Summary	of	Interagency	Working	Comments	on	Draft	Language	under	EO	12866	Interagency	Review.		

Subject	to	Further	Policy	Review.	

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Reg Flex Analysis

 EPA should consider additional regulatory alternatives as required in the RFA to 

minimize the rule’s economic impact on small entities

▪ Based on the analysis of the economic impacts of this rule on small entities 

illustrated in Table 6-7 of the RIA, EPA was not able to certify this rule under the 

RFA. EPA also found that this rule is expected to have some sizeable impacts to 

very small entities, that individual industries had with compliance costs 

encompassing over 10% of industry revenues, and, in some cases, compliance 

costs to be over 100% of entity revenues. Given these substantial impacts, EPA 

should consider additional reasonable alternatives to reduce the economic impact 

on small entities. While EPA has considered an alternative to the proposed 

approach to this rule, this alternative as shown in Table 6-8 of the RIA is actually

expected to increase the already large economic impact on small entities. 

Therefore, EPA should consider alternatives such as those suggested in section 

603(c) of the RFA namely:

 Exemption for certain or all small entities from coverage of the rule in 

whole, or in part;

 Establishment of different compliance or reporting requirements for small 

entities or timetables that take into account the resources available to small 

entities; and

 Clarification, consolidation, or implication of compliance and reporting 

requirements for small entities.

 EPA should provide greater detail on why it chose to reject the SBAR panel, SBA, and 

OMB’s recommendation to not move forward on issuing emissions limitations for the 

mason heater industry

▪ Advocacy staff interprets the recommendation that EPA focus on the most 

polluting sources first differently than does EPA in its summary and response to 

the panel recommendation. The EPA proposal includes sources that are already 

quite clean and provide significantly fewer emissions benefits than other sources 

in the proposal. Advocacy staff again encourages EPA to refocus its efforts on 

only the sources that provided the greatest cost effectiveness of regulation and 

consider other means of addressing other sources, such as continuing the 

successful volunteer programs or allowing states to regulate based on local and 

regional variation and needs.

▪ On page 152 of the preamble EPA explains that it is issuing emissions limitations 

on masonry heaters against the recommendations of the SBAR panel, SBA, and 

OMB because industry requested a standard. Please identify the individuals 

representing “industry” in this case, provide as much specifics as possible about 

the request, and how EPA’s proposed standard responds to this request. Please 

also explain how the industry request is relevant to the agency’s obligations under 

section 111 and its decision to regulate.

▪ Why does EPA believe that masonry heaters are a source that causes or 

significantly contributes to air pollution? SBA and OMB suggested excluding 
Summary	of	Interagency	Working	Comments	on	Draft	Language	under	EO	12866	Interagency	Review.		

Subject	to	Further	Policy	Review.	

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sources that fell below a threshold emission level; why is that not equivalent to 

saying a source does not significantly contribute?

▪ EPA further justifies regulating all residential wood heaters as soon as possible 

based on some State’s desire for another tool to help them with their efforts to 

reduce wood smoke emissions. Please explain how the State request creates a 

need for Federal regulation under sec. 111(b), and how existing state Clean Air 

Act programs or existing voluntary programs are insufficient for these low 

volume sources. 

 How did EPA address the panel’s recommendation that:

▪ the EPA Administrator should consider, where beneficial, adopting behavioral 

approaches including but not limited to disclosure and labeling, as well as 

increasing the public’s awareness of voluntary programs?

▪ the EPA Administrator should consider exempting small production lines where 

the firm may be unable to recover the R&D and related expenses in a reasonable 

amount of time?

 Use of “conservative” estimates: EPA should provide information to help create a best 

estimate and not most conservative estimate of economic impacts on small entities. EPA 

should either use their best estimate or present a high and low range and request comment 

on whether the high and low are reasonable.

▪ EPA uses the term “conservative” in its RIA repeated, presumably to deflect 

criticism that their estimates are not supported by available information. Labeling 

these estimates 'conservative' doesn't make the end result the high-end of the cost 

estimates, particularly where EPA does not contrast their 'conservative' estimate 

with a 'best' estimate.

▪ Throughout Section 6 of the RIA, EPA explains that the analyses of the impacts 

of this rule on small entities should be put into context of these “conservative” 

(i.e., intentionally overstated) estimates. We believe EPA’s presentation is 

therefore rendering some estimates less relevant because they are so large. EPA 

should be describing its economic analyses to help the public get the most 

accurate estimate of the rule’s impacts as possible. 

 EPA needs to reconsider the SBAR panel’s recommendation to collect more data on the 

manufacturing costs associated with this rule to ensure that its cost estimates are 

comprehensive

▪ While EPA has put effort into gathering more information on the potential costs 

associated with this rule, the data behind the EPA’s cost estimates as part of the 

RIA and cost memos may not be comprehensive. These estimates depend on a 

very small number of data points from only a couple of manufacturers potentially

leading to a selection bias in EPA cost estimates. It is possible that the data EPA 

collected may understate the costs of small manufacturers who may not be able to 

easily spread out administrative and overhead costs over many units and potential 

models. Similarly, manufacturers that produce very few units may face 

significantly greater testing costs than estimated since they will not see any 
Summary	of	Interagency	Working	Comments	on	Draft	Language	under	EO	12866	Interagency	Review.		

Subject	to	Further	Policy	Review.	

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efficiency games from being able to test representative units. As a result, some 

cost estimates may be understated for particular groups of manufacturers 

depending on whether they could utilize economies of scale.

 EPA’s time period for evaluating the cost-effectiveness of the proposed standard should 

be much shorter, particularly given required periodic reviews of the NSPS.

▪ According to Table 11 of the preamble which details the cost effectiveness of the 

proposed standard, EPA is evaluating cost effectiveness for a BSER 

determination using a period of analysis of 44 years (i.e., 2013 to 2057). Since 

EPA is required to review NSPS at least every 8 years it is likely that this 44 year 

period of analysis will encompass future rulemakings. Given that EPA expects 

manufacturers to comply with these rules by redesigning fireboxes and the need to 

continuously update the NSPS, it may not be reasonable to model purchases of 

2019 models out an additional 20 years. As a result, EPA should consider making 

this period of analysis consistent with time periods used in the RIA. EPA could 

shorten this period to either the life of a wood heater from when the NSPS 

becomes effective or to the length of this rulemaking cycle. 

 Use of industry standards: Does EPA intend to incorporate by reference standards not yet 

finalized? If so, how will EPA ensure the future availability of a draft standard if/when 

the standard is finalized? If not, will EPA delay the rulemaking until those standards are 

finalized?

 Time frame for cost expenditures: The cost expenditures for this rule appear to be almost 

entirely R&D during the phase-in period. Amortizing costs over a longer period of time 

serves to reduce the presented annual costs of the rule in a way that is unreasonable for 

small businesses that have limited access to capital and must finance their R&D out of 

current revenues. We strongly recommend presenting R&D costs annualized only for the 

phase-in period.

▪ Please confirm the annualization periods for Tables 6-4, 6-5.

 R&D cost difference between proposal and alternative: How does EPA characterize the 

difference between the intensity of R&D necessary to meet step 2 (proposal) from step 1 

vs. the lesser intensity that would be required to meet step 2 (alternative) followed by step 

3 (alternative)? Without allowing for some difference in intensity and more time across 

which to pay for the R&D, the alternative seems designed to be rejected.

RIA Comments

Analytic timeline: EPA should clarify that the agency is assuming that the heaters will be 

commercially available for purchase for 20 years with 20 years of useful life. Different 

languages around the analytic timelines are confusing. Also, please explain what EPA is only 

presenting results up to 2022?
Summary	of	Interagency	Working	Comments	on	Draft	Language	under	EO	12866	Interagency	Review.		

Subject	to	Further	Policy	Review.	

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Stranded capital: can the manufacturers sell heaters that were manufactured before the 

publication date (p. 2-16)? If no, what is the magnitude of the potential stranded capital? Are 

there other areas of potential stranded capital problem?

Shipment information: please include the shipment projection (tables would be great).

Benefit estimates between the primary and the alternative: why are there such differences 

between the alternative and the proposed options if the only change is timing of when provisions 

kick in? Why are VOC and CO emissions so high for the alternative option?

Usage: what are the assumed usage rates for different heaters?

Provision by provision analysis: it looks like some heater categories deliver the bulk of the 

benefits. Has EPA conducted a provision-by-provision analysis?

2-4: why require manufacturers to offer unconditional warranties?

2-6: why require hang-tags and permanent labels if manufacturers have to meet the emission 

standards?

2-12: is PFI a virtual monopoly?