if t hey believe there is sufficient market demand for their new product, in hopes that EPA can proces s the certification before the period when most consumers buy wood heaters – typically in Augu st and the autumn months. Wood heater manufacturers are exposed to a fairly high level of risk while awaiting certification, as they produce the season’s output of new models before th ey receive certification from EPA. Wood

heater manufacturers are in a “race” to receive the ir certification so that they may ship and invoice these heaters before the busy purchasing se ason begins in August. The regulations do

not allow manufacturers to sell units that are not certified and properly labeled pursuant to Subpart AAA. See 40 C.F.R. § 60.538. Thus, manufacturers are left in an exposed financial position – awaiting certification while an inventor y that they cannot sell or ship to customers sits

idle.

Compounding the risk that companies face while awai ting certification is the fact that many other wood heater manufacturers undertake this proc ess at the same time. Thus, EPA’s system, which is already slowed by virtue of paper applicat ion processing, is even slower because of the volume of applications it processes at the same tim e. Further exacerbating the certification “logjam” at EPA is the fact that Subpart AAA is cur rently undergoing a long delayed review. It is anticipated that as a result of this review, Sub part AAA’s applicability will be expanded to cover a universe of wood heaters that has not previ ously been subject to NSPS regulation. Both HPBA and employees of certification laboratories an ticipate that the entry of these new products into the Subpart AAA-regulated market will bring ma ny small companies into this program and cause significantly more delay in the certification process. To be sure, the potential impacts of this expansion of Subpart AAA applicability will be mitigated by the plan to privatize much of the certification process, through the use of ISO c ertified independent third party certification bodies. However, current plans are for OECA to rev iew the work of these certification bodies;

HPBA is confident that if the certification submiss ion system is converted to an electronic medium, much of the avoidable delay in the certific ation process will be eliminated.3

At present, we understand that the Office of Air Q uality Protection and Standards intends to amend Subpart AAA following the current review to i nclude an electronic certification submission system. In order to ensure that this ch ange occurs, HPBA respectfully asks EPA to commit to implementing an electronic certification submission system for Subpart AAA as part of its retrospective review process. Replacing Sub part AAA’s current paper certification submission system with an electronic system is cons istent with the Preliminary Plan, Executive Order 13563, and the retrospective review process b ecause it would: 1) be consistent with EPA’s stated goal of increasing electronic reporting; 2) accelerate the development of new technologies; 3) improve environmental protection; and 4) relieve the small business community of

unnecessary pressure.

EPA’s Goal of Increasing Electronic Reporting

Replacing paper reporting requirements with electro nic ones is consistent with the broad command in Executive Order 13563 for agencies to co nduct retrospective analyses to make their regulatory programs more effective and less burdens ome. See Executive Order 13563, 76 Fed. Reg. 3821, 3822 (Jan. 21, 2011). The Memorandum on Regulatory Flexibility, Small Business and Job Creation issued the same day as Executive O rder 13563 specifically targeted electronic reporting as an option agencies should consider tha t leads to decreased regulatory burdens on small businesses. 76 Fed. Reg. 3827, 3828 (Jan. 21 , 2011). Accordingly, the Preliminary Plan discusses EPA’s intention to abandon paper-based re porting in favor of electronic reporting. The agency believes that paper reporting is unnecessari ly resource-intensive, inefficient and ineffective for compliance monitoring and assurance . Preliminary Plan, pp. 5-6.

The Preliminary Plan also identifies individual rul es that EPA slated for priority retrospective reviews. The Preliminary Plan indicates that sever al of these rules involve paper reporting requirements that EPA plans to replace with electro nic reporting including: the reporting of health and safety data under TSCA, FIFRA and FFDCA; reporting of additional requirements under TSCA; creating an electronic manifest for RCR A-regulated shipments; electronic submittal of RCRA Site ID forms; and electronic sub mittal of SIP revisions under the Clean Air Act. Preliminary Plan pp. 14-31. Additionally, in the portion of the Preliminary Plan that lays out EPA’s plan for future periodic regulatory revie ws, one of the criteria that EPA will apply to future reviews is whether the regulation “imposes p aperwork activities (reporting recordkeeping, or third party notifications) that could benefit fr om online reporting or electronic recordkeeping.” Preliminary Plan at p. 38.

Accordingly, creating an electronic certification s ubmission system for Subpart AAA is consistent with the general command of Executive Or der 13563 and the accompanying memorandum, EPA’s general intention of replacing pa per-based reporting systems with electronic ones, and the agency’s initial plan to e liminate paper-based reporting requirements for the select set of regulations discussed above.

Accelerating the Development of New Technologies

One of the broad goals stated in Executive Order 13 563 is to maintain a regulatory system that “protect[s] public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creati on.” Inherent in this goal is the message that4

regulations should promote where possible, and not unnecessarily impede, the development of new technologies. In the Preliminary Plan, EPA mad e “Innovation” one of the criteria for future regulatory reviews. Preliminary Plan at p. 39. Th e criteria call on EPA to ask whether an alteration could be made to the regulation to spur new markets, technologies or jobs.

In the context of the wood heater industry, a new p roduct’s entry into the market is contingent upon EPA processing the certification pursuant to S ubpart AAA. As described above, the timing of the certification is often critical, as there is a relatively narrow window between the spring trade show and the time that consumers begin making new product selections in August. At a minimum, delays in certification caused by the pape r-based reporting system can lead to a new product not reaching the market in time for the hei ght of the wood heater purchasing season. Manufacturers may also choose to defer entry of a p roduct into the marketplace by one season because they doubt that the product will be certifi ed in time for the purchasing season. A more extreme consequence that could result from delays i n the paper-based reporting system would involve a product or manufacturer’s commercial viab ility being undermined because a new product was not certified in time for the busy purc hasing season. Clearly this scenario would be unlikely for larger, established manufacturers, as they are better equipped to take risks. However, HPBA is very concerned that many small ent ities, whose products will be subject to Subpart AAA following the current review, may under estimate the delays in this process and be

unable to continue in business.

In either event, customers would be deprived of new technologies that are frequently more energy efficient and result in lower emissions rate s than existing models. Without even considering the effect on consumers, the current ce rtification submission system does not accelerate the development of new technologies and their introduction into the market – it impedes it. Further, because new products and tech nologies may encounter certification delays, the paper-based reporting system does not reward or encourage the development of new technologies that can bring a myriad of benefits. Therefore, creating an electronic certification submission system for wood heaters covered by Subpa rt AAA is in accord with the retrospective review process and EPA’s Preliminary Plan.

Improved Environmental Protection

As stated above, one of the President’s objectives in issuing Executive Order 13563 was to protect the environment while encouraging innovatio n. This goal is reflected in the Preliminary Plan’s criteria for future periodic regulatory revi ews. Specifically, the Preliminary Plan asks “[d]oes the regulation have complicated or time-con suming requirements, and are there feasible alternative compliance tools that could relieve bur den while maintaining environmental protection?” Preliminary Plan at p. 38. The Preli minary Plan’s section on priority retrospective reviews also discusses the goal of ensuring that NS PS eight-year reviews result in updates to outdated emissions control technologies when possib le. Preliminary Plan at p. 22.

Electronic certification submission for Subpart AAA wood heaters furthers both of these goals because it will likely result in improved environme ntal protection and emissions control technologies. Electronic certification reporting w ill undoubtedly result in more wood heater models on the market that have improved energy effi ciency and decreased particulate matter emissions. This should improve environmental prote ction in two ways. First, new models with5

improved emissions control technologies and perform ance will begin to supplant existing models. Second, the increased competition created by the entry of new products into the market should drive prices down and encourage customers th at would not otherwise purchase new wood heaters to do so. The second effect is quite signi ficant if it comes to fruition because approximately 60% of all wood heaters in use in the U.S. still pre-date Subpart AAA. As these pre-existing units are not subject to Subpart AAA, EPA could indirectly influence a turn-over to new units that would benefit particulate matter emi ssions and the environment.

From conversations with the EPA Office of Air Quali ty Protection and Standards, HPBA understands that in the current review of Subpart A AA, EPA plans to revise the rule to institute an electronic certification submission system. HPB A is fully supportive of this change to the

rule and wants to ensure that it is included in the revision that emerges from the review. Although this change will not directly mandate any specific new emissions control technologies, it will certainly indirectly increase the number of pollution control technologies that are available

on the wood heater market.

Relieving the Small Business Community of Unnecessa ry Pressure

As discussed above, the memorandum that accompanied the issuance of Executive Order 13563 – Regulatory Flexibility, Small Business and Job Cr eation – stressed the importance of simplifying reporting requirements for small busine sses. Additionally, the criteria for future retrospective reviews in the Preliminary Plan calls on EPA to consider whether regulations that have a large impact on small businesses could be ch anged to reduce the impact, while still maintaining environmental protection. Preliminary Plan at p. 38. Executive Order 13563 also includes a broad command for regulations to impose the least burden possible on society.

Small businesses are often the companies that devel op new and innovative products in the wood heater industry. Thus, the certification process d iscussed above and the risks associated with trying to certify a new product in time for the pri me purchasing season frequently impact small businesses. Predictably, the risks associated with new product certification are significantly higher for small businesses, as they generally have fewer existing products on the market and less capital to survive a delay in EPA processing a nd issuing a new product’s certification. As noted previously, manufacturers cannot sell or ship products that are awaiting certification. Thus, manufacturers are often left in a precarious position, as they have made large financial commitments to produce the inventory of a new model that they are unable to recoup costs on until they receive certification.

To illustrate the increased hardship that certifica tion poses for small businesses, when Subpart AAA first went into effect, roughly 80 percent of t he small businesses that manufactured regulated wood heaters went out of business. With the scope of Subpart AAA expanding after the current review to include a universe of product s that were not previously subject to the rule, HPBA expects the manufacturers of these products to encounter difficulties with the certification submission system and the ensuing delays. Although HPBA does not anticipate that large numbers of manufacturers of the newly regulated pro ducts will go out of business, we anticipate that these manufacturers will not be sufficiently p repared for the certification process and the inevitable delays that will accompany an influx of newly-regulated products.6

Both EPA and the industry can take additional steps during the next 18 months, the anticipated duration of the current review, to begin to prepare the newly-regulated manufacturers for compliance with Subpart AAA. However, converting t o an electronic certification submission system is one way to ease this transition that is a pparent at this point in time, and is consistent with the regulatory review process and EPA’s approa ch towards reporting requirements in other regulatory regimes. Given the limited time frame r emaining in the Subpart AAA review, we believe it is critical for EPA to begin this proces s immediately.

Conclusion

For the reasons stated above, HPBA asks EPA to amen d Subpart AAA to include an electronic certification submission requirement. Further, HPB A encourages the agency to take the necessary steps at this juncture – including budget ing and arranging third-party contracts – to ensure that EPA can promptly implement the electron ic submission system once it is incorporated into Subpart AAA.

Sincerely,

Jack H. Goldman

President & CEO

HPBA